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TMI Blog2022 (8) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 (hereinafter referred to as the I & B Code) were filed before the NCLT New Delhi. In one such proceeding, Smt. Vijay Purohit versus Trading Engineers, the NCLT initiated Corporate Insolvency Resolution proceedings by appointment of IRP by its order dated 04.07.2019. In the meantime the petitioner had issued a legal notice on 11.6.2019 to the respondent for initiation of arbitration proceedings for Rs.45,55,18,787/- (Rupees Forty Five Crores Fifty Five Lakhs Eighteen Thousand Seven Hundred Eighty Seven) in terms of the Contracts dated 15.4.2011 and 28.4.2011. On failure of the respondent to reply to such notice the petitioner approached this Court for appointment of a sole Arbitrator. This Court by its order dated 17.03.2020 appointed Justice (Retired) Anurag Kumar. The petitioner filed its Statement of Claim of more than Rs.45 crores on 14.09.2020. The respondent filed a Defence Statement and a Counter Claim of Rs.144,11,93,202/- (Rupees One hundred Forty Four Crores Eleven Lakhs Ninety Three Thousand Two Hundred Two only) before the Learned Tribunalon 16.11.2020. The petitioner also filed a reply. 2. In a connected arbitration proceedings pending before another sole Arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Puneet Chandra, has raised a preliminary objection as to the maintainability of this writ petition under Article 227 of the Constitution and learned Senior Counsel has referred to the interim order passed by this court on 23.12.2021 in this Petition. The counsel for the respondent had placed reliance upon several judgments of the Supreme Court and has argued that this court had entertained the petition without going into the question of maintainability because it was of the opinion that it is related to disputed questions of fact that could be decided at the time of final hearing. It had nevertheless granted an interim order to the petitioner to the extent that the matter was directed to be listed on 17.01.2022 and till such date, arbitrator was directed not to proceed with the arbitration. The respondents were directed to file their counter affidavit in the matter. Against this order granting interim relief to the petitioner the petitioner had approached the Supreme Court for modification of the order of interim relief to the extent that the arbitrator may continue to hear the claim of the petitioner on its merits but ignore the counterclaim of the respondent as it amounted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 SCC 618 and paragraph 45, 46 and 47 as also paragraph 103 and 108. (2) Deep Industries Ltd Versus Oil and Natural Gas Corp Ltd and another (2019 SCC online SC 1608) and paragraphs 13, 16, 17, 22 and 24. (3) Bhaven Construction through Authorised Signatory Premji Bhai K Shah versus Executive Engineer Sardar Sarovar Narmada Nigam Ltd and another (2021 SCC online SC 8) and paragraphs 11, 16, 18, 20 and 21 (4) Punjab State Power Corporation Limited versus Emta Coal Ltd and another (2020 SCC online SC 1165) paragraph 5; (5) Navayuga Engineering Co versus Bangalore Metro Rail Corp Ltd (2021 SCC online SC 469); (6) Essar Steel India Ltd Committee of Creditors versus Satish Kumar Gupta 2020 (8) SCC 531; (7) P. Mohan Raj v Shah Bros.Ispat (Pvt) Ltd 2021 (6) SCC 258. 10. In response to the arguments made by the learned counsel for the respondent, the learned counsel for the petitioner had submitted that the company is under liquidation and a CIRP is pending before the National Company Law Tribunal, Adjudicating Authority, under the Insolvency and Bankruptcy Code 2006 and and Insolvency Resolution Professional has been appointed on 04.07.2020 therefore no counterclaim by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunals act within the limits of their authority and in accordance with law. Since Article 227 is a constitutional provision therefore no fetters can be placed on the jurisdiction conferred on the High Court by any ordinary legislation like the Arbitration Act 1996, hence existence of a statutory remedy in an ordinary legislation cannot take away or limit the right to exercise constitutional power under Article 227. While it had been held by the Supreme Court that the High Court should be extremely circumspect in exercising its discretion under Article 227, it has been emphasised repeatedly that if there is an exceptional circumstance which would justify the exercise of these powers, the same ought to be exercised even if there is an alternate statutory remedy. The High Court ought to interfere under Article 227 where there is a patent lack of inherent jurisdiction, or where a party is left remedyless, or a Tribunal has acted in bad faith, or the tribunal has not acted within the limits of its authority resulting in grave injustice or failure of justice, where the Tribunal has assumed a jurisdiction it does not have, failed to exercise a jurisdiction it does have, or exercised jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to it or guided by the High Court. In appropriate cases the High Court, while exercising supervisory jurisdiction, may substitute such impugned decision by a decision of its own, as the inferior court or Tribunal should have made. Lastly, the jurisdiction under Article 226 of the Constitution is capable of being exercised on a prayer made by or on behalf of the party aggrieved; the supervisory jurisdiction is capable of being exercised Suo Moto as well. 15. On the basis of such judgments, submissions have been made by the Counsel that the High Court under Article 227 can exercise jurisdiction over private Tribunals as well, such as arbitral Tribunals to ensure that such Tribunals act within the limits of their authority and according to law. Article 227 being a constitutional provision no fetters can be placed on the jurisdiction conferred by such Article by any ordinary legislation like the Arbitration Act. The High Court should exercise its jurisdiction under Section 227 where there is a patent lack of inherent restriction, or a party is left remedyless, or a party has acted in bad faith, or a Tribunalhas not acted within the limits of their authority, or there is a grave injust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have stood extinguished as they were not submitted before the Resolution Professional at the relevant time as per the mandate of the I&B Code. The learned Tribunal erroneously stated that the moratorium under Section 14 would apply only at the stage of execution and not at the stage of mere adjudication of claims and counterclaims. In the present case the arbitration clause was invoked on 11.06.2019. The moratorium was declared by the Adjudicating Authority on 04.07.2019. The counterclaim was filed on 16.11.2020 at a time when the moratorium was in force and such counterclaim being in the nature of a Suit could not have been instituted much less adjudicated. 18. In Deep Industries Ltd. Versus Oil and Natural Gas Corporation Ltd. and Another (supra), a three judges bench of the Supreme Court was considering the question as to whether High Court could have exercised its jurisdiction under Article 227 of the Constitution of India when it comes to matters that are decided under the Arbitration and Conciliation Act 1996. The respondent ONGC had awarded a contract to the Appellant for a period of five years. The contract was terminated much earlier. The Appellant invoked the arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in cases where no Appeal lies but such orders should not be interlocutory orders which do not decide the matter in issue finally. It was held that the High Court should not have entertained the petition under Article 227 as any observations made by the Arbitrator while entertaining a Stay Application and granting interim relief would amount to a mere error of law and not amount to lack of jurisdiction. 20. On the other hand the counsel for the respondent had argued that SBP and Co (Supra) applied only at a stage where an order of Arbitral Tribunal was sought to be interfered with directly under Article 226/227. In the present case the Tribunal's orders was challenged in a First Appeal which was dismissed. Such order came to be challenged in a petition under Article 227 praying for exercise of supervisory jurisdiction which vested in the High Court. The Supreme Court considered the language of Section 5 of the Act of 1966 as also Section 37 and held that it was important to note that under Section 29A of the Act inserted by Amendment in 2016, a time limit was given within which Arbitral Awards must be made. Even in so far as Section 34 applications are concerned, Subsection (6) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its judgement in Nivedita Sharma Versus Cellular Operators Association of India and Others reported in (2011) 14 SCC 337; wherein several judgements including L. Chandra Kumar Versus Union of India reported in 1997 (3) SCC 261, Thansingh Nath Mal Versus Superintendent of Taxes reported in AIR 1964 Supreme Court 1419, Titaghur Paper Mills Co. Ltd. Versus State of Orissa reported in (1983) 2 SCC 433; Mafatlal Industries Ltd. Versus Union of India reported (1997) 5 SCC 536, were cited and observed that "the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken, itself contains a mechanism for redressal of grievance still hold the field". 