Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2019 (7) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 636 - Tri - Insolvency and BankruptcyExtension of mining lease - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - It is alleged by the Corporate Debtor/Applicant that that the order dated 26.09.2018 passed by the 1st Respondent, rejecting the request of the Applicant for deemed extension of the Mining lease, is in violation of Section 14 of the Insolvency and Bankruptcy Code, 2016. Whether the order dated, 26.09.2018 passed by the Respondents No.1 to 3 by which Mining Lease bearing No. ML-2293 is terminated and the request for Deemed Extension of the said Mining Lease is rejected, violates the Moratorium declared by this Authority on 12.03.2018 while initiating the CIRP against the Corporate Debtor/Applicant? HELD THAT:- The intention of the legislature in relation to Section 14 is to ensure that after the declaration of moratorium, there is a standstill period during which there is a bar on creating any encumbrance, sale or alienation of the assets of the Corporate Debtor, so that the financial position of the Corporate Debtor must remain preserved and transparent as a going concern. The suspension of all proceedings against the Corporate Debtor is essential as it stabilizes the assets of the Corporate Debtor thereby giving the creditors clarity regarding the financial health of the Corporate Debtor and providing them a drawing board to formulate a Resolution Plan, which could effectively restructure the outstanding debts. Thus, the language of Section 14 of the Code is wide enough to include legal proceedings of any nature within its ambit. The Corporate Debtor must continue to be a going concern during the moratorium, and any action which is likely to frustrate the object of the CIR process is prohibited. Thus, any violation of the moratorium will certainly derail the CIR process and Resolution Plan, which the Committee of Creditors (“CoC”) may be considering, thereby defeating the scope and purpose of the Code. In view of it, the Tribunal/Court has to make a purposive Interpretation of the provisions of Section 14 of the Code, so as to give effect to the same by keeping in mind the purport and object of the Code - In the case on hand, Clause (d) of Sub-Section (1) of Section 14 of the IBC is relevant, which provides that the declaration of the Moratorium prohibits ‘the recovery of any property by any owner or lessor where such property is occupied by or in possession of the Corporate Debtor.’ The Respondent Nos. 1 to 3 are directed to execute Supplement Deeds in favour of the Corporate Debtor/Applicant extending the period of the Mining Lease bearing ML No.2293 up to 31.03.2020, in accordance with Sec. 8 A (6) of the M.M.D.R Act, 1957 as amended under the Mines and Minerals (Development and Regulation) Amendment Act, 2015, within a period of two weeks from the date of the receipt of the certified copy of this Order. Application disposed off.
|