The Calcutta High Court held that the writ jurisdiction can be invoked in the Insolvency and Bankruptcy Code (IBC) matters, despite the availability of an alternative remedy.
The petitioners, Kolkata Municipal Corporation (KMC) have urged that the NCLT and the Resolution Professional have no jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority.
The KMC, which is a statutory authority, exercised its powers under Sections 217 to 220 of the 1980 Act to distract the asset of the debtor and to attach the property, to be followed by sale in future. Such exercise of power, it is argued, is beyond the purview of the IBC and does not come within the ambit of the powers conferred on the Resolution Professional or the NCLT by the IBC. As such, the Resolution Professional and the NCLT acted de hors their statutory powers in seeking to take control and custody of the asset.
The issue raised in the petition is Whether the writ jurisdiction of this court under Article 226 of the Constitution of India can be invoked in the matter, despite the availability of an alternative remedy.
The other issue raised is whether the property-in-question, having been seized by the KMC in recovery of its statutory claims against the debtor, can be the subject-matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016.
The petitioners have urged that the NCLT and the Resolution Professional have no jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority.
The court noted that the nature of challenge thrown in the writ petition is on the ground of absence of jurisdiction and not ‘wrongful exercise of the available jurisdiction’, thus bringing it within the fold of Article 226 of the Constitution. In such a scenario, the present writ petition is maintainable.
The single judge bench of Justice Sabyasachi Bhattacharyya held that although a wrongful exercise of available jurisdiction would not be sufficient to invoke the High Court’s jurisdiction under Article 226 of the Constitution, the ground of absence of jurisdiction could trigger such invocation. Hence, in view of the nature of challenge involved in the present writ petition, the same is maintainable in law.
The court while answering another issue against the writ petitioner held that the Corporation followed such procedure and took possession of the disputed property for non-payment of tax. Thus, there was no further scope for any “determination” of ownership of the property by the KMC. As such, there arose no question of the task of the interim resolution professional, in taking control and custody of the asset, being subject to the determination of ownership by any authority, as contemplated under Section 18(f)(vi) of the IBC.
“The parameters of powers of the NCLT, as an Adjudicating Authority under Section 60 of the IBC, is defined and circumscribed by the scope of Section 18(f)(vi) of the IBC. Such exercise of power would fall within the ambit of the expression “arising out of or in relation to the insolvency resolution”, as envisaged in Section 60(5)(c) of the IBC,” the Court ruled.
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