The Bombay High Court recently granted ad-interim relief to the landowners in a development project, restraining the Respondents therein (including the developer and the lender) from taking any coercive measures in furtherance to a loan agreement and an Indenture of Mortgage and from creating any third party rights in respect of the mortgaged property belonging to the landowners. Pertinently, the judgment was passed against the backdrop of proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) instituted by the lender against the developer.
In the Order the learned Single Judge has examined the interplay between the jurisdiction of the Adjudicating Authority (NCLT) under the IBC and the jurisdiction of the civil courts. The learned Single Judge held that the jurisdiction of civil courts would not be denuded in all cases, especially when it is ex facie clear that the dispute is one in respect of which the NCLT could never grant relief.
The exclusion of jurisdiction has to be qua the subject matter and if the subject matter or the issue in dispute is one which falls outside the exclusive jurisdiction of the NCLT, the civil courts will have jurisdiction. Provisions of the IBC which exclude the jurisdiction of civil courts cannot be read so widely as to expand the scope of jurisdiction of the NCLT over disputes which fall outside the four corners of the IBC.
