2018 (12) TMI 1674 - Tri - Companies Law

Attachment of Bank Accounts - Bank Accounts were attached prior to the Insolvency and Bankruptcy Code commencement date in view of the fact that the respondents have filed formal claim for their dues with the applicant - HELD THAT - This bench takes a conscious decision under the powers granted to this Tribunal u/s 238 of the code that the Orders passed under Section 226 (3) of the Income Tax Act dated 16.11.2017 and 17.11.2017 by Income Tax Recovery Officer-4 Mumbai Room No.210 Ayakar Bhawan MK Road Mumbai are hereby suspended forthwith and we further hereby direct the authorities concerned not to proceed further for the recovery of dues. Resolution Professional are directed to approach the Banks with the copy of this order for the withdrawal of funds available in their respective accounts to keep the company as going concern. Application disposed off.

Summary

Issues:
1. Application to lift attachment of bank accounts by Income Tax Department.
2. Application for resolution plan by unregistered Employees Association.

Analysis:
Issue 1:
The Tribunal heard an application filed by the Resolution Professional requesting the Income Tax Department to lift the attachment of bank accounts belonging to the Company, as the Department had filed formal claims for their dues. The Resolution Professional stated that significant funds were held in various bank accounts, with the Income Tax Department having placed attachments on them. The company faced financial difficulties, including unpaid labor salaries and a pressing need for funds to continue operations. After considering the priority of the Income Tax Department in claiming dues in case of liquidation, the Tribunal, under its powers granted by the Insolvency and Bankruptcy Code, suspended the Income Tax Recovery Officer's orders for recovery of dues. The Tribunal directed the Resolution Professional to approach banks for withdrawal of funds to sustain the company's operations, thereby disposing of the application.

Issue 2:
Another application was filed by the unregistered Employees Association of the Corporate Debtor, proposing an investor with a resolution plan for the company. Despite previous failed attempts by other parties to submit resolution plans, the association claimed their investor was interested but required financial details from the Resolution Professional to proceed. The Tribunal noted the association's recent formation and the lack of registration. The Committee of Creditors had previously voted to liquidate the company, but the Tribunal emphasized the importance of resolution under the Insolvency and Bankruptcy Code. The Tribunal suggested the investor join the application to instill confidence in their commitment. The matter was adjourned for further proceedings on 01.01.2019.