Jotun India (P) Ltd. v. PSL Ltd.

INSOLVENCY AND BANKRUPTCY CODE, 2016

--Bar of jurisdiction --Appeal filed against non-restraining Adjudicating Authority from continuing with application under section 10 Issue of Company Court jurisdiction to grant injunction against proceedings before Adjudicating Authority --Company court did not have jurisdiction to stay proceedings before Adjudicating Authority in respect of revival or resolution issue--Though Company Judge had no jurisdiction to stay proceedings before Adjudicating Authority in respect of revival or resolution issue and there was also no bar on the Adjudicating Authority from proceeding with application under section 10 of the corporate debtor, therefore, the Company Judge rightly rejected request of the creditor of restraining the Adjudicating Authority from continuing with the application under section 10. --Creditor filed petition under sections 433 and 434 against corporate debtor, which was admitted by Single Judge. Consequently, the corporate debtor filed an application under section 10 for initiation of corporate insolvency resolution process. Therefore, the creditor made request to the Company Judge for appointment of a provisional liquidator and restrained Adjudicating Authority from continuing with the application under section 10. The Company Judge rejected the request of the creditor on the ground that there was no bar on the Adjudicating Authority from proceeding with the application under section 10 of the corporate debtor. Therefore, the creditor filed an appeal against the order on the ground that the Company Judge has jurisdiction to grant injunction against other proceedings, including proceedings before the Adjudicating Authority. Further that I&B Code, 2016 does not have primacy over Companies Act, 1956. Held: IBC, 2016 primarily purpose is to revive the company by having a resolution method. Whereas in the winding up petition pending before the Company Court, ultimate approach and object is to wind up the company. Even under the IBC, if efforts to revive the company fail, then liquidation proceedings get initiated under Chapter III of the IBC, 2016. Further that, no Civil Court shall have jurisdiction in respect of any matter in which the Adjudicating Authority is empowered under the Code to pass orders and no injunction shall be granted by any Court or other Authority in respect of any action taken or to be taken in pursuance of any orders passed by such Adjudicating Authority under the Code. Therefore, the Company Judge rightly held that it had no jurisdiction to stay the proceedings before the Adjudicating Authority in respect of revival or resolution issue and there was also no bar on the Adjudicating Authority from proceeding with the application under section 10 of the corporate debtor. Hence, the appeal was dismissed.