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TMI Blog2022 (5) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... m which is put in place by virtue of the order passed under section 14 of the IBC and whether corporate debtor can take advantage of the same to bring the application in this case filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996 Act'). 3. Pursuant to an agreement dated 20.02.2015, the appellant placed a purchase order of Rs.16,20,00,000/- with the respondent. The appellant, however, issued a termination notice to the respondent on account of its alleged inaction and conduct which is described as non-responsive. This led to the respondent approaching the High Court of Delhi which finally culminated in a direction by the High Court to afford an opportunity of hearing to the respondent and to consider its representation. The appellant, however, rejected the representation by communication dated 17.05.2016. Invoking the provision in the contract providing for arbitration, the respondent addressed communication dated 07.06.2016. The appellant sent its reply on 20.7.2016 where it, inter alia, did not consent for either of the names suggested by the respondent and instead proposed to proceed for arbitration through the Delhi In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of limitation pertains to jurisdiction the mere fact that the counsel for the appellant in the High Court has consented to the order appointing the arbitrator will not stand in the way of the appellant pointing out that the application under section 11(6) was clearly beyond time. In this regard, Section 3 of the Limitation Act, 1963 (hereinafter referred to as '1963 Act') is harnessed. It is pointed out that irrespective of whether the parties set up the case of limitation, it is the bounden duty of the Court to dismiss the suit or an application or proceeding which is barred by limitation. In this regard, learned senior counsel also relied upon the judgment of this Court reported in Noharlal Verma v. District Cooperative Central Bank Limited, Jagdalpur (2008) 14 SCC 445: "32. Now, limitation goes to the root of the matter. If a suit, appeal or application is barred by limitation, a court or an adjudicating authority has no jurisdiction, power or authority to entertain such suit, appeal or application and to decide it on merits. 33. Sub-section (1) of Section 3 of the Limitation Act, 1963 reads as under: "3. Bar of limitation.-(1) Subject to the provisions contained in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............................................................ (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; ....................................................................................... ........................................................................................" He would, therefore, contend that when not only there is no express embargo against the corporate debtor from pursuing any proceeding but the law, in fact, contemplates the resolution professional launching the proceedings and representing and acting on behalf of the corporate debtor in judicial, quasi-judicial or arbitration proceedings during a moratorium, the present application under section 11(6) which is admittedly barred but for exclusion of the time under Section 60(6) is to be treated as time barred. In this regard, he would commend to the Court that the Court may employ the principles of interpretation which have commended itself of late, in particular, viz., an interpretation, which advances the object and the purpose of the law. A mere adherenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplate that there may be suits which a corporate debtor also during the period of the moratorium may not be in a position to bring. He gives an example of interpleader suit. It may be in such cases alone that the Courts must give meaning to the exclusion of the period of limitation in favour of a corporate debtor in Section 60(6). He would further contend that the acceptance of the case of the respondent under Section 60(6) would render the phrase in section 60(6), viz., 'for which an order of moratorium has been made under this part' otiose. The said phrase, in other words, is employed in order to confine the benefit of the exclusion to only suits which would be covered by or come under a cloud as a result of the moratorium. The present application under section 11(6) is clearly not one such proceeding. In other words, it is his case that the words 'for which an order of moratorium has been made under this part' which is to be treated as a descriptive part, describes the case of such proceedings to which the third part will apply, the third part being the period during which the moratorium is in place, shall be excluded. The Court may place an interpretation which gives meaning to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued and it was under the management of the Resolution Professional who was duly clothed with the authority to proceed for the appointment of an arbitrator under Section 11(6), even during the moratorium. By reason of the fact that the management is taken over, the corporate body does not vanish. So all throughout, there is a corporate body and there is nothing in law which stood in the way of it lodging an application under Section 11(6). The moratorium certainly has nothing to do with the delayed launching, as it did not bar the launching of proceedings under Section 11(6). It is therefore, contended that the Court may not accept the case based on Section 60(6) of the IBC. 9. Per contra, Shri N. K. Kaul, learned senior counsel for the respondent would stoutly oppose the appeal. In the very first place he would submit that the conduct of the appellant which is a public authority should not commend itself to the Court. He would point out that in the letter dated 20.07.2016, actually the stand of the respondent was that it agreed for arbitration but it wanted the arbitration to be carried out through DIAC. Thereafter, he would draw our attention to the finding in the impugned Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k an ailing corporate debtor to life. The argument based on Section 25(2)(b) of the