TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Jurisdiction Clarification Under IBC: Limits on Challenges to Enforcement Actions</h1> The Adjudicating Authority clarified its jurisdiction under the IBC, 2016, emphasizing the need for a specific textual basis for its exercise. The court ... CIRP - Corporate debtor under liquidation - Action of ED attaching the property of CD - Seeking withdrawal of provisional attachment order with immediate effect for the sake of continuing the liquidation process which shall benefit the creditors as well as other stakeholders of the Corporate Debtor - seeking remission of the amount which was withdrawn/transferred from the account of the Corporate Debtor to the Enforcement Directorate on 2nd August 2018 into the Liquidation Account of the Corporate Debtor - HELD THAT:- The summons/orders issued by the Enforcement Directorate/Adjudicating Authority/Appellate Authority under that law are related to some investigation about the affairs of the Corporate Debtor and its officers prior to the CIRP. It has no relation of whatsoever nature about the insolvency of the Corporate Debtor or its liquidation process. The prayers as made therein are not maintainable before this Adjudicating Authority invoking provisions under section 60(5)(c) of the IBC, 2016. Hence, applications to that extent need to be rejected. Seeking issue of appropriate directions to Respondents No. 2 to 5 herein to pay/clear admitted outstanding - HELD THAT:- This prayer does not fall within the ambit of sections 43 and 66 of the IBC, 2016. The amount claimed herein by the Liquidator was to be recovered by the Corporate Debtor from its debtor even prior to the CIRP. Section 35(1)(k) of the IBC, 2016 states that 'subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely:- to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor. Invoking that provision, the Liquidator may file recovery suits against Respondents No. 2 to 5. We permit him to do so. Both applications, being not maintainable, stands rejected and disposed of. Issues:Challenge to action of Enforcement Directorate during investigation of case against Corporate Debtor and Director. Jurisdiction of Adjudicating Authority under section 60(5)(c) of IBC, 2016. Prayers for quashing letters, setting aside provisional attachment order, and directing payment by debtors.Analysis:Challenge to Enforcement Directorate's Action:- Liquidator filed applications challenging Enforcement Directorate's actions during investigation against Corporate Debtor and Director.- Prayers included quashing letters and setting aside provisional attachment order.- Respondents appeared and filed replies, but Enforcement Directorate did not.- Liquidator sought to quash summons/orders of attachment, invoking jurisdiction under section 60(5)(c) of IBC, 2016.- Cited legal precedents by Hon'ble Supreme Court to determine Adjudicating Authority's jurisdiction.- Held that Enforcement Directorate's actions were unrelated to insolvency of Corporate Debtor or liquidation process.- Applications challenging Enforcement Directorate's actions were deemed not maintainable and rejected.Jurisdiction of Adjudicating Authority:- Legal position on Adjudicating Authority's jurisdiction under section 60(5)(c) of IBC, 2016 was clarified.- Supreme Court rulings emphasized the specific textual hook required for NCLT to exercise jurisdiction.- Adjudicating Authority's jurisdiction defined by text of IBC, not by the spirit or object of the statute.- Applications seeking directions from Enforcement Directorate fell outside the scope of Adjudicating Authority's jurisdiction.- Second prayer to direct return of a specific sum also rejected for lack of jurisdiction.Directions for Payment by Debtors:- Liquidator's prayer for directions to debtors to pay outstanding amount not quantified.- Request for payment by debtors did not fall under sections 43 and 66 of IBC, 2016.- Liquidator granted permission to file recovery suits against debtors under section 35(1)(k) of IBC, 2016.- Both applications challenging Enforcement Directorate's actions and seeking payment by debtors were rejected as not maintainable.This judgment clarifies the limitations of the Adjudicating Authority's jurisdiction under the IBC, 2016, emphasizing the need for a specific textual basis for exercising authority. The ruling highlights that matters unrelated to insolvency or liquidation processes fall outside the purview of the Adjudicating Authority. Additionally, the judgment provides guidance on the appropriate legal avenues for challenging actions of statutory authorities and seeking recovery of outstanding amounts from debtors.
TaxTMI 
TaxTMI 
