2025 (6) TMI 1018

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.... his legal heir. In view of the above, this Court, by order dated 17.04.2025, suo motu impleaded T. Stella as Petitioner No. 4(b) in the writ petition, dispensing with the necessity for filing a formal application for substitution. 3.The petitioners have filed the present writ petition challenging the communication issued by the second respondent in response to their letter dated 22.12.2020, wherein it was informed that the National Company Law Tribunal, Chennai, had ordered the liquidation of M/s. Associated Cylinders & Accessories Private Limited by order dated 16.07.2018. It was further stated that, in terms of Section 53 of the Insolvency and Bankruptcy Code, 2016, the distribution of assets was to be effected upon commencement of the liquidation process. The company had treated the petitioners as falling within the definition of "workers" under Section 53(1)(b)(i) and, with the consent of the secured creditor, had disbursed the first tranche of payment to all employees. They were also informed that the 1st and 3rd petitioners had resigned from the company in the year 2014. It was further clarified that both the first and second tranches of distribution had been made strictl....

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....ial dispute in I.D(T). No. 12 of 2018 through their union. The said dispute was referred by the Government to the Industrial Tribunal and Labour Court, Puducherry, vide G.O.Rt. No. 48/AIL/LAB/J/2018 dated 03.04.2018. In that proceeding, neither the Resolution Professional nor the Liquidator was impleaded as a party. An ex parte award was passed on 05.04.2019. Subsequently, Execution Petition No. 399 of 2019 was filed, and again, the pendency of CIRP or liquidation proceedings was not disclosed to the executing court. An ex parte order was passed therein on 09.04.2021. Challenging these ex parte orders, the Liquidator has filed W.P. Nos. 2396 of 2022 and 22096 of 2024, which are pending consideration. 7.The Liquidator also brought to the notice of this Court that, along with two trade unions, the petitioners entered into a tripartite settlement with the Liquidator on 28.05.2024. Under the terms of the said agreement, the five petitioners had expressly agreed to withdraw the present writ petition within a fortnight from the date of signing the agreement. However, despite such undertaking, the petitioners failed to do so. 8.The principal questions that arise for consideration in....

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....hold monetary limit. It does not result in a conclusive determination of the validity, extent, or admissibility of individual claims. 13.The Code entrusts the Interim Resolution Professional under Section 18, the Resolution Professional under Section 25, and the Liquidator under Section 35, with the statutory obligation to receive, collate, and verify all claims independently and in accordance with the law. The Supreme Court, in Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17, has categorically held that the determination of default at the stage of admission is only for triggering the insolvency process; it is not a final adjudication of claims. 14.As affirmed by the Hon'ble Supreme Court in M/s. B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633, the purpose of admission under the Insolvency and Bankruptcy Code, 2016 is not to adjudicate the precise quantum of the claim, but to determine whether a debt exceeding the prescribed threshold exists and whether there has been a default in its payment. 15.Thus, it is well settled that the Resolution Professional or the Liquidator is vested with the authority to independently verify, and....

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....usive domain of the NCLT/NCLAT are not amenable to writ jurisdiction, except in exceptional circumstances, namely: (i) where the Liquidator has acted wholly without jurisdiction; (ii) where there is a blatant violation of the principles of natural justice; or (iii) where the action is manifestly arbitrary or actuated by mala fides. 20.The case on hand does not fall within any of the aforesaid exceptions. A Division Bench of this Court, in W.P. No. 712 of 2024 dated 23.01.2025 (Dharamshi K. Patel and another v. Kamala D. Patel and others), while considering a writ petition filed against the order of admission passed by the NCLT, Chennai Bench, initiating the corporate insolvency resolution process against a corporate debtor, made the following observation: (23) Both sides relied upon a few judgments on the maintainability of the writ petition under Article 226 of the Constitution of India in view of the alternative remedy available. This Court in exceptional cases can entertain a writ petition under Article 226, as there are several exceptions carved out by this Court and Hon'ble Supreme Court to entertain a writ petition under Article 226 ....

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....55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 22. Just as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are recognised as complete and self- contained codes, the Insolvency and Bankruptcy Code, 2016 is also a comprehensive and exhaustive piece of legislation. The Supreme Court, in Embassy Property Developments Pvt. Ltd. v. State of Karnataka, (2020) 13 SCC 308, made the following observations with regard to the nature and scope of the Code: "11. It is beyond any pale of doubt that IBC, 2016 is a complete Code in itself. As observed by this Court in M/s Innoventive Industr....

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....other legal proceeding shall be instituted or continued against the corporate debtor by any creditor or third party without prior approval of the Adjudicating Authority. 26.In the present case, the ex parte orders were obtained without apprising the Industrial Tribunal or the Executing Court of the CIRP and liquidation orders passed by the NCLT against the first respondent. In such circumstances, the proceedings conducted and orders passed in violation of the express prohibitions under Sections 14 and 33(5) of the IBC, 2016, are rendered void and non-est in the eyes of law. 27.In the impugned order, the second respondent rejected the claim of the petitioners on the ground that they do not fall within the definition of "workmen" under the applicable provisions, and further noted that the 1st and 3rd petitioners had resigned from service in the year 2014, nearly four years prior to the initiation of liquidation order. If the petitioners were aggrieved by the said rejection, the appropriate course of action would have been to prefer an appeal under Section 42 of the Insolvency and Bankruptcy Code, 2016. Instead, the petitioners have chosen to file the present writ petition, whic....