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2021 (1) TMI 183 - Tri - Insolvency and BankruptcyRelease of attached property - Inconsistency between IB Code and Gujarat VAT Act - attachment of raw materials, stock, machinery, factory building and land of the Corporate Debtor, during the period of CIRP - Applicant's contention is that if the assets/ properties are under charge/ attachment, then in that case, Corporate Debtor's asset/ property cannot be auctioned under Liquidation process and as such the very object of the IB Code will get frustrated - HELD THAT - Admittedly, the assets/ property of the Corporate Debtor is under attachment/ charge of the Respondent. In view of Section 238 of the IB Code, when there is/ are any inconsistency between IB Code and any other law, IB Code will prevail - Under the facts and circumstances, the application so filed is partially allowed and Respondent No. 1 is hereby, directed to release the property of the Corporate Debtor so attached, in favour of the Liquidator and further directed to claim their dues before the Liquidator. Applicant is hereby directed to file an application before the competent authority i.e. Mamlatdar cum Executive Magistrate, Taluk Seva Sdan, Nr. Vanikar Club, Mehsana for appropriate order, as records are required to be rectified by the revenue authorities for which this Bench has no jurisdiction, relying upon the judgement of Hon'ble Supreme Court in PR. COMMISSIONER OF INCOME TAX VERSUS MONNET ISPAT AND ENERGY LTD. 2018 (8) TMI 1775 - SC ORDER as Section 238 of IB Code shall prevail, whenever there is any inconsistency between IB Code and any other law. Application disposed off.
Issues:
1. Application under Section 35(1)(n) read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 for quashing an order and restraining attachment of assets. 2. Validity of attachment by Respondent during Corporate Insolvency Resolution Process (CIRP) and Liquidation period. 3. Conflict between Insolvency and Bankruptcy Code and other laws regarding attachment of assets. 4. Direction for release of attached property in favor of Liquidator and filing of application for rectification of records. Analysis: Issue 1: The Applicant filed an application under Section 35(1)(n) read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking to quash an order and restrain Respondent No. 1 from attaching assets of the Corporate Debtor. The application also prayed for cancellation of a mutation entry in revenue records related to a specific land parcel. Issue 2: During the CIRP, Respondent No. 1, a State Tax Officer, attached various assets of the Corporate Debtor, including raw materials, stock, machinery, and land, under the Gujarat Value Added Tax Act, 2003. This attachment continued during the Liquidation period, raising concerns about the validity of the attachment during the insolvency process. Issue 3: The Tribunal considered the conflict between the Insolvency and Bankruptcy Code and other laws regarding the attachment of assets. Section 238 of the IB Code stipulates that in case of inconsistency, the IB Code will prevail. The Applicant argued that the attachment of assets could hinder the liquidation process and frustrate the objectives of the IB Code. Issue 4: The Tribunal partially allowed the application, directing Respondent No. 1 to release the attached property in favor of the Liquidator. Respondent No. 1 was further instructed to claim their dues before the Liquidator. Additionally, the Applicant was directed to file an application before the competent authority for rectification of records, as the Tribunal lacked jurisdiction in that regard. In conclusion, the Tribunal addressed the concerns raised by the Applicant regarding the attachment of assets during the insolvency process, emphasizing the overriding effect of the Insolvency and Bankruptcy Code in case of inconsistencies with other laws. The judgment provided clarity on the release of attached property and the process for rectifying records, ensuring compliance with the legal framework governing insolvency proceedings.
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