https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=461739 https://www.taxtmi.com/caselaws?id=461739 Petitioner's right as a suspended director of a corporate debtor is protected by section 14 of the Insolvency and Bankruptcy Code, 2016 - moratorium provisions prohibiting recovery of property occupied or possessed by the corporate debtor - HELD THAT:- The receiver appointed in a particular suit is nothing more than the hand of the Court, so to speak, to hold the property of the litigants whenever it must be kept in the grasp of the Court in order to preserve the subject matter of the suit pendente lite and the possession of the receiver is simply the possession of the Court. To such an extent is this the case that any attempt to disturb that possession, without the leave of the Court, is a contempt of Court. The receiver's possession is on his behalf and for the benefit of all the parties to the suit in which he is appointed. The property in his hands is in custodia legis for the person who can make a title to it. He is not appointed for the benefit of strangers other than parties to the suit. He has no estate or interest himself, and his power to manage is created by the Court's order appointing him and binding on persons before the Court. On meaningful reading of Section 14(1)(d), it is clear that recovery of property by owner/lessor where such property is "occupied by" corporate debtor is not permissible when a moratorium under IBC is declared. Section 14(1)(d) does not deal with any of the assets or legal right or beneficial interest in such assets of the corporate debtor, but what is referred to therein is the "recovery of any property". Moreover, the bar under clause (d) is attracted only when the owner or lessee is seeking recovery of property. In the facts of the case, the receiver is seeking property from an agent of the receiver on default of payment of royalty amount. Such proceedings cannot termed as proceedings for the recovery of property by the owner or lessee. The object of the Insolvency and Bankruptcy Code, 2016, is to resolve insolvency and bankruptcy cases involving an insolvency professional's appointment to manage the debtor's affairs and the resolution of the case transparently and efficiently. The purpose of such an act is to recover the dues of the corporate debtor and calculate the value of the assets so that if ultimately it is found that the company is to be revived, the appropriate recommendation shall be made to the appropriate Court for the revival of such company. However, possession of the receiver's agent cannot be termed as an asset of a company. Applying section 14 of the IBC to the receiver's agent would amount to reading something into statute that the legislature never intended. In so far as the locus of suspended directed to agitate rights of the corporate debtor is concerned, such issue does not rise for consideration in the facts of the case as it is already held that the position of an agent of the receiver cannot be termed as possession or occupation contemplated by Clause 2 of Sub-Section (1) of Section 14 of the IBC. Conclusion - Possession of the receiver's agent cannot be termed as possession within the meaning of Clause (d) of Section 14(1) of the IBC. In view of the undisputed fact of failure to pay Rs. 2,89,30,000/- towards the royalty amount by the corporate debtor, the exercise of discretion by the Court cannot be faulted. There is no merit in the writ petition - Petition dismissed. Case-Laws IBC Thu, 07 Sep 2023 00:00:00 +0530