Judgments

NEW DELHI MUNICIPAL COUNCIL VS. MINOSHA INDIA LTD : CASE SUMMARY

The Supreme Court held in New Delhi Municipal Council Vs Minosha India Ltd (Civil Appeal No. 3470/2022 ) that period of moratorium will be excluded  under Section 60 (5) of Insolvency and Bankruptcy Code, 2016 in  suit or application filed by Corporate Debtor.

Facts of the Case

Appellant placed purchase order of Rs. 16, 20, 00,000 with the Respondent. The appellant issued a termination notice on alleged account of inaction and unresponsiveness of the Respondent.  The Respondent invoked the arbitration clause and sent communication to the Appellant to appoint arbitrator. The Appellant did not consent to names suggested by the Respondent and proposed to proceed for arbitration through the Delhi Arbitration Centre. On 14.05.2018 insolvency proceedings was admitted in the matter of the Respondent under Section 10 of the Insolvency and Bankruptcy Code, 2016 and Resolution Plan was approved on 28.11.2019.  High Court allowed Petition under Section 11 (6) vide order dated 14.12.2020 and appointed Arbitrator in the matter. The same was challenged before the Supreme Court.

Findings of the Court

It was argued by the appellant  before the Supreme Court that no reliance should be permitted on Section 60 (5) of the Code. Section 14 does not put any embargo on the Corporate Debtor to initiate any proceedings against third party.  It was contended that if the Resolution Professional can launch proceeding before judicial, quasi-judicial or arbitration proceedings during moratorium, exclusion cannot be given to the Corporate Debtor. Court should interpret in a manner which should advances object and purposes of the law. Acceptance of the Respondent’s case will give free run to those who sleep on their rights and bring a delayed claim much beyond period of limitation.

The Court observed that Section 14 of the Insolvency and Bankruptcy Code, 2016 does not bar Corporate Debtor to initiate any proceedings including Application under Section 11 (6) of Arbitration and Conciliation Act, 1996 during moratorium. There is no express exclusion of the jurisdiction of the court or authorities to entertain any such proceedings at the hands of the Corporate Debtor.

The Supreme Court observed that there cannot be slightest doubt that period of moratorium is excluded in case of suit or application by the Corporate Debtor under Section 60 (6). The Supreme Court noted that ambiguity emerges in respect of exclusion of period of limitation for a suit or application at the instance of the Corporate Debtor when moratorium does not bar any suit or application at the instance of the Corporate Debtor.  The Supreme Court noted that Section 60 (6) is integral part of scheme which will benefit Resolution Applicant which is enabled to take suitable measures to ventilate its legitimate grievances by excluding the period during which moratorium was enforced.

The Court observed that the Court would not indulge in interpretation of a report when there is better material available in form of Act itself. If words of statute are not ambiguous, the scope of interpretation dwindles. It is not for a Court to rewrite the statute.  The Court cannot sit in judgment over the wisdom of law giver.

The Court concluded that Appellant should be debarred from raising he plea of limitation and dismissed the appeal.

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Mukesh Kumar Suman is an advocate and legal author based at Delhi. He regularly appears before various Judicial Forums including NCLT, NCLAT, High Courts and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

Mukesh Kumar Suman

Mukesh Kumar Suman

Mukesh Kumar Suman is an advocate based at Delhi. He has rich experience in civil, criminal, commercial, arbitration and corporate insolvency matters. He regularly appears before District Courts, NCLT, NCLAT, High Court and the Supreme Court. He can be approached at mukesh_suman@outlook.com or +91 9717864570.

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