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2022 (12) TMI 1202 - HC - Insolvency and BankruptcyGrant of ad interim order restraining the respondent company who is in liquidation from taking possession or control of the pledge shares or to interfere with the possession of the physical share certificates of the petitioner - HELD THAT - NCLT and NCLAT are constituted under Section 408 and 410 of the Companies Act, 2013 but without specifically defining the power and functions of NCLT. Section 408 of the Companies Act states that the Central Government shall constitute a National Company Law Tribunal to exercise and discharge such powers and functions as are or may be conferred on it by or under the Companies Act or any other law for the time being in force. The matters fall within the jurisdiction of the NCLT, under the Companies Act, 2013 lie scattered all over the Companies Act, therefore, Section 420 and 424 of the Companies Act, 2013 indicates in brought terms, merely the procedure to be followed by the NCLT before passing any order. There is no separate provision in the Companies Act exclusively dealing with the jurisdiction and powers of NCLT. In Sub-Sections (4) and (5) of Section 60 of the IBC, 2016 give an indication respectively about the powers and jurisdiction of the NCLT. Sub- Section 4 of Section 60 of IBC, 2016 states that the NCLT will have the powers of DRT as contemplated under part III of the Code for the purpose of sub Section (2). Sub Section (2) deals with situation where the Insolvency Resolution or Liquidation of Bankruptcy of the corporate guarantor or personal guarantor of a Corporate Debtor is already pending before the NCLT - In the present case, the petitioner though had filed the civil suit praying for decree as well as the declaration with respect of the equity shares of the respondent and subsequently the petitioner has invoked the provisions of Section 7 of IBC which was duly admitted by the NCLT and the petitioner has filed the similar claim before the Liquidator. As per Section 238 of the IBC, 2016 is having override effect in any other law for the time being in force. In view of my prima facie findings that this Court cannot pass any interim order at this stage. This Court is of the view that the matter in issue in the suit can be more appropriately and effectively decided and adjudicated by the NCLT. In the present case, Section 430 of the Companies Act, 2013 itself provides an additional bar by stating that no injunction shall be granted by any civil court in respect of any action taken or to be taken in pursuance of any power conferred on the NCLT by the Companies Act, 2013. This Court finds that the petitioner is not entitled to get an ad interim order - Application disposed off.
Issues Involved:
1. Entitlement of the petitioner to an ad interim injunction. 2. Jurisdiction of NCLT and the role of the Liquidator. 3. Security interest of the petitioner over the pledged shares and Tajpur land. 4. Applicability of Section 52 and Section 60 of the Insolvency and Bankruptcy Code, 2016. 5. Overriding effect of Section 238 of the IBC, 2016. 6. Bar under Section 430 of the Companies Act, 2013. Detailed Analysis: 1. Entitlement of the petitioner to an ad interim injunction: The petitioner sought an ad interim order to restrain the respondent company in liquidation from taking possession or control of the pledged shares or interfering with the possession of the physical share certificates. The court examined whether the petitioner was entitled to such an injunction. The petitioner's claim was based on loans provided to the respondent, secured by pledged shares and title deeds of land. The court concluded that the petitioner was not entitled to an ad interim order as the matter could be more effectively adjudicated by the NCLT. 2. Jurisdiction of NCLT and the role of the Liquidator: The court referred to Sections 408 and 410 of the Companies Act, 2013, which establish the NCLT and NCLAT, and their jurisdiction under the IBC, 2016. The NCLT has the authority to handle insolvency resolution and liquidation processes. The Liquidator, appointed by the NCLT, is responsible for managing the affairs of the respondent company. The court emphasized that the NCLT is the appropriate forum for resolving disputes related to the liquidation process. 3. Security interest of the petitioner over the pledged shares and Tajpur land: The petitioner claimed security interest over 77,500 equity shares and 10.08 acres of land in Tajpur, provided as collateral for the loans. The Liquidator denied the security interest, arguing that the assets form part of the liquidation estate. The court noted that the petitioner had submitted the claim to the Liquidator, who is responsible for verifying and adjudicating such claims. The court found that the petitioner's apprehensions about losing control over the pledged shares should be addressed by the NCLT. 4. Applicability of Section 52 and Section 60 of the Insolvency and Bankruptcy Code, 2016: Section 52 allows secured creditors to either relinquish their security interest to the liquidation estate or realize it independently. Section 60(5) grants the NCLT jurisdiction over insolvency resolution and liquidation proceedings, including disputes related to the assets of the corporate debtor. The court highlighted that the petitioner should approach the NCLT to resolve the issue of security interest rather than seeking an injunction from the civil court. 5. Overriding effect of Section 238 of the IBC, 2016: Section 238 of the IBC, 2016, provides that the provisions of the IBC shall have an overriding effect over any other law in force. The court reiterated that the IBC takes precedence, and the NCLT is the appropriate forum for adjudicating matters related to insolvency and liquidation. 6. Bar under Section 430 of the Companies Act, 2013: Section 430 prohibits civil courts from granting injunctions in matters where the NCLT has jurisdiction. The court emphasized that this provision further supports the conclusion that the petitioner should seek relief from the NCLT rather than the civil court. Conclusion: The court concluded that the petitioner is not entitled to an ad interim order as the NCLT is the appropriate forum for adjudicating the issues related to the liquidation process. The court emphasized the jurisdiction of the NCLT under the IBC, 2016, and the bar on civil courts under Section 430 of the Companies Act, 2013. The overriding effect of Section 238 of the IBC, 2016, further supports this conclusion.
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