TMI Blog2021 (7) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... rchasers. The petitioners could be held liable to pay statutory dues in respect of the subject vehicles, which have been claimed by the respondent Regional Transport Offices after their purchase by the petitioners in April 2019, only from the date when they had purchased the subject vehicles after having exercised their right to raise objections to such claim. It would be appropriate to direct the petitioners to make payment of the statutory dues from the date of purchase of the subject vehicles by the petitioners, which would be made subject to other proceedings in relation to the said vehicles since the petitioners, being the auction purchasers, could not be asked to make payment of the statutory dues claimed against the Corporate Debtor in liquidation in respect of vehicles prior to their date of purchase by the petitioners. The respondents Regional Transport Offices, Gujarat and Maharashtra are directed to complete the transfer proceedings of the subject vehicles purchased by the petitioners from the Court appointed Official Liquidator of M/s. Siddhi Vinayak Logistic Ltd., which shall be subject to the outcome of the proceedings that may be pending under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, the IB Code ) was ordered to be released by the Adjudicating Authority under the PMLA by order dated 03.12.2019 passed in O.C. No. 1160 of 2019 before which the complaint was filed by the Deputy Director, Directorate of Enforcement, where the Official Liquidator had filed his objections / reply. Learned advocate Ms. Shah submitted that since the Provisional Attachment Order has been removed, she does not press for the relief sought for in paragraph-10(B) of the petition. 2.2 The petitioners have also prayed to issue appropriate directions to the respondent - Regional Transport Offices to complete the proceedings of transfer of the vehicles purchased by the petitioners from the Court appointed Official Liquidator of the Corporate Debtor. 3. The facts, in a nutshell, are as under :- The Bank Security Frauds Cell (BS FC) of C.B.I., Mumbai registered five different FIRs against M/s. Siddhi Vinayak Logistics Ltd. (Corporate Debtor) and its Directors between the years 2015 to 2018 invoking various sections under the Indian Penal Code, 1860 and Sections 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Each FIR is based on the complaint filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles in the name of the buyers auction purchasers. 4. On 18.06.2019 the respondent No.2 issued the Provisional Attachment Order : PAO / MBZO-11 / 02 / 2019 under sub-Section (1) of Section 5 of the PMLA, by which the movable properties, i.e. 6170 numbers of road vehicles of the Corporate Debtor, were ordered to be provisionally attached for a period of 180 days. The petitioners-auction purchasers made representation dated 14.08.2019 to the respondent-Department seeking release of the movable properties from attachment. When no heed was given to the representation made by the petitioners, they preferred the present petition before this Court. 5. It appears that during the pendency of this petition, the Adjudicating Authority (Under the PMLA) passed the order dated 03.12.2019, by which the Provisional Attachment Order dated 18.06.2019 was partially confirmed to the effect that out of 6170 Trucks, 4826 Trucks were traced out and their possession was secured and that out of the said 4826 Trucks, 2336 Trucks were sold in auction proceedings and the sale proceeds have been deposited with Punjab National Bank; insofar as the remaining 2490 Trucks are concerned, the same are ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, wherein it has been held that where a motor vehicle is not using the road, no tax could be levied thereon. 7. Mr. Devang Vyas, learned Additional Solicitor General of India appearing on behalf of respondent Nos.1 2, submitted that the proceedings under the IB Code and under the PMLA are independent proceedings. He submitted that the Company In Liquidation and others had cheated the respondent-Banks to the tune of ₹ 1609.78 Crores, which is public money. The preliminary investigations under the PMLA had revealed that the Company In Liquidation had either brought back the majority of loan amounts in their bank accounts or the said loan amount was utilized for the repayment of their liability on account of purchase of vehicles / loan amount, etc. The investigations also revealed that the majority of the amount so received by the Company In Liquidation in their account was utilized mainly for repayment of loan amount in respect of the vehicles mortgaged with the bank authorities, for the payment of the outstanding amount to the suppliers of vehicles. The remaining amount was utilized by the said Company for other purposes such as loans and advances and other expenses, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the learned counsels for the respondents. 11. Before we advert to the merits of the case, it would be useful to refer to certain provisions of the IB Code in order to get a better insight into the issue on hand. Section 5(21) of the IB Code defines the term operational debt to mean a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. Section 53 of the IB Code relates to Distribution of assets . It lays down the mechanism for the distribution of proceeds from the sale of the liquidation assets. Priority is given to secured financial creditors over unsecured financial creditors. In other words, Section 53 provides with a waterfall mechanism, which requires that higher-tiered creditors receive interest and principal payments, while the lower-tiered creditors receive principal payments after the higher-tiered creditors are paid back in full. The dues of the Central and State Government, including that of the respondent-Regional Transport Offices, could be classified as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles, which have been claimed by the respondent Regional Transport Offices after their purchase by the petitioners in April 2019, only from the date when they had purchased the subject vehicles after having exercised their right to raise objections to such claim. 14. Considering the overall facts of the case and the provisions of the IB Code, it would be appropriate to direct the petitioners to make payment of the statutory dues from the date of purchase of the subject vehicles by the petitioners, which would be made subject to other proceedings in relation to the said vehicles since the petitioners, being the auction purchasers, could not be asked to make payment of the statutory dues claimed against the Corporate Debtor in liquidation in respect of vehicles prior to their date of purchase by the petitioners. 15. For the foregoing reasons, the petition is partly allowed subject to the following conditions:- (i) The respondents Regional Transport Offices, Gujarat and Maharashtra are directed to complete the transfer proceedings of the subject vehicles purchased by the petitioners from the Court appointed Official Liquidator of M/s. Siddhi Vinayak Logistic Ltd., which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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