2021 (12) TMI 186 - Tri - Insolvency and Bankruptcy

Tribunal asserts IBC dominance over MPID Act, releases assets. RP favored in property attachment case.

The Tribunal asserted its jurisdiction to entertain the application filed by the Resolution Professional against the attachment of properties under the ... Jurisdisction - power of Tribunal to entertain the instant CA - Whether the attachment of the properties of the corporate debtor made under the provisions of the Maharashtra Protection of Interests of Depositors (In Financial Establishments) Act, 1999 (MPID Act) vide notification dated 28.08.2014 i.e. prior to the date of initiation of CIRP against the corporate debtor is liable to be de-attached in view of the overriding affect under Section 238 and other provisions of IBC 2016? - HELD THAT:- The Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank & another, [2017 (9) TMI 58 - SUPREME COURT], while dealing with the overriding effect of the Code under Section 238 of IBC with reference to Maharashtra Relief Undertakings (Special Provisions) Act, 1958 has held that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. The Hon'ble High Court of Bombay in Anil Kohil case [2020 (11) TMI 677 - BOMBAY HIGH COURT] while setting aside the order of the NCLT wherein it was directed that the bank account of the corporate debtor to be defreezed, held that the designated court under Section 7 of the MPID Act alone is having jurisdiction to decide the validity of any order passed under MPID Act. However, in our considered view the said judgment has no application to the facts of the present case in view of the observations made in Para 26 of the said judgment itself. In the said judgment the Hon'ble High Court of Bombay after considering the judgment of the Hon'ble Apex Court in Innoventive Industries Limited [2017 (9) TMI 58 - SUPREME COURT] categorically observed that the position of law as held by the Hon'ble Apex Court in Innoventive Industries Limited is well settled and there cannot be any dispute about the same however, in the case on hand i.e. in Anil Kohil's case, the learned counsel for the respondent i.e. the RP of the corporate debtor therein has not argued that the provisions of MPID Act are repugnant with the provisions of I&B Code whereas in the instant case both the counsels argued elaborately on the issue of repugnancy of the provisions of MPID Act to that of provisions of IBC 2016. The respondents are directed to release/de-attach all the assets/properties of the corporate debtor and to cooperate with the RP and to supply all the necessary documents and information pertaining to the property of the corporate debtor - the respondents are permitted to file their claims, if any, with the RP within two weeks from the date of receipt of this order and in such an event the RP shall consider the same in accordance with the Code and Regulations made thereunder and shall not reject the same on the ground of delay in submission of the claims. Application disposed off. Issues Involved:1. Jurisdiction of the Tribunal to entertain the CA.2. Whether the attachment of the properties of the corporate debtor under the MPID Act is liable to be de-attached in view of the overriding effect of the IBC 2016.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal:The Tribunal considered whether it had jurisdiction to entertain the application filed by the Resolution Professional (RP) of M/s. Skyhigh Infraland Pvt. Ltd. against the Collector and District Magistrate, Mumbai, and others. The respondents argued that the application was not maintainable as the attachment made under the MPID Act could only be challenged before the designated court established under the said Act and not before the Tribunal. They contended that the Tribunal had no jurisdiction to entertain the CA. The Tribunal referred to the judgment of the Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank & another, which dealt with the overriding effect of the IBC under Section 238 of the IBC with reference to the Maharashtra Relief Undertakings (Special Provisions) Act, 1958. The Tribunal concluded that the provisions of the IBC, being a later Parliamentary enactment, would prevail over the MPID Act, a State enactment, thus asserting its jurisdiction to entertain the application.2. Attachment of Properties under MPID Act:The Tribunal examined whether the properties of the corporate debtor attached under the MPID Act prior to the initiation of the CIRP were liable to be de-attached in view of the overriding effect of Section 238 of the IBC. The RP argued that the IBC had an overriding effect against all other laws, including the MPID Act, and relied on several decisions to support this submission. The respondents, however, contended that the provisions of the IBC did not have an overriding effect on the MPID Act and that the attachment made under the MPID Act was valid. The Tribunal referred to various judgments, including Innoventive Industries Ltd. and Bank of India vs. Tirupati Infraprojects Pvt. Ltd., which emphasized the overriding effect of the IBC over State laws. The Tribunal also considered the judgment of the Hon'ble High Court of Judicature at Bombay in Anil Kohil's case, which held that the designated court under the MPID Act had exclusive jurisdiction to deal with the validity of orders passed under the MPID Act. However, the Tribunal distinguished the present case from Anil Kohil's case, noting that the issue of repugnancy between the MPID Act and the IBC was argued in detail in the present case. The Tribunal concluded that the provisions of the IBC had an overriding effect over the MPID Act and directed the respondents to release/de-attach all the assets/properties of the corporate debtor and cooperate with the RP.Conclusion:The Tribunal allowed the CA No. 47/2019, directing the respondents to release/de-attach all the assets/properties of the corporate debtor and to cooperate with the RP by supplying all necessary documents and information. The respondents were permitted to file their claims with the RP within two weeks, and the RP was directed to consider the claims in accordance with the IBC and its regulations. The CA was thus disposed of.