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2021 (4) TMI 928 - SC - Insolvency and BankruptcyRelease of freezed bank account of petitioner - moratorium in process - HELD THAT - The contours of the jurisdiction under 482 of the Cr.P.C. are far too well settled to require articulation or reiteration. Undoubtedly, in this case by 26.08.2019 an application filed under section 7 of the IBC was admitted, the appellant appointed as the interim resolution professional and what is more a moratorium declared. With the declaration of the moratorium the prohibitions as enacted in section 14 came into force. It is clear that the assets of the company would include the amounts lying to the credit in the bank accounts - The provisions of the IBC contemplate resolution of the insolvency if possible, in the first instance and should it not be possible, the winding up of the Corporate Debtor. The role of the insolvency professional is neatly carved out. From the date of admission of application and the appointment of Interim Resolution Professional, the management of the affairs of the Corporate Debtor is to vest in the Interim Resolution Professional. With such appointment, the powers of the Board of Directors or the partners of the Corporate Debtor as the case may be are to stand suspended. Having regard to the orders passed by the NCLT admitting the application, under Section 7, and also the ordering of moratorium under Section 14 of the IBC and the orders which have been passed by the tribunal otherwise, the impugned order of the High Court resulting in the Respondent No. 1 being allowed to operate the account without making good the amount of ₹ 32.50 lakhs to be placed in the account of the Corporate Debtor cannot be sustained. The Learned Counsel for the Appellant has also no objection in the Respondent No. 1 being allowed to operate its account subject to it remitting an amount of ₹ 32.50 lakhs into the account of the Corporate Debtor. The Respondent No.1 is allowed to operate its account subject to it to first remitting into the account of the Corporate Debtor, the amount of ₹ 32.50 lakhs which stood paid to it by the management of the Corporate Debtor - Appeal allowed.
Issues Involved:
1. Legality of the High Court's order allowing the respondent to operate its bank accounts. 2. Allegations of unauthorized transactions violating the moratorium under Section 14 of the IBC. 3. Jurisdiction and powers of the High Court under Section 482 of the Cr.P.C. 4. Compliance with the provisions of the Insolvency and Bankruptcy Code (IBC). Detailed Analysis: 1. Legality of the High Court's Order: The appeal challenges the High Court's order dated 04.02.2021, which permitted the respondent to operate its bank accounts and unfreeze the accounts of its creditors, subject to certain conditions. The High Court's decision was based on the contention that freezing the accounts would cause unnecessary hardship and was not necessary for the investigation of the FIR. 2. Unauthorized Transactions Violating Moratorium: The appellant, appointed as the Interim Resolution Professional (IRP) and later as the Resolution Professional (RP), alleged that the former Managing Director of the Corporate Debtor engaged in unauthorized transactions amounting to ?32.50 lakhs, violating Section 14 of the IBC. The transactions were made without the appellant's authority and during the moratorium period, which prohibits transferring or encumbering the Corporate Debtor's assets. 3. Jurisdiction and Powers under Section 482 of the Cr.P.C.: The High Court, while exercising its jurisdiction under Section 482 of the Cr.P.C., allowed the respondent to operate its bank accounts. The Supreme Court highlighted that the High Court overlooked the statutory provisions of the IBC, particularly Sections 14 and 17, which mandate the management of the Corporate Debtor's assets by the IRP/RP during the moratorium. The Supreme Court emphasized that the power under Section 482 cannot be used to undermine statutory dictates. 4. Compliance with IBC Provisions: The Supreme Court reiterated the roles and responsibilities of the IRP/RP under the IBC. From the date of admission of the application under Section 7 and the appointment of the IRP, the management of the Corporate Debtor's affairs vests in the IRP. Section 14 imposes a moratorium, prohibiting the transfer of the Corporate Debtor's assets. The IRP/RP must manage the assets and operations of the Corporate Debtor, ensuring compliance with the IBC. Findings: The Supreme Court found that the High Court's order allowing the respondent to operate its bank accounts without remitting the ?32.50 lakhs into the Corporate Debtor's account was unsustainable. The Court noted that the transactions occurred after the moratorium was in place, and the High Court's interim order overlooked the statutory provisions of the IBC. Conclusion: The Supreme Court allowed the appeal and modified the High Court's order. The respondent was permitted to operate its bank accounts only after remitting ?32.50 lakhs into the Corporate Debtor's account. The Court clarified that its order does not affect the ongoing investigation or the petition under Section 482 of the Cr.P.C. The respondent retains the right to pursue its claims in the appropriate forum. Separate Judgments: No separate judgments were delivered by the judges. Final Order: The appeal is allowed with the following modifications: 1. The respondent is allowed to operate its bank account subject to remitting ?32.50 lakhs into the Corporate Debtor's account. 2. The assets of the Corporate Debtor shall be managed in accordance with the IBC provisions. 3. The judgment does not affect the ongoing investigation or the petition under Section 482 of the Cr.P.C. 4. The respondent can pursue its claims for ?32.50 lakhs and any other sums in the appropriate forum. No order as to costs.
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