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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.5393 OF 2023

1. Anupam Dikshit ....Petitioner

V/S

1. S. Kumars Nationwide Limited

2. Om Prakash Agarwal

Appointed as the Liquidator of

S. Kumars Nationwide Limited ....Respondents

_________

Mr. Rohan Savant with Mr. Huzefa Khokhawala i/b M/s. Nankani &

Associates,

for the Petitioner.

Mr. Harsh Sheth i/b M/s. MDP Legal for Respondents.

__________

CORAM : SANDEEP V. MARNE, J.

RESERVED ON: 29 JANUARY 2026.

PRONOUNCED ON : 05 FEBRUARY 2026.

J U D G M E N T :

1. By this Petition, Petitioner challenges order dated 17 October

2022 passed by the learned Judge of City Civil Court, Greater Mumbai,

dismissing Chamber Summons No.1769 of 2019 �led by the Petitioner-

Plaintiff for adding Of�cial Liquidator as party Defendant in the Suit.

2.Brie�y stated, facts of the case are that Petitioner is a Plaintiff in

Summary Suit No.1398 of 2017 �led before the City Civil Court for

recovery of monies from the Defendant. Petitioner-Plaintiff is a

management professional and had joined the services wi th the

Respondent No.1 as Chief Operating Of�cer on 24 April 2006 in the High

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Value Fine Cotton Division. He was con�rmed in service on 24 January

2007. According to the Plaintiff, Respondent No.1 was irregular in

payment of salaries. Plaintiff resigned from services of Respondent No.1

with effect from 10 October 2014 alleging irregularities in payment of

salaries. By his letter dated 9 October 2014, he requested release of his

full gratuity. He was paid lump sum amount of Rs.5,00,000/- towards

gratuity. According to the Plaintiff, there are dues in respect of salaries

and other allowances from Respondent No.1. According to Petitioner-

Plaintiff, Respondent No.1 never disputed the liability to pay salaries but

cited the reason of �nancial crunch. Plaintiff has �led Summary Suit

No.1398 of 2017 on 4 October 2017 under Order XXXVII, Rule 2 of the

Code of Civil Procedure, 1908 (Code) before the City Civil Court for

recovery of principal sum of Rs.76,85,981/-.

3.Despite service of summons, Respondent No.1 failed to appear or

to apply for leave to defend within the prescribed time limit.

Accordingly, order has been passed on 22 June 2018 directing that the

Suit would proceed

ex parte against Respondent No.1.

4.Petitioner-Plaintiff claims that he became aware about �ling of

Company Petition No.294 of 2018 under Section 7 of Insolvency and

Bankruptcy Code, 2016 (IBC) by IDBI Bank Limited as �nancial creditor

before National Company Law Tribunal (NCLT) and by order dated 24

April 2018, moratorium was imposed in respect of Respondent No.1 and

an Interim Resolution Professional (IRP) was appointed. Petitioner-

Plaintiff informed the IRP about pendency of Summary Suit by letter

dated 18 July 2018. Petitioner-Plaintiff also lodged his claim with IRP.

Later, Resolution Professional (RP) was appointed in respect of

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Respondent No.1 and Petitioner pursued his claim with the RP. By order

dated 19 June 2019, NCLT made an order of liquidation in respect of

Respondent No.1. After acquisition of knowledge about liquidation of

Respondent No.1, Petitioner-Plaintiff preferred Chamber Summons

No.1769 of 2019 in the Summary Suit, seeking impleadment of the

Liquidator of Respondent No.1 (Respondent No.2) as party Defendant to

the Suit. Respondent No.2-Liquidator opposed his impleadment to the

Suit. By order dated 17 October 2022, the learned Trial Judge has

dismissed the Chamber Summons preferred by the Petitioner-Plaintiff.

Aggrieved by order dated 17 October 2022, the Petitioner-Plaintiff has

�led the present Petition.

5.Mr. Savant, the learned counsel appearing for Petitioner would

submit that the Trial Court has erred in rejecting Chamber Summons for

impleadment of the Liquidator. He would submit that the bar under

Section 63 of the IBC on jurisdiction of Civil Court is not applicable in

the present case. He would submit that under provisions of Section 33(5)

of the IBC, the prohibition is against institution of suit against corporate

debtor after passing of liquidation order. That there is no prohibition on

continuation of the suits already �led. That so far as the Liquidator is

concerned, he can �le a suit on behalf of corporate debtor. That if

Liquidator can �le a suit, he can also defend the same. He relies on the

judgment of Kerala High Court in The Liquidator of the Corporate

Debtor vs. The State of Kerala and Anr.

