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TMI Blog2020 (12) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... later confirmed as Resolution Professional. b. The applicant avers that the Respondent No. 1 vide order dated 10.04.2019 attached only one property of the corporate debtor which is undergoing CIRP, which is detrimental to the interest of the CIRP of the corporate debtor and therefore needs to be removed for maximization of the value of the corporate debtor in accordance with the provisions of the Code and Rules and Regulations applicable there under. c. It is averred that the Government of Andhra Pradesh proposed to set up a Gems and Jewellery park in Hyderabad with a twin objective to promote Jewellery trade as well as tourism in the then State of Andhra Pradesh and owned land to an extent of Ac. 2 and 05 guntas in Road No. 10 Banjara Hills. d. The project was conceptualized to be executed in public private partnership model. Government delegated the project's execution to the Andhra Pradesh State Trading Corporation ("APSTC") and the land was first transferred from Government to APSTC. This was followed by invitation of international tenders in March 2002 from prospective private parties who wish to execute the project in partnership with APSTC. e. The project was env ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corporate debtor, possibly with the risk of further litigation by APSTC. That being so, in October, 2018 a massive fraud was alleged inter alia against Mr. Mehul Choksi and his group companies. The allegation is that Mr. Choksi and his group companies, in connivance with bank officials, procured fraudulent letters of Undertaking ("LOU") from Punjab National Bank. This led to huge illegitimate siphoning of funds. By the time these allegations were reported, Mr. Mehul Choksi fled the country evading all further legal process. j. It is averred that though corporate debtor is not concerned with the allegations against Mr. Mehul Choksi or his group Companies. During the investigation by the Enforcement Directorate from the records ED seems to have understood that the Mr. Mukul Choksi's Gitanjali Group owns 89% of equity in the corporate debtor. k. Thus Respondent No. 1, on 17.10.2018, vide Provisional Attachment Order ("PAO") directly attached the property owned by the Corporate Debtor. It is pertinent to note herein that the Corporate Debtor was neither conceptualized nor incorporated by Mr. Mehul Choksi or his group companies. Mr. Mehul Choksi only purchased the equity from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l certainly discourage the prospective resolution applicants from submitting a Resolution Plan for the revival of the prestigious project of establishing "Gems and Jewellary Park" promoted by the Trade Promotion counsel of the Telangana State. q. It is averred that non-receipt of the resolution plans and upon completion of the maximum CIRP period of 180 days the corporate debtor has to be liquidated and this is against the objective of the I&B Code, 2016. r. It is further averred that, Hon'ble NCLAT on 25.10.2019, in the matter of "JSW Steel Ltd., vs. Mahendra Kumar Khandelwal & ors- Company Appeal (AT) (Insolvency) No. 957 of 2019 stated that "if the assets are seized by the Enforcement Directorate and finally hold that the assets were purchased out of the Proceeds of crime, in such case, the amount as may be generated out of the assets will come within the meaning of the operational debt payable to the Enforcement Directorate for which it may file claim in terms of I&B Code, 2016. s. It is further submitted that, the continuation of the attachment order of the Enforcement Directorate under the provisions of the Money Laundering Act, 2002 will derail the very objective o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the proceedings initiated by the ED however, corporate debtor chose not to act at the relevant time. e. It is reiterated that provisional attachment Order 18/2018 dated 17.10.2018 has been confirmed by the Hon'ble Adjudicating Authority(PMLA) New Delhi. It is further submitted that the proceedings under PMLA will override the proceedings even under the I&B Code, 2016 by virtue of PMLA being a penal Act and by effect of Section 71 of the PMLA, 2002. f. It is further submitted that though I&B code, 2016 as well as the prevention of Money Laundering Act, 2002(PMLA) both Acts are Special Statutes but the PMLA, 2002 being different in pith and substances from IBC, 2016 will not be effected by it and all actions taken under PMLA would be saved by virtue of Section 71 of the PMLA. g. Respondent No. 1 also cited the NCLAT Order, in the matter of Varrsanalspat Limited vs. the Deputy Director, ED, in Company Appeal(at) (Insolvency) No. 493 of 2018 vide order dated 02.5.2018 