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attachment (POA) under the provisions of the Prevention of Money
Laundering Act, 2002 (“PMLA”) in respect of the assets of Shree Ganesh on
16.04.2019, after an order of liquidation was passed in respect of Shree
Ganesh, which was not confirmed and set by the Adjudicating Authority
under the PMLA on 09.10.2019. The Respondent No.2 appealed against such
decision. An order of status quo was passed in the said appeal proceedings
on 20.09.2023. The writ petitioner was not concerned with the PMLA orders.
They should dissolve upon sale in view of Section 32A of the IBC. On
30.11.2022, the writ petitioner was in receipt of an order of seizure no.
01/2022 (“Provisional Seizure Order”), which was issued by the respondent
no. 2 under Section 37A of the Foreign Exchange Management Act, 1999
(“FEMA”) in respect of the assets of Shree Ganesh, the company. The
issuance of the Provisional Seizure Order was in complete disregard of the
moratorium prescribed by Section 33(5) of the IBC. On 31.01.2023, the writ
petitioner was in receipt of a petition u/s 37A(2) of FEMA seeking
confirmation of the Provisional Seizure Order from the respondent no. 3
directing him to personally appear in the proceedings (“Notice”). The issuance
of the Notice was in breach of the moratorium imposed by Section 33(5) of
the IBC. Accordingly, the writ petitioner filed the instant writ petition
challenging the Provisional Seizure Order and the Notice. During the
pendency of the writ petition, the respondent no. 3 on 23.05.2023 confirmed
the Provisional Seizure Order. The order dated 23.05.2023 was subject to the
result of the writ petition and was a lis pendens event. The order dated
23.05.2023 was a dependant order. Upon the writ petition succeeding, the
same would naturally lose its force. The writ petitioner was compelled to file
an appeal from the confirmation order dated 23.05.2023 before the Appellate
Tribunal at New Delhi in view of the strict limitation period, which it did
mentioning about the instant writ petition challenging the Provisional
Seizure Order. Anyhow, this was of no issue since when provisional seizure
order was under challenge, final order passed was subject to the result of the
writ petition. In Ramsarup Industries Limited and Others v. Union of India
and Another reported at 2022 SCC Online Cal 2571, when during the
pendency of a writ petition challenging provisional attachment, the Authority
issued confirmatory order, the writ petition was not found to be infructuous
by this Court. The provisional order and final order were both stayed when
the petitioner was found to be entitled to interim reliefs. It was submitted
that the provisions of the IBC would override the provisions of the FEMA.
Therefore, the moratorium under the IBC would override the provisions of
the FEMA. Firstly, the IBC was a later Act, which was enacted by the
legislature when the FEMA was already in force. Secondly, Section 238 of the
IBC clearly stated that “The provisions of this Code shall have effect,
notwithstanding anything inconsistent therewith contained in any other law
for the time being in force or any instrument having effect by virtue of such
law.” When the legislature enacted the IBC, it was conscious of FEMA. On
the other hand, the FEMA did not have any non-obstante clause. In this
connection, reliance was placed on the following judgements. i)
Paschimanchal Viduyt Vitran Nigam Ltd. V. Raman Ispat Private Ltd. and
Ors. reported at (2023) 10 SCC 60. The Hon‟ble Supreme Court of India held
that Section 238 of the IBC would override the provisions of the Electricity
Act, 2003 although the latter contained two specific provisions (Section 173
and Section 174) that had overriding effect over all other laws, ii) Sundaresh
Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and
Customs reported at (2023) 1 SCC 472. The Hon‟ble Supreme Court of India
held that the provisions of the IBC would prevail over the Customs Act, 1962
due to Section 238 of IBC, iii) Duncans Industries Limited v. AJ Agrochem
reported at (2019) 9 SCC 725. The Hon‟ble Supreme Court of India held that
Section 16G of Tea Act, 1953 was overridden by Section 238 of IBC, iv)
Innovative Industries Limited v. ICICI Bank reported at (2018) 1 SCC 407.
The Hon‟ble Supreme Court of India held that non-obstante clause of IBC
would prevail over the Maharashtra Relief Undertaking (Special Provisions)
Act, 1958, v) Principal CIT v. Monet Ispat and Energy Limited reported at
(2018) 18 SCC 786. The Hon‟ble Supreme Court of India held that non-
obstante clause of IBC would prevail over the Income Tax Act, 1961, vi)
Assistant Director, Enforcement Directorate v. Raj Kumar Ralhan, Resolution
Professional reported at 2019 SCC Online NCLT 30928. The National
Company Tribunal, inter alia, held that (i) moratorium declared under
Section 14 of IBC was applicable to proceedings under the FEMA, ii) the
Enforcement Directorate could not proceed against the corporate debtor as
long as moratorium under IBC was in force, and iii) if under the provisions of
the FEMA, if any of the Directors/Officers were individually liable for any
actions done prior to the commencement of CIRP, the applicant might
proceed against those Directors/Officers of the corporate debtor.
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