Insolvency and Bankruptcy Code, 2016

High Court of Delhi


[CS (COMM) 470/2016 & CC (COMM) 73/2017] DATE: 18.07.2019


In this case,a suit was filed for recovery of Rs.1,61,47,336.44 against which a counter claim was filed stating that the Defendant is entitled to recover a sum of Rs.59,51,548/- and no amount is due and payable to the Plaintiff.

This occurred when CIRP had already been initiated against the Plaintiff.


Whether adjudication of counter claim is required to be stayed in view of Section 14 of the Code?


The Court held that Plaintiff's and the Defendant's claim needs to be adjudicated comprehensively by the same forum. Till the defence is adjudicated, there is no threat to the assets of the Plaintiff and the continuation of the counter claim would not adversely impact its assets.


The Court herein has rightly observed and examined the fact of not staying the Counter Claim filed by the Defendant.

When moratorium is declared under the Code, only those actions of claims are to be prohibited which might endanger, diminish, dissipate or adversely impact the Assets of the Corporate Debtor.

When there is filing of Counter Claim, it would be a proceeding against the corporate debtor. Further, it would be an action which is not permitted under Section 14 of the Code.

There is an intersting aspect that the corporate debtor undergoing CIRP can continue to pursue its claims but the counter claim would be barred under Section 14(1)(a) to the extent it's outcome can affect its assets.

The Courts are required to see whether the jurisprudence of moratorium is being satisfied or not. The purpose of moratorium is to sagfeguard the assets and accordingly the interests of stakeholders i.e creditors.

The proceedings before NCLT are summary in nature and the RP does not conduct a trial. The RP merely simply collates and determine as to what payment can be made towards the claims raised, subject to availability of funds and the NCLT/RP cannot be burdened with the task of entertaining the counterclaim which was uncertain, undetermined and unknown.

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