Home Insolvency & Bankruptcy IBC Overrides The Provisions Of Andhra Pradesh Revenue Recovery Act, 1864

IBC Overrides The Provisions Of Andhra Pradesh Revenue Recovery Act, 1864

0
IBC Overrides The Provisions Of Andhra Pradesh Revenue Recovery Act, 1864

The Nationwide Firm Regulation Tribunal (‘NCLT’) Hyderabad, comprising Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri. Charan Singh (Technical Member) held that the Insolvency and Chapter Code, 2016 (‘IBC’) overrides the provisions of the Andhra Pradesh Income Restoration Act, 1864.

Background Details:

NCS Sugars Ltd. (Company Debtor) concerned within the sugarcane enterprise defaulted in cost of the worth for the sugarcane provided by farmers. Proceedings beneath the Andhra Pradesh Income Restoration Act, 1864 to promote the immovable property have been initiated by Tahsildar, Bobbili (Respondent 2), and Tahsildar, Seethanagaram (Respondent 3) to pay the quantities attributable to farmers. Two Sale notices have been additionally issued on 04.01.2022. A public public sale was performed with Dhatri Actual Property & Builders (Respondent 4) being declared as the best bidder and an Earnest Cash Deposit (‘EMD’) of Rs.3.75 Lakhs was deposited by it.

The Company Debtor was admitted into the Company Insolvency Decision Course of (‘CIRP’) initiated by Punjab Nationwide as per Order dated 24.06.2022. As of 19.11.2022, Respondent 4 deposited the full consideration of Rs. 20.05 crores minus EMD with the steadiness quantity of Rs. 17.04 crores. A Sale Certificates was issued on 03.12.2022 in favor of Respondent 4, Punjab Nationwide Financial institution (Respondent 5), and Dharti Promoters (Respondent 6).

NCLT by way of its Order dated 05.12.2022 restrained Respondent 1 to three from additional disbursement of quantity as deposited by Respondent 4 as per the Two Sale notices.

The moment software has been filed by Ok. Sivalingam (‘Applicant’) Decision Skilled of the Company Debtor to annul the sale of the immovable property, declare the Sale certificates as invalid, declare the sale deed of the Immovable Property as invalid, declare the proclamation of sale dated 04.12.2022 as invalid and order and grant a everlasting injunction restraining Respondent 4 and 6 from giving impact to the Sale certificates.

NCLT Verdict:

The NCLT Hyderabad allowed the software and held that IBC overrides the provisions of the Andhra Pradesh Income Restoration Act, 1864.

The Tribunal positioned reliance on the Supreme Courtroom determination in Innoventive Industries Ltd. vs. ICICI Financial institution & Anr.. It famous and noticed Paras 58, 59 and 60 of the choice which is learn as follows:

“58. There might be little question, due to this fact, that the Code is a Parliamentary legislation that’s an exhaustive code on the subject material of insolvency in relation to company entities, and is made beneath Entry 9, Listing III within the Seventh Schedule which reads as beneath:

“9. Chapter and insolvency”

“59. On studying its provisions, the second initiation of the company insolvency decision course of takes place, a moratorium is introduced by the adjudicating authority vide Sections 13 and 14 of the Code, by which establishment of fits and pending proceedings and many others. can’t be proceeded with. This continues till the approval of a decision plan beneath Part 31 of the stated Code. Within the interim, an interim decision skilled is appointed beneath Part 16 to handle the affairs of company debtors beneath Part 17.”

“60. It’s clear, due to this fact, that the sooner State legislation is repugnant to the later Parliamentary enactment as beneath the stated State legislation, the State Authorities could take over the administration of the aid enterprise, after which a brief moratorium in a lot the identical method as that contained in Sections 13 and 14 of the Code takes place beneath Part 4 of the Maharashtra Act. There isn’t a doubt that by giving impact to the State legislation, the aforesaid plan or scheme which can be adopted beneath the Parliamentary statute will immediately be hindered and/or obstructed to that extent in that the administration of the aid enterprise, which, if taken over by the State Authorities, would immediately impede or are available the way in which of the taking up of the administration of the company physique by the interim decision skilled. Additionally, the moratorium imposed beneath Part 4 of the Maharashtra Act would immediately conflict with the moratorium to be issued beneath Sections 13 and 14 of the Code. It will probably be seen that whereas the moratorium imposed beneath the Maharashtra Act is discretionary and should relate to a number of of the issues contained in Part 4(1), the moratorium imposed beneath the Code pertains to all issues listed in Part 14 and follows as a matter after all. Within the current case it is evident, due to this fact, that except the Maharashtra Act is out of the way in which, the Parliamentary enactment will probably be hindered and obstructed in such a fashion that it won’t be attainable to go forward with the insolvency decision course of outlined within the Code. Additional, the non-obstante clause contained in Part 4 of the Maharashtra Act can’t probably be held to use to the Central enactment, inasmuch as a matter of constitutional legislation, the later Central enactment being repugnant to the sooner State enactment by advantage of Article 254 (1), would function to render the Maharashtra Act void vis-àvis motion taken beneath the later Central enactment.

Additionally, Part 238 of the IBC offers that the provisions of IBC shall have impact, however something inconsistent therewith contained in every other legislation in the meanwhile in pressure or any instrument having impact by advantage of any such legislation.

It’s clear that the later non-obstante clause of the Parliamentary enactment can even prevail over the restricted non-obstante clause contained in Part 4 of the Maharashtra Act. For these causes, we’re of the view that the Maharashtra Act can’t stand in the way in which of the company insolvency decision course of beneath the Code.”

The Tribunal additionally referred to Part 238 of IBC which reads as follows:

Part 238 Provisions of this Code to override different legal guidelines:

The provisions of this Code shall have impact, however something inconsistent therewith contained in every other legislation for the time being in pressure or any instrument having impact by advantage of any such legislation.

Primarily based on the above determination, the NCLT noticed that as per the Supreme Courtroom’s determination, it may be held that the provisions of the IBC override the provisions of the State-enacted legislation, such because the Andhra Pradesh Income Restoration Act, 1864.

Case Title: Ok. Sivalingam RP of NCS Sugars Ltd. vs. District Collector and Ors.

Case No.: IA (IBC) 410 & 1879/2023, IA (IBC) 1433/2022 in CP(IB) No.299/7/HDB/2018

Counsel for the Applicant: Shri Y. Suryanarayana, Advocate with Shri Yohaan Lunathwala, Advocate & J.Sagar Associates.

Counsel for respondents 1, 2, and three: Shri. O. Manohar Reddy, Senior Advocate, for Shri O.P. Subash, and Shri Ok. Dilip Naik, Advocates.

Counsel for respondents 4 and 6: Shri D.V. Seetharam Murthy, Senior Advocate, for Shri Bendi Ravi Teja, Advocate.

Counsel for respondent 5: Shri M. Sunil Kumar, Advocate.

Click on Right here to Learn/Obtain Order

LEAVE A REPLY

Please enter your comment!
Please enter your name here