2023 (3) TMI 592 - AT - Corporate Laws

Provisional attachment of property - Power of the NCLT to protect the assets of corporate debtor - Action under the Prohibition of Benami Property Transactions Act, 1988 - clear cut stand of the Respondent is that, in the instant case, the Adjudicating Authority (Prohibition of Benami Property Transactions Act, 1988), having passed an Order, treating the Appellant’s Assets as Benami Assets, only the Appellate Tribunal, under PBPT Act, can test the veracity of the PBPT Adjudicating Authority.

HELD THAT:- It transpires that the Appellant / Liquidator, had placed the proposed Resolution Plans, before the Committee of Creditors, during the 9th CoC Meeting, that took place on 02.11.2018. After due consideration of the Resolution Plans submitted, the CoC, had rejected the Resolutions Plans, and consciously had resolved to prefer an Application for Liquidation of the Corporate Debtor, before the Adjudicating Authority. In MA/604/2018, filed by the Appellant / Liquidator /Petitioner, under Section 33 (2) of the I & B Code, 2016, for Liquidation of the Corporate Debtor, a Liquidation Order, was passed on 14.02.2019.

It appears that the Appellant / Petitioner / Liquidator (pending the Liquidation Proceeding), had received a Notice dated 01.11.2019, from the Respondent, to Show Cause, as per Section 24(1) of the The Prohibition of Benami Property Transactions Act, 1988, as to why the Property being the proportionate share of the Land, owned by the Corporate Debtor, out of the total extent of 889.82 Acres, where the factory of the Corporate Debtor, was located, should not be treated as Benami Property, and that, any Reply ought to be provided on or before 21.11.2019. The Respondent, also had issued a Provisional Attachment Order dated 01.11.2019, as per Section 24(3) of the Act, 1988.

The crystalline stand of the Appellant / Liquidator is that, there was no Cash Inflows into the Company, either in the form of Cash or Cheque, from the Promoters of the Company or others, and the same is evidenced from the Disclosure on Specified Bank Notes, given by the Statutory Auditor, in his Report for the Financial year 2016-17, filed with the Ministry of Corporate Affairs. To support the fact that there was no Cash Flows into the Corporate Debtor, the Appellant / Petitioner, had enclosed the Copy of the Audited Balance Sheets for the Financial Years 2016-17, 2017-18 and 2018-19, Income Tax Returns for the Years 2016-17, 2017-18 and 2018-19 and the Bank Statements from October 2016 to March 2017 of the Corporate Debtor.

In the instant case, it is quite evident that the Respondent / Department had attached the Property of the Corporate Debtor, as per the ingredients of the Provisions of The Prohibition of Benami Property Transactions Act, 1988. Therefore, an Attachment effected, under The Prohibition of Benami Property Transactions Act, 1988, is to be assailed under the relevant provisions of the said Act, 1988, and in fact, the I & B Code, 2016, only pertains to questions concerning the Insolvency Resolution or Liquidation Proceedings of the Corporate Debtor - the Attachment, made as per Section 24(3) of The Prohibition of Benami Property Transactions Act, 1988, cannot be a subject matter of proceedings, under Section 60(5) of the I & B Code, 2016, in the considered opinion of this Tribunal. To put it differently, the Adjudicating Authority (National Company Law Tribunal), is not the proper FORA, to determine the controversies, revolving around the Attachment of the Property, under The Prohibition of Benami Property Transactions Act, 1988, as held by this Tribunal. As such, it is held by this Tribunal, that the filing of the instant Comp. App (AT) (CH) (INS.) Nos. 188 and 189 of 2022, by the Appellant / Petitioner / Liquidator, per se are not Maintainable, in the eye of Law.

A closure scrutiny of The Prohibition of Benami Property Transactions Act, 1988, and the I & B Code, 2016, clearly exhibit that they do operate in their own field and without any simmering doubt, this Tribunal, without any haziness, holds that an element of public interest, is involved in PBPT Act - Only when a Resolution Plan was approved by the Adjudicating Authority (Tribunal), Section 32A of the I & B Code, 2016, gets attracted. In reality, an Adjudicating Authority (Tribunal), cannot traverse upon matters which is beyond its scope. To put it precisely, issues/disputes, pertaining to an Attachment, effected under The Prohibition of Benami Property Transactions Act, 1988, cannot be gone into, by an Adjudicating Authority (Tribunal), under the I & B Code, 2016. In short, the Appellant / Liquidator, cannot take umbrage, either under the ingredients of Section 32A, coupled with Section 60(5) of the I & B Code, 2016.

This Tribunal, taking note of the divergent contentions advanced on either side, considering the fact that Liquidator, cannot bypass a remedy, provided under The Benami Transactions (Prohibition) Act, 1988, in assailing the Order, passed by the Adjudicating Authority, before the Appellate Tribunal, under the PBPT Act, 1988, keeping in mind of the surrounding facts and circumstances of the case, in a holistic fashion, comes to a resultant conclusion that the view arrived at, by the Adjudicating Authority (National Company Law Tribunal, Division Bench – II, Chennai), in dismissing the MA/1373/2019 and MA/1372/2019 in MA/1130/CAA/2019 in CP/612(IB)/2017, through its Impugned Order, dated 29.03.2022, is free from Legal Infirmities.

Appeal dismissed.