SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD INDUSTRIES LTD.versusJSVM PLYWOOD INDUSTRIES LTD. & ANR.

122                       [2021]
               SUPREME COURT     4 S.C.R. 122
                              REPORTS                      [2021] 4 S.C.R.


A       SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR
             NATIONAL PLYWOOD INDUSTRIES LTD.
                           VERSUS
                JSVM PLYWOOD INDUSTRIES LTD. & Anr.

B                       (Criminal Appeal No.447 of 2021)
                                APRIL 22, 2021
             [UDAY UMESH LALIT AND K. M. JOSEPH, JJ]
             Insolvency and Bankruptcy Code, 2016: ss. 14, 17 and 7 –
      Code of Criminal Procedure, 1973 – s. 482 – Power of High Court
C
      u/s. 482, if can override statutory provisions of IBC – On facts,
      NCLT admitted application u/s. 7 IBC against one NPIL and
      subsequently appellant was appointed as Resolution Professional
      – Appellant alleging that the respondent-operational creditor,
      transferred Rs 32.50 lakhs from the Corporate Debtor’s bank
D     account without the appellant’s sanction in violation of s. 14 –
      Appellant then filed an FIR against the respondent – Respondent
      filing petition u/s.482 before the High Court – Respondent also
      filed an application for allowing it to use its bank account over
      which lien had been created and the frozen accounts of its creditors
      – High Court lifted the lien created on the respondent’s bank account,
E
      and allowed the respondent to operate the bank account over which
      lien had been created and the accounts of its creditors frozen in
      connection with the FIR – On appeal, held: Power u/s. 482 may not
      be available to the court to countenance the breach of a statuary
      provision – Words ‘to secure the ends of justice’ in s. 482 cannot
F     mean to overlook the undermining of a statutory dictate, provisions
      of ss. 14 and 17 of the IBC – High Court overlooked the salutary
      limits on its power u/s. 482 – Order of the High Court resulting in
      the respondent No. 1 being allowed to operate the account without
      making good the amount of Rs 32.50 lakhs to be placed in the
      account of the Corporate Debtor, cannot be sustained – Respondent
G
      No.1 is allowed to operate its account subject to first remitting Rs
      32.50 lakhs into the account of the Corporate Debtor.
            Allowing the appeal, the Court
            HELD: 1.1 In this case an application filed under section 7
H     of the Insolvency and Bankruptcy Code, 2016 was admitted, the
                                    122
SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD         123
         INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD.



appellant was appointed as the interim resolution professional        A
and a moratorium was declared. With the declaration of the
moratorium the prohibitions as enacted in section 14 came into
force. It is clear that the assets of the company would include the
amounts lying to the credit in the bank accounts. There cannot
be any dispute that well after the order under section 14 was
                                                                      B
passed, a sum of Rs. 32.50 lakhs has been remitted into the
account of Respondent No.1 company. No doubt it is the definite
case of the Respondent No.1 that it has had business relations
with the Corporate Debtor since more than 15 years and that the
amount remitted in its account represented the price of the
materials supplied to the Corporate Debtor. Apart from this           C
amount a sum of rupees more than Rs.39 lakhs is still due. It is
to be noticed that though an appeal was filed against the order
admitting the petition under Section 7 the same was dismissed
by the NCLAT. The appellate order was undoubtedly set aside
by this court and the appeal remanded to the NCLT for its
                                                                      D
consideration. Setting aside the appellate order of the NCLAT
by this Court and remanding the appeal would not have the effect
of setting aside the order admitting the application. Initially, an
order was passed on 28.02.2020. The ambiguity created by the
said order was removed by the subsequent order of the Tribunal
dated 20.03.2020. In other words, by the order dated 20.03.2020       E
the NCLT ordered that the appellant was at liberty to act as per
law and the words used in the earlier order dated 28.02.2020
relied upon by the Respondent No.1 were found to be a mere
casual observation which did not culminate into any direction.
Furthermore, there is an FIR and which is pending consideration
                                                                      F
in the High Court also. The appellant is essentially aggrieved by
the transactions representing a sum of Rs. 32.50 lakhs all of which
took place after order dated 20.03.2020. [Para 16][133-A-G]
      1.2 In the interim order passed by the NCLT Guwahati,
the Tribunal had directed the Directors to refund the amount of
the Corporate Debtor less any amount paid for supplies. It is         G
also true that the review petition filed by the Appellant is
dismissed, essentially based on the limitations on the power of
review. [Para 17][133-G-H]

                                                                      H
124            SUPREME COURT REPORTS                      [2021] 4 S.C.R.


