CIVIL APPEAL 4159 of 2012 on 31 December 2021

1. That the Closure of Samtel Color Limted,Parwanoo and Samtel Electron Devices(SCL and SED) would take place w.e.f.01.01.2013 and as such, all the benefits ofParwanoo and Samtel Electron Devices(SCL and SED) would take place w.e.f.01.01.2013 and as such, all the benefits of Closure under Section 25(0) of theIndustrial Disputes Act, 1947, will bemade available to the Workmen of boththe units (who were on muster roll ofCompany as on 01.12.2011), as perprovision of I.D. Act, 1947.

2. That the management of Samtel ColorLimited & Samtel Electron Devices (SCLand SED) agrees to pay all their statutorydues under the EPF and MP Act and1952, ESI Act, 1948, and will take alleffective steps in this regard to helpworkmen to claim their dues.Limited & Samtel Electron Devices (SCLand SED) agrees to pay all their statutorydues under the EPF and MP Act and1952, ESI Act, 1948, and will take alleffective steps in this regard to helpworkmen to claim their dues.

3. That the management of Samtel ColorLimited & Samtel Electron Devices (SCLand SED) agrees to pay outstandingwages workmen w.e.f. 01.12.2011 upto31.12.2012 along with the closure benefits.Limited & Samtel Electron Devices (SCLand SED) agrees to pay outstandingwages workmen w.e.f. 01.12.2011 upto31.12.2012 along with the closure benefits.

4. That the management of Samtel ColorLimited, Samtel Electron Devices (SCLand SED) and Samtel Workers Union,Parwanoo agrees to withdraw all the casesagainst each other pending in courts andtribunals once the settlement is finalized.However, the same will not be applicableto individual cases filed against eachother.Limited, Samtel Electron Devices (SCLand SED) and Samtel Workers Union,Parwanoo agrees to withdraw all the casesagainst each other pending in courts andtribunals once the settlement is finalized.However, the same will not be applicableto individual cases filed against eachother.

5. That the management of Samtel ColorLimited, Parwanoo & Samtel ElectronLimited, Parwanoo & Samtel Electron Devices (SCL and SED), Parwanoo furtheragrees to pay all the outstanding dues andclosure benefits as per section 25 O of IDAct 1947 to workmen on or before30.04.2013 and in case of any default,action will be taken against the occupier,as per law.

6. That the management of Samtel ColorLimited & Samtel Electron Devices (SCLand SED) agrees to pay outstandingamount of gratuity due as per Gratuity Act1972 along with the closure benefits.Limited & Samtel Electron Devices (SCLand SED) agrees to pay outstandingamount of gratuity due as per Gratuity Act1972 along with the closure benefits.

7. That it has agreed between the workmenand the management of Samtel ColorLimited & Samtel Electron Devices (SCLand SED) that the workers will have noobjection for selling of the industrialundertaking/company assets and it'sstock etc for payment of the closurebenefits and outstanding wages, gratuityand payment of banks loan.and the management of Samtel ColorLimited & Samtel Electron Devices (SCLand SED) that the workers will have noobjection for selling of the industrialundertaking/company assets and it'sstock etc for payment of the closurebenefits and outstanding wages, gratuityand payment of banks loan.

8. That the parties undertake to act in goodfaith with respect to each other's rightsunder this MOU and to adopt allreasonable measures to ensure therealization of the objective of this MOU."faith with respect to each other's rightsunder this MOU and to adopt allreasonable measures to ensure therealization of the objective of this MOU."

In view of the aforesaid settlement, this Court quashed the proceedings initiated by the Labour Inspector inthe Court of Judicial Magistrate 1[st] Class against theManagement, for not complying with the settlement and also,the order passed by the Labour Commissioner, dated 3[rd]November, 2012, was modified to the extent that the units ofthe Management located at Parwanoo shall be deemed tohave been closed with effect from 1[st] November, 2013. Thematter is since then pending with this Court for complianceof the aforesaid settlement. Several orders have thereafterbeen passed extending the time limit for compliance of thesettlement. In the meantime, the proceedings forreconstruction of the Company were initiated at the instanceof the Management before the Board for Industrial andFinancial Reconstruction (for short 'BIFR'). TheManagement sought permission from the BIFR to conductsale of the assets, but such permission was not granted. ThisCourt, on 8[th] May, 2014, adjourned the matter for four weeksso as to enable the respondent No. 8-Company/theManagement to do the needful. Thereafter, when the matterwas taken up on 28[th] July, 2014, respondent No.8-Companyinformed the Court that despite extension of time by thisCourt to comply with the order dated 18[th] December, 2012, compliance of the said order could not be made for the reasonthat the assets belonging to respondent No. 8-Company aresubject matter of the proceedings pending before the BIFR,which has already directed constitution of an Assets SalesCommittee. The ICICI Bank, being the lead Bank of theconsortium of banks, which have claims against respondentNo. 8-Company, is yet to take further action in the matter byway of constitution of such Committee in terms of the order ofthe BIFR. A prayer was, therefore, made that appropriatedirection be issued to ICICI Bank for constitution of suchCommittee. However, this Court observed that neither theBIFR nor ICICI Bank are party to the proceedings before thisCourt. This Court, therefore, deferred the proceedings byobserving that needful shall be done after obtainingnecessary orders from BIFR and assets be sold by theCommittee to be constituted by ICICI Bank.

4. When the matter was taken up on 25[th] August,2014, respondent No. 8-Company informed this Court that ithas moved an application before the BIFR for passingappropriate orders to satisfy the claim of the workmen. ThisCourt observed that “We hope and trust that the BIFR willprepone the matter and pass orders by or before 13[th] October,

2014.” Vide order, dated 13[th] October, 2014, this Courtdirected the impleadment of BIFR as party-respondent andfurther directed the BIFR to pass appropriate orders on orbefore 17[th] November, 2014. Respondent No. 8 was directedto remain personally present before the Court on the nextdate of hearing to explain their failure to comply with thedirections of the Court. Similar order was passed on 17[th]November, 2014 for their appearance before this Court on30[th] December, 2014, on which date respondent No. 8-Company did not comply the order and Managing Director ofrespondent No. 8-Company prayed for extension of time. Inthis manner, the matter was adjourned to different dates.When, however, the matter was taken up on 12[th] August,2015, on request of the Workers' Union, the Commissioner,Regional Provident Fund, Shimla was ordered to beimpleaded as party-respondent. It was thereafter that on 17[th]May, 2016, this Court was informed on behalf of the Workers'Union that the ICICI Bank is conducting the auction of theassets of the respondent No. 8-Company and the same bestayed. This Court, therefore, directed the impleadment ofICICI Bank Limited, ICICI Bank Tower, NBCC Place,Pragati Vihar, Bhishma Pitamah Marg, New Delhi, through its authorized representative as party-respondent No. 10 andissued notice to them. It was directed that respondent No.10-ICICI Bank would be at liberty to conduct the auction,but, shall not utilize or spend the bid amount till 12[th] July,2016, which was fixed as the next date of hearing. On thatday, the matter was adjourned to 3[rd] October, 2016.Thereafter, directions were passed on various dates forconducting the auction sale, but the sale was conducted andthis Court on 28[th] March, 2017, issued show cause notice torespondent No. 10-ICICI Bank to show cause as to whycontempt proceedings may not be initiated against them fornon-compliance of the orders passed by this Court. It wasthereafter that on 24[th] April, 2017, an affidavit dated 28[th]October, 2016 filed by the authorized signatory of M/s.Edelweiss Asset Reconstruction Company Limited was takennote of by the Court showing that the debt now standsassigned to that Company and therefore, the said Companywas ordered to be impleaded as party-respondent No. 11.