24. The Supreme Court referred to the judgement rendered by the larger bench of seven judges in SBP and Company (Supra), where the Court was considering interference with an order passed by an Arbitral Tribunal by the High Court under Article 226/227 and had observed in paragraph 45 and 46 as follows:" "It is seen that some High Courts have proceeded on the basis that any order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Act." 26. The three judges bench in Deep Industries (Supra) also noticed that in Punjab Agro Industries Corporation Limited Versus Kewal Singh Dhillon reported in 2008 (10) SCC 128, the Supreme Court had distinguished SBP and Co (supra) but it held that the same was an exceptional case where the statutory provisions did not conceive of any appeal against an order passed under Section 11 refusing to appoint an Arbitrator. In the case of Deep Industries (supra) however, the Supreme Court observed that the High Court has entertained a 227 petition after the First Appeal was dismissed by the Civil Court whereas Section 37 of the Act did not permit any Second Appeal and only one bite at the cherry. It observed further-"...,The drill of Section 16 of the Act is that where a Section 16 application is dismissed, no appeal is provided and the challenge to the Section 16 application being dismissed must await the passing of a final Award at which stage it may be raised under Section 34... Further to state that serious disputes as to jurisdiction seem to have cropped up is not the same thing as saying that the Arbitral Tribunal lacked inherent jurisdiction in going into and deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act disputing the jurisdiction of the sole Arbitrator. The Arbitrator rejected the application of the respondent no.1 and held that it had jurisdiction to adjudicate the dispute. Aggrieved by such orders of the Arbitrator the respondent no.1 preferred a petition under Article 226/227 of the Constitution. It was rejected by the Single Judge as not maintainable by holding that remedy under Section 34 of the Act was available and the respondent no.1 should wait till the Award is passed by the Learned Arbitrator. The respondent no.1 further challenged such order before the Division Bench in the Letters Patent Appeal. Such appeal was entertained and allowed. Aggrieved, the appellant filed the Civil Appeal before the Supreme Court saying that Section 16(2) of the Act mandates that the sole Arbitrator had the jurisdiction to adjudicate the preliminary issue of jurisdiction, which can only be challenged under Section 34 of the Act. On the other hand the respondent no.1 contended that under Article 226 and 227 of the Constitution it was always open for the respondent no.1 to invoke the jurisdiction of the High Court to set aside an arbitration proceeding which was a nullity. 29. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of grievances, awrit petition should not be entertained ignoring the statutory dispensation. It is therefore, prudent for a judge to not exercise discretion to allow judicial interference beyond the procedure prescribed under the enactment. This power needs to be exercised in exceptional rarity, where in one party is left remedyless under the statute or a clear bad faith is shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient." 32. The Supreme Court thereafter referred to the observations made by it in M/s Deep Industries Ltd (supra) that the "High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumberated by us hereinabove so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction." 33. The Supreme Court observed further that the respondent no.1 had not been able to show exceptional circumstances or bad faith on the part of the appellant, to invoke the remedy under article 227 of the Constitution. "No doubt the ambit of Article 227 is broad and pervasive, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2017 the appeal was asked to be registered and notice was issued awaiting reply. It was this order which was challenged before the Supreme Court. The Supreme Court observed that the mandate of the new I&B Code is that the moment an insolvency petition is admitted, the moratorium comes into effect under Section 14 expressly interdicts institution or continuation of pending suits or proceedings against the corporate debtors. The Court set aside the order of the District Judge dated 06.07.2017 entertaining the appeal under Section 37 of the Arbitration Act 1996 and observed that the effect of Section 14 is that the arbitration that has been instituted after the aforesaid moratorium is non-est in law. 37. The Learned counsel for the petitioner has placed reliance upon Committee of Creditors of Essar Steel (supra) to say that once the Resolution Plan is approved by the Committee of Creditors and submitted before the Adjudicating Authority no other claims that may exist apart from those decided on merit by the Resolution Professional and by the Adjudicating Authority/Appellate Tribunal could be decided by any other forum. He has referred to para 63 onwards of the judgement which dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the only one argument against the amendment is that the time taken in legal proceedings should not be put against parties before the NCLT and NCLAT based upon a latin maxim which sub serves the cause of justice namely, "actus curiae neminem gravabit". The Supreme Court observed thereafter in paragraph 79 thus : - "given the fact that the time taken in legal proceedings cannot possibly harm a litigant if the Tribunal itself cannot take up the litigant's case within the requisite period for no fault of the