The court ruled that the moratorium under Section 33(5) of the IBC does not apply to pending suits, thereby allowing them to proceed despite liquidation proceedings.

JUDGMENT

1. The issue which arises for consideration in the present suit is whether upon commencement of liquidation proceedings against the defendant no.1 company under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and Liquidator being appointed, the present suit can proceed or not. The said issue was noted in the order dated 17th October, 2019 passed by this Court. Written submissions have been filed on behalf of the plaintiff as well as the defendant no.1 company. Oral submissions on behalf of the counsels have been heard on 23rd May, 2022, 30th May, 2022, 18th August, 2022 and 31st August, 2022.

2. The present suit was filed seeking relief of permanent injunction restraining the defendant no.1 company from encashment of bank guarantees and for recovery of a sum of Rs.10,69,77,650/- against the defendant no.1.

3. It is the case of the plaintiff that the defendant no.1 had wrongfully and unlawfully invoked/encashed the contract performance bank guarantees and advance bank guarantees issued by the defendant no.2 and defendant no.3 respectively.

4. Vide order dated 27th February, 2017, while issuing summons in the suit, this Court had granted an ad interim injunction against payments under the bank guarantees being made to the defendant no.1. In view of the insolvency proceedings initiated against the defendant no.1, the present suit was stayed vide order dated 14th November, 2017. Subsequently, on 21st August, 2018 liquidation proceedings commenced in respect of the defendant no.1 company.

5. Senior counsel on behalf of the plaintiff submits that the proceedings in the present suit shall continue even if liquidation proceedings have commenced and a Liquidator has been appointed in respect of the defendant no.1 company. In support of this contention, the senior counsel on behalf of the plaintiff has highlighted the difference in the language of Section 14 and Section 33(5) of the IBC to contend that under Section 33(5) of the IBC the moratorium is only in respect of institution of fresh suits and does not apply to pending suits.

6. He further submits that the present suit was initiated much before the initiation of proceedings against the defendant no.1 company before the National Company Law Tribunal (NCLT). During the pendency of the resolution proceedings, the moratorium under Section 14 of the IBC was applicable to the present suit. However, once the resolution process failed, the moratorium came to an end and the suit has to proceed.

7. Per contra, it has been contended on behalf of the defendant no.1 company, represented by the Liquidator, that the defendant no.1 is a "corporate debtor in liquidation" in proceedings before the NCLT, Delhi. In terms of Sections 63 and 231 of the IBC, jurisdiction of Civil Courts is barred in respect of any issue for which NCLT is empowered under the IBC to pass any order. He relies upon Section 60(5)(b) of the IBC to contend that NCLT alone has the jurisdiction to entertain `any claim' made by or against the corporate debtor. Therefore, the remedy of the plaintiff would be to file a claim before the Liquidator and thereupon, invoke the provisions of the IBC.

8. Though he concedes that Section 33(5) of the IBC does not refer to pending suits, it is