Tribunal sets aside order, directs banks to defreeze accounts, condones delay, emphasizes jurisdiction lapse

The Tribunal allowed the appeal, setting aside the impugned order. It directed the tax authorities to withdraw the notices freezing the Corporate Debtor's bank accounts and the banks to defreeze the accounts. The delay in filing the appeal was condoned, and the appeal was allowed without costs, emphasizing the Adjudicating Authority's failure to exercise jurisdiction under Section 60(5) of the IBC.

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Issues Involved:
1. Delay in filing the appeal.
2. Freezing of bank accounts of the Corporate Debtor by government authorities.
3. Powers and duties of the Liquidator under Section 35 of the IBC.
4. Jurisdiction of the Adjudicating Authority under Section 60(5) of the IBC.
5. Overriding effect of IBC provisions under Section 238.

Detailed Analysis:

1. Delay in Filing the Appeal:
The Appellant sought condonation for a delay of less than 15 days in filing the appeal. The Tribunal allowed this request, citing that the delay fell within the permissible period under the Proviso to Section 61(2) of the IBC and appeared bona fide.

2. Freezing of Bank Accounts:
The Appellant, serving as the Liquidator, faced issues with the bank accounts of the Corporate Debtor being frozen by the Assistant Commissioner of State Tax, Mumbai, and the Commercial Tax Officer, Gwalior Circle-1, Madhya Pradesh, due to outstanding CST/VAT liabilities. Despite several communications to the authorities and banks, the accounts remained frozen, prompting the Appellant to seek directions from the Adjudicating Authority to defreeze the accounts.

3. Powers and Duties of the Liquidator under Section 35 of the IBC:
Section 35 of the IBC empowers the Liquidator to take custody of the Corporate Debtor's assets, including bank accounts, to form part of the liquidation estate. The Liquidator is also authorized to apply to the Adjudicating Authority for necessary orders or directions to facilitate the liquidation process. The Appellant argued that despite making genuine efforts to defreeze the accounts, the lack of cooperation from the authorities necessitated intervention from the Adjudicating Authority.

4. Jurisdiction of the Adjudicating Authority under Section 60(5) of the IBC:
Section 60(5) of the IBC grants the National Company Law Tribunal (NCLT) wide jurisdiction to entertain applications or proceedings related to the insolvency resolution or liquidation of the Corporate Debtor. The Tribunal emphasized that the Adjudicating Authority should have exercised its residuary jurisdiction to provide relief to the Liquidator, ensuring that the objectives of the IBC were not frustrated.

5. Overriding Effect of IBC Provisions under Section 238:
Section 238 of the IBC stipulates that the provisions of the Code override any inconsistent laws. The Tribunal referred to several judgments affirming that the IBC prevails over other enactments, including those concerning tax dues. The Tribunal concluded that the directions issued by the tax authorities to freeze the accounts were inconsistent with the IBC, and the Adjudicating Authority should have intervened to rectify this.

Conclusion:
The Tribunal found merit in the Appellant's submissions, noting that the Adjudicating Authority erred in not exercising its jurisdiction under Section 60(5) of the IBC. The impugned order was set aside, and the following directions were issued:
1. The tax authorities were directed to withdraw the notices freezing the Corporate Debtor's bank accounts.
2. The banks were directed to defreeze the accounts.
3. The appeal was allowed without any order as to costs.

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