Bgr Energy Systems Private Limited vs Union Of India
2024 Latest Caselaw 9033 AP

Andhra Pradesh High Court - Amravati

Bgr Energy Systems Private Limited vs Union Of India on 1 October, 2024

APHC010432872024
                    IN THE HIGH COURT OF ANDHRA PRADESH
                                  AT AMARAVATI                  [3329]
                           (Special Original Jurisdiction)

                   TUESDAY, THE FIRST DAY OF OCTOBER
                    TWO THOUSAND AND TWENTY FOUR

                                PRESENT

  THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

                      WRIT PETITION NO: 22023/2024

Between:

Bgr Energy Systems Private Limited                       ...PETITIONER

                                     AND

Union Of India and Others                            ...RESPONDENT(S)

Counsel for the Petitioner:

1. T V P SAI VIHARI

Counsel for the Respondent(S):

1.

The Court made the following:

INTERIM ORDER:

W.P.NO: 22023/2024

Notice before admission.

Learned Deputy Solicitor General takes notice for the respondents.

Learned counsel for the petitioner is permitted to take out personal

notice to respondent Nos.2 and 3 through RPAD and file proof of service in

the Registry.

List the matter after four (04) weeks.

________________________________ VENKATESWARLU NIMMAGADDA, J

Heard learned Senior Counsel for the petitioner.

2. Learned Senior Counsel appearing for the petitioner submits that the

petitioner company herein is a public limited company incorporated under the

provisions of the Companies Act, 1956 and is engaged in the business of

execution of EPC Contracts. He further submits that on 19.11.2021, the 3rd

respondent herein filed a Company Petition vide CP(IBC)36/9/AMR/2022

alleging that the petitioner company has defaulted in making payments and

the date of default is on 11.07.2020 and 08.10.2020. Learned counsel further

submits that, as per Section 10A of IBC, 2016, no application shall ever be

filed for initiation of the Corporate Insolvency Resolution Process of a

Corporate Debtor from 25th March, 2020, for a period of six (06) months and

the words used in the provisio is 'no application shall ever be filed' with an

emphasis on the term 'ever' Section 10 A also states that "notwithstanding

anything contained in Sections 7, 9 and 10. Hence, no application can be filed

in correspondence to the period from 25th March, 2020 till September 2021.

3. Learned Senior Counsel further submits that, instead of refusing to

entertain as mention in Rule 23(1) and rejecting the said petition, the Hon'ble

NCLT has numbered the said petition and issued notices. Therefore, the

entertaining of the Section 9 petition by the Hon'ble NCLT, is without any

jurisdiction and authority and the same is not maintainable as per Section 10A

of IBC, 2016 and the same was restored by the impugned order, dated

09.02.2024 under Rule 11 of NCLT Rules is against the provisions of IBC,

which are not applicable to the proceedings under IBC, 2016. For more

understanding, Section 10A of Insolvency and Bankruptcy Code, 2016 is

extracted hereunder:

"Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be noticed in this behalf : Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.

Explanation.- For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020."

4. Learned Senior Counsel further submits that as per Section 9 (5)(ii), the

2nd respondent, acting as Adjudicating Authority, ought to have rejected the

company petition if the petition made under sub-Section 2 of Section 9 is

incomplete and such rejection ought to have been made before continuing any

proceedings against the petitioner under the company petition. Learned

Senior Counsel is also advised to state that, in the present case, the 3rd

respondent has not submitted the record of default of information utility.

5. Learned Senior Counsel further placed reliance on paragraph Nos.17,

26 and 28 of the judgment passed by the Hon'ble Supreme Court in Tharakan

Web Innovations Pvt. Ltd., Represented by its Director Shameem

Palykandy Jaleel and Another... Versus National Company Law Tribunal,

represented by its Deputy Registrar and Another... and others, wherein,

the relevant paragraphs are extracted hereunder:

"17. I will first deal with the question of maintainability of the writ petition under Article 226 of the Constitution of India, to challenge Ext.P7 order of the Tribunal. It is well settled by a catena of decisions that exercising or not exercising jurisdiction under Article 226 on issues where an alternate remedy is available, it is more a rule of self restraint. It has been consistently held that alternate remedy will not be a reason for not exercising jurisdiction when the issue relates to enforcement of the fundamental right or violation of principles of natural justice or where the proceedings challenged are without

jurisdiction or in cases where the validity of a Statute is challenged. Recently the Hon'ble Supreme Court has in the decision in Ghnashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. reported in [(2021) 9 SCC 557] held in para.137 as follows;