A            1.3 The provisions of the IBC contemplate resolution of
      the insolvency if possible, in the first instance and should it not
      be possible, the winding up of the Corporate Debtor. The role of
      the insolvency professional is neatly carved out. From the date
      of admission of application and the appointment of Interim
      Resolution Professional, the management of the affairs of the
B
      Corporate Debtor is to vest in the Interim Resolution
      Professional. With such appointment, the powers of the Board of
      Directors or the partners of the Corporate Debtor as the case
      may be are to stand suspended. Section 17 further declares that
      the powers of the Board of Directors or partners are to be
C     exercised by the Interim Resolution Professional. The financial
      institutions are to act on the instructions of the Interim Resolution
      Professional. Section 14 is emphatic, subject to the provisions of
      sub section (2) and (3). The impact of the moratorium includes
      prohibition of transferring, encumbering, alienating or disposing
      of by the Corporate Debtor of any of its assets. Furthermore,
D
      Section 14 (2A) was inserted with effect from 28.12.2019. No
      doubt under this provision goods or services not covered by
      Section 14(2) are also covered. The call however is to be taken
      by the IRP/RP. Raw material supply could fall within the provision.
      The IRP/RP must take a decision guided purely by the object of
E     the IBC and the provisions and the factual matrix. [Para 18,
      22][134-A-D; 135-C-D]
            1.4 With the appointment of Committee of Creditors, a
      Resolution Professional is to be appointed. The Resolution
      Professional is thereafter to conduct the resolution process and
F     manage the operations. Section 23 (2) makes it clear that his
      power is the same as the powers of the Interim Resolution
      Professional. Undoubtedly, the Resolution Professional is bound
      to seek prior approval of the Committee of Creditors in matters
      covered by Section 28. [Para 23][135-D-F]
G           1.5 The High Court appears to have, in passing the
      impugned order, which is an interim order for that matter,
      overlooked the salutary limits on its power under Section 482.
      The power under Section 482 may not be available to the Court
      to countenance the breach of a statuary provision. The words ‘to
      secure the ends of justice’ in Section 482 cannot mean to overlook
H
SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                125
         INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD.



the undermining of a statutory dictate, which in this case is the            A
provisions of Section 14, and Section 17 of the IBC. [Para 24]
[135-F-G]
       1.6 Having regard to the orders passed by the NCLT
admitting the application, under Section 7, and also the ordering
of moratorium under Section 14 of the IBC and the orders which               B
have been passed by the tribunal otherwise, the order of the High
Court resulting in the Respondent No. 1 being allowed to operate
the account without making good the amount of Rs 32.50 lakhs
to be placed in the account of the Corporate Debtor cannot be
sustained. The appellant has also no objection in the Respondent
No. 1 being allowed to operate its account subject to it remitting           C
an amount of Rs. 32.50 lakhs into the account of the Corporate
Debtor. The Respondent No.1 is allowed to operate its account
subject to it to first remitting into the account of the Corporate
Debtor, the amount of Rs 32.50 lakhs which stood paid to it by
the management of the Corporate Debtor. The assets of the                    D
Corporate Debtor shall be managed strictly in terms of the
provisions of the IBC. [Para 25][135-G-H; 136-A-C]
       CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 447 of 2021.
       From the Judgment and Order dated 04.02.2021 of the High Court        E
of Gauhati at Gauhati in I.A.(Crl.)/453 of 2020 in Crl. Pet./454 of 2020.
       Anand Varma, Abhishek Prasad, Ms. Astha Ahuja, Advs. for the
Appellant.
       Harish Pandey, C.K. Rai, Anshuman Tiwari, Shuvodeep Roy, Advs.
for the Respondents.                                                         F
       The Judgment of the Court was delivered by
       K. M. JOSEPH, J.
       Leave granted.
       1. The appeal is directed against order dated 04.02.2021 passed
by the Hon’ble High Court of Guwahati. In the impugned order, the            G
High Court has allowed an interlocutory application filed by the
Respondent No. 1 to allow it to operate its bank account maintained
with the ICICI Bank Bhubaneswar and to unfreeze the bank account of
its creditors over which the lien has been created and the accounts frozen
                                                                             H
126               SUPREME COURT REPORTS                       [2021] 4 S.C.R.


