Orissa High Court
Devendra Umrao vs M/S. Nayagarh Cooperative .... ... on 10 January, 2025
Author: Arindam Sinha
Bench: Arindam Sinha
IN THE HIGH COURT OF ORISSA AT CUTTACK
RVWPET No. 239 of 2022
Devendra Umrao .... Applicant
-Versus-
M/s. Nayagarh Cooperative .... Opposite Parties
Sugar Industries Ltd. and
others
Advocates appeared in this case :
For Applicant : Mr. L.K. Maharana, Advocate
For Opposite Parties: Mr. S. Dwibedi, Advocate
CORAM:
THE HON'BLE MR. JUSTICE ARINDAM SINHA
JUDGMENT
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Date of hearing and judgment: 10th January, 2025
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ARINDAM SINHA, J.
1. Mr. Maharana, learned advocate appears on behalf of
review-applicant, who wants recall of order dated 25th
August, 2022, by which the writ petition was disposed of.
Applicant, the Resolution Professional (RP) was opposite
party no.2 in the writ petition.
2. Drawing attention to sub-paragraph (xix) under
paragraph 2 in the application he submits, he had appeared
virtually upon his client having had received the notice on
20th August, 2022. His client intended to file counter
affidavit and as such time was sought. The writ petition,
however, was disposed of on it being moved. As such,
contention of his client could not be put forward and it
cannot be said the omission was on lack of due diligence. He
submits, there be recall of said order to restore the writ
petition for hearing.
3. Mr. Maharana relies on views taken by two learned
single Judges in the High Court of Delhi. First was by
judgment dated 11th December, 2017 under O.M.P.
(COMM.) 397/2016 (Power Grid Corporation of India
Ltd. v. Jyoti Structures Ltd.). Relied upon paragraph 10 is
reproduced below.
"10. In the light of above purpose or object
behind the moratorium, Section 14 of the Code
would not apply to the proceedings which are in
the benefit of the corporate debtor, like the one
before this court in as much these proceedings are
not a 'debt recovery action' and its conclusion
would not endanger, diminish, dissipate or impact
the assets of the corporate debtor in any manner
whatsoever and hence shall be in sync with the
purpose of moratorium which includes keeping
the corporate debtor's assets together during the
insolvency resolution process and facilitating
orderly completion of the process envisaged
during the insolvency resolution process and
ensuring the company may continue as a going
concern."
The other view is by judgment dated 18th July, 2019 of
another learned single Judge of said Court, delivered on,
inter alia, CS (COMM) 470/2016 (SSMP Industries Ltd. v.
Perkan Food Processors Pvt. Ltd.). A passage from relied
upon paragraph in the judgment is reproduced below.
"8. ... ... ... Section 14 has created a piquant
situation i.e., that the corporate debtor undergoing
insolvency proceedings can continue to pursue its
claims but the counter claim would be barred under
Section 14(1)(a). When such situations arise, the
Court has to see whether the purpose and intent
behind the imposition of moratorium is being
satisfied or defeated. A blinkered approach cannot
be followed and the Court cannot blindly stay the
counter claim and refer the defendant to the
NCLT/RP for filing its claims."
4. Mr. Dwibedi, learned advocate appears on behalf of
writ petitioner and submits, it will appear from said disposal
order dated 25th August, 2022 that submissions were made
on behalf of review-applicant (opposite party no.2). Upon
hearing of parties, the order was made giving reasons for it.
By the application review-applicant is seeking appellate
remedy. The application be dismissed.
5. Sole ground of review is that applicant did not have
opportunity to put forth its contention. The contention is that
a claim of the company undergoing resolution process cannot
be deemed to be covered by the order of moratorium. There
is no embargo by issuance of moratorium on prosecution of
claim by the company undergoing resolution. This
contention stood dealt with by paragraph 4 in said disposal
order dated 25th August, 2022. The paragraph is reproduced
below.
"4. There is no dispute that there has been
declaration of moratorium. There is also no
dispute, as Court has ascertained, petitioner has
counter claims against the corporate debtor in the
reference. There is no law, which provides for
proceeding with a reference piece meal. The
moratorium applies. That being said, it is not
necessary to go into the supplementary dispute as
to whether management of the corporate debtor
has been handed over to the RP."
(emphasis supplied)
6. Reason given by paragraph 4 in said disposal order
dated 28th August, 2022 is on finding no dispute on counter
claim raised by writ petitioner against review-applicant. The
counter claim, even according to review-applicant, is hit by
the moratorium. As such, reasoning was of there being no
law, which provides for proceeding with a reference
(arbitration) piecemeal, to allow review-applicant to proceed,
on the counter claim against it stayed.
7. There is no necessity for this Bench to comment on the
views relied upon by review-applicant. However, conduct of
review-applicant is deprecated inasmuch as there is implied
allegation that prayer for adjournment was made and not
recorded in said disposal order dated 25th August, 2022. This
Bench has no recollection of what transpired at the hearing
on that day except to say that orders made by this Bench on
the several matters dealt with has never ever given rise to
such an allegation of judicial dishonesty, made against it.
8. At this stage Mr. Maharana submits, the statement was
incorrectly made. Views taken by the Delhi High Court were
discovered later and reliance on them is his client's ground
for review. He tenders unqualified apology on behalf of his
client. The apology is accepted.
9. The application is dismissed.
(Arindam Sinha)
Judge
Jyoti
Location: HIGH COURT OF ORISSA
