TMI Blog2022 (9) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been maintained under the Section 279 of the Companies Act, 2013. However, the word pending is missing in Section 33(5) of the IBC. A reading of Section 63 of the IBC would reveal that the bar on the Civil Court is only to entertain any suit or proceeding in respect of any matter on which NCLT has the jurisdiction under this Code . This would not apply to suits, which were already pending before the commencement of liquidation proceedings. Section 231 of the IBC, inter alia states that no injunction shall be granted by a Court in respect of action taken in pursuance to any order passed by the Adjudicating Authority. The intent is clear that the bar is only in respect of civil suits filed after an order has been passed by the Adjudicating Authority. In my view, the aforesaid bar under Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections 63 and 231 of the IBC cannot be read in manner so as to defeat the provisions of Section 33(5) of the IBC. If Sections 63 and 231 of the IBC are interpreted in the manner canvased by the counsel for the Liquidator, the provision of Section 33(5) of the IBC would be rendered otiose and the moratorium under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff that the defendant no.1 had wrongfully and unlawfully invoked/encashed the contract performance bank guarantees and advance bank guarantees issued by the defendant no.2 and defendant no.3 respectively. 4. Vide order dated 27th February, 2017, while issuing summons in the suit, this Court had granted an ad interim injunction against payments under the bank guarantees being made to the defendant no.1. In view of the insolvency proceedings initiated against the defendant no.1, the present suit was stayed vide order dated 14th November, 2017. Subsequently, on 21st August, 2018 liquidation proceedings commenced in respect of the defendant no.1 company. 5. Senior counsel on behalf of the plaintiff submits that the proceedings in the present suit shall continue even if liquidation proceedings have commenced and a Liquidator has been appointed in respect of the defendant no.1 company. In support of this contention, the senior counsel on behalf of the plaintiff has highlighted the difference in the language of Section 14 and Section 33(5) of the IBC to contend that under Section 33(5) of the IBC the moratorium is only in respect of institution of fresh suits and does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a construction that results in defeating the intent behind the Statue. 10. Reliance is also placed on the judgment in Delhi High Court Bar Association Anr. v. Govt. of NCT of Delhi Anr., 2013 (203) DLT 129, to submit that the Court should rely upon the Statement of Objects and Reasons of a Statute for appreciating the true intent of the legislature. 11. I have heard the rival submissions. 12. At the outset, the Relevant provisions of Section 13, Section 14, Section 33(5), Section 60(5), Section 63 and Section 231 of the IBC are set out below: 13. (1) The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order - (a) declare a moratorium for the purposes referred to in section 14; 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 pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language of Section 33(5) of the IBC, it is clear that the bar/moratorium is only in respect of fresh suits or legal proceedings. Unlike the moratorium under Section 14 of the IBC, where it is clearly noted that the moratorium is in respect of institution of suits or continuation of pending suits or proceedings against corporate debtor, the words continuation of pending suits or proceedings are conspicuously absent in Section 33(5) of the IBC. 14. Section 33(5) of the IBC came up for consideration before the Madras High Court in Chennai Metro Rail Limited, Represented By The Chief General Manager v. Lanco Infratech Limited, Represented By the Liquidator Lanco House And Ors., 2020 SCC OnLine Mad 26397. Comparing Section 446 of the Companies Act, 1956 and Section 279 of Companies Act, 2013 with Section 33(5) of the IBC, the Madras High Court observed as under: 31. Section 446 of the Company Act 1956 Act prohibited the commencement of any suit or legal proceeding when a winding up order is made. It also applied for the pending proceeding and the leave was required. Section 279 of the Companies Act 2013 also deals with the word pendency and this word is conspicuously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Minimum Wages Act, 1948 even though the same was passed during the liquidation process. 17. I am in respectful agreement with the views expressed by Madras High Court and Kerala High Court above. To appreciate the difference in the language of Sections 14 and 33(5) of the IBC it may be useful to refer to the scheme of the IBC in the context of the aforesaid Sections. Section 14 and Section 33 are part of two separate Chapters of IBC. Section 14 is part of Chapter II which deals with Corporate Insolvency Resolution Process , whereas Section 33 is a part of Chapter III which deals with Liquidation Process . Chapter II of the IBC deals with the Resolution Process in respect of a corporate debtor , where the objective is to revive the corporate debtor by coming out with a resolution plan, which is to be approved by the committee of creditors and thereafter, by the Adjudicating Authority. Chapter III of the IBC deals with the liquidation process which comes into effect upon the failure to come out with a resolution plan within the prescribed time period or a resolution plan not being approved. The moratorium under Section 14 of the IBC comes into effect upon the Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of civil suits filed after an order has been passed by the Adjudicating Authority. In my view, the aforesaid bar under Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections 63 and 231 of the IBC cannot be read in manner so as to defeat the provisions of Section 33(5) of the IBC. If Sections 63 and 231 of the IBC are interpreted in the manner canvased by the counsel for the Liquidator, the provision of Section 33(5) of the IBC would be rendered otiose and the moratorium under Section 33(5) of the IBC, which was to apply only in respect of fresh suits would also apply to pending suits. This cannot be the intention of the legislature. Therefore, I do not find any merit in the submission of the Liquidator that the present suit cannot proceed in view of Sections 63 or 231 of the IBC. 21. Counsel for the Liquidator has relied upon the Report of the Insolvency Law Committee dated 20th February, 2020, the relevant portions of which are set out hereinafter: 1. STAY ON CONTINUATION OF PROCEEDINGS 1.1. Section 33(5) of the Code bars the institution of suits or legal proceedings by or against the corporate debtor without the leave of the Adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even be stated that the legislature was not aware of the omission in view of the fact that the words pending suit or legal proceedings have been specifically used in Section 14 of the IBC. 23. In any event, the submission of the counsel for the liquidator that words which are missing from the language of Section 33(5) of the IBC can be added by the Court is completely against the rule of casus omissus, in terms of which, an omission in a statute cannot be supplied by judicial interpretation. 24. The Supreme Court in Ebix Singapore Private Ltd v. Committee Of Creditors Of Educomp Solutions Limited And Anr., (2022) 2 SCC 401, applying the rule of casus omissus refused to add words in the language of Section 12-A of the IBC. Similarly, in Babita Lila and Anr., v. Union of India (2019) 9 SCC 647, the Supreme Court held that casus omissus cannot be supplied by the Court where the omissions noticed in a statute had been on account of conscious legislative intendment. In Padma Sundara Rao (Dead) And Ors v. State of T.N. And Ors., (2002) 3 SCC 533, the Supreme Court held that while interpreting a provision, the Court only interprets the law and cannot legislate it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) and Delhi High Court Bar Association (supra) cited by the counsel for the Liquidator have no application in the present case. 28. Counsel for the Liquidator has relied upon an order dated 25 th September, 2019 passed by the National Company Law Appellate Tribunal (NCLAT), New Delhi in Company Appeal (AT) (Insolvency) No.230 of 2019 titled KSB Shanghai Pump Co. Ltd. v. Lanco InfraTech Ltd. and Ors. In the said case, the Resolution Professional in respect of the corporate debtor, invoked the performance bank guarantees in order to recover the advance payment. In the appeal before the NCLAT, the appellants sought a restraint against the invocation of the bank guarantees. In view of the fact that the performance bank guarantees had been invoked and the corporate debtor had received the amount out of the said guarantees, NCLAT did not interfere with the same and gave liberty to the appellants to file their claims before the Appropriate Forum for appropriate relief. No finding has been given in the aforesaid order whether the bank guarantees were validly invoked by the Liquidator or not. This was not a case where a suit had already been filed challenging the invocation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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