1

in support of his contention that

the prohibition is only on �ling of fresh suit or proceedings and that

there is no prohibition for continuation of pending suits or proceedings

under Section 33(5) of the IBC after liquidation order. He also relies on

1

WP (C) No.22096 of 2019 decided on 8 April 2022

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the judgment of Delhi High Court in Elecon Engineering Company

Limited vs. Energo Engineering Projects Limited and others

2

in support

of the contention that Section 63 of the IBC does not apply to suits

which are already pending before commencement of liquidati on

proceedings. He also relies on the judgment of this Court in Urban

Infrastructure Trustees Ltd. vs. Bhavik Bhimjiyani and others

3

in support

of his contention that Of�cial Liquidator can be impleaded as party to

the Suit. He however clari�es that the judgment of this Court is subject

matter of challenge before the Supreme Court in which initially

proceedings before this Court were stayed and subsequently the matter

was compromised before the Apex Court leaving open the question of

law. He relies on judgment of Division Bench of this Court in Cipla

Limited vs. Competent Authority and the District Deputy Registrar, Co-

operative Society and others

4

in support of his contention that the ratio

of judgment of this Court in Urban Infrastructure Trustees Ltd. (supra)

does not get diluted merely on account of leaving of question of law

open by the Apex Court while disposing of the Special Leave Petition. He

also relies upon judgment of Madras High Court in Chennai Metro Rail

Limited vs. Lanco Infratech Limited

5

in support of his contention that

Section 33(5) of the IBC does not apply to pending cases. Mr. Savant

would accordingly submit that the Trial Court has grossly erred in

dismissing the Chamber Summons.

6.Mr. Savant relies on judgment in Rajesh Kumar Agarwal and

Others vs. K.K. Modi and Others

6

in support of his contention that the

2

2022 SCC OnLine Del 2860

3

2018 SCC OnLine Bom 20447

4

2021 SCC OnLine Bom 622

5

2020 SCC OnLine Mad 26397

6

(2006) 4 SCC 385

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learned Trial Judge has erroneously gone into merits of the amendment

while deciding the Chamber Summons.

7.Mr. Savant further submits that Section 53 of the IBC only deals

with priority of claims and the said provision cannot be read to mean as

if claims towards salary in excess of 24 months get obliterated. He would

pray for setting aside the impugned order dated 17 October 2022 and for

impleadment of Liquidator as Defendant to the Suit.

8.Mr. Sheth, the learned counsel appearing for Respondents opposes

the Petition submitting that the learned Trial Judge has rightly rejected

the baseless Chamber Summons preferred by the Plaintiff. That since the

Company is in liquidation, neither Plaintiff’s Suit against the Company

is maintainable nor Of�cial Liquidator can be joined as a party

Defendant. He relies on Section 38 of the IBC in support of his

contention that the Liquidator needs to collect and consolidate all

claims of creditors. That the Plaintiff would be like a creditor and needs

to lodge his claim before Liquidator. That under Section 40 of the IBC,

Liquidator can adjudicate the claims and its decision

qua claim is

appealable under Section 42 of the IBC. He would therefore submit that

once Company goes in liquidation, there is a completely different

mechanism under Sections 38 to 42 of IBC for adjudication of claims.

That there cannot be a parallel inquiry into the claim of the Plaintiff in

the pending Suit. That the Suit itself has become infructuous and

therefore there is no question of addition of Liquidator to the Suit. He

also relies upon provisions of Section 53 of IBC in support of his

contention that the Plaintiff can no longer pursue the Suit for recovery

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of wages in excess of 24 months as workers dues of only upto 24 months

can be granted under Section 53 of the IBC. Relying on provisions of

Section 63 of the IBC, he submits that the jurisdiction of the Civil Court

is expressly barred. He would pray for dismissal of the Petition.

9.Rival contentions of the parties now fall for my consideration.

10.Petitioner’s Application for impleadment of second Respondent-

Liquidator has been rejected by the learned Trial Judge by the impugned

order. The reasons recorded by the learned Judge for rejection of the

Application are to be found in paragraphs 3 and 4 of the Order, which

read thus:

“3. Heard the Learned Advocate for plaintiff. The Advocate for plaintiff

relied upon Rajesh Kumar Aggarwal and Ors. Vs. K.K. Modi and Ors., reported

(2006) 4 Supreme Court Cases 385. The said citation is in respect of the

amendment. It has been observed that at the time of deciding the application

for amendment the correctness of the amendment should not be considered.

