TMI Blog2020 (12) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC has not yet approved any Resolution Plan as on the date of issue of PAO. Application dismissed. - IA No. 310/2020 in CP (IB) No. 143/7/HDB/2019 - - - Dated:- 18-8-2020 - Ratakonda Murali, Member (J) And Veera Brahma Rao Arekapudi, Member (T) For the Appellant : Party-in-Person, Anjali, D.V.A.S. Ravi Prasad For the Respondent : J. Ramachandra Rao, Additional Advocate ORDER Ratakonda Murali, Member (J) 1. The Application is filed U/s 60(5), Section 32(A) and 238 of the IBC Code, 2016, and R/w Rule 11 of NCLT Rules, 2016 praying the Tribunal for a direction to declare the attachment of the only property of the corporate debtor as Null and Void and for other reliefs. 2. Averments of the application in brief: a. The Tribunal vide order dated 04.06.2019 admitted the Company Application filed U/s 7 of IBC 2016 by M/S. Phoenix Tech Tower Private Limited for initiating CIRP against M/s.. AP Gems and Jewellary Park Private Limited and appointed Dr. Kondapalli Venkata Srinivas as IRP, who was later confirmed as Resolution Professional. b. The applicant avers that the Respondent No. 1 vide order dated 10.04.2019 attached only one property of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 481 dated 12.04.2005 of the Government of Andhra Pradesh. h. It is averred that the construction of building commenced on 04.05.2003 and by 2013, the project was under immense financial strain as the under construction portion could not be sold as envisaged. It is averred that in the year 2013, M/s. Gitanjali group, controlled by Mr. Mehul Choksi, proposed to acquire M/s. IOI corporation's equity in the Corporate Debtor with the consent of APSTC and government of Andhra Pradesh and further offered to pay the entirety of amounts due to APSTC to amicably enter the Corporate Debtor. This proposal was favourably recommended by APSTC in its Board Meeting held on 31.03.2013. However, the government, which was the final approving authority, in its review meeting dated 02.09.2015, did not approve the proposal and directed APSTC to take remedial measures against M/s. IOI corporation and invite fresh tenders to take the project forward. i. It is averred that M/s.. Gitanjali Group continued with its acquisition of M/s.. IOI Corporation's equity in the corporate debtor, possibly with the risk of further litigation by APSTC. That being so, in October, 2018 a massive fraud wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 floors, having unfinished constructed Area of 2,10,000 sq ft on 2.05 Acre of Land situated at T.S. No. 6/1 part, Ward No. 11 of Shaikpet Village, Banjara Hills, Hyderabad Owned by M/s.. A.P. Gems and Jewelry. A copy of the order is enclosed as Annexure-V. o. It is further stated that the applicant vide letter dated 05.02.2020 intimated Respondent No. 1 about the commencement of CIRP and the fact that he made public announcement in Form G calling EOI'S from prospective resolution applicant and sought their objections, if any to the same and a response is still awaited. A copy of the intimation is enclosed as Annexure-VIII. p. It is further submitted that the order of attachment by the Enforcement Directorate was placed before the COC for discussion. The COC had directed to move an application before the Tribunal in accordance with the provisions of the Code for the Maximization of value of the corporate debtor under the provisions of the I B Code, 2016. It is averred that 4 EOI'S received and due to the ED action over the property of the corporate debtor it will certainly discourage the prospective resolution applicants from submitting a Resolution Plan for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject IOI Mauritius to M/s.. Jewel Trade DMCC, (which is one of the gitanjali Group Companies based in UAE) and thus M/s. Jewel Trade DMCC automatically became owner of M/s.. Project IOI Mauritius and of its subsidiary M/s.. AP Gems Jewellery Park Pvt. Ltd. c. In para 2.3 it is averred that Mr. Mehul Choksi is the beneficial owner of M/s.. AP Gems Jewellery Park Pvt. Ltd to the extent of 89%. Further the funds diverted to M/s.. AP Gems Jewellery Park Pvt. Ltd from various Gitanjali Group of Companies were proceeds of Crime (POC). However, it is submitted in a detailed investigation the ED came to a conclusion that Mr. Muhul Choksi owns 89% stake in M/s.. AP Gems Jewellery Park Pvt. Ltd. Since the POC diverted to these Gitanjali Group Companies were not available M/s.. AP Gems Jewellery Park Pvt. Ltd having 89 % stake is required to be attached in terms of Section 5(1) ibid. d. It is averred that ED has informed its proceeding to both the concerned parties and have been given an opportunity to appear before the Adjudicating Authority. It is stated that corporate debtor was fully aware of the proceedings initiated by the ED however, corporate debtor chose