5. Even as the proceedings were pending before thisCourt, the Insolvency and Bankruptcy Code, 2016 (for short'the Code'), came to be enforced, which was published in theGazette of India on 28[th] May, 2016, and its different

provisions came to be enforced vide different notificationsissued by the Central Government on different dates. But,what is relevant for our purpose is that the Punjab NationalBank, the Financial Creditor, filed an application underSection 7 of the Code before the National Company LawTribunal, New Delhi, Principal Bench (for short 'the NCLT')with a prayer for triggering the insolvency resolution processin the matter of respondent No. 8-Company. The NCLT, videits order, dated 7[th] September, 2017, while recording itssatisfaction that the Financial Creditor has proved byoverwhelming evidence that default has occurred, admittedthe application and appointed Shri Sanjay Gupta as InterimResolution Professional and directed that publicannouncement in terms of Section 13 (2) of the Code shall beimmediately made by the Interim Resolution Professionalwith regard to admission of the application under Section 7 ofthe Code. The NCLT also declared moratorium in terms ofSection 14 of the Code. The relevant directions issued by theNCLT in para 23 of its order, dated 7[th] September, 2017, arereproduced hereunder:

“23. In pursuance of Section 13 (2) of Code, wedirect that public announcement shall beimmediately made by the interim Resolutiondirect that public announcement shall beimmediately made by the interim Resolution Professional with regard to admission of thisapplication under Section 7 of the Code. Wealso declare moratorium in terms of Section 14of the Code. A necessary consequence of themoratorium flows from the provisions ofSection 14 (1)(a), (b), (c) & (d) and thus thefollowing prohibitions are imposed; "(a) the institution of suits or continuation ofpending suits or proceedings against theRespondent no.-1 including execution of anyjudgment, decree or order in any court of law,tribunal, arbitration panel or other authority:

(b) transferring, encumbering, alienating ordisposing of by the Respondent no:-1 any of itsassets or any legal right or beneficial interesttherein,

(c) any action to foreclose, recover or enforceany security interest created by the Respondentno.-1 in respect of its property including anyaction under the Securitisation andReconstruction of Financial Assets andEnforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner orlessor where such property is occupied by or inthe possession of the Respondent no.-1."

6. The Interim Resolution Professional thereafter filed an application under Section 33 (2) of the Code before the NCLT for initiation of the liquidation process of theCorporate Debtor. The NCLT, vide order, dated 4[th] July,2018, granted the said application and declared that theCorporate Debtor be liquidated in the manner as laid down inChapter-III of the Code. The NCLT appointed Shri SanjayGupta as the Liquidator and required him to issue a publicnotice stating that the Corporate Debtor is in liquidation.The operative part of the order passed by the NCLT on 4[th]

July, 2018, is reproduced hereunder:

“Accordingly, we allow the application namelyC.A. No. 474(PB)/2018 and declare that theCorporate Debtor be liquidated in the manneras laid down in Chapter-III. A public noticestating that the Corporate Debtor is inliquidation shall be issued by the Liquidator. Acopy of this order be sent to the authorities withwhich the Corporate Debtor is registered.Subject to the provisions of Section 52 of theCode no suit or other legal proceedings ought tobe instituted by or against the CorporateDebtor. However, leave is granted to theLiquidator to institute any proceeding onbehalf of the Corporate Debtor with the priorapproval of the Adjudicating Authority NCLT.It is also clarified that the aforesaid conditionis not to apply to legal proceedings in relationto such transaction as may be notified by the Central Government in consultation with theFinancial Sector Regulator. It is furtherclarified that the order of liquidation beingpassed today shall be deemed to be a notice ofdischarge to the officers, employees and theworkmen of the Corporate Debtor. Accordingly,we direct the RP, Mr. Sanjay Gupta to act as aLiquidator. As a Liquidator he is to first paythe dues of insolvency resolution process costs ifany paid by the IRP or RP as per the provisionsof Regulation 53 of the Insolvency andBankruptcy Board of India (InsolvencyResolution Process for Corporate Persons)Regulation, 2016. The Liquidator so appointedshall perform all his duties as given in detailsin Section 55 of the Code and submit hisreports from time to time as per therequirement of the provisions of the Code,Regulations and the Rules.”

7. It was thereafter that an application (CMP No.7290 of 2018) was moved by respondent No. 8-Companyunder Order 1 Rule 10 of the Code of Civil Procedure (forshort 'CPC') in the present proceedings, seeking impleadmentof Shri Sanjay Gupta, Liquidator, as necessary and properparty, who was appointed as Liquidator under Section 33 (2)of the Code, by the NCLT, vide order dated 4[th] July, 2018.This Court, instead of impleading Shri Sanjay Gupta as party-respondent, directed the Registry to inform him that noproceedings were being initiated against him, but, only hisassistance was sought for giving effect to the object of Section53 of the Code, for which the NCLT has also issued thedirection vide order dated 4[th] July, 2018. He was required topersonally appear before this Court. One Shri VipulDharmani, Advocate, appeared on his behalf before thisCourt on 8[th] April, 2019 and sought time to seek instructions.The matter was ordered to be posted on 15[th] May, 2019, onwhich date, Shri Vipul Dharmani submitted that neither anypower of attorney has been given to him by Shri SanjayGupta nor has he been given any other instruction in thematter. In those circumstances, this Court passed thefollowing order:

“xxx xxx xxx

“xxx xxx xxx

On the previous date of hearing i.e. 8thApril, 2019, Mr. Vipul Dharmani, learnedCounsel, put in appearance on behalf of Mr.Sanjay Gupta Today, he states that neither anyPower of Attorney has been given to him norMr. Sanjay Gupta has given any instructionsin the matter. We do not appreciate the nonappearance of Mr. Sanjay Gupta despite thereasons recorded in our order dated 4"December, 2018, as to why his presence was required.

In these circumstances, we restrain Mr.Sanjay Gupta or any other authorizedrepresentative from alienating the assets of M/sSamtel Color Ltd. And Samtel Electron DevicesLtd. (respondent No.8). We also restrain himfrom disbursing the sale proceeds, if any,received upon auctioning of the assets of theCompany He is directed to remain present inCourt either in person or through Counsel onthe next date of hearing.”

8. Shri Sanjay Gupta, the Liquidator, finally appeared before this Court on 15[th] July, 2019 and informedthat some of the assets of the Company were sold for 42₹crores and part of the money was paid to the FinancialCreditors and balance distributed amongst the workers fromGaziabad factory of respondent No. 8-Company, whoapproached the Resolution Professional, but none of theworkers from Parwanoo Unit has been paid any money asthey neither approached the NCLT nor the ResolutionProfessional. This Court on that date passed the followingorder:

For the purpose of resolving the dispute now onhand, the following order is passed:

(i) The learned Senior Counsel for theWorkmen shall file a tabulation on thenext date of hearing High Thistabulation shall contain the names ofeach of the Workmen whom herepresents and who were on the rolls ofthe Company as on 31.12.2012,number of years of service that theyclaim to have rendered, the last drawnwages of each one of them, the amountpayable to them and the accountnumbers and bank into which themoney shall be remitted.Workmen shall file a tabulation on thenext date of hearing High Thistabulation shall contain the names ofeach of the Workmen whom herepresents and who were on the rolls ofthe Company as on 31.12.2012,number of years of service that theyclaim to have rendered, the last drawnwages of each one of them, the amountpayable to them and the accountnumbers and bank into which themoney shall be remitted.

