Division Bench Validates Economic Offences Wing's Actions; Liquidator Empowered to Recover Dues
In a landmark judgment, the Madras High Court has ruled in favor of the Tamil Nadu Protection of Interests of Depositors (TNPID) Act, 1997, over the Insolvency and Bankruptcy Code (IBC), 2016, in the high-profile fraud case involving Thiripura Chits Private Limited. The Court's decision comes as a significant relief to the thousands of depositors who were defrauded by the company, as it upholds the actions taken by the Economic Offences Wing (EOW) to recover their dues.
The case revolves around Thiripura Chits Private Limited, which was accused of defrauding 9,927 depositors of approximately Rs. 220.15 crores. Multiple complaints against the company led to the registration of cases across various districts, which were later consolidated for investigation by the EOW in Chennai. Amidst these proceedings, corporate insolvency was initiated against the company, leading to a legal tussle over the applicability of IBC versus the TNPID Act.
In an earlier order, the National Company Law Tribunal (NCLT) had favored the IBC, nullifying the property attachments made by the EOW. However, the Division Bench of the Madras High Court overturned this decision, asserting that the TNPID Act, being a special enactment aimed at protecting depositors' interests, takes precedence over the IBC in matters involving depositors' grievances.
Justice D. Bharatha Chakravarthy, presiding over the case, directed the EOW to provide the appointed Liquidator with a complete set of documents related to Thiripura Chits Private Limited. This will enable the Liquidator to initiate recovery proceedings under the Chit Funds Act, 1982, to collect outstanding dues from chit subscribers who have defaulted on payments. The costs for photocopying these documents will be borne by the petitioner, and the exercise must be completed within three weeks.
The Court also emphasized the duty of the Liquidator, appointed under the IBC, to recover amounts due to the company. The EOW is further tasked with expeditiously realizing and disbursing recovered amounts to the depositors in accordance with the law.
This judgment underscores the judiciary's commitment to safeguarding the interests of depositors and ensuring that justice prevails in economic offences involving large-scale fraud. The decision is expected to set a precedent for similar cases where conflicts arise between the TNPID Act and the IBC.
Bottom Line :
Interplay between Insolvency and Bankruptcy Code, 2016 (IBC) and Tamil Nadu Protection of Interests of Depositors (TNPID) Act, 1997 - Economic Offences Wing's actions upheld by Division Bench - Liquidator under IBC can take steps to recover dues of the company under Chit Funds Act, 1982, without interfering with statutory exercise by Economic Offences Wing.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016; Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997; Chit Funds Act, 1982; Indian Penal Code Sections 420, 406, 120B.
P.V. Krishnaprasad v. Inspector General of Registration, (Madras) : Law Finder Doc id # 2964241