A     pursuant to the lodging of an FIR by the appellant before us. It was
      made subject to conditions.
             2. An application under Section 7 of the Insolvency and Bankruptcy
      Code, 2016, hereinafter referred to as the IBC was admitted on
      26.08.2019 against one National Plywood Industries Limited (NPIL).
B     The Appellant was appointed as the Interim Resolution Professional. A
      moratorium also came to be passed by the very same order within the
      meaning of Section 14 of the IBC. The Appellant came to be appointed
      as the Resolution Professional by an order dated 08.11.2019. In the
      meantime, the Respondent No.1 claiming to be an operational creditor
      lay the claim for the amounts due to it from the Corporate Debtor before
C     the Appellant vide communication dated 22.11.2019. It would appear
      that the former Managing Director of the Corporate Debtor challenged
      the order of the NCLT, Guwahati, admitting the application under Section
      7. The NCLAT by order dated 24.11.2019 dismissed the appeal interalia
      holding that the application under Section 7 was not barred by limitation.
D     Civil Appeal No. 9142 of 2019 filed by the former Managing Director of
      the Corporate Debtor came to be however allowed by this Court by an
      order dated 20.01.2020. The NCLT was directed to consider the matter
      in accordance with law. It would appear that on 28.01.2020 interlocutory
      application 7 of 2020 filed by the former Managing Director of the
      Corporate Debtor seeking an injunction restraining the Respondents
E     therein from interfering in the operation of the Corporate Debtor and to
      disperse the cost of the CIRP was disposed of interalia as follows: -
            i.      “Today the Respondents submitted across the Bar that
                    except ratifying the expenses of the IRP, no major decisions
                    have been taken by the COC in the yesterday’s COC
F                   meeting. Both the respondents informed that they are
                    conscious about the order passes by the Hon’ble Supreme
                    Court and the legal consequences thereof.
            ii.     In view of the above submissions of the respondents, this
                    Tribunal expects that the respondents would maintain status-
G                   quo in respect of the IRP proceedings. As the main company
                    petition was remanded back to the Hon’ble NCLAT for
                    fresh disposal in accordance with law, this Tribunal is of
                    the considered opinion that the petitioner has to approach
                    the Hon’ble NCLAT for any further directions in the above
                    matter and accordingly above application stands disposed
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SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                   127
  INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD. [K. M. JOSEPH, J.]