(ii) The Resolution Professional shall alsofile a tabulation containing the detailsof the assets sold, the amount forwhich the assets were sold, the partiesto whom money were distributed andthe cash/deposit. He shall also furnishthe details of the property availablewith him to be brought to sale. file a tabulation containing the detailsof the assets sold, the amount forwhich the assets were sold, the partiesto whom money were distributed andthe cash/deposit. He shall also furnishthe details of the property availablewith him to be brought to sale.

(iii) The tabulation by the Workmen aswell as by the Resolution Professionalshall be filed before this Court withintwo weeks.”well as by the Resolution Professionalshall be filed before this Court withintwo weeks.”

9. Thereafter, when the matter was taken up on 5[th]August, 2019, the Court was informed that the Workers'Union has filed a tabulation and similarly, the Resolution Professional has also filed a tabulation, containing details ofthe assets sold, the amount so far distributed and the balancelying with him. The Resolution Professional (Liquidator) wasdirected to verify the correctness of the claim made by theworkmen in the tabulation filed by them alongwith CMP No.7241 of 2019 and file his response within a period of oneweek.

10. In the meantime, the NCLT passed an order on7[th] June, 2019, on the application moved by the workmen ofGaziabad, who prayed for a direction to the Liquidator totake into account the whole amount of their dues and in thealternative, direct the Liquidator to distribute the workmen'sprovisional admitted dues in the ratio of 50:50 for full periodof 24 months. Another application was filed by theseworkmen for a direction to the Liquidator to rectify themistake in the computation of gratuity and make necessaryamendments to the admission of final claim dated 15[th]September, 2018. The correctness of the wages quantified bythe workmen was disputed by the Liquidator and certainorders were passed by the NCLT with regard to the paymentthereof. The Liquidator submitted before the NCLT that atotal sum of 33,44,00,000/- was received from the auction₹

purchasers of the property till 29[th] November, 2018 and out oftotal amount, a sum of 26,99,37,893/- has been disbursed₹amongst 959 workmen and 19 financial creditors. TheLiquidator also filed their details by asserting that transfer offunds was initiated for 1090 stakeholders, out of which 117failed on account of incorrect bank details. It was submittedby him that he has filed reply to Application No. 1193/18,wherein its decision under Section 42 of the Code has beenchallenged. It was submitted therein that the CorporateDebtor-Company was incorporated on 15[th] May, 1986 havingits industrial units at four locations, namely, Chappraula(Gaziabad), Kota (Rajasthan), Meerut Road Gaziabad andParwanoo (Himachal Pradesh). However, the Companyceased its operation in December, 2012; Corporate InsolvencyResolution Process was initiated on 7[th] September, 2017 andliquidation order under Section 33 of the Code was passed on4[th] July, 2019.

11. It may be pertinent to mention here that claim ofa sum of ₹ 8.04 crores in respect of 214 workmen wasadmitted by the Liquidator, who, on 12[th] September, 2018,issued a Final Admittance Letter. Another Final AdmittanceLetter was issued on 15[th] September, 2018 after receipt of

four more claims. Thus, a total claim of ₹ 9.91 crores inrespect of 218 workmen has been calculated. The arrears ofwages of workmen for the period of 24 months preceding theliquidation commencement; the arrears towards gratuity forthe period from the date of joining till the liquidationcommencement date and the arrears of bonus for a period oftwo years preceding the liquidation commencement date havebeen admitted. All the claims received by the Liquidatorwere admitted and the amount disbursed under Section 53(1) (b) of the Code on the basis of recovery from theliquidation estate parri passu with the secured creditors. Asper the scheme of Section 53 of the Code, workmen's dues forthe period of 24 months preceding the liquidationcommencement date is ranked on priority equally with thesecured creditors. The NCLT referred to its earlier order,dated 19[th] March, 2019, passed in CA No. 19 (PB)/2019 in thematter of Alchemist Asset Reconstruction Co. Ltd. vs. MoserBaer India Limited (CP No. (IB)-378(PB)/2017), wherein itwas held that workmen's dues under Clause (iv) of Section326 of the Companies Act, 2013, would not form part ofliquidation estate, as has been provided by Section 36(4)(a)(iii) of the Code. The application was finally disposed of by the NCLT, vide order, dated 7[th] June, 2019, with thefollowing directions:

“24. In view of the aforesaid discussion, theapplications are disposed of as under:

i) The liquidator is directed to proceed with thedistribution of the workmen's due inaccordance with the provisions of Section 53(1)(b) (i) by ranking it equally between andamongst the workmen and the secured creditorsin the events such secured creditors hasrelinquished security in the manner set out inSection 52 of the Code. The course to be adoptedwith distribution of proceed of liquidation hasbeen fully described in Regulation 41 and 42 ofthe Code and the same shall be followedstrictly.

ii.) The application of the workmen asking toaccept the workmen's due in Toto would not beacceptable as it is parri passu and would rankequally between and amongst the workmen andthe debts ought to secured creditors in theevents such secured creditors has relinquishedsecurity in the manner set out in Section 52 ofthe Code.

iii.) The liquidator shall revisit the calculationmade by in the amount of claim admitted on17.09.2018 under the caption Final Admissionof Claim' by applying the aforesaid principles or any other similar final admission of claimdecision.

iv.) The amount of employee's provident fund,pension fund and gratuity funds etc. shall notconstitute part of liquidation estate as per theprovisions of Section 36(4)(a) () of the Code andthe same be calculated by the liquidatorkeeping in view the principal laid down in thecase of Alchemist Asset Reconstruction Co. Ltd(supra).

The applications are disposed of in the aboveterms.”

12. Against the backdrop of all the afore-narratedfacts, the Liquidator, on 29[th] July, 2019 filed an application(CMP No. 7227 of 2019) under Section 151 CPC seekingvacation of the restraint order passed by this Court on 15[th]May, 2019. When the matter was taken up by the Court on16[th] November, 2021, it was argued by Mr. Neeraj Gupta,learned Senior Counsel appearing for respondent No. 10-ICICI Bank and respondent No. 11-M/s. Edelweiss AssetReconstruction Company Ltd., that with the liquidation orderhaving been passed by the NCLT on 7[th] September, 2017 andwith the appointment of Shri Sanjay Gupta as Liquidator on4[th] July, 2018, this Court has ceased to have jurisdiction inthe present matter. It was also informed that the Resolution

Professional has filed a Special Leave Petition before theSupreme Court against the orders passed by this Court on15[th] May, 2019 and 6[th] March, 2020, and the matter was fixedbefore the Supreme Court on 22[nd] November, 2021. On therequest of the parties, the matter was adjourned to 7[th]December, 2021, and thereafter to 21[st] December, 2021. Thisis how the matter has been listed today.

