TMI Blog2017 (9) TMI 1663X X X X Extracts X X X X X X X X Extracts X X X X ..... nnounced by the NCLT invoking Section 14(1)(a) the words "any Court of law" used therein cannot be interpreted as including this High Court and such a moratorium order cannot injuct this Court from continuing a winding up proceeding pending on it's file where notices were already served on the respondent-Company prior to 15.12.2016 and which is saved by the notifications issued by the Central Government under Section 239 and Section 255 of the IBC. Whether the Constitution of present proceedings before this Court, in the winding up petition filed by petitioner herein can be so injuncted by the NCLT, which is a tribunal not superior to this Court? - The principle of Comity of Courts cannot be invoked to restrain the High Court from proceeding with a winding up petition which Parliament intended the High Court alone to decide as per the notifications issued under Sections 239 and 255 of the IBC. Since this winding up petition did not get transferred to the NCLT by virtue of the notifications dated 7.12.2016 and 29.6.2017 issued under the very IBC, the NCLT cannot have any jurisdiction in regard to the petitioner or to the winding up petition and it's order cannot be interpreted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following actions: (i) The institution of suits or continuation of pending suits or proceeding against the corporate debtor including execution of any judgment, decree or order in any Court of law tribunal, arbitration panel or other authority. (ii)............. 4. Counsel for respondent-company, placing reliance on the above clause, contends that the Moratorium imposed by the NCLT under the IBC applies to continuation of winding up proceedings before any Court of law, this it applies to this Court as well; that this power of the NCLT is traceable to Section 14(1)(a) of the Act; and in view of the said Moratorium, this company petition cannot be continued/proceeded with and adjudicated by this Court. He also placed reliance on Section 238 of the IBC and contended that the said Act will override any provisions in any other law including the Companies Act, 1956, inconsistent with the IBC. He placed reliance on Yellagola Ramanarasaiah v. G. Sadanand and others, 1989 (3) ALT 610. 5. On the other hand, Counsel for petitioner in the company petition however refuted the said contentions and pointed out that Section 238 of IBC needs to be read with Section 255 of IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled law that Parliament is competent to enact a law transferring the jurisdiction exercised by High Courts in regard to any specified subject (other than those which are vested by express provisions of the Constitution) to any Court/Tribunal. IBC is one such law and the NCLT is such a forum as held in Union of India v. Madras Bar Association, MANU/SC/0378/2010MANU/SC/0378/2010 : (2010) 11 SCC 1. In that case it was held that NCLT took over the functions of the High Court. A. IBC itself confers jurisdiction on the High Court in regard to pending winding up proceedings like the instant case. 10. Section 255 of IBC made amendments to the Companies Act, 2013 as specified in 11th Schedule. A proviso has been added to Clause (c) of sub-section (1) of Section 434 of the Companies Act, 2013 stating that only such proceedings relating to winding up of companies pending on the file of the High Court shall stand transferred to the Tribunal as may be prescribed by the Central Government. The Central Government issued Notifications dated 7.12.2016 and 29.6.2017 directing transfer of only those winding up petitions pending before the High Court as on 15.12.2016 wherein petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution of India. The NCLT, however, is only a statutory Tribunal constituted under the Companies Act, 2013. It cannot therefore be said that the High Court and the NCLT have equal status, though it may not be subordinate to the High Court. 16. Though the High Court is the forum constituted under the Companies Act, 1956 to hear winding up petitions, it is also a Superior Court of Record. As held in Naresh Shridhar Mirajkar v. State of Maharashtra and another, AIR 1967 SC 1; it is entitled to consider the question of its own jurisdiction. 17. A 'moratorium' under Section 14(1)(a) of the IBC is in effect nothing but an injunction restraining a person from initiating or prosecuting a proceeding in a Court of law. 18. Question is whether the Constitution of present proceedings before this Court, in the winding up petition filed by petitioner herein can be so injuncted by the NCLT, which is a tribunal not superior to this Court? 19. Since NCLT is not a forum superior to the High Court, it's orders cannot be construed as injuncting this Court from proceeding with a winding up proceeding in which it has clear jurisdiction to hear and decide. That is the ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e injunction granting stay of proceeding was directed to the Court and the Court has to be the Court subordinate to the one granting the injunction. This is postulated on the well recognised principle that the superior Court can regulate proceedings in a Court subordinate to it. It is implicit in this assumption and the language used in Section 56(b) that the Court could 'not grant injunction under Section 56(b) of the repealed Act to stay proceeding in a Court superior in hierarchy to the Court from which injunction is sought. But by judicial interpretation, a consensus was reached that as injunction acts in personam while the Court by its injunction cannot stay proceedings in a Court of superior jurisdiction, it could certainly by an injunction restrain a party before it from further prosecuting the proceeding in other Courts may be superior or inferior in the hierarchy of Court. To some extent this approach not only effectively circumvented the provision contained in Section 56 of the repealed Act but denuded it of its content. The Legislature took notice of this judicial interpretation and materially altered the language of the succeeding provision enacted in Section 41(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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