The validity of a judgment rendered by the court on the progress of litigation proceedings without knowledge of the decision on commencement of rehabilitation proceedings for one of the parties to the lawsuit, even though the court has made a decision on commencement of rehabilitation proceedings.

Article 59(1) of the Debtor Rehabilitation and Bankruptcy Act provides, “If a decision to commence a rehabilitation procedure is made, the proceedings relating to the debtor’s property shall be interrupted.” Therefore, in a case where a court rendered a judgment by proceeding with proceedings without knowledge of either party when a decision to commence a rehabilitation procedure was made against one party during a lawsuit, and without such knowledge, the court rendered a decision, the said judgment is erroneous as it is in the same manner as in the case where the administrator, who is to take over the proceedings, was tried and sentenced in a state where it is impossible to conduct legal proceedings due to a decision to commence a rehabilitation procedure by a party,

Article 59(1) of the Debtor Rehabilitation and Bankruptcy Act

Supreme Court Decision 94Da24121 Decided February 9, 1996 (Gong1996Sang, 865) Supreme Court Decision 2012Du1546 Decided September 27, 2012 (Gong2012Ha, 1754)

Nonparty (Law Firm LLC, Attorneys Kim Dong-soo et al., Counsel for the plaintiff-appellant)

Sejong Special Self-Governing City President

Daejeon High Court Decision 2020Nu10584 decided Nov. 27, 2020

The judgment of the court below is reversed, and the case is remanded to Daejeon High Court.

The grounds of appeal are examined.

1. As to the assertion of misapprehension of legal principles as to the interruption of litigation procedures

A. Article 59(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”) provides that “when a decision to commence rehabilitation procedures has been rendered, the proceedings relating to the debtor’s property shall be interrupted.” Therefore, if a court rendered a judgment by proceeding with proceedings without knowledge of either party while a decision to commence rehabilitation procedures was rendered against one party during the proceeding, and without such knowledge of the decision, the said judgment is erroneous in the same manner as in the case where a custodian, who is to take over the proceedings by either party’s decision to commence rehabilitation procedures, was tried and sentenced under a state in which it is impossible for him/her to conduct legal proceedings, and thus, the said judgment was rendered, and the said judgment was rendered by an agent (see, e.g., Supreme Court Decisions 94Da24121, Feb. 9, 1996; 2012Du1546, Sept. 27, 2012).

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On February 13, 2019, the lower court filed the instant lawsuit seeking revocation with respect to the taxation disposition that the regular industry of the Plaintiff (hereinafter “regular industry”) was previously reduced or exempted on the ground that the regular industry is not subject to acquisition tax reduction or exemption (including additional tax; hereinafter “acquisition tax, etc.”).

2) However, on September 22, 2020, prior to the second date for pleading, the lower court rendered a decision to commence rehabilitation proceedings for a regular industry on September 22, 2020 (the Suwon District Court 2020 Gohap156). The lower court rendered a judgment to dismiss an appeal for a regular industry on November 27, 2020, under the circumstance that the said decision to commence rehabilitation proceedings was not filed with the Plaintiff from the regular industry, despite verifying the fact that the said decision to commence rehabilitation proceedings was confirmed.

3) On December 18, 2020, the Plaintiff’s agent indicated the Plaintiff as appellant and submitted a petition of appeal. The Plaintiff’s agent asserted that the appellate brief filed on January 27, 2021 erred by the lower court’s aforementioned procedure.

C. Examining such factual basis in light of the relevant statutes and the legal principles as seen earlier, the Defendant’s right to collect acquisition tax, etc. on a regular industry was established prior to the commencement order of rehabilitation procedures, and the instant lawsuit disputing the imposition and amount of such acquisition tax, etc. constitutes “litigation on the debtor’s property” under Article 59(1) of the Debtor Rehabilitation Act, and thus, ought to be deemed as having been suspended by the commencement order of rehabilitation procedures on a regular industry. Nevertheless, the lower court, as it did not take litigation proceedings while the lawsuit was not taken place and rendered a judgment, was

2. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)