TaxTMI 
TaxTMI 
2021 (3) TMI 430
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....Sections 217-220 of the 1980 Act, had distrained the said property in recovery of municipal tax dues from an assessee. 3. Subsequently, the debt of the assessee came within the purview of a Corporate Insolvency Resolution Process (CIRP), thus prompting respondent no.4, the Resolution Professional, representing the owner of the asset, to approach the NCLT for handing over of such physical possession of the property-in-question from the KMC. Such action gave rise to the present writ petition. 4. Learned senior counsel appearing for the petitioner, by relying on the 1980 Act, submits that the KMC is a statutory authority and, as such, took possession of the asset in exercise of its statutory powers. Such independent statutory exercise, it is argued, cannot be interdicted by the NCLT within the scope of the IBC. 5. It is argued, by placing reliance on Embassy Property Developments Pvt. Ltd. vs. State of Karnataka and others, reported at 2019 SCC OnLine SC 1542, that the powers of the NCLT, as Adjudicating Authority under Section 60 of the IBC, are circumscribed by the authority of the interim resolution professional, as contemplated in Section 18(f) of the IBC. In terms of Cla....
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....ion 18(1)(f) stipulates that the IRP will take control and custody of assets subject to determination of ownership by a court or authority. 10. Relying on paragraph no.40 of Embassy Property (supra), it is argued that if NCLT has been conferred with jurisdiction to decide all types of claims with property of the corporate debtor, Section 18(1)(f)(vi) would not make the task of the IRP, in taking control and custody of an asset on which the corporate debtor has ownership right, subject to the determination of ownership of a court or other authority. Thus, the rights of the IRP to take control and custody of properties are not completely subject to the determination of ownership by courts or authorities. Secondly, it is not that the NCLT must yield to determination of ownership by courts or other authorities in all cases, insofar as the right to determination of ownership of properties of the corporate debtor is concerned. 11. In Embassy Property (supra), the mining lease of the corporate debtor was about to expire and a termination notice was issued by the Government. The IRP wanted extension of the lease and filed a writ petition for such purpose, during pendency of which the....
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....ilable against the impugned order. As such, the writ petition ought not to be entertained. 17. Placing reliance on Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others, reported at (1998) 8 SCC 1, learned counsel submits that, where there is an appellate remedy, this court does not entertain writ petitions unless the order impugned has been passed without jurisdiction or in violation of natural justice. 18. In Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, reported at (2014) 1 SCC 603, the Supreme Court held that interference is not warranted under Article 226 of the Constitution of India unless extraordinary circumstances are made out. In paragraph no. 15 of the report, exceptions to the rule of alternative remedy were reiterated. In paragraph no. 16 thereof, it was held that since the Income Tax Act provided a complete machinery, petitioner therein could not be permitted to invoke the jurisdiction of the High Court under Article 226 of the Constitution. 19. Learned counsel argues that, in Debts Recovery and SARFAESI Laws, the same principles have been applied by the Supreme Court in Punjab National Bank vs. O.C. Krishnan and others [(200....
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....dgment rendered in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and others, reported at (2020) 8 SCC 531 is relied on in such context. 26. Respondent no.4 also relies on the judgment rendered in Commissioner of Income Tax vs. Monnet Ispat and Energy Ltd. [Special Leave to Appeal (C) No. (S) 6483 of 2018] for the proposition that income tax dues, being in the nature of crown debts, do not take precedence even over secured creditors who are private persons. Thus, in the case at hand, the petitioner cannot argue that their debt, which is in the nature of crown debt, will take precedence over the other debts. 27. It is further argued by learned counsel appearing for respondent no.4 that Section 238 of the IBC gives overriding effect to the IBC over other laws, which has been upheld in Duncans Industries Ltd. vs. A. J. Agrochem [(2019) 9 SCC 725]. 28. Learned counsel goes on to argue that the order passed by the Adjudicating Authority (NCLT) was within jurisdiction. The Statement and Objects of the IBC, Section 5(21), Section 14, Section 18, Section 25, Section 30, Section 31, Section 32A, Section 36 and Section 238 of the IBC, read with Regulation....
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....jurisdiction', thus bringing it within the fold of Article 226 of the Constitution. In such a scenario, the present writ petition is maintainable. 36. As held in Whirlpool Corporation (supra), alternative remedy would not be a bar where the order or the proceedings are wholly without jurisdiction. Such proposition, read in conjunction with Chhabil Dass (supra), would facilitate interference under Article 226 of the Constitution, since absence of jurisdiction on the part of the authority concerned constitutes an exceptional case warranting interference. 37. The self-imposed restriction, as highlighted in Punjab National Bank (supra) ought not to be a bar, if read harmoniously with the above judgments. Such an interpretation would be in consonance with the observations made in Satyawati Tondon (supra), where it was held that the powers conferred upon the High Court under Article 226 of the Constitution of India are very wide and there is no express limitation on exercise of the power, although one cannot be oblivious of the rules of self-imposed restraint evolved by the Supreme Court. The rule of exhaustion of alternative remedy was held to be a rule of discretion and not one o....
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.... 5(21), making the Government an "operational creditor" in terms of Section 5(20). The moment the dues to the Government are crystallised and what remains is only payment, the claim of the Government will have to be adjudicated and paid only in a manner prescribed in the resolution plan as approved by the Adjudicating Authority, namely the NCLT. 42. Again, the Supreme Court found, if NCLT has been conferred with jurisdiction to decide all types of claims to property of the corporate debtor, Section 18(f)(vi) of the IBC would not have made the task of the interim resolution professional in taking control and custody of an asset over which the corporate debtor has ownership rights, subject to the determination of ownership by a court or other authority. 43. There cannot be any doubt about the proposition that the contours of the powers conferred on the Adjudicating Authority, being the NCLT, under Section 60 of the IBC, are defined by the duties of the interim resolution professional under Section 18. The language of Section 18 (1) (f)(vi), however, leaves scope for two different interpretations of such duties. From one perspective, the phrase "assets subject to the determinati....
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....e is no further scope for determination of the ownership of the property by the writ petitioner under the 1980 Act. The procedure, as laid down in Sections 217- 220, automatically follow. 47. In the present case, the Corporation followed such procedure and took possession of the disputed property for non-payment of tax. Thus, there was no further scope for any "determination" of ownership of the property by the KMC. As such, there arose no question of the task of the interim resolution professional, in taking control and custody of the asset, being subject to the determination of ownership by any authority, as contemplated under Section 18(f)(vi) of the IBC. Rather, the claim of the KMC, in the absence of any successful challenge thereto, attained finality, fastening a liability upon the corporate debtor. As per the interpretation in Embassy Property (supra), such a finalized claim would come within the purview of "operational debt" under Section 5(21) of the IBC. Hence, the Resolution Professional has jurisdiction to take custody and control of the same. 48. As discussed earlier, the parameters of powers of the NCLT, as an Adjudicating Authority under Section 60 of the IBC, ....