             of with the above observations. Even otherwise, the order          A
             of admission of the company petition has not attained finality
             and, therefore, no interim orders as prayed for needs to be
             passed today.
      iii.   In the result, IA No. 07 of 2020 is disposed of with the
             above observations.”                                               B
      Thereafter there is order dated 20.03.2020 passed which we will
advert to.
         3. It is the case of the Appellant that the former Managing Director
of the Corporate Debtor in conspiracy with the Respondent No.1
engaged in an illegal transaction to the tune of Rs. 32.50 lakhs without        C
authority from the Appellant and in violation of Section 14 of the IBC. It
is his complaint that initially, the Managing Director made a transaction
of Rs. 500. Thereafter, he proceeded by virtue of 4 consecutive
transactions to transfer a sum of Rs. 32.50 lakhs to the Respondent No.
1. It is also complaint of the Appellant that the former Managing Director      D
proceeded to transfer another sum of Rs. 3.29 lakhs from another account
and the amount was transferred to his close associate.
        4. On 23.04.2020, the Appellant filed a cyber complaint. This was
followed on the same date by filing an application under Section 19 read
with Section 23 (2) of the IBC alleging non corporation by the previous         E
management of the Corporate Debtor. On 27.04.2020, the Appellant got
lodged an FIR. On 04.05.2020 the ICICI Bank created a lien upon the
bank account of the Respondent No. 1 based on the allegedly illegal
transaction. The next development to be noticed is the order dated
20.05.2020 passed by the NCLT, Guwahati. The order is passed in I.A.
No. 37 of 2020. The relief sought therein was for direction to the Directors    F
of the Corporate Debtor to hand over the management of the company.
The order reflects the controversy relating to the payment of Rs. 32.50
lakhs violating the moratorium. Tribunal finds that the directors of the
Corporate Debtor were not giving maximum assistance. On the basis of
its findings the tribunal issued directions to the suspended Board of the       G
Corporate Debtor to cooperate with the Appellant. The Auditors were
to complete the audit expeditiously interalia. More importantly the
Directors were directed to refund the amount withdrawn less the amount
if any paid to the alleged supplier as the cost of raw materials. The
interlocutory application was posted before the regular bench for hearing
after lifting the lockdown.                                                     H
128               SUPREME COURT REPORTS                          [2021] 4 S.C.R.


A            5. A perusal of the order reveals that the Directors of the company
      sought to defend the withdrawal of Rs.32.50 lakhs as one intended to
      pay for the raw materials. It is further noticed that the Tribunal noticed
      that there was no proof for the same. More importantly it was found
      that even if done to discharge debt due to supplies during the CIRP,
      without permission and knowledge of the Resolution Professional, it was
B
      in violation of Section 14 of the Code.
             6. The Appellant moved an application for review of the order
      dated 20.05.2020. The Tribunal in its order dated 05.06.2020 noticed the
      limitations flowing from Rules 154 and 155 of the NCLT, Rules, 2016 in
      the matter of review. It is observed that for the reasons highlighted in
C     the 20.05.2020 the former Directors of the Corporate Debtor are found
      prima facie liable to refund the amount unauthorisedly withdrawn from
      the account of the Corporate Debtor. It is also noticed that the Directors
      of the suspended board were not made respondents. The application for
      review came to be dismissed.
D           7. The genesis of the impugned order is the FIR lodged against
      the Appellant and arose from the payment effected into the account of
      Respondent No.1 in a sum of Rs. 32.50 lakhs. The said FIR came to be
      challenged in a petition under Section 482 of the Cr.P.C. by the
      Respondent No.1 by filing Criminal Petition No. 454 of 2020. In the
E     same the Appellant also filed I.A. No. 453 of 2020.
             8. On 19.01.2021 the NCLT, Guwahati passed an order in I.A
      No. 37 of 2020. By the said order the Appellant was directed to discharge
      his duties as per the provisions of the IBC. Thereafter, it also passed the
      following directions: -
F           i.      “The Learned Counsel for the Respondents has confirmed
                    that the Suspended Management has been co-operating and
                    providing assistance to RP to complete the CIRP in time.
                    The Corporate Debtor is directed to submit its reply Affidavit
                    to the allegations made relating to the transactions of Rs.
G                   35.795 lakhs serving a copy upon the RP.
            ii.     Any amount of the Corporate Debtor lying in any Bank is
                    to be transferred to the account being operated by the RP.
                    Banks having account of the Corporate Debtor are directed
                    to lift the lien, if any, on any amount of the Corporate Debtor
                    and allow the operation of the account by the RP only.
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SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                  129
  INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD. [K. M. JOSEPH, J.]



