Tribunal rules on jurisdiction clash between Benami Act and Insolvency proceedings

The Tribunal dismissed the appeals, ruling that the NCLT lacks jurisdiction to address issues related to the attachment of property under the Benami Act within insolvency proceedings. It emphasized the need to adhere to the procedural hierarchy and remedies provided by the Benami Act, noting the Act's overriding effect in cases involving benami transactions and property confiscation. The Tribunal underscored the public interest aspect of the Benami Act, affirming that it prevails over the IBC, 2016, and that the Liquidator's powers are subject to the Adjudicating Authority's supervision.

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Issues Involved:
1. Jurisdiction of NCLT under Section 60(5) of IBC, 2016.
2. Applicability of Prohibition of Benami Property Transactions Act, 1988.
3. Conflict between IBC, 2016 and Prohibition of Benami Property Transactions Act, 1988.
4. Validity of Provisional Attachment Orders.
5. Role and Powers of the Liquidator.
6. Moratorium under Section 14 of IBC, 2016.
7. Non-obstante Clauses in Special Statutes.

Summary:

1. Jurisdiction of NCLT under Section 60(5) of IBC, 2016:
The Appellant argued that the NCLT should have entertained and disposed of questions arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor under Section 60(5) of IBC, 2016. However, the Tribunal held that the attachment made under the Prohibition of Benami Property Transactions Act, 1988, cannot be a subject matter of proceedings under Section 60(5) of the IBC, 2016, as the NCLT is not the proper forum to determine controversies revolving around the attachment of property under the Benami Act.

2. Applicability of Prohibition of Benami Property Transactions Act, 1988:
The Respondent contended that once a cause of action arises under the Prohibition of Benami Property Transactions Act, 1988, any properties subject to such transactions shall be liable to be confiscated by the Central Government. The Tribunal noted that the Benami Act has its own procedural hierarchy and remedies, which the Appellant must follow.

3. Conflict between IBC, 2016 and Prohibition of Benami Property Transactions Act, 1988:
The Appellant argued that IBC, 2016, should prevail over the Benami Act due to its overriding effect. However, the Tribunal found no inconsistency between the two statutes and held that the Benami Act operates in its own field. The Tribunal emphasized that public interest is involved in the Benami Act, and it cannot be overridden by IBC, 2016.

4. Validity of Provisional Attachment Orders:
The Tribunal observed that the provisional attachment orders made by the Respondent were in accordance with the Benami Act and that the Liquidator should seek remedy under the provisions of the Benami Act. The Tribunal also noted that the moratorium under Section 14 of IBC, 2016, does not affect the provisional attachment orders passed under the Benami Act.

5. Role and Powers of the Liquidator:
The Tribunal stated that the Liquidator's actions are under the parental supervision of the Adjudicating Authority and that the Liquidator has no unfettered powers. The Liquidator must perform functions in a reasonable and prudent manner and cannot bypass the procedural hierarchy of the Benami Act.

6. Moratorium under Section 14 of IBC, 2016:
The Tribunal clarified that the moratorium under Section 14 of IBC, 2016, does not affect the provisional attachment orders passed under the Benami Act. The object of the Benami Act is to prohibit benami transactions and recover properties held benami.

7. Non-obstante Clauses in Special Statutes:
The Tribunal noted that both the Benami Act and IBC, 2016, contain non-obstante clauses. However, it emphasized that the Benami Act has an overriding effect as per Section 67 of the Act. The Tribunal held that the Benami Act's non-obstante clause takes precedence in this case.

Disposition:
The Tribunal dismissed the appeals, stating that the Appellant/Liquidator must seek redressal through the competent forum under the Benami Act. The Tribunal's dismissal does not preclude the Appellant from approaching the appropriate forum for necessary reliefs.

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