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Judgment
Per: Justice Rakesh Kumar Jain (J) (Oral)
This Appeal is directed against an Order dated 04.09.2020, by which an Application bearing I.A. No. 139/2019 filed by KEC International Ltd. (Respondent No. 1) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, (Code) for a direction to the Resolution Professional (RP) of the Corporate Debtor M/s. Diamond Power Infrastructure Limited to hand over the goods of the Applicant (raw material/semi-finished/finished to Respondent No. 1 within the time bound manner has been allowed.
Shorn of unnecessary details, a Job Work Agreement dated 04.11.2017 was entered into between Respondent No. 1 and the Corporate Debtor. As per the said Agreement, the goods were to remain under the ownership of the Respondent No. 1 and the Corporate Debtor was only a bailee having a temporary possession over it.
The premises of the Corporate Debtor was searched by the Enforcement Directorate (ED) under the provisions of the Prevention of Money Laundering Act, 2002 (for short `The Act’). A Provisional Attachment Order was passed on 24.04.2018 qua attachment of many things including the raw material/semi-finished/finished goods of Respondent No. 1 which were lying in the premises of the Corporate Debtor. The Order dated 24.04.2018 was confirmed on 01.10.2018 but on 18.02.2019, the Appellate Authority under the Act, quashed not only the Provisional Order dated 24.04.2018 but also the Confirmation Order dated 01.10.2018 and hence there was no eclipse on the rights of Respondent No. 1 regarding the raw material/semi-finished/finished goods.
On 04.09.2020, the Application bearing I.A. No. 139/2019 was allowed and a direction was issued to the RP to handover the goods to the Applicant (raw material/semi-finished/finished goods) within seven days from the date of the Order passed and the RP and representative of the Applicant (Respondent No. 1) were directed to identify the goods and make inventory.
It is submitted by Mr. Dholakia, appearing on behalf of Respondent No. 1, that pursuant to the Impugned Order dated 04.09.2020, the goods were handed over by RP to Respondent No. 1 on 28.10.2020.
Mr. Hussain appearing on behalf of the Appellant has however submitted that the ED filed a statutory Appeal under Section 42 of the Act before the Hon’ble High Court of Gujarat at Ahmedabad bearing First Appeal No. 5180/2019 to challenge the Order dated 18.02.2019, by which, the Appellate Authority of the PMLA had quashed the Order dated 24.04.2018 and 01.10.2018.
In the Appeal, an Interim Order was passed on 02.12.2020, which read thus:
“7.In the aforesaid view, the order dated 18th June, 2019 passed by the Appellate Tribunal, PMLA, New Delhi, which is impugned in this appeal whereby attachment of the properties of M/s. DPIL is released shall remain stayed till the final outcome of this appeal. As the said order is stayed, the original order dated 24th April, 2018 by the competent authority confirmed on 01st October, 2018 by the Adjudicating Authority attaching the properties of M/s. DPIL shall remain in operation during the pendency of the present appeal.”
Mr. Hussain has submitted that in view of the fact that the aforesaid Order is still continuing and the Order dated 18.02.2019 has been stayed, therefore, direction issued in the Impugned Order to deliver back the raw material, semi-finished/finished goods to Respondent No. 1 is erroneous and illegal.
In this regard, Counsel for Respondent No. 1 has submitted that though there is no dispute that the aforesaid Order has been passed by the Hon’ble High Court of Gujarat on 02.12.2020 but before that date, pursuant to Order dated 04.09.2020, the goods have been handed over by RP to Respondent No. 1.
In this regard, he has drawn our attention to Annexure R-19, appended with the Reply, which is a letter dated 28.10.2020, as per which the RP has handed over the raw material, semi-finished/finished goods to Respondent No. 1. The text of the letter is also reproduced as hereunder:
Although, this case was adjourned on the request of the Counsel for the Appellant to seek instructions of the Department as to whether the present Appeal has to be pursued or withdrawn in view of the aforesaid developments, as per which the goods have already been given back to Respondent No. 1 before the Order of stay by the High Court but despite adjournments given in this regard, no concrete Reply has been given, therefore, this Court has decided to adjudicate this issue as to whether, in the given facts and circumstances, the Appeal should continue or not.
We have heard the Counsel for the Parties and perused the record with their able assistance.
The issue travels in a narrow compass as to whether the Order dated 02.12.2020, passed by the Hon’ble High Court of Gujarat, staying the operation of 18.06.2019, shall have any impact, after the Order dated 04.09.2020 has been passed and the goods have been received by Respondent No. 1 in terms of the said Order. In this regard it is suffice to mention that the Order dated 24.04.2018 which was confirmed on 01.10.2018 was quashed by the Appellate Authority of the PMLA on 18.02.2019, thereafter the Application filed by Respondent No. 1 was allowed on 04.09.2020 directing the RP to release the semi-finished/finished goods to Respondent No. 1 which has been done by the RP on 28.10.2020 and by that time there was no stay Order against the RP not to deliver the goods to Respondent No. 1.
The Order of stay was rather passed on the statutory Appeal filed by the Appellant on 02.12.2020 i.e., almost after a period of more than one month, therefore, it has no effect so far as the Order dated 04.09.2020 is concerned as the goods were returned by the RP on 28.10.2020.
Therefore, in such circumstances, we do not find merit in the present Appeal and the same is hereby dismissed. No order as to costs.