      iii.   The RP is directed to utilize the funds of the Corporate          A
             Debtor under CIRP judiciously keeping the Unit in its full
             operation.”
       9. Thereafter, in the petition filed by the Respondent No.1 under
Section 482, the High Court admitted the petition. The case was directed
to be listed for regular hearing in usual course. (According to the            B
Appellant the High Court had directed investigation to be continued.
This is not seen reflected in the order which is produced). In the I.A No.
453 of 2020 filed in the Section 482 resulting in the impugned order, the
prayers sought has already been noted. It is to allow the Respondent
No.1 and its creditors to operate their bank account over which lien has
been created and those accounts which have been frozen based on the            C
FIR dated 27.04.2020.
      THE IMPUGNED ORDER
      10. After noticing the contentions of the parties, the Learned Single
Judge in the impugned order proceeds to hold as follows:-                      D
      i.     “From the material on record, it is apparent that there was
             business relation between the petitioner company and the
             NPIL, which is evident from the various documents
             annexed to the petition. Only question raised in this FIR is
             that the money was transferred by the suspended CMD               E
             without any authority, inasmuch as, the entire state of affairs
             of NPIL was vested with the Respondent No. 2, who has
             been appointed as resolution professional. Only incriminating
             allegation against the petitioner is that the suspended CMD
             has personal interest in the petitioner company being an
             associate company, which is however, a disputed fact              F
             required to be investigated by police.
      ii.    Be that as it may, having considered the entire gamut of the
             matter and the nature of accusation brought against the
             present petitioner, I am of the view that freezing of all the
             bank account as indicated above would certainly cause             G
             unnecessary hardship, which may not be necessary for the
             investigation of the present FIR in view of the nature of the
             accusation made therein as well as in view of the offer
             made by the petitioner to furnish a bond. Therefore, in my
             consider view, the petitioner is entitled to the interim relief
                                                                               H
130                SUPREME COURT REPORTS                          [2021] 4 S.C.R.


A                    as sought for. Accordingly, it is provided that the lien created
                     upon the bank account no. 149905001306 maintained with
                     the ICICI Bank Limited, Chandrasekarpur Branch,
                     Bhubaneswar be lifted, the petitioner and its creditors shall
                     be allowed to operate the bank account over which lien has
                     been created and the accounts have been frozen pursuant
B
                     to the instruction of the Respondent No. 2 in connection
                     with Margherita P.S. Case No. 0112/2020, until further order
                     of the Court.
            iii.     It is however, made clear that the interim relief granted to
                     the petitioner as above with regard to unfreezing the bank
C                    account and lifting of lien shall be subject to the condition
                     that the petitioner shall withdraw the WP (C) No. 118/2020
                     filed before the Itanagar Permanent Bench of this Court
                     and furnishing an indemnity bond undertaking to refund the
                     amount of Rs. 32.50 Lakhs if required, subject to final
D                    outcome of the criminal case.”
           11. We heard the Learned Counsel for the Appellant Shri Anand
      Varma and the Learned Counsel for the Respondent No. 1, Shri Harish
      Pandey. The State is represented by Shri Shuvodeep Roy.
            SUBMISSIONS
E
              12. The Learned Counsel for the Appellant contended that the
      impugned order proceeds on an erroneous basis namely that the
      allegations about the co-accused (former Managing Director of the
      Corporate Debtor) having an interest in the Respondent No.1 Company
      was a disputed fact which had to be investigated. It is the case of the
F     Appellant that there is a report of the auditing firm. Also, the said finding
      of the High Court is contrary to the documents of the Respondent No. 1
      itself. It is also urged that the High Court itself has permitted the
      investigation to go on in the petition under section 482. Secondly, he
      pointed out that the impugned order was contrary to Section 14 of the
G     IBC. He drew support from the judgment of this Court in P Mohanraj
      vs. M/S. Shah Brothers Ispat Pvt. Ltd. in Civil Appeal No. 10355 of
      2018. According to him, the whole purpose of the moratorium would be
      defeated if members of the previous management of the Corporate Debtor
      are left free to transfer the funds of the Corporate Debtor. The
      Respondent No. 1 was a related party of the Corporate Debtor. He
H
SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                  131
  INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD. [K. M. JOSEPH, J.]



