TMI Blog2021 (2) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... ort submitted continues to be liable to be prosecuted and punished for the offence committed by the corporate debtor. The corporate debtor and its property in the context of the scheme of the code constitute a distinct subject matter justifying the special treatment accorded to them. Creation of a criminal offence as also abolishing criminal liability must ordinarily be left to the judgement of the legislature. Erecting a bar against action against the property of the corporate debtor when viewed in the larger context of the objectives sought to be achieved at the forefront of which is maximisation of the value of the assets which again is to be achieved at the earliest point of time cannot become the subject of judicial veto on the ground of violation of Article 14. Let copy of the resolution plan be placed on record by the Petitioner Bank. Counter affidavit be filed within four weeks. Rejoinder thereto, if any, be filed within four weeks thereafter. The ED is permitted to take the above objections, with respect to the jurisdiction of this court, in its counter affidavit. The same shall be heard as a preliminary objection - List for hearing on 18th May, 2021. - W.P.(C) 1547/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady mortgaged to the Bank. It is the case of the Petitioner that this has had a negative impact on the CIRP and realization of the debt of the Petitioner from the Respondent No.4. 7. Mr. Alok Kumar, ld. counsel appearing for the Petitioner submits that in another similar matter involving another debtor, titled JSW Steel Ltd. v. Mahender Kumar Khandelwal and Ors. (AT) (Insolvency) No. 957/2019, the present issue of conflict, was raised before the Union of India, Ministry of Corporate Affairs through its Department of Financial Services, and the stand of Ministry of Corporate Affairs, in their Counter Affidavit, was clear that such intervention by the ED or any such authority would have a negative effect on the entire CIRP process. The statement of the Ministry of Corporate Affairs, as recorded in the judgment of the National Company Law Appellate Tribunal, Delhi, in JSW Steel (Supra) is set out below: 3) That pursuant to the captioned notice, the Ministry had called for meeting of the officials of Department of Financial Services and the Banks who were members of the Committee of Creditors on October 3rd, 2019 to ascertain their views and formalize the response of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IBC, there cannot be any attachment or confiscation of the assets of the Corporate Debtor by any enforcement agencies after approval of the Resolution Plan. The CIR Process is an open and transparent statutory process wherein under Resolution Plans are invited from bona fide Prospective applicants who are not hit or disqualified under Section 29A of the IBC. 7) Resolution Plan submitted by the interested Resolution Applicants are duly examined and validated by the Resolution Professional and the Committee of Creditors ( CoC ). Once the Resolution Plan is voted upon and approved by the CoC, it is submitted to the Ld. Adjudicating Authority for its approval. The Ld. Adjudicating Authority after hearing the objections, if any, and being satisfied that the Resolution Plan is in compliance with the provisions of the law, approves the Plan. The CIR Process is desired to ensure that undesirable persons do not take control of the Corporate Debtor by virtue of Section 29A of the IBC. The purpose and scheme of the CIR process is to hand over the company of the corporate debtor to a bona fide new resolution applicant. Any threat of attachment of the assets of the corporate debtor or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are already stated to have been mortgaged by the Bank, are not a part of the resolution plan. 9. Considering the fact that the resolution plan has already been approved in this matter, and that the ED s order of provisional attachment of the properties of Respondent No. 4 has been passed after the approval of the resolution plan by the NCLT, the said provisional attachment would prima facie be contrary to Section 32A of the IBC. The recent judgment of the Supreme Court in Manish Kumar v. Union of India (WP(C) No. 26/2020, decided on 19th January 2021) has extensively dealt with this issue in context of Section 32A of the IBC and held: 256. The contentions of the petitioners appear to be that this provision is constitutionally anathema as it confers an undeserved immunity for the property which would be acquired with the proceeds of a crime. The provisions of the Prevention of Money-Laundering Act, 2002 (for short, the PMLA) are pressed before us. It is contended that the prohibition against proceeding against the property, affects the interest of stakeholders like the petitioners who may be allottees or other creditors. In short, it appears to be their contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrariness in the provision. 258. It must be remembered that the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or conspiracy for the commission of the offence and the report or complaint filed thereto. These ingredients are also insisted upon for claiming exemption of the bar from actions against the property. Significantly every person who was associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of the offence in terms of the report submitted continues to be liable to be prosecuted and punished for the offence committed by the corporate debtor. The corporate debtor and its property in the context of the scheme of the code constitute a distinct subject matter justifying the special treatment accorded to them. Creation of a criminal offence as a ..... 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