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2019 (5) TMI 1469 - HC - Insolvency and BankruptcyTaking over the godowns/properties of the Corporate Debtor, including its plant, machinery, mortgaged properties and stocks of grain etc. - Section 14 of the Insolvency Bankruptcy Code, 2016 - HELD THAT - Since the respondent no.1/Bank has also expressed its willingness to the IRP/RP taking control of all the assets, including the perishable assets of the corporate debtor, there is no real contest in the present case - DRAT was not powerless to modify its own order whereby the two court commissioners had been appointed to take over control of the assets of the petitioner/corporate debtor. In the facts of the case, the learned DRAT should have recalled its order so that the IRP/RP could take over the assets of the corporate debtor in the exercise of its mandate under the Insolvency Bankruptcy Code, 2016. The appointment of the two Court Commissioners vide order dated 15.11.2018 is recalled - impugned order set aside - the IRP/RP is directed to act in exercise of the power vested in it by the Insolvency Bankruptcy Code, 2016. Petition disposed off.
Issues:
1. Setting aside an order passed by Debt Recovery Appellate Tribunal (DRAT) in a case involving a corporate debtor proceeded against by a bank. 2. Interpretation of Section 14 of the Insolvency & Bankruptcy Code, 2016 regarding the imposition of a moratorium on proceedings against a corporate debtor. 3. The authority of the Interim Resolution Professional/Resolution Professional (IRP/RP) under the Insolvency & Bankruptcy Code, 2016 to manage the assets of a corporate debtor. Issue 1: Setting Aside DRAT Order The petitioner, a corporate debtor, approached the High Court seeking to set aside an order passed by DRAT appointing Court Commissioners to take over its assets. The petitioner argued that the appointment hindered the IRP/RP from efficiently managing the assets, as required by the Insolvency and Bankruptcy Code, 2016. The Court held that DRAT had the power to modify its order and recalled the appointment of Court Commissioners, allowing the IRP/RP to take control of the assets. Issue 2: Interpretation of Section 14 of the Insolvency & Bankruptcy Code DRAT had dismissed the application of the IRP/RP citing Section 14 of the Insolvency & Bankruptcy Code, 2016, which imposes a moratorium on proceedings against a corporate debtor. The High Court disagreed with DRAT's interpretation, stating that the moratorium only prohibits the institution of new suits or proceedings, not the management of assets crucial for the corporate debtor's interest. The Court emphasized the IRP/RP's duty to salvage the best value of assets within a specified timeframe. Issue 3: Authority of IRP/RP under the Insolvency & Bankruptcy Code The High Court highlighted the IRP/RP's authority under the Insolvency & Bankruptcy Code, 2016, to monitor and take control of a corporate debtor's assets. Given the consent of the bank, the primary lender, for the IRP/RP to manage all assets, including perishable ones, the Court found no real contest in the case. Consequently, the High Court set aside DRAT's order, recalled the appointment of Court Commissioners, and directed the IRP/RP to take over the assets promptly. In conclusion, the High Court's judgment addressed the issues of setting aside the DRAT order, interpreting Section 14 of the Insolvency & Bankruptcy Code, and affirming the authority of the IRP/RP to manage the assets of a corporate debtor efficiently. The decision aimed to ensure the timely and effective resolution of insolvency proceedings in line with the statutory provisions and the best interests of the corporate debtor.
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