The High Court · 2025

THE HON'BLE SRIJUSTICE P. SAM KOII {Y AND THE HON'BLE SRI JUSTICE N. TUKARA] IJI Review l.A. No.3 of 2025 in COMCA No.16 c)l : 2020 ORDER: (Per Hon'ble Sri Justice N. Tukaramji) This Review Petition is filed under Order XLVI Rule '1 read with Section 114 of the Code of Civil Procedure, I )08, seeking review of the judgment dated 12.06.2025 passed by this Court in COIVICA No 16 ot 2020, whereby the appeal iiled by the respondent was allowed, and the order of the Conri rercial Court dated 06.022020 in C.O.P. No. 42 of 2019, lirecting the respondent to furnish a security or bank r; rarantee for Rs 12,90,59,5671, was set aside. 2 The Review Petitioner submits that the ju:;ment under review suffers from errors apparent on the face t f the record, particularly regarding the misapplication of the 5 ick lndustrial Companies (Special Provisions) Act, 1985 (Sl(A") and the lnsolvency and Bankruptcy Code, 2016 ("lBC"). 2 Brief Facts

3. The Review Petitioner instituted an application under Section 9(1) of the Arbitration and Conciliation Act, 7996 before the Commercial Court-cum-XXIV Additional Chief Judge, City Civil Court, Hyderabad, seeking a direction that the respondent furnish a bank guarantee in the sum of Rs.12,90,59,567/- The Commercial Court allowed the application and directed the respondent to provide adequate security, either by way of a third- party guarantee or a bank guarantee, for securing the arbitral claim.

4. Aggrieved by this order, the respondent preferred COMCA No. 16 o'f 2020. By judgment dated '12.06.2025, this Court allowed the appeal, holding that since the respondent company was purportedly undergoing rehabilitation under the BIFR/SICNIBC framework, coercive or execution-like directions under Section 9 could not be sustained. The present Review Petition challenges this finding as being factually erroneous, and manifestly contrary to the statutory position prevailing at the relevant time. 3 Submissions on Beh alf of the Review Petitioner

5.1 Learned Senior Counsel for the Review petit rner submits that the impugned judgment suffers from non-cc r sideration of material facts, including (i) The sale of the respondent's plant and macr nery through MSTC pursuant to orders of this Court in l.A. Nr .1 of 2022, demonstrating cessation of all industrial i ctivity; and (ii) The respondent's continued ownership : immovable assets valued at approximately Rs.500 c i res, clearty establishing that it is not a financially distressed or r ick', industrial com pany.

5.2 lt is further contended that S/CA stood repea -,d with effect from 01 .'12.2016 by virtue of Section 252 of lhe lr solvency and Bankruptcy Code, 2016. Upon repeal, all procee< ings pending before the Board for lndustrial and Financial : econstruction ('BlFR") automatically abated unless refiled beforr the National Company Law Tribunal ("NCLT") within 190 dav , as per the Companies (Transfer of Pending proceedings) R,i es, 2076. No such proceedings were ever instituted by the res6 rndent under Section 10 of the IBC. Therefore, any reliance c,r S/CA in the 4 impugned judgment constitutes a manifest and patent error of

5.3 Even assuming that S/CA were applicable, lhe Modified Draft Rehabilitation Scheme (MDRS-2007), sanctioned by the BIFR on 03.12.2007, stood expired by efflux of time under Section 22(3) ot S/CA on 03.12.2014. The respondent could not, therefore, be treated as a "sick company" thereafter

5.4 The Review Petitioner relies on the following authoritative precedents t. Tata Motors Ltd. v. Pharmaceutical Products of lndia Ltd., (2019)13 SCC 739; ii KSL & lndusties Ltd. v. Aihant Threads Ltd., (2015) I SCC 166; ii Firm Ashok Traders v. Gurumukh Das Sa/u7a, (2004) 3 SCC 155; and iv. Adhunik Sfee/s Lfd v. Onssa Manganese & Minerals (P) Ltd , (2007)7 SCC 125.

