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

Dishonour of cheques - Jurisdiction and cause of action explained

In a landmark judgment, Hon'ble Supreme Court went to some length to define the cause of action and jurisdiction of cases under Section 138 of the Negotiable Instruments Act. While deciding in 2014 STPL(Web) 499 SC 1, Dashrath Rupsingh Rathod Vs. State of Maharashtra & Anr., the Hon'ble court said, one of the main issues faced by the court (a) from which stage do we consider a offence under Section 138 to have been caused (b) Where would the jurisdiction of the court lie if the cheque was drawn in city A and presented dishonored in City B ? After discussion on various past decisions, the Hon'ble court finally affirmed, " To sum up: (i) An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank. (...
Post a Comment
Read more

Registrar cannot remove trademark from record without notice to trademark holder

In Kleenage Products (India) Private Limited vs The Registrar of Trade Marks, the petitioner had applied for registration of trademark ‘KLITOLIN’ which was accepted and from 1988 to 2009, the said trademark was renewed multiple times. The trademark was due for renewal on August 21, 2009, but the petitioner failed to tender application for renewal.  It was, thereafter, revealed that the trademark is likely to be removed from the register. The petitioner contended that the Registrar of Trademarks (respondent No.1) also failed to issue the requisite mandatory notice in Form O-3 to him (the registered proprietor) under Section 25(3) of the Trade Marks Act, 1999. The Bombay High Court allowed the petition holding that any such removal can only be possible if prior notice, mandatory under Section 25(3) of the Trade Marks Act 1999, has been given Article referred: http://www.livelaw.in/removal-registered-trademarks-cant-done-without-giving-prior-notice-registered-proprie...
Post a Comment
Read more

Loss of earning capacity, and not percentage of disability, must decide compensation, says HC

While computing compensation claims of accident victims, the victim's loss of earning capacity shall outweigh the percentage/extent of his disability, the Madras high court has felt. Justice R Mahadevan, enhancing the compensation payable to an injured driver by Rs 2 lakh, said: "In cases for compensation, it is not the disability, which is partial or total, alone that matters, it is the loss in earning capacity as a result of accident that is to be considered." R Murali, driver of a mixed concrete vehicle, met with an accident in January 2009 and suffered injuries in hip, right leg and ankle. He claimed loss of 100% earning capacity and sought appropriate compensation along with 12% interest rate. However, as the disability certificate issued by a doctor pegged the percentage of his disability at 60%, the deputy commissioner of labour-II, awarded Rs 3.12 lakh as compensation, by fixing the monthly income at Rs 4,000. Aggrieved by the poor package, Murali filed the...
Post a Comment
Read more