TaxTMI 
TaxTMI 
2021 (12) TMI 186
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....the Corporate Debtor for smooth conduct of CIRP; iii. Direct the Respondent to file its claim with the RP; iv. Pass any other order(s) as this Hon'ble Tribunal may deem fit in the given facts of the present case." 2. Heard Mr. Manish Jain, the learned counsel for the applicant-Resolution Professional and Mr. Akhilesh S. Dubey, the learned counsel for respondent No. 2 and perused the pleadings on record. 3. It is stated that CP (IB) No. 161/Chd/Hry/2018 seeking initiation of CIRP against the corporate debtor was admitted on 29.10.2018. The process has been commenced on 02.11.2018 when an Interim Resolution Professional was appointed. On coming to know that the second respondent-Deputy Collector and Competent Authority (NSEL), Mumbai attached some of the properties of the corporate debtor, vide Annexure A-4 dated 03.11.2018 the applicant-RP informed to the respondent No. 2 about the initiation of the Insolvency Resolution Process against the corporate debtor and requested to de-attach all the properties of the corporate debtor. But the second respondent vide Annexure A-6 letter dated 12.11.2018 stated that the properties of the corporate debtor were attach....
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..... Ashita Nilesh Patel and another v. Deputy Secretary - Home Department & others, C/SCA/18637/2015; ii. Ashita Nilesh Patel and another v. Deputy Secretary - Home Department & others, SLP No. 10626-10627 of 2019, dated 17.04.2017, Supreme Court; iii. White Water Foods Pvt. Ltd. & another v. State of Maharashtra & others, CWP No. 11189 of 2014, dated 25.10.2017, Punjab and Haryana High Court; iv. Embassy Property Developments Pvt. Ltd. v. v. K.K. Baskaran v. State Represented by its Secretary, Tamil Nadu and others; (2011) 3 SCC 793; vi. Vishal N. Kalsaria v. Bank of India and others. (2016) 3 SCC 762; vii. Central Bank of India v. State of Kerala and others, (2009) 4 SCC 94; viii. The Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999; ix. Ashita Nilesh Patel and another v. Deputy Secretary, Home Department and others, Special Leave to Appeal (C) No(s). 10626-10627/2017, dated 17.04.2017, Supreme Court; and x. Ashita Nilesh Patel & another v. Deputy Secretary - Home Department & others, C/SCA/18637/2015 8. In the backdrop of the above submissions the issues fell....
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....ility Partnership Act, 2008, or an "officer who is in default", as defined in clause (60) of section 2 of the Companies Act, 2013, or was in any manner incharge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not-- (i) a promoter or....
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.... field, there is room or possibility of both the statutes operating in the same field without coming into collision with each other, no repugnancy results. 4. That where there is no inconsistency but a statute occupying the same field seeks to create distinct and separate offences, no question of repugnancy arises and both the statutes continue to operate in the same field." (Emphasis Supplied)" xx xx 50. The case law referred to above, therefore, yields the following propositions: 51.1. Repugnancy under Article 254 arises only if both the Parliamentary (or existing law) and the State law are referable to List III in the 7th Schedule to the Constitution of India. 51.2. In order to determine whether the Parliamentary (or existing law) is referable to the Concurrent List and whether the State law is also referable to the Concurrent List, the doctrine of pith and substance must be applied in order to find out as to where in pith and substance the competing statutes as a whole fall. It is only if both fall, as a whole, within the Concurrent List, that repugnancy can be applied to determine as to whether one particular statute or par....
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....ng or qualifying the general provisions made in it, there can be said to be no repugnancy. 51.8. A conflict may arise when Parliamentary law and State law seek to exercise their powers over the same subject matter. This need not be in the form of a direct conflict, where one says "do" and the other says "don't". Laws under this head are repugnant even if the rule of conduct prescribed by both laws is identical. The test that has been applied in such cases is based on the principle on which the rule of implied repeal rests, namely, that if the subject matter of the State legislation or part thereof is identical with that of the Parliamentary legislation, so that they cannot both stand together, then the State legislation will be said to be repugnant to the Parliamentary legislation. However, if the State legislation or part thereof deals not with the matters which formed the subject matter of Parliamentary legislation but with other and distinct matters though of a cognate and allied nature, there is no repugnancy. 51.9. Repugnant legislation by the State is void only to the extent of the repugnancy. In other words, only that portion of the State's statute ....
