TMI Blog2022 (5) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... ver. Suffice it to say that if the words of a statute are not ambiguous, the scope of interpretation dwindles. It is not for the Court to rewrite a statute. There may be occasions where the Court may even go to the extent of leaving out a word or not giving effect to certain part in order to give full meaning to the law by way of gleaning and giving effect to the intention of the legislature. Under the IBC, by virtue of the order admitting the application, be it under Sections 7, 9 or 10, and imposing moratorium, proceedings as are contemplated in Section 14 would be tabooed. This undoubtedly does not include an application under Section 11(6) of the 1996 Act by the corporate debtor or for that matter, any other proceeding by the corporate debtor against another party. At least there is no express exclusion of the jurisdiction of the Court or authorities to entertain any such proceeding at the hands of the corporate debtor - The powers of the Board of Directors or the partners of the corporate debtor shall stand suspended and it would be exercised by the interim resolution professional. When the authority changes hands from the interim resolution professional to the resolution p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Harsha Peecharra, Adv. Mr. Yoginder Handoo, AOR Mr. Rakesh Talukdar, Adv. Mr. Ashwin Kataria, Adv. Mr. Garvit Solanki, Adv. For Respondent(s) Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Mahesh Agarwal, Adv. Ms. Sayree Basu Mullik, Adv. Mr. Rishabh Parikh, Adv. Mr. Rohan Talwar, Adv. Mr. Deepak Joshi, Adv. Mr. Raghav Agrawal, Adv. Ms. Aarzoo Aneja, Adv. Mr. E. C. Agrawala, AOR J U D G M E N T K. M. JOSEPH, J. 1. Leave granted. 2. The foremost question which falls for determination by this Court is the impact of Section 60(6) of the Insolvency and Bankruptcy Code (hereinafter referred to as IBC for brevity) and whether the aforesaid provision gives rise to a new lease of life to a proceeding at the instance of the corporate debtor on the basis of a moratorium which is put in place by virtue of the order passed under section 14 of the IBC and whether corporate debtor can take advantage of the same to bring the application in this case filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 1996 Act ). 3. Pursuant to an agreement dated 20.02.2015, the appellant placed a purchase order of Rs.16,20,00,000/- with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the Delhi International Arbitration Centre (DIAC), for being arbitrated. 9. Today, before me, learned counsel request the Court to appoint an independent arbitrator, who would conduct the arbitration under the aegis of the DIAC, and in accordance with the procedure established in that regard. 10. Learned counsel are also agreeable to pay the fees of the learned sole arbitrator in accordance with the Fourth Schedule to the 1996 Act. It is in view thereto that the appointment of the arbitrator was made. 4. We have heard Shri Gourab Banerjee, learned senior counsel for the appellant, and Shri N. K. Kaul, learned senior counsel on behalf of the respondent. Shri Gourab Banerjee, learned senior counsel, would contend that being a plea relating to limitation and since the aspect of limitation pertains to jurisdiction the mere fact that the counsel for the appellant in the High Court has consented to the order appointing the arbitrator will not stand in the way of the appellant pointing out that the application under section 11(6) was clearly beyond time. In this regard, Section 3 of the Limitation Act, 1963 (hereinafter referred to as 1963 Act ) is harnesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrant for exclusion of the period for a suit or proceeding by the corporate debtor. In this regard, he seeks further reinforcement by virtue of the fact that IBC contemplates that the resolution professional is clothed with the power to conduct proceedings including the proceedings under the 1996 Act. In this regard, support is sought to be drawn from provisions of Section 25 of the IBC. Section 25(2)(b) inter alia reads as follows: 25 (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:- (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; . He would, therefore, contend that when not only there is no express embargo against the corporate debtor from pursuing any proceeding but the law, in fact, contemplates the resolution professional launching the proceedings and repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the Court construed the expression Prize Chit in Srinivasa [(1980) 4 SCC 507 : (1981) 1 SCR 801 : 51 Com Cas 464] and we find no reason to depart from the Court's construction. 7. In this regard, he would point out that the Court may contemplate that there may be suits which a corporate debtor also during the period of the moratorium may not be in a position to bring. He gives an example of interpleader suit. It may be in such cases alone that the Courts must give meaning to the exclusion of the period of limitation in favour of a corporate debtor in Section 60(6). He would further contend that the acceptance of the case of the respondent under Section 60(6) would render the phrase in section 60(6), viz., for which an order of moratorium has been made under this part otiose. The said phrase, in other words, is employed in order to confine the benefit of the exclusion to only su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... run to those who sleep on their rights and bring a delayed claim much beyond the period of limitation. 8. In this regard, it is also pointed out that there is a resolution plan which is approved and its impact may be perceived. The case of the respondent, it is pointed out, even according to the respondent, is that the respondent discovered late on going through the files that the application had to be filed. All of this is incomprehensible when the corporate debtor continued during the period of the moratorium, i.e., the corporate body continued and it was under the management of the Resolution Professional who was duly clothed with the authority to proceed for the appointment of an arbitrator under Section 11(6), even during the moratorium. By reason of the fact that the management is taken over, the corporate body does not vanish. So all throughout, there is a corporate body and there is nothing in law which stood in the way of it lodging an application under Section 11(6). The moratorium certainly has nothing to do with the delayed launching, as it did not bar the launching of proceedings under Section 11(6). It is therefore, contended that the Court may not accept the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplated under Section 14. He would contend that be