Kennigton Industries Pvt. Ltd. v. Spads Textiles Ltd.
2024-12-10
B.S.BHANUMATHI
body2024
DigiLaw.ai
JUDGMENT : 1. This revision petition is filed under Article 227 of the Constitution of India against the ad interim ex parte order, dated 21.04.2023, in IA No.40 of 2023 in OS No.54 of 2023 on the file of the Court of the Additional Junior Civil Judge, Jaggaiahpet, filed by the respondent herein/plaintiff under Order XXXIX, Rules 1 and 2 CPC, Sections 75, 94 and 151 CPC to grant interim injunction restraining the respondents/defendants/revision petitioners herein, their men etc., from interfering with the plaintiff's peaceful possession and enjoyment of the plaint schedule property to an extent of Acs.3.82 cents in RS No.87 with 25 staff quarters therein or by alienating the Western side factory lying in an extent of Acs.13.29 cents in RS No.86 situated at Ravikampadu Village, Jaggaiahpet Mandal, by lifting the machinery, stock-in-trade etc., therefrom until the division of entire property of Acs.17.11 cents is affected by metes and bounds and in any manner whatsoever. 2. This revision petition was filed mainly contending that the plaintiff is no longer a legal entity as it stood dissolved by the National Company Law Tribunal, Hyderabad Bench, Hyderabad ('NCLT') vide its order, dated 31.03.2023, with immediate effect and as such, the suit which was filed on 20.04.2023, is not maintainable in view of the prohibition under Sections 33(5) and 63 of the Insolvency and Bankruptcy Code, 2016 ('IBC'). 3. When the office of the Registry raised an objection about the maintainability of the revision petition, the revision petitioners placed reliance on the decisions in Radhe Shyam and others v. Chhabi Nath and others, MANU/SC/0200/2015; Todendula Venkata Krishnaiah v. Uppu Gangaiah, MANU/AP/0401/2003; Raj Shri Agarwal @ Ram Shri Agarwal and another v. Sudheer Mohan and others, 2022 Live Law (SC) 864; Timothy Ravinder Dev Pradeep v. Charles Samraj N. and others and the CSI Coimbatore Diocese v. Charles Samraj N. and others, MANU/TN/9795/2021 and Election Engineering Company Limited v. Energo Engineering Projects Limited and others, MANU/DE/3432/2022, in support of the contention that though an alternative remedy is available under law/CPC, the revision is not barred as the jurisdiction of the Trial Court is challenged on legal aspects and the impugned order was passed without having jurisdiction to entertain the suit. 4. On 19.04.2024, the registry was directed by this Court to number the case subject to maintainability. Accordingly, the revision petition was registered.
4. On 19.04.2024, the registry was directed by this Court to number the case subject to maintainability. Accordingly, the revision petition was registered. The respondent made appearance before this Court through an Advocate. 5. Heard Sri N. Subba Rao, the learned Senior Counsel for the revision petitioners assisted by Sri N. Jeevan Kumar and Sri Karthik Shah, learned Counsel representing Sri Jada Sravan Kumar, the learned Counsel for the respondent. 6. The learned Senior Counsel for the revision petitioners contended that the plaintiff company was dissolved by the NCLT on 31.03.2023 and though the plaintiff had knowledge of the same, had filed the suit on 20.04.2023 inspite of a bar to file suit under Sections 33(5) and 63 of the IBC. The learned Senior Counsel reiterated the answer given to the office objection at the time of registering the revision petition. 7. The learned Counsel for the respondent submitted that the property covered by the suit schedule property is not part of the property sold by the Official Liquidator, and therefore, the contention of the revision petitioners claiming title over the same as a purchaser of the property in the sale held by the Official Liquidator holds no water. He further submitted that since an alternative remedy of appeal under Order LXIII Rule 1(r) CPC is permitted against the order passed under Order XXXIX Rules 1 and 2 CPC, the revision petition ought not to have been filed and placed reliance on the decision of the Supreme Court in Mohammed Ali v. V. Jaya and others, 2022 Live Law (SC) 574. It was held at Para No.7 as follows : "7. At this stage, the decision of this Court in the case of Virudhunagar Hindu Nadargal Dharma Paribalana Sabai and others v. Tuticorin Educational Society and others, (2019) 9 SCC 538 , is required to be referred to. In the said decision, it is observed and held by this Court that wherever the proceedings are under the Code of Civil Procedure and the forum is the Civil Court, the availability of a remedy under Code of Civil Procedure, will deter the High Court and therefore, the High Court shall not entertain the revision under Article 227 of the Constitution of India especially in a case where a specific remedy of appeal is provided under the Code of Civil Procedure itself.
