NCLT : In Asset Reconstruction Company (India) Pvt. Ltd. vs. Shivam Water Treaters Pvt. Ltd.

Once the Adjudicating Authority ordered Moratorium under Section 14 of I&B Code, Municipal Corporation had no authority to seal the property of the Corporate Debtor in view of Section 238 of I&B Code.

It is pertinent to mention that during CIRP period the moratorium under Section 14 of the I&B Code exists and during this period any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and further the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor is stayed by the moratorium order and that the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period. This is the case, where despite moratorium ordered, Municipal Authorities have sealed the Corporate Office/Registered Office of the Corporate Debtor. Section 238 of I&B Code provides the overriding effect. Moratorium order has been passed under Section14 I&B Code and after that Municipal Corporation had no authority to seal the property of the Corporate Debtor.

(Link : https://nclt.gov.in/sites/default/files/Interim-order-pdf/Asset%20Reconstruction%20Co%20CP%201882%20of%202018%20%20NCLT%20on%2018.2.2019%20Interim.pdf)