CRP/3556/2023 of M/s. Cheekatla Plolymers Pvt. Ltd Vs S.Seshagiri Rao on 29 December 2023

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IN THE HIGH COURT FOR THE [STATE ][OF ][TELANGANA]AT HYDERABAD

FRIDAY THE TWENTY NINTH DAY [OF DECEMBER]TWO THOUSAND AND TWENTY THREE

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PRESENT

THE HONOURABLE SRI JUSTICE [T.VINOD KUMAR]

CIVIL REVISION PETITION NO: [3556 OF][ 2023]

Petition Under Atticle 227 constitution of [lndia ][against ][the ][Order ][dated]07-11-2023, in 1.A.362t2O23 [in ][O.S.100'l/2014 ][on ][the ][file ][of ][the ][Court ][of ][the ][Il]Additionat District and Sessions Judge [Medchal-Malkajgiri District at Medchal']Between:1. years, Mis. Cheekatla Plolymers Occ: Manaling Director Pvt. [Ltd, Ch. ]of 54 [N. ][years, ][Prasad, ].R/o [S/o ][Plot No. ][Rama ][Rao, ][24 ][and ][aged ][25,]-54Vignanapuri Colonr,-Behind Metro, [Kukatpally Municipality, ][Balanagar]Mandal, Ranga Reddy District.2. Ch. N. Prasad, S/o Rama Rao, [aged ][54 ][years, Occ: ][Managing ][Director ][of]Cheetla Polymers Pvt. Ltd., [R/o Plot No. 24 ][and ][25, ][Vignanapuri ][Cglony']-.1Behind Metio, Kukatpally Municipality, [Balanagar ][Mandal, Ranga ][Reddy]District.3. Chavakula Padmanaba Pradeep, [S/o. Veera Venkata Rao, ][Aged ][about ][27]years, Occ: Director of M/s. Cheekatla Polymers Pvt.Ltd, [F/o- ][H. ][N ][o..3!-2-6 ]'Chavakula Vari Street, lrr'tangalvari Peta, [Raiahmundry, ][East ][Godavari ][District.]...PETITIONERS/PETITIONERS/DEFENDANTSAND1. S.Seshagiri Rao, S/o. Late. Vasudeva Rao, Aged about 54 [years, ][Occ:]Business, Rl/o. Plot No.215, Telecom [Nagar, ]Gachibowli, [Hyderabad.]...RESPONDENT/RESPONDENT/PLAINTIFF2. Cheekatla Srinivas @ Bobby, S/o. Pullaiah Naidu, Aged about 45 [years, ]OccDirector of M/s. Eles Vinyl Pvt Ltd., Jeedimetla, [Plot No.12, ]Sai [Keerthi]Layout, Near Rajiv Gruhakalpa, Nizampet, Kukatpally, [Hyderabad.](R2 is not necessary party in this CRP)...RESPONDENTS/DEFENDANT No.4

lA NO: 1 OF 2023

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;.lrj:,,ftr --.trl,,;.'I:: ;{'-t:PetitionUnderSectionl5lCPCprayingthatinthecircumstancesstatedinthe affidavit [filed ][in support of the petition, ][the ][High ][Court may be ][pleased ][to ]-stay,iiirrtn"i [jroceedings ][in ][O.S.100i/2014 ][Dt: ][07-11-2023 ][on ][the ][file of ][the ll ][Addl']Oi.in"t a Sessions [J-udge ][Medchal-tr/alkajgiri ][District at Medchal ][pending disposal]of the main Revision.Counsel for [the ][Petitioners ][:SRl. RAMESH ][BABU ][PEDAPALLI]rrl',.'Counsel for the the [[Respondent ]][[No.1: SRI ][M' ][PHANI KUMAR]][[M' ][PHANI KUMAR]][[PHANI KUMAR]]!

Counsel for the the [[Respondent ]][[No.1: SRI ][M' ][PHANI KUMAR]][[M' ][PHANI KUMAR]][[PHANI KUMAR]]The Court made [the ][following:]

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.I'III] I{ON'BLE SRI JUSTICE T. VINOD KUMAR

CIVIL REVISION PETITION No.3556 of 2023

ORDEIT

l. 'l'his Civil Revision Petition is filed aggrieved by the orderdated 07. 1 1.2023 in I.A. No. 362 of 2023 in O.S. [No.100l ][of ][2014]by the II Additional District & Sessions Judge, at Medchal,Medclial Malkajgiri District, as being illegal and contrary to [settled]principlcs ol' law.

2. lleard learrred counsel for the petitioner, and [perused ]therecold 'ilrc 3. pctitioner's herein are the defendant's No. 1 to,4 in thesuit. [-l'lic- ]Rcspondent No.1 herein is the ptaintiff in the suit.

4. ['l'hc ]suit was filed seeking recovery of money ofRs.30,97,150/- and a consequential declaration that the plaintiff [is]not liablc to discharge the debt due to the [defendant ]No.7 by therevision petitioner No. l/Defendant No.1 [(company) ]herein.

5. At the stage of cross examination of PW-l, the [petitioners]

herein had filed the underlying application v/e I.A.No. 362 of2023 under Order 7 Rule 10 of the Code of Civil Procedure, 19082023 under Order 7 Rule 10 of the Code of Civil Procedure, 1908

(hereinafter referred to as 'the Code'), with a prayer to return thesuit for want ofjurisdiction on account of the establishing NationalCompany Law Tribunal (flor short 'NCLT'). The Resporrdcnt No. Iherein filed his counter opposing the same. The Court below aftersuit for want ofjurisdiction on account of the establishing NationalCompany Law Tribunal (flor short 'NCLT'). The Resporrdcnt No. Iherein filed his counter opposing the same. The Court below afterhearing both sides, dismissed the application. Aggricvcd by thesame the present revision is preferred.same the present revision is preferred.

