The NCLT's Kolkata Bench reaffirmed that the adjudicating authority lacked the capacity to consider cases of money laundering in Rahul Carbon Commercials Private Limited v. Kohinoor Steel Pvt. Ltd., supporting the decision of the appellate authority.
In the instant case titled Sesh Nath Singh & Another v. Baidyabati Sheoraphuli Co-Operative Bank Limited and Another the issue raised for clarification before the Apex Court was:
Whether petitions under Section 7 of the IBC are subject to the provisions of Act Section 14 (Exclusion of Time of Proceeding Bona Fide in Court Without Jurisdiction). If so, may time be excluded under Section 14 of the Act only if the proceedings before the incorrect forum have been adjourned?
With regard to this issue, The NCLAT's position was supported by the SC. According to the SC, Section 5 of the Act would have explicitly provided for the mandatory requirement of a written application if it had been necessary. As a result, it was decided that in the absence of a written application, the court is not prohibited from tolerating delay. It was decided that Section 14 of the Act does not apply to time spent proceeding in a wrong forum that is unable to hear the case due to lack of jurisdiction or another such reason. As a result, it was decided that in the absence of a written application, the court is not prohibited from tolerating delay. It was decided that Section 14 of the Act does not apply to time spent proceeding in a wrong forum that is unable to hear the case due to lack of jurisdiction or another such reason. When such processes have concluded, the final day for claiming exclusion under Section 14 of the Act would be that day. When exercising his or her authority under Section 14 of the SARFAESI, the Chief Metropolitan Magistrate or Judicial Magistrate, as the case may be, serves as a civil court or an executing court. Therefore, proceedings under the SARFAESI would be regarded as civil court proceedings. The term "court" as used in Section 14(2) of the Act would be understood to include any tribunal or forum established under the SARFAESI. Additionally, it was decided that actions taken in the NCLT or NCLAT in accordance with the IBC would be subject to the Act's provisions mutatis mutandis.
The Court categorically stated that,
“The expression in our judgment covers all proceedings in which a party asserts the existence of a civil right conferred by the civil law or by statute, and claims relief for breach thereof. A criminal proceeding on the other hand is ordinarily one in which if carried to its conclusion it may result in the imposition of sentences such as death, imprisonment, fine or forfeiture of property. It also includes proceedings in which in the larger interest of the State, orders to prevent apprehended breach of the peace, orders to bind down persons who are a danger to the maintenance of peace and order, or orders aimed at preventing vagrancy are contemplated to be passed. But the whole area of proceedings, which reach the High Courts is not exhausted by classifying the proceedings as civil and criminal. There are certain proceedings which may be regarded as neither civil nor criminal. “