5.5 lt is submitted that proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Acl) ate interim and protective in character, intended to secure the subject matter of arbitration, even during the stages of Sections 34 and 37 of the 5 Arbitration Act. Further, they are not coercive or €,) ecutionary in nature and hence do not attract the bar of moratoritrr r under S/CA or IBC Submissi ons on Beh alf of the Respondent 6. 'l The respondent contends that the review 5 etition is not maintainable since no error apparent on the face c,l the record is demonstrated. lt is argued that the petitioner mereir seeks to re_ agitate issues already adjudicated by this Hon,ble Cr urt.

6.2 The respondent furlher asserts that t le Modified Rehabilitation Scheme (MRS_2007), sanctioned b,r the BIFR on 17.122007, continues to remain varid and has not t -.en decrared failed or terminated, thereby entifling the responde.. to protection under Section 22(1) of SICA. 6 3 lt is also contended that a review of a commr> r judgment is impermissible unless directed against the entire ji Jgment, and since a Special Leave petition (SLp) arising out )f connected proceedings is pending before the Hon,ble Suprer e Court, the instant review petition is barred. 6 .- \:*tfl \, Points for Determination 7 . The following issues arise for consideration (i) Whether the respondent company was entitled to protection under S/CA or IBC al the relevant time? (ii) Whether the judgment daled 12.06.2025 suffers from an error apparent on the face of the record within the meaning of Order XLVII Rule 1 of the Code of Civil Procedure, 1908? Discussion and Analvsis A. Repeal of SICA and its Legal Consequences

8. Section 252 of the lnsolvency and Bankruptcy Code, 2016 repealed S/CA with effect from 01 .12.2016, resulting in the dissolution of BIFR and AAIFR. Pursuant to the repeal, all references pending before the BIFR stood abated unless refiled before the NCLT within '180 days.

9. Admittedly, the respondent did not initiate any insolvency resolution process under Section '10 of the /BC. Hence, after 01 .12.2016, it ceased to enjoy any statutory moratorium or protective cover. The Supreme Court in Swiss Rlbbons Pvt. Ltd. - v. union of lndia, (2019) 4 SCC '17, and Tata Motors Lfd (supra) 7 categorically held that all proceedings under S/Czt abated post- repeal, and any claim of "sickness" must henceforth le addressed exclusively under the /BC framework. B. Expiry of the BIFR Rehabilitation Scheme '1 0. The Modified Draft Rehabititation Scheme MDRS-2007) sanctioned on 03.12.2007 had a maximum statuto., life of seven years under Section 22(3) of S/CA. Accordingly it expired on

03.12.2014 by efflux of time. No application fo. extension or revival was ever made by the respondent.

11. Therefore, as on the date of the petitio r before the Commercial Court, much less by the date of impuS ted judgment (12.06.2025), no operative or enforceable rehabilil rtion scheme existed. This fact is buttressed by the counter of m() letary agency (O.AylDBl Bank Ltd. in t.A. No.3 of 2O2O in COt\1CA No.16 of 2020, lhat the period of scheme ended by 31 .03i014. Hence, the conclusion that the respondent remained ur der a BIFR_ directed rehabilitation process was thus factualty base/ess and legally untenable. 8 E C. Nature and Scope of Section 9 Proceedings

12. Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant interim measures of protection to safeguard the subject matter of arbitration As held in Firm Ashok Traders (supra) and Adhunik Sfee/s (supra)' Section 9 proceedings are ancillary, preventive, and facilitative in nature' they do not partake of the character of execution proceedings'

13. ln Essar Hous e Pvt. Ltd. v. Arcetor Mittal Nippon Steel lndia Ltd , (2022) 8 SCC 235, the Supreme Court held that the jurisdiction under Section 9(1) extends even "after the making of thearbitralawardbutbeforeitisenforcedinaccordancewith Section 36." Therefore, pendency of proceedings under Sections 34or3ToftheActdoesnotbarSectiongrelief.Consequently, any reliance on supposed moratorium provisions under S/CA or tBC lo defeat interim protective relief under Section 9 is m isconceived. D. Error Apparent on the Face ofthe Record