13. We have heard Mr. Sanjeev Bhushan, learnedSenior Counsel representing the Workers' Union; Mr. G.C.Gupta, learned Senior Counsel representing the Liquidatorand Mr. Neeraj Gupta, learned Senior Counsel representingrespondent No. 10-ICICI Bank and respondent No. 11-M/s.Edelweiss Asset Reconstruction Company Ltd.

14. Mr. G.C. Gupta, learned Senior Counselrepresenting the Liquidator, contended that though thematter before the Supreme Court is still pending, but merependency of SLP may not be an impediment for this Court fordeciding the application filed by the Liquidator seekingvacation of the restraint order passed on 15[th] May, 2019. Hefurther contended that on account of the aforesaid restraintorder, the entire liquidation proceedings and theconsequential reconstructionof the assets of the Company under liquidation has come to stand still. Mr. Neeraj Gupta,learned Senior counsel appearing for respondent No. 10-ICICI Bank and respondent No. 11-M/s. Edelweiss AssetReconstruction Company Ltd., has also supported him inmaking this argument. Mr. G.C. Gupta, learned SeniorCounsel, argued that under Section 60 (1) of the Code, theNCLT, having the territorial jurisdiction over the placewhere the registered office of the corporate person is located,shall be the Adjudicating Authority in relation to theinsolvency resolution and liquidation of corporate debtor.The present claim of the workmen against the creditors isbased on the settlement arrived at before this Court on 18thDecember, 2012, yet it has to be adjudicated by the NCLT inthe same manner in which the claim of the other debtors is tobe adjudicated, particularly, when this period falls outside 24months, as envisaged in Section 53(1)(b)(i) of the Code.

15. Mr. G.C. Gupta, learned Senior Counsel invitedattention of this Court towards Section 33 (5) of the Code toargue that subject to Section 52, when a liquidation order hasbeen passed, no suit or other legal proceeding shall beinstituted by or against the corporate debtor except with theprior approval of the Adjudicating Authority. The learned

Arguments

Senior Counsel also relied upon Section 231 of the Codewhich provides that no Civil Court shall have jurisdiction inrespect of any matter in which the Adjudicating Authority orthe Board is empowered by or under this Code to pass anyorder and no injunction shall be granted by any Court orother Authority in respect of any action to be taken inpursuance of any order passed by such AdjudicatingAuthority or Board. Attention of this Court is also invited toSection 238 of the Code, which provides that the provisions ofthe Code shall have effect, notwithstanding anything,inconsistent therewith contained in any other law for thetime being in force or any instrument having effect by virtueof any such law. Argument is that the provisions of the Codewould have overriding effect over the provisions of any otherlaw, on account of which the present proceedings are notmaintainable.

16. Mr. G.C. Gupta, learned Senior Counsel,submitted that under the provisions of Section 53(1)(b)(i) ofthe Code, only such dues of the workmen are liable to be paidwhich fall within the period of 24 months preceding the dateof commencement of liquidation. In this case, the Liquidatorhas been appointed by the NCLT on 4[th] July, 2018. It is for the Liquidator to distribute the sale proceeds as per thepriorities mentioned in Section 53(1)(b)(i) of the Code. It isargued that some of the workmen have already movedapplication before the NCLT, which firstly restrained theLiquidator from making any disbursement vide order, dated30[th] November, 2018 and finally disposed of their applicationvide order, dated 7[th] June, 2019, directing the Liquidator toproceed with the distribution of the dues to the workmen asper provisions of Section 53(1)(b)(i) of the Code. It is arguedthat even in respect of such workmen, the retrenchmentcompensation and leave encashment have not been admittedby the Liquidator on account of the fact that the plant of theCorporate Debtor was not functional since 2012 and noworker was working for the Corporate Debtor after the saidperiod. Further, that even the components, which have beenadmitted by the Liquidator, are to be paid parri passu withthe dues owed to the secured creditors, who haverelinquished their security in the manner set out in Section52 of the Code. It is next argued that since the informationavailable with the Liquidator is limited, in suchcircumstances, it is not possible for him to verify thegenuineness of the claim of the workmen from any source other than the documents received from them. Such exercisemay lead to an improper admittance of claims, which mayeither be lower or higher in amount than the amount actuallypayable to such workmen. It is further argued that under theInsolvency and Bankruptcy Board of India (LiquidationProcess) Regulations, 2016, there are specific forms forsubmission of Claim to the Liquidator alongwith thestipulated time-line, i.e. Form A accompanied by affidavit,which has not been complied with by the workmen or theirUnion in the present case.

17. Mr. G.C. Gupta, learned Senior Counsel,submitted that on account of the order passed by this Courton 15[th] May, 2019, the Liquidator has been restrained fromalienating the assets of the Company in liquidation andfurther restrained from disbursing the sale proceeds hereceived upon auctioning of the assets of the Company. TheLiquidator, appointed by the NCLT vide order, dated 4[th] July,2018, has certain statutory duties to perform after followingthe law. He has to determine the claim of variousstakeholders. He has meticulously followed the law and uponreceiving the claim of various stakeholders, has submittedthe list of the claims of the stakeholders to the NCLT after verification. While certain assets were auctioned by theLiquidator on 23[rd] October, 2018 and sale proceeds receivedtherefrom distributed to the stakeholders as per thearrangement mentioned in Section 53 of the Code, somefunds are still lying with him, pending distribution betweenthe secured creditors, including the workers, as per the law.The learned Senior Counsel, therefore, submitted that therestraint order passed by this Court should be vacated.

18. Mr. Sanjeev Bhushan, learned Senior Counselappearing for the Workers' Union, has submitted that theclaim of the workmen working in the factory of respondentNo. 8-Company at Parwanoo has already been admitted byrespondent No. 8-Company following the settlement arrivedat between them before this Court on 18[th] December, 2012.Respondent No. 8-Company cannot be allowed to wriggle outof the admitted claims now by taking shelter of the orderspassed by the NCLT directing liquidation of the Companyand appointing Liquidator. It is submitted that thejurisdiction of this Court cannot be ousted even on conjointreading of Sections 33(5), 231 and 238 of the Code, which onlybars the jurisdiction of the Civil Courts and not of this Courtas this Court is a Constitutional Court. Even if Section 231

of the Code is read independently, it merely provides that noCivil Court shall have jurisdiction in respect of any matter inwhich the Adjudicating Authority or the Board is empoweredby or under this Code to pass any order and no injunctionshall be granted by any Court or other Authority in respect ofany action to be taken in pursuance of any order passed bysuch Adjudicating Authority or the Board under this Code.Argument is that the phraseology “No Civil Court” would notinclude the High Court, which is a Constitutional Court and,therefore, the bar contained therein would not be applicableto this Court. Learned Senior Counsel submitted that themere fact that Section 238 of the Code has given overridingeffect to the provisions of the Code or any other law, cannotbe an impediment for this Court to seek compliance of itsorder based on the settlement arrived at between the parties.

19. Referring to sub-Section (5) of Section 33 of theCode, the learned Senior Counsel has submitted that all thathas been stated therein is that subject to Section 52, when aliquidation order has been passed, no such suit or legalproceedings shall be instituted by or against the CorporateDebtor, but, even in that, an exception has been carved outthat such legal proceedings may be instituted with the prior approval of the Adjudicating Authority. This provision,therefore, according to him, cannot be taken as mandatory.

