Skip to main content

IBC overides Money Laundering Act - No attachment under PMLA under Insolvency Process

In the matter of SREI Infrastructure Finance Limited vs Sterling SEZ and Infrastructure Limited, M.A 1280/2018 in C.P. 405/ 2018, before the NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH, the Tribunal admitted a Section 7 petition against the Corporate Debtor on 16.07.2018 and appointed the Applicant herein as the Interim Resolution Professional who was subsequently confirmed as Resolution Professional.

The office of the Enforcement Directorate provisionally attached the assets belonging to the Corporate Debtor vide order/notice dated 29.05.2018 and corrigendum dated 14.06.2018 as part of certain proceedings initiated by the office of the Enforcement Directorate against the Corporate Debtor. On 05.09.2018, the Applicant intimated the Directorate of Enforcement about the initiation of CIRP and imposition of moratorium as mentioned in this Tribunal’s order. The Applicant also requested the Directorate of Enforcement to withdraw the attachment, if any, on the properties and assets of the company as the IRP is required to take charge and custody of the same under the provisions of the Code. The Applicant submitted that unless the attachment is withdrawn and properties are set free, he cannot proceed with the CIRP process. The Enforcement Directorate rejected the claim of the Applicant stating that the properties provisionally attached constitute the value of such proceeds of crime under the PMLA is a special act and have overriding effects in terms of section 71 of the PMLA. The main object of Insolvency and Bankruptcy Code, 2016 and PMLA are different from each other. The Code being a civil law cannot be given precedence over PMLA, 2002 and hence NCLT lacks jurisdiction in the matter. Therefore the moratorium declared by the NCLT adjudicating authority is not applicable to the criminal case initiated under the PMLA by the 
enforcement directorate and to the criminal case initiated by the CBI.

The Ld. Tribunal referring to the order of the Appellate Tribunal for PMLA in the case of Bank of India v. The Deputy Directorate of Enforcement of Mumbai, observed that the proceedings before Adjudicating Authority under PMLA in respect of attached properties is a civil proceedings. Based on the said order as well as other judgments and Section 14(1) & 63 of the IBC code, the Ld. NCLT decided that the attachment order under PMLA Act is a nullity and non-est in law and hence it will not have any binding force.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Court approached in the early stages of arbitration will prevail in all other subsequent proceedings

In National Highway Authority of India v. Hindustan Steelworks Construction Limited, the Hon'ble Delhi High Court opined that once the parties have approached a certain court for relief under Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings. Language of Section 42 of Act is categorical and brooks no exception. In fact, the language used has the effect of jurisdiction of all courts since it states that once an application has been made in Part I of the Act then ―that Court alone shall have jurisdiction over arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings shall be made in that Court and in no other Court. Court holds that NHAI in present case cannot take advantage of Section 14 of the Limitation Act, 1963 for explaining inordinate delay in filing present petition under Section 34 of this Act in this Court.
Post a Comment
Read more

Procedure to be followed on admissibility of additional evidence at appeal stage

In The Corporation of Madras vs M. Parthasarathy & Ors., the trial court had allowed the respondent company to file evidence in the form of photocopies and had dismissed all the four suits filed by the respondents with costs as the evidence were in the form of photocopies and were objected to by the respondents. On appeal the Additional District Judge allowed the respondents to file additional evidence in the form the original documents of the earlier admitted photocopies and based on the same allowed the appeal. In its turn the High Court also dismissed the appeal filed by the appellants who in turn approached the Supreme Court. The Supreme Court decided that the first Appellate Court committed two jurisdictional errors in allowing the appeals.  Referring to earlier judgements of the Supreme Court in Land Acquisition Officer, City Improvement Trust Board vs. H. Narayanaiah & Ors., , Shalimar Chemical Works Ltd. vs. Surendra Oil & Dal Mills (Refineri...
Post a Comment
Read more