"137. As held by this Court in a catena of cases including in Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Muzaffarnagar [Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Muzaffarnagar, (1969) 1 SCR 518: AIR 1969 SC 556], Whirlpool Corpn. v. Registrar of Trade Marks [Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1], Nivedita Sharma v. COAI [Nivedita Sharma v. COAI, (2011) 14 SCC 337: (2012) 4 SCC (Civ) 947], Embassy Property Developments (P) Ltd. v. State of Karnataka [Embassy Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308] and recently in Kalpraj Dharamshi [Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401 2021 SCC OnLine SC 204], that non-exercise of jurisdiction under Article 226 is a rule of self-restraint. It has been consistently held that the alternate remedy wouls not operate as a bar in at least three contingencies, namely, (1) where the writ petition has been filed for the enforcement of any the fundamental rights;

(2) where there has been a violation of the principle of natural justice; and (3) where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged."

26. Even otherwise, the Tribunal has in my opinion, gone wrong in its interpretation of Section 4 of the Act. Section 4, after amendment on 24.3.2020 clearly on says that Part II of the IBC shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of default is Rs. 1 Crore. As per Section 3(12) of the IBC, "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. What is to be noted is that Corporate debtors who are in default of less than Rs. 1 lakh prior to the

amendment and Rs. 1 Crore after the amendment, also are defaulters. However, whether a proceeding for insolvency or liquidation of such corporate debtor should be initiated would depend on the amount in default. It is only if the Corporate debtor has incurred a default of at least the minimum amount stated in Section 4 that a proceeding under the provisions of the IBC under Part II can be initiated. The minimum amount of default is statutorily fixed, with power available to the Government to refix, upto a sum of Rs. 1 Crore. Once the Government has exercised the said power by issuance of a notification fixing the minimum amount of default as Rs. 1 Crore, the Section will have to be read by replacing the words "one lakh rupees" by "rupees one crore. As such, from the date of amendment, Part II of the IBC can apply oniy to matters relating to insolvency and liquidation of corporate debtors, where the minimum amount of default is Rs. 1 Crore. (emphasis supplied). Once that is the position, the application of Part II itself is taken away with effect from 24.03.2020 as far as defaults less than Rs. 1 Crore are concerned and hence no application can be filed after 24.03.2020 regarding an amount where the default is less than Rs. 1 Crore. By application of Section 10A, even in cases where the default is more than Rs. 1 Crore, an application cannot be filed for a period of six months from 24.3.2020. There can be no other understanding of the statutory provisions, as there is no ambiguity in the language. It is well settled that the grammatical and ordinary sense of the words of the Statute should be adhered to, unless that would lead to absurdity, or some repugnance or inconsistency with the rest of the provisions of the statute. In the words of Viscount Simon L.C. "The golden rule is that the words of a prima facie be given their ordinary meaning.. statute must Judges are not called upon to apply their opinions of sound policy so as to modify the plain meaning of statutory words, but where, in construing general words the meaning of which is not entirely plain there are adequate reasons for doubting whether the Legislature could have been intending so wide an interpretation as would disregard fundamental principles, then we may be justified in adopting a narrower construction" (see Nokes v. Doncaster Amalgamated Collieries Ltd., [[1940] A.C. 1014 (HL)], Chandvarkar Sita Ratna Rao v.

Ashalata S. Guram [(1986) 4 SCC 447] and B. Parmanand v. Mohan Koikal [(2011) 4 SCC 266)]. The above observations are fully supported by the judgment of the Apex Court in Manish Kumar (supra), wherein the Hon'ble Supreme Court categorically held that the litmus test is whether there exists a default as defined in Section 4 of IBC, on the date of the application.

27. In the light of the view taken above regarding the jurisdiction of the Tribunal, the writ petition under Article 226 is maintainable and there is no necessity or purpose for relegating the petitioner to the alternate remedy. Nor is it necessary to decide on the question whether an appeal is maintainable under the IBC against the order of the Tribunal on a preliminary issue regarding jurisdiction."

6. Learned Senior Counsel further submits that, admittedly, the 3rd

respondent invoked the application under Section 9(2) of the Act, which is

contrary to the competent of Section 10A of the IBC.

7. Accordingly, there shall be an interim stay of all further proceedings in

CP(IBC)/36/9/AMR/2022 and any proceedings consequent to orders in

Rest.A.(IBC)/3/2023 on the file of the Hon'ble National Company Law

Tribunal, for a period of four (04) weeks.

________________________________ VENKATESWARLU NIMMAGADDA, J

Dated:01.10.2024 SCH