20. We have given our anxious consideration to therival submissions and perused the material on record.

21. The Insolvency and Bankruptcy Code, 2016enacted by Parliament provides for complete mechanism forreorganization and insolvency resolution of the corporatepersons in a time bound manner for maximization of value ofassets in order to promote entrepreneurship, availability ofcredit and balance the interests of all the stakeholdersincluding alteration in the order of priority of payment ofGovernment dues. Section 7 of the Code provides that afinancial creditor either by itself or jointly with otherfinancial creditors, may file an application for initiatingcorporate insolvency resolution process against a corporatedebtor before the Adjudicating Authority when a default hasoccurred. Sub-section (4) of Section 7 provides that theAdjudicating Authority shall, within fourteen days of thereceipt of the application under sub-section (2), ascertain theexistence of default from the records of an information utilityor on the basis of other evidence furnished by the financialcreditor. Sub-section (5) of Section 7 provides that where the Adjudicating Authority is satisfied that a default hasoccurred and the application filed by the financial creditor iscomplete, and there is no disciplinary proceeding pendingagainst the proposed resolution professional, it may, by order,admit such application. Sub-section (6) of Section 7 providesthat the corporate insolvency resolution process shallcommence from the date of admission of the applicationunder sub-section (5). Sub-section (7) of Section 7 requiresthe Adjudicating Authority to communicate the order undersub-section (5)(a) to the financial creditor and the corporatedebtor and the order under sub-section (5)(b) to the financialcreditor, within seven days of admission of the application.Section 13 of the Code provides that the AdjudicatingAuthority, after admission of the application under Section 7by an order (a) declare a moratorium for the purposesreferred to in section 14; (b) cause a public announcement ofthe initiation of corporate insolvency resolution process andcall for the submission of claims under Section 15; and (c)appoint an interim resolution professional in the manner aslaid down in Section 16. It is thereafter that Section 14(1) ofthe Code provides that subject to the provisions of sub-sections (2) and (3) thereof, on the insolvency commencement date, the Adjudicating Authority shall by order declaremoratorium for prohibiting all kind of proceedings in a suit,execution of any judgment, decree or order, which may havethe effect of transferring, encumbering, alienating ordisposing off the assets or any legal right or beneficialinterest therein of any corporate debtor.

22. Apart from the fact that upon declaration ofmoratorium under Section 14 of the Code by the AdjudicatingAuthority from the date of commencement of the corporateinsolvency resolution, the institution of suits or continuationof pending suits or proceedings against the corporate debtorincluding execution of any judgment, decree or order in anycourt of law, tribunal, arbitration panel or any otherauthority shall be prohibited, Section 33(5) of the Codeprovides that subject to Section 52, when a liquidation orderhas been passed, no suit or other legal proceeding shall beinstituted by or against the corporate debtor. Section 60(1) ofthe Code provides that the Adjudicating Authority, inrelation to insolvency resolution and liquidation for corporatepersons including corporate debtors and personal guarantorsthereof shall be the National Company Law Tribunal havingterritorial jurisdiction over the place where the registered office of the corporate person is located, thus, confining thejurisdiction to the Adjudicating Authority having territorialjurisdiction in the matter. Section 63 of the Code, inter alia,provides that “no civil court or authority shall havejurisdiction to entertain any suit or proceedings in respect ofany matter on which National Company Law Tribunal or theNational Company Law Appellate Tribunal has jurisdictionunder this Code”. Section 231 of the Code bars thejurisdiction of any Civil Court to entertain any matter andpass any order or injunction in respect of any action taken orought to be taken in pursuance of any order passed by theAdjudicating Authority. Section 238 of the Code also containsthe non-obstante clause and provides that the provisions ofthis Code shall have effect, notwithstanding anythinginconsistent therewith contained in any other law for thetime being in force or any instrument having effect by virtueof any such law.

23. Section 52(1) of the Code provides that (1) Asecured creditor in the liquidation proceedings may (a)relinquish its security interest to the liquidation estate andreceive proceeds from the sale of assets by the liquidator inthe manner specified in Section 53; or (b) realise its security interest in the manner specified in that Section and in thatevent, according to sub-section(2) thereof, he shall inform theliquidator of such security interest and identify the assetsubject to such security interest to be realized. Section 53 ofthe Code has provided for the order of priority, the period andmanner in which the proceeds from the sale of liquidationassets shall be distributed. This Section begins with non-obstante clause which gives overriding effect to it over anylaw enacted by the Parliament and any other StateLegislature. It is deemed appropriate to reproduce Section 53of the Code hereunder:- “53. (1) Notwithstanding anything to thecontrary contained in any law enacted by theParliament or any State Legislature for thetime being in force, the proceeds from the sale ofthe liquidation assets shall be distributed inthe following order of priority and within suchperiod and in such manner as may be specified,namely :—

(a) the insolvency resolution process costs andthe liquidation costs paid in full; (b) the following debts which shall rankequally between and among the following :—

(i) workmen's dues for the period oftwenty- four months preceding theliquidation commencement date; and

(ii) debts owed to a secured creditor inthe event such secured creditor hasrelinquished security in the manner setout in section 52;

(c) wages and any unpaid dues owed toemployees other than workmen for the periodof twelve months preceding the liquidationcommencement date; (d) financial debts owed to unsecuredcreditors;creditors; (e) the following dues shall rank equallybetween and among the following:—between and among the following:—

(i) any amount due to the CentralGovernment and the State Governmentincluding the amount to be received onaccount of the Consolidated Fund of Indiaand the Consolidated Fund of a State, ifany, in respect of the whole or any part ofthe period of two years preceding theliquidation commencement date;Government and the State Governmentincluding the amount to be received onaccount of the Consolidated Fund of Indiaand the Consolidated Fund of a State, ifany, in respect of the whole or any part ofthe period of two years preceding theliquidation commencement date;

(ii) debts owed to a secured creditor forany amount unpaid following theenforcement of security interest;any amount unpaid following theenforcement of security interest; (f) any remaining debts and dues; (g) preference shareholders, if any; and (h) equity shareholders or partners, as thecase may be.

(2) Any contractual arrangements betweenrecipients under sub-section (1) with equalranking, if disrupting the order of priorityunder that sub-section shall be disregarded bythe liquidator.

(3) The fees payable to the liquidator shallbe deducted proportionately from the proceedspayable to each class of recipients under sub-section (1), and the proceeds to the relevantrecipient shall be distributed after suchdeduction.”

The order of priority that has been provided in Section 53 ofthe Code has placed the workmen’s dues for the period of 24months preceding the liquidation commencement date nextonly to the insolvency resolution process costs or theliquidation costs. The unpaid wages in the present case,agreed to be paid by the Management of the corporate debtorherein, in terms of the settlement arrived at before this Courtwith the Workers' Union on 18[th] December, 2012, wouldadmittedly not fall within that period of 24 months.

