Examine and state in the context of provisions of Insolvency and Bankruptcy Code, 2016 and the decided case law that "no suit or proceedings in a civil court or any other authority in any matter on which the National Com

CS Professional · Insolvency - Law and Practice · PYQS · December 2022
Examine and state in the context of provisions of Insolvency and Bankruptcy Code, 2016 and the decided case law that "no suit or proceedings in a civil court or any other authority in any matter on which the National Company Law Tribunal (NCLT) or the National Company Law Appellate Tribunal (NCLAT) hold jurisdiction under the Insolvency and Bankruptcy Code, 2016 are maintainable against the corporate debtor".

Answer & Explanation:

Section 60 of the Insolvency and Bankruptcy Code, 2016 (the Code) provides that the National Company Law Tribunal (NCLT) being the Adjudicating Authority, in relation to any insolvency resolution and liquidation for corporate persons, including corporate debtors and personal guarantors thereof, shall be having territorial jurisdiction over the place where the registered office of the corporate persons is located. Section 63 of the Code bars any suit or proceedings in a civil court or any other authority in any matter on which the National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Section 238 of the Code grants an overriding effect by having a non-obstante clause and ensuring that provisions of the Code will continue to be in full force even if they are inconsistent with any other law of the country. It is further also stated in section 231 of the Code that no civil court shall have the jurisdiction in any matter where the Adjudicating Authority (NCLT) or the Board is empowered, by, or under, this Code, to pass any order. It also states that no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of an order passed by such Adjudicating Authority or the Board under this Code. Section 33 of the Code bars every suit or proceeding instituted against the corporate debtor when a liquidation order has been passed. NCLAT, New Delhi in the case of E.C. John vs. Jitendra Kumar Jain & Ors, set aside the order of the NCLT and quashed the civil suit against the Corporate Debtor. The Tribunal further observed that, even though the filing of a civil suit is barred in terms of the Code, the correct course for the liquidator is to approach the Court where the civil suit was pending and point out the pertinent provisions of law.

Topics: Jurisdiction

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