where in it was that the IBC does not have overriding effect on PMLA. Copy of the order dated 02.05.2018 of the Hon'ble NCLAT is annexed as Annexure-4. h. Respondent No. 1 also stated that the order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Jewellary Park Pvt. Ltd. Since corporate debtor has not complied to the conditions and obligations under which the land is alienated to the corporate debtor and therefore the corporation has all the rights to resume the property. d. It is averred that AP Gems and Jewellary Park Pvt. Ltd., has not paid any loan amount to the 2nd Respondent in terms of the loan agreement dt 09.05.2006. The 2nd respondent is the financial creditor to the corporate debtor. All the documents in support of the claim made have been submitted to the Applicant. e. It is averred that the entire operations of M/s.. AP Gems and Jewellary Park Pvt. Ltd. has been managed and carried out by corporate debtor. All documents, books of accounts, data etc are held and maintained by the corporate debtor. The corporation was not involved in any of its operations except attending Board meetings as and when called for. The corporation is not at all directly responsible for the operations of the Company. 5. We have heard the Counsel for Resolution Professional and also the Counsel for Respondent No. 1 and Respondent No. 2 through video conference. Written submissions are filed on behalf of Resolution Professional as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the Resolution Professional would contend the allegation by Enforcement Directorate/1st Respondent that Mr. Mehul Choksi of M/s. Gitanjali Group was involved in money laundering and that money is stated to have been utilised in acquiring the equity in the Corporate Debtor Company. On this ground Enforcement Directorate has attached the asset of the Corporate Debtor. The main contention of Learned Counsel for Resolution Professional that Enforcement Directorate cannot attach the assets of the Corporate Debtor as there is moratorium under Section 14 of IBC. The Counsel further contended, the attachment also cannot be effected in view of Section 32(A) of the Code. The Learned Counsel prayed for raising the attachment. 9. It is the case of Respondent No. 2, the said land held by Corporate Debtor belongs to the Government as Corporate Debtor in terms of MoU was still liable to pay huge money to the Government. Therefore, the Enforcement Directorate cannot attach the asset of the Corporate Debtor as the same belong to the Government represented by Respondent No. 2. 10. On the other hand, the Learned Counsel for Enforcement Directorate would contend that Enforcement Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obably throw light on this question would be Subsection (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of Subsection (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase "arising out of or in relation to the insolvency resolution" appearing in Clause (c) of Subsection (5). 12. The Learned Counsel also relied on the decision of Hon'ble NCLAT in the matter of Rotomac Global v.. Deputy Director and relevant paragraph is as follows:- "As the 'Prevention of Money Laundering Act, 2002' relates to different fields of penal action of 'proceeds of crime', it invokes simultaneously with the 'I&B Code', having no overriding effect of one Act over the Company Appeal (AT) (Insolvency) No. 140 of 2019 other including the 'I&B Code', we find no merit in this appeal. It is accordingly dismissed. No costs." The case of the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders of the "Corporate Debtor' and they cannot be given protection from the 'Prevention of Money Laundering Act, 2002' and such individual cannot take any advantage of Section 14 of the 'I&B Code'. This apart, we find that the attachments were made by the Deputy Director of Directorate of Enforcement much prior to initiation of the 'Corporate Insolvency Resolution Process', therefore, the 'Resolution Professional' cannot derive any advantage out of Section 14. Para 14. As the 'Prevention of Money Laundering Act, 2002 relates to different fields of penal action of 'proceeds of crime', it invokes simultaneously with the 'I&B Code', having no overriding effect of one Act over the 8 Company Appeal (AT) (Insolvency) No. 140 of 2019 other including the 'I&B Code', we find no merit in this appeal. It is accordingly dismissed. No costs." 18. Hon'ble NCLAT has also held in the matter of Varrsana Ispat Limited versus Deputy Director, Enforcement Director which is as follows:- Para 12: From the aforesaid provisions, it is clear that the "Prevention of Money-Laundering Act, 2002' relates to "proceeds of crime' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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