Case: Directorate of Economic Offences v. Binay Kumar Singhania & Ors
Facts of the Case
M/s Bengal Polypete had filed an Application under Section 9 of the IBC against M/s Pincon Spirits Ltd. NCLT admitted his application and appointed an Interim Resolution Professional (IRP). They appointed Binay Kumar Singhania as Resolution Professional (RP) and later on they appointed him as the Liquidator.
Pincon Group of Companies is involved in many fraudulent transactions. The police filed an FIR under Sections 406 and 420 of IPC and Section 3 of the WBPIDFE Act (West Bengal Protection of Interest of Depositories in Financial Establishment Act, 2013). DEO (Directorate of Economic Offences), WB sealed the registered office of the Corporate Debtor and attached the Bank Accounts, movable and immovable properties of the Corporate Debtor. He has to look after all the properties, moveable and immovable till the realization of the liability with the help of the local police stations.
The Liquidator filed an Application under Sections 33 (5), 60 (5) (c), and 238 of the IBC requesting to pass an order directing the DEO to de-attach all the properties. He requested to hand over the possession of properties for the liquidation process to safeguard the interest of the Creditors. The DEO challenged the same as the attached properties claimed by the liquidator are not assets of the Corporate Debtor. The Ld. Adjudicating Authority allowed the application filed by the Liquidator and directed the DEO to de-attach all the properties. The DEO filed an appeal against the order.
Arguments presented before the Court
Appellant
The Counsel for the Appellant submitted that Ld. Adjudicating Authority has allowed the application on the ground of dismissal of the earlier application filed by the DEO. The authority assumed that the earlier findings attained finality.
He further submitted that the attached property is in the custody of the Court and the DEO, WB cannot de-attach the property and hand over possession to the liquidator. Moreover, there was no direction to the DEO, WB by Hon’ble High Court of Calcutta to de-attach the properties. He further added that IBC and WBPIDFE Act are legislated with two different aims, on two different fields, thus, they should be read harmoniously.
Respondent
The Counsel for the Respondent submitted that the Court had directed the Appellant to co-operate with Respondent which he failed to do and thus frustrated the CIRP of Corporate Debtor. The provisions of the WBPIDFE Act are inconsistent with Sections 14 and 33(5) of the IBC. They will have an overriding effect on the provisions of the WBPIDFE Act.
Observation of the Court
The Court observed that the Ld. Adjudicating Authority had disposed of the Application of liquidator for de-attachment of the property showing inability to pass the same. He applied with the same prayer, and Ld. Adjudicating Authority allowed the Application. They directed to de-attach all the properties attached by the DEO, WB, and to restore possession to the liquidator.
The Court further observed that the property of Corporate Debtor, who is not a financial establishment under Section 2(e) WBPIDFE Act, can be attached. The Hon’ble High Court did not intend to keep the assets of the Corporate Debtor outside the purview of sale. The Court further added that Section 14 of the IBC has no overriding effect on Section 3 of the WBPIDFE Act. The Court finally concluded that the attached property is not in possession and control of the DEO, WB, thus he cannot de-attach the property.
Court’s Decision
The Court allowed the appeal and set aside the order. The Court allowed the liquidator to take legal action available.
Click here to view the judgment.
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