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of <h1>Tribunal Upholds IBC Supremacy Over TNPID Act: Resolution Professional Empowered</h1> The Tribunal held that the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) prevails over the Tamil Nadu Protection of Interest of Depositors Act, 1997 ... Corporate insolvency process - Whether the proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 (TNPID Act) can be taken over by the Resolution Professional under the Provisions of the Insolvency and Bankruptcy code, 2016? - HELD THAT:- On completion of the maximum period of time provided under Section 12, if no resolution plan is received by the Adjudicating Authority under Section 30(6) or it rejects the resolution plan under Section 31 for the non- compliance of the requirements specified under Section 30(2) of the IBC, 2016, then liquidation order has to be passed against the Corporate Debtor u/s 33 of the IBC, 2016 and in the process of the liquidation, the Assets of the Company are to be disposed of in order to distribute the proceeds among the stakeholders as per the waterfall mechanism provided under Section 53 of the IBC, 2016. In short, a comprehensive scheme is available under the IBC, 2016 for the companies which fail to pay its debt to the creditors. In view of the legal position stated above, the IBC, 2016 being a special legislation and by virtue of Section 238 of the IBC, 2016, overrides the provisions of TNPID Act. This view is fortified by the proposition settled in the matter of M/S. Aryarup Tourism Club Resorts Private Limited (in Liquidation) [2017 (6) TMI 608 - BOMBAY HIGH COURT] wherein it has been held that the powers of the competent authority appointed under the Maharashtra Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (MPID Act) and the MPID Court does not supersede or prevail upon the powers of the Official liquidator or of the Company Court under the provision of the Companies Act. Therefore, in the light of the provisions of the IBC, 2016 the proceedings initiated under TNPID Act can legally be taken over by the Resolution Professional in relation to the Corporate Debtor viz. Thiripura Chits Private Limited. Accordingly, the issue framed herein above is answered in affirmative. The competent authority and the investigation officer(s) under TNPID Act including Deputy Superintend Police, Economic offences wing-Il, are directed to hand over all the records of the Corporate Debtor viz. Thiripura Chits Private Limited, including books of Account along with chits security deposits amounting to ₹ 2.71 Crores as mentioned above, to the Resolution Professional viz. J. Manivannan, within a period of two weeks after receiving the certified copy of this order. The Resolution Professional is directed to obtain a certified copy of this order and to submit to the competent authorities and the investigating officers of the Police including Deputy Superintendent of Police, Economic offences wing-II for record and compliance. However, it is made clear that the Deputy Superintendent of Police, Economic offences wing-II may retain the Xerox copies of the record, original will be handed over to the Resolution Professional, for taking appropriate action against the accused persons in accordance with law. Issues Involved:1. Whether the proceedings pending under the Tamil Nadu Protection of Interest of Depositors Act, 1997 (TNPID Act) can be taken over by the Resolution Professional under the Provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).Issue-wise Detailed Analysis:1. Proceedings under TNPID Act vs. IBC, 2016:The primary legal issue was whether the proceedings pending under the TNPID Act can be taken over by the Resolution Professional under the IBC, 2016. The Tribunal referenced Section 238 of IBC, 2016, which states, 'The provisions 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.' This provision implies that IBC, 2016, being a special legislation, overrides any other conflicting laws, including the TNPID Act. The Tribunal cited the Supreme Court's judgment in Innovative Industries Limited v. ICICI Bank and Anr., which upheld that the IBC, 2016, prevails over other laws due to its non-obstante clause.2. Time-bound Insolvency Resolution Process:The Tribunal emphasized that the IBC, 2016 prescribes a 180-day period for the Insolvency Resolution Process, extendable under certain conditions. If no resolution plan is accepted within this timeframe, liquidation proceedings must commence as per Section 33 of IBC, 2016. The Tribunal highlighted the comprehensive scheme provided under IBC, 2016, for resolving corporate insolvency, including the distribution of assets as per the waterfall mechanism in Section 53.3. Overriding Effect of IBC, 2016:The Tribunal reiterated that IBC, 2016, overrides the TNPID Act by virtue of Section 238. This position was supported by the Bombay High Court's ruling in M/S. Aryarup Tourism Club Resorts Private Limited (in Liquidation), which stated that the powers of the competent authority under the MPID Act do not supersede the powers of the Official Liquidator or Company Court under the Companies Act. Hence, the Tribunal concluded that the Resolution Professional could take over proceedings related to the Corporate Debtor under IBC, 2016.4. Ad-interim Attachment Order:The Tribunal noted that an ad-interim attachment order was passed during the moratorium period, violating Section 14(1)(a) of IBC, 2016. The order, which froze the chit security deposit amounting to Rs. 2.71 crores, was declared null and void. This decision was aligned with the NCLT Mumbai's ruling in SREI Infrastructure Finance Limited v. Sterling SEZ and Infrastructure Limited, which set aside similar orders passed during the moratorium.5. Jurisdictional Limitations of TNPID Act:The Tribunal observed that the TNPID Act's jurisdiction is limited to Tamil Nadu, whereas the Corporate Debtor had branches across multiple states. The IBC, 2016, being a central legislation, provides a comprehensive solution to such complex issues, further justifying the Resolution Professional's takeover of proceedings.6. Directions to Hand Over Records:The Tribunal directed the competent authorities and investigating officers under the TNPID Act, including the Deputy Superintendent of Police, Economic Offences Wing-II, to hand over all records of the Corporate Debtor, including books of accounts and chit security deposits amounting to Rs. 2.71 crores, to the Resolution Professional within two weeks. The Resolution Professional was instructed to obtain a certified copy of the order and ensure compliance.Conclusion:The Tribunal concluded that the IBC, 2016, overrides the TNPID Act, allowing the Resolution Professional to take over proceedings related to the Corporate Debtor. The ad-interim attachment order was set aside, and the competent authorities were directed to hand over all relevant records to the Resolution Professional for further action. The judgment reinforces the supremacy of IBC, 2016, in resolving corporate insolvency issues comprehensively.
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