TMI Blog2021 (3) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor, can be the subject-matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016? - HELD THAT:- In the present case, the Corporation followed such procedure and took possession of the disputed property for non-payment of tax. Thus, there was no further scope for any determination of ownership of the property by the KMC. As such, there arose no question of the task of the interim resolution professional, in taking control and custody of the asset, being subject to the determination of ownership by any authority, as contemplated under Section 18(f)(vi) of the IBC. Rather, the claim of the KMC, in the absence of any successful challenge thereto, attained finality, fastening a liability upon the corporate debtor - the finalized claim of the KMC can very well be the subject-matter of a Corporate Resolution Process under the IBC. Both the issue answered in the affirmative and against the writ petitioner. - WPA No. 977 of 2020 - - - Dated:- 29-1-2021 - Mr. Sabyasachi Bhattacharyya, J. For the petitioners : Mr. Ashok Kumar Banerjee, Sr. Adv., Mr. Rajdip Roy, Mr. Anindya Sundar Chatterjee, Mr. Goutam Dinda For the respondent no.3 : M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in of the writ petitioner. The exercise of power by the interim resolution professional has to be subject to such authority, it is argued. 6. Learned senior counsel further argues that, as held in Embassy Property (supra), the writ jurisdiction of this court under Article 226 of the Constitution can be invoked despite the availability of an alternative remedy, since the nature of the challenge pertains to lack of jurisdiction of the NCLT and not merely wrongful exercise of any available jurisdiction. 7. Learned counsel for respondent no.3 argues that, upon commencement of the Corporate Insolvency Resolution Process (CIRP), the National Company Law Tribunal (NCLT) passed an order dated January 17, 2019, lifting the attachment and directing the petitioner to hand over the registered office of the corporate debtor to the liquidation by an order dated January 31, 2020 (by which time the CIRP failed and liquidation commenced). 8. The impugned order dated January 17, 2019 it is argued, was passed by the NCLT within its jurisdiction. The IBC specifies that financial or operational creditors can file petitions before the NCLT. If the matter is admitted for CIRP, all attempts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order granted, from which the matter went up to the Supreme Court. 13. Paragraph no. 37 of Embassy Property (supra), it is argued, clearly indicates that a decision taken by a Government or a statutory authority in relation to a matter which is in the realm of public law cannot be brought within the fold of the expression arising out of or in relation to the insolvency resolution , appearing in Section 60(5) of IBC, 2016. The Supreme Court created a distinction between proceedings which had attained finality, fastening a liability upon the corporate debtor, and other matters. Keeping in mind the said distinction, learned counsel for respondent no.3 argues, a distinction has to be drawn between matters which are relevant for the purpose of CIRP on the issue of debt or of property of the company and other matters; all other issues would be beyond the jurisdiction of the Tribunal. Likewise, even if it is within the jurisdiction of the NCLT, a distinction must be drawn between matters which have a direct bearing on the CIRP, that is, directly pertaining to debt or property of the corporate debtor, and other matters. Adjudicatory jurisdiction of other courts or Tribunals cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. 21. As such, respondent no.3 prays for the writ petition to be dismissed. 22. Learned counsel appearing for respondent no.4 argues that there is no distinction between statutory and operational debts. Even statutory dues/crown debts are considered as operational debt, as envisaged in Section 5(21) of the IBC. 23. Learned counsel submits that the interim resolution professional has certain duties to perform, as envisaged under Section 18 of the IBC. Section 18(1)(f), Clauses (i), (ii) and (vi) of the IBC indicate that the IRP has to take control and custody of assets over which the corporate debtor has ownership rights, which may or may not be in possession of the corporate debtor, or any asset subject to determination of ownership by a court or authority. Section 25(1) and Section 25(2)(b) of the IBC deals with the duties of the resolution professional. 24. Section 36 of the IBC is relied on for the proposition that the assets attached by the writ petitioner, which are now under liquidation, have to be dealt with as per the mechanism provided under the IBC. The writ petitioner has only attached the asset of the corporate debtor and is in possession thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich arise in the matter are: 31. Whether the writ jurisdiction of this court under Article 226 of the Constitution of India can be invoked in the matter, despite the availability of an alternative remedy; and 32. Whether the property-in-question, having been seized by the KMC in recovery of its statutory claims against the debtor, can be the subject-matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016. 33. In order to resolve the first question, we merely have to look to the ratio of Embassy Property (supra), as laid down in paragraph no. 4 of the said report. The Supreme Court held therein that, in so far as the question of exercise of the power conferred by Article 226, despite the availability of a statutory alternative remedy, is concerned, the distinction between lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special statute. 34. In the present case, the petitioners have urged that the NCLT and the Resolution Professional have no jurisdiction t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opositions, as laid down in the various judgments, boil down to the ratio that, although a wrongful exercise of available jurisdiction would not be sufficient to invoke the High Court s jurisdiction under Article 226 of the Constitution, the ground of absence of jurisdiction could trigger such invocation. Hence, in view of the nature of challenge involved in the present writ petition, the same is maintainable in law. 39. Question (i), posed above, is thus decided in the affirmative. 40. To answer the second question, it would be particularly apt to consider the tests laid down by the Supreme Court in paragraph nos. 37 and 40 of Embassy Property (supra). While discussing the broad sweep of Section 60 (5)(c) of the IBC, the Supreme Court held, But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase arising out of or in relation to the insolvency resolution . Taking the instance of a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal at the time of initiation of CIRP, the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to the determination of ownership by a court of authority pertain to the phrase take control and custody , used at the beginning of clause (f) of sub- section (1) of Section 18. In Embassy Property (supra), the second interpretation was accepted, indicating that the power of the resolution professional to take control of any asset, itself, is subject to the determination of ownership by a court or authority. In view of such interpretation by the Supreme Court, this court is bound by it and there is no further scope of dwelling on the question as to which of the two interpretations ought to be applied. 44. Thus being the situation, what is to be seen to examine the charter of the interim resolution professional is whether the assets, of which control and custody is sought to be taken by the professional, are sub judice before a court or authority for the purpose of determination of ownership thereof. 45. The writ petitioner proceeded with acquiring possession of the property-in-question and putting up the same for attachment under its powers as flowing from Sections 217-220 of the 1980 Act. The said provisions envisage a situation where an amount of tax, for which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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