24. The issue involved in the present case wasdirectly dealt with by the Supreme Court in AnandraoKorada, Resolution Professional vs. Varsha Fabrics PrivateLimited and others, (2020) 14 SCC 198. In the appeal before

the Supreme Court, Hirakud Industrial Workers Union-respondent No.13 filed a writ petition before the Odisha HighCourt praying, inter alia, for the cancellation of sharepurchase agreement executed between M/s Varsha FabricsPvt. Ltd.-respondent No.1, India Finance Ltd.-respondentNo.2, Mudrika Commercial Pvt. Ltd.-respondent No.3,Hirakud Industrial Works Ltd.-respondent No.4 andIndustrial Development Corporation of Orissa Ltd.-respondent No. 5, which divested its 100% shareholding inHirakud Industrial Works Ltd.-respondent No.4 in favour ofMudrika Commercial Pvt. Ltd.-respondent No.3 and HirakudIndustrial Works Ltd.-respondent No.4. Consequently,Hirakud Industrial Works Ltd.-respondent No.4 shut down itsfactory on 8[th] May, 2007. Hirakud Industrial Workers Union-respondent No.13 filed another writ petition before theOdisha High Court for payment of their dues. The HighCourt vide its order dated 14[th] March, 2012, directed theDeputy Labour Commissioner, Sambalpur Division to recoverthe workmen’s dues by sale of assets of Hirakud IndustrialWorks Ltd-respondent No.4 through a public auction. Theseproceedings culminated in the order dated 3[rd] August, 2015,passed by the Supreme Court, wherein it was directed that the issue of quantifying the compensation payable to theworkmen should be determined by the Labour Court and thatif respondents No.1 to 3 fail to make the payment ofcompensation to the workmen, the assets of respondent No.4-Company would be sold through public auction and theproceeds would be used for disbursement of the arrears of theworkmen. The Labour Court, Sambalpur vide order dated11[th] November, 2016 quantified the amount payable to theworkmen as ₹ 45,66,67,133/-. The High Court vide orderdated 12[th] January, 2017 directed the Deputy LabourCommissioner, Sambalpur Division to sell a parcel ofrespondent No.4’s land admeasuring 157.27 acres to theHirakud Dam Project. On receipt of the sale proceeds of₹ 10,04,12,105/- from the Government of Orissa, this amountwas disbursed towards the arrears of the workmen’s dues.During the pendency of the proceedings before the HighCourt, M/s Nandakini Contractors Pvt. Ltd., a financialcreditor, filed a petition under Section 7 of the Code before theNational Company Law Tribunal, Cuttack Bench forinitiation of the Corporate Insolvency Resolution Processagainst the Corporate Debtor, respondent No.4-Companysince it had committed a default in paying the financial debt

of ₹ 24,11,975/-. The NCLT vide order dated 4[th] June, 2019admitted the insolvency petition and declared a moratoriumin accordance with the provisions of Sections 13 and 15 of theCode. The moratorium was declared for the purpose referredto in Section 14 of the Code. The appellant before theSupreme Court was appointed as the Insolvency ResolutionProfessional. During the pendency of the moratorium, WritPetition (Civil) No.7939 of 2011 was posted for hearing beforethe Odisha High Court on 14[th] August, 2019. The AdditionalGovernment Advocate appearing for the State submitted thatthe valuation of the land in Mouza Tara Nagar owned byrespondent No.4 was ₹ 6,05,000/- per acre. The High Courtdirected the Additional Government Advocate to file anaffidavit with respect to the valuation conducted. The HighCourt by its further order dated 5[th] September, 2019 recordedthe submission of the appellant that there were othercompanies which had expressed an interest to participate inthe public auction. The matter was posted for further hearingon 17[th] September, 2019.

25. In the above matter, the appellant-ResolutionProfessional filed appeals challenging the interim ordersdated 14[th] August, 2019 and 5[th] September, 2019 passed by the Odisha High Court on the ground that since theCorporate Insolvency Resolution Process against respondentNo.4 had commenced, the proceedings before the High Courtin WP (Civil) No.7939 of 2011 ought to be stayed. TheSupreme Court against the backdrop of the aforementionedfacts held that that Section 14 provides that on the insolvencycommencement date, the Adjudicating Authority shall, byorder, declare a moratorium prohibiting the institution ofsuits, or continuation of pending suits or “proceedings”against the corporate debtor, including execution of anyjudgment, decree, or order in any court of law, tribunal,arbitration panel, or any other authority. Section 238 gives anoverriding effect to the Code over all other laws. Theprovisions of the Code vest exclusive jurisdiction on NCLTand NCLAT to deal with all issues pertaining to theinsolvency process of a corporate debtor, and the mode andmanner of disposal of its assets. Section 231 of the Code barsthe jurisdiction of civil courts in respect of any matter inwhich the Adjudicating Authority i.e. NCLT or NCLAT isempowered by the Code to pass any order. The SupremeCourt held that in view of the provisions of the Code, the HighCourt ought not to have proceeded with the auction of the property of the corporate debtor. The moratorium havingbeen declared by the NCLT, the High Court was not justifiedin passing the orders for carrying out auction of the assets ofrespondent No.4 company i.e. the corporate debtor beforeNCLT. It was held that if the assets of respondent No.4company are alienated during the pendency of theproceedings under the Code, it will seriously jeopardize theinterest of all the stakeholders. Accordingly, the SupremeCourt set aside the orders passed by the High Court byobserving that parallel proceedings with respect to the mainissue cannot take place in the High Court. The relevantdiscussion made by the Supreme court is to be found in paras11 to 14 of the judgment, which for the facility of reference are reproduced hereunder:-

“11. In view of the provisions of the IBC, theHigh Court ought not to have proceeded withthe auction of the property of the CorporateDebtor – Respondent No. 4 herein, once theproceedings under the IBC had commenced,and an Order declaring moratorium waspassed by the NCLT. The High Court passedthe impugned Interim Orders dated 14.08.2019and 05.09.2019 after the CIRP had commencedin this case. High Court ought not to have proceeded withthe auction of the property of the CorporateDebtor – Respondent No. 4 herein, once theproceedings under the IBC had commenced,and an Order declaring moratorium waspassed by the NCLT. The High Court passedthe impugned Interim Orders dated 14.08.2019and 05.09.2019 after the CIRP had commencedin this case.

12. The moratorium having been declared bythe NCLT on 04.06.2019, the High Court wasnot justified in passing the Orders dated14.08.2019 and 05.09.2019 for carrying outauction of the assets of the Respondent No. 4–Company i.e. the Corporate Debtor before theNCLT. The subject matter of the auctionproceedings before the High Court is a vastchunk of land admeasuring about 330 acres,including Railway lines and buildings.

13. If the assets of the Respondent No. 4Company are alienated during the pendency ofthe proceedings under the IBC, it will seriouslyjeopardise the interest of all the stakeholders.As a consequence, we set aside the impugnedInterim Orders dated 14.08.2019 and05.09.2019 passed by the Odisha High Court,as parallel proceedings with respect to the mainissue cannot take place in the High Court. Thesale or liquidation of the assets of RespondentNo. 4 will now be governed by the provisions ofthe IBC.

14. It is open for Respondent No. 13 –Hirakud Workers’ Union to file an applicationunder Regulation 9 of the Insolvency andBankruptcy Board of India (InsolvencyResolution Process for Corporate Persons)Regulations, 2016 for payment of arrears,salaries and other dues before the competentauthority.”

