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Judgment
Per: Justice Rakesh Kumar Jain (Oral)
06.08.2024: This order shall dispose of two appeals i.e. CA (AT) (Ins) No. 170 of 2024 (hereinafter referred to as the first appeal) and CA (AT) (Ins) No. 698 of 2024 (hereinafter referred to as the second appeal).
The first appeal is directed against the order dated 29.11.2023 by which an application filed by the Appellant (Liquidator) bearing I.A. No. 2489 of 2023 under Sections 35, 36 & 238 of the IBC, 2016 (in short ‘Code’) seeking a direction to lift the attachment of the assets of the Corporate Debtor and deposits with the City Civil and Sessions Court, Mumbai under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (in short ‘Act’), has been dismissed.
The second appeal is directed against the order dated 29.01.2024 by which an application bearing I.A. No. 274 of 2024 filed by the Successful Bidder in the E-auction for the sale of property of the CD and to direct the liquidator to restrain from distribution of Rs. 24 Cr. (Mentioned in the order dated 29.01.2024 but Rs. 25 Cr. submitted by the Appellant in court), the amount paid by the Applicant towards the purchase of the property, has been dismissed.
Shorn of unnecessary details, as many as 15 properties of the Corporate Debtor (Rasiklal Sankalchand Jewellers Pvt. Ltd.) were sized by Respondent No. 1 (Economic Offences Wing, Mumbai) under the provisions of the Act.
The Appellant was informed by Respondent No. 1 that there are 150 investors who have been deprived of an amount of Rs. 11 Cr. The detail of the properties seized, mentioned in the letter dated 22.05.2023, are as under: -
| 2) KRL-1-7175-2013, Area of property 256.84 sq.mtr. car parking 13.75 sq.mtr. 3) KRL-1-7173-2013 Area of property 107.50 sq.mtr. Car parking 13.75 sq.mtr. 4) KRL-1-5072-4-2014 Area of property 239.33 sq.mtr. car parking 1 sq.mtr. 5) KRL-1-7174-2013 area of property 305.01 sq.mtr. car parking 27.05 sq.mtr. 6) KRL-1-7176-2013 area of property 282.49 sq.mtr. car parking 13.75 sq.mtr. | ||
| 7 | Shop No. 3 Vora Apartment, Vallabhbaug Lane, Ghatkopar East, Mumbai-77 (area 375.25 sq.mtr.) | Jayesh Shah Nilesh Shah |
| 8 | Shop No. 4, Vora Apartment, Vallabhbaug Lane, Ghatkopar East, Mumbai-77 (area 336.25 sq.mtr.) | Jayesh Shah Nilesh Shah |
| 9 | 402, 4th Floor, Kukareja Palace-2, I. Wing, | Jayesh Shah Nilesh Shah |
| Vallabhbaug Extension, Garodia Nagar, Ghatkopar East, Mumbai-77, KRL-1- 839-1-76-2017 (Area 2400 sq.ft. Carpet, 3 Parking) | ||
| 10 | 502, 5th floor, Kukreja Palace-2, I Wing, Vallabhbaug Extension, Garodia Nagar, Ghatkopar East, Mumbai-77 KRL-1- 3119-1-82-2014 Parul Jayesh Shah | Jayesh Shah Nilesh Shah |
| 11 | 52-12 Bhim Nagar, Sakha-2, Tanasa Pipe Line, Rajwadi, Vidyavihar (E), Mumbai-77 | Nilesh Shah |
| 12 | Total 42,584 Kg. Gram Silver utensils and silver gift items, total Value Rs.14,47,856/- | Seized from shop |
| 13 | 700 gr. Gold value Rs. 37,10,000/- | Kapil Choksi |
| 14 | 1766.400 grm Gold value Rs.86,55,360/- | Kapil Choksi |
| 15 | 1498.740 gms. Net wt. 1136.142 grm Gold and Platinum ornaments total | Harshad Bagadia |
The Appellant issued a letter of intent (LOI) about part of the property (mentioned in serial no. 4 hereinabove) to Swarnamala Jewellers for consideration of Rs. 25 Cr. The amount of Rs. 25 Cr. lying deposited with the Appellant.
