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TMI Blog2021 (2) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... has also instituted the writ petition in his capacity as a shareholder of the corporate debtor and as such shareholder of the company, he is entitled to bring it to the notice of a constitutional Court that a quasi-judicial tribunal had committed a grievous error in transgressing its authority and passing an order in breach of the statutory command as contained in Section 14 of the Code of 2016. Thus, the initial ground urged by the bank is negatived. The bank seeks to assert that the proceedings before the DRAT could not be seen to be a suit or continuation of any suit and even goes to the extent of suggesting that a writ petition under Article 226 of the Constitution may not lie against an order passed by a DRAT, though a petition under A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receives the DRAT's attention at the earliest so as not to prejudice the bank and the auction purchaser who has put in a sum in excess of Rs. 5 crore and has waited so long to enjoy the fruits of its substantial investment - Petition allowed. - HON'BLE JUDGES SANJIB BANERJEE, C.J. AND SENTHILKUMAR RAMAMOORTHY, J. For the Appellant : P.H. Arvind Pandian, Senior Counsel for Genicon and Associates For the Respondents : M.L. Ganesh, K.V. Babu and T. Ravichandran ORDER SANJIB BANERJEE, C.J. 1. At the highest, if the writ petition succeeds it may only be a pyrrhic victory and there may not be much cheer for the writ petitioner at the end of the day. 2. The essential facts are undisputed. The petitioner was a shareholder and director in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be proceeded with before any forum whether by way of a suit or by way of any other proceedings. The issue that arises is whether the bank's appeal before the DRAT fell within the dragnet of the moratorium under Section 14 of the Code of 2016. 5. However, before such issue is addressed, a question of propriety has to be attended to since the bank questions the very maintainability of the present proceedings by referring to a Supreme Court judgment reported at (2018) 1 SCC 407 (Innoventive Industries Limited v. ICICI Bank). The bank claims that by virtue of such dictum, proceedings cannot be pursued by or at the behest of a corporate debtor while a moratorium is in place and the erstwhile directors of the corporate debtor lose their ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction may be carried by a shareholder prejudiced by the same insofar as the order is directed against the concerned company and the shareholder is aggrieved as he has an interest in the company. Such an action is not precluded by anything contained in the Code of 2016 and the doors of the constitutional Court cannot be shut out to a shareholder, if he perceives something remiss and if appropriate action in such regard is not taken by the Resolution Professional or any other entitled to espouse the cause of the corporate debtor. The derivative right that inheres in a shareholder qua the company will permit such course of action. 7. The bank seeks to assert that the proceedings before the DRAT could not be seen to be a suit or continuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14 of the Code of 2016, the action or proceedings before the DRAT could not have been continued. The embargo under Section 14 of the Code of 2016 was expressly brought to the notice of the DRAT, but it appears to have bludgeoned its way through nonetheless. In so doing, the DRAT acted completely without jurisdiction as there can be no greater bar than a statutory prohibition to check any adjudicating authority in carrying on its adjudicatory or quasi-judicial functioning. 9. The bank has also referred to the operational creditor in the present case being a friendly creditor of the corporate debtor who happened to arrive at the right place at the right time to apparently bail the corporate debtor out of the miseries that lay in store fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of the company in liquidation before the DRAT. If, as the liquidator reports, the relevant secured asset proceeded against by the bank has been kept outside the purview of the liquidation proceedings, the RP may have precious little to say before the DRAT, for the DRAT to, in effect, pass the same order now that the embargo no longer operates. 11. As far as the merits of the DRAT decision is concerned, the same is not required to be gone into, particularly in this jurisdiction and once it is noticed that the order itself was without jurisdiction. 12. In effect, though the order dated August 21, 2019 is set aside, it will be open to the respondent bank to seek a similar order, which the DRAT may now pass, if it so perceives and upon taki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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