NCLT Kolkata (22.07.2020) in Mr. Anil Goel, Liquidator of Varrsana Ispat Limited, Vs. Deputy Director, Directorate of Enforcement, Delhi [I.A.(IB) No. /KB/2020 In C.P. (IB) No. 543 /KB/2017] held that;
The above said discussion no doubt enables us to hold that the 32-A is also applicable to the assets of the CD undergoing liquidation and a liquidator can file an application like the one in hand. That being so we do not find any merit in the first and second objections on the side of the respondent.
In view of the above said position of law we are of the considered opinion that a liquidator can proceed with the sale of the assets even if it is under attachment by the respondent, to continue the time bound process of liquidation under the provisions of the Code and upon completion of the sale proceedings the buyer can take appropriate steps to release the attachment. It appears to us that the attachment and confiscation of properties of a CD undergoing CIRP or liquidation become void under section 32-A of the Code.
The liquidator is permitted to sell the assets of the CD as per the provisions of the Code and Regulation which were attached by the respondent/ED subject to the right of the buyer to apply for deattachemt in accordance with section 32-A of the Code from the appropriate authority.
Excerpts of the order;
# 1. Mr. Anil Goel, Liquidator of Vaarsana Ispat Limited has filed this unnumbered application being IA(IB) No. /KB/2020 in CP(IB) No.543/KB/2017 under Sections 60(5) and 32A of the Insolvency and Bankruptcy Code, 2016 (in short, ‘I & B Code’) for seeking permission to sale the assets of the CD which were attached by the respondent/ED in view of Section 32A inserted by Insolvency and Bankruptcy Code (Amendment) Act, 2020.
# 2. The Ld. Liquidator Mr. Anil Goel, submitted that he is running the Company as a going concern and endeavours to sell the Corporate Debtor as a going concern has been hampered due to the attachment as no one is willing to bid for the company in spite of several interested parties having approached him. For the said reason he filed the application for an urgent hearing before the lockdown is lifted. As lockdown was declared due to pandemic COVID-19 situation, the normal operation of NCLT Kolkata Bench is yet to be resumed, the unnumbered application was listed on today for hearing through video conferencing (VC) by giving advance notice from the Registry to the applicant as well as to the respondent directing to submit written notes of defence, if any.
# 3. Heard both sides. Perused the records, written note of defence submitted on the side of the respondent and the citations referred to us on both sides.
# 7. As on today the CD is undergoing liquidation, and its valuable assets referred to above are under attachment. The Ld. Liquidator Mr. Anil Goel, submitted that he is running the Company as a going concern but unable to proceed with the sale of the CD or its business due to the pending attachment. According to him no one is willing to bid for the company in spite of several interested parties having approached him. In the meanwhile on 28/12/2019 Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 was promulgated which was converted into the Insolvency and Bankruptcy Code (Amendment) Act, 2020 on 13/03/2020. After promulgation of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, Section 32A has been inserted to the Code by giving much clarity in regards the assets under attachment and accordingly he filed this Application under newly inserted Section 32A of the ‘I & B Code’ seeking permission to sell the assets of the CD which were attached by the respondent/ED.
# 8. The respondent / ED appeared through its Counsel Mr. Zoheb Hossain, and Mr. Agni Sen. A written notes of defence also submitted. The Ld.Counsel Mr. Zoheb Hossain objected to this application mainly on three grounds. Firstly he submitted that only after the liquidation process is over or resolution plan is approved then alone an application u/s. 32A can be made. Secondly he submitted that no Application can be filed by the liquidator u/s. 32A and according to him such an application can be filed only by the successful resolution applicant. Thirdly he submitted that proceedings are going on before the PMLA Appellate Authority which is attended by the Ld. Liquidator and the challenge against the attachment became final and therefore, even if the provisions of Code are amended if the right of the parties had already been crystallized then, subsequent change in law would not take away such rights which had attained finality.
# 12. A reading of section subsection (2) of section 32-A with the object behind the introduction we are of the considered opinion that 32-A is also applicable to liquidation proceedings. Under the object as well as under section it is specifically dealt with that the section is applicable to prevent insolvency in case the company goes into CIRP or liquidation. We are stressing the wording CIRP or Liquidation in the object behind insertion of this section and the following words under subsection (2) of Section 32-A. ``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—“. The above said discussion no doubt enables us to hold that the 32-A is also applicable to the assets of the CD undergoing liquidation and a liquidator can file an application like the one in hand. That being so we do not find any merit in the first and second objections on the side of the respondent.
# 15. Here in this application, though multiple reliefs are sought for by the applicant the Ld. Liquidator has not pressed for passing an order for de-attachment. What he pressed for is a relief to proceed with the sale of the assets which were under attachment in view of the non obstante clause as provided under section 32-A . According to him the respondents are prevented from taking any action 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 and therefore he can proceeds with the sale of the property under attachment and upon confirmation of the sale the buyer can seek appropriate relief for de-attachment in accordance with section 32-A.
# 16. Having gone through the judgments cited by the Ld. Counsel for the respondents and upon hearing on both sides at length what we understood is that section 32-A prohibits any action to be taken by the respondent as against properties of the CD undergoing CIRP or undergoing liquidation. But it would not have any application to the designated partner or an officer who is in default or was in any manner in-charge of or responsible to CD for conduct of its business or associated in any manner who was directly or indirectly involved in commission of such offence. To sum up the properties of a CD under liquidation is also to be exempted from the purview of the commission of such offence. In view of the above said position of law we are of the considered opinion that a liquidator can proceed with the sale of the assets even if it is under attachment by the respondent, to continue the time bound process of liquidation under the provisions of the Code and upon completion of the sale proceedings the buyer can take appropriate steps to release the attachment. It appears to us that the attachment and confiscation of properties of a CD undergoing CIRP or liquidation become void under section 32-A of the Code. In the result we are inclined to allow this application upon the following orders:
i). The liquidator is permitted to sell the assets of the CD as per the provisions of the Code and Regulation which were attached by the respondent/ED subject to the right of the buyer to apply for deattachemt in accordance with section 32-A of the Code from the appropriate authority.
ii). The respondents are directed to render as much co-operation to the liquidator to proceeds with the sale of the assets as described above.
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