Allied Laws

  1. Winding up petition – IBC provisions vis a viz Companies Act

The Court held that in a conflict, the provisions of the IBC would prevail over the Companies Act. Further, the Court held that once a winding up petition was admitted, it should trump any subsequent attempt at revival of the company through petitions under Sections 7 or 9 IBC and that a petition under Section 7 IBC was an independent proceeding which must be tried on its own merits.

A Navinchandra Steels Private Limited v. SREI Equipment Finance Limited [2021] 125 taxmann.com 50 (SC) [01-03-2021]

  1. Interpretation of statutes – noscitur a sociis – nature of proceedings under the Negotiable Instruments Act 1881- Sections 138, 141 of the Negotiable Instruments Act 1881, Section 8 IBC]

The question before the Court was whether proceedings under the Negotiable Instruments Act were hit by Section 14 IBC. The Court held that the exception in Section 14(3) to moratorium included transactions evidencing a debt or a liability, as was clear from the language of Sections 96(3), 101(3), and 14(3)(a)/(b) IBC. The Court also held that the word ‘or’ in Section 14(1)(a) in “the institution of suits or continuation of pending suits” must be read conjunctively. The Court also held that since the word proceedings is widened by the phrasing of “any judgment, decree or order” and “any court of law, tribunal…” and thus criminal proceedings under the CrPC would also be prohibited. When asked to use the noscitur a sociis rule of interpretation, the Court ruled that where a residuary phrase is used as a catch-all expression to take within its scope what may reasonably be comprehended by a provision, noscitur a sociis could not be used to colour an otherwise wide expression. The Court also reiterated that the purpose of the moratorium would be chipped away if quasi criminal proceedings which would deplete the assets of the corporate debtor were permitted. The Court ruled that a quasi-criminal proceeding under Chapter XVII of the NI Act would be a proceeding under Section 14(1)(a) and the moratorium would attach to such proceeding. Further, the Court ruled that such moratorium would only prohibit proceedings against the corporate debtor and proceedings under Section 141 NI Act could be continued against persons, such as the Director of the corporate debtor.

P Mohanraj & Ors. v. M/s Shah Brothers Ispat Pvt Ltd [2021] 125 taxmann.com 39 (SC) [01-03-2021]

  1. Consumer Protection Act, – pecuniary jurisdiction NCDRC – change of forum

The consumer case was instituted on 18.06.2020 under the provisions of the Consumer Protection Act, 1986. Meanwhile, the material provisions of the Consumer Protection Act, 2019 were notified to come into force on 20.7.2020 and 24.07.2020. The NCDRC dismissed the consumer case on the ground that after the enforcement of the 2019 Act, its pecuniary jurisdiction has been enhanced from rupees one crore to ten crores. The Court, after a detailed consideration of the law on change of forum, set aside the NCDRC order, and held that all the proceedings instituted before 20.07.2020 under the 1986 Act shall continue to be heard by the fora corresponding to those designated under the 1986 Act, and not be transferred in terms of the new pecuniary limits established under the 2019 Act. In arriving at the aforesaid conclusion, the Court also took note of the financial hardship to the consumer and the delay that may accrue on account of transfer of pending cases to the lower fora.

Neena Aneja & Anr. v. Jai Prakash Associates Ltd. [Civil Appeal Nos. 3766-3767 of 2020, Dated : 16th March, 2021 (SC)]

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