Punjab National Bank Vs NCS Sugars Ltd (NCLT Hyderabad)
NCLT Hyderabad held that the provisions of the Insolvency & Bankruptcy Code, 2016 (IBC) override the provisions of the State enacted law, such as, Andhra Pradesh Revenue Recovery Act, 1864.
Facts- The Corporate Debtor is engaged in the business of cane crushing and production of sugar and associated by-products. Corporate Debtor purchases sugarcane from farmers. Corporate Debtor committed default in paying the price for the sugarcane supplied by farmers to the units of the corporate debtor. Consequently, respondents no.2 and 3 initiated proceedings under Andhra Pradesh Revenue Recovery Act, 1864, to sell the immovable property to pay the amounts due to farmers.
Notably, public auction was conducted, wherein 4th respondent was declared as the highest bidder and Earnest Money Deposit (EMD) was paid by the 4th respondent. Thereafter, order was passed in admitting the Corporate Debtor into CIRP. Said Company Petition was filed by Punjab National Bank (erstwhile Oriental Bank of Commerce). The respondents did not inform that a Sale Certificate has been issued. The applicant was apprised of the above development. The Balance sale consideration of Rs.17,04,25,000/- was deposited post-commencement of CIRP.
Conclusion- Held that the provisions of the IBC override the provisions of the State enacted law, such as, Andhra Pradesh Revenue Recovery Act, 1864.
Held that, merely because, the impugned sale is for realisation of the arears of the amount due and payable by the corporate debtor to the suppliers of sugarcane, who are farmers and were reportedly agitating, by resorting to Dharanas and Rasta Roko’s, which allegedly resulted in Law & Order problem, the same cannot be the justification, for bypassing/ violating the order of moratorium under Section 14 of the I&B Code.
Held that the impugned sale of the property of the corporate debtor, which is undergoing CIRP, pursuant to the public auction held on 09.02.2022 under the provisions of AP Revenue Recovery Act, is unsustainable, unenforceable besides null and void, hence the same is liable to be annulled.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
1. This Interlocutory Application is filed by the Resolution Professional of the Corporate Debtor/ NCS Sugars Limited praying for the following reliefs:
(a) Annul the sale of the immovable property belonging to the Corporate Debtor illegally permitted by respondent nos. 1 – 3 in favour of respondent nos.4 and 6;
(b) Declare the sale certificate dated December 3, 2022 with respect to the Immovable Property of the Corporate Debtor issued by respondent no.1, in favour of respondent nos.4 and 6 as illegal and/ or invalid and/ or improper.
(c) Declare the sale deed having Reg. No.8512 of 2022, executed by and between the respondent no.1, 4 and 6 with respect to the Immovable Property of the Corporate Debtor, as illegal and/ or invalid and/ or improper;
(d) Declare the proclamation of sale dated December 4, 2022 published by respondent nos. 1 – 3 as illegal and/or invalid and/or improper;
(e) Order and grant a permanent injunction restraining respondent nos.4 and 6 from acting upon and/or giving effect to, directly or indirectly, in any manner whatsoever, the sale certificate dated December 3, 2022 illegally issued in favour of respondent nos.4 and 6 by respondent nos. 1-3.
2. This Tribunal vide order dated 20.04.2023 has permitted impleading of the sale certificate holder of the impugned sale as 6th respondent and accordingly this petition has been amended and the neat copy of this IA, has been filed on 27.04.2023.
3. As per the averments of this application, the Corporate Debtor is engaged in the business of cane crushing and production of sugar and associated by-products. The Corporate Debtor purchases sugarcane from farmers. The Corporate Debtor committed default in paying the price for the sugarcane supplied by farmers to the units of the corporate debtor. Consequently, respondents no.2 and 3 initiated proceedings under Andhra Pradesh Revenue Recovery Act, 1864, to sell the immovable property in order to pay the amounts due to farmers.
The chronology, of evets right from the commencement of sale till its conclusion and delivery of the subject property to the 6th respondent, as narrated in the pleadings is mentioned hereunder.
