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TMI Blog2019 (3) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... Original lease deeds entered into between Sterling SEZ and Infrastructure Ltd. and P. I. Industries Ltd. on 28.08.2018, as prayed for in this application. - M.A 1280/2018 in C.P. 405/ 2018 - - - Dated:- 12-2-2019 - Bhaskara Pantula Mohan And V. Nallasenapathy, JJ. For the Applicant: Mr. Shavez Mukri a/w Ms. Almira Lasrado, Advocates i/b India Law, Mr. Vishal G. Jain, Resolution Professional. Respondent: Mr. Retesh Srivastava, Advocate and Mr. Nitesh Rana, Advocate Amicus curie: Mr. Mayur R. S. Khandeparkar, Advocate. V. Nallasenapathy, ORDER 1. The Applicant is the resolution Professional of Sterling SEZ and Infrastructure Ltd. (hereinafter called Corporate Debtor ) and has sought the following reliefs a. To direct the Enforcement Directorate to release the provisional (or final, if confirmed) attachment on all the assets and properties of the company and hand over the charge to the Resolution Professional b. To direct the sub-registrar at Jambusar to register and hand over the two Original lease deeds entered into between Sterling SEZ and Infrastructure Ltd. and P. I. Industries Ltd. on 28.08.2018 in respect of the following: i. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding anything inconsistent therewith in any other law for the time being in force. The Applicant cited these sections to draw home the point that during CIRP, the Resolution Professional should decide how the properties and assets of the Corporate Debtor can be appropriated. c. Further, the Applicant cited a judgment pronounced by the Hon ble NCLT, Kolkata bench in Surendra Kumar Joshi v. REI Agro Limited, C.A (IB) No. 453/KB/2018 in C.P (IB) No. 73/KB/2017 wherein a liquidator had filed an application under Section 35(1) (n) of the Code seeking orders against the Directorate of Enforcement, New Delhi to release the attachment on the assets of the Corporate Debtor which was allowed. d. The Hon ble Supreme Court in Solidaire India Ltd v. Fairgrowth Financial Services Pvt. Ltd., (2001) 3 SCC 71 held that where there are two special statues which contain non-obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non-obstante clause it means that the Legislature wanted that enactmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered an FIR RCBD1/2017/E/007 dated 25.10.2017 u/s 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 and 120-B r/w 420, 467, 468, 471 and 469 of IPC against various accused persons including the promoters of SBL group, on the basis of which the Enforcement Directorate, Headquarters Investigation Unit recorded an ECIR bearing number ECIR/HQ/17/2017 to investigate into the offences under PMLA. As the investigation kept unfolding the role of different accused persons and determination of various assets which are proceeds of crime/laundered money led to attachment of properties involved in money laundering which were nothing but proceeds of crime to the tune of ₹ 4274 Crores and filing of different prosecution complaints, the last being filed on 23.10.2018 before special PMLA Court, Patiala House, New Delhi. On the said Court taking cognizance of the matter, issued nonbailable warrants against the accused persons/promoters of SBL group on 25.10.2018. g. The Promoters of SBL group left the country under suspicious circumstances and evaded the process of law to face criminal prosecution. h. The property in question constitute the value of proceeds of the crime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Allahabad in case of Raman Ispat Pvt. Ltd. Vs Executive Engineer, Pashimanchal Vidyut Vitran Nigam Ltd. In the case of Surender Kumar Joshi (supra), NCLT, Kolkata has directed ED to hand over the possession of the attached properties of the Corporate Debtor under liquidation to the liquidator along with the title deeds thereof. It is, however, clarified by the NCLT that the Court established under PMLA could decide whether the properties attached could said to be properties acquired out of proceeds of crime. In the present MA, the Resolution Professional have sought release of attachments as well as handing over possession of the assets. However, there is nothing on record to indicate that the possession of these assets in question have been taken over by the ED under PMLA. In absence of such material, it is obligation/duty of the Resolution Professional to take control and custody of assets of the Corporate Debtor in terms of Section 18(1)(f) of the Code. However, it is required to be noted that the provisions of PMLA permit possession to be taken by the ED under Section 8(4) of the PMLA only after confirmation of the provisional order of attachment under Sub-Section 3 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Raman