4. After going through the submission raised by the plaintiff and the reply

of the of�cial liquidator /respondents, it seems that the plaintiff �led the

present suit for recovery of the amount against the defendant. Admittedly, the

defendant Company has gone into liquidation and an of�cial liquidator has

been appointed by the NCLT in the Company Petition bear ing

No.CP(IV)294/NCLT/MB/2018 as per Order dated 24.04.2018. Since all the

proceedings of the defendant Company are taken by the of�cial liquidator, all

the claims of the creditors are to be taken up by the of�cial liquidator. As per

express bar of Section 63 of the Code of Civil Courts are barred from

entertaining any suit or proceedings in respect of the matter over which NCLT

has jurisdiction. Similarly, since Civil Court does not have jurisdiction to try

the suit, the of�cial liquidator also cannot be added as a party defendant to the

suit. The plaintiff will have to appear before the Liquidator to seek his claim

and therefore, the present Chamber Summons is not maintai nable. I,

therefore, proceed to pass the following Order:

ORDER

1. Chamber Summons No.1769 of 2019 is dismissed.

2. Parties to bear their own costs.”

11.Thus, the learned Trial Judge has relied on provisions of Section

63 of the IBC for holding that it does not have jurisdiction to try the Suit.

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This �nding of the learned Trial Judge appears to be contrary to the

provisions of Section 63 of the IBC which provides thus:

“63. Civil Court not to have jurisdiction.—No Civil Court or authority shall

have jurisdiction to entertain any suit or proceedings in respect of any matter

on which National Company Law Tribunal or the National Company Law

Appellate Tribunal has jurisdiction under this Code.”

12. Thus, jurisdiction of Civil Court is barred only in respect of

Suit or proceedings in respect of any matters on which NCLT or National

Company Law Appellate Tribunal (NCLAT) has jurisdiction under the

IBC. It cannot be contended that Plaintiff’s claim for unpaid salary can

be adjudicated by NCLT or NCLAT. The Suit is not �led in respect of a

matter on which NCLT or NCLAT has jurisdiction under the IBC. More

importantly, the Suit was already instituted well before admission of

Company Petition and before imposition of moratorium by order dated

24 April 2018. In my prima facie view therefore, bar of jurisdiction under

Section 63 of the IBC would not be attracted in the present case. Also,

what effect Section 63 of the IBC would have on pending suit also needs

to be decided independently and cannot be mixed up with the issue of

amendment of Plaint and impleadment of the Liquidator.

13.However, as of now, the issue of bar of jurisdiction under Section

63 of IBC is not really relevant. I have referred to provisions of Section

63 of IBC only because the learned Trial Judge has relied upon the same

in the impugned order. However, though �ndings are recorded that the

Court does not have the jurisdiction to try the Suit, the Suit has not been

dismissed as yet. The said �nding is recorded only in relation to the ratio

of impleadment of the Liquidator to the Suit. While deciding that issue,

the Court ought not to have gone into issue of maintainability of the

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Suit in view of provisions of Section 63 of IBC. The Court was dealing

with application for amendment of the Plaint and ought to have

restricted the consideration only to the aspect of permissibility to

amend the Plaint and implead the Liquidator. The approach of the Court

in touching upon the issue of maintainability of the Suit while deciding

the application for amendment is not appreciated. Reliance by Mr.

Savant on judgment of the Supreme Court in Rajesh Kumar Aggarwal

(supra) is apposite in which it is held thus:

19. While considering whether an application for amendment should or should

not be allowed, the court should not go into the correctness or falsity of the

case in the amendment. Likewise, it should not record a �nding on the merits

of the amendment and the merits of the amendment sought t o be

incorporated by way of amendment are not to be adjudged at the stage of

allowing the prayer for amendment. This cardinal principle has not been

followed by the High Court in the instant case.

14.In the present case, the Trial Court has decided not just merits of

the averments sought to be added in the Plaint but also the issue of

maintainability of suit and has ruled that the suit itself is not

maintainable.

