Tribunal Denies Property Release Due to Missing Party; Appellant Granted Opportunity to Address Issue

The Tribunal rejected the application to release properties under the amended provision in the IBC due to non-joinder of the necessary party, the Liquidator. The appellant was granted the opportunity to file an application to include the Liquidator and address the legal issue during the appeal hearing scheduled for 26th February 2021.

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Issues Involved:
1. Continuation of attachment order under PMLA during liquidation under IBC.
2. Applicability of Section 32A(2) of IBC (Amendment) Act, 2020.
3. Rights of secured creditors versus the provisions of PMLA.
4. Necessity of involving the Liquidator in the proceedings.

Detailed Analysis:

1. Continuation of Attachment Order under PMLA During Liquidation under IBC:
The appellant argued that once the corporate debtor proceeds for liquidation, the attachment order under PMLA cannot continue. They cited Section 32A(2) of the IBC (Amendment) Act, 2020, which states that 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 if such property is covered under a resolution plan approved by the Adjudicating Authority or sale of liquidation assets. The appellant contended that the properties mortgaged should be released from attachment to aid the liquidation process.

2. Applicability of Section 32A(2) of IBC (Amendment) Act, 2020:
The appellant emphasized that the properties of the corporate debtor forming part of the resolution/liquidation process, subject to attachment under any other prevailing law, are liable to be released from attachment forthwith due to the amendments in IBC. They argued that the provisions of Section 32A(2) should be applied as the properties were mortgaged before the registration of any FIR or initiation of proceedings under PMLA.

3. Rights of Secured Creditors Versus Provisions of PMLA:
The appellant claimed that their rights as secured creditors under SARFAESI Act, Recovery of Debts and Bankruptcy Act, 1993, and IBC should not be superseded by the attachment under PMLA. They argued that the attachment under PMLA scuttles the procedure established by law regarding the rights of secured creditors and that the properties should be released from attachment to be dealt with in accordance with the provisions of the IBC.

4. Necessity of Involving the Liquidator in the Proceedings:
The respondent argued that the Liquidator appointed by NCLT should be a necessary party in the proceedings as the Liquidator steps into the shoes of the corporate debtor. The Tribunal agreed, stating that the Liquidator is necessary to be heard before passing any order, particularly when the question of law has a bearing on the disposal of the appeal. The Tribunal rejected the application on the ground of non-joinder of the necessary party, giving liberty to the appellant to file an appropriate application to implead the Liquidator in the appeal.

Conclusion:
The Tribunal concluded that the application to release the properties on the ground of the amended provision in IBC is rejected due to non-joinder of the necessary party, i.e., the Liquidator. The appellant was given liberty to file an appropriate application to implead the Liquidator and raise the present question of law at the time of hearing the appeal on merit. The appeal was listed for hearing on 26th February 2021.

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