2019 Supreme(Bom) 733

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT NAGPUR
Manish Pitale, J.
Tata Steel BSL Ltd - Appellant
Vs.
Varsha - Respondent
Writ Petition No. 8620 of 2018
Decided On : 28-03-2019

Headnote:

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Regulation 38 – Code of Civil Procedure, 1908 – Order XXXVII – Insolvency and Bankruptcy Code, 2006 – Sections 7, 8 – Suit for recovery of amount – Process of corporate insolvency resolution – Question that arises for consideration in the present petition is, as to whether the petitioner herein is justified in contending that upon process of corporate insolvency resolution being triggered under the Insolvency and Bankruptcy Code, 2006 and respondent No.1 having participated in the same, the suit for recovery of amount filed by respondent No.1 could no longer survive and that the Court of Joint Civil Judge, Senior Division, Nagpur (Trial Court) committed an error in rejecting the application filed by the petitioner for dismissal of the suit. – The contention raised on behalf of the petitioner rests on the assertion that the IBC has overriding effect over other laws and that the effect of the corporate insolvency resolution process having been triggered in the context of the petitioner in the present case resulted in rendering all proceedings like the suit filed by respondent No.1 as not maintainable and liable to be dismissed. – Held, Suit filed for permanent injunction restraining the respondents from invoking or encashing bank guarantees or seeking remittance in the backdrop of proceedings initiated under the IBC. It was held that if conflicting orders were passed by Civil Court and by the National Company Law Tribunal, it would be detrimental to the resolution process and on this basis, it was held that the suits could not be entertained by the Court. – In the present case the resolution plan itself recognizes sub judice claims like that of respondent No.1 and there is no question of the proceedings before the Trial Court being in conflict with the resolution plan. – As noted above, the resolution plan itself provides for operational creditors settlement amount to take care of the amount due, if any, that would be identified and crystallized in the proceedings before the Trial Court. – Hence, the aforesaid judgment of the Delhi High Court does not help the petitioner in the present case. – Respondent No.1 relied upon judgment of the Honble Supreme Court in the case of Mobilox Innovations Private Limited v. Kirusa Software Private Limited (supra). In the aforesaid case, the Honble Supreme Court was concerned with the question of existence of a dispute or a suit or other proceedings. – The Honble Supreme court has held that the dispute, existence of which is claimed ought not to be spurious, mere bluster, plainly frivolous or vexatious and that such a pre-existing dispute could be pursued. – In the present case, suit was filed by respondent No.1 way back in the year 2011, wherein the liability was disputed by the petitioner on the ground that sub-standard quality of goods were supplied by respondent No.1. – Such a dispute, which not only existed but stood recognized as a sub judice claim for which an inbuilt mechanism was incorporated in the resolution plan, could not be extinguished, merely because corporate insolvency resolution process had been undertaken. – Respondent No.1 is justified in relying upon the said judgment in support of its contention. – Apart from this, it is relevant to note that in the case of Innoventive Industries Ltd. v. ICICI Bank and another (supra) while distinguishing between initiation of corporate insolvency process by financial creditors under section 7 of the IBC and insolvency resolution process by operational creditors under section 8 of the IBC, it has been held that when insolvency resolution is by an operational creditor, the moment there is existence of dispute, the operational creditor gets out of clutches of the IBC. – In the present case, although the resolution process was initiated by a financial creditor under section 7 of the IBC, the resolution plan prepared under the provisions of the IBC and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, recognized the claim of respondent No.1 as an operational creditor and under Regulation 38 of the aforesaid Regulation of 2016, priority is given to the amount due to respondent No.1 as an operational creditor over the dues of financial creditors. – Thus, when the resolution plan provides for the dues payable to respondent No.1, subject to the pending suit, it cannot be said that any error was committed by the Trial Court in passing the impugned order. – When applied to the facts of the present case clearly demonstrates that the attempt on the part of the petitioner to escape liability of paying dues of respondent No.1 as an operational creditor, was correctly shot down by the Trial Court by passing the impugned order. – Therefore, it is held that the suit filed by respondent No.1 cannot be dismissed as claimed by the petitioner in the application at Exhibit-153. – Writ Petition Dismissed.