not to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was incorporated by the then Government of erst while State of Andhra Pradesh as Andhra Pradesh State Trading Corporation Limited on 31.01.1972. up on formation of Telangana state the state of Telangana has incorporated Telangana State Trade Promotion Corporation on 27.09.2014. The subject property of the corporate debtor was apportioned to the second Respondent viz., Telangana State Trade Promotion Corporation on location basis in terms of the provisions of AP Reorganization Act, 2014. b. It is submitted that consequent to the issue of the GO Ms. No. 481 dated 12.04.2005 and payment of the amount in terms of the said GO by the corporate debtor, a loan agreement dated 09.05.2006 was entered between the Respondent No. 2 and the corporate debtor for the balance amount to be paid at 11% interest on annual rests basis from the date of bhoomi Pooja i.e. w.e.f. 04.05.2003. c. It is averred that the government has alienated the property to M/s.. AP Gems and Jewellary Park Pvt. Ltd for a specific purpose of establishment of Gems and Jewellary park subject to certain conditions which have not been fulfilled by M/s.. AP Gems and Jewellary Park Pvt. Ltd. Since corporate debtor h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise the attachment on the sole asset of the Corporate Debtor. 7. The Learned Counsel for Resolution Professional further contended that provision of IBC prevails over the provisions of PMLA by virtue of Section 238 of IBC. The Learned Counsel contended, the attachment order is causing hindrance for CIRP resulting in non-receipt of resolution plans form prospective resolution applicants. The Learned Counsel contended, if at all any amount was involved in the alleged transactions, then the amount becomes operational debt payable to the Enforcement Directorate and it can file its claim before the Resolution Professional. 8. The Learned Counsel contended, the Corporate Debtor was incorporated by Government of Andhra Pradesh. An extant of acres 2.05 guntas was allotted to the Corporate Debtor. Tenders were called for starting the project. M/s. IOI Corporation Berhand, Malaysia became highest bidder and became shareholder of around 89% shares. The balance of the amount agreed was payable to Andhra Pradesh Trading Corporation (APSTC). Now it is under the control of 2nd Respondent after passing of Andhra Pradesh Reorganization Act. The Learned Counsel for the Resolution Professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.2019 and IRP was appointed on 04.06.2019 after order of restoration of the Corporate Debtor Company and CIRP started only after confirmation of attachment. 11. The Learned Counsel would contend, no appeal is preferred by the Resolution Professional against the order of Adjudicating Authority to the Appellate Authority under Section 25 of PMLA. If the Resolution Professional is not satisfied with the adjudication of Adjudicating Authority under PMLA, then he ought to have filed appeal before Appellate Tribunal under PMLA but no action is taken by the Resolution Professional. The Learned Counsel for Corporate Debtor relied on the decision of Hon'ble Apex Court in the case of Embassy Developers Private Limited vs. State of Karnataka regarding jurisdiction of NCLT. The relevant paragraphs as quoted hereunder:- From a combined reading of Subsection (4) and Sub section (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of MMDR Act, 1957 and the Rules issued thereunder. The only provision which can probably throw light on this q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. It is outside the jurisdiction of NCLT. The Applicant has to agitate on the merits of the attachment before concerned authorities under PMLA. 17. The important point for consideration is that PAO was passed on 17.10.2018 which was long prior to commencement of CIRP. The second point for consideration that PAO was also confirmed by the Adjudicating Authority under PMLA. The question whether this Adjudicating Authority can set aside the order of attachment passed under the provisions of PMLA on the ground that attachment is in contravention of moratorium order passed under Section 14 of IBC. The attachment was effected prior to the commencement of CIRP. The Hon'ble Appellate Authority NCLAT in the matter of Rotomac Global v. Deputy Director in Company Appeal (AT) (Insolvency) No. 140 of 2019 has held that Section 14 of IBC is not applicable. Relevant paragraph is as follows:- Para 13. In so far as penalty is concerned, offence of money laundering is punishable with rigorous imprisonment which is not less than three years and has nothing to do with the 'Corporate Debtor'. It will be applicable to the individual which may include the Ex-Directors and Shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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