litigant or the provision which mandatorily requires the CIRP to end by a certain date without any exception thereto, may well be an excessive interference with the litigants' fundamental right to non-arbitrary treatment under Article-14, and an excessive and arbitrary and therefore unreasonable restriction on the litigant's Fundamental Right to carry on business under Article 19 of the Constitution of India - - - while leaving the provision otherwise intact, we strike down the word 'mandatorily 'as being manifestly arbitrary under Article 14 of the Constitution of India - - - the effect of this declaration is that ordinarily the time taken in relation to corporate resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditors of the corporate debtor as is required under Section 15 of the I&B Code. The last date for submission of claims was 8.8.2017. The Resolution Professional upon receipt of the claims maintained a list of creditors alongside the amount claimed by them and the security interest. The Resolution Professional thereafter also invited Expression of Interest. Resolution Plans were submitted thereafter. Pursuant to the approval by Committee of Creditors of one plan, NCLT also granted approval. Despite various communications addressed to the Tax Authorities informing them that after the Resolution Plan was approved by the NCLT all proceedings instituted against the corporate debtor, arising and pending before the transfer date shall stand withdrawn, and that all liabilities towards operational creditors shall be deemed to have been settled by discharge and payment of resolution amount by the corporate debtor, it was insisted by the Tax Authorities that since there was no specific stay, the proceedings could not be dropped for recovery of Commercial Tax against the corporate debtor. The appellant approached the Supreme Court and argued that though the respondent authorities were awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India under a single unified umbrella with the object of speeding up the insolvency process. The Scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the Insolvency Resolution Process begins. Such debt maybe financial debt or an operational debt. Application under Section-7 or Section-9 can be filed and the moment the Adjudicating Authority is satisfied that a default has occurred the application must be admitted. Such debt may be in the form of a payment which actually became due or in the form of a claim which becomes payable unless it is disputed. The entire process is to be completed within a specified period from the date of admission of the application and extension of time for completion of CIRP under Section 12 can only be for a limited time period on specific reasons to be indicated in the order so made. As soon as the application is admitted, a moratorium in respect of Section 14 of the Code is to be declared by the Adjudicating Authority and a public announcement is made stating inter alia the last date for submission of claims and the details of the Interim Resolution Professional who shall be vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 238 of the I&B Code, the provisions thereof will have an overriding effect, if there is any inconsistency with any of the provisions of the law for the time being in force or any instrument having effect by virtue of such law. As such , Vide Section 7 of Act No.26 of 2019, with effect from 16 August 2019 , the following words have been inserted in Section 31 of the I&B Code-" including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed." After the amendment any debt in respect of payment of dues arising under any law for the time being in force including the ones owed to the Central Government, any State Government or any local authority, which does not form a part of the approved Resolution Plan, shall stand extinguished - -" 45. The Supreme Court in Paragraph-95 thereafter answered the questions framed by it by saying that "once a Resolution Plan is duly approved by the Adjudicating Authority under Subsection (1) of Section 31, the claims as provided in the Resolution Plan shall stand froze ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees and guarantors. 47. In paragraph 67 it set aside the impugned NCLAT judgement where it had left it open for claims that may have existed apart from those decided on merits by the Resolution Professional and by the Adjudicating Authority/Appellate Tribunal to be decided now by an appropriate forum in terms of Section 60 Subsection (6) of the I&B Code saying that such observation made by the NCLAT militates against the rationale of Section 31 of the I&B Code. It observed - "a successful Resolution Applicant cannot suddenly be faced with "undecided" claims after the Resolution Plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective Resolution Applicant who successfully takes over the business of the corporate debtor. All claims must be submitted to and decided by the Resolution Professional so that a prospective Resolution Applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. this the successful Resolution Applicant does on a fresh slate, as has been pointed out by us here in above...." 