IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
Sanjay Kumar, M. Ganga Rao, JJ.
Golden Jubilee Hotels Limited – Appellant
Vs.
EIH Ltd. and another – Respondents
Civil Revision Petition No. 4881 of 2018
Decided On : 27-09-2018
Civil Procedure Code, 1908 – Order 37 Rules 1 and 2 – Insolvency and Bankruptcy Code, 2016 – Section 7 – Suits plaintiff seeks only to recover debt or liquidated demand in money from defendant on the strength of a written contract or an enactment – Stay of proceedings – Trial Court insist upon their filing written statements – Challenged – Held, Trial Court compounded its error by seeking to continue with suit proceedings despite the said moratorium order and dismissing applications filed in suit while insisting upon filing of written statements by the defendants – Revision allowed (Para 23, 24 and 25)
Facts of the Case:
Suits plaintiff seeks only to recover debt or liquidated demand in money from defendant on the strength of a written contract or an enactment – Stay of proceedings – Trial Court insist upon their filing written statements – Challenged.
Finding of Court:
Trial Court compounded its error by seeking to continue with suit proceedings despite the said moratorium order and dismissing applications filed in suit while insisting upon filing of written statements by the defendants.
Result: Revision allowed
Sanjay Kumar, J.
M/s. EIH Limited, Kolkata, instituted C.O.S.No.67 of 2017 on the file of the learned Judge, Commercial Court-cum-XXIV Additional Chief Judge, City Civil Court, Hyderabad, against M/s. Golden Jubilee Hotels Private Limited, Hyderabad, and L.N.Sharma, its Director & Chief Executive Officer (CEO), for recovery of a sum of Rs. 7,10,37,510/- along with pendente lite and future interest. This suit was filed under Order 37 Rules 1 and 2 CPC.
2. The trial Court set L.N.Sharma, the second defendant, ex parte on 14.11.2017. On 29.12.2017, M/s. Golden Jubilee Hotels Private Limited, Hyderabad, the first defendant, was also set ex parte. I.A.No.79 of 2018 was filed by L.N.Sharma, the second defendant, under Order 9 Rule 7 CPC to set aside the order dated 14.11.2017, whereby he was set ex parte. I.A.No.82 of 2018 was filed by the first defendant company under Order 9 Rule 7 CPC to set aside the order dated 29.12.2017, whereby it was set ex parte. In the first instance, these I.A.s were allowed by the trial Court on 05.03.2018 with the condition that both the defendants should file their written statements by 12.03.2018.
3. While so, the Bank of Baroda initiated a corporate insolvency resolution process against the first defendant company, vide CP(IB) No.248/7/HDB/2017 on the file of the National Company Law Tribunal, Hyderabad Bench, Hyderabad (hereinafter, the Tribunal), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity, the Code of 2016). The Tribunal passed Order dated 27.02.2018 therein admitting the case and appointing Subodh Kumar Agrawal as the Interim Resolution Professional under Section 16 of the Code of 2016. The Tribunal further declared a moratorium by prohibiting various actions, including the institution of suits or continuation of pending suits or proceedings against the corporate-debtor, the first defendant company, in any Court of law, Tribunal, Arbitration Panel or other authority. Thereupon, the plaintiff company filed Memo dated 05.03.2018 informing the trial Court that the Tribunal had ordered commencement of corporate insolvency resolution process against the first defendant company and prayed that notice of the suit proceedings be served upon the Interim Resolution Professional appointed by the Tribunal. The defendants, on the other hand, filed Memo dated 12.03.2018 adverting to the fact that the trial Court had allowed the set-aside petitions earlier with the condition that they should file written statements by that date and stating that the Tribunal had passed an order on 27.02.2018 declaring a moratorium while appointing an Interim Resolution Professional. They accordingly prayed for adjournment of the suit proceedings till the insolvency proceedings were completed.
4. By order dated 14.03.2018, the trial Court merely recorded the Memo filed by the defendants, holding that the filing of written statements would assist the Interim Resolution Professional to resolve the dispute and that the defendants were using delaying tactics. Their contention that in view of the order of the Tribunal, the trial Court ought not to insist upon their filing written statements was rejected. Further, as the defendants had not filed their written statements by 12.03.2018 in terms of the earlier orders dated 05.03.2018, I.A.Nos.82 of 2018 and 79 of 2018, filed by the first defendant company and the second defendant respectively, were also dismissed by the trial Court vide separate orders of the same date.
5. Aggrieved by these orders, the first defendant company and the second defendant are before this Court. C.R.P.No.4881 of 2018 was filed by the first defendant company aggrieved by the dismissal of I.A.No.82 of 2018 filed by it in the suit and C.R.P.No.4884 of 2018 was filed by it against the order passed by the trial Court upon the Memo filed by the defendants. C.R.P.No.4885 of 2018 was filed by the second defendant aggrieved by the order passed on the Memo filed by the defendants while
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