Moratorium u/s 14 of IBC not Bar to Execute Decree against Directors/Officers of Corporate Debtor: SC [Read Judgement]
Moratorium u/s 14 of IBC not Bar to Execute Decree against Directors/Officers of Corporate Debtor, rules SC
The Supreme Court of India in a recent decision ruled that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 ( IBC ) is not bar to execute a decree against directors/officers of corporate debtor.
By the impugned orders, the National Commission held that the decree cannot be executed against the company due to the operation of the moratorium under Section 14 of the IBC. Thereafter, the National Commission observed that in view of moratorium against the company, it would not be appropriate to proceed in the same execution against the opposite party Nos. 2 to 9. Another observation was made that other opposite parties (opposite party Nos. 2 to 9 to the execution application) were not parties in the main complaint. The appellant is the applicant/decree holder in the execution applications.
The submission in brief of the appellants is that under the provisions of the IBC, there is no prohibition on proceeding against the directors/officers of the company, which is the subject-matter of moratorium under Section 14 of the IBC.
A reliance is placed by the appellant on the second proviso to sub-Section (1) of Section 32A of the IBC and a decision of the Supreme Court in the case of P. Mohanraj vs. Shah Bros. Ispat (P) Ltd. The attention was also invited to another decision of the Court in the case of Anjali Rathi and others vs. Today Homes and Infrastructure Pvt. Ltd. And Others. Hence, the submission is that the view taken by the National Commission is erroneous.
The counsel for the respondents submitted that the National Commission has held that opposite party were not parties to the main complaint. Their submission is that in the case of Anjali Rathi, the Court made a departure by permitting the appellants to proceed against the promoters of the company, which was subject to moratorium only because there was a settlement arrived at between them before the Court and further submitted that these opponents cannot be held liable.
A Two-Judge Bench of Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “We are of the view that only because there is a moratorium under Section 14 of the IBC against the company, it cannot be said that no proceedings can be initiated against the opposite party Nos. 2 to 9(the respondent Nos. 2 to 9) for execution, provided that they are otherwise liable to abide by and comply with the order, which is passed against the company. The protection of the moratorium will not be available to the directors/officers of the company.”
To Read the full text of the Judgement CLICK HERE
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