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TMI Blog2021 (6) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has to take note of statement of objects for bringing the enactment. The very object is to prevent committing default in return to the public, the deposits on maturity and thereby cheating the depositors of their legitimative due. The term default to include fraudulent failure to return the deposits or pay interest, bonus and profit or perform service promised. The term deposit is defined under Section 2(2) of the Act, which includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either by cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form - there is a force in the contention of the petitioner s counsel that the provisions of the IBC is having overriding effect over other laws and the same would prevail in view of Section 238 of the Code. Hence, the petitioner has made out grounds to quash the proceedings initiated against the petitioner under Section 7(1) of the Act, 2004. Petition allowed. - WRIT PETITION NO.13477/2020(GM-RES) - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstanding of law that, the petitioner-Company falls under the scope and ambit of the Act, 2004 initiated action before Principal City Civil and Sessions Judge (Spl. Judge), Metropolitan Area, Bengaluru stating that the petitioner has accepted the deposits from 3668 depositors to the tune of ₹ 385 Crores. 4. It is further alleged that the petitioner has failed to repay the said amount. It is also contended that in this background of various complaints lodged against the petitioner-Company, three homebuyers being aggrieved by the actions of the petitioner-Company moved a petition before the Hon'ble National Company Law Tribunal bearing CP(IB) No.84/BB/2019 under Section 7 of Insolvency and Bankruptcy Act, 2016 seeking to declare the petitioner-Company as insolvent. The NCLT, after considerable hearing, admitted the petition on 20.08.2019 and Corporate Insolvency Resolution Process as contemplated under Insolvency and Bankruptcy Act, 2016 was directed to be commenced. In the same order, Sri.Ashok Kriplani was appointed as Interim Resolutional Professional to over look the activities of petitioner-Company. Sri. Ashok Kriplani was confirmed as the Resolutional Profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krantiveer Sangoli Rayanna Co-op Society Ltd., Belagavi v. Nana Dhondiba Desai and Another reported in ILR 2018 KAR 4125 and would contend that the said ratio is aptly applicable to the case on hand. It is further contended that the petitioner is not a financial establishment and hence, the Act, 2004 cannot be invoked against the petitioner herein. 8. Learned counsel also relied upon the judgment of this Court in the case of M.S. Shivashankar v. State of Karnataka Represented by its Chief Secretary to Government and Another reported in ILR 2010 KAR 328 wherein it is held with regard to the procedure adopted under the Act in respect of the attachment of properties on default of return of deposits and the procedure which has to be followed. This Court set aside the order impugned and directed to follow the procedure. 9. Learned counsel also relied upon the judgment of the Apex Court in the case of Innoventive Industries Limited v. ICICI Bank and Another, reported in (2018) 1 SCC 407, wherein the Apex Court discussed with regard to repugnancy with 2016 Code and effect of moratorium given to the Company under the Maharashtra Act, as in present case where, by notifications d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy between the two enactments. 12. Learned counsel also relied upon the judgment of the Apex Court in the case of Anand Rao Korada, Resolution Professional v. Varsha Fabrics (P). Ltd., and Others reported in 2019 SCC Online SC 1508 and brought to the notice of this Court the detailed discussion made in the judgment with regard to moratorium and also para No.11, with regard to Section 238 of the Code, provisions of this Code to override other laws and also brought to the notice of this Court para Nos.13 to 17, wherein it is held that in view of the provisions of IBC, the High Court ought not to have proceeded with the auction of the property of the Corporate Debtor. Once the proceedings under the IBC had commenced and an order declaring moratorium was passed by the NCLT, the High Court passed the impugned interim orders dated 14.08.2019 and 05.09.2019 after CIRP had commenced in the said case and held that the High Court was not justified in passing such an order. 13. Learned counsel also brought to the notice of this Court the judgment of the Apex Court in the case of Alchemist Asset Reconstruction Company Limited v. Hotel Gaudavan Private Limited and Others reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Special Court to accord permission to the respondent herein to submit the report to the Special Court and accept the same as required under Section 7(1) of the Act, 2004 and further permit the respondent herein to submit any other assets and deposit liability that may come to his notice in due course of his duties for necessary action to be initiated under the Act. It is also to be noted that an allegation is made in the petition that the petitioner herein had indulged in collecting an amount of ₹ 385 Crores from 3668 depositors and investigation discloses that they are due to the tune of ₹ 385 Crores. The interim order of attachment of the Government discloses that value fo the assets of the said Dreams Infra Limited is around ₹ 100 Crores. Hence, the petitioner is required to file a petition under Section 7(1) of the Act, 2004 reporting deposit liabilities and the assets of the petitioner herein. 18. Having perused the petition filed before the Special Court invoking Section 7(1) of the Act, the prayer sought is only with regard to seeking permission to submit a report with regard to assets and liabilities that may come to the notice of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accepted. However, it has to be noted that the State Government has appointed competent authority and passed an order of attachment of property and consequent upon the appointment, the competent Authority has approached the Special Court invoking Section 7 of the Act, 2004 with regard to assessment of assets and deposit liabilities. It has to be noted that the said petition is filed before the Special Court on 30.12.2019. Learned counsel for the petitioner also brought to the notice of this Court that NCLT has passed an order on 20.08.2019 against the petitioner herein when some of the investor/homebuyers have approached the NCLT. The respondent also not disputes the said fact. Some of the homebuyers have already approached the NCLT and an order has also been passed on 20.08.2019. 21. Having perused the order invoking the provisions of IBC, 2016, the same was admitted by initiating Corporate insolvency resolution and Ashok Kriplani was appointed as Interim Resolution professional in respect of the Corporate Debtor to carry on the function as mentioned under the IBC, 2016. It is also important to note that the moratorium is also declared and the IRP is directed to file a progre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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