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2021 (3) TMI 26 - AT - Insolvency and BankruptcySeeking directions upon Respondent No. 2 to defreeze the Account of petitioner - It is argued that the Adjudicating Authority failed to exercise jurisdiction vested in it and to invoke section 238 of I B Code, 2016 - HELD THAT - It is rightly submitted by appellant that the freezing of Account by the Respondent No. 1 is not maintainable and the Liquidator cannot be made to run to the parties and Authorities under the Sales Tax Act to get the Account defreezed - also appellant rightly says that Liquidation Proceedings are time-bound to maximize the value and all the Creditors are entitled to get their dues only in terms of Section 53 of I B Code, 2016 and different Creditors cannot be allowed to resort to different proceedings and enactments only because they are Authorities under earlier enactments considering the Provision of Section 238 of I B Code, 2016. The Adjudicating Authority has failed to exercise jurisdiction vested in it to give relief to the Appellant in the context of the position of law under Section 238 of IBC. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Jurisdiction of the Adjudicating Authority over defreezing a corporate debtor's account under the I&B Code. 2. Conflict between provisions of the I&B Code and earlier enactments regarding creditor claims. 3. Applicability of Section 238 of the I&B Code in overriding inconsistent enactments. Analysis: Issue 1: Jurisdiction of the Adjudicating Authority The Appellant-Liquidator sought directions to defreeze a bank account of the Corporate Debtor. The Adjudicating Authority dismissed the application, stating that the liquidator should address the State Tax office regarding the matter. The Appellant filed an appeal, arguing that the Adjudicating Authority failed to exercise its jurisdiction. The Tribunal found merit in the Appellant's submission, emphasizing the Adjudicating Authority's obligation to provide relief under the I&B Code. Issue 2: Conflict Between Provisions of I&B Code and Earlier Enactments The Appellant contended that the Respondent's claim as an Operational Creditor conflicted with the I&B Code's provisions, specifically Section 53. The Appellant highlighted that all creditors are entitled to their dues as per Section 53, and different proceedings cannot be allowed based on earlier enactments. The Tribunal agreed with the Appellant's argument, emphasizing the time-bound nature of Liquidation Proceedings to maximize value for all creditors. Issue 3: Applicability of Section 238 of the I&B Code The Appellant invoked Section 238 of the I&B Code, citing a Supreme Court judgment that the Code overrides inconsistent enactments. The Tribunal referenced the Supreme Court's ruling regarding the primacy of the I&B Code over other laws. The Tribunal accepted the Appellant's reliance on this legal principle and directed the Respondent to defreeze the Corporate Debtor's account, setting aside the Adjudicating Authority's order. In conclusion, the National Company Law Appellate Tribunal, New Delhi allowed the appeal, quashed the impugned order, and directed the Respondent to defreeze the Corporate Debtor's account. The Tribunal upheld the supremacy of the I&B Code in resolving conflicts with earlier enactments and emphasized the Adjudicating Authority's duty to provide relief to the Appellant within the framework of the law.
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