INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Tanmay Sharma and Bhanu Jindal, AZB & Partners
undue gain received under such a contract to be restituted to an innocent party. Further, the Specific Relief Act, 1963 provides that a person entitled to the possession of spe - cific movable property may recover it as per the procedure prescribed under the Code of Civil Procedure, 1908 (CPC). Accordingly, once the contract has been declared void, a party is enti - tled to prefer a civil suit seeking declaratory relief with respect to the title to the property, along with possession thereof. The Insolvency and Bankruptcy Code, 2016 (IBC) The IBC provides for various processes in order to claw back or disgorge any undue benefit received by any creditor or related party of a cor - porate debtor. Section 66 provides that, during the liquidation process or the corporate insol - vency resolution process, where any resolution professional (RP) or liquidator finds that the cor - porate debtor has conducted their business with intent to defraud creditors or for any fraudulent purpose, the adjudicating authority may direct any persons (including directors or partners) who were knowingly parties to it to make such con - tributions to the assets of the corporate debtor as it may deem fit. The obligation is also cast on the resolution pro - fessional to claw back such preferential transac - tions (if they qualify for the conditions in Section 43) or undervalued transactions (if they qualify for the conditions in Section 46) by making an appli - cation under Section 44 or 45 of the IBC, respec - tively. However, such processes only allow these transactions to be restored to a corporate debtor and not a claimant. Any person applying for such transactions to be reversed will be entitled to proceeds from such transactions in accordance with the resolution plan or the scheme provided
for the distribution of assets in liquidation under Section 53 of the IBC. It has recently been held that such avoidance applications by the RP will be unaffected by the approval of the resolution plan, or conclusion of the corporate insolvency resolution process (CIRP). The Insolvency and Bankruptcy Board of India (IBBI) has also been given powers to direct “any person” who has made an unlawful gain or averted loss by contravening the IBC to dis - gorge an amount equivalent to such unlawful gain. The IBBI has also been given the power to take appropriate steps in order to restitute the loss suffered by such person on account of this contravention, if such person is identifiable and the loss suffered is directly attributable to the contravener. The BNSS Under the BNSS, the police are also empow - ered to seize any movable property or evidence that they suspect may have been involved in any fraudulent act. Additionally, under Section 497 of the BNSS (Section 451 of the CrPC), the court has the power to pass an order, as it thinks fit, for proper custody of any property during the pendency of the criminal trial. The BNSS has introduced further procedural requirements under Section 497, which man - date specific steps for handling property pro - duced before the court or magistrate, including disposal, destruction, confiscation or delivery of the property. Where the claimant seeks to establish their proprietary rights in a criminal proceeding to recover property, they may make a claim before the court. In that case, the court can order the release/restoration of the seized property, either during the pendency of the investigation/trial or
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