Insolvency Code prevails over conflicting asset attachment, allowing removal of obstruction to a corporate debtor's bank accounts.

Attachment under a State depositor-protection law could not obstruct control and custody of a corporate debtor's bank accounts during CIRP or liquidation, because the insolvency code prevails to the extent of inconsistency and includes attachment within prohibited actions against the corporate debtor's property. The adjudicating authority could direct removal of that obstruction in insolvency jurisdiction where the asset must be brought under the liquidator's control. However, the later bank-account attachment could not be mixed with an earlier notification relating to other properties of promoters and directors, so the linkage in the impugned order had to be deleted while the substantive relief was maintained.

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Issues: (i) Whether attachment of the corporate debtor's bank accounts under the State depositor-protection law could be sustained after commencement of CIRP and during liquidation under the insolvency code; (ii) whether the adjudicating authority could direct removal of such attachment in exercise of insolvency jurisdiction; (iii) whether the impugned order could link the later attachment of bank accounts with the earlier notification attaching other properties.

Issue (i): Whether attachment of the corporate debtor's bank accounts under the State depositor-protection law could be sustained after commencement of CIRP and during liquidation under the insolvency code.

Analysis: The statutory scheme of the insolvency code requires the resolution professional and liquidator to take control and custody of the corporate debtor's assets, preserve them, and complete resolution or liquidation in a time-bound manner. The Code gives overriding effect to inconsistent laws, and the explanation to section 32A clarifies that an action against the property of the corporate debtor includes attachment, seizure, retention, or confiscation. The State law's attachment mechanism may continue against properties of promoters or other persons, but not so as to obstruct the insolvency process in relation to the corporate debtor's own assets.

Conclusion: The attachment could not stand in the way of CIRP or liquidation insofar as it related to the corporate debtor's bank accounts.

Issue (ii): Whether the adjudicating authority could direct removal of such attachment in exercise of insolvency jurisdiction.

Analysis: The adjudicating authority's jurisdiction under the insolvency code extends to questions arising out of or in relation to insolvency resolution and liquidation, including obstruction caused by an external attachment over the corporate debtor's property. Where the property is required to be brought within the control of the liquidator for the purposes of the Code, the authority can grant relief to remove the obstruction. The reasoning also distinguishes the present situation from cases where the dispute lies wholly in the realm of public law and outside insolvency.

Conclusion: The adjudicating authority had jurisdiction to grant relief against the attachment of the corporate debtor's bank accounts.

Issue (iii): Whether the impugned order could link the later attachment of bank accounts with the earlier notification attaching other properties.

Analysis: The relief sought before the adjudicating authority concerned only the attachment communicated by the later letter relating to bank accounts. The earlier notification dealt with other attached properties, including properties of promoters and directors, and was not the subject of the application in the same manner. The impugned order wrongly read the later bank-account attachment together with the earlier notification, and that mixed reliance required correction.

Conclusion: The linkage with the earlier notification was and had to be deleted, while the remainder of the order was maintained.

Final Conclusion: The appeals succeeded only to the limited extent of correcting the basis of the impugned order, while the substantive relief protecting the corporate debtor's bank accounts from inconsistent attachment under the insolvency regime was sustained.

Ratio Decidendi: Where an attachment under a State depositor-protection statute obstructs control and custody of a corporate debtor's assets during CIRP or liquidation, the insolvency code prevails to the extent of inconsistency and the adjudicating authority may direct removal of the obstruction; however, attachments concerning non-corporate assets or distinct notifications are not to be conflated.

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