Karnataka High Court

Zillion Infraprojects Private Limited vs Tenova Technologies Private Limited on 21 February, 2024

Author: S.R.Krishna Kumar

Bench: S.R.Krishna Kumar

                                                  -1-
                                                                NC: 2024:KHC:7368
                                                            WP No. 20544 of 2023




                             IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                               DATED THIS THE 21ST DAY OF FEBRUARY, 2024

                                                BEFORE
                               THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
                                WRIT PETITION NO. 20544 OF 2023 (GM-CPC)
                      BETWEEN:

                      ZILLION INFRAPROJECTS PRIVATE LIMITED
                      REGISTERED UNDER COMPANIES ACT, 1956
                      5TH FLOOR, ANUSHKA TOWER, GARG
                      TRADE CENTRE, PLOT-2, SECTOR-11
                      ROHINI, NEW DELHI-110085
                      THROUGH ITS RESOLUTION PROFESSIONAL
                      UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016
                      MR. HARISH TANEJA
                                                              ...PETITIONER
                      (BY SRI. C.K. NANDA KUMAR SENIOR COUNSEL FOR;
                          SRI. RICAS CHAND K., ADVOCATE)

                      AND:

                      TENOVA TECHNOLOGIES PRIVATE LIMITED
                      REGISTERED UNDER COMPANIES ACT, 1956
                      REGISTERED OFFICE AT
                      I THINK TECHNO CAMPUS,
Digitally signed by
VANDANA S             A WING, 5THFLOOR, POKHRAN ROAD, NO. 2
Location: High        BEHIND TCS, THANE WEST, THANE,
Court of Karnataka
                      MAHARASHTRA-400601
                      THROUGH ITS DIRECTOR
                                                                   ...RESPONDENT
                      (BY SRI. AYAPPA C P.,ADVOCATE)

                           THIS WP FILED UNDER ARTICLE 226 AND 227 OF THE
                      CONSTITUTION OF INDIA PRAYING TO SETTING ASIDE THE
                      ORDER DTD 19TH OCTOBER, 2019 PASSED BY THE HONBLE
                      LXXXII ADDL. CITY CIVIL AND SESSION JUDGE BANGALORE CITY
                      (CCH 83) IN COM O.S NO. 27279/2009 (ANNEXURE-F)

                            THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
                      THIS DAY, THE COURT MADE THE FOLLOWING:
                                 -2-
                                                NC: 2024:KHC:7368
                                           WP No. 20544 of 2023




                              ORDER

This petition is aggrieved by the defendants in Commercial

O.S.No.27279/2009 is directed against the impugned order dated

19.10.2019 passed on I.A.No.1/19 by the LXXXII Addl. City Civil

and Sessions Judge, Bangalore (Commercial Court) whereby the

application filed by the petitioner-defendant for a direction to

continue the proceedings insofar as they relate to counter claim of

the petitioner-defendant against the respondent-plaintiff was

rejected by the Trial Court. The impugned order dated 19.10.2019

was sought to be reviewed in review application I.A.No.4/2022

which was also rejected vide impugned order dated 08.12.2022.

Aggrieved by the impugned orders passed on I.A.No.1/2019 and

I.A.No.4/2022, petitioner-defendant is before this Court by way of

the present petition.

2. Heard learned counsel for the petitioner and learned

counsel for the respondent and perused the material on record.

3. A perusal of the material on record will indicate that the

respondent-plaintiff instituted the aforesaid suit against the

petitioner-defendant for recovery of a sum of Rs.10,88,10,521.96/-

together with interest and other reliefs. The said suit is contested

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by the petitioner-defendant who not only filed its written statement

and also put forth a counter claim against the plaintiff for a sum of

Rs.18,98,74,347/- (page 259) together with interest. During the

pendency of the petition, proceedings under the Insolvency and

Bankruptcy Code 2016 (IBC) were initiated against the petitioner-

defendant before the National Company Law Tribunal (NCLT)

pursuant to which an order dated 05.02.2019 was passed declaring

moratorium under section 14 of IBC. The said order dated

05.09.2019 declaring moratorium in the proceedings before the

NCLT is still continuing and said moratorium is still in force and

operating as against the petitioner. In this context, a plain reading

of Section 14 of IBC will indicate that all proceedings including

present suit filed by the respondent against the petitioner would

necessarily have to be stayed until completion of the insolvency

proceedings.

