Section 14 of the Code will prevail over Section 28A of the SEBI Act, 1992 and Securities Exchange Board of India cannot recover any amount including the penalty from the Corporate Debtor – Ms. Anju Agarwal RP for Shree Bhawani Paper Mills Ltd. Vs. Bombay Stock Exchange & Ors. – NCLAT
NCLAT held that Section 14 of the Code will prevail over Section 28A of the SEBI Act, 1992 and Securities Exchange Board of India cannot recover any amount including the penalty from the Corporate Debtor. The Bombay Stock Exchange for the same very reason cannot take any coercive steps against the Corporate Debtor nor can threaten the Corporate Debtor for suspension of trading of shares. The Bombay Stock Exchange deals with the shares. The shares of the Corporate Debtor, if listed with the Bombay Stock Exchange, can be dealt with by the Bombay Stock Exchange. However, in view of Section 18 of the Code, the IRP while taking control and custody of any asset including the tangible and intangible assets, cannot sell the shares of the Corporate Debtor during the period of Moratorium except in accordance with the provisions of the Code and with the approval of the Committee of Creditors. Therefore, dealing with the shares of the Corporate Debtor by the Bombay Stock Exchange during the period of Moratorium normally does not arise. The shares can be transferred only in the manner prescribed under the Code and following requirements framed under the SEBI Act, 1992 and the Companies Act, 2013. At this stage, we may mention that in the case of Maharashtra Seamless Ltd. vs. Shri Padmanabhan Venkatesh & Ors.─Company Appeal (AT) (Insolvency) No. 220 of 2019, this Appellate Tribunal held that the statutory dues i.e. the dues to Central Government or the State Government arising under any law for the time being in force and payable come within the meaning of Operational Debt. If penalty is imposed or amount is payable to the ‘Securities Exchange Board of India’ in such case, it may claim as an ‘Operational Creditor’ but cannot recover the same during the Resolution Process.