While holding so, it is observed and held in Paragraphs 11 to 13 as under : 11. Secondly, the High Court ought to have seen that when a remedy of appeal under Section 104(1)(i) read with Order 43 Rule 1(r) of the Code of Civil Procedure, 1908, was directly available, respondent Nos.1 and 2 ought to have taken recourse to the same. It is true that the availability of a remedy of appeal may not always be a bar for the exercise of supervisory jurisdiction of the High Court. In A. Venkatasubbiah Naidu v. S. Chellappan, (2000) 7 SCC 695 , this Court held that "though no hurdle can be put against the exercise of the constitutional powers of the High Court, it is a well-recognised principle which gained judicial recognition that the High Court should direct the party to avail himself of such remedies before he resorts to a constitutional remedy". 12. But Courts should always bear in mind a distinction between (i) cases where such alternative remedy is available before Civil Courts in terms of the provisions of Code of Civil Procedure, and (ii) cases where such alternative remedy is available under special enactments and/or statutory rules and the fora provided therein happen to be quasi-judicial authorities and Tribunals. In respect of cases falling under the first category, which may involve suits and other proceedings before Civil Courts, the availability of an appellate remedy in terms of the provisions of Code of Civil Procedure, may have to be construed as a near total bar. Otherwise, there is a danger that someone may challenge in a revision under Article 227, even a decree passed in a suit, on the same grounds on which respondent Nos.1 and 2 invoked the jurisdiction of the High Court. This is why, a 3-Members Bench of this Court, while overruling the decision in Surya Dev Rai v. Ram Chander Rai, (2003) 6 SCC 675 , pointed out in Radhey Shyam v. Chhabi Nath, (2015) 5 SCC 423 = (2015) 3 SCC (Civ.) 67, that "orders of Civil Court stand on different footing from the orders of authorities or Tribunals or Courts other than judicial/Civil Courts. 13.
13. Therefore wherever the proceedings are under the Code of Civil Procedure and the forum is the Civil Court, the availability of a remedy under the Code of Civil Procedure, will deter the High Court, not merely as a measure of self-imposed restriction, but as a matter of discipline and prudence, from exercising its power of superintendence under the Constitution. Hence, the High Court ought not to have entertained the revision under Article 227 especially in a case where a specific remedy of appeal is provided under the Code of Civil Procedure itself." 8. He further argued that the petitioner has to take recourse before the Trial Court to challenge the maintainability of the suit, but so far they have not preferred to take such step before the Trial Court even when they had an opportunity, and therefore, it cannot be decided in the revision petition filed against an order passed in an interlocutory application under Order XXXIX, Rules 1 & 2 CPC. 9. In reply, the learned Senior Counsel submitted that the decision relied on by the petitioners has no application to the present case as the maintainability of the suit was not an issue therein and further that the observations therein say existence of an alternative remedy is not a bar. 10. It is settled law that supervisory jurisdiction under Article 227 of the Constitution of India can be exercised to examine whether the Trial Court has jurisdiction or not, though not to examine the veracity of the order on merits on points of facts in dispute. As such, jurisdiction of the High Court is no way curtailed. 11. In the present case, the defendants have challenged the order passed in petition under Order XXXIX Rules 1 & 2 CPC not on the ground of merit based on facts and disputes relating to the rights of the parties. The sole and the main ground of challenging the order is based on the maintainability of the suit and consequently, the jurisdiction of the Trial Court to pass any order, including an interim order. Therefore, this Court is of the view that the jurisdiction of this Court under Article 227 of the Constitution of India is not barred to hear this revision petition. 12. Sections 33(5) and 63 of the IBC read as follows : 33.
