TaxTMI 
TaxTMI 
2019 (8) TMI 1928
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....rate Debtor under the provisions of FEMA, 1999, iii) Or pass any other appropriate order(s)/direction(s) as this Hon'ble Tribunal may deem fit. 2. CP (IB) No. 102/Chd/CHD/2018 was filed by M/s Weather Makers Pvt. Ltd., an Operational Creditor of the Corporate Debtor, namely, M/s Parabolic Drugs Ltd., under Section 9 of the Code, seeking initiation of Corporate Insolvency Resolution Process ('CIRP') on the ground that the respondent-corporate debtor i.e. M/s Parabolic Drugs Pvt. Ltd., has committed default in payment of the operational debt due to it. 3. This Tribunal vide order dated 23.08.2018 had admitted the petition and declared moratorium prohibiting the actions in terms of Section 14(1) of the Code. The operative part of the said order reads as under:- "19. In view of the above, the instant petition deserves to be admitted. The petition under Section 9 of the Code is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of Section 14(1) of the Code as amended:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any jud....
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....of Directors shall stand suspended and the management of the affairs shall vest with the Interim Resolution Professional and the officers and the managers of the 'Corporate Debtor' shall report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim Resolution Professional under Section 18 and other relevant provisions of the 'Code', including taking control and custody of the assets over which the 'Corporate Debtor' has ownership rights recorded in the balance sheet of the 'Corporate Debtor' etc. as provided in Section 18 (1) (f) of the 'Code'. The Interim Resolution Professional is directed to prepare a complete list of inventory of assets of the 'Corporate Debtor'; (iii) The Interim Resolution Professional shall strictly act in accordance with the 'Code', all the rules framed thereunder by the Board or the Central Government and in accordance with the 'Code of Conduct' governing his profession and as an Insolvency Professional with high standards of ethics and moral; (iv) The Interim Resolution Professional shall....
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....mission and approval of the Resolution Plan. 7. The applicant- Assistant Director of the Enforcement Directorate in the instant application i.e. CA No. 613/2019, has stated that Corporate Debtor has made serious violations under Foreign Exchange Management Act, 1999 ('FEMA') and has contravened Sections 4, 7, 8 and 10(6) of FEMA and regulations issued by Reserve Bank of India ('RBI'). It is also stated that the applicant is in the process of filing complaint under Section 16(3) of FEMA against the corporate debtor before the appropriate Adjudicating Authority for the aforesaid contraventions amounting to Rs.37,15,03,583.04. It is also stated that investigation against the Corporate Debtor was initiated on the basis of information received from ICICI Bank that the Corporate Debtor is a chronic defaulter of overdue advance payments received against exports of goods and the investigation against the Corporate Debtor was initiated on the basis of the aforesaid information on 10.02.2017. It was stated that during the investigation, ICICI Bank vide letter dated 28.03.2018 has reported 52 entries of overdue advance payments amounting to USD 17,26,136.72 in respect of the responden....
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....ondition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. ^1[(1A) If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37A, he shall be liable to a penalty up to three times the sum involved in such contravention and confiscation of the value equivalent, situated in India, the Foreign exchange, foreign security or immovable property. (1B) If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may, after recording the reasons in writing, recommend for the initiation of prosecution and if the Director of Enforcement is satisfied, he may, after recording the reasons in....
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....s under sub-section (1), also specify in the order published in the Official Gazette, their respective jurisdictions. (3) No Adjudicating Authority shall hold an enquiry under subsection (1) except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. (4) The said person may appear either in person or take the assistance of a legal practitioner or a chartered accountant of his choice for presenting his case before the Adjudicating Authority. (5) Every Adjudicating Authority shall have the same powers of a civil court which are conferred on the Appellate Tribunal under sub-section (2) of section 28 and- (a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860); (b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) Every Adjudicating Authority shall deal with the complaint under sub-section (2) as expeditiously as possible and endeavour shall be made to dispose of the complaint finally within ....
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..... 11. On the other hand, the learned counsel appearing for the Resolution Professional contends that once a company petition for initiation of CIRP was admitted against any Corporate Debtor and moratorium was declared under Section 14 of the Code, no recovery proceedings can be initiated or proceeded with against the Corporate Debtor till the said moratorium is lifted. He further submits that according to the applicant, the investigation under the provisions of FEMA against the Corporate Debtor was started on 10.02.2017 and nothing prevented them from obtaining appropriate order from the appropriate Adjudicating Authority under FEMA and in getting executed the said order, as the CIRP proceedings against the Corporate Debtor were admitted by this Tribunal only on 23.08.2018 in CP (IB) No. 102/Chd/CHD/2018. But once, the company petition is admitted, the applicant has to wait till the said moratorium is lifted in accordance with the provisions of the Code. 12. In view of the above referred rival contentions, the point fell for our consideration is that 'whether the proceedings for determination of the penalty under Section 16(3) of the FEMA and the consequential recovery p....
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....while dealing with the repugnancy and overriding affect between the provisions of Maharashtra Relief Undertakings (Special Provision) Act, 1958 ( 'Maharashtra State Act') and the provisions of the Code, held that Maharashtra State Act cannot stand in the way of the Corporate Insolvency Resolution Process under the Code and the action contemplated under the Maharashtra State Act cannot be proceeded with in view of the moratorium imposed under Section 14 of the Code against the Corporate Debtor. 15. In Principal Commissioner of Income Tax Versus Monnet Ispat and Energy Ltd (2018) SCC OnLine SCC 984, the Hon'ble Supreme Court while dealing with the provisions of the Income Tax Act, held as under:- "3. Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act. 4. We may also refer in this Connection to Dena Bank v. Bhikhabhai Prabhudas Parekh and Co. (2000) 5 SCC 694 and its progeny, making it clear that income-tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors, who are private persons." ....
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.... be proceeding or any judgment or decree of money claim. Imposition of fine cannot held to be a money claim or recovery against the Corporate Debtor nor order of imprisonment, if passed by the court of competent jurisdiction on the Directors, they cannot come within the purview of Section 14. Infact no criminal proceeding is covered under Section 14 of I&B Code. 7. The Adjudicating Authority having failed to appreciate law, we have no option but to set aside the impugned order dated 24th May, 2018 passed in MA/102/IB/2018 in CP/507/IB/2017. The court of competent jurisdiction may proceed with the proceeding under Section 138 of NI Act, even during the period of moratorium. The appeal is allowed with aforesaid observations. I. A. Nos. 820/2018, 821/2018, 822/2018 and 823/2018 stands disposed of. No Cost. 19. In Canara Bank Versus Deccan Chronicle Holdings Limited, Company Appeal (AT) (Insolvency) No. 147 of 2017, the Hon'ble National Company Law Appellate Tribunal while answering the question 'that the Adjudicating Authority cannot exclude any court from the purview of Moratorium for the purpose of recovery of amount or execution of any judgement or decree, inc....
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....M.A No. 1280 of 2018 in C.P. No. 405 of 2018; SREI Infrastructure Finance Limited Versus Sterling SEZ and Infrastructure Limited, passed on 12.02.2019, the National Company Law Tribunal, Mumbai Bench, held as under:- xx xx xx xx xx "c.) Section 63 of the IBC provides that, no Civil Court or Authority shall have jurisdiction to entertain any suit or proceeding in respect of any matter on which NCLT or NCLAT has jurisdiction under the Code. In view of the ruling by the Appellate Authority under PMLA in "Bank of India Vs Deputy Directorate Enforcement, Mumbai" Supra, that the proceedings before Adjudicating Authority under PMLA in respect of attached properties is a civil proceedings, the Adjudicating Authority under PMLA does not have jurisdiction to attach the properties of the Corporate Debtor undergoing Corporate Insolvency Resolution Process." 21. In Power Grid Corporation of India (Supra) on which the applicant placed reliance, whether the pending proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, against the corporate debtor, needs to be stayed, in view of the moratorium under Section 14(1)(a) of the Code, 2016, the Hon'bl....
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.... where a counter claims was preferred by the objector, though rejected, it would be appropriate if the interim resolution profession be made aware of these proceedings and he consents to its continuation. 17. Thus consent/permission of interim resolution professional be obtained and be filed in this Court within four weeks from today." 22. The relevant provisions of FEMA under which the applicant is seeking to proceed against the Corporate Debtor before the appropriate Adjudicating Authority for determination of the penalties for the alleged contravention of Sections 4, 7, 8 and 10(6) of FEMA and the regulations of RBI, provides for adjudication of any contravention by the appropriate Adjudicating Authority under FEMA and for passing of an order, determining the penalty payable. The relevant provisions do not provide for any imprisonment by way of penalty. The applicant stated that though investigation was started, but no proceedings under Section 16(3) was filed initiating proceedings before the appropriate Adjudicating Authority and that the amount of fine was not determined and no order was passed till date. 23. The conspectus of the above referred decisions, clea....