Ispat Pvt. Ltd. (Supra) has in exercise of power u/s 35(1)(n) of IBC directed the District Magistrate and Tehsildar, Muzaffarnagar to release the attached properties in favour of liquidator. However, in the present case the provisional attachments were levied prior to the commencement of CIRP. Also, Section 35(1) of the Code only applied in the case of liquidation and hence such recourse cannot be applied in the present case. The only other provisions which may be applicable for considering raising of attachment would be section 60 (5) of IBC where under NCLAT would have jurisdiction to pass appropriate orders and decide all such issues relating to the Corporate Debtor or as regards any claim against the same. It was further submitted that the Resolution Professional to take out an appropriate application before the adjudicating authority under PMLA for raising the attachment. However, in the interregnum the Resolution Professional can take physical possession of the properties attached in terms of Section 18(1)(f) of the Code. The Hon ble Supreme Court and several High Courts have consistently held that an order of attachment is passed for achieving a limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured Creditors beneficiaries under both statutes:- It is submitted that the ultimate beneficiaries under both statutes are the secured Creditors/ Financial Institutions who have filed claim before the Resolution Professional. Section 31 of IBC provides for Resolution Plan in CIRP whereas Section 53 of PMLA provides for distribution in case of liquidation. Similarly, under Section 8(8) of PMLA the Special Court may direct the Central Government to restore the confiscated property or part thereof to the claimant with legitimate interest therein. Thus in both situations the ultimate beneficiaries are financial creditors/secured creditors. The object of IBC is to expedite the insolvency process and to secure maximization of value of assets of Corporate Debtor for distribution to all stake holders. PMLA contemplates restoration of confiscated property to the claimants who have legitimate interest. The Appellate Tribunal for PMLA in the case of Punjab National Bank (supra) held as below:- The Adjudicating authority is bound by the law laid down by the higher courts. No authority has any justification to ignore the law laid down by the Supreme Court and various High Courts and this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s open for Respondent No. 3 at any time before a winding up order is passed to apply under Section 7 of the Code. This is clear from a reading of Section 7 together with Section 238 of the Code which reads as follows: 238. Provisions of this Code to override other laws.- The provisions of this 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 any such law. 18. Shri Dave's ingenious argument that since Section 434 of the Companies Act, 2013 is amended by the Eleventh Schedule of the Code, the amended Section 434 must be read as being part of the Code and not the Companies Act, 2013, must be rejected for the reason that though Section 434 of the Companies Act, 2013 is substituted by the Eleventh Schedule of the Code, yet Section 434, as substituted, appears only in the Companies Act, 2013 and is part and parcel of that Act. This being so, if there is any inconsistency between Section 434 as substituted and the provisions of the Code, the latter must prevail. We are of the view that the NCLT was absolutely correct in applying Section 238 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14(1)(a) of IBC, where moratorium on any kind of proceedings is imposed by the Adjudicating Authority, particularly this attachment is a legal proceedings which squarely falls under the ambit of the said Sections of IBC. Since, the attachment order passed by the PMLA court is hit by the provisions of Section 14 of the Code and considering the overriding effect of IBC under Section 238 of the Code, this Tribunal is of the considered view that the attachment order under PMLA Act is a nullity and non-est in law and hence it will not have any binding force. c. Section 63 of the IBC provides that, no Civil Court or Authority shall have jurisdiction to entertain any suit or proceeding in respect of any matter on which NCLT or NCLAT has jurisdiction under this Code. In view of the ruling by the Appellate Authority under PMLA in Bank of India vs Deputy Directorate Enforcement, Mumbai supra, that the proceedings before Adjudicating Authority under PMLA in respect of attached properties is a civil proceedings, the Adjudicating Authority under PMLA does not have jurisdiction to attach the properties of the Corporate Debtor undergoing Corporate Insolvency Resolution Process. d. The sug ..... 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