Anup Kumar Singh Vs Union of India & others (Calcutta High Court)
Calcutta High Court held that issuance of provisional seizure order under Foreign Exchange Management Act, 1999 [FEMA] is in complete disregard of the moratorium prescribed by section 33(5) of Insolvency and Bankruptcy Code [IBC] since the provisions of the IBC would override the provisions of other Acts like the FEMA.
Facts- Corporate insolvency resolution process (“CIRP”) of Shree Ganesh Jewellery House (I) Pvt. Ltd. (“Shree Ganesh”) commenced on 12.02.2018 pursuant to an order being passed by the National Company Law Tribunal (“NCLT”) at Kolkata under the provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC”). Section 14 of the IBC prohibited the initiation of suits or continuation of pending suits or proceedings against the corporate debtor (in this case, Shree Ganesh) following the initiation of CIRP. This is an application praying for quashing of notices dated 30.11.2022 and 30.01.2023 issued under the provisions of the Foreign Exchange Management Act, 1999.
Conclusion- In Assistant Director, ED vs. Raj Kumar Ralhan, the NCLT held that moratorium declared under Section 14 of the IBC was applicable to proceedings under the FEMA. The Enforcement Directorate could not proceed against the corporate debtor as long as moratorium under the IBC was in force. If any of the Directors/Officers were individually liable for any actions done prior to the commencement of the CIRP, the applicant might proceed against those Directors/Officers.