26. The Supreme Court in Swiss Ribbons PrivateLimited and another vs. Union of India and others, (2019) 4SCC 17, repelling the argument that operational creditorswill never get anything as they rank below all other creditors,including other unsecured creditors, who happen to befinancial creditors and therefore, Section 53 and in particularSection 53(1)(f) being discriminatory and arbitrary, should bedeclared violative of Article 14 of the Constitution of India, inpara 119 held as under:-

“119. It will be seen that the reason fordifferentiating between financial debts, whichare secured, and operational debts, which areunsecured, is in the relative importance of thetwo types of debts when it comes to the objectsought to be achieved by the Insolvency Code.We have already seen that repayment offinancial debts infuses capital into the economyinasmuch as banks and financial institutionsare able, with the money that has been paidback, to further lend such money to otherentrepreneurs for their businesses. Thisrationale creates an intelligible differentiabetween financial debts and operational debts,which are unsecured, which is directly relatedto the object sought to be achieved by the Code.In any case, workmen‘s dues, which are alsounsecured debts, have traditionally been placed above most other debts. Thus, it can be seenthat unsecured debts are of various kinds, andso long as there is some legitimate interestsought to be protected, having relation to theobject sought to be achieved by the statute inquestion, Article 14 does not get infracted. Forthese reasons, the challenge to Section 53 of theCode must also fail.”

27. The Supreme Court in P. Mohanraj and others vs.Shah Brothers Ispat Private Limited, (2021) 6 SCC 258, hasexpounded the law relating to the object and interpretation ofSection 14 of the Code. In that case, the question whether inview of the moratorium declared by the NCLT under Section14 of the Code, matter under Section 138/141 of theNegotiable Instruments Act against corporate debtor wouldfall within expression “proceedings” in Section 14 of the Code.Analyzing the law on the subject, the Supreme court in para-19 of the judgment held as under:- “19. We now come to the language of Section14(1)(a). It will be noticed that the expression“or” occurs twice in the first part of Section14(1)(a)– first, between the expressions“institution of suits” and “continuation ofpending suits” and second, between theexpressions “continuation of pending suits”and “proceedings against the corporate debtor…”. The sweep of the provision is verywide indeed as it includes institution,continuation, judgment and execution of suitsand proceedings. It is important to note that anaward of an arbitration panel or an order ofan authority is also included. This being thecase, it would be incongruous to hold that theexpression “the institution of suits orcontinuation of pending suits” must be readdisjunctively as otherwise, the institution ofarbitral proceedings and proceedings beforeauthorities cannot be subsumed within theexpression institution of “suits” which areproceedings in civil courts instituted by aplaint (see Section 26 of the Code of CivilProcedure, 1908). Therefore, it is clear that theexpression “institution of suits or continuationof pending suits” is to be read as one category,and the disjunctive “or” before the word“proceedings” would make it clear thatproceedings against the corporate debtor wouldbe a separate category. What throws light onthe width of the expression “proceedings” is theexpression “any judgment, decree or order” and“any court of law, tribunal, arbitration panelor other authority”. Since criminal proceedingsunder the Code of Criminal Procedure, 1973(“CrPC”)] are conducted before the courtsmentioned in Section 6, CrPC, it is clear that aSection 138 proceeding being conducted before

a Magistrate would certainly be a proceedingin a court of law in respect of a transactionwhich relates to a debt owed by the corporatedebtor”.

28. This Court in M/s Apple Valley Developers andors. vs. M/s Coastal Projects Ltd. And ors., Ex. Petition No. 19of 2016, decided on 14[th] May, 2018, was dealing with theExecution Petition. The decree holder in that case filedapplication under Order 21 Rule 37 read with Section 151CPC, another application under Section 21 Rule 41 read withSection 151 CPC. The judgment debtor on the contrary filedtwo applications to bring on record the subsequent eventsincluding the order passed by the NCLT, whereby not onlythe petition under Section 7 was admitted but even amoratorium was declared in terms of Section 14 of the IBC,contending that execution petition cannot proceed further.This Court analyzed various provisions of the Code, includingSection 14, 60, 231, 238. Relying on the judgment of SupremeCourt in Innoventive Industries Limited (supra), this Courtheld that since the moratorium has already been declared bythe NCLT under Section 14 of the IBC, which vide its orderdated 5.1.2018 has prohibited the institution of suits orcontinuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decreeor order in any Court of law, tribunal, arbitration panel orother authority, the execution proceedings before this Courtwould stand prohibited. On analysis of various provisions of the Code, this Court held as under:- “59. On reading its provisions, the momentinitiation of the corporate insolvency resolutionprocess takes place, a moratorium is announcedby the adjudicating authority vide Sections 13and 14 of the Code, by which institution of suitsand pending proceedings etc. cannot beproceeded with. This continues until theapproval of a resolution plan under Section 31of the said Code. In the interim, an interimresolution professional is appointed underSection 16 to manage the affairs of corporatedebtors under Section 17.”

29. Understood in the light of afore discussedprovisions of the Code and in view of the declaration ofmoratorium under Section 14 of the Code by the Tribunal videits order dated 7[th] September, 2017 and the order dated 4[th]July, 2018 passed by the Tribunal for giving effect to theprovision of Section 53 of the Code and the final liquidationorder under Section 33 of the Code passed by the Tribunal on4[th] July, 2018, notwithstanding the settlement arrived at between the Management and the Workers' Union recordedby this Court in its order dated 18[th] December, 2012, itsexecution, in view of the bar contained in the above referredto provisions, cannot be enforced in the present proceedings inthe scope of Article 226 of the Constitution of India. Our thisview is fortified from the decision of Supreme Court inAnandrao Korada, Resolution Professional (supra) and otherdecisions referred to supra.

30. Apart from the bar on continuation of presentproceedings, even otherwise, the order passed by this Courton 15[th] May, 2019, restraining Sh. Sanjay Gupta, theLiquidator from proceeding, alienating the assets of theCorporate Debtor and also from disbursing the sale proceed, ifany, received upon auctioning of the assets of the Company,cannot be continued being untenable in law. We may, in thisbehalf, refer to the judgment passed on 5[th] January, 2018 byBombay High Court in Jotun India Private Limited vs. PSLLimited, 2018 (2) AIR BomR 350. In that case, applicant-PSLLtd., who was respondent in the Company Petition before theHigh Court, filed an application before the learned CompanyJudge for vacation/recall of the order dated 19[th] July, 2017,whereby the learned Company Judge restrained the National

Company Law Tribunal (NCLT) Ahmedabad from continuingwith the application filed by the PSL Ltd. before the NCLTAhmadabad under Section 10 of Code. The Bombay HighCourt held that in the light of provisions of the Code andapplication of the petitioner filed under Section 10 by the PSLLtd., the Company Court cannot stay the proceedings ofNCLT as petition before the Company Court gets stayed inview of the moratorium declared under Section 14 of the Codeand if any such stay order is passed, it will make theprovisions of the Code meaningless. The relevant discussionmade by the Bombay High Court in para 15 of the judgmentis reproduced hereunder:- “15. The issue is whether this Court can stayproceedings before NCLT, especially in light ofthe provisions of IBC, which specifically barssuch intervention? It cannot, otherwise, inlight of the fact that on admission of petitionbefore NCLT, petition before this Hon’ble Courtgets stayed as per Section 14, it will makeprovisions of IBC meaningless. Section 63 ofIBC bars jurisdiction of Civil Courts toentertain proceedings on the issue over whichNCLT has jurisdiction. This Section is pari-materia to Section 34 of SARFAESI Act, 2002.Section 231 of IBC, specifically curtails thepower of Civil Courts or any other authority to restrain any action taken or to be taken beforeNCLT. This clearly curtails the power of thisCourt to pass any injunction against theBank/Intervenor from pursuing the pendingapplication. The power of this Court to passorder to restrain proceedings before any otherCourt is under Section 446. The provisions ofIBC, by virtue of Section 238 of IBC willoverride the provisions of the Companies Act tothat extent.”