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....being repugnant to the earlier State enactment by virtue of Article 254 (1), would operate to render the Maharashtra Act void vis-à-vis action taken under the later Central enactment. Also, Section 238 of the Code reads as under: "Sec. 238. Provisions of this Code to override other laws.-The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." It is clear that the later non-obstante clause of the Parliamentary enactment will also prevail over the limited non-obstante clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. xx xx 65. The appeals, accordingly, stand dismissed. There shall, however, be no order as to costs." 11. The Hon'ble NCLT New Delhi Bench in Bank of India vs. Tirupati Infraprojects Pvt. Ltd., (IB)-104(PB)/2017 dated 01.02.2019 examined the overriding effect of the IBC with reference to the very same Maharashtra Protect....
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.... to Seventh Schedule, 1. Union List, 2. State List and 3 Concurrent List to submit that these three lists have distribution of subjects on frame laws. The MPID Act, 1999 is a State enactment connected to heading 1 of the public order of the State List of the Seventh item 9 (the Bankruptcy and Insolvency) of the concurrent list. It is sought to be argued that the Code can over-ride a prior act enacted by the State under the concurrent list but cannot over-ride a statute enacted under the State list. Therefore, moratorium imposed under Section 14 of the Code would not have any application in criminal proceedings instituted in the year 2013 nor Section 74 would not have any such application. 11. Having heard learned counsel for the parties, we find that the issue whether a State Act is to give way to the Insolvency and Bankruptcy Code passed by the Parliament is no longer res integra. The question arose before Hon'ble the Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank Ltd. & Anr. (2018) 1 SCC 407 in that case also the conflict between the provisions of Maharashtra Relief Undertaking (State Provisions) Act, 1958 and Insolvency and Bankruptcy Code, 2....
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....r and direct and of such a nature as to bring the two Acts or parts thereof into direct collision with each other, reaching a situation where it is impossible to obey one. without disobeying the other - Further, even in absence of a direct conflict, where the Parliamentary law is intended to be a complete, exhaustive or exclusive code, a State law so long as it is referable to the same subject - matter as the Parliamentary legislation does not purport to be exhaustive or unqualified, but itself permits or recognizes other laws restricting or qualifying the general provisions made in it, there can be said to be no repugnancy C. Constitution of India - Art. 254 - Repugnant State law - when prevails over Parliamentary law - Effect of subsequent Parliamentary law -Repugnant legislation by the State is void only to the extent of the repugnancy - Further, when it is found that a State legislation is repugnant to Parliamentary legislation or an existing law if the case falls within Art. 254(2), and Presidential assent is received for State legislation, the State legislation prevails over Parliamentary legislation or an existing law within that State - However, h....
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....Radisson Blue Hotel is deemed to have come to an end on 01.02.2019." 12. Inspite of the clear dicta of the Hon'ble Apex Court in Innoventive Industries Ltd. (supra) with reference to the State Act of the same State, the Hon'ble High Court of Judicature at Bombay in WP No. 3396 of 2019 with Civil Application No. 29 of 2020 in the State of Maharashtra vs. Anil Kohil, RP for Dunar Foods Ltd. in its judgment dated 09.11.2020 observed as under:- "1. In the present case a very interesting question arises as to whether action taken under the provisions of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (hereinafter referred to as "MPID Act") against a "Financial Establishment", as contemplated under the MPID Act, can be challenged not before the Designated Court under the MPID Act but before the National Company Law Tribunal (hereinafter referred to as "NCLT") by resorting to the remedy provided under the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "I.B. Code"). On the application of a "Financial Creditor" as contemplated under I.B. Code, an Interim Resolution Professional (hereinafter referred as "IRP") i....
