Remedies Against Third-Parties Not Available Under Section 66 Of IBC: Supreme Court

The Supreme Court on Friday affirmed that the remedy against third party is not available under Section 66 of IBC, and in such circumstances, it is for the Resolution Professional or the successful resolution applicant to take such civil remedies against third party for recovery of dues payable to corporate debtor, and the civil remedies which may be available in law are independent of the said Section. The bench of Justices Krishna Murari and Sanjay Kumar was hearing an application seeking clarification of the February 24, 2023 decision of the Apex Court wherein the Special Leave Petition filed by the applicant was dismissed. The applicant, an unsecured financial creditor of M/s. Leading Hotels limited, which is facing insolvency proceedings under the IBC, 2016, approached the Top Court by filing the SLP challenging an interim order dated 30.11.2022 passed by Delhi High Court extending the transit anticipatory bail granted to the Respondents herein, who are stated to be suspended directors of LHL. By the judgment and order of 24.02.2023, the SLP was dismissed on the ground that the applicant (petitioner in the aforementioned SLP) had no locus in the matter, as he was neither the informant nor a party to the proceedings pending before the High Court and is totally unconnected with the FIR lodged by the financial creditors who were also the members of the committee of creditors. The applicant again approached the Supreme Court by means of the instant application seeking clarification of the aforesaid orderBefore the bench of Justices Krishna Murari and Kumar, the counsel for the applicant submitted that the judgment and order dated 24.02.2023 dismissing the SLP may be clarified to the effect that it shall not come in the way of the applicant persuading the Resolution Professional to consider initiation of proceedings for recovery under Section 66 of IBC against the persons who, prima facie, appear to be primarily responsible for the fraudulent affairs of the corporate debtors, and also qua other persons and organisations with whom any business was carried out by the corporate debtor, fraudulently and illegally with mala fide intention. It was further submitted that the January, 2023 decision of the Tripura High Court in the PIL matter of Smt. Sudipa Nath v. Union of India & Ors. has wrongly relied upon the judgment of the Supreme Court in the case of Usha Ananthasubramanian v. Union of India (2020) and has erroneously held that Section 66 of the IBC cannot be invoked against other persons, entities or organisations with which there was any business transaction by the corporate debtor, but only the persons who were responsible for the conduct of business of the corporate debtor can be proceeded againstThe bench of Justices Krishna Murari and Kumar stated, "We may also observe that the Tripura High Court has rightly relied upon the observations made by this Court in a binding precedent, in Usha Ananthasubramanian v. Union of India, which pertains to a matter under Section 339(1) of the Companies Act, 2013 which is pari materia with Section 66 of IBC"The bench proceeded to observe, "We are of the considered opinion that in such circumstances, it is for the Resolution Professional or the successful resolution applicant, as the case may be, to take such civil remedies against third party, for recovery of dues payable to corporate debtor, which may be available in law. The remedy against third party, however, is not available under Section 66 of IBC, and the civil remedies which may be available in law, are independent of the said Section""In our considered opinion, in the name of seeking a clarification, the endeavor of the applicant herein is to indirectly get over with the judgment and order dated 18.01.2023 in WP(C) (PIL) 04 of 2023 passed by Tripura High Court. Such an endeavor, in the guise of a clarification, cannot be permitted", said the benchThe bench of Justices Krishna Murari and Kumar then dismissed the application for clarification as being "wholly misconceived"Case Title : Glukrich Capital Pvt Ltd vs The State of West BengalCitation : 2023 LiveLaw (SC) 464Click Here To Read/Download Order

Remedies Against Third-Parties Not Available Under Section 66 Of IBC: Supreme Court

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Remedies Against Third-Parties Not Available Under Section 66 Of IBC: Supreme Court

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