Appellant's Challenge to Decrees Stalled by Insolvency Code Moratorium The appellant challenged decrees in two suits, but the respondent invoked a statutory bar under Section 14 of the Insolvency and Bankruptcy Code, 2016, ...
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Appellant's Challenge to Decrees Stalled by Insolvency Code Moratorium
The appellant challenged decrees in two suits, but the respondent invoked a statutory bar under Section 14 of the Insolvency and Bankruptcy Code, 2016, due to a declared moratorium. The Tribunal's moratorium declaration prohibited suits against the corporate debtor, and failure to obtain a resolution plan triggered consequences under Section 14. The Court emphasized the prohibition's applicability, directing the appellant to await the NCLT's decision. The appeal was ordered to be returned for re-presentation after the NCLT's ruling, resolving pending applications.
Issues: - Challenge to decrees in two suits by the appellant - Statutory bar under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Declaration of moratorium and public announcement under Section 13 - Consequences of moratorium under Section 14 - Liquidation process under Section 33
Analysis: 1. The appellant challenged decrees in two suits, one decreeing amounts due from the appellant and the other rejecting the suit for recovery from the respondent. The respondent raised a statutory bar under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IB Code), prohibiting suits during moratorium.
2. Section 13 of the IB Code declares a moratorium after admission of an application under Section 7, 9, or 10. The Tribunal declared a moratorium, and Section 14 prohibits suits against the corporate debtor. The Interim Resolution Professional (IRP) failed to obtain a resolution plan within the specified time, triggering consequences under the proviso to Section 14.
3. The proviso states that if the Tribunal approves a resolution plan under Section 31 or orders liquidation under Section 33, the moratorium ceases. Section 33 outlines the initiation of liquidation, requiring the Tribunal to pass a liquidation order if a resolution plan is not received or is rejected.
4. The judgment emphasized that the prohibition under Section 14 was in force at the time of the appeal's filing. Consequently, the appeal should not have been registered, and parties should have awaited the NCLT's decision in the ongoing proceedings.
5. The Court directed the Registry to return the papers, allowing the appellant to re-present them after the NCLT's decision. The appeal was ordered and disposed of accordingly, with any pending applications also being disposed of due to the appeal's resolution.
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