High Court Can Quash Ad Interim Injunction Order Granted By Civil Court In Suit Barred Under IBC: Kerala High Court
The Kerala High Court has recently held that High Courts can use their supervisory jurisdiction under Article 227 of the Constitution of India to set aside an ad interim injunction granted by a civil court in a suit barred by the Insolvency and Bankruptcy Code (IBC).
Justice K. Natarajan observed that the existence of an alternative remedy to vacate an order provided under Order 43 or Order 39 Rule 4 of the Code of Civil Procedure, 1908, does not preclude the high courts from setting aside an illegal order granted by a civil court.
The single judge noted that Sections 63 and 231 of the IBC bar a civil court from entertaining a suit in which the NCLT has jurisdiction or when a matter is pending before the adjudicating authority or the Board. It opined that any order passed by the civil court in such barred suits is illegal and without jurisdiction.
In the present case, insolvency proceedings were initiated against the petitioner company before the NCLT (National Company Law Tribunal) by the respondents, and a liquidation order was passed. The 2nd petitioner was appointed as the liquidator of the company. However, the 1st respondent filed a suit before the civil court, and it passed an ad interim temporary injunction. This was challenged by the petitioners before the High Court.
The Court reached a finding that it has jurisdiction to interfere with an order passed without authority of law and observed:
“When the order is illegal without jurisdiction, then this Court can entertain the petition under Article 227 of the Constitution of India…Such being the case, the order under challenge call for interference which is illegal and without any authority of law.”
The Court also observed that the trial courts have a duty to verify if a suit before it is maintainable, whether or not an application is made before it.
“However, the trial court, while entertaining any suit required to suo moto verify whether the suit is maintainable before the said court or whether suit is barred by any law or limitation or court fee has been paid which was required under Order 7 Rule 11 (a)(b)(c)(d) of CPC. Even without any application, the court should verify, whether suit is maintainable before the said court or not”, it remarked.
The Court, thus, allowed the petition and set aside the order of the civil order. The civil order was also directed to hear the parties on maintainability. The parties were also given the liberty to approach the NCLT in case of any grievance.
Case No: OP(C) No. 800 of 2025
Case Title: Vysali Pharmaceuticals Ltd and Anr. v. T. Beena and Ors.
Citation: 2025 LiveLaw (Ker) 421
Counsel for the petitioners: D. Reetha, P.V.Vinod (Bengalam)
Counsel for the respondents: S. Shyam, P.A. Mohammed Aslam, Arthur B. George, E.B. Thajuddeen, Irshad V.P., Sarath Sasi, Muhammed Riswan K.A., Midhun Mohan, Abdul Samad P.B., Ramshad K.R.
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