15.Coming to the issue of permissibility to implead the Liquidator to

the Suit, it is seen that for deciding the issue of impleadment of

Liquidator to the Suit, provisions of Section 33 of the IBC are relevant,

and which are pressed into service by the Respondent and which provide

thus:

“33. Initiation of liquidation.—

(

1) Where the Adjudicating Authority,—

(

a) before the expiry of the insolvency resolution process period or the

maximum period permitted for completion of the corporate insolvency

resolution process under section 12 or the fast track corporate

insolvency resolution process under section 56, as the case may be,

does not receive a resolution plan under sub-section (

6) of section 30;

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or

(

b) rejects the resolution plan under section 31 for the non-compliance

of the requirements speci�ed therein,

it shall—

(

i) pass an order requiring the corporate debtor to be liquidated in the

manner as laid down in this Chapter;

(

ii) issue a public announcement stating that the corporate debtor is in

liquidation; and

(

iii) require such order to be sent to the authority with which the

corporate debtor is registered.

(

2) Where the resolution professional, at any time during the corporate

insolvency resolution process but before con�rmation of resolution plan,

intimates the Adjudicating Authority of the decision of the committee of

creditors approved by not less than sixty-six per cent. of the voting share to

liquidate the corporate debtor, the Adjudicating Authority shall pass a

liquidation order as referred to in sub-clauses (

i), (ii) and (iii) of clause (b) of

sub-section (

1).

Explanation.—For the purposes of this sub-section, it is hereby declared that

the committee of creditors may take the decision to liquidate the corporate

debtor, any time after its constitution under sub-section (

1) of section 21 and

before the con�rmation of the resolution plan, including at any time before

the preparation of the information memorandum.

(

3) Where the resolution plan approved by the Adjudicating Authority under

section 31 or under sub-section (

1) of section 54-L, is contravened by the

concerned corporate debtor, any person other than the corporate debtor,

whose interests are prejudicially affected by such contravention, may make an

application to the Adjudicating Authority for a liquidation order as referred to

in sub-clauses (

i), (ii) and (iii) of clause (b) of sub-section (1).

(

4) On receipt of an application under sub-section (3), if the Adjudicating

Authority determines that the corporate debtor has contravened the

provisions of the resolution plan, it shall pass a liquidation order as referred to

in sub-clauses (

i), (ii) and (iii) of clause (b) of sub-section (1).

(5) Subject to section 52, when a liquidation order has been passed, no suit or

other legal proceeding shall be instituted by or against the corporate debtor:

Provided that a suit or other legal proceeding may be instituted by the

liquidator, on behalf of the corporate debtor, with the prior approval of the

Adjudicating Authority.

(

6) The provisions of sub-section (5) shall not apply to legal proceedings in

relation to such transactions as may be noti�ed by the Central Government in

consultation with any �nancial sector regulator.

(

7) The order for liquidation under this section shall be deemed to be a notice

of discharge to the of�cers, employees and workmen of the corporate debtor,

except when the business of the corporate debtor is continued during the

liquidation process by the liquidator.”

(emphasis added)

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16.Thus, under Section 33(5) of the IBC, once liquidation order is

passed, no Suit or other legal proceedings can be initiated by or against

the corporate debtor. However, there is no embargo on the Liquidator,

who is free to sue on behalf of the corporate debtor with prior approval

of Adjudicating Authority. Since Liquidator can sue, I do not see any

reason why Liquidator cannot defend an action on behalf of the

corporate debtor.

17.In the present case, the Suit has been instituted by the Plaintiff on

4 October 2017, whereas the liquidation order is passed on 19 June 2019.

In The Liquidator of the Corporate Debtor (supra), the learned Single

Judge of Kerala High Court has considered the effect of provisions of

Section 33(5) of IBC and has held in paragraph 10 as under;

“10. M/s. Orieon Kuries and Loans Private Limited was undergoing Corporate

Insolvency Resolution Process (CIRP) since 10.07.2017 and upon failure to

resolve the insolvency, the NCLT, in exercise of the powers under Section 33

(1) (a) of the Code, by Ext.P1 order dated 15.01.2018, ordered liquidation of the

Corporate Debtor. The moratorium which was in force from 10.07.2017 ceased

to have effect from 15.01.2018. Under Section 14(1) (a) of the Code, on

declaration of moratorium, the institution of suits or continuation of pending

suits or proceedings against the Corporate Debtor is prohibited. With the

passing of Ext.P1 order, the moratorium ceased to have effect. As per Section

33(5) of the Code, after Ext.P1 liquidation order, no suit or legal proceedings

can be instituted against the Corporate Debtor. Under Section 33 (5), unlike

Section 14(1) (a), there is no prohibition for continuance of already instituted

suits and proceedings. Section 5 (17) of the Code de�nes “liquidation

commencement date” to mean the date on which proceedings for liquidation

commence in accordance with Section 33 or Section 59, as the case may be.