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....e possibility. vi) Repugnancy may be direct in the sense that there is inconsistency in the actual terms of the competing statutes and there is, therefore, a direct conflict between two or more provisions of the competing statutes. In this sense, the inconsistency must be clear and direct and be of such a nature as to bring the two Acts or parts thereof into direct collision with each other, reaching a situation where it is impossible to obey the one without disobeying the other. This happens when two enactments produce different legal results when applied to the same facts. vii) Though there may be no direct conflict, a State law may be inoperative because the Parliamentary law is intended to be a complete, exhaustive or exclusive code. In such a case, the State law is inconsistent and repugnant, even though obedience to both laws is possible, because so long as the State law is referable to the same subject matter as the Parliamentary law to any extent, it must give way. One test of seeing whether the subject matter of the Parliamentary law is encroached upon is to find out whether the Parliamentary statute has adopted a plan or scheme which will be hindered and....
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.... (Emphasis added) He only raised three contentions: (i) in view of availability of alternate remedy under Section 61 of I.B. Code of Appeal to be preferred to the NCLAT, the Writ Petition is not maintainable, (ii) in view of Section 32-A of the I.B. Code the proceedings under the MPID Act shall cease and cannot be proceeded with and (iii) Alternatively to submissions at Sr. Nos. (i) and (ii), he submitted that, as IRP was appointed by NCLT on 22.12.2017 and the attachment of the said account took place subsequently by issuance of notification dated 19.10.2018 issued under Section 4 of the MPID Act, although the attachment of other properties which are subject matter of section 4 notification issued earlier may be permissible, at least, the attachment of the said account is totally impermissible. 27. We have already made it clear that in the present Writ Petition we are only examining the aspect regarding the forum in which the action taken under the MPID Act can be challenged and not the merits of the case. In fact, the Respondent can file objections to the attachment under Section 7 of the MPID Act before the Designated Court under the MPID Act and can poin....
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.... 2. Competent Authority and EOW is directed to hand over to applicant/intervener the custody and charge of the immovable properties mentioned at Sr. No. 8, 10, 12, 16, 17, 18, 19, 20 and 23 of the notification dtd. 06.05.2016 alongwith all documents, record etc., within two weeks from today. They are further directed to handover to applicant office equipment, computers, furnitures and fixture in premises at Sr. 5 and 24 of the notification. 3. The Competent Authority and EOW are directed to hand over amount of Rs. 40 Lakhs alongwith accrued interest, if any to the applicant, within two weeks from today. 4. The Competent Authority is directed to the represent all depositors/investors before the applicant/intervener and to file the claims on their behalf. CA shall do all acts necessary for safeguarding and protecting the interest of depositors in Roofit Industries. Date: 18.08.2017 A.S. Kaloti Special Judge, M.P.I.D. Act & Addl. Sessions Judge, City Civil & Sessions Judge At Bombay." Thus, even the said order, on which reliance is placed by the Respondents, shows that the IRP in that case approached the Designated Court under the MPID Act a....
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....s a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any fundamental right or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. 32. In view of above discussion, we quash and set aside the order dated 28/01/2019 passed by the NCLT in M.A. No. 1372/2018 in C.P. No. 1138/I & BC/NCLT/MB/MAH/2017 by which the said account was directed to be de-freezed. The Respondents can approach the Designated Court under section 7 of the M.P.I.D. Act seeking appropriate reliefs. We have not dealt with the merits of the case and the contentions in that behalf are expressly kept open. Rule is made absolute in above terms with no order as to costs. 33. In view of disposal of the Writ Petition, Civil Application No. 29 of 2020 does not survive and is disposed of as such." 13. The Hon'ble High Court of Bombay in Anil Kohil case while setting aside the order of the NCLT wherein it was directed that the bank account of the corporate debtor to be defreezed, held that the designated court under Section 7 of....