IBC is sought to be met by pointing out that while it does give power to the Resolution Professional to represent the company in proceedings including proceedings under the 1996 Act and there can be no doubt that the Resolution Professional could have taken steps under Section 11(6), that should not be the end of the inquiry. The question must be answered with reference to the express words used in Section 60(6) and also bearing in mind what actually happens on the ground once a moratorium is put in place and the corporate debtor undergoes a CIRP. 12. The learned senior counsel for the respondent also enlists in his support, the report of the Joint Committee of the Insolvency and Bankruptcy Code 2015, which reads as follows: "29. Adjudicating Authority for Corporate persons - Clause 60 and 79 (14(e) FICCI in the memorandum submitted to the Committee was of the view that the exclusion of moratorium period from calculation of limitation period applies only in the context of suit or application in the name or on behalf of the corporate debtor. It is not clear as such exclusion also applies in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debt or any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing effect to the intention of the legislature. The principle that literal meaning must be accepted is undoubtedly subject to the principle that it will make way when such interpretation will lead to an absurdity or grave injustice which a law giver could not have contemplated. 20. It is necessary to refer to the Principles of Interpretation of Statute in context of the submissions, which have been made. In (1976) 3 All England Law Reports 611, Lord Simon of Glaisdale, in the case of Suthendran v. Immigration Appeal Tribunal has given an exposition of the golden rule of interpretation, which is the same as understanding the words of a Statute in their natural and ordinary sense, with reference to the grammatical meaning and the same has been adverted and approved by this Court in Harbhajan Singh v. Press Council of India and others (2002) 3 SCC 722: "9. ... 'Parliament is prima facie to be credited with meaning what is said in an Act of Parliament. The drafting of statutes, so important to people who hope to live under the rule of law, will never be satisfactory unless courts seek whenever possible to apply "the golden rule" of construction, that is to read the statutory languag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent of the author, but rather the intent the author would have had, had he or she acted reasonably." (Aharon Barak, Purposive Interpretation in Law, (2007) at p. 87.)" 22. In Justice G.P. Singh's Principles of Statutory Interpretation 14th Edition, page 145 while dealing with the application of Heydon's Rule, we find the following statements: "It has also been said that the application of the rule in Heydon's case should not be taken to extremes; that if there were many problems before the enactment of the statute it does not follow that in an effort to solve some of them the Parliament intended to solve all; and that loyalty to the rule does not require the adoption of a construction which leads manifestly to absurd results. These propositions stated by LORD ROSKILL in Anderton v. Ryan [(1985) 2 ALL ER 355] are unexceptional but their misapplication may lead to a narrow construction defeating the object of the statute as actually happened in that case which was overruled within a year in R. V. Shivpuri [(1986) 2 ALL ER 334]. Further, if the statutory language in its primary or ordinary meaning in the context has a wider effect, it cannot be artificially confined to remed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in form, the corporate debtor continues to exist and represented by the interim resolution professional to begin with and the resolution professional thereafter, the erstwhile management of the corporate debtor is displaced. When the resolution plan is approved, a new management takes over. All this is contemplated when the CIRP is successful. Undoubtedly, if it is unsuccessful, the corporate debtor slips into liquidation. Therefore, on the one hand, an application under Section 7, 9 or 10, does bring in a period which is intended to bring a corporate debtor back to life if possible, 'a period of calm', in the words of the respondent. But this is a period during which the management of the corporate debtor is displaced, ironically, a period of turbulent churning. While it may be true that proceedings by the corporate debtor through the resolution professional is contemplated, it is not impossible to contemplate that the resolution professional for whatever reason it may be, does not discharge his duties and conduct proceedings in all matters as he should. We are noting this as this can be the rationale for the Law Giver excluding the period of limitation in regard to suits or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution plan and the effect of Section 31 apparently of the IBC does not appeal to us. What Section 31 of the Act, IBC undoubtedly proclaims is that on approval of the resolution plan by the adjudicating authority the plan becomes binding on a corporate debtor, its employees, members, creditors, the Central Government any State Government or any local authority as provided therein, guarantors and others stakeholders involved in the resolution plan. We are unable to perceive how the appellant can derive support from the said provision. In fact, taking the scheme of the IBC Section 60(6) would become an integral part of the scheme which will enure to the benefit of the resolution applicant which is enabled to take suitable measures to ventilate its legitimate grievances by excluding the period during which a Moratorium was enforced for the purpose of computing the period of limitation. 27. In other words, notwithstanding the period of limitation under the Limitation Act, the Law Giver has thought it fit to provide that in respect of a corporate debtor if there has been an order of moratorium made in Part II, the period during which such moratorium was in place shall be excluded. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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