48. The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arcelor Mittal (India) (P) Limited versus Satish Kumar Gupta (2019) 2 SCC 1, this Court had held that the time taken in legal proceedings in relation to the CIRP must be excluded from the timeline mentioned in Section 12. Since this could extend the CIRP indefinitely, the Insolvency and Bankruptcy Code (Amendment) Act 2019 inserted a Second Proviso to Section 12 (3) with effect from 16.08.2019 to state that the CIRP in its entirety must be mandatorily completed within 330 days from the insolvency commencement date, including the time taken in legal proceedings. A legislative amendment that takes away the basis of a judicial finding is indicative of the strong emphasis of the IBC on its timelines and its attempt to thwart the prospect of stakeholders engaging in multiple litigations, solely with the intent of causing undue delay. Delays are also a cause of concern because the liquidation value depletes rapidly, irrespective of the imposition of moratorium, and a delayed liquidation is harmful to the value of the corporate debtor, the recovery rate of the COC and consequently, the economy at large. In Essar steel (supra) a three-judge bench of this Court, emphasised the rationale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Appellate Tribunal the delay or a large part of being attributable to the tardy process of the Adjudicating Authority and/or the Appellate Tribunal, it may be open in such cases for the Adjudicating Authority and/or Appellate Tribunal to extend the time beyond 330 days. - - - - it is only in such exceptional cases that the time can be extended, within which resolution of the stressed assets of the corporate debtor must take place beyond which the corporate debtor is to be driven into liquidation." 53. The Supreme Court observed in paragraph 128 of Ebix (supra) that the evolution of the IBC framework through an interplay of legislative amendments, regulations and judicial interpretations, consistently emphasises the predictability and timelines of the IBC. It noted the amendment made in Regulation 40 with effect from 20.04.2020, which excluded the period of lock down during Covid 19 pandemic from the timeline that has been stipulated under the statutory framework to observe "...,we cannot afford to be swayed by abstract conceptions of equity and contractual freedom of the parties to freely negotiate terms of the Resolution Plan with unfettered discretion, that are not grounded i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Applicant, vesting the Resolution Applicant with such a relief through a process of judicial interpretation would be impermissible. Such a judicial exercise would bring in the evils which the IBC sort to obviate through the back door.." 56. Having heard the learned counsel for the parties this Court has carefully gone through the order impugned and finds that, the learned counsel for the respondent in support of his case for consideration of its counter claim simultaneously with the petitioner's claim had submitted that it had filed its defence and counterclaim before the Learned Tribunal under Section 23 (2-A) of the Act of 1996. The moratorium under Section 14 of the I&B Code would have affect only up to the time of completion of the Corporate Insolvency Resolution Process (hereinafter referred to as the "CIRP"), relying upon judgement rendered by the NCLAT in Jharkhand Bijli Vitaran Nigam Ltd versus IVRCL Ltd (corporate debtor) 2018 SCC online NCLAT 891; and by the Delhi High Court in Power Grid Corporation of India Limited versus Jyoti Structures Ltd (2017 SCC online Delhi 1289) and SSMP Industries Ltd versus Perkan Food Processors (Private) Limited (2019 SCC onli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a case no recovery can be made during the period of moratorium. 59. The learned counsel for the petitioner had argued before the Tribunal that (i) connected arbitration proceeding pending before another sole Arbitrator a preliminary objection has been raised by the respondent itself that such arbitration cannot proceed in view of the provisions under Section 9 read with Section 14 of the I&B Code. Such a finding was also recorded by the sole Arbitrator on 25.03.2021 in such other proceedings. (ii)Section 238 of the I&B Code had an overriding effect over all laws that are inconsistent with its provisions. (iii) In Jharkhand Bijli Vitaran Nigam Limited the parties had consented for the adjudication of the counterclaim before the sole Arbitrator. In PGCIL (supra), a petition was filed under Section 34 of the Arbitration and Conciliation Act 1996 challenging the Award passed in favour of the corporate debtor who was under CIRP but PGCIL (supra) is no longer good law in the light of observations made by the Supreme Court in P Mohan Raj and others versus Shah Brothers Ispat Private