The liquidation commencement date is the date of Ext.P1, viz; 15.01.2018 and

the date of �ling the claim petition under the Minimum Wages Act, 1948 is

25.04.2012. The prohibition for continuation of pending suits or proceedings

against the Corporate Debtor under Section 14 (1) (a) was only for the period

from 10.07.2017 to 15.01.2018. Thereafter, the prohibition is only in respect of

institution of fresh suits or proceedings. There is no prohibition of

continuation of pending suits or proceedings under Section 33(5) of the Code

after 15.01.2018. The petitioner received summons from the Controlling

Authority under the Minimum Wages Act, 1948 on 10.01.2019 and entered

appearance and �led written statement. Ext.P3 order was passed on

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18.07.2019. Since there is no prohibition of continuation of pending suits or

proceedings under Section 33(5) of the Code, the Controlling Authority was

well within its powers to pass Ext.P3 order during the liquidation process.”

18.Thus, the Kerala High Court has held that there is no prohibition

under Section 33(5) of the IBC for continuance of Suits already instituted

and that the prohibition is only in respect of institution of fresh suits or

proceedings.

19.Similar view is taken by this Court in Urban Infrastructure

Trustees Ltd. (supra) in which Respondent No.5 therein was ordered to

be wound up by NCLT. The Applicant therein had �led application under

Section 11 of the Arbitration and Conciliation Act, 1996 for appointment

of Arbitrator. The Applicant therein applied for amendment of Section

11 Application for its substitution with the Liquidator. The Respondent

therein opposed substitution by referring to Section 33(5) of the IBC.

This Court however held in paragraph 8 as under:

“8. Having heard the learned Counsel for the parties and having perused the

orders passed by National Company Law Tribunal and the provisions of

Section 33(5) as also the provisions of Section 35(1)(k), I am not persuaded to

accept the submissions as urged on behalf of respondent nos.1 and 2. This for

the reason that Section 33(5) provides that when a liquidation order has been

passed, “no suit or legal proceedings shall be instituted by or against the

corporate debtor”. Even the proviso under the said provision says that a suit or

other legal proceedings may be instituted by the liquidator, on behalf of the

corporate debtor, only with prior approval of adjudicating authority (NCLT).

Thus it is the institution of a proceeding which is of relevance. The present

case is not a case where the Of�cial Liquidator would be instituting the

proceedings but would be pursuing the proceedings already executed. Even

Section 35(1) recognizes various powers as conferred on the liquidator subject

to directions of the Adjudicating Authority (NCLT). On a plain reading of this

provision it can be clearly seen that the powers are substantive and which

includes power to take such measures and protect the property of the

corporate debtor. Sub- section (1)(k) of Section 35 provides that the liquidator

would have power to institute or defend any suit, prosecution or other legal

proceedings, civil or criminal, in the name of on behalf of the corporate debtor.

On a conjoint reading of Section 33(5) read with Section 35(1) and more

particularly 35(1)(k), I am of the opinion that there is no embargo on the

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Of�cial Liquidator to be impleaded as a party to the present proceedings and

for the Of�cial Liquidator to prosecute this proceeding.”

20.Thus, in Urban Infrastructure Trustees Ltd. (supra), this Court held

that on conjoint reading of Section 33(5) read with Section 35(1) and

more particularly 35(1)(k) of the IBC that there is no embargo on Of�cial

Liquidator to be impleaded as a party to Section 11 proceedings. In his

usual fairness, Mr. Savant has invited attention of this Court to the fact

that the judgment of this Court in Urban Infrastructure Trustees Ltd.

(supra), which was challenged before the Supreme Court in Special Leave

Petition (C) Nos.391-392 of 2019, in which initially stay was granted to

the further proceedings by order dated 14 January 2019. However, the

dispute was compromised before the Apex Court by which Respondent

No.5 (Company in liquidation) was agreed to be dropped from

arbitration proceedings and accordingly permission was granted for

withdrawal of the SLP. However, while permitting withdrawal of SLP, the

Apex Court left question of law raised in the Petition open to be

considered in appropriate proceedings. It is well settled position that

even if question of law is left open by the Supreme Court while disposing

of proceedings with consent of parties, it does not amount to setting

aside the principles of law in the judgment rendered after adjudicating

the rights of the parties. It would be apposite the refer to the judgment

of this Court in Cipla Limited (supra), in which it is held in paragraphs

171 to 174 are as under:

“171. A perusal of the order dated 18

th

April 2018 passed by the Hon'ble

Supreme Court in the Special Leave to Appeal arising out of the judgment

delivered by this Court in the case of

Paul Parambi, Chief Promoter, Springs

CHS Ltd.

v. The Bombay Dyeing and Manufacturing Co. Ltd. (supra) indicates

that the Hon'ble Supreme Court had granted leave in the said Special Leave to

Appeal. By consent of parties, the Hon'ble Supreme Court had set aside the

said judgment of this Court in the case of

Paul Parambi, Chief Promoter,

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Springs CHS Ltd. v. The Bombay Dyeing and Manufacturing Co. Ltd. (supra)

and had kept the question of law decided therein open. There were no

arguments advanced by any of the parties. No reasons were recorded by the

Hon'ble Supreme Court in the said order. The said order was by consent of

parties.

172. A Division Bench of this Court in the case of

Indian Cork Mills Private

Limited

v. The State of Maharashtra (supra) after adverting to the judgment of

Supreme Court in the case of

Municipal Corporation of Delhi v. Gurnam Kaur,

(1989) 1 SCC 101 has held that it is a settled principle of law that when the

Court passes an order, by consent of the parties, the Court does not adjudicate

upon the rights of the parties nor does it lay down any principle. Thus it

cannot be said that the statement of law as declared by the Division Bench of

this Court in interpreting the provisions of Section 3B and Section 13 falling

under Chapter I-A of Maharashtra Slum Areas (Improvement, Clearance and

Redevelopment) Act, 1971 in the case of

Anil Gulabdas Shah, in any manner

stands diluted by the consent order between the parties. In our view, the

principles laid down by the Division Bench of this Court in the case of

Indian

Cork Mills Private Limited

v. The State of Maharashtra (supra) squarely applies

to the facts of this Court.

173.

In our view, by consent of parties, principles of law laid down by this

Court after adjudicating upon the rights of parties cannot be set aside before

the Hon'ble Supreme Court. The said order passed by the Hon'ble Supreme

Court on 18

th

April 2018 was not passed on adjudication of any issue or after

considering the arguments advanced by the parties and was passed without

recording any reason by consent of parties. In our view, the principles of law

laid down by this Court in the judgment in case of Paul Parambi, Chief

Promoter, Springs CHS Ltd. (supra) does not cease to have effect as binding

precedent. The view taken by the Division Bench of this Court in the case of

Indian Cork Mills Private Limited v. The State of Maharashtra (supra) is

adverting to the principle of law laid down by the Hon'ble Supreme Court in

the case of

Municipal Corporation of Delhi v. Gurnam Kaur (supra).

174. It has been held by the Hon'ble Supreme Court in the said judgment that

when a direction or order is made by consent of the parties, the Court does not

adjudicate upon the rights of the parties nor does it lay down any principle.

Quotability as ‘law’ applies to the principle of a case, its ratio decidendi. The

only thing in a Judge's decision binding as an authority upon a subsequent

Judge is the principle upon which the case was decided. The task of �nding the

principle is fraught with dif�culty because without an investigation into the

facts, as in the present case, it could not be assumed whether a similar

direction must or ought to be made as a measure of social justice. This Court

rejected the contentions of the respondents in that matter that the judgment

of Division Bench in the case of

Anil Gulabdas Shah (supra) had merged in the

consent orders passed by the Supreme Court considering the well settled

position in the law as laid down in the decision in

S. Shanmugavel Nadar v.

State of T.N., (2002) 8 SCC 361.

(emphasis added)

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21.Therefore, even though the question of law is left open by the

Apex Court while permitting withdrawal of proceedings in Urban

Infrastructure Trustees Ltd. (supra), it cannot be a reason for not

following the judgment of this Court in which a principle of law is

enunciated that there is no embargo on impleadment of liquidator in

view of the provisions of Section 33(5) read with Sections 35(1) and

35(1)(k) of the IBC.