reiterates that with the appointment of Appellant as the Resolution            A
Professional under Section 25 (2) a of the IBC he is to take custody and
control of all the assets of the Corporate Debtor. Finally, he also
emphasized the nature of the jurisdiction under Section 482 of the Cr.P.C.
The High Court has overlooked the limits of its power in passing the
impugned order, he complains. He points out that the order admitting the
                                                                               B
application under section (7) has not been stricken by the remand by this
Court of the appeal against the order admitting the application.
       13. Per contra Shri Harish Pandey, Learned Counsel, contended
that the order may not be interfered by this Court. The Respondent
No.1 was a related party and it was always known to be such related
party. He referred to the fact that the Respondent No.1 was supplier of        C
raw material to the Corporate Debtor. He pointed out goods worth more
than Rs.2 crores have been supplied by it to the Corporate Debtor.
Payments were being made. In fact, a sum of more than Rs.39 lakhs is
further due from the Corporate Debtor to the Respondent No. 1. It is
emphasized as a MSME it would cause grave prejudice to it if the               D
impugned order is set aside.
       14. It is the case of the Respondent No. 1 further that the business
relationship between the Respondent No. 1 and Corporate Debtor has
existed for more than 15 years. The Corporate Debtor has been declared
a sick industry on 18.04.2006. It was nursed back by the Respondent            E
No. 1. Our attention is drawn to the minutes of the first meeting of the
Committee of Creditors dated 23.09.2019. The minutes reveal that
committee of creditors observes that a substantial part of the raw
materials is purchased from Respondent No.1 and that the relatives of
the Corporate Debtor directors or shareholders hold more than 51 percent
shareholding of the first respondent. It is further noted that the processes   F
to assess the veracity and reasonableness of the transaction in such
situation were let known and the purchases/sales must be benchmarked
against arm’s length transactions and open market transactions. (We
may also notice that the meeting resolved that all the banks were to act
on the instructions of the appellant interalia.) It is the case of the         G
Respondent No. 1 that right from the beginning, it was known that the
Respondent No. 1 was a related party. It is the further case of the
Respondent No. 1 that its claim for over 6 crores of rupees was vetted,
verified and admitted by the Appellant. After the commencement of
CIRP Respondent No. 1 had made regular substantial supplies to the
                                                                               H
132             SUPREME COURT REPORTS                            [2021] 4 S.C.R.


A     Corporate Debtor for which the payment were being made (they relate
      to the period from 26.08.2019 to 31.03.2020). This is shown as amounting
      to Rs. 2,70,84,982. The Respondent No. 1 lays store by the order of the
      NCLT, Guwahati dated 28.01.2020 which we have already referred to.
      E-mails addressed to the Appellant to clarify did not evoke any response.
B     In March 2020, orders were placed by the Corporate Debtor for
      approximately Rs. 30 lakhs. The lockdown intervened. On 18.04.2020 it
      is not disputed that the Corporate Debtor made a payment of Rs 32.50
      lakhs through online net banking transfer against material supplied during
      the period that the corporate debtor was under CIRP. The Learned
      Counsel for the Respondent No.1 would point out that the order of the
C
      NCLT dated 20.05.2020 passed by the NCLT directed the directors of
      the Corporate Debtor to refund the amount withdrawn less any amount
      supplied to the alleged supplier. It is therefore, pointed out creating a lien
      on the accounts of the Respondent no. 1 was not justified. The Learned
      Counsel also drew our attention to the order dated 24.03.2021 passed by
D     the NCLT Guwahati Bench. This is in an effort at showing the manner
      in which the appellant has been functioning. The Tribunal in the said
      order refers to the Impugned Order and the Interim order passed by this
      Court in this matter. The Tribunal noted that the production has been
      suspended and layoff notice is also issued in regard to the Corporate
E     Debtor. The objectives of the IBC are being defeated on the basis of the
      claims and the FIR interalia. The Appellant was directed to file the copy
      of the FIR in this case among other documents. The Learned counsel
      for the Respondent no. 1 would submit that the having regard to the
      orders passed by the tribunal the Impugned Order passed by the High
F     Court may not be interfered with. Having regard to the dismissal of the
      review petition filed against the 20.05.2020 there is no merit in the present
      appeal.

             15. The Learned Counsel for the Appellant would point out that
      the Appellant is prevented from disbursing the salary of the workers.
G     Nearly four months’ salary would be disbursed with the amount which
      was paid by the former management without any authority as noticed. It
      is the case of Appellant that the transactions between the Respondent
      No.1 and the Corporate Debtor was not authorised by the Appellant
      during the period from 21.02.2020 to 27.04.2020.
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SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                  133
  INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD. [K. M. JOSEPH, J.]



