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2019 (11) TMI 1280 - SC - Insolvency and BankruptcyAuction of property of Corporate Debtor - Stay on auction proceedings - CIRP - recovery of the workmen s dues by sale of the assets of Respondent No. 4 Company through a public auction - HELD THAT - In view of the provisions of the IBC, the High Court ought not to have proceeded with the auction of the property of the Corporate Debtor Respondent No. 4 herein, once the proceedings under the IBC had commenced, and an Order declaring moratorium was passed by the NCLT. The High Court passed the impugned Interim Orders dated 14.08.2019 and 05.09.2019 after the CIRP had commenced in this case. The moratorium having been declared by the NCLT on 04.06.2019, the High Court was not justified in passing the Orders dated 14.08.2019 and 05.09.2019 for carrying out auction of the assets of the Respondent No. 4 Company i.e. the Corporate Debtor before the NCLT. The subject matter of the auction proceedings before the High Court is a vast chunk of land admeasuring about 330 acres, including Railway lines and buildings. The impugned Interim Orders dated 14.08.2019 and 05.09.2019 passed by the Odisha High Court is set aside, as parallel proceedings with respect to the main issue cannot take place in the High Court. The sale or liquidation of the assets of Respondent No. 4 will now be governed by the provisions of the IBC.
Issues Involved:
Challenge to interim orders passed by Odisha High Court during insolvency proceedings under IBC. Analysis: Issue 1: Jurisdiction of High Court during insolvency proceedings The Supreme Court examined the jurisdiction of the High Court to proceed with auction proceedings of a corporate debtor's assets after the initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). It highlighted that once the NCLT declares a moratorium, the High Court should refrain from conducting parallel proceedings that may affect the interests of stakeholders. The Court emphasized the exclusive jurisdiction of NCLT and NCLAT in insolvency matters and the overriding effect of IBC over other laws, as per Sections 238 and 231 of the Code. The judgment set aside the interim orders of the High Court, directing that the sale or liquidation of assets must comply with the IBC provisions. Issue 2: Rights of Workmen and Employees Regarding the rights of workmen and employees of the corporate debtor, the Court mentioned Regulation 9 of the Insolvency and Bankruptcy Board of India Regulations. It allowed the Hirakud Workers' Union to file claims for arrears, salaries, and other dues before the competent authority under the IBC regulations. The judgment emphasized the procedural requirements for submitting claims by workmen and employees, ensuring their rights are protected during the insolvency resolution process. Issue 3: Participation of Interested Parties The judgment acknowledged the participation of interested parties, such as HINDALCO, in the auction proceedings before the High Court. It granted liberty to parties to pursue legal remedies in accordance with the law. The Court allowed Respondent No. 8 to file an application for addressing objections raised during the auction process, while reserving the right of the Resolution Professional to contest such applications. In conclusion, the Supreme Court's judgment clarified the jurisdictional boundaries of High Courts during insolvency proceedings, safeguarded the rights of workmen and employees, and permitted interested parties to seek appropriate remedies within the framework of the IBC regulations.
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