Appellant's Bid to Auction Seized Goods During CIRP Denied Upholding Moratorium The Tribunal upheld the rejection of the Appellant's application seeking permission to auction goods seized during the Corporate Insolvency Resolution ...
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Appellant's Bid to Auction Seized Goods During CIRP Denied Upholding Moratorium
The Tribunal upheld the rejection of the Appellant's application seeking permission to auction goods seized during the Corporate Insolvency Resolution Process (CIRP) due to the 'Moratorium' in place as per the I&B Code. The Appellant's argument to recover dues by auctioning the goods was dismissed, emphasizing the importance of staying such actions during CIRP proceedings as established by legal principles and previous court judgments. The Appeal was ultimately dismissed for lack of merit.
Issues: Appeal against rejection of IA 463/AHM/2019 filed by Appellant in C.P. (IB) No. 175/AHM/2018 for auctioning ceased goods during Corporate Insolvency Resolution Process (CIRP).
Analysis: 1. The Appeal was filed against the order rejecting IA 463/AHM/2019 seeking permission to auction goods seized during CIRP against 'Swastik Ceracon Limited'. The Resolution Professional informed the Central GST department about CIRP initiation to prevent the sale of ceased goods. The Adjudicating Authority rejected the application, leading to this Appeal.
2. The Appellant argued that as the goods were attached on 31.01.2018, they should be allowed to auction them to recover dues, especially considering significant government dues against the Corporate Debtor. The Appellant submitted a claim for a total tax amount and relied on the Panchanama dated 31.01.2018.
3. The Counsel for the Appellant was heard, and the records were examined by the Tribunal.
4. The Tribunal noted that the goods were attached on 31.01.2018, and the application for auctioning them was filed on 12.07.2019. Section 14 of the I&B Code deals with 'Moratorium,' which prohibits certain actions, including disposing of assets by the Corporate Debtor.
5. The order dated 15.01.2019 by the Adjudicating Authority confirmed the declaration of 'Moratorium.'
6. The Tribunal found no error in the Adjudicating Authority's decision not to allow IA 463 of 2019 due to the ongoing CIRP. Reference was made to a Supreme Court judgment regarding the importance of staying actions like auctions during CIRP proceedings.
7. Citing the Supreme Court judgment, the Tribunal emphasized that once the moratorium is declared, actions like auctions of assets should not proceed, as seen in a similar case where the High Court's auction orders were deemed unjustified during CIRP.
8. Based on the legal principles established by the Supreme Court, the Tribunal upheld the rejection of IA 463 of 2019, noting that the Appellant had already filed a claim. The Appeal was dismissed for lack of merit.
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