IN THE judgement of the case – Sandeep Khaitan, Resolution Professional for National Plywood Industries Ltd. v. JSVM Plywood Industries Ltd. & Another delivered on April 22, 2021, Justice Uday Umesh Lalit and Justice K. M. Joseph, at the Supreme Court have prefaced their findings in the judgement with the observation that the contours of the jurisdiction under section 482 of the Criminal Procedure Code are far too well settled to require articulation or reiteration, while at the same time pointed out that in passing the impugned order on February 4, 2021,which is an interim order for that matter, the Guwahati High Court appears to have overlooked the salutary limits on its power under Section 482. According to the Supreme Court, the power under Section 482 may not be available to the High Court to countenance the breach of a statutory provision.

 

The words ‘to secure the ends of justice’ in Section 482 cannot mean to overlook the undermining of a statutory dictate, which in this case is the provisions of Sections 14 and 17 of the Insolvency and Bankruptcy Code, 2016 (IBC). In view of the SC, having regard to the orders passed by the National Company Law Tribunal (NCLT) admitting the application, under section 7 and also ordering of moratorium under section 14 of the IBC and the orders which have been passed by the Tribunal otherwise, the impugned order of the HC resulting in the respondent-1. JSVM Plywood being allowed to operate the account without making good the amount of Rs 32.5 lakh to be placed in the account of the Corporate Debtor cannot be sustained.

 

The Court has also noted the ‘no objection’ from the appellant’s counsel to the respondent-1 being permitted to operate its account subject to it remitting an amount of Rs 32.5 lakh into the account of the Corporate Debtor. In this case, an application filed under section 7 of the IBC was admitted on August 26, 2019, the appellant was appointed as the interim resolution professional and what is more a moratorium was declared. With this declaration, the prohibitions as enacted in section 14 came into force. It is clear that the assets of the company would include the amounts lying to its credit in the bank accounts. There is no dispute that well after the order under section 14 was passed, a sum of Rs 32.5 lakh has been remitted into the account of respondent-1 company.

 

No doubt, it is the definite case of the respondent No.1-Company that it has had business relations with the Corporate Debtor since more than 15 years and that the amount remitted in its account represented the price of the materials supplied to the Corporate Debtor. Apart from this amount a sum of more than Rs 39 lakh is still due. The SC has also noticed that though an appeal was filed against the order admitting the petition under section 7, the same was dismissed by the Appellate Authority of the NCLT. The appellate order of the NCLAT was set aside by the SC and the appeal was remanded to the NCLT for its consideration. On March 20, 2020,the NCLT, Guwahati ordered that the appellant was at liberty to act as per law and the words used in the earlier order of February 28, 2020 relied upon by the respondent -1 were found to be a mere casual observation, which did not culminate into any direction. The SC did not state anything further, particularly in view of the fact that there is an FIR and which is pending consideration in the HC also. The SC considered it significant to notice that the appellant is essentially aggrieved by the transactions representing sum of Rs 32.5 lakh, all of which took place after the order of March 20, 2020. It may be true that in the interim order passed by the NCLT, it had been directed to the Directors to refund the amount of the Corporate Debtor less any amount paid for supplies.

 

It is also true that the review petition filed by the appellant is dismissed, essentially based on the limitations on the power of review. The genesis of the impugned order is the FIR lodged against the appellant and arose from the payment effected into the account of the respondent -1, in a sum of Rs 32.5 lakh. The said FIR came to be challenged in a petition under section 482 of the Cr.P.C. by the respondent-1 by filing a criminal petition. On January 19, 2021, the NCLT passed an order in the appeal, directing the appellant to discharge his duties as per the provisions of the ICB and issued certain directions. This appeal before the Supreme Court was directed against the order passed by the Guwahati High Court on February 4, 2021, allowing an interlocutory application filed by the respondent -1, to allow it to operate its bank account in the ICICI Bank, Bhubaneswar and to unfreeze the bank account of its creditors over which the lien has been created and the accounts frozen pursuant to the lodging of an FIR by the appellant before the SC. It was made subject to conditions. In the meantime, the respondent-1 claiming to be an operational creditor lay the claim for the amounts due to it from the Corporate Debtor before the appellant through communication of November 22, 2019.

 

The SC has allowed the appeal modifying the impugned order. The SC has allowed the respondent-1 to operate its account subject to it to first remitting into the account of the Corporate Debtor, the amount of Rs 32.5 lakh which stood paid to it by the management of the Corporate Debtor. The assets of the Corporate Debtor shall be managed strictly in terms of the provisions of the IBC. The appellant as Resolution Professional has been asked to bear in mind the provisions of section 14(2A) and object of the IBC. The Court has, however, made it clear that its order shall not be taken as its pronouncement on the issues arising from the First Information Report (FIR) including the petition pending under section 482 of the Cr.P.C. the Supreme Court has made it further clear that the judgement will not stand in the way of the respondent-1, pursuing its claim with regard to its entitlement to a sum of Rs 32.5 lakhs and any other sum from the Corporate Debtor or any other person in the appropriate forum and in accordance with law.