TMI Blog2020 (6) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ner to go on an appeal before it especially when arguments have been heard at length. Considering the facts of the case and invoking Section 14 of the Limitation Act, 1963, we grant a further period of six weeks to respondents 1 and 3 to take appropriate action in accordance with law under the PMLA by exhausting the remedy provided therein - Petition allowed. - Writ Petition No. 29970 of 2019, WMP Nos. 29872 And 34971 of 2019 - - - Dated:- 2-6-2020 - M.M. Sundresh And Krishnan Ramasamy, JJ. For the Petitioner : G. Rajagopalan, Addl. Solicitor General and Rajnish Pathiyil For the Respondent : AR.L. Sundaresan, S.C., Gaurav Chatterjee, B. Kumar, S.C. and S. Ramachandran ORDER M.M. SUNDRESH, J. Challenge in this writ petition is to the order passed by the National Company Law Tribunal, Hyderabad Bench-I, Hyderabad in I.A.Nos.413 and 287 of 2019 in CP(IB) No.219/HDB/2017 filed under Section 60(5) of Insolvency and Bankruptcy Code, 2016. The applications filed seeking to set aside and grant stay on the impugned Provisional Attachment Order No.04/2019 with a consequential direction to Enforcement Directorate viz., the petitioner to raise the same are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement was entered into, substantial amount was already paid even prior in favour of M/s Veceroy Hotels Ltd. Even though this was terminated by way of a Deed of confirmation of Termination dated 16.09.2013, no action was taken to get back the amount. Part of the amount was paid through M/s Bhagayanagar Investments Trading Pvt. Ltd. This company is also stated to be one of the shell companies. Therefore, neither there existed a sale of any hotel nor a return of money in pursuant to the Deed of confirmation of Termination. According to the petitioner, multiple circular transactions were involved with the connivance of all the accused. 2.6. Thus, the petitioner is of the view that by fraud, M/s Best and Crompton Engineering Project Ltd., along with the accused persons through the various intermedia companies of Sujana Group by circular transactions diverted the fund, of which, substantial part of money reached the second respondent viz., M/s Veceroy Hotels Ltd. We may note that the so called object was to purchase a hotel by name J M Mariot at Chennai. 2.7. In a nutshell, money is stated to be diverted by the borrower through Sujana Group Companies to various companies incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of action before the Tribunal. All the banks are situated at Chennai, proceedings have been initiated by the petitioner at Chennai and so also the order of attachment. The attachment made is also confirmed in view of the interim order of stay granted by this Court. Under the Prevention of Money-Laundering Act, 2002, (hereinafter referred to as the PML Act ) not only the tainted property, but also any other asset can be attached. The Tribunal ought not to have gone into the merits of the case. The judgment relied upon by the Tribunal in PUNJAB NATIONAL BANK v. DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT (2019 SCC Online ATPMLA 5) has been stayed by the jurisdictional High Court in F.A No.13840 of 2018. Section 71 of the PML Act has got overriding effect. The amendment made by way of insertion through Section 32-A of IBC will not help the case of the respondents. It is prospective in nature apart from having no application. The fact that the National Company Law Tribunal has started functioning at Chennai, is not a ground when a challenge is made on the ground of lack of jurisdiction. Support has been drawn for the submission made through the reliance on the following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though a proceeding towards attachment is stated to be having the trappings of a civil adjudication, one has to see the object of enactment as a whole. To put it differently, both civil and criminal proceedings under the Act complement each other. The idea is to achieve the object. 7. The Code aims on giving a legal frame work for effective and timely resolution of insolvency and bankruptcy through the adjudicative forum. The need was felt to have a common forum in this regard. 8. Section 14 of the IBC speaks of moratorium. A declaration has to be made through an order by the Adjudicatory Authority in this regard. If one carefully goes through the said section, there is no way professional attachment order passed under the provisions of the PMLA would automatically invite a moratorium. This provision only speaks about the consequence for institution of the suit, for continuance and other proceedings against the Corporate Debtor. Therefore, Section 14 of the IBC is consequent upon an order passed by the Adjudicative Authority declaring moratorium. This would not apply to a special enactment which travels on its own path. After all, one cannot presume a conflict between two ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, determined either by its geographical location or by the place where the cause of action, in whole or in part, arose. While the nature of the power exercised by the High Court is delineated in Clause (1) of Article 226, the jurisdiction of the High Court for the exercise of such power, is spelt out in both Clauses (1) and (2) of Article 226. 24. Therefore 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, Anisminic cannot be relied upon. The distinction between the 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. 28. Therefore as rightly contended by the learned Attorney General, the decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain and hence the correctness of the said decision can be called into question only in a superior court which is vested with the power of judicial review over administrative action. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT. Clause (c) of Subsection (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. 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 appearing in Clause (c) of Subsection (5). Let us take for instance 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. If Section 60(5)(c) of IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260A of the Income Tax Act, 1961. Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. 13. The learned single Judge of the Delhi High Court in the Deputy Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner to proceed against the asset which is also the one of the subject matters of the proceeding before the Tribunal. As discussed, proceedings have been initiated before the jurisdictional Court by the petitioner pursuant to the Final Report filed by the Central Bureau of Investigation within the territorial jurisdiction of this Court. A mere fact that NCLT has been established now at Chennai would not be a ground to drive the petitioner to go on an appeal before it especially when arguments have been heard at length. 16. As stated, we are not dealing with the merits of the case and therefore, even on that count, there is no need to direct the petitioner to file an appeal when the Tribunal lacks inherent jurisdiction. In such view of the matter, we are inclined to set aside the order under challenge. However, considering the facts of the case and invoking Section 14 of the Limitation Act, 1963, we grant a further period of six weeks to respondents 1 and 3 to take appropriate action in accordance with law under the PMLA by exhausting the remedy provided therein. We also take note of the fact that the confirmation of the attachment order has been passed on 11.09.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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