Case Note & Summary
The petitioner, SREI Equipment Finance Limited, a non-banking financial corporation, challenged an order dated 20.07.2022 passed by the District Consumer Dispute Redressal Commission, Akola, in Consumer Complaint No.312/2021, which directed the petitioner to return a JCB machine to respondent no.1, Rajesh Bajirao Khandewar. The petitioner also sought to quash bailable warrants issued on 19.06.2024 against its owner and CEO. The facts reveal that on 04.10.2021, the Reserve Bank of India superseded the board of directors of the petitioner and filed an application before the National Company Law Tribunal, Kolkata Bench, for insolvency resolution. The NCLT admitted the application on 08.10.2021 and imposed a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016. Despite the moratorium, respondent no.1 filed a consumer complaint on 26.10.2021 before the District Consumer Commission, alleging illegal repossession of his JCB machine due to non-payment of installments. The complaint was allowed on 20.07.2022, directing the return of the machine. The petitioner argued that the proceedings were void ab initio as they were initiated and continued during the moratorium. The court analyzed Section 14 of the IBC, which prohibits the institution or continuation of any legal proceedings against the corporate debtor. The court held that the consumer complaint and the subsequent orders, including the bailable warrants, were in clear violation of the moratorium. The court set aside the order dated 20.07.2022 and the bailable warrants dated 19.06.2024, allowing the petition.
Headnote
A) Insolvency and Bankruptcy Code - Moratorium - Section 14 IBC - Bar on Proceedings - The moratorium imposed under Section 14 of the IBC prohibits the institution or continuation of any legal proceedings against the corporate debtor. The complaint filed by the respondent no.1 before the District Consumer Commission after the imposition of moratorium was void ab initio. The order dated 20.07.2022 passed by the District Consumer Commission and the bailable warrants dated 19.06.2024 were set aside as they were passed in violation of the moratorium. (Paras 2-6) B) Consumer Protection Act - Proceedings During Moratorium - Section 14 IBC - The District Consumer Commission allowed the complaint and directed return of the JCB machine after the moratorium had been imposed. Such proceedings are barred under Section 14 of the IBC. The court held that the continuation of the consumer complaint and the issuance of bailable warrants were illegal and without jurisdiction. (Paras 4-6)
Issue of Consideration
Whether the proceedings before the District Consumer Dispute Redressal Commission and the issuance of bailable warrants against the petitioner company and its officers are barred by the moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Final Decision
The court allowed the petition, quashed and set aside the order dated 20.07.2022 passed by the District Consumer Dispute Redressal Commission, Akola, in Consumer Complaint No.312/2021, and also set aside the bailable warrants dated 19.06.2024.
Law Points
- Moratorium under Section 14 of IBC bars continuation of proceedings against corporate debtor
- Consumer Protection Act proceedings cannot be initiated or continued during moratorium
- Bailable warrants issued during moratorium are illegal