Therefore, this Court is of the view that the jurisdiction of this Court under Article 227 of the Constitution of India is not barred to hear this revision petition. 12. Sections 33(5) and 63 of the IBC read as follows : 33. Initiation of liquidation.-(1) xx xx xx xx (2) xx xx xx xx (3) xx xx xx xx (4) xx xx xx xx (5) Subject to Section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor : Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. 63. Civil Court not to have jurisdiction.-No Civil Court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil Court not to have jurisdiction." 13. In Election Engineering Company Limited's case (supra), it was held at Para Nos.18 & 19 as follows : "18. The objective of the liquidation process is to derive the maximum value from the assets of the corporate debtor for the benefit of various creditors and other stakeholders in the company under liquidation. The objective is not the revival of the company. It is perhaps for this reason that unlike Chapter-II, no time limits have been provided in Chapter-III of the IBC. Therefore, Legislature in its wisdom has decided not to include 'pending suits or legal proceedings' within the scope of moratorium under Section 33(5) of the IBC. To be noted that even the proviso to Section 33(5) of the IBC only uses the word 'instituted', but does not use the word 'pending'. Further, in terms of the said proviso, even a fresh suit or legal proceedings may be instituted by the Liquidator with the prior approval of the Adjudicating Authority. So, unlike Section 14 of the IBC, under Section 33(5) of the IBC, there is no absolute bar in a suit or legal proceedings continuing alongwith the liquidation proceedings. 19.
Further, in terms of the said proviso, even a fresh suit or legal proceedings may be instituted by the Liquidator with the prior approval of the Adjudicating Authority. So, unlike Section 14 of the IBC, under Section 33(5) of the IBC, there is no absolute bar in a suit or legal proceedings continuing alongwith the liquidation proceedings. 19. It is vehemently contended on behalf of the Counsel for the Liquidator that in light of Sections 63 and 231 of the IBC, the jurisdiction of the civil Court is barred and therefore, the present suit cannot be continued as the claims made in the said suit fall within the jurisdiction of NCLT. Reliance is also placed on Section 60(5) of the IBC." 14. In view of the aforesaid settled legal position and the jurisdiction of the Civil Court curtailed by Sections 33(5) and 63 of IBC, this Court is of the view that the Trial Court ought not to have entertained the suit or proceed further when it had been informed of lack of jurisdiction in any further proceeding. The jurisdiction of the Civil Court under Order VII Rule 11 CPC can be exercised suo motu besides when the defendant invokes the relief therein. 15. Insofar as the maintainability of the suit in the light of Sections 33(5) and 63 of the IBC is concerned, the learned Counsel for the respondent has not disputed the legal proposition, however, contended that this is not the forum to agitate the same while challenging the order passed in an application under Order XXXIX Rules 1 & 2 CPC. 16. When the Civil Court has no jurisdiction by virtue of the above provisions, the authority of the Civil Court to pass any order goes to the root of the matter and lack of jurisdiction nullifies the order, if any, passed by such Court. Since the order impugned in the revision is not challenged or argued before this Court on merits of the rights of the parties, certainly, it can be said that the said order is illegal for lack of jurisdiction of the Trial Court to pass any order including this order. 17. In the result, the civil revision petition is allowed. Consequently, the order, dated 21.04.2023, in IA No.40 of 2023 in OS No.54 of 2023 on the file of the Court of the Additional Junior Civil Judge, Jaggaiahpet, is set aside. 18.
17. In the result, the civil revision petition is allowed. Consequently, the order, dated 21.04.2023, in IA No.40 of 2023 in OS No.54 of 2023 on the file of the Court of the Additional Junior Civil Judge, Jaggaiahpet, is set aside. 18. There shall be no order as to costs. 19. Miscellaneous petitions, if any, pending, shall stand closed.