TMI Blog2018 (2) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... tisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002, have been included under Sub Cause (c) of Sub Section (1) of Section 14. Therefore, unable to accept the submission of the learned Senior Counsel Mr.APS.Ahluwalia, that the present proceedings cannot be termed as proceedings within the meaning of Sub Clauses a, b, c and d of Sub Section (1) of Section 14. Mr.APS.Ahluwalia, learned Senior Counsel would also contend that by virtue of the lien created under the Order dated 21.04.2011, the property becomes answerable to the claims of the 1st respondent. Therefore the 1st respondent would be in the position of the secured creditor and hence these proceedings cannot be prohibited by the order of NCLT. A lien created over the property would not divest the ownership of the corporate debtor over the said property. Even claims of secured creditors are barred under Sub Clause (c) of Sub Section (1) of Section 14. Clause (d) of Sub Section (1) of Section 14 includes even proceedings of recovery of any property in possession of a corporate debtor by its owner or lessor. Apart from the wide language of Section 14, Section 238 of the Code gives an over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. It appears that several interlocutory applications were taken out in the suit for injunction restraining the 1st defendant, viz. M/s.Geodis Overseas Pvt. Ltd. (India) from encashing the Bank guarantees executed by the plaintiff. Several orders were passed from time to time by this Court. The earliest of the orders passed was on 21.04.2011 in OA No.87 of 2011 and Application No.1397 of 2011. The original application in OA.No.87 of 2011 was filed seeking an order of injunction directing the respondents/defendants to clear 87 units covered by 9 Invoices under 9 EPCG licences as per Schedule to be released from CFS immediately upon payment of customs duty by the plaintiff. Application No.1397 of 2011 was filed by the 1st defendant in the said suit seeking to vacate the interim order granted on 28.01.2011 in Original Application No.87 of 2011. A common order was passed in the said applications and this Court had issued the following directions in the said common order. 31. Hence, the applications are disposed of with the following directions : (i) Within a week from today, the first defendant shall file necessary documents before the Customs Department and have the mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t handed over by the plaintiff in pursuance of the orders passed on 28.1.2011, to the Registrar General. The Registrar General shall sign the necessary discharge or make necessary endorsement on the original fixed deposit receipt and hand over the same to the counsel for the first defendant, upon the counsel for the first defendant producing proof (a) that the Customs Department had cleared the cargo (b) that the liner has issued valid delivery order and (c) that the second defendant as well as J.M.Baxy and Co., and GDL had released the entire cargo of 87 units covered by 9 invoices, for transportation by road to the factory of the plaintiff; (vii) After getting a delivery order from the liner and after getting the cargo released from the second defendant, the first defendant shall file a memo into Court, after serving a copy upon the counsel for the plaintiff indicating the total expenses incurred by the first defendant towards detention charges and demurrage; (viii) Within a week from the date of service of such a memo, by the first defendant upon the counsel for the plaintiff, the plaintiff shall deposit into Court, an amount equivalent to 50% of the amount indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the order dated 21.04.2011. This Court, after hearing the parties, passed the following order on 04.07.2012: 16. In the result, this application is ordered by directing the plaintiff to deposit ₹ 3,05,42,956.98 within one week from the date of receipt of this order, failing which the cargo lying at the factory premise of the plaintiff at K.R.S.Road, Metagali, Mysore, Karnataka shall stand attached and be brought to the custody of this Court to be brought for public auction and the amount due to the plaintiff under the order, dated 21,04.2011, shall be realized from and out of the amount realized through public auction and the balance sum, after defraying the expenses for attachment and for bringing the same into the custody of the court and for conducting the public auction shall be deposited to the credit of the suit. This petition is accordingly ordered. 6. An appeal filed against the order dated 04.07.2012 in OSA No.296 of 2011was also dismissed as withdrawn on 24.09.2012. In the mean time, this Court by an order dated 13.08.2012, directed the plaintiff/1st respondent, viz. Falcon Tyres Limited to deposit a sum ₹ 3,05,42,956.98 to the credit of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the earlier orders. If there is any short fall, it shall be deposited by the applicant/plaintiff, failing which, the earlier order for bringing other properties for sale shall prevail. 8. It is conceded at the bar that this consent order was also not complied with. Hence, the 1st defendant in the suit, viz. Geodis Overseas Pvt Ltd., filed an application in Application No.341 of 2017 with a prayer to appoint a retired District Judge or such other person as deemed fit as a Commissioner to auction the attached machinery. This Court, by an order dated 08.02.2017, appointed a retired District Judge to be the Commissioner. Thereafter, the Commissioner had sought for certain directions before this Court, directions were issued by this Court with regard to the valuation as well as the publication of notices of auction. Those aspects are not very germane to the present relief sought for in the application which is now under consideration. 9. While things stood thus, the present application has been filed by Mr.Anand Ramachandra Bhatt stating that he has been appointed as a Insolvency Resolution Professional by NCLT at Bengaluru, on such appointment the moratorium prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. 12. Relying on Section 14 as well as Section 238, which provides that the provisions of the Insolvency and Bankruptcy Code, 2016, will have an overriding effect on any other Law that is time being in force. Mr.K.F.Manavalan would submit that this court has no other option but to stay further proceedings. Section 238 of the Code reads as follows: 238. Provisions of this Code to override other laws- The provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution process outlined in the Code. Further, the non-obstante clause contained in Section 4 of the Maharashtra Act cannot possibly be held to apply to the Central enactment, inasmuch as a matter of constitutional law, the later Central enactment being repugnant to the earlier State enactment by virtue of Article 254 (1), would operate to render the Maharashtra Act void vis- -vis action taken under the later Central enactment. Also, Section 238 of the Code reads as under: Sec. 238. Provisions of this Code to override other laws.- The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. It is clear that the later non-obstante clause of the Parliamentary enactment will also prevail over the limited non-obstante clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. It will be noticed that whereas the moratorium imposed under the Maharashtra Act is discretionary and may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conclusion of the Insolvency Resolution process. All that this Court can do in the present situation is only to sympathize with the 1st respondent/defendant. A bare perusal of the earlier orders passed by this Court would show that the plaintiff in the suit M/s.Falcon Tyres Ltd., is a consistent and willful defaulter. But, in view of Section 14 of the Code, this Court is denuded of the power to proceed against the properties of a consistent defaulter also. 18. The language of Section 14 leaves no room for doubt that the proceedings contemplated under Clauses (a) to (d) of Subsection (1) of Section 14 would include any proceeding for recovery against the corporate debtor. Even proceedings initiated by a secured creditor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002, have been included under Sub Cause (c) of Sub Section (1) of Section 14. Therefore, I am unable to accept the submission of the learned Senior Counsel Mr.APS.Ahluwalia, that the present proceedings cannot be termed as proceedings within the meaning of Sub Clauses a, b, c and d of Sub Section (1) of Section 14. Mr.APS.Ahluwalia, learned Senior Counsel wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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