The Appellant filed an application bearing no. 669 of 2023 and the Auction purchaser also filed an application bearing no. 44 of 2024 to be impleaded in the proceedings pending before the Designated Court under the Act before the City Civil & Session Court, Mumbai where the MPID Special case was pending. The application was filed for cancellation of attachment of the property of the CD, namely, shop situated at Building known as Skyline Status, Ground Floor, Opp. Pooja Hotel, MG Road, Ghatkopar East, Mumbai 400 077 bearing Survey No. 225, Hissa No. 12 and CTS No. 555 to 5560 revenue village, Ghatkopar – Kirol, Taluka – Kulra, Mumbai.
The Appellant in the first appeal filed the present application no. 2489 of 2023 before the Tribunal for lifting the attachment order. In the second appeal, auction purchaser also filed I.A. No. 274 of 2024 for the same purpose.
The Tribunal dismissed the application bearing no. 2489 of 2023 of the appellant on 29.11.2023 with the following observations: -
“Heard the counsel for the applicant/liquidator and the representative of the respondent. This bench is of the considered opinion that the court under MPID Act is established under the special enactment to adjudicate the crimes committed and comes under purview of the EOW. Therefore, this Tribunal has no jurisdiction to pass order for lifting of attachment by the respondent, for which, the case is pending adjudication before the special court and the applicant has already approached the said special court (MPID court) for impleading him as a party in that proceeding. At this stage, this Tribunal has no jurisdiction to interfere into the adjudication of that special court for lifting the attachment made by the EOW.”
I.A. No. 274 of 2024 was also dismissed on 29.01.2024 on the basis of the order passed on 29.11.2023.
Aggrieved against both the orders dated 29.11.2023 and 29.01.2024 the aforesaid appeals i.e. CA (AT) (Ins) No. 170 of 2024 filed by the Appellant and CA (AT) (Ins) No. 698 of 2024 is filed by the auction purchaser.
While arguing the first appeal, Mr. Bishwajit Dube, Counsel appearing on behalf of the Appellant has submitted that the Ld. Special Court has rejected the application no. 44 of 2024 on the ground that the property in question, mentioned hereinabove, also in the said application, has not been attached by way of an official gazette by the State Govt. which is required under Section 4 of the Act, therefore, the application filed by the Appellant was found to be premature, however, liberty was granted to the Appellant to file fresh application as and when a right accrues to them in case any order is passed under Section 4 r/w Section 7 of the Act.
On the last date of hearing, we had asked Counsel for Respondent No. 1 to provide the details as to whether the other 14 properties have been attached by the issuance of a notification or not. There is no categoric answer to this question but we have found that the application of the Appellant bearing no. 2489 of 2023 has simply been dismissed on the ground that since the matter is pending before the Special Court, therefore, the Tribunal has not having the jurisdiction to deal with the application but since, the Special Court in the application filed by the Appellant in the first appeal, bearing no. 44 of 2024 was held to be premature because notification under Section 4 was not published in respect of property mentioned in the order, therefore, the Appellant was not required to be impleaded as a party in that case for seeking vacation of the order. In that view of the matter, the Tribunal now has the jurisdiction to at least deal with the said property. The second question would thus arise as to whether other 14 properties about which the Appellant has preferred this appeal also can be dealt with by this Court in its Appellate Jurisdiction. The answer to this question is in negative because the Appellant is required to file similar application before the Special Court constituted under the Act for obtaining order as to whether there is any order of publication of notification in respect of those properties as well.
Thus, in view of the aforesaid facts and circumstances, we are of the considered opinion that at present there is nothing in this appeal for adjudication by this Court as the Appellant has the remedy to approach the Tribunal for an order as has been passed by the Special Court under the Act on 19.06.2024.
It is needless to mention that it shall be open for the Appellant to file an appropriate application before the Special Court under the Act for taking an order as to whether the other properties mentioned by Respondent No. 1 in its letter addressed to it, mentioned hereinabove, have also been attached or any publication has been issued by the State Govt. or not.
In the second appeal, the appellant/auction purchaser shall also have the same liberty to file similar application before the Specific Court constituted under the Act and in case the properties are not lying attached in terms of Section 4 of the Act, they are free to file an appropriate application before the Tribunal for passing an appropriate order.
With these observations, both the appeal are hereby disposed of, however, the Appellant is hereby directed not to disburse the amount of Rs. 25 Cr. deposited by the auction purchaser for the purpose of purchasing the property in question which is mentioned in the order passed by the Special Court till a final decision is taken.
If any such application is filed then the Tribunal shall decide the application as early as possible.