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2019 (1) TMI 872 - HC - Indian LawsArbitration and Conciliation - Petition filed for restraining the respondent from invoking/encashing the performance bank guarantee - effect of declaration of moratorium - interim orders effect - Held that:- Considering the aim and object of the provisions of the Code, it is clear that provisions of declaration of moratorium under the Code, have been enacted for the benefit of corporate debtor to protect it from debt recovery action, endangering, diminishing, dissipating or having adverse impact on the assets of corporate debtor in any manner and the purpose of moratorium includes the protection of assets of the corporate debtor during insolvency resolution process and facilitating orderly completion of the process envisaged during the insolvency resolution process and ensuring the company to continue. In present case, respondent is undisputedly a corporate debtor, as defined in Section 3(8) of the Code, in the proceedings before Appellate Tribunal. But interim order dated 15.10.2018 passed by Appellate Tribunal is not an order passed under Section 14 of the Code. It is explicit from the interim order dated 15.10.2018 passed by the Appellate Tribunal that though moratorium has not been declared with respect to respondent Company, but the interim directions are identical to the provisions of Section 14 of the Code. Therefore, the principle that declaration of moratorium will not cause to stay the proceedings beneficial to corporate debtor, are also applicable in the present case. Interim order prohibits the proceedings against IL&FS (respondent herein) and its 348 Group Companies, which restrains any kind of recovery from the respondent herein, but not the proceedings beneficial to IL&FS, entitling it for recovering any amount from other parties. Sine die adjournment of present case would run contrary to the interest of respondent Company herein, as it would amount the interim stay against the interest of respondent Company. From the combined reading of interim directions contained in order dated 15.10.2018, it is evident that stay has been ordered against the proceedings having adverse effect on the financial resources of IL&FS (respondent herein), therefore, interim order dated 15.10.2018 will not be applicable in present proceedings, for the reasons, as discussed above, as sine die adjournment of present proceedings will have adverse effect on the interest of respondent Company. Therefore, present application is dismissed. It is made clear that observations made in this application shall be confined only for the purpose of adjudication of the issues raised in this application and would not amount, at any cost, an expression of view on merit in favour of either party with respect to issues involved in the main petition under Section 9 of the Arbitration and Conciliation Act. Claims and counter claims in the main petition are to be adjudicated on its own merits, independent of any observations made in present
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