Skip to main content

Liquidator Cannot Deal With Properties Attached As 'Proceeds Of A Crime' Under PMLA

In NATIONAL COMPANY LAW APPELLATE TRIBUNAL, Company Appeal (AT) (Insolvency) No. 140 of 2019, Rotomac Global Private Limited vs Deputy Director, Directorate of Enforcement, Bank of Baroda initiated ‘Corporate Insolvency Resolution Process’ against ‘Rotomac Global Private Limited’ (Corporate Debtor). After the conclusion of the ‘corporate insolvency resolution process’ in absence of any viable and feasible resolution plan, the Adjudicating Authority ordered for liquidation of the ‘Corporate Debtor’. Meanwhile the Enforcement Directorate had also initiated action against the Directors of the company under Prevention of Money Laundering Act and basing on the material and evidences on record and exercising the powers conferred by Sub-Section (1) of Section 5 of the ‘Prevention of Money Laundering Act, 2002’, passed a Provisional Attachment Order No.08/2018 dated 28.05.2018 attaching the properties which fall within the definition of ‘Proceeds of Crime’ in terms of Section 2(1)(u) of the PMLA, provisionally lying in name of ‘Corporate Debtor’ and its Directors wherein it was further ordered that the same shall not be transferred, disposed, parted with or otherwise dealt with in any manner, whatsoever, until or unless specifically allowed to do so by the Directorate.

Subsequently, the Liquidator filed an application for direction on Directorate of Enforcement for release of assets of the ‘Corporate Debtor’ claiming that as per PMLA act, confiscated property should vest  absolutely in the Central Government free from all encumbrances, but these properties have charge held by lending banks. The State objected claiming first right to recover their debts from an accused.

The NCLAT agreeing with the State observed that similar question has already been decided in ‘Varrsana Ispat Limited vs. Deputy Director, Directorate of Enforcement’ – Company Appeal (AT) (Insolvency) No. 493 of 2018’ wherein this Appellate Tribunal taking into consideration the provisions of Section 4 of the PMLA held that Section 14 of the Insolvency & Bankruptcy Cide is not applicable to the criminal proceeding or any penal action taken pursuant to the criminal proceeding or any act having essence of crime or crime proceeds whereas the PMLA provisions therein relates to ‘proceeds of crime’, we hold that Section 14 of the ‘I&B Code’ is not applicable to such proceeding. Further, the penalty under money laundering offence will be applicable to the individual which may include the Ex-Directors and Shareholders of the ‘Corporate Debtor’ and they cannot be given protection from the ‘Prevention of Money Laundering Act, 2002’ and such individual cannot take any advantage of Section 14 of the ‘I&B Code’.


Comments

Post a Comment

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...
Post a Comment
Read more

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...
1 comment
Read more

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...
1 comment
Read more