The National Company Law Tribunal (NCLT), Kolkata Bench reaffirms the Resolution Professional's entitlement to possession of the assets of the Corporate Debtor under the Insolvency and Bankruptcy Code, overriding any conflicting provisions of the State Financial Corporation Act, 1951.
NCLT, Kolkata Bench comprising Justice (Smt.) Bidisha Banerjee (Judicial Member) and D. Arvind (Technical Member) was hearing the application of the Resolution Professional and held that under the Insolvency and Bankruptcy Code, 2016 (IBC), the Resolution Professional (RP) has the duty to take control and custody of all assets owned by the Corporate Debtor, even if not in its possession at the commencement of the Corporate Insolvency Resolution Process (CIRP). The NCLT emphasized that the IBC prevails over any other law in case of inconsistency.
The case involves Basukinath Food Processors Limited, a company that availed a loan from West Bengal Industrial Development Corporation Limited (WBIDCL). Due to default, WBIDCL took possession of the company's assets. Subsequently, the Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Basukinath Food Processors Limited, leading to the initiation of Corporate Insolvency Resolution Process (CIRP) on January 11, 2022.
Mr. Rajesh Lihala was appointed as the Resolution Professional (RP) for Basukinath Food Processors Limited. He filed an application against WBIDCL under Section 60(5) of the IBC, seeking direction to hand over possession of the assets of the Corporate Debtor to him. Despite several attempts, WBIDCL refused to comply.
WBIDCL argued that under the State Financial Corporation Act, 1951, it had become the owner of the property due to the default. However, the RP contended that as per the IBC, the assets should be handed over to him for the completion of the CIRP.
NCLT Bench directed the West Bengal Industrial Development Corporation Limited (WBIDC) to hand over possession of the factory to the RP within 15 days. Additionally, the NCLT directed the RP to verify and admit WBIDC's claim in the Committee of Creditors (CoC) within 15 days of admission of the claim.
In summary, the NCLT's decision reaffirmed the RP's entitlement to possession of the assets of the Corporate Debtor under the I&B Code, overriding any conflicting provisions of the State Financial Corporation Act, 1951.