"Moratorium

14. (1) 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

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of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein,

(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where such property is occupies by or in the possession of the corporate debtor."

4. The petitioner contends that though proceedings against it

were liable to be stayed by declaration of moratorium under

Section 14, IBC, the counter-claim put forth by the petitioner

against the respondent can continue since proceedings by the

petitioner-Company against respondent did not require to be

stayed under Section 14 of the IBC. Under these circumstances,

the petitioner filed an instant application under Section 151, CPC

requesting the Commercial Court to continue the proceedings only

insofar as the counter claim of the petitioner against the

respondents were concerned. The said application having been

opposed by the respondent-plaintiff, the Trial Court proceeded to

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pass the impugned order rejecting the application and the same

was confirmed by dismissing the review application I.A.No.4/2022,

aggrieved by which the petitioner is before this Court by way of the

present petition.

5. A perusal of the impugned orders passed by the

Commercial Court will indicate that reliance is placed upon the

judgment of the Delhi High Court in the case of SSMP Industries

Ltd. v/s Perkan Food Processors Pvt. Ltd. 2019 SCC Del 9339

which followed an earlier judgment of the Delhi High Court in the

case of Power Grid Corporation of India v/s Jyothi Structures

Ltd. 2017 SCC Del 12189. Subsequently, the said judgment of the

Delhi High Court in Power Grid Corporation's case has been

expressly over-ruled by the Hon'ble Apex Court in the case of

P.Mohan Raj v/s Shah Brothers Pvt. Ltd. 2021 (6) SCC 258.

Under these circumstances, since judgment of the Delhi High Court

in Power Grid Corporation case supra, relied upon in SSMP's

case supra and the Commercial Court to reject the application

I.A.No.19 while passing the impugned orders has been over-ruled,

I am of the considered opinion that the impugned orders passed by

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the Commercial Court deserves to be set aside and the application

I.A.No.1/2019 deserves to be allowed.

6. A perusal of the provisions contained in Section 14 supra,

will clearly indicate while proceedings against the petitioner

company which is undergoing insolvency resolution process would

have to remain stayed till completion of the insolvency

proceedings, the petitioner company would be entitled to continue

proceedings filed by it against the respondent-plaintiff and/or all

third parties subject to the condition that in such proceedings, the

petitioner would have to be represented by the resolution

professional appointed by the NCLT. In the instant case, it is an

undisputed fact that one Sri Harish Taneja has been appointed as

the resolution professional of the petitioner company by the NCLT

and his term continues even as on today. Under these

circumstances also, I am of the considered opinion that the

petitioner company represented by resolution professional would

be entitled to prosecute the counter claim put forth by it against the

respondent-plaintiff in view of the provisions contained in Order 8

Rule 6A(2), CPC which contemplates that all counter claims shall

have the same effect so as that of a cross suit. Further, since the

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proceedings insofar as the claim of the respondent against the

petitioner are concerned would have to be remained stayed by

averments of the monitorium declared under Section 14, IBC,

petitioner company would be entitled to prosecute its counter claim

as against the respondent-plaintiff.

7. In view of the aforesaid facts and circumstances, the

impugned orders passed by the Trial Court on I.A.No.1/19 and 4/22

deserve to be set aside and I.A.No.1/19 deserves to be allowed.

8. In the result, I pass the following:

ORDER

(i) The impugned order dated 19.10.2019 in

Com.O.S.No.27279/2009 at Annexure-F and order dated

08.12.2022 in Com.O.S.No.27279/2022 at Annexure-G, are hereby

set aside