Case Note & Summary
The dispute arose from a lease deed dated 28.03.2007 between the respondent landlady and the applicant company over land admeasuring 42000 sq. mtrs. at Mouza Burkoni, District Wardha. The respondent issued a termination notice dated 01.06.2021 and later filed Regular Civil Suit No.23 of 2022 on 21.01.2022 before the Civil Judge Junior Division, Hinganghat, seeking declaration, recovery of possession, eviction, injunction and arrears of rent. Meanwhile, the National Company Law Tribunal, by order dated 30.08.2021, admitted an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the applicant company, initiating Corporate Insolvency Resolution Process and imposing a moratorium under Section 14 IBC. The NCLT order expressly prohibited institution of suits and recovery of property by an owner or lessor where such property was occupied by or in the possession of the corporate debtor. The applicant company filed an application under Order VII Rule 11 read with Section 151 CPC seeking rejection of the plaint, contending that the suit was instituted during the subsistence of the moratorium and was therefore barred by Section 14(1)(a) IBC. The trial court rejected the application on 23.11.2023, reasoning that the CIRP period of 180 days/270 days under Section 12 IBC had lapsed before the suit filing and that since the moratorium was later lifted, the suit could continue. The applicant challenged this order in Civil Revision Application No.42 of 2024 before the Bombay High Court. The applicant argued that the trial court erred in computing the CIRP period. CIRP commenced on 30.08.2021 and the suit was filed on 21.01.2022, meaning only 145 days had elapsed, well within the maximum 270 days. The moratorium expressly barred the suit for recovery of property by a lessor. The applicant relied on cases such as Sheenlac Noroo Coatings, Electrosteel Steel, Jaipur Trade Expocentre, Alchemist Asset Reconstruction, Anand Rao Korada, and RPS Infrastructure. It further contended that the claim for rent/license fee was an operational debt under Section 5(21) IBC, and the creditor should have filed a claim before the Interim Resolution Professional or Resolution Professional rather than pursuing a civil suit, especially in view of Sections 63 and 238 IBC which oust civil court jurisdiction and give overriding effect to the IBC. The respondent supported the trial court order and argued that no prejudice would be caused if the application was rejected. The respondent relied on Embassy Property Developments, C. Ramachandra, and Kanak Projects. The High Court perused the NCLT order, noting that the moratorium was effective from the date of pronouncement (30.08.2021) till completion of CIRP or approval of resolution plan, and the resolution plan was approved on 19.05.2023. The Court reproduced Section 238 and Section 63 IBC and referred to the Jaipur Trade Expocentre decision holding that license fee for demised premises is an operational debt. The available judgment text ends abruptly during the discussion of the Sheenlac Noroo decision, without recording the final operative direction. Therefore, the final decision of the High Court cannot be extracted from the provided excerpt.
Headnote
A) Civil Procedure - Rejection of Plaint - Order 7 Rule 11, Code of Civil Procedure, 1908 - Suit filed during subsistence of moratorium under Section 14 IBC is barred by law; applicant sought rejection of plaint on that ground; trial court dismissed application holding CIRP period lapsed, but applicant contended only 145 days elapsed and moratorium was in force at suit filing (Paras 2-6). B) Insolvency and Bankruptcy - Moratorium - Section 14, Insolvency and Bankruptcy Code, 2016 - NCLT order dated 30.08.2021 expressly prohibited institution of suits and recovery of property by owner/lessor where property in possession of corporate debtor; suit filed on 21.01.2022 during moratorium; resolution plan approved 19.05.2023, moratorium effective till then (Paras 10-13). C) Insolvency and Bankruptcy - Jurisdiction - Sections 63 and 238, Insolvency and Bankruptcy Code, 2016 - IBC has overriding effect over inconsistent laws and bars civil court jurisdiction for matters within NCLT jurisdiction; claim for license fee/rent may be operational debt required to be filed before IRP/RP (Paras 14-16). D) Insolvency and Bankruptcy - Operational Debt - Section 5(21), Insolvency and Bankruptcy Code, 2016 - License fee for use of demised premises for business purposes constitutes operational debt; NCLT in Jaipur Trade Expocentre held such claim is operational debt; creditor should raise claim in CIRP, not civil suit (Paras 15-16). E) Interpretation - CIRP Timeline Computation - Section 12, Insolvency and Bankruptcy Code, 2016 - Trial court erroneously computed CIRP period; applicant argued CIRP initiated 30.08.2021, suit filed 21.01.2022, only 145 days lapsed, so moratorium applicable (Paras 5-6).
Issue of Consideration
Whether the civil suit filed by the respondent landlord during subsistence of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 is barred by law and liable to be rejected under Order 7 Rule 11 CPC; whether the trial court erred in computing the CIRP period under Section 12 IBC and holding that the moratorium had lapsed before filing of the suit.
Final Decision
Not mentioned - the provided judgment text is incomplete and does not include the final operative order.
Law Points
- Order 7 Rule 11 CPC
- Section 14 IBC moratorium
- Section 238 IBC overriding effect
- Section 63 IBC civil court jurisdiction bar
- operational debt under Section 5(21) IBC
- CIRP timeline computation
- NCLT jurisdiction over insolvency matters
- suit filed during moratorium barred
