13/11/2017
6
The High Court of Judicature at Allahabad has recently decided on a writ petition filed by an ex-director of Lohia Machines Limited (LML). The said company is facing moratorium with prayer that the repayment plan which was pending before the Board for Industrial and Financial Reconstruction (BIFR) remain operative despite moratorium.
Noticeably, LML, was declared a sick company by the BIFR in 2007. A rehabilitation scheme, arrived under the SICA Act, 1985 was pending before the BIFR. BIFR was later dissolved in December 2016 in view of notification of the SICA Repeal Act, 2003. However, insolvency against LML was triggered by itself under Section 10 of the Insolvency and Bankruptcy Code, 2016. The NCLT while admitting the petition has passed an order under Section 14 of the IBC, prohibiting institution or continuance of any suits against the debtor company (LML).
The HC however observed that there is no lis between the parties to adjudicate on, given that LML is facing moratorium under the IBC. The court also recorded that:
“However, no authoritative finding can be recorded in this regard since the records of the NCLT are not before us and pleadings are inadequate. Further, the company (LML) has also not been impleaded as a party and has consequently not submitted its stand in the instant writ petition. As such the claim of the petitioner cannot be adjudicated at this stage in the instant writ petition ”
The court, however, also wrote in its judgment that while it cannot intervene at this stage, the petitioner has the liberty to question the veracity of claims if the respondent banks do not stake their claims in accordance with the sanctioned scheme.
