Karnataka High Court Upholds NCLT's Jurisdiction: Writ Against Section 7 IBC Proceedings Not Maintainable

Case Overview

Case: Rajesh Exports Limited Vs Canara Bank
Court: Karnataka High Court
Forum Below: National Company Law Tribunal (NCLT), Bengaluru
Proceedings Reference: CP(IB)No.51/2021

Background of the Dispute

In this matter, the Karnataka High Court was called upon to adjudicate a writ petition filed by Rajesh Exports Limited against Canara Bank, wherein the petitioner sought judicial intervention to nullify insolvency proceedings that had been initiated before the NCLT, Bengaluru. The proceedings in question had been triggered under Section 7 of the Insolvency and Bankruptcy Code, 2016, which governs the initiation of the Corporate Insolvency Resolution Process (CIRP) by a financial creditor.

The petitioner approached the High Court with a multi-pronged prayer, essentially seeking to have the NCLT proceedings set aside through the exercise of the High Court's writ jurisdiction, while simultaneously restraining the respondent-bank from pursuing the matter further before the Tribunal.

Reliefs Sought by the Petitioner

The petitioner formally prayed for the following reliefs before the Karnataka High Court:

  1. Issuance of a Writ of Certiorari or any other appropriate writ, order, or direction for quashing the impugned proceedings in CP(IB)51/2021 as recorded at Annexure-A on the file of NCLT Bangalore, initiated by the Respondent under Sec.7 of the Insolvency and Bankruptcy Code, declaring the same as void ab initio.

  2. Issuance of a Writ of Mandamus or any other appropriate writ, order, or direction, restraining the Respondent from pursuing or continuing the impugned proceedings any further.

  3. Any such additional orders as the Court may deem just, equitable, and appropriate given the facts and circumstances of the case.

Preliminary Objection by the Respondent

Sri. C. K. Nandakumar, Senior Counsel appearing on behalf of Sri. Hemanth R. Rao (counsel for the respondent — Canara Bank), participated via video conferencing and raised a preliminary objection going to the very root of maintainability of the writ petition.