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TMI Blog2022 (9) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... such steps taken under Section 60(5) of the Code before the Adjudicating Authority, would tantamount to bypassing/short-circuiting the Judicial Proceedings - The Appellant is well within its powers to take appropriate steps to file legal proceedings, if the circumstances so warrant. The Code expressly provides for the Liquidator to institute or defend any Suit, Prosecution or other Legal Proceedings, Civil or Criminal, in the name or on behalf of the Corporate Debtor . There is no illegality or infirmity in the direction given by the Adjudicating Authority - Appeal dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 810 of 2020 COMPANY APPEAL (AT) (INSOLVENCY) No. 811 of 2020 COMPANY APPEAL (AT) (INSOLVENCY) No. 812 of 2020 COMPANY APPEAL (AT) (INSOLVENCY) No. 815 of 2020 - - - Dated:- 1-9-2022 - Shri Ramachandra D. Choudhary Versus Bansal Trading Company, Shri Snehal Patel, Olga Vinchentpaul Menezes, Rajasekharan Krishnan Nair Shri Ramachandra D. Choudhary Versus Shree Umiya Traders, Shri Snehal Patel, Olga Vinchentpaul Menezes, Rajasekharan Krishnan Nair Shri Ramachandra D. Choudhary Versus Marshall Multiventures (I) Pvt. Ltd., Shri Snehal Patel, Olga Vinchentpaul Men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This application has been filed by Liquidator for recovery of outstanding amount of Rs.4,25,90,475.00 from Respondent No. 1, namely, M/s Bansal Trading Company Ors. It is noted that direction/order is sought from this Authority under Section 60(5)(b) of Insolvency and Bankruptcy Code, 2016. On our considered view, the said Application is not at all maintainable. The liquidator is required to recover their sum by way of filing application under Section 7 or 9 of Insolvency Bankruptcy Code, 2016 or in alternative he can approach Civil Forum for the recovery of the same, which he is obliged to do as per provisions of the section 31(1)(k) of Insolvency and Bankruptcy Code, 2016. We also held that there is no bar under Section (11) of Insolvency and Bankruptcy Code, 2016 to proceed under Section 7 or 9 as Insolvency Bankruptcy Code, 2016 as per explanation II, thereto which has been incorporated w.e.f. 28.12.2019. Further, we also consider it pertinent to mention that term claim used in Section 60(5)(b) has been defined under Section 3(6) of Insolvency and Bankruptcy Code, 2016 and that has to be read for the purpose of Section 7/9 with other relevant Sections and Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Law Appellate Tribunal has jurisdiction under this Code. Civil Court not to have jurisdiction. 6. It is submitted that a conjoint reading of Section 60(5)(b) with Section 63 of the Code reveals that the only remedy available to the Appellant was to approach the Adjudicating Authority for recovery of the said amounts. 7. The first Respondent/Sundry Debtor in this Appeal was set Ex-Parte, but however since it is a common Order and the Sundry Debtors have filed their Replies in the other Appeals their submissions are being taken into consideration. It is the case of the Sundry Debtors that the Corporate Debtor had failed to supply the requisite goods despite entering into a transaction for supply of Crude Edible Oil and Palm Oil, thereby causing huge losses to the Sundry Debtor. Eventually these amounts were squared off and adjusted against the dues of the Corporate Debtor . Whether any amounts are due or not by the Sundry Debtor would require Adjudication after calling for evidence and therefore can be proceeded only in a Civil Suit. Reliance was placed on the Judgements of the Hon ble Supreme Court in Embassy Property Development Private Limited Vs. State of Karnat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate persons.- (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 11. Counsel for Respondents No. 2 3, the erstwhile Directors of the Corporate Debtor , stated in their email dated 21.03.2020 that there was some delay in providing information to the Liquidator regarding the Sundry Debtors as the documents were ceased by the VAT Department during the raids, but they did submit the Ledger Accounts of the Sundry Debtor, copies of the invoices together with details regarding supply of goods. It is pertinent to mention that Respondents No. 2 3 in this Appeal have themselves admitted in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word assets , while Section 20(1) uses the word property together with the word vale . Sections 18 and 25 do not use the expression property . Another important aspect is that under Section 25(2)(b) of the IBC, 2016, the resolution professional is obliged to represent and act on behalf of the corporate debtor with third parties and exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings. Sections 25(1) and 25(2)(b) reads as follows: This shows that wherever the corporate debtor has to exercise rights in judicial, quasi-judicial proceedings the resolution professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). 41. Therefore in the light of the statutory scheme as culled out from various provisions of the IBC, 2016, it is clear that wherever the corporate debtor has to exercise a right that falls outside the purview of the IBC, 2016 especially in the realm of the public law, they cannot, through the resolution professional, take a bypass and go before NCLT for the enforcement of such a right. 13. A brief perusal of the Replies filed by the Sundry Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings . Therefore, considering the text of Section 60(5)(c) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor. However, in doing do, we issue a note of caution to the NCLT and NCLAT to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor. The nexus with the insolvency of the Corporate Debtor must exist. 68. It is appropriate to refer to the observations in the Report of the BLRC, wherein it noted the role of the NCLT, as the Adjudicating Authority for the CIRP, in the following terms: An adjudicating authority ensures adherence to the process. At all points, the adherence to the process and compliance with all applicable laws is controlled by the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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