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2020 (10) TMI 589 - Tri - Insolvency and BankruptcyRelease of attachment on the plant and machinery, factory building, movable assets and bank accounts - Section 60(5) of I B Code - HELD THAT - A bare reading of the MPID Act, 1999, would show that with regard to the attachment that are effected by the competent authority under the MPID Act, 1999, the designated court would further enquire into claims/objections on such attachments and for that purpose, Section 7 of the MPID Act, 1999 provides the designated court all the powers as contained in Civil Procedure Code - It is pertinent to note that the properties of the Corporate Debtor are attached under the provisions of the MPID Act for the alleged dues of ₹ 98.8 Crores, payable by the Corporate Debtor to NSEL on the premise that NSEL is Financial Establishment. However, Hon'ble High Court of Bombay in the matter of 63 Moons Technologies Limited vs. State of Maharashtra 2019 (8) TMI 1038 - BOMBAY HIGH COURT has categorically held that NSEL is not a Financial Establishment and that all the attachments made under the MPID Act, 1999 on the premise that NSEL is a Financial Establishment would not subsist. Section 238 of the IB Code, 2016 provides for non-obstante clause to the effect that the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of such law - The Hon'ble Supreme Court in the case of Solidaire India Ltd. Vs. Fairgrowth Financial Services Pvt. Ltd. 2001 (2) TMI 968 - SUPREME COURT has held that where two statutes contain non-obstante clause, latest statute would prevail. Thus IB Code, 2016 being the later statute of the two, provisions of Section 238 of IB Code, 2016 would prevail over the provisions of MPID Act, 1999, insofar as it relates to enquiry on attachments which are civil in nature as per Section 7 of MPID Act, 1999 - Further, since the Hon'ble High Court of Bombay has ruled that NSEL is not a Financial Establishment, the impugned notification of the Deputy Secretary to the Government of Maharashtra with regard to attachment over the properties of Corporate Debtor owing to its alleged dues to NSEL cannot survive. This Adjudicating Authority holds the attachment made by the Competent Authority under MPID Act, 1999, as invalid in the eyes of law - Application disposed off.
Issues Involved:
1. Release of attachment on the plant and machinery, factory building, movable assets, and bank accounts. 2. Validity of attachments made under the Maharashtra Protection of Interest of Depositors (MPID) Act, 1999. 3. Applicability of Section 238 of the Insolvency and Bankruptcy Code (IBC), 2016. 4. Determination of NSEL as a Financial Establishment under MPID Act. 5. Jurisdiction and precedence between MPID Act and IBC, 2016. Issue-wise Detailed Analysis: 1. Release of Attachment on Assets: The application sought to direct Respondents No. 1 and 4 to release the attachment on the plant, machinery, factory building, movable assets, and bank accounts belonging to the Corporate Debtor. The attachments were imposed by the Economic Offence Wing (EOW), CB, CID Mumbai, and the Department of Central Excise. The Interim Resolution Professional (IRP) argued that these attachments hindered the performance of duties under the IBC, 2016, particularly in maintaining the Corporate Debtor as a going concern and attracting investors. 2. Validity of Attachments under MPID Act, 1999: The properties were attached under the MPID Act by the state of Maharashtra to recover dues from the Corporate Debtor to NSEL. The IRP contended that financial creditors have priority over others for recovery under the IBC's waterfall mechanism, making the attachments by EOW and Central Excise infructuous. The Bombay High Court in "63 Moons Technologies Ltd vs. State of Maharashtra" ruled that NSEL is not a Financial Establishment, thereby invalidating the attachments under the MPID Act. 3. Applicability of Section 238 of IBC, 2016: Section 238 of the IBC, 2016, provides a non-obstante clause, stating that the Code will prevail over any other law in case of inconsistency. The Supreme Court in "Solidaire India Ltd. Vs. Fairgrowth Financial Services Pvt. Ltd." held that the latest statute with a non-obstante clause would prevail. Thus, the IBC, 2016, being the later statute, overrides the MPID Act concerning civil attachments. 4. Determination of NSEL as a Financial Establishment: The Bombay High Court concluded that NSEL is not a Financial Establishment under the MPID Act. Consequently, the attachments made under the MPID Act on the premise that NSEL is a Financial Establishment would not subsist. This judgment was pivotal in determining the invalidity of the attachments on the Corporate Debtor’s assets. 5. Jurisdiction and Precedence between MPID Act and IBC, 2016: The Tribunal held that the provisions of the IBC, 2016, would prevail over the MPID Act, 1999, due to the non-obstante clause in Section 238 of the IBC. The designated court under the MPID Act has the power to enquire into claims/objections on attachments, but the IBC's provisions take precedence in insolvency proceedings. Conclusion: The Tribunal declared the attachments made by the Competent Authority under the MPID Act, 1999, as invalid. The IRP was directed to proceed with the assets of the Corporate Debtor under the IBC, 2016. Respondents were given the liberty to file their claims before the IRP or the Liquidator in accordance with the IBC, 2016. The application was disposed of accordingly.
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