M/s.Calyx Chemical & Pharmaceuticals Ltd vs Office of Additional Director of Enforcement, Directorate of Enforcement
W.P.No.7950 of 2020 and W.M.P.No.9386 of 2020
Facts:
1. By an order dated 06.02.2018, the Nation Company Law Tribunal (hereinafter referred to as “NCLT”) admitted the petitioner company to the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) on an application filed by the State Bank of India.
2. RP issued public advertisement inviting prospective resolution applicants to submit a resolution plan for resolving the insolvency of the petitioner company. In response, two companies incorporated under the Laws of India viz., M/s.Khilari Infrastructure Private Limited and M/s. Topnotch Chemicals Private Limited (hereinafter referred to as “resolution applicant”) submitted their resolution plan for revival of the petitioner company and the resolution of its insolvency.
3. In pursuant to the approval of the resolution plan by the creditors of the petitioner company, an application in M.A.No.1346 of 2018 was filed by the RP before the NCLT under Section 30(6) r/w, Section 31(1) of the IBC, for approval of the resolution plan and by an order dated 16.04.2019, the resolution plan was approved by the NCLT. It was also approved by the National Company Law Appellate Tribunal (hereinafter referred to as “NCLAT”) by an order dated 30.08.2019. The said order was challenged before the Hon’ble Supreme Court of India and the same was also dismissed by an order dated 20.02.2020, thereby confirming the order passed by the NCLAT.
4. The first respondent by an order dated 28.08.2020 imposed penalty of Rs.15,20,00,000/- on the petitioner company for certain contravention that had been alleged to have committed by the petitioner company even prior to commencement of the corporate insolvency resolution process. Hence, the present writ petition.
Issue: Whether the writ petition can be allowed ?
Arguments:
Appellant:
1. Counsel submitted that as per the impugned order, the petitioner had imported 23 consignments of chemical through Chennai Port in the year 2010-11, wherein the declared value appeared to be on higher side and also the importers had already paid the overseas suppliers but not bothered to take clearance of the goods. Therefore, the first respondent initiated investigation against the petitioner company under FEMA and also against the second respondent, the then Director of the petitioner company.
2. It was submitted that the petitioner company, being corporate debtor resolved under the IBC following the approval of the resolution plan by the order dated 16.04.2019 on the file of the NCLT, is covered by Section 32A as per the amendment ordinance. It was submitted that as per the the provision 32A of IBC, the petitioner was granted immunity in respect of past liabilities and actions of the erstwhile management as per the order passed by the NCLT. Hence, he prayed to quash the impugned order.
Respondent:
1. Counsel submitted that petition itself is neither maintainable in law nor on fact, since there is alternative remedy provided under Section 16(1), 19(1) and 35 of the FEMA. The petitioner had imparted 23 consignments of chemicals wherein the declared value appeared to be on higher side and the importers had already paid the overseas suppliers but not bothered to take clearance of the goods. Therefore, the first respondent had initiated investigation against the petitioner and the second respondent herein.
Decision: Hon’ble HC dismissed the petition.
Rationale:
1. Hon’ble HC held that the writ petition itself is not maintainable since, there is alternative remedy provided under Section 16(1), 19(1) and 35 of the FEMA. It held that the petitioner was not granted any immunity from the adjudication proceedings initiated under the provisions of FEMA. Whereas as per the order passed by the NCLT, the company had immunity from regulatory or administrative proceedings but not adjudicating proceedings as per Section 43 of FEMA.
2. It held that there is no breach of fundamental right and the petitioner was duly served with show cause notice and give opportunity of hearing. Further the first respondent has power to impose the penalty.
Order:
