Whether Pending Proceeding before High Court can be peruse after declaration of moratorium ibc

Whether Pending Proceeding before High Court can be peruse after declaration of moratorium ibc

Short Summary:

In this flash tabloid, the writer initiates by speak of the provisions of Insolvency & Bankruptcy Code, 2016 (hereafter referred as “IBC”) in relation to power of IBC u/s 14(1)(a) of IBC and Section 238 of IBC, 2016.

The main drive of the broadsheet, on the other hand, is upon the Whether Pending Proceeding before Hon’ble High Court can be peruse after declaration of Moratorium in IBC, 2016

            This is article no. 291 of the series of editorials written by the author on corporate laws
{Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

In this editorial author discuss the provisions under Section 14(1)(a) and 238 of the IBC and landmark judgement delivered by NCLAT, in case Steam Line Industries Limited Vs. Tecpro Systems Ltd.

Case element:

Case Name
Steamline Industries  Ltd Vs. Tecpro Systems Ltd
Operational Creditor
Edelweiss Asset Reconstruction Company Limited
Corporate Debtor
Tecpro Systems Ltd
Bench Name
The National Company Law Appellate Tribunal (NCLAT)

Heard & Pronounced on Order
04th December, 2017

A.  Factual Background:

I.            CIRP has already been initiated against the Corporate Debtor u/s 7 of IBC, 2016.
II.            Moratorium ordered U/s 13 read with section 14 of the I&B Code.
III.            The civil suits against the CD and another pending before the Hon’ble High Court of Delhi can’t be proceed.
IV.            Appellant: it’s filed an application before the NCLT, Principle Bench, New Delhi, to permit the Appellant to pursue the proceedings pending before the Hon’ble High Court of Delhi in Civil Suit.
V.            NCLT: The NCLT rejected the application preferred by Appellant with cost u/s 14(1)(a).
Section 14(1)(a) :Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:—
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;”
VI.             Appellant:  Its submit that the suit in question has been filed under “Commercial Court Act” therefore, the provisions of the said Act will prevail over the “I&B Code”.
Findings of the NCLT Bench: 
Hon’ble NCLAT states that, submission of Appellate can’t be accepted in view of section 238 of the ‘I&B Code” which read as follow:
as per Section 238 [1]The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
Therefore, No relief can be granted to the Appellant.
The detailed discussion on Section 238 has been decided by Hon’ble NCLAT in the case:

Case Name
ICICI Bank Ltd Vs. Innoventive Industries Ltd
Bench Name
The National Company Law Appellate Tribunal (NCLAT)
Heard & Pronounced on Order
15th May, 2017
Order Passed by
Justice S. J. Mukhopadhaya
7    Rule 4
Type of Creditor
Financial Creditor

The NCLAT held that section 238 of the Code is a non-obstante clause which overrides the all other Acts, and thus the provisions of the Code shall prevail over the provisions of the MRU Act.
Detailed analysis of above case can be read on the following link:

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

 Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.


[1] Interpret the above mentioned sentence:


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