SREI EQUIPMENT FINANCE LIMITED, THROUGH ITS POWER OF ATTORNEY SHRI SHOUNAK TAPAN CHATTERJEE v. RAJESH BAJIRAO KHANDEWAR AND OTHERS
High Court of Bombay, Nagpur (Criminal)
2025:BHC-NAG:11220
Discusses the interplay between IBC, company and consumer laws, and the moratorium's effect on legal proceedings.
List of Laws: The Insolvency and Bankruptcy Code, 2016; Companies Act; Consumer Protection Act, 2019
Legal Discussion:
- The Insolvency and Bankruptcy Code, 2016: The judgment extensively discusses several sections of the IB Code, 2016. Section 3(27) defines 'property'. The court notes that the direction by the Consumer Commission to return the JCB machine upon payment of dues is akin to a monetary decree and falls within the definition of 'property' under this section. This is significant because it broadens the scope of 'property' under the IB Code to include such decrees, thereby potentially triggering the moratorium provisions. The practical implication is that even orders for specific performance involving assets can be stayed during insolvency proceedings. Section 14 outlines the moratorium. The court emphasizes that Section 14 prohibits the institution or continuation of suits or proceedings against the corporate debtor, including the execution of any judgment, decree, or order of any court, tribunal, or authority, upon declaration of the moratorium. The significance lies in its broad application, effectively halting recovery actions against the debtor. This aligns with the Code's objective of providing a breathing space for the resolution process. The practical implication is that creditors are barred from pursuing legal remedies during the moratorium period, forcing them to participate in the resolution process. Section 31(1) deals with the approval of the resolution plan. The court highlights that the resolution plan approved by the Adjudicating Authority is binding on the corporate debtor, its employees, members, creditors (including government authorities), guarantors, and other stakeholders. The significance is that it gives the resolution plan a wide-ranging effect, extinguishing claims not part of the plan. This aligns with the objective of providing a clean slate to the restructured entity. The practical implication is that creditors whose claims are not included in the resolution plan lose their right to pursue those claims. The court interprets these sections to mean that once a moratorium is declared or a resolution plan is approved, recovery proceedings cannot be maintained in any court, tribunal, or arbitration panel. This interpretation reinforces the supremacy of the IB Code in matters of insolvency and resolution.
- Companies Act: The judgment mentions that the petitioner is a company registered under the Companies Act. However, there is no detailed discussion or interpretation of any specific section of the Companies Act. The reference serves only to establish the petitioner's corporate status.
- Consumer Protection Act, 2019: The judgment refers to the complaint filed by the respondent under the Consumer Protection Act, 2019 before the District Consumer Dispute Redressal Commission. The court notes that the complaint was filed during the pendency of the moratorium proceedings under the IB Code. The significance lies in the conflict between consumer protection remedies and insolvency proceedings. The court ultimately prioritizes the IB Code, holding that the consumer complaint is not maintainable due to the moratorium and the approved resolution plan.