Legal Provisions Involved: Sections 24, 26, 27, 45, 46 and 67 of the Prohibition of Benami Property Transactions Act, 1988; Sections 14, 32A and 36 of the Insolvency and Bankruptcy Code, 2016
Judgement by: Supreme Court of India
Judge/Bench: Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar
Facts
The promoters of M/s Padmaadevi Sugars Ltd. transferred 100% shareholding to V.K. Sasikala. Authorities under the Benami Act issued provisional attachment orders against the corporate debtor’s properties. Meanwhile, the corporate debtor was admitted into CIRP and subsequently ordered into liquidation.
Key Legal Provisions
Sections 24, 26, 27, 45, 46 and 67 of the Prohibition of Benami Property Transactions Act, 1988; Sections 14, 32A, 36 of the Insolvency and Bankruptcy Code, 2016
Issues raised
- Whether orders passed under the Benami Act can be challenged before NCLT/NCLAT under IBC?
- Whether the moratorium under Section 14 of IBC applies to proceedings under the Benami Act?
Arguments of the case
The Appellant argued that IBC being a later and comprehensive legislation must prevail over the Benami Act and the moratorium under Section 14(1)(a) prohibits proceedings that deplete assets, including Benami attachments. The Respondent on the other hand argued that the Benami Act is a self-contained code with exclusive jurisdiction vested in its own authorities.
Judgement
The Court held that orders under the Benami Act cannot be challenged before authorities under IBC, as the Benami Act constitutes a complete code with its own adjudicatory hierarchy.
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