22.In Elecon Engineering Company Limited (supra), the issue before

learned Single Judge of Delhi High Court was whether Suit could proceed

after liquidation of Defendant No.1-Company. The Suit was �led seeking

permanent injunction to restrain the Company from encashing the bank

guarantee and recovery of monies. During pendency of Suit, order of

liquidation was passed against the Company. The Delhi High Court took

into consideration various provisions of IBC, particularly Section 33(5) of

the IBC. It also took into consideration the ratio of the judgment of

Madras High Court in Chennai Metro Rail Limited (supra), in which it is

held that pending matters are consciously excluded under Section 33(5)

of the IBC. Agreeing with the view expressed by Madras High Court,

Delhi High Court held in paragraphs 17 to 20 as under:

“17. I am in respectful agreement with the views expressed by the Madras High

Court and Kerala High Court above. To appreciate the difference in the

language of Sections 14 and 33(5) of the IBC it may be useful to refer to the

scheme of the IBC in the context of the aforesaid sections. Section 14 and

Section 33 are part of two separate Chapters of IBC. Section 14 is part of

Chapter II which deals with "Corporate Insolvency Resolution Process",

whereas Section 33 is a part of Chapter III which deals with "Liquidation

Process". Chapter II of the IBC deals with the Resolution Process in respect of a

‘corporate debtor’, where the objective is to revive the corporate debtor by

coming out with a resolution plan, which is to be approved by the committee

of creditors and thereafter, by the Adjudicating Authority. Chapter III of the

IBC deals with the liquidation process which comes into effect upon the failure

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to come out with a resolution plan within the prescribed time period or a

resolution plan not being approved. The moratorium under Section 14 of the

IBC comes into effect upon the Adjudicating Authority passing an order

declaring a moratorium and continues till the completion of Corporate

Insolvency Resolution Process. Upon the approval of the resolution plan by the

Adjudicating Authority or upon passing of a liquidation order under Section 33

of the IBC, the moratorium shall cease to have effect. After the Adjudicating

Authority (NCLT) passes a liquidation order under section 33(4) of the IBC, a

fresh moratorium in terms of section 33(5) of the IBC comes into place.

18. The objective of the liquidation process is to derive the maximum value

from the assets of the corporate debtor for the bene�t of various creditors and

other stakeholders in the company under liquidation. The objective is not the

revival of the company. It is perhaps for this reason that unlike Chapter II, no

time limits have been provided in Chapter III of the IBC. Therefore, the

legislature in its wisdom has decided not to include "

pending suits or legal

proceedings

" within the scope of moratorium under Section 33(5) of the IBC.

To be noted that even the proviso to section 33(5) of the IBC only uses the

word "

instituted” but does not use the word "pending". Further, in terms of the

said proviso, even a fresh suit or legal proceedings may be instituted by the

Liquidator with the prior approval of the Adjudicating Authority. So, unlike

Section 14 of the IBC, under Section 33(5) of the IBC there is no absolute bar

in a suit or legal proceedings continuing along with the liquidation

proceedings.

19. It is vehemently contended on behalf of counsel for the Liquidator that in

light of Sections 63 and 231 of the IBC, the jurisdiction of the Civil Court is

barred and therefore, the present suit cannot be continued as the claims made

in the said suit fall within the jurisdiction of NCLT. Reliance is also placed on

Section 60(5) of the IBC.

20. A reading of Section 63 of the IBC would reveal that the bar on the Civil

Court is only to "

entertain any suit or proceeding in respect of any matter on

which National Company Law Tribunal has the jurisdiction under this Code

".

This would not apply to suits, which were already pending before the

commencement of liquidation proceedings. Section 231 of the IBC,

inter alia,

states that no injunction shall be granted by a Court in respect of action taken

in pursuance to any order passed by the Adjudicating Authority. The intent is

clear that the bar is only in respect of civil suits �led after an order has been

passed by the Adjudicating Authority. In my view, the aforesaid bar under

Sections 63 and 231 of the IBC would only be in respect of fresh suits. Sections

63 and 231 of the IBC cannot be read in manner so as to defeat the provisions

of Section 33(5) of the IBC. If Sections 63 and 231 of the IBC are interpreted in

the manner canvassed by counsel for the Liquidator, the provision of Section

33(5) of the IBC would be rendered otiose and the moratorium under Section

33(5) of the IBC, which was to apply only in respect of fresh suits would also

apply to pending suits. This cannot be the intention of the legislature.

Therefore, I do not �nd any merit in the submission of the Liquidator that the

present suit cannot proceed in view of Sections 63 or 231 of the IBC.”

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23.Considering the principles enunciated in the above judgment, I

am of the view that there is no embargo on liquidator defending the Suit

under Section 33(5) of the IBC. More importantly, Section 33(5) does not

apply to pending Suits. In the present case, the Suit has been instituted

well before liquidation of Respondent No.1. Thus, bar under Section 63

of the IBC is not attracted to the present Suit, which is �led for recovery

of unpaid salary, which issue cannot be adjudicated by NCLT or NCLAT.

