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TMI Blog2022 (8) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor; given that Section 238 of IBC overrides anything inconsistent contained in any other enactment and also given that Section 60(5) of the IBC vests residuary jurisdiction on the Adjudicating Authority to intervene and, above all, keeping in mind that the cardinal objective of the IBC Code is to obviate uncalled for derailment of the insolvency resolution process, there are sufficient merit in the submission made by the Learned Counsel for the Appellant that the Adjudicating Authority ought to have appreciated the constraints faced by the Appellant/Liquidator and provided relief by exercising its residuary jurisdiction rather than remanding the Appellant once again back in the hands of the government authorities. The Adjudicating Authority erred in not exercising the residuary jurisdiction vested in it under Section 60(5) of the IBC and having failed to provide necessary relief to the Appellant, the impugned order is set aside - Respondents No. 1 and 2 are herewith directed to immediately withdraw the notices issued by them defreezing the Bank Accounts of the Corporate Debtor, Pan India Utilities Distribution Co. Ltd., maintained in IDBI Bank, Khar West Branch, Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor. The Resolution Professional having not received any Expression of Interest following the public announcement made on 22.02.2020, the Committee of Creditors ( CoC in short) on 13.06.2020 resolved by majority to go ahead with liquidation. Accordingly, the Liquidation Order was passed on 11.08.2020 by the Adjudicating Authority. 4. The Learned Counsel for the Appellant has further submitted that the exercise of consolidation of the assets of the Corporate Debtor, by bringing the bank accounts of the Corporate Debtor held in IDBI Bank and Axis Bank within the liquidation estate, was occasioned by the need to further the liquidation process in accordance with the provisions of the IBC. However, this exercise could not progress as Respondents No. 1 and 2, namely, the Assistant Commissioner of State Tax, Mumbai and the Commercial Tax Officer, Gwalior Circle-1, Madhya Pradesh respectively had issued notices to IDBI and Axis Bank, arrayed herein as Respondents No. 3 and 4, directing them to freeze the current account of the Corporate Debtor towards clearance of outstanding dues/liabilities of CST/VAT. Following these directions, Respondents No. 3 and 4 had placed debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 were not present during the hearing. None of the Respondents have filed any counter affidavit. 8. Having heard the Learned Counsels and after perusing carefully the records/documents placed before us, the issue before us for our consideration is whether the Liquidator having already made sufficient efforts and still having failed to persuade the government authorities and the banks to de-freeze the relevant bank accounts of the Corporate Debtor, does it become incumbent upon the Adjudicating Authority in terms of the IBC to intervene and issue appropriate directions to the relevant government authorities/banks to lift the debit freeze on the accounts of Corporate Debtor, if it is so requested by the Liquidator. 9. Before we proceed to dwell on this matter any further, a quick look into some of the duties of the liquidator as provided under Section 35 of the IBC juxtaposed against the facts of the present case will be useful and constructive. Section 35 reads as follows: - 35. Powers and duties of liquidator - (1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely: - (a) to verify claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account of the Corporate Debtor as part of the liquidation estate. 12. It has been further stated by Learned Counsel for the Appellant that Regulation 44(1) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 mandates that the Liquidator shall liquidate the Corporate Debtor within a period of one year from the liquidation commencement date. It has also been pointed out that it is necessary to take over the bank accounts of the Corporate Debtor as part of the liquidation estate within the prescribed time-frame or otherwise the object of value maximization will be lost if not completed within a reasonable time. It has been further argued that the Appellant had already tried his level best to get the accounts defreezed and despite having failed to succeed in doing so, the directions made in the impugned order remanding the Appellant yet again before the government authorities would only add to delay in completion of the CIRP and mount liquidation costs. We agree with these submissions in as much as the Preamble to the IBC aspires to bring in place a statutory framework where insolvency resolution can take place in a time bound manner for maximi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . Section 238 of IBC clearly overrides anything inconsistent contained in any other enactment. The IBC is thus a complete code and prevails over all other laws which are inconsistent with or in conflict with the Code. This is a settled position of law and a catena of judgements of the Hon ble Supreme Court affirms this position viz. Principal Commissioner of Income Tax Vs. Monnet Ispat and Energy Limited (2018 SCC Online SC 3465) ; Tata Consultancy Services Limited Vs. Vishal Ghisulal Jain (2020 SCC Online SC 1254) and Indus Biotech Pvt. Ltd. v. Kotak India Venture (Offshore) Fund (2021 SCC Online SC 268) . We therefore agree that the directions issued by Respondent No.1 and 2 freezing the accounts of the Corporate Debtor during liquidation process is bad in law and hence it was within the remit of the Adjudicating Authority to issue appropriate directions to the Respondents No. 1 and 2 to set the matter right and provide statutory relief to the Appellant. 16. The Learned Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 238 of IBC. 17. Given that the persistent efforts on the part of the Appellant to defreeze the accounts of the Corporate Debtor did not bear any result; given that there is sufficient proof of reluctance on the part of Respondents 1 to 4 to defreeze the bank accounts of the Corporate Debtor; given that Section 238 of IBC overrides anything inconsistent contained in any other enactment and also given that Section 60(5) of the IBC vests residuary jurisdiction on the Adjudicating Authority to intervene and, above all, keeping in mind that the cardinal objective of the IBC Code is to obviate uncalled for derailment of the insolvency resolution process, we find sufficient merit in the submission made by the Learned Counsel for the Appellant that the Adjudicating Authority ought to have appreciated the constraints faced by the Appellant/Liquidator and provided relief by exercising its residuary jurisdiction rather than remanding the Appellant once again back in the hands of the government authorities. 18. In view of the above discussions, facts and circumstances, we hold that the Adjudicating Authority erred in not exercising the residuary jurisdiction vested in it under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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