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TMI Blog2021 (12) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... rect the Respondent to file its claim with the RP; iv. Pass any other order(s) as this Hon'ble Tribunal may deem fit in the given facts of the present case." 2. Heard Mr. Manish Jain, the learned counsel for the applicant-Resolution Professional and Mr. Akhilesh S. Dubey, the learned counsel for respondent No. 2 and perused the pleadings on record. 3. It is stated that CP (IB) No. 161/Chd/Hry/2018 seeking initiation of CIRP against the corporate debtor was admitted on 29.10.2018. The process has been commenced on 02.11.2018 when an Interim Resolution Professional was appointed. On coming to know that the second respondent-Deputy Collector and Competent Authority (NSEL), Mumbai attached some of the properties of the corporate debtor, vide Annexure A-4 dated 03.11.2018 the applicant-RP informed to the respondent No. 2 about the initiation of the Insolvency Resolution Process against the corporate debtor and requested to de-attach all the properties of the corporate debtor. But the second respondent vide Annexure A-6 letter dated 12.11.2018 stated that the properties of the corporate debtor were attached by the Government of Maharashtra vide notification dated 28.08.2014 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther v. Deputy Secretary - Home Department & others, SLP No. 10626-10627 of 2019, dated 17.04.2017, Supreme Court; iii. White Water Foods Pvt. Ltd. & another v. State of Maharashtra & others, CWP No. 11189 of 2014, dated 25.10.2017, Punjab and Haryana High Court; iv. Embassy Property Developments Pvt. Ltd. v. v. K.K. Baskaran v. State Represented by its Secretary, Tamil Nadu and others; (2011) 3 SCC 793; vi. Vishal N. Kalsaria v. Bank of India and others. (2016) 3 SCC 762; vii. Central Bank of India v. State of Kerala and others, (2009) 4 SCC 94; viii. The Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999; ix. Ashita Nilesh Patel and another v. Deputy Secretary, Home Department and others, Special Leave to Appeal (C) No(s). 10626-10627/2017, dated 17.04.2017, Supreme Court; and x. Ashita Nilesh Patel & another v. Deputy Secretary - Home Department & others, C/SCA/18637/2015 8. In the backdrop of the above submissions the issues fell for our consideration in this CA are:- (i) Whether this Tribunal has jurisdiction to entertain the instant CA? (ii) Whether the attachment of the properties of the corporate debtor made under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not-- (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (ii) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession reason to believe that he had abetted or conspired for the commission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes continue to operate in the same field." (Emphasis Supplied)" xx xx 50. The case law referred to above, therefore, yields the following propositions: 51.1. Repugnancy under Article 254 arises only if both the Parliamentary (or existing law) and the State law are referable to List III in the 7th Schedule to the Constitution of India. 51.2. In order to determine whether the Parliamentary (or existing law) is referable to the Concurrent List and whether the State law is also referable to the Concurrent List, the doctrine of pith and substance must be applied in order to find out as to where in pith and substance the competing statutes as a whole fall. It is only if both fall, as a whole, within the Concurrent List, that repugnancy can be applied to determine as to whether one particular statute or part thereof has to give way to the other. 51.3. The question is what is the subject matter of the statutes in question and not as to which entry in List III the competing statutes are traceable, as the entries in List III are only fields of legislation; also, the language of Article 254 speaks of repugnancy not merely of a statute as a whole but also "any provision" thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical. The test that has been applied in such cases is based on the principle on which the rule of implied repeal rests, namely, that if the subject matter of the State legislation or part thereof is identical with that of the Parliamentary legislation, so that they cannot both stand together, then the State legislation will be said to be repugnant to the Parliamentary legislation. However, if the State legislation or part thereof deals not with the matters which formed the subject matter of Parliamentary legislation but with other and distinct matters though of a cognate and allied nature, there is no repugnancy. 51.9. Repugnant legislation by the State is void only to the extent of the repugnancy. In other words, only that portion of the State's statute which is found to be repugnant is to be declared void. 51.10. The only exception to the above is when it is found that a State legislation is repugnant to Parliamentary legislation or an existing law if the case falls within Article 254(2), and Presidential assent is received for State legislation, in which case State legislation prevails over Parliamentary legislation or an existing law within that State. Here again, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any instrument having effect by virtue of any such law." It is clear that the later non-obstante clause of the Parliamentary enactment will also prevail over the limited non-obstante clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. xx xx 65. The appeals, accordingly, stand dismissed. There shall, however, be no order as to costs." 11. The Hon'ble NCLT New Delhi Bench in Bank of India vs. Tirupati Infraprojects Pvt. Ltd., (IB)-104(PB)/2017 dated 01.02.2019 examined the overriding effect of the IBC with reference to the very same Maharashtra Protection of Interests of Depositors (In Financial Establishments) Act, 1999 i.e. the MPID Act itself, as under:- "8. The Resolution Professional asserted that in the annual report of M/s. Mohan India Limited, there is no subsidiary except M/s. Mohan Infracon Limited nor there is any joint-venture/associate company. It has been accepted that Mohan India Ltd. and Mohan Infracon Pvt. Ltd. are not shareholders of the Corporate Debtor. 9. Apart from the lack of connection betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list. Therefore, moratorium imposed under Section 14 of the Code would not have any application in criminal proceedings instituted in the year 2013 nor Section 74 would not have any such application. 11. Having heard learned counsel for the parties, we find that the issue whether a State Act is to give way to the Insolvency and Bankruptcy Code passed by the Parliament is no longer res integra. The question arose before Hon'ble the Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank Ltd. & Anr. (2018) 1 SCC 407 in that case also the conflict between the provisions of Maharashtra Relief Undertaking (State Provisions) Act, 1958 and Insolvency and Bankruptcy Code, 2016 came to the fore-front in the context of imposition of moratorium. The view of Hon'ble the Supreme Court is discernible from the head notes prepared by the learned Editors of the reports and the same read as under:- "A. Insolvency and Bankruptcy Code, 2016 - Maharashtra Relief Undertakings (Special Provisions) Act, 1958 - Repugnancy with 2016 and Effect of - Moratorium given to company under the Maharashtra Act, as in the present case where, by Notifications dt. 22-7-2015 and 18-7-2016 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s restricting or qualifying the general provisions made in it, there can be said to be no repugnancy C. Constitution of India - Art. 254 - Repugnant State law - when prevails over Parliamentary law - Effect of subsequent Parliamentary law -Repugnant legislation by the State is void only to the extent of the repugnancy - Further, when it is found that a State legislation is repugnant to Parliamentary legislation or an existing law if the case falls within Art. 254(2), and Presidential assent is received for State legislation, the State legislation prevails over Parliamentary legislation or an existing law within that State - However, here also the State law must give way to any subsequent Parliamentary law which adds to, amends, varies or repeals the law made by the legislature of the State, by virtue of the operation of Art. 254(2) proviso D. Constitution of India - Art. 254 - Laws made by Parliament and legislature of State - When, even in the absence of a direct conflict, are repugnant - Test of implied repeal - Applicability of - Held, the test applied in such cases is based on the principles on which the rule of implied repeal rests, namely, that if the subject - matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Depositors (In Financial Establishments) Act, 1999 (hereinafter referred to as "MPID Act") against a "Financial Establishment", as contemplated under the MPID Act, can be challenged not before the Designated Court under the MPID Act but before the National Company Law Tribunal (hereinafter referred to as "NCLT") by resorting to the remedy provided under the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "I.B. Code"). On the application of a "Financial Creditor" as contemplated under I.B. Code, an Interim Resolution Professional (hereinafter referred as "IRP") is appointed by NCLT by exercising power under section 7 of the I.B. Code against the Corporate Debtor as contemplated under I.B. Code, which is also the Financial Establishment under the MPID Act and de-freezing of the corporate Debtor's account attached in MPID proceedings is ordered. This order is the subject matter of challenge in this petition. xx xx 26. The learned counsel of the Respondent relied on judgments of Hon'ble Supreme Court in West U.P. Sugar Mills Association(supra), M. Karunanidhi (supra) and Innoventive Industries Ltd.(supra). All these judgments are on the issue of repugnan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Parliamentary law is intended to be a complete, exhaustive or exclusive code. In such a case, the State law is inconsistent and repugnant, even though obedience to both laws is possible, because so long as the State law is referable to the same subject matter as the Parliamentary law to any extent, it must give way. One test of seeing whether the subject matter of the Parliamentary law is encroached upon is to find out whether the Parliamentary statute has adopted a plan or scheme which will be hindered and/or obstructed by giving effect to the State law. It can then be said that the State law trenches upon the Parliamentary statute. Negatively put, where Parliamentary legislation does not purport to be exhaustive or unqualified, but itself permits or recognises other laws restricting or qualifying the general provisions made in it, there can be said to be no repugnancy. viii) A conflict may arise when Parliamentary law and State law seek to exercise their powers over the same subject matter. This need not be in the form of a direct conflict, where one says "do" and the other says "don't". Laws under this head are repugnant even if the rule of conduct prescribed by both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier may be permissible, at least, the attachment of the said account is totally impermissible. 27. We have already made it clear that in the present Writ Petition we are only examining the aspect regarding the forum in which the action taken under the MPID Act can be challenged and not the merits of the case. In fact, the Respondent can file objections to the attachment under Section 7 of the MPID Act before the Designated Court under the MPID Act and can point out the provisions of the I.B. Code to the Designated Court. The statement of law which is applicable to the present case as found in paragraphs 40 and 41 in the judgment of Embassy Property Developments Pvt. Ltd. (supra) is, at the cost of repetition, again quoted hereinbelow: "40. If NCLT has been conferred with jurisdiction to decide all types of claims to property, of the corporate debtor, Section 18(f)(vi) would not have made the task of the interim resolution professional in taking control and custody of an asset over which the corporate debtor has ownership rights, subject to the determination of ownership by a court or other authority. "41. This shows that wherever the corporate debtor has to exercise rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall do all acts necessary for safeguarding and protecting the interest of depositors in Roofit Industries. Date: 18.08.2017 A.S. Kaloti Special Judge, M.P.I.D. Act & Addl. Sessions Judge, City Civil & Sessions Judge At Bombay." Thus, even the said order, on which reliance is placed by the Respondents, shows that the IRP in that case approached the Designated Court under the MPID Act and after hearing all the parties, an order was passed and certain directions in the interest of depositors as contemplated under the MPID Act were also issued. 29. The learned counsel for the Petitioner has also relied on the judgment of NCLAT in the case of JSW Steel Ltd.(supra) wherein it has been held that the action of Directorate of Enforcement did not meet the criteria under Section 32-A(1)(b) of I.B. Code. However, in the present case, the Designated Court under MPID Act will examine the said aspect and therefore, the said judgment is not applicable to the present case. 30. Thus, in view of the above discussion, we hold that the NCLT has no jurisdiction to examine legality or validity of action taken under MPID Act and it is only the Designated Court constituted under Section 6 of the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of disposal of the Writ Petition, Civil Application No. 29 of 2020 does not survive and is disposed of as such." 13. The Hon'ble High Court of Bombay in Anil Kohil case while setting aside the order of the NCLT wherein it was directed that the bank account of the corporate debtor to be defreezed, held that the designated court under Section 7 of the MPID Act alone is having jurisdiction to decide the validity of any order passed under MPID Act. However, in our considered view the said judgment has no application to the facts of the present case in view of the observations made in Para 26 of the said judgment itself. In the said judgment the Hon'ble High Court of Bombay after considering the judgment of the Hon'ble Apex Court in Innoventive Industries Limited (Supra) categorically observed that the position of law as held by the Hon'ble Apex Court in Innoventive Industries Limited is well settled and there cannot be any dispute about the same however, in the case on hand i.e. in Anil Kohil's case, the learned counsel for the respondent i.e. the RP of the corporate debtor therein has not argued that the provisions of MPID Act are repugnant with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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