24.Respondents have relied on provisions of Sections 38 to 42 of the

IBC in support of the contention that there is complete mechanism for

adjudication of claims before Liquidator and that therefore separate

Suits would not be maintainable. I am unable to agree. It would only be

an option open to a Claimant to raise a claim before the Liquidator

which can be adjudicated under Sections 38 to 40 of IBC. However, in a

case where Plaintiff has already instituted the Suit, it cannot be

contended that provisions of Sections 38 to 42 would have the effect of

rendering the Suit not maintainable upon liquidation of Defendant

therein.

25.So far as reliance of Respondent on Section 53 of the IBC is

concerned, the same deals with distribution of assets and provides thus:

53. Distribution of assets.—

(

1) Notwithstanding anything to the contrary contained in any law enacted by

the Parliament or any State Legislature for the time being in force, the

proceeds from the sale of the liquidation assets shall be distributed in the

following order of priority and within such period and in such manner as may

be speci�ed, namely:—

(

a) the insolvency resolution process costs and the liquidation costs

paid in full;

(

b) the following debts which shall rank equally between and among

the following:—

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(

i) workmen’s dues for the period of twenty-four months

preceding the liquidation commencement date; and

(

ii) debts owed to a secured creditor in the event such secured

creditor has relinquished security in the manner set out in

section 52;

(

c) wages and any unpaid dues owed to employees other than workmen

for the period of twelve months preceding the liquidat ion

commencement date;

(

d) �nancial debts owed to unsecured creditors;

(

e) the following dues shall rank equally between and among the

following:—

(

i) any amount due to the Central Government and the State

Government including the amount to be received on account of

the Consolidated Fund of India and the Consolidated Fund of a

State, if any, in respect of the whole or any part of the period of

two years preceding the liquidation commencement date;

(

ii) debts owed to a secured creditor for any amount unpaid

following the enforcement of security interest;

(

f) any remaining debts and dues;

(

g) preference shareholders, if any; and

(

h) equity shareholders or partners, as the case may be.

(

2) Any contractual arrangements between recipients under sub-section ( 1)

with equal ranking, if disrupting the order of priority under that sub-section

shall be disregarded by the liquidator.

(

3) The fees payable to the liquidator shall be deducted proportionately from

the proceeds payable to each class of recipients under sub-section (

1), and the

proceeds to the relevant recipient shall be distributed after such deduction.

Explanation.—For the purpose of this section—

(

i) it is hereby clari�ed that at each stage of the distribution of

proceeds in respect of a class of recipients that rank equally, each of

the debts will either be paid in full, or will be paid in equal proportion

within the same class of recipients, if the proceeds are insuf�cient to

meet the debts in full; and

(

ii) the term “workmen’s dues” shall have the same meaning as

assigned to it in section 326 of the Companies Act, 2013 (18 of 2013).

26.Thus, what is provided under Section 53 is only the priority of

debts. Respondent No.2 is not right in contending that workmen’s dues

only for the period of 24 months can be paid from assets by the

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Liquidator. It is just that the said dues of the workmen for a period of 24

months have priority over other debts. Therefore, provisions of Section

53(1)(b)(i) cannot be read to mean that the wages beyond 24 months get

obliterated. Also, the said provision does not mean an embargo on

jurisdiction of Civil Court in adjudicating claims towards unpaid salary

in excess of period of 24 months.

27.Considering the overall conspectus of the case, I am of the view

that the learned Trial Judge has erred in rejecting the Chamber

Summons for impleadment of the Liquidator. It has erred in holding that

it has no jurisdiction to try the Suit or that Plaintiff must appear before

the Liquidator to seek his claim. Impugned order dated 17 October 2022

is thus indefensible and liable to be set aside.

28.The Petition accordingly succeeds, and I proceed to pass the

following order:

i)The impugned order dated 17 October 2022 passed by the City

Civil Court in Chamber Summons No.1769 of 2019 �led in

Summary Suit No.1398 of 2017 is set aside.

ii)Chamber Summons No.1769 of 2019 is made absolute in terms of

the prayers made therein. Necessary amendments in the Plaint be

carried out within a period of four weeks.

29.With the above directions, the Writ Petition is allowed and

disposed of. There shall be no orders as to costs.

(SANDEEP V. MARNE, J.)

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SUDARSHAN

RAJALINGAM

KATKAM

Digitally signed by

SUDARSHAN

RAJALINGAM KATKAM

Date: 2026.02.05

22:08:18 +0530