2019 (5) TMI 1936 - AT - Insolvency and Bankruptcy

Seeking direction to release the attached property of Raman Ispat Private Limited (Corporate Debtor) attached by the Appellant - issuing direction to the Appellant for submitting their claims to the Liquidator of the Corporate Debtor appointed under Section 33 of the Insolvency and Bankruptcy Code 2016 - HELD THAT - The Electricity Act 2003 was enacted and came into force w.e.f. 26th May 2003 when the I B Code was not in existence - The decision of the Hon ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd. 2008 (3) TMI 654 - SUPREME COURT was also a decision prior to the I B Code and related to the Electricity Act 2003 wherein the Hon ble Supreme Court held that the Electricity Act 2003 will have overriding effect on the Arbitration and Conciliation Act 1996. In view of Section 238 of the I B Code the I B Code will have overriding effect on all laws which are for the time being in force including the Electricity Act 2003 and Rules and Regulations framed thereunder - The I B Code being a subsequent Act of parliament the Electricity Act 2003 cannot override any provisions of the I B Code. Section 238 of the I B Code which is a subsequent parliamentarian law which talks of overriding effect on all existing laws therefore it is held that the I B Code will have overriding effect on the Electricity Act 2003 if any of the provisions of the Electricity Act 2003 is inconsistent with the provisions of the I B Code - As per sub-section (5) of Section 33 when a liquidation order has been passed no suit or other legal proceeding can be instituted by or against the Corporate Debtor. Though a suit or other legal proceeding may be instituted by the liquidator on behalf of the Corporate Debtor with the prior approval of the Adjudicating Authority. If there is any amount due to any creditor he can file claim before the Liquidator who is required to verify the claims under Clause (a) of sub-section (1) of Section 35 and thereafter on consolidation of claims under Section 38. After verification of claims under Section 39 it is the Liquidator who is entitled to admit or reject the claim under Section 40 - the District Collector cannot initiate proceeding for any outstanding dues for supply of electrical energy nor can auction movable and immovable properties. Though it is open to the Electricity Authority of the Collector to file claim before the Liquidator. Appeal dismissed.

Issues:
1. Application for direction to release attached property and submit claims to Liquidator.
2. Adjudicating Authority's order allowing the application.
3. Outstanding dues under agreement for supply of electrical energy.
4. Appellant's attachment of properties due to unpaid dues.
5. Liquidator's duty in the Corporate Insolvency Resolution Process.
6. Recovery notice issued by District Collector.
7. Impact of attachment orders on property sale.
8. Appellant's claim classification and distribution.
9. Applicability of Electricity Act provisions.
10. Conflict between Electricity Act and Insolvency and Bankruptcy Code.
11. Overriding effect of Insolvency and Bankruptcy Code.
12. Precedents supporting overriding effect of subsequent laws.
13. Sections 173 and 174 of the Electricity Act.
14. Timing of Electricity Act and Insolvency and Bankruptcy Code.
15. Supreme Court decisions on overriding effect of specific laws.
16. Complete Code nature of Insolvency and Bankruptcy Code.
17. Section 238 of the Insolvency and Bankruptcy Code.
18. Overriding effect of Insolvency and Bankruptcy Code on existing laws.
19. Superiority of subsequent parliamentary laws.
20. Resolution of conflicts between parliamentary laws.
21. Interpretation of Section 238 of the Insolvency and Bankruptcy Code.
22. Legal proceedings post liquidation order.
23. Powers and duties of Liquidator.
24. Liquidator's role in protecting assets and selling properties.
25. Verification and consolidation of creditor claims.
26. District Collector's limitations in initiating proceedings.
27. Upholding the Adjudicating Authority's order.
28. Dismissal of the appeal.

Analysis:
1. The case involved an application for the release of attached property and submission of claims to the Liquidator in a Corporate Insolvency Resolution Process.
2. The Adjudicating Authority's order allowed the application, directing the release of attached property for sale to realize value and distribute proceeds as per the Insolvency and Bankruptcy Code.
3. The agreement between the parties outlined that outstanding dues for electrical energy supply would be a charge on the company's assets.
4. The Appellant attached properties due to unpaid dues by the Corporate Debtor, leading to the liquidation process.
5. The Liquidator's duty was to form a liquidation estate, consolidate creditor claims, and distribute proceeds as per the Code's provisions.
6. A recovery notice was issued by the District Collector for outstanding dues, affecting the property auction.
7. The Liquidator argued that attachment orders must be set aside for property sale certainty.
8. The Liquidator highlighted the classification and pro-rata distribution of claims, including those of the Appellant.
9. The Appellant argued that Electricity Act provisions had an overriding effect on the Insolvency and Bankruptcy Code.
10. The conflict between the Electricity Act and the Insolvency and Bankruptcy Code was raised by the Appellant.
11. The Insolvency and Bankruptcy Code's overriding effect on existing laws was emphasized.
12. Precedents showcasing the overriding effect of subsequent laws were cited to support the Liquidator's position.
13. Sections 173 and 174 of the Electricity Act were presented to highlight their impact on conflicting laws.
14. The timing of the Electricity Act and the Insolvency and Bankruptcy Code was crucial in determining their applicability.
15. Supreme Court decisions on specific laws' overriding effect were referenced to support legal arguments.
16. The Insolvency and Bankruptcy Code's nature as a complete Code was pivotal in the legal analysis.
17. Section 238 of the Insolvency and Bankruptcy Code was crucial in determining its overriding effect on existing laws.
18. The Insolvency and Bankruptcy Code's superiority over existing laws was a key point in the judgment.
19. The principle of subsequent parliamentary laws having precedence over earlier laws was highlighted.
20. Resolving conflicts between parliamentary laws required an analysis of their hierarchy and applicability.
21. Interpretation of Section 238 of the Insolvency and Bankruptcy Code was central to determining its impact on conflicting laws.
22. Legal proceedings post liquidation order were outlined, emphasizing the role of the Liquidator.
23. The powers and duties of the Liquidator were detailed, focusing on asset protection and property sale.
24. The Liquidator's role in verifying claims and selling properties was essential for the resolution process.
25. Verification and consolidation of creditor claims were critical steps in the liquidation process under the Code.
26. Limitations on the District Collector's authority in initiating proceedings were discussed in the judgment.
27. The Adjudicating Authority's order was upheld, considering the legal arguments and factual circumstances.
28. The appeal was dismissed, with no costs imposed, concluding the legal proceedings in the case.

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