The NCLAT has held that an agreement barring the filing of a suit or case between parties in India while vesting the jurisdiction with a foreign court does not oust the jurisdiction of the Adjudicating Authority i.e National Company Law Tribunal (NCLT) for proceedings under the Insolvency and Bankruptcy Code (IBC).
An application under Section 9 IBC was filed by Benteler Trading International GMBH, a German Company against the Corporate Debtor, Excel Metal Processors Private Limited for failing to make payment to the extent of US $1,258,219.42 inclusive of interest @ 15% per annum.
After the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench admitted the application, the Director of the Corporate Debtor, Imran Iqbal Khan moved an appeal before the NCLAT.
The Appellant argued that as per the agreement between the parties, any suit or case between them was maintainable only in the court at Germany and no case could be filed in any court in India.
Hence, it was argued that the NCLT has no power to entertain the application under Section 9.
Analysis of the order:
- Section 63 of the Code bars jurisdiction of the Civil Court in respect of any matter on which NCLT or National Company Law Appellate Tribunal (NCLAT) has jurisdiction under the Code.
- Section 231 of the Code also bars the jurisdiction of High Court.
- Section 60(5)(c) of the Code empowers the NCLT to entertain the dispute raised by the suit.
- The Code is a self contained legislation conferring supervisory powers on the NCLT over CIR Process, right from the stage of an application being made for initiation of CIR Process, to the completion of CIR Process and/or liquidation, as the case may be. Thus, any assertion by anyone or any issue arising out of the CIR Process under the provisions of the Code, falls within the exclusive domain and jurisdiction of NCLT.
- It is only owing to the provisions of the Code, that on commencement of the CIR Process with the order of NCLT, the management of the corporate debtor has been vested in the RP, also appointed by the NCLT, and resolution plan of the corporate debtor have been invited along with BBGs in favour of SBI and the resolution plans submitted by the plaintiff have been approved by CoCs and submitted for approval of NCLT and on default by the plaintiff in submitting PBGs inspite of approval of resolution plans by CoCs and issuance and acceptance of LoIs the BBGs, have been invoked by SBI.
- Section 60(5)(c) of the Code provides that, “Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the Code”. The questions raised in these lis, have clearly arisen out of our in relation to the insolvency resolution of Castex Ltd. and ARGL Ltd. being corporate debtors. Once it is so, Section 63 of the Code provides, “No civil court……shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal……. has jurisdiction under this Code”. Since the questions raised in these suits arise out of or in relation to insolvency resolution and the NCLT has jurisdiction to entertain the same. The jurisdiction of this Court will also be barred by Section 231 of the Code which provides that “No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority is empowered, by or under, this Code to pass any order…….”.
- The jurisdiction of this(high) Court is thus expressly barred over the subject matter of these suits, by aforesaid provisions of the Code.
Click here to read full order: Excel Metals Processors Limited Vs Benteler