TMI Blog2017 (12) TMI 1660X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Learned Arbitrator and the claim of the corporate debtor being upheld. The continuation of these proceedings shall cause no harm to either party‟s rights to seek determination of issues under section 34 of the Act and object of the code shall be preserved rather than defeated. The question posed is thus answered. Second limb of objection raised is once the moratorium is declared the decision to continue with the objections need to be taken only be the Resolution Professional, since per Section 17 of the Code from the date of the appointment of the interim resolution professional, the management of the affairs of the corporate debtor shall vests with the interim resolution professional and hence in the peculiar circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted such application and has declared a moratorium in terms of Section 14 of the Code. 3. The question now has arisen is if the present proceedings under Section 34 of the Act, need to be stayed, per Section 14 (1)(a) of the Code? 4. The respondent‟s case is if the proceedings are stayed, the respondent would be unable to execute the award given in its favour for an extended period till the moratorium exists and be unable to recover its dues thereby further impeding its financial condition. Hence, the issue is if the word proceedings‟ used in Section 14 (1) (a) of the Code be read to mean all legal proceedings‟ or be read restrictively to mean a particular type of legal proceedings viz., debt recovery action&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and adding to its financial corpus. Such a consequence would infact be directly contrary to the object of the Code. To determine the true meaning of the statute, the provision would have to be construed in the context of the statute as a whole, for which purpose interpretative criteria may have to be applied even when the statutory language is apparently free from any semantic ambiguity. 9. The meaning and purpose of Section 14 (1) (a) of the Code may also be reliably ascertained from the context of its surrounding provisions. Sub-clauses (b), (c) and (d) of Section 14 (1) of the Code are reproduced below for ease of reference would further demonstrate the moratorium provision would apply only to protect the assets of the corporate debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o recovery actions and filing of new claims against the corporate debtor and the purpose behind moratorium is there should be no additional stress on the assets of the corporate debtor. The report of the Bankruptcy Law Reforms Committee has been relied upon by the Supreme Court in M/s Innovative Industries Limited vs. ICICI Bank another 2017 SCC OnLine SC 1025. 12. The learned counsel for the respondent has though argued that once the moratorium comes into effect, no proceedings against the corporate debtor may continue. No doubt to the said proposition of law as stated above, but one need to see the nature of the proceedings; if such proceedings is against the corporate debtor or is in its favour. Stay of proceedings against an award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that follows it i.e. debt recovery action against assets of the corporate debtor; (f) the use of narrower term against the corporate debtor in section 14(1)(a) as opposed to the wider phase by or against the corporate debtor used in section 33(5) of the code further makes it evident that section 14(1)(a) is intended to have restrictive meaning and applicability; (g) the Arbitration Act draws a distinction between proceedings under section 34( i.e. objections to the award) and under section 36(i.e. the enforceability and execution of the award). The proceedings under section 34 are a step prior to the execution of an award. Only after determination of objections under section 34, the party may move a step forward to execute such award ..... X X X X Extracts X X X X X X X X Extracts X X X X
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