IBC – Code does not relate to the insolvency resolution of individuals and partnership firms – HELD that Section 95 petition even at the stage of filing is not maintainable and NCLT has no jurisdiction.
The petitioner is the partnership firm and developer / infrastructure development business. On 23.12.2009, there was MOU between the land owners with Respondent No.2 Buoyant Technology Constellation Pvt Ltd. The said company had entered into distinct joint development agreements for joint development of lands.
On account of the disputes, the petitioner and Manyata Infrastructure Development – a private entity issued notice to the Company for termination of Joint Development Agreement and damages.
On 10.10.2022, the petitioner firm gave arbitration notice. On 17.10.2022, the Company replied the notice and nominated its arbitrator. On 5.12.2022, the petitioner filed statement of claim. On 25.1.2023, the Company filed its counter claim. Objections to the counter claim and rejoinder were also filed.
Thereafter, the respondent Company issued the legal notice under Section 95 of the IBC demanding huge sums against the alleged loan account from the petitioner and its partners. The Company also filed petition before NCLT.
HELD that the moment a section 95 petition is filed, interim moratorium is axiomatic.
Interim moratorium places any corporate debtor in a state of stillness as found in Section 96(1)(b) of the Code. Section 96(2) of IBC mandates that when an application is made it shall operate against all the partners of the firm and appointment of Resolution Professional. These are consequences of filing section 95 application and not entertaining by the Tribunal. Nowhere the Directors have stood as personal guarantors to any of the problems of the firm. Therefore, it cannot be said that the proceedings before NCLT are maintainable.
If a quasi judicial authority or a Tribunal does not have jurisdiction to entertain a petition merely because it is at the stage of filing, it cannot be permitted to be proceeded further. If the section 95 petition is not fileable before NCLT it cannot be allowed to be proceeded upto the stage of whether it is entertainable or not. A non-fileable petition has dire consequences, let alone its entertainment. Therefore, such proceedings which are on the fact of it, dehors jurisdiction must be nipped in the bud and should never be allowed to germinate any further.
Judgment dated 6.3.2024 in W.P.No.26977 of 2023 (GM-RES) of M/s. Manyata Reallty Vs. The Registrar, National Company Law Tribunal and others with connected writ petitions