it a literal interpretation that this Court may place or a contextual interpretation, the result is inevitable that the period of moratorium will stand excluded even as far as a suit or an application by a corporate debtor is concerned. As far as the literal interpretation goes, the law giver has not left anything for imagination and there would be no merit in the case of the appellant. As far as the object of the Code is concerned, Parliament contemplated that every attempt should be made to bring back an ailing corporate debtor to life. The argument based on Section 25(2)(b) of the IBC is sought to be met by pointing out that while it does give power to the Resolution Professional to represent the company in proceedings including proceedings under the 1996 Act and there can be no doubt that the Resolution Professional could have taken steps under Section 11(6), that should not be the end of the inquiry. The question must be answered with reference to the express words used in Section 60(6) and also bearing in mind what actually happens on the ground once a moratorium is put in place and the corporate debtor undergoes a CIRP. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated in favour of the corporate debtors. 15. The learned senior counsel for the appellant did attempt to emphasise the impact of the following sentence: ..It is not clear as such exclusion also applies in respect of suits against the company by the creditors which are also subject to stay under the moratorium provisions. The appellant would also contend that the fact of the arbitration being on going was disclosed to this Court. ANALYSIS 16. Section 14 of the IBC reads as follows: 14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debt or any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation which is purposive or which seeks to accommodate the object of the law giver. Suffice it to say that if the words of a statute are not ambiguous, the scope of interpretation dwindles. It is not for the Court to rewrite a statute. There may be occasions where the Court may even go to the extent of leaving out a word or not giving effect to certain part in order to give full meaning to the law by way of gleaning and giving effect to the intention of the legislature. The principle that literal meaning must be accepted is undoubtedly subject to the principle that it will make way when such interpretation will lead to an absurdity or grave injustice which a law giver could not have contemplated. 20. It is necessary to refer to the Principles of Interpretation of Statute in context of the submissions, which have been made. In (1976) 3 All England Law Reports 611, Lord Simon of Glaisdale, in the case of Suthendran v. Immigration Appeal Tribunal has given an exposition of the golden rule of interpretation, which is the same as understanding the words of a Statute in their natural and ordinary sense, with reference to the grammatical meaning and the same has been adverted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor's shoes, they introduce two elements of objectivity : First, the interpreter should assume that the legislature is composed of reasonable people seeking to achieve reasonable goals in a reasonable manner; and second, the interpreter should accept the non-rebuttable presumption that members of the legislative body sought to fulfil their constitutional duties in good faith. This formulation allows the interpreter to inquire not into the subjective intent of the author, but rather the intent the author would have had, had he or she acted reasonably. (Aharon Barak, Purposive Interpretation in Law, (2007) at p. 87.) 22. In Justice G.P. Singh s Principles of Statutory Interpretation 14th Edition, page 145 while dealing with the application of Heydon s Rule, we find the following statements: It has also been said that the application of the rule in Heydon s case should not be taken to extremes; that if there were many problems before the enactment of the statute it does not follow that in an effort to solve some of them the Parliament intended to solve all; and that loyalty to the rule does not require the adoption of a construction which leads manifestly to absurd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs comes into being. Under the supervision, as it were , of the committee of creditors, all the matters are proceeded with. The resolution plans are received by the resolution professional and the resolution plan which is finally approved by the committee of creditors and still further at the hands of the adjudicating authority, would result in the curtains being wrung down on the moratorium under Section 31(3). During this entire period, what is noteworthy is that while in law and in form, the corporate debtor continues to exist and represented by the interim resolution professional to begin with and the resolution professional thereafter, the erstwhile management of the corporate debtor is displaced. When the resolution plan is approved, a new management takes over. All this is contemplated when the CIRP is successful. Undoubtedly, if it is unsuccessful, the corporate debtor slips into liquidation. Therefore, on the one hand, an application under Section 7, 9 or 10, does bring in a period which is intended to bring a corporate debtor back to life if possible, a period of calm , in the words of the respondent. But this is a period during which the management of the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of reference and being the sine qua non for applying Section 60(6), it also specifies the period of time which will be excluded in computing of the period of limitation. In other words, present an order of Moratorium under Section 14, the entire period of the Moratorium is liable to be excluded in computing the period of limitation even in a suit or an application by a corporate debtor. 26. The contention of the learned Senior Counsel for the appellant based on the approval of the resolution plan and the effect of Section 31 apparently of the IBC does not appeal to us. What Section 31 of the Act, IBC undoubtedly proclaims is that on approval of the resolution plan by the adjudicating authority the plan becomes binding on a corporate debtor, its employees, members, creditors, the Central Government any State Government or any local authority as provided therein, guarantors and others stakeholders involved in the resolution plan. We are unable to perceive how the appellant can derive support from the said provision. In fact, taking the scheme of the IBC Section 60(6) would become an integral part of the scheme which will enure to the benefit of the resolution applicant which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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