6. Learned counsel for the petitioner contends that, thethe petitioner contends that, thepetitioner contends that, thecontends that, thethat, thetheimpugned order is emoneous as the Civil Court has no.iurisdictionto entertain suits in view of the formation of the NCI- I

Learned counsel for the petitioner contends that, thethe petitioner contends that, thepetitioner contends that, thecontends that, thethat, thethe

7. I have taken note of the contentions urged.

8. The Insolvency and Bankruptcy Code, 2016 (for sliort 'theCode,20l6') was enacted with an object to consolidatc and amendthe laws relating to re-organization and insolvency resolution ofcorporate persons, partnership firms and individuals in a timebound manner and to establish an Insolvency and tlankruptcyBoard of India, and for matters connected therewith or incidentalthereto. Section 60 (1) of the Code, 2016 states rhat theadjudicating authoritytnrelation to insolvency resolution andliquiclation for corporate persons shall be the NCLT. Sub section ,/:,

(3) thercol' states that any insolvency resolution process (IRP) orliquidation or bankruptcy proceedings of a corporate guarantor orpersonal guarantor pending in any court or tribunal shall standtranslclrcd ro the NCLT. Sub - section (5) thereof specifies thejurisdiction of the NCLT as under:

"(5 ) Nor\v itlrstanding anyhing to the contrary contained in any other law for thetinre bcing il lorce, the National Company Law Tribunal shall have [jurisdiction][o crrrcr rrrir or dispose ol- (a) irnl application or proceeding by or against the corporate debtor orcorp()rate personi (b) any claim made by or against the corporate debtor or corporatepelson, iucluding claims by or against any of its subsidiaries situated inlnrlia: lnd (c ) lrrr,i clLrestion of priorities or any question of law or facts, arising out ofor rr rclariorr to the insolvency resolution or liquidation proceedings oftlrc cor'polare debtor or corporate person under this Code."

From a rncaningful reading of Section 60 of the Code, 2016 it is understood that the NCLT has [jurisdiction ]to deal with anyapplications or proceedings by or against a corporate debtor orcolporatc person in relation to insolvencyorbankruptcyproceed illgs.

9. Scrction 3(8) of the Code,2016 defines corporate debtor as aperson who owes the company a debt.

10. In thc lacts at hand, a reading ofthe plaint elucidates that the respondcr.rL No.l herein is an erstwhile director of the petitioner

No.1 herein; and that he is claiming recovery [of ][money ][dr-rc ][to him]as profits and remuneration. The respondent [No. ]I [hercin ][lurther]pleads that he had neither stood as a surety/guaran [to ]l [rror ][had]advanced any loan to the petitioner No. i herein [ar.rd ][thrrs, ][the]respondent No.1 herein sought for a consequential [dcclaration ][that]he is not liable to pay the debt owed by the [petitionel ]No.l [herein]to the defendant No.7 in the suit 1 1 . While so, the petitioner No.l in its [written ][statement denied]the claim of the respondent No.l herein for [share ][in ][profits ][and]further remuneration. Notwithstanding the same, evetl [accordillg ][to]the petitioner No.1 herein the respondent No.l [had ]ncither [taken]responsibility of any collateral security to the [Delenrlant ][No.7-]However, the petitioner No. t herein alleges [that the ][lesporrdent]No.1 herein is liable for the loan transactions [pertaining ][to ][l-he ][year]2012 to which he had given personal [guarantee]

12. The above said pleadings [prima ]facie [show ][that ][thc fact ][of]the respondent No.l herein being liable [for ][any ][alleged ][loan]transactions entered into by the [petitioner ][No. ][I ][is ][dispr-rtcd. ][Further,]admittedty the suit was primarily filed for [recovery ][ol ][share in]

profrts. l;ur-ther, it is nobody's case that the dispute arises out [of ][the]CIRP process. Therefore, this Court [is ]of [the ][view ][that the ][Civil]Courl's [jtrrisdiction ]is not ousted by [virtue ]of [bar ][contained ][in]Section [(r3 ]of the Code,20l6.

13. ['I'hat ]apart it is trite law that NCLT [is ][not ][a ][debt ][collecting]

foruin (Sae: .S..S. Engineers Vs. Hindustan [Petroleum]Corporution Ltd. and Orst) [.]

14. l'lrcrcfore, this Court is of the [view ][that the order ][of ][the]Coult bclow does not sulfer lrom any [infirmity.]

I 5. Accordingly, the Civil Revision Petition [is dismissed.]

16. [(-'onscquently, ]miscellaneous [petitions pending ][if ][any ][shall]stand closcd. No orders as to cost.

SDI V.HARI [PRASAD]ASSISTANT[REGIS]SECTION [OFFICER]

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To,1. The ll Addl. [District and ][sessions ][Judge Medchal-Malkajgiri District ][at]Medchal.(With [records if ][anY)]

2. o;;aa tl sRl. [RnvesH ][BA'BU ][PEDAPALLI' Advocate ][[oPUCl]

5. O"" CC [to ][SRl. ][M. ][PHANI ][KUMAR, ][Advocate ][[OPUC]]

4. Two CD [CoPies]

DLW

NS

r 2022 SCC Onlinc SC 1385

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HIGH COURTDATEDizgl1212023

ORDERCRP.No.3556 ot [2023]

DISMISSING THE CRP

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