NCLT Hyderabad: 'Provisional Order Of Attachment' Made Under PMLA Would Not Nullify The Protection Granted Under Section 32A IBC

NCLT Hyderabad bench comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and SH. Charan Singh (Technical Member) in its recent order has cleared that, the provisional order of attachment (POA) under Section 5(1) of the Prevention of Money Laundering Act, 2002, in respect of the properties of the corporate debtor covered under the approved resolution plan, would not end the protection available to such properties under section 32A IBC. Section 32A stipulates that once Resolution Plan is approved by the Adjudicating Authority after completion of CIRP, there cannot be attachment or confiscation of assets of Corporate Debtor, as otherwise same will defeat objects of the insolvency Regime. Facts and Background The applicant “SREI Multiple Assets Investment Trust” is a successful resolution applicant (SRA); respondent no. 1 is the Enforcement Directorate; respondent no. 2 is the Chairman of the Supervisory Committee of the Corporate Debtor; and respondent no. 3 to 6 are the pro forma parties. By the order dated July 5, 2017, Deccan Chronicle Holdings Limited was admitted into CIRP, and Ms. Mamta Binani (respondent No. 2) was appointed as Resolution Professional. Ms. Mamta Binani (Respondent No. 2) took all the required steps, such as the constitution of the COC and inviting expressions of interest. After extension of the date for receiving Expression of Interest (EoI), 11 participants submitted EoIs, out of whom two Resolution Applicants were at the forefront, viz. Arm Infra & Utilities and SREI Multiple Assets Investment Trust (the applicant). In the 15th CoC, the resolution plan submitted by the applicant was approved with 81.30% votes under Section 30(4) of the Code. Ultimately, the CIRP was concluded on February 15, 2019. NCLT Hyderabad on June 3, 2019, approved the resolution plan submitted by Ms. Mamta Binani (respondent No. 2). Further, the provisional order of attachment dated October 15, 2020, issued by Enforcement Directorate (respondent No. 2) under Section 5(1) PMLA, attaches immovable properties valued at Rs. 1,22,15,06,450/- for a period of 180 days. In response to the 'Provisional Order of Attachment', the applicant filed a petition seeking relief. The Hon'ble NCLAT, vide order dated January 21, 2022, set aside order dated June 3, 2019, passed by this Tribunal approving the resolution plan. Further, Canara Bank (Financial Creditor) challenged the above NCLAT order dated January 21, 2022, before the Hon'ble Supreme Court of India. The Supreme Court upheld NCLT order dated June 3, 2019, regarding the implementation of the resolution plan. The applicant files this application under Sections 32A and 60(5) of the IBC with the prayer of obtaining a declaration asserting that the assets and/or properties belonging to the corporate debtor, as outlined in the resolution plan, are not subject to attachment by the Enforcement Directorate (Respondent No. 1). Additionally, the applicant seeks the annulment of the provisional order of attachment issued under Section 5(