9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 919 - Tri - Insolvency and BankruptcyInitiation of corporate insolvency resolution process (CIRP) - Corporate Debtor - section 7 of the Insolvency and Bankruptcy Code, 2016 - whether the financial creditor is to first approach the Adjudicating Authority under Section 8 of PMLA, 2002 for seeking appropriate orders/permission to take any action for resolution of the assets of the corporate debtor attached under provisional attachment order passed by the ED? - whether the proceedings in CP(IB) No. 73/Chd/CHD/2018 be kept in abeyance till the final decision of the Adjudicating Authority under Section 8 of the PMLA Act, 2002? HELD THAT - The plea in the instant application is that in view of the provisional attachment order dated 15.03.2017 under Section 5(1) of the PMLA, 2002, the RP will not be able to perform his duties under Section 18(1)(f) of the Code of taking control and custody of any assets over which the corporate debtor has ownership rights. The provisional attachment order directs that the properties provisionally attached under Section 5(1) of PMLA, 2002 shall not be removed, parted with or otherwise dealt with without prior permission of the Deputy Director, ED. Therefore, the ownership rights of the corporate debtor are not affected by the provisional attachment order. The possession also continues to remain with the corporate debtor. It is only the right of removing, parting with or otherwise dealing with the properties has been reduced to the extent that the prior permission of the Deputy Director ED would be required. Therefore, there is no impediment to the initiation of the CIRP consequent to order made by the Adjudicating Authority under the Code. An order of attachment under PMLA does not ipso facto render illegal a prior charge of encumbrance of a secured creditor and the secured creditor can prove and as and when the secured creditor proves his bonafides and satisfies the other conditions, the property to the extent of such interest of the secured creditor would not be subjected to confiscation. Thus, the proceedings in CP (IB) No. 73/Chd/CHD/2018 for initiation of CIRP in the case of the corporate debtor be continued and not kept in abeyance and that the financial creditor and/or the Resolution Professional who may be appointed may take necessary action as deemed fit for declaration under the PMLA, 2002 that the property to the extent of the interest of the respective secured creditor is not to be subjected to confiscation. Application disposed off.
Issues Involved:
1. Whether the financial creditor must first approach the Adjudicating Authority under Section 8 of PMLA, 2002 for appropriate orders/permission before taking any action for resolution of the corporate debtor's assets attached under provisional attachment order. 2. Whether the proceedings in CP(IB) No. 73/Chd/CHD/2018 should be kept in abeyance until the final decision of the Adjudicating Authority under Section 8 of PMLA, 2002. Issue-Wise Detailed Analysis: 1. Requirement to Approach Adjudicating Authority under PMLA, 2002: The corporate debtor argued that the financial creditor must seek orders from the Adjudicating Authority under Section 8 of PMLA, 2002 before taking any action for resolution of the assets attached under provisional attachment order No. 03/2017 dated 15.03.2017. The corporate debtor relied on the Hon’ble NCLT, Allahabad's decision in the case of Bank of Baroda Vs. Rotomac Global Private Limited, which emphasized that matters regarding the attachment of properties under PMLA, 2002 should be decided by the authorities under PMLA, 2002. 2. Keeping CIRP Proceedings in Abeyance: The corporate debtor requested that the CIRP proceedings be kept in abeyance until the final decision of the Adjudicating Authority under PMLA, 2002. They argued that the Resolution Professional (RP) would not be able to take control and custody of the assets due to the provisional attachment order. The financial creditor opposed this, arguing that the physical control of the assets remained with the corporate debtor, and thus the RP could discharge his duties under Section 18(1)(f) of the Code. Tribunal's Analysis and Conclusion: On Requirement to Approach Adjudicating Authority under PMLA, 2002: The Tribunal noted that the provisional attachment order dated 15.03.2017 does not affect the ownership rights of the corporate debtor, and the possession of the assets remains with the corporate debtor. The Tribunal referred to the Hon’ble NCLT, Allahabad's decision, which allowed the Liquidator to approach the authorities under PMLA, 2002 to release the properties from attachment. However, the Tribunal distinguished the present case, noting that the prayer was for keeping the CIRP proceedings in abeyance, not for withdrawal of the attachment order. On Keeping CIRP Proceedings in Abeyance: The Tribunal highlighted the Hon’ble Delhi High Court's judgment in CRL.A.143/2018, which stated that the PMLA, RDBA, SARFAESI Act, and Insolvency Code must co-exist and be construed in harmony. The Tribunal concluded that there is no legal impediment to initiating CIRP proceedings even if the corporate debtor's assets are subject to PMLA, 2002 proceedings. The Tribunal held that the RP could take control and custody of the assets, as the provisional attachment order does not take away ownership rights. Final Decision: The Tribunal decided that the proceedings in CP(IB) No. 73/Chd/CHD/2018 for initiation of CIRP should continue and not be kept in abeyance. The financial creditor and/or the RP may take necessary actions as deemed fit for declaration under the PMLA, 2002 that the property to the extent of the interest of the respective secured creditor is not to be subjected to confiscation. Disposition: CA NO. 191/2019 was disposed of accordingly.
|
