Delhi High Court
Ssmp Industries Ltd. vs Perkan Food Processors Pvt. Ltd. on 18 July, 2019
SSMP INDUSTRIES LTD. ..... Plaintiff
Versus
PERKAN FOOD PROCESSORS PVT. LTD. ..... Defendant
The Court framed the question it sought to answer in the following terms - “whether the
adjudication of the counter claim would be liable to be stayed in view of Section 14 of the
Code.”
In this light, the Court commenced its analysis on the footing that the adjudication of the
plaint and counterclaim are interlinked with each other, and that the outcome of the same
is uncertain. The Court thereafter placed reliance on the Order of the Hon’ble Delhi High
Court in Power Grid Corporation of India v Jyoti Structures Ltd. ((2018) 246 DLT 485) (Power
Grid), and drew from it the conclusion that “until and unless the pending proceeding has the
effect of endangering, diminishing, dissipating or adversely impacting the assets of the
corporate debtor, it would not be prohibited under Sec. 14(1)(a) of the Code” (emphasis
supplied). The Court also placed reliance on the Order of the NCLAT (National Company Law
Tribunal) in Jharkhand Bijli, where the NCLAT permitted the continuation of a counterclaim
against the corporate debtor undergoing CIRP (Corporate Insolvency Resolution Process) on
the ground that the claim by the corporate debtor could be determined only after
determination of the counter claim made against the corporate debtor.
The Court concluded its analysis with the finding that though a counter-claim would strictly
speaking be covered by the moratorium under Sec. 14 IBC, it would be purposive and
efficacious for a counter-claim to be adjudicated comprehensively by the same forum in
case the counter-claim was integral to the recovery sought by the corporate debtor and
related to the same transaction.
As regards the possibility of the counter-claim succeeding and a judgment-debt being
created against the Plaintiff-Corporate Debtor, the Court stated simply that Section 14 of
the IBC could be triggered to protect the Plaintiff-Corporate Debtor’s assets at the stage of
execution of such a decree.
