IBC moratorium and overriding clause bar State attachment actions against corporate debtor assets during CIRP.

The Insolvency and Bankruptcy Code, 2016, with its overriding clause and CIRP framework, prevails over inconsistent State recovery proceedings. Proceedings under the Tamil Nadu Protection of Interest of Depositors Act, 1997 could therefore be taken over by the Resolution Professional, who is entitled to control the corporate debtor's records and books of account during insolvency. An ad-interim attachment order passed after commencement of CIRP and during the moratorium conflicts with the statutory bar on coercive action against the corporate debtor's assets and cannot be sustained. The attachment is invalid and unenforceable against the insolvency process.

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Issues: (i) Whether proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 can be taken over by the Resolution Professional under the Insolvency and Bankruptcy Code, 2016. (ii) Whether an ad-interim attachment order passed during the moratorium under the Insolvency and Bankruptcy Code, 2016 is valid.

Issue (i): Whether proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 can be taken over by the Resolution Professional under the Insolvency and Bankruptcy Code, 2016.

Analysis: The Insolvency and Bankruptcy Code, 2016 contains a non-obstante clause giving it overriding effect over inconsistent laws. The Code provides a complete framework for corporate insolvency, including commencement of CIRP, management by the Resolution Professional, decision-making by the committee of creditors, and, if required, liquidation and distribution of assets. On that basis, proceedings initiated under the State depositors protection law could not prevail over the insolvency regime governing the corporate debtor.

Conclusion: Yes. The proceedings under the Tamil Nadu Protection of Interest of Depositors Act, 1997 could be taken over by the Resolution Professional under the Insolvency and Bankruptcy Code, 2016.

Issue (ii): Whether an ad-interim attachment order passed during the moratorium under the Insolvency and Bankruptcy Code, 2016 is valid.

Analysis: The moratorium declared under the Code prohibited coercive steps against the corporate debtor's assets. The attachment order was passed after commencement of CIRP and during the moratorium, and therefore conflicted with the statutory protection under the Code. The attachment could not be sustained in the face of the moratorium and the overriding operation of the Code.

Conclusion: The ad-interim attachment order was invalid and was set aside as null and void.

Final Conclusion: The Resolution Professional was entitled to take over the records and books of account of the corporate debtor, and the attachment made during the moratorium could not be enforced against the insolvency process.

Ratio Decidendi: By virtue of its overriding clause and moratorium provisions, the Insolvency and Bankruptcy Code, 2016 prevails over inconsistent State recovery proceedings and bars attachment or seizure actions against the corporate debtor's assets during CIRP.

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