TaxTMI 
TaxTMI 
2026 (3) TMI 759
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....ciding the appeal are: i. The corporate debtor, Swastik Ceracon Limited was subjected to Corporate Insolvency Resolution Process (CIRP) by order dated 15.01.2019 passed by the adjudicating authority. In pursuance of publication issued by Interim Resolution Professional (IRP), appellant has filed its claim in Form-C for an amount of Rs. 10,43,45,631/-. ii. The corporate debtor had equity shares of Mehsana Urban Cooperative Bank Limited, which was reflected in the Information Memorandum of the corporate debtor as prepared by Resolution Professional (RP). Resolution plan of the corporate debtor was approved by the adjudicating authority vide order dated 20.06.2022. Under the resolution plan against the admitted claim of the appellant, appellant was proposed an amount of more than Rs. 5,00,00,000/-. iii. Successful Resolution Applicant (SRA) having taken control of the corporate debtor after approval of the resolution plan filed an I.A.370/AHM/2025 praying for reliefs which have been quoted in paragraph 1 of the impugned order which are to the following effect: "(A). This Hon'ble Tribunal be pleased to direct the Respondent herein to refund and I....
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....ank Guarantees (invoked pre-CIRP) is refundable? and (iv) What reliefs, if any, are to be granted to the Applicant?" vi. Adjudicating authority on Issue No. 1, held that Tribunal has jurisdiction to entertain the application. On deciding Issue No.2, it was held that the adjustment set of affected by appellant from the share dividend account is violative of moratorium under Section 14 and shares held by the corporate debtor qualify in the definition of assets. In paragraph 25, while allowing the application following was directed: "25. Accordingly, the Application filed by the Applicant/SRA qua Prayer (A) is allowed, directing the Respondent to: (A) Refund Rs. 56,00,000 /- with 10% p.a. interest from respective adjustment dates (15.07.2019, 02.08.2021, 18.07.2022, 01.06.2023, 29.08.2023 till payment, within 45 days; (B) "No relief qua Prayer (B) is granted as regards closure of the account(s} and refund/pay an amount to the tune of Rs. 20,37,767.85ps. or part thereof along with appropriate interest thereon on fixed deposits/ margin money against pre-invoked Bank Guarantees, as upheld in Indian Overseas Bank v. Consortium of GSECL and Rake....
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....t cannot rely on the provisions of the Multi-State Cooperative Societies Act, 2002, to contend that dispute ought to have been raised by the SRA under Section 84 of the Multi-State Cooperative Societies Act, 2002. After approval of the resolution plan, all claims and rights of the appellant shall stand extinguished and it is further submitted that after enforcement of the moratorium, no dividend could have been adjusted by the appellant payable to the corporate debtor. The submission of the appellant that the shares of the corporate debtor are not the assets of the corporate debtor is also misconceived. Shares are assets owned by the corporate debtor. 5. We have considered the submissions of the counsel for the parties and perused the records. 6. From the facts brought on the record, it is clear that appellant has filed claim in CIRP of the corporate debtor on 08.02.2019 for an amount of Rs. 10,43,35,631/- and was allocated voting share of 8.9% in the Committee of Creditors (CoC). In the claim, appellant has not declared any mutual credit debt or particulars of its security over the shares. The material on record indicate that corporate debtor received dividend for the period....
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....nt that provisions of the Companies Act, which generally governs the affairs of the registered companies under the Companies Act are not applicable to the Multi-State Cooperative Societies Act, 2002. The related question which has been raised by the appellant is that whether the Tribunal constituted under the companies act, that is, NCLT is also excluded to exercise any jurisdiction. We may notice the provisions of the IBC, which is an Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons and partnership firms and individuals in time bound manner. The provision of the Companies Act has been amended in its applicability to IBC. Companies Act, 2013 is amended as specified in 11th Schedule of the IBC. Adjudicating Authority is defined in Section 5(1) as a National Company Law Tribunal constituted under Section 408 of the Companies Act, 2013. Thus, for the purposes of the IBC, adjudicating authority is the National Company Law Tribunal and IBC defines adjudicating authority. Now we look into Section 238 of the IBC, which contains an overriding effect, which is as follows: "238. Provisions of this Code to override other ....
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....ond jurisdiction of the NCLT also cannot be accepted. From the facts noted above, it is clear that the CIRP commenced on 15.01.2019 and after commencement of the CIRP, the dividend which was payable to the corporate debtor on the shares held by the corporate debtor of the appellant, the dividends were unilaterally adjusted during the CIRP period as well as subsequent to the approval of the resolution plan. The shares of the appellant held by the corporate debtor were shown in the Information Memorandum and were clearly assets of the corporate debtor. Section 60(5)(c) empowers the adjudicating authority to exercise jurisdiction on any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings. Section 60(5)(c) is as follows: "60. Adjudicating Authority for corporate persons.- (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceeding....
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....Debts Recovery Appellate Tribunal by or under this Code." Though what is found in sub-section (2) of Section 180 is not found in the corresponding provision in Part II, namely, Section 63, a similar provision is incorporated in an unrelated provision, namely, Section 64, which primarily deals with expeditious disposal of applications. Thus, there appears to be some mix-up. However, we are not concerned about the same in this case and we have made a reference to the same only because of sub-section (4) of Section 60, vesting upon the NCLT, all the powers of the DRT. 37. From a combined reading of sub-section (4) and sub-section (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the Government under the provisions of the MMDR Act, 1957 and the Rules issued thereunder. The only provision which can probably throw light on this question would be sub-section (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out ....
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....ecurities or any other registry that records the ownership of assets including- (i)-(v) *** (vi) assets subject to the determination of ownership by a court or authority; (g) *** Explanation.-For the purposes of this section, the term "assets" shall not include the following, namely- (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator." 40. If NCLT has been conferred with jurisdiction to decide all types of claims to property, of the corporate debtor, Section 18(1)(f)(vi) 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. In fact an asset owned by a third party, but which is in the possession of the corporate debtor under contractual arrangements, ....
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....Court in 'Embassy Property Development Private Limited' (supra) was in entirely different context and has no applicability. Learned counsel for the appellant has relied on the judgement of the Hon'ble Supreme Court in 'Union of India & Anr.' Vs. Deoki Nandan Aggarwal' reported in [(1992) Supp. (1) SCC 323]. The above was a case, where Hon'ble Supreme Court had occasion to consider a different question. In the above context, the Hon'ble Supreme Court has held that Court cannot enlarge the scope of the legislation. Learned counsel for the appellant has relied on paragraph 7 of the judgement where Hon'ble Supreme Court made following observations: "7. By the Amending Act 35 of 1976 the First Schedule was amended by substituting paragraphs 2 and 9 and deleting paragraphs 3, 4 and 5. The substituted paragraphs 2 and 9 read as follows: "2. Subject to the other provisions of this Part, the pension payable to a Judge to whom this Part applies and who has completed not less than seven years of service for pension shall be- (a) for service as Chief Justice in any High Court Rs. 2400 per annum; and (b) for service as any other Judge in any High Court Rs. 16....
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....nt to operate as a tool for banks and ensures a smooth debt recovery process. The provisions of the Sarfaesi Act make its purport amply clear, specifically under the provisions of Sections 13(2) and 13(4) of the Act, which read as under: "13. Enforcement of security interest.-(1)*** (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). *** (4) In case the borrower fails to discharge his liability in full within the period specified in sub- section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely- (a) take possession of the secured assets of the borrower including th....