31. The Supreme Court in Innoventive IndustriesLimited vs ICICI Bank and another, (2018) 1 SCC 407, afterconsidering the provisions of IBC, more particularly Section238, came to a conclusion that even Statutory Injunctionunder Maharashtra Relief Undertaking Act will not come inthe way of Secured Creditor to initiate proceedings underIBC. The relevant discussion made by the Supreme Court inpara 55 of the judgment, which reads as under:- “55. It is clear, therefore, that the earlier Statelaw is repugnant to the later Parliamentaryenactment as under the said State law, theState Government may take over themanagement of the relief undertaking, afterwhich a temporary moratorium in much thesame manner as that contained in Sections 13and 14 of the Code takes place under Section 4of the Maharashtra Act. There is no doubt that by giving effect to the State law, the aforesaidplan or scheme which may be adopted underthe Parliamentary statute will directly behindered and/or obstructed to that extent inthat the management of the relief undertaking,which, if taken over by the State Government,would directly impede or come in the way of thetaking over of the management of the corporatebody by the interim resolution professional.Also, the moratorium imposed under Section 4of the Maharashtra Act would directly clashwith the moratorium to be issued under Section13 and 14 of the Code. It will be noticed thatwhereas the moratorium imposed under theMaharashtra Act is discretionary and mayrelate to one or more of the matters contained inSection 4(1), the moratorium imposed underthe Code relates to all matters listed in Section14 and follows as a matter of course. In thepresent case it is clear, therefore, that unless theMaharashtra Act is out of the way, theParliamentary enactment will be hindered andobstructed in such a manner that it will not bepossible to go ahead with the insolvencyresolution process outlined in the Code.Further, the non-obstante clause contained inSection 4 of the Maharashtra Act cannotpossibly be held to apply to the Centralenactment, inasmuch as a matter ofconstitutional law, the later Central enactment

being repugnant to the earlier State enactmentby virtue of Article 254(1), would operate torender the Maharashtra Act void vis-à-visaction taken under the later Central enactment.

Also, Section 238 of the Code reads as under:

“Sec. 238. Provisions of this Code tooverride other laws.-The provisions of thisCode shall have effect, notwithstandinganything inconsistent therewith containedin any other law for the time being in forceor any instrument having effect by virtueof any such law.”

It is clear that the later non-obstante clause ofthe Parliamentary enactment will also prevailover the limited non-obstante clause containedin Section 4 of the Maharashtra Act. For thesereasons, we are of the view that theMaharashtra Act cannot stand in the way ofthe corporate insolvency resolution processunder the Code.”

32.

32. The writ petitions tilted as Five MemberCommittee of Employees of Appu Hotels Limited and anothervs Tourism Finance Corporation of India Limited. and others,WP SR Nos. 3786 and 3789 of 2021, decided on 22[nd] January,2021, werefiled before the Madras High Court by theCommittee of the Employees of the corporate debtor prayingfor restraining the respondents from preparing an insolvency resolution plan without incorporating necessary clauses inprotecting the employment of the employees/workmenemployed with the corporate debtor-respondent No.10-AppuHotels Limited and praying for an interim injunctionrestraining the 9[th]respondent/Corporate ResolutionProfessional in any manner proceeding with the proposedresolution plan approval of Appu Hotels Limited. The HighCourt held that the prayer seeking injunction restrainingrespondents from preparing an Insolvency Resolution Planwithout incorporating the necessary clauses purely fallswithin the purview of IBC and NCLT was seized of thematter. When the insolvency proceedings have already beeninitiated and a Corporate Resolution Professional has beenappointed, the matter falls within the exclusive jurisdiction ofNCLT. When a power is exercised by the NCLT within itsjurisdiction as provided under the Statute, the High Courtcannot entertain the writ petition interfering with the same.The relevant discussion has been made in paras 10 and 11,which is reproduced hereunder:- “10. A reading of the prayer clearly shows thatan injunction restraining the respondents 1 to 9from preparing an Insolvency Resolution Planwithout incorporating the necessary clauses purely falls within the purview of Insolvencyand Bankruptcy Code (IBC) and the matterseized off by the National Company LawTribunal (NCLT). When the insolvencyproceedings have already been initiated and aCorporate Resolution Professional has beenappointed, the matter falls within the exclusivejurisdiction of NCLT. When there is a specificstatute govern the Corporate InsolvencyResolution Process, it shall be done within thefour corners of that statute. Only when theTribunal exercise the jurisdiction which is notvested in it or available to it or when failed toexercise the available jurisdiction, the HighCourt can interfere under Article 226 of theConstitution of India. On the one hand, ajudicial forum making a wrong decision withinits jurisdiction where it has right to consider.On the other hand, a judicial forum has nojurisdiction or right to consider a particularaspect and also no power to grant the reliefprayed for. In the first instance, where there isa wrong decision taken within its jurisdiction,it is amenable to appeal as provided in thestatute. Only when judicial forum lacksjurisdiction or failed to exercise the jurisdictionor exercise the jurisdiction without any powerto grant the relief the judicial review underArticle 226 of the Constitution of India willcome into play.

Conclusion

11. In the instant case, the relief sought foris to forbear the respondents from preparing theInsolvency Resolution Plan, which falls withinthe exclusive jurisdiction of the NCLT. When apower is exercised within its jurisdiction asprovided under the Statute, this Court cannotentertain the Writ Petition inferring the same.Apart from this, the interim prayer sought forproceeds on the basis of apprehension that ifthe Committee of Creditors approve theresolution application, 600 persons and theirfamilies will be adversely affected. But this ispurely based on apprehension and not based onany concluded action by the respondents.Therefore, merely on apprehension also, theWrit Petitions are not maintainable.”

33. Analysis of law, as delineated above and upshot of the above discussion lead us to hold that continuation of thepresent proceedings would be barred by law. Mere fact thatthe matter arises out of settlement arrived at between theManagement and the Workers' Union before this Courtcannot provide justification for continuation of theseproceedings in the present matter in the teeth of the barcreated by the aforediscussed provisions of the Code.

34. In the light of the view that we have taken of thematter, the present proceedings are terminated with liberty to the Workers' Union/Workmen to avail their remedy inaccordance with the provisions of the Code. CMP No.733 of2014 in CWPIL No.11 of 2012 and COPC No. 59 of 2017 areaccordingly disposed of. Consequently, CMP No.7227 of 2019filed by the Resolution Professional (the Liquidator) isallowed and the restraint order passed by this Court on 15[th]May, 2019 is hereby vacated.

35. Other pending miscellaneous applications, if any,shall also stand disposed of accordingly.

36. There shall be no order as to costs.

( Mohammad Rafiq )

Chief Justice

December 31, 2021

( rajni / vt )

( Jyotsna Rewal Dua ) Judge Judge