Judgment Summaries (NCLT) – Om Prakash Agarwal

  December 22, 2021

In the matter of Om Prakash Agarwal (Principal Bench New Delhi (11.06.2020))

Facts

In this case, the Liquidator filed an application before the AA to de-freeze the accounts of the CD, which were attached by the Tax Recovery Officer (Respondents) stating that the CD had failed to pay the arrears. The Liquidator contended that more than one crore was lying in the accounts of the CD attached by the Officer, and if the said attachment was not removed, the Liquidator would not be in a position to distribute the amount to the stakeholders under Section 53 of the Code. The Income Tax Department submitted that the Income Tax Act proceedings had an overriding effect on other enactments, and the monies attached by the Officer should no more be treated as an asset of the CD. To this, the Liquidator responded that the Respondent had already submitted its claim against the CD, and it should be entitled to claim distribution as envisaged under Section 53 of the Code. 

Order

After due deliberation, the Tribunal held that the monies of the CD lying in the bank account would be construed as an asset of the CD, even if an attachment order has been passed against it. It did not make any difference as to whether it was cash or kind. Further, the Tribunal observed that Section 178 of the Income Tax Act had been amended, incorporating a clause stating that the Code will have an over-riding effect over the mandate of Section 178. Therefore, the Tribunal allowed the application, and directed the bank to de-freeze the accounts of the CD.

 

Full text of the order accessible here.

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