Court No. - 29 Case :- WRIT - C No. - 32444 of 2017 Petitioner :- Deepak Singhania Respondent :- Union Of India And 9 Others Counsel for Petitioner :- Dinesh Kacker,Akash Chandra Maurya Counsel for Respondent :- A.S.G.I.,Chandan Sharma,Jeevan Kumar,Krishna Kant Tiwari,P.K.Sinha,Pranjal Mehrotra,R.V. Pandey,Satish Chaturvedi,Shashi Dhar Sahai,Siddharth Hon'ble Tarun Agarwala,J. Hon'ble Ajay Bhanot,J. The petitioner contends that he is a promoter, director and guarantor in M/s LML Limited, which is a company incorporated under the Companies Act, 1956. This company was declared "sick" under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The rehabilitation scheme was pending consideration before the Board constituted under the said Act and, during its pendency, the Act was abolished with effect from 01.12.2016. The repeal Act provided a saving clause, namely, that any action taken under the Act will not affect any right, privilege, obligation or liability that had already been acquired by the parties under the Act. It was contended that for implementation of the rehabilitation scheme various meetings were held with the financial institutions and the respondent- Bank agreed and sanctioned the repayment of the overdues. Such repayment schedule was subject to the sanction of the revival scheme by the Board for Industrial and Financial Reconstruction (BIFR). But before the scheme could be granted,
-2- the Act was abolished and the matter came to an end. One of the contentions raised by the petitioner is that the action of the respondents in sanctioning the repayment of the dues is binding upon them and such sanction is saved by Section 5 of the Repeal Act. For facility, Section 5 of the Repeal Act is extracted hereunder: "5. Savings. -- (1) The repeal by this Act of the repealed enactment shall not (a) affect any other enactment in which the repealed enactment has been applied, incorporated or referred to; (b) affect the previous operation of the repealed enactment or anything duly done or suffered thereunder; (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment; (d) affect any order made by the Board for sanction of the schemes; (e) affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred or any remedy or proceeding in respect thereof or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand, or any indemnity already granted, or the proof of any past act or thing; (f) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against the repealed enactment, affect any investigation, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and may such privilege forfeiture or punishment may be imposed as if this Act had not been passed; (g) affect any principle or rule of law, or establishment jurisdiction, form or course of pleading, practice or procedure,
-3- or existing usage, custom, privilege, restriction, exemption, office or appointment, notwithstanding that the same respectively may have been in any manner affirmed or recognized or derived by, in, or from, the repealed enactment; (h) revive or restore any jurisdiction, office, custom, liability, right, title, privilege, restriction, exemption, usage, practice, procedure or other matter or thing not now existing or in force. (2) Save as otherwise provided in section 4 and in sub-section (1) of this section, the mention of particular matter in the said section and sub-section shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal." It was contended that in view of the savings clause, the rights acquired or accrued and liabilities incurred during its operation would be binding and that the Repeal Act was to prevent the obliteration of a statute, inspite of its repeal to keep intact rights acquired or accrued liabilities incurred during its operation and permit continuance of institution of any legal proceedings or recourse to any remedy which may have been available before the repeal for enforcement of such rights and liabilities. In support of his contention, the learned counsel placed reliance upon a decision of the Supreme Court in Gammon India Ltd. Vs. Special Chief Secretary and others, 2006 (3) SCC 354. It was contended that by a letter dated 4th August, 2012 the respondent-banks had intimated that the appropriate authority of the bank has sanctioned/approved repayment of the debt as per the terms and conditions mentioned therein. It was contended that even though the scheme could not be sanctioned in the SICA proceedings, nonetheless, the arrangements entered between the petitioner and the respondent-banks are
-4- inter-se binding and is saved by the saving clause. The petitioner therefore, prayed that a writ of mandamus should be issued commanding the respondents to adhere to their respective settlement agreements. Having heard Sri M.M. Lahoti, Sri Dinesh Kacker along with Sri Akash Chandra Maurya, the learned counsel for the petitioner and Sri Satish Chaturvedi, Sri Pranjal Mehrotra, Sri P.K. Sinha, Sri Jeevan Kumar, Sri M.M. Agarwal, Sri K.K. Tiwari, Sri R.V. Pandey, Sri S.D. Sahai, Sri Chandan Sharma, the learned counsel for the respondents, we find that the company which has not been made a party in these proceedings has filed an application before the National Company Law Tribunal for initiating Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code of 2016) and for public announcement of the initiation of Corporate Insolvency Resolution Process and to declare a moratorium in terms of Section 14 of the Code of 2016. The Court finds that the Tribunal by an order dated 30th May, 2017 has appointed a person as an Interim Resolution Professional and also also issued an order of moratorium under Section 14 of the Code of 2016 which will have effect from 30th May, 2017 till the completion of corporate insolvency resolution process or until the Tribunal approves the resolution plan under Section 31(1) of the Code of 2016 or passes an order for liquidation of the Corporate debtor under Section 33 of the Code of 2016.
-5- The company has already filed an application for initiation of corporate insolvency resolution under Section 10 of the Code of 2016. An Interim Resolution Professional has already been appointed. Claims will be submitted by the creditors before the Interim Resolution Professional. The resolution plan will be submitted and the same would be considered and appropriate orders would be passed under Section 31 by the Adjudicating Authority which shall be binding on the corporate debtor, its employees, members creditors, guarantors and other stakeholders involved in the resolution plan. The company is already placing its contention before the Interim Resolution Professional. It is always open to the petitioner, who is not only a Director in the company but is also a guarantor to stake his claim or object to the claim of the creditors before the appropriate forum under the Code of 2016. We are of the opinion that at the moment there is no lis which exists today to be adjudicated between the parties. The claim made by the petitioner for issuance of a writ in the nature of declaration cannot be invoked in a writ jurisidiction under article 226 of the Constitution nor the Court could exercise its discretionary jurisdiction at this stage, especially when the Court finds that proceedings have been invoked under the Code of 2016, which is a complete Code and substitutes the provisions of the SICA Act. The proceedings under the SICA Act, pending before the BIFR were to be transferred to the NCLT, in view of Section 252 of the Code of 2016 read with Schedule 8 of the said Code. The
-6- aforesaid proceedings are apparently pending before the NCLT. 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 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. If the respondent-banks stake their claim for recovery of the amount, which is not as per the alleged agreement, it would be open to the petitioner to question the veracity of the claim of the secured creditors including the respondentbanks. It would be at that stage, the claim of the creditor would be considered in the light of the objection raised by the petitioner. This Court finds that such relief cannot be granted in exercise of equitable jurisdiction under Article 226 of the Constitution. For the reasons stated aforesaid, the writ petition fails and is dismissed. Order Date :- 26.10.2017 Bhaskar (Ajay Bhanot, J.) (Tarun Agarwala, J.)