14. The impugned judgment proceeded on the erroneous assumption that the respondent continued to enjoy statutory -' protection under a subsisting rehabilitation scheme' The non- I I I I i --]7-- 9 consideration of (a) the statutory repeal of SiCA, ard (b) the expiry of the BIFR scheme, constitutes an error app:t ent on the face of the record within the meaning of Order XLVII Flt le 1 CpC. 15. ln Thungabhadra lndustries Ltd v. Govt of A.F, AIR 1964 SC 1372, and Aibam Tuleshwar Sharma v. AriLt, m pishak Sharma, (1919) 4 SCC 389, the Supreme Court held that overlooking a binding regar provision or materizrr evidence constitutes a manifest error warranting review. Findin qs

16. Based on follows: the foregoing discussion, this Corrr finds as (i) s/cA stood repeared with effect ttom 01 .1z.zo1(, and the respondent's BIFR-sanctioned rehabilitation scheme,,xpired on 03.12.2014; (ii) fhe respondent did not initiate any insolvency t,t )ceedings under the /BC to continue or renew protection; (iii) Consequenfly, the respondent was not a ,,sick c: npany,, in law at the relevant time; (iv) The finding in COMCA No 16 of 2020 extending Ii CA_based protection was manifesfly erroneous; and (v) Section 9 proceedings, being interim and prot€ ltive, are I I \ \ unaffected by the pendency of appeals or any moratorium provisions under S/CA or lBC. Conclusion

17. For the reasons stated above, this Court is of the considered view that the judgment dated 12.06.2025 in COMCA No. 16 of 2020 suffers from a clear and patent error apparent on the face of the record. The respondent was neither under a valid rehabilitation scheme nor entitled to statutory protection under SICA or IBC '18. Accordingly, the Review Petition is allowed. The judgment dated '12.06.2025 passed in COMCA No. 16 of 2020 is hereby reviewed and recalled, and the order of the Commercial Court in C.O.P. No. 42 of 2019 directing the respondent to furnish adequate security or a bank guarantee for Rs.12,90,59,567/- to secure the arbitral award amount is restored. There shall be no order as to costs. Miscellaneous petitions, if any, pending in the Petition, shall stand closed. //TRUE COPY// D/.K.SRINIVASA RAO JOINT REGIST I ECTION OFFICER To,

1. The Jud.ge, Commercial Court -cum_XXIV Additionat Chief Judge, City Civil Court, Hyderabad 2 ,T-1: Ygllq,."g Director, prateek GuptaS/o. Ashok K. cupta, Rockwel Ind_ust,es- Ltd ., (previoq_sly known as M/s Rockwell lndudtries pfi. Ltd) Regd ^ 9fl9" at 6-3-883/2/4, 3'd Ftoor, Tejaswi ptaza. ean;igutta Hyderabad. 3 D. Nagesh, the chief Manager Mat'eriar/ Finance, ilintlstnan' rturo carbons - Ltd., having its Registered o-ffice at 303, Bahu Xnan gstate. easfreerOagh. Hyderabad- 500 001. 4. The S.O. O.S. Section, High Court for the State of Telangana at Hyderabad. 5. One CC to SRl. Y VENKATESHWARLU ,Advocate [OpUC] .-.r , l i$iv,;, ,;

6. One CC to SRI SETTY RAVI TEJA' Advocate [OPUC] 7. Two CD CoPies kul/PSL . 7 l i' ..1 S rrE o '...<- Vo\\- i t \ J}: Ntf )ScD ) . .(( ,7t L-) )-' .ir,' * HIGH COURT DATED:2311212025 I t ORDER REVIEW I.A. NO.3 OF 2025 IN COMCA.No.16 of 2020 ALLOWING 'IHE RIVIEW PETITION. 6\r ^h