      FINDINGS                                                                 A
        16. The contours of the jurisdiction under 482 of the Cr.P.C. are
far too well settled to require articulation or reiteration. Undoubtedly, in
this case by 26.08.2019 an application filed under section 7 of the IBC
was admitted, the appellant appointed as the interim resolution
professional and what is more a moratorium declared. With the                  B
declaration of the moratorium the prohibitions as enacted in section 14
came into force. It is clear that the assets of the company would include
the amounts lying to the credit in the bank accounts. There cannot be
any dispute that well after the order under section 14 was passed, a sum
of Rs. 32.50 lakhs has been remitted into the account of Respondent
No.1 company. No doubt it is the definite case of the Respondent No.1          C
that it has had business relations with the Corporate Debtor since more
than 15 years and that the amount remitted in its account represented
the price of the materials supplied to the Corporate Debtor. Apart from
this amount a sum of rupees more than Rs.39 lakhs is still due. It is to be
noticed that though an appeal was filed against the order admitting the        D
petition under Section 7 the same was dismissed by the NCLAT. The
appellate order was undoubtedly set aside by this court and the appeal
remanded to the NCLT for its consideration. We would think that setting
aside the appellate order of the NCLAT by this court and remanding the
appeal would not have the effect of setting aside the order admitting the
application. Initially, as was noticed by us an order was passed on            E
28.02.2020. The ambiguity created by the said order was removed by
the subsequent order of the Tribunal dated 20.03.2020. In other words,
by the order dated 20.03.2020 the NCLT, Guwahati ordered that the
appellant was at liberty to act as per law and the words used in the
earlier order dated 28.02.2020 relied upon by the Respondent No.1 were         F
found to be a mere casual observation which did not culminate into any
direction. We need not say anything further particularly in view of the
fact that there is an FIR and which is pending consideration in the High
Court also. It is significant only for us to notice that the Appellant is
essentially aggrieved by the transactions representing a sum of Rs. 32.50
lakhs all of which took place after order dated 20.03.2020.                    G

       17. It may be true that in the interim order passed by the NCLT
Guwahati, the Tribunal had directed the Directors to refund the amount
of the Corporate Debtor less any amount paid for supplies. It is also true
that the review petition filed by the Appellant is dismissed, essentially
based on the limitations on the power of review.                               H
134                  SUPREME COURT REPORTS                       [2021] 4 S.C.R.


A            18. The provisions of the IBC contemplate resolution of the
      insolvency if possible, in the first instance and should it not be possible,
      the winding up of the Corporate Debtor. The role of the insolvency
      professional is neatly carved out. From the date of admission of application
      and the appointment of Interim Resolution Professional, the management
      of the affairs of the Corporate Debtor is to vest in the Interim Resolution
B     Professional. With such appointment, the powers of the Board of Directors
      or the partners of the Corporate Debtor as the case may be are to stand
      suspended. Section 17 further declares that the powers of the Board of
      Directors or partners are to be exercised by the Interim Resolution
      Professional. The financial institutions are to act on the instructions of
C     the Interim Resolution Professional. Section 14 is emphatic, subject to
      the provisions of sub section (2) and (3). The impact of the moratorium
      includes prohibition of transferring, encumbering, alienating or disposing
      of by the Corporate Debtor of any of its assets.
              19. Sub section 2 reads as follows:-
D           “The supply of essential goods or services to the corporate debtor
      as may be specified shall not be terminated or suspended or interrupted
      during moratorium period.”
            20. Essential goods and services referred to in Section 14(2) has
      been defined by Regulations. Regulation 32 of the INSOLVENCY AND
E     BANKRUPTCY BOARD OF INDIA (INSOLVENCY
      RESOLUTION PROCESS FOR CORPORATE PERSONS)
      REGULATIONS, 2016, reads as follows:-
              “Essential Supplies.
              The essential goods and services referred to in section 14(2) shall
F     mean-
              i.       Electricity;
              ii.      water;
              iii.     telecommunication services; and
G             iv.      information technology services, to the extent these are not
                       a direct input to the output produced or supplied by the
                       corporate debtor.
              Illustration- Water supplied to a corporate debtor will be essential
              supplies for drinking and sanitation purposes, and not for generation
H             of hydro-electricity.”
SANDEEP KHAITAN, RESOLUTION PROFESSIONAL FOR NATIONAL PLYWOOD                 135
  INDUSTRIES LTD. v. JSVM PLYWOOD INDUSTRIES LTD. [K. M. JOSEPH, J.]



