Facts: Anupam Dikshit, the Petitioner, filed a summary suit in 2017 for recovery of unpaid salaries and allowances from S. Kumars Nationwide Limited (Respondent No. 1). During the pendency of the suit, corporate insolvency resolution process (CIRP) was initiated against Respondent No. 1, and a moratorium was imposed. Subsequently, a liquidation order was passed. The Petitioner then sought to implead the Liquidator of Respondent No. 1 (Respondent No. 2) as a party defendant in the summary suit. The Trial Court dismissed the Chamber Summons seeking impleadment, holding that it lacked jurisdiction due to Section 63 of the Insolvency and Bankruptcy Code (IBC).
Procedural Posture: The Petitioner challenged the Trial Court's order dismissing the Chamber Summons before the Bombay High Court by way of a Writ Petition.
Issue: Did the Trial Court err in rejecting the Chamber Summons for impleadment of the Liquidator, holding that it lacked jurisdiction to try the suit due to Section 63 of the IBC, and whether Section 33(5) of the IBC bars the continuation of suits already instituted before the liquidation order?
Holding: Yes, the Trial Court erred in rejecting the Chamber Summons. Section 33(5) of the IBC does not bar the continuation of suits already instituted before the liquidation order. The bar under Section 63 of the IBC is not attracted to the present suit, which is for recovery of unpaid salary.
Reasoning: The High Court reasoned that Section 63 of the IBC bars the jurisdiction of Civil Courts only in respect of matters over which the NCLT or NCLAT has jurisdiction. A claim for unpaid salary cannot be adjudicated by the NCLT or NCLAT. Further, Section 33(5) of the IBC prohibits the institution of fresh suits after the liquidation order but does not prohibit the continuation of pending suits. The Court relied on judgments from the Kerala High Court in The Liquidator of the Corporate Debtor vs. The State of Kerala and Anr. and the Delhi High Court in Elecon Engineering Company Limited vs. Energo Engineering Projects Limited and others, which held that Section 33(5) does not apply to pending suits. The Court also noted that Section 35(1)(k) of the IBC empowers the liquidator to defend suits on behalf of the corporate debtor. The High Court clarified that Sections 38 to 42 of the IBC provide a mechanism for adjudication of claims before the Liquidator, but it is an option for the claimant and does not render a previously instituted suit non-maintainable. The court also clarified that Section 53 of the IBC only deals with the priority of debts and does not mean that wages beyond 24 months get obliterated.