Limited, 2021 (6) SCC 258, decided by a three-judge bench of the Supreme Court. Similarly, judgem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Tribunal thereafter looked into the I&B Code and the language of Section 14 which provides for a moratorium. It quoted the entire Section 14 and held that from the language of Section 14 (1) (a), it was clear that on the date of commencement of the CIRP, the NCLT could impose a moratorium prohibiting the institution of a suit or continuation of a pending suit or proceeding against the corporate debtor including execution of any judgement, decree or order in any court of law, Tribunal, Arbitral Panel or other Authority. It referred to the observations made by the High Court of Delhi in Power Grid Corporation of India Ltd (supra) and its interpretation of sub-clause (a) of subsection (1) of Section 14 of the I&B Code which intended to prohibit debt recovery actions against the assets of the corporate debtor and that "Proceedings" did not mean all proceedings. Continuation of proceedings which do not result in adversely affecting the assets of the corporate debtor are not prohibited under Section 14(1)(a) of the I&B Code. The term "including" is clarificatory of the scope and ambit of the term "proceedings". The term "proceedings" would be restricted to the nature of action that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is related to the same transaction. Section 14 has created a piquant situation i.e. the corporate debtor undergoing Insolvency proceedings can continue to pursue its claim but the counterclaim would be barred under Section 14 (1)(a). When such situations arise, the Court has to see whether the purpose and intent behind the imposition of the moratorium is being satisfied or defeated. A blinkered approach cannot be followed and the Court cannot blindly stay the counterclaim and refer the defendant to the NCLT/Resolution Professional for filing its claims. The nature of a counterclaim is such that it requires proper pleadings to be filed, defences and stands of both the parties to be considered, evidence to be recorded, then issues have to be adjudicated. The proceedings before the NCLT are summary in nature and the Resolution Professional does not conduct a trial. The Resolution Professional really determines what payment can be made towards the claims raised, subject to the availability of funds. The NCLT/RP cannot be burdened with the task of entertaining claims of the defendant which are completely uncertain, undetermined and unknown. Moreover, the question as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as claimed there in, would not violate the moratorium. It is only after determination of counterclaim when the amount is determined or the execution proceedings are initiated, the provisions of Section 14 of the I&B Code 2016 would come into play. 65. It was also observed by the Tribunal that under subsection (4) of Section 14 the order of moratorium does not continue indefinitely but has effect only from the date of order initiating CIRP till completion of the said process which in turn is time bound. It was quite clear that the Resolution and plan had been submitted by the IRP before the Adjudicating Authority on 11.06.2021 and the proceedings before the NCLT Delhi were in the final stages. It may be possible that by now the proceedings before the Adjudicating Authority must have come to an end. 66. The learned counsel for the petitioner has placed reliance upon judgement rendered in Surendra Kumar Singhal and others versus Arun Kumar Bhalotia and others, rendered by the Delhi High Court on 25.03.2021. The Delhi High Court in paragraph 24 of its judgement in Surendra Kumar Singhal (supra) thereafter observed - - "A perusal of the above mentioned decisions, shows that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is that there is a patent lack of inherent jurisdiction. Here patent lack of inherent jurisdiction requires no argument whatsoever - it must be the perversity of an order that must stare one in the face. Unfortunately, parties are using this expression mentioned in our judgement in Deep Industries Ltd to go to the 227 Court in matters which do not suffer from a patent lack of inherent jurisdiction. This is one of them. Instead of dismissing the writ petition on the grounds stated, the High Court would have done well to have referred to our judgement in Deep Industries and dismissed the 227 petition on the ground that there is no such perversity in the order which leads to a patent lack of inherent jurisdiction. The High Court ought to have discouraged similar litigation by imposing heavy costs ......We dismiss this Special Leave Petition with costs of Rs.50,000/- to be paid to the Supreme Court Legal Services committee within two weeks". 69. The learned counsel for the petitioner has also argued that the learned Tribunal has relied upon Delhi High Court Judgments in PGCIL (supra) and SSMP Industries (supra) which have not been found to be good law by the Supreme Court in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Law Appellate Tribunal in Jharkhand Bijli Vitaran Nigam Ltd. Versus IVRCL Ltd and Another (Company Appeal (Insolvency) 285/2018 decided on 3 August 2018). It also considered the judgement of the coordinate bench of the Delhi High Court in Power Grid Corporation of India Versus Jyoti Structures Ltd. Manu/DE/5162/2017. It thereafter observed that the claim of the plaintiff was much higher than that of the defendant but both the claim and counterclaim arose out of the same transaction between the parties, and would require to be adjudicated on the basis of evidence being placed on the Court's record. The Court would have to first determine the question as to whether any amount at all was due to the plaintiff. It observed that the plaintiff's claim being higher, even if the counterclaim is decreed fully and the claim of the plaintiff is also allowed, the plaintiff would in fact be entitled to recover and not the defendant. The possible outcome of the suit and a counterclaim was not something that could be predicted before actual adjudication. It was clear that the plaint and the counterclaim were interlinked with each other. It went on to observe that in Power Grid Corpn, a Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be followed by the Court and the Court could not blindly stay a counterclaim and refer the defendant to NCLT/RP for filing its claims. The Delhi High Court also observed in paragraph 9 that the nature of the counterclaim is such that it required proper pleading to be filed and the defences and stance of both the parties had to be considered, evidence had to be recorded and then issues had to be adjudicated. It observed that the proceedings before the NCLT are summary in nature and the Resolution Professional also does not conduct trial. The Resolution Professional merely determines what payment can be made towards the claims raised subject to availability of funds. The NCLT/Resolution Professional cannot be burdened with the task of entertaining claims of the defendant which are completely uncertain, undetermined and unknown. The Court was of the opinion that the plaintiff and the defendant's claim ought to be adjudicated comprehensively by the same forum. Till such time that the defences are adjudicated there is no threat to the assets of the corporate debtor and the continuation of the counterclaim would not adversely impact the assets of the corporate debtor. Only when an Award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coercive steps being taken against the assets of the corporate debtor, all such "proceedings" are necessarily subsumed within the meaning of Section 14(1)(a). It observed in paragraph 10 that the language of Section 14 (1) makes it clear that subject to the exceptions contained in Sub-section (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall mandatorily, by order, declare a moratorium to prohibit what follows in clauses (a) to (d). Importantly, under 14(4) this order of moratorium does not continue indefinitely, but has effect only from the date of the order declaring moratorium till the completion of the Corporate Insolvency Resolution Process, which is time bound, either culminating in the order of the Adjudicating authority approving a Resolution Plan or in liquidation. 74. The Court observed in paragraph 53 of P. Mohan Raj (supra) that after going through all the judgements that were cited by both the sides it was evident that a proceeding under Section 138, though cast in language making 'the act complained of an offence, is really in order to get back through a summary proceeding, the amount contained in the dishonoured cheque together with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents that criminal proceedings as well as quasi-criminal proceedings can go on against the corporate debtor or its directors as they do not strictly fall within the definition of proceeding under Section 14 (1) of the Act. The court held that a Section 138/141 proceedings under the Negotiable Instruments Act is against the corporate debtor is covered by Section 14 (1)(a) of the I&B Code. It however clarified that in the case before it such proceedings under the Negotiable Instruments Act could continue against the company as well as the Appellants for the reason that the Insolvency Resolution Process did not involve a new management taking over and the moratorium period had come to an end. 77. This Court having considered all the judgements cited by learned counsel for the parties and also the impugned order of the Tribunal finds that Article 227 of the Constitution of India, the supervisory role assigned to this Court is extremely limited. The Supreme Court has repeatedly emphasised in its judgements the importance of keeping handsoff approach where arbitration matters are concerned. This Court finds that the learned Tribunal has decided an application made to it by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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