      21. Also, undoubtedly Section (2A) of Section 14 of the THE             A
INSOLVENCY AND BANKRUPTCY CODE, 2016 provides as
follows:
      “Where the interim resolution professional or resolution
      professional, as the case may be, considers the supply of goods or
      services critical to protect and preserve the value of the corporate    B
      debtor and manage the operations of such corporate debtor as a
      going concern, then the supply of such goods or services shall not
      be terminated, suspended or interrupted during the period of
      moratorium, except where such corporate debtor has not paid
      dues arising from such supply during the moratorium period or in
      such circumstances as may be specified.”                                C

       22. This provision was inserted with effect from 28.12.2019. No
doubt under this provision goods or services not covered by Section
14(2) are also covered. The call however is to be taken by the IRP/RP.
Raw material supply could fall within the provision. The IRP/RP must
take a decision guided purely by the object of the IBC and the provisions     D
and the factual matrix.
      23. With the appointment of Committee of Creditors, a Resolution
Professional is to be appointed. The Resolution Professional is thereafter
to conduct the resolution process and manage the operations. Section 23
(2) makes it clear that his power is the same as the powers of the Interim    E
Resolution Professional. Undoubtedly, the Resolution Professional is
bound to seek prior approval of the Committee of Creditors in maters
covered by Section 28.
       24. We have to also in this context bear in mind that the High
Court appears to have, in passing the impugned order, which is an interim     F
order for that matter, overlooked the salutary limits on its power under
Section 482. The power under Section 482 may not be available to the
Court to countenance the breach of a statuary provision. The words ‘to
secure the ends of justice’ in Section 482 cannot mean to overlook the
undermining of a statutory dictate, which in this case is the provisions of   G
Section 14, and Section 17 of the IBC.
      25. It would appear to us that having regard to the orders passed
by the NCLT admitting the application, under Section 7, and also the
ordering of moratorium under Section 14 of the IBC and the orders
which have been passed by the tribunal otherwise, the impugned order
                                                                              H
136                 SUPREME COURT REPORTS                        [2021] 4 S.C.R.


A     of the High Court resulting in the Respondent No. 1 being allowed to
      operate the account without making good the amount of Rs 32.50 lakhs
      to be placed in the account of the Corporate Debtor cannot be sustained.
      The Learned Counsel for the Appellant has also no objection in the
      Respondent No. 1 being allowed to operate its account subject to it
      remitting an amount of Rs. 32.50 lakhs into the account of the Corporate
B
      Debtor. In such circumstances, Appeal is allowed. The Impugned order
      is modified as follows:
              i.      The Respondent No.1 is allowed to operate its account
                      subject to it to first remitting into the account of the
                      Corporate Debtor, the amount of Rs 32.50 lakhs which stood
C                     paid to it by the management of the Corporate Debtor. The
                      assets of the Corporate Debtor shall be managed strictly in
                      terms of the provisions of the IBC. The Appellant as RP
                      will bear in mind the provision of Section 14 (2A) and the
                      object of IBC. We however make it clear that our order
D                     shall not be taken as our pronouncement on the issues arising
                      from the FIR including the petition pending under Section
                      482 of the Cr.P.C.
              ii.     We also make it clear that the judgment will not stand in the
                      way of the Respondent No.1 pursuing its claim with regard
E                     to its entitlement to a sum of Rs.32.50 lakhs and any other
                      sum from the Corporate Debtor or any other person in the
                      appropriate forum and in accordance with law. There will
                      be no order as to costs.

      Nidhi Jain                                                     Appeal allowed.
F




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