Directorate Of Enforcement vs Kec Internationaal Limited And Ors
- CitationCompany Appeal (AT) (Insolvency) No. 1121 of 2022
Ratio decidendi
The rule this decision rests on
A stay order granted in a statutory appeal operates prospectively from the date it is passed; it does not retrospectively invalidate acts already completed before that date under an order that was in force at the time. Where a direction given under Section 60(5) of the Insolvency and Bankruptcy Code to a Resolution Professional to hand over goods has been complied with before a stay of the underlying attachment-related order is granted, the subsequent stay has no effect on the earlier direction or on the completed handover, and no basis remains for an appeal challenging that direction.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: Deputy Director Directorate of Enforcement ...Appellant Versus KEC International Ltd. & Anr. ...Respondents
Present: For Appellant : Mr. Zoheb Hossain, Advocate.
For Respondents : Mr. Ashish Dholakia, Sr. Advocate with Ms. Shreya Jain, Mr. Gaurav Tanwar, Mr. Rohan Chawla and Ms. Ananya, Advocates for R-1.
Mr. Udit Gupta, Ms. Amarnath Sahoo and Ms. Deepshika Kumar, Advocates for R-2.
ORDER
(Hybrid Mode)
Per: Justice Rakesh Kumar Jain (J) (Oral)
16.12.2024 : 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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
Comp. App. (AT) (Ins.) No. 1121 of 2022 & I.A. No. 3338 of 2022 2 of 6 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.
7. 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."
8. 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.
9. 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.
10. 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:
Comp. App. (AT) (Ins.) No. 1121 of 2022 & I.A. No. 3338 of 2022 3 of 6 Comp. App. (AT) (Ins.) No. 1121 of 2022 & I.A. No. 3338 of 2022 4 of 6
11. 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.
12. We have heard the Counsel for the Parties and perused the record
with their able assistance.
13. 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.
14. 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
Comp. App. (AT) (Ins.) No. 1121 of 2022 & I.A. No. 3338 of 2022 5 of 6 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.
[Justice Rakesh Kumar Jain] Member (Judicial)
[Naresh Salecha] Member (Technical)
[Indevar Pandey] Member (Technical) himanshu/rr
Comp. App. (AT) (Ins.) No. 1121 of 2022 & I.A. No. 3338 of 2022 6 of 6
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