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of <h1>Post-resolution management change and benami property status u/s 32A IBC - writ maintainable; attachments upheld</h1> Dominant issue: Whether a change in corporate management post-approval of a resolution plan bars maintainability of a writ challenging Benami Act ... Maintainability of writ petition - Benami Transactions - Provisional attachment order - release of the property at the interim stage - action against the property of the corporate debtor in relation to an offence committed prior to the commencement of CIRP - ejusdem generis - Non-obstante clause / overriding effect - HELD THAT:- It is seen that the appeal before the tribunal was filed by the erstwhile management. Though the very same entity is before me, its composition has undergone a fundamental change. As a result of the approval of the resolution plan, a new management has taken over. They seek the benefit under Section 32A of the Code. This issue cannot be decided by the Appellate Tribunal. The said Tribunal having been established under Section 30 of the Benami Act cannot travel beyond its four corners. The present management may not be in a position to even withdraw the appeal since it was filed by the erstwhile management. This writ petition cannot therefore be termed as not maintainable on the ground that there is pursuit of parallel remedies by the same party on the same cause of action. There has been no sale of the property. The composition of management of the purchaser-company alone has changed and that too under the aegis of the NCLT. The change in management has been through a statutorily approved process. Thus, there has been no transfer of the property within the meaning of Section 2(29) of PBPT Act, 1988. Hence, Section 57 has no application. Though Section 3 of the Act prohibits benami transactions, Section 4 of the Act states that no suit, claim or action to recover a property held benami is maintainable. In other words, the beneficial owner or the person claiming to be the real owner of the property cannot maintain a suit for recovery of the property. It is like a coin dropped in a temple hundiyal. Once dropped, no recovery. Likewise, a defence that the property is being held benami is also not allowed. This is sufficient indication that statute does recognize that the benamidar is the holder of the property. The benamidar is entitled to hold the property even against the beneficial or real owner but subject to a overriding consideration i.e, the Central Government can confiscate the same. Till the Central Government confiscates the same, the property is very much the property of the benamidar. IBC came into force only in the year 2016. The Prohibition of Benami Property Transactions Act was enacted way back in the year 1988. Thus, when the parliament enacted IBC 2016, it was conscious that benami transactions stood prohibited. If the parliament intended that benami properties should not be saved, they would have definitely introduced some limiting expression or qualifying word in Section 32A. No such expression is found in Section 32A of the Code. When Section 32A talks about the property of the corporate debtor, it includes and encompasses all the properties of the corporate debtor whatever be their character. Even though the petitioner assails the validity of the impugned attachment orders, it is not open to me to quash the same. They have been validly passed. It is declared that by virtue of the impugned attachment proceedings, no action can be taken against the subject properties. Viewed in this manner, the petitioner cannot be accused of pursuing parallel remedies. The Resolution Plan approved by NCLT will act as an impregnable fire wall. This writ petition is allowed on these terms Issues: Whether, upon approval of a resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 resulting in a change in management, Section 32A(2) of the Code (read with Section 238) bars action (including attachment) against properties of the corporate debtor that are covered by the resolution plan even if those properties are alleged to be held benami under the Prohibition of Benami Property Transactions Act, 1988.Analysis: Section 32A(2) provides that no action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of CIRP where such property is covered by an approved resolution plan that results in change in control; the term 'property of the corporate debtor' is unqualified and of wide amplitude. Section 32A(1) contains a non-obstante clause and Section 238 of the IBC gives the Code overriding effect over other laws. Where the resolution plan approved by the Adjudicating Authority covers the attached property and results in change of control to persons not falling within the excepted categories, the combined effect of Section 32A(2) and Section 238 precludes actions against such property, including attachment, notwithstanding provisions of the PBPT Act. The PBPT Act recognises the benamidar as the holder of the property until confiscation by the State and Section 57 (prohibiting transfers after notice) does not apply where there has been no transfer of the property but only a change in the company's management pursuant to an NCLT-approved resolution plan. Parallel remedy considerations do not bar exercise of the court's jurisdiction where the new management cannot effectively pursue or withdraw an appeal filed by the erstwhile management and where the issue (application of Section 32A) falls outside the appellate tribunal's jurisdiction.Conclusion: Section 32A(2) of the Insolvency and Bankruptcy Code, 2016 (read with Section 238) protects properties of the corporate debtor covered by an NCLT-approved resolution plan that effects change in control from action (including attachment) in relation to offences committed prior to commencement of CIRP; this protection extends to properties alleged to be held benami where the property is included in the resolution plan and the excepted categories in Section 32A are not attracted. The writ petition is allowed on these terms and the impugned attachment orders shall not be acted upon in respect of the subject properties covered by the approved resolution plan until further order.
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