2023 (12) TMI 752 - HC - Insolvency and Bankruptcy

Territorial Jurisdiction - validity of declaratory decree to the effect that the purported Assignment Deed - permanent and mandatory injunction - HELD THAT - This Court has no territorial jurisdiction to entertain the prayers of the plaintiff with respect to the assignment deed dated 03.02.2023, which is the fulcrum of the present suit. The contention of the plaintiff that it became aware of the assignment deed when it was filed as a document before the NCLAT, would not confer any jurisdiction for the purpose of Section 20 of the CPC. Sections 63 and 231 IBC create a bar on the jurisdiction of the civil court in respect of any matter in which the NCLT and NCLAT has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order. Further, clause (c) sub-Section (5) of Section 60 of the Code vests the jurisdiction in NCLT to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. Ex-facie, the controversy sought to be raised in the present suit is a subject matter of proceedings before the NCLT/NCLAT. As such, the bar under Section 60 and Section 231 would squarely apply to the present suit. In the circumstances, the plaint is returned, with liberty to the plaintiff to take appropriate remedies as may be available to him under law. Application disposed off.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Subject Matter Jurisdiction

Summary:

Territorial Jurisdiction:
The plaintiff argued that under Section 20(c) of the Code of Civil Procedure, 1908, the cause of action arose within the territorial jurisdiction of the Delhi High Court because the impugned assignment deed dated 03.02.2023 emanated from a settlement agreement dated 27.09.2021, which is subject to Delhi jurisdiction. Additionally, the plaintiff claimed to have learned about the assignment deed when it was filed in NCLAT, New Delhi.

The defendant No. 2 countered that the settlement agreement was executed in Gautam Buddha Nagar, Uttar Pradesh, and the relevant addresses were of Gautam Buddha Nagar and Chandigarh. The project site was in Mohali, Punjab, and the Section 9 petition was filed in NCLT, Chandigarh. The place of knowledge cannot create jurisdiction, and the plaintiff had prior knowledge of the assignment of debt.

The Court found merit in the submissions of defendant No. 2, noting that the assignment deed was executed in Chandigarh, and the entire dispute arose from transactions related to the project site in Mohali. Hence, the Delhi High Court has no territorial jurisdiction.

Subject Matter Jurisdiction:
Defendant No. 2 argued that the suit is barred under Section 231 of the Insolvency and Bankruptcy Code, 2016 (IBC), which precludes civil courts from jurisdiction over matters within the purview of NCLT/NCLAT. The plaintiff's reliance on the settlement agreement dated 27.09.2021 was misplaced as it had been pronounced upon by NCLAT and had no nexus with the assignment deed dated 03.02.2023.

The Court highlighted that Sections 63 and 231 of the IBC bar civil courts from matters within the jurisdiction of NCLT/NCLAT. The controversy in the present suit is subject to proceedings before NCLT/NCLAT, and thus, the suit is precluded under Section 231 of the IBC.

Conclusion:
The plaint was returned to the plaintiff with liberty to seek appropriate remedies under the law. All pending applications were disposed of, and the Court clarified that its observations should not be construed as an opinion on the merits of the dispute.