Liquidator of Asis Global Ltd - It noted that section 178 of the Income-tax Act, 1961 has been amended to allow the Code to have overriding effect and accordingly directed the Bank to defreeze the account.

 NCLT Mumbai-3 (28.10.2021) in Liquidator of Asis Global Ltd. [I.A. 2061/2021 in C.P.(IB)-4442 (MB)/2018] held that;

• “the monies of the CD lying in the bank account shall be construed to be an asset of the CD even if tax attachment order is passed against the same. 

• It noted that section 178 of the Income-tax Act, 1961 has been amended to allow the Code to have overriding effect and accordingly directed the Bank to defreeze the account”

Excerpts of the Order;

# 1. The above present Interlocutory Application has been filed by the Liquidator against the Respondent Dy. Commissioner of State Tax (Respondent No. 1) and Axis Bank Limited (Respondent No. 2) seeking direction from this Tribunal to unfreeze/lift the attachment on the Bank Account of the Corporate Debtor maintained by Axis Bank (Respondent No.2), details of which are hereunder:

 

Sr. No.	Account No.	Account Maintained with
1.	186010200000383	Axis Bank (Khar west Branch)
2.	186010200006019	Axis Bank (Khar west Branch)

 

# 2. The applicant vide it’s letter dated 27.02.2020 had communicated to the Respondent no. 1 about the initiation of the CIRP of the Corporate Debtor. The applicant had also vide letter dated 27.02.2020 requested the Respondent No. 2 (Axis Bank) to remove the attachment / lien marked on the said Bank Accounts.

 

# 3. The Bench notes that the Applicant has appraised the officials of the Respondent No. 1 and 2. The Bench has no doubt in its mind that the attachment is violative of Section 14 of the Code and thus needs to be lifted.

 

# 4. The Bench further notes that the respondent No. 1 i.e. Dy. Commissioner of State Tax has already submitted its claim before the liquidator vide its FORM -B dated 12.04.2021. The said claim has been accepted by the liquidator. The claim of the Respondent (Dy. Commissioner of State Tax) will be dealt in the manner as provided u/s. 53 of the IBC and therefore, Respondent No. 1 i.e Dy Commissioner of State Tax cannot continue to enforce its lien over the bank accounts of the Corporate Debtor. In this regard the Bench notes that Hon’ble NCLT, Principal Bench New Delhi in Om Prakash Agarwal Vs/ Tax Recovery Officer & Anr. in like circumstance held that “the monies of the CD lying in the bank account shall be construed to be an asset of the CD even if tax attachment order is passed against the same. It noted that section 178 of the Income-tax Act, 1961 has been amended to allow the Code to have overriding effect and accordingly directed the Bank to defreeze the account”. Similarly, the applicant also places reliance “on the order passed by NCLT Kolkata Bench in Ram Ratan Modi (RP of Duncans Industries Ltd.) Vs. ICICI Bank (Darjeeling Branch) wherein it observed as follows”: 

• “10 What pains us is to see such applications being filed so often even after the point of law stands settled in this regard. One of the objects of the Code is to conduct the CIRP in a time bound manner, therefore, to save the time upon coming to knowledge of the order of admission of the corporate debtor into CIRP, the statutory authorities should withdraw their direction of attachment from the assets of the corporate debtor.

• 11. Specially in cases such as this, where the authorities have filed their claims with the Resolution Professional. After filing their claim with the resolution professional, it is only prudent that the authorities withdraw their directions.

• 12 We, therefore, direct the release of attachment and defreezing of account of the corporate debtor company bearing no. 63xxxxxxxx68 and the statutory authorities are restrained from levying any further attachment or lien on the account of the corporate debtor company, with immediate effect”.

 

# 5. In view of the above, the Bench directs the Dy. Commissioner of State Tax (Respondent No. 1) and Axis Bank Limited (Respondent No. 2) to lift its lien/attachment over the said bank accounts bearing Nos. 186010200000383 and 186010200006019 maintained with Respondent No. 2 bank. The respondent No.2 i.e. Axis Bank Limited is further directed to unfreeze the bank account of the Corporate Debtor and allow the applicant to manage its Operations.

 

# 6. The above Interlocutory Application bearing No. 2061/2021 is ‘Allowed’ and disposed of in terms of the para 5 above.

 

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