Insolvency Code prevails over state attachment law, protecting liquidation assets for distribution to creditors.

Section 32A of the Insolvency and Bankruptcy Code was treated as barring attachment of a corporate debtor's property for pre-CIRP offences, and its protection was read retrospectively to preserve the insolvency and liquidation process. The Code's overriding effect under Section 238 was applied to give priority to the insolvency regime over the competing Maharashtra protection law, because continued attachment would prejudice creditors and obstruct realisation and distribution of assets. The assets were therefore treated as liquidation assets, and the impugned attachment order and notification were set aside to the extent necessary to require handover of the assets to the liquidator.

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Issues: Whether the attachment of the corporate debtor's assets under the Maharashtra protection law could continue despite the insolvency and liquidation regime, and whether the attachment order and related notification were liable to be set aside so that the assets could be handed over to the liquidator.

Analysis: Section 32A of the Insolvency and Bankruptcy Code, 2016 was treated as prohibiting any action, including attachment, against the property of the corporate debtor in relation to offences committed prior to commencement of the corporate insolvency resolution process, and the provision was read as operating retrospectively to protect the insolvency and liquidation process. The Code's overriding effect under Section 238 was applied to give primacy to the insolvency regime over the competing State law, because continued attachment would prejudice creditors and frustrate realisation and distribution of assets through the liquidation process. The assets were therefore treated as liquidation assets that had to be made available for distribution in accordance with the statutory scheme under the Code.

Conclusion: The attachment could not be sustained against the corporate debtor's liquidation assets, and the impugned order and notification were set aside to that extent with a direction to hand over the assets to the liquidator.

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