Applicability of insolvency code provisions to pending wage recovery suits - pre liquidation suits maintainable and liquidator may defend.

Section 33(5) of the insolvency legislation does not apply to suits instituted before liquidation, and the liquidator may be impleaded and may defend pending proceedings under his statutory powers; therefore the statutory bar on civil courts under the insolvency code (section 63) was not attracted to a pre-liquidation wage recovery suit and the trial court erred in holding it lacked jurisdiction. Priority under section 53 gives 24 months of workmen dues precedence but does not extinguish wages beyond that period nor bar civil adjudication of excess claims. The trial court's refusal to permit impleadment and its maintainability ruling were set aside.

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Issues: (i) Whether the Trial Court erred in dismissing Chamber Summons No.1769 of 2019 and rejecting impleadment of the Official Liquidator as defendant in a summary suit instituted prior to the liquidation order; and whether Section 33(5) and related provisions of the Insolvency and Bankruptcy Code, 2016 bar continuation of such pending suit or the impleadment of the Liquidator.

Analysis: The Court examined Section 33(5) which prohibits institution of fresh suits by or against the corporate debtor after a liquidation order but permits suits by the liquidator with NCLT approval. On a conjoint reading of Section 33(5) with Section 35(1) and Section 35(1)(k), the liquidator has substantive powers to institute or defend suits on behalf of the corporate debtor. The Court distinguished the moratorium under Section 14(1)(a) and held that Section 33(5) does not contain an express bar on continuance of suits already instituted prior to liquidation. The Court considered competing provisions relied upon by respondents (Sections 38-42, Section 53, Section 63, Section 231 and Section 60(5)) and held that those provisions provide mechanisms for claim lodging, adjudication and distribution priority but do not, as a matter of law, render pending suits instituted before liquidation non-maintainable or preclude impleadment of the liquidator to defend such suits. The Trial Court improperly adjudicated maintainability and merits while deciding the amendment application, contrary to the established principle that merits of the amendment should not be gone into at that stage.

Conclusion: The Trial Court's order dismissing the Chamber Summons is set aside; Chamber Summons No.1769 of 2019 is made absolute permitting impleadment of the Official Liquidator and necessary amendments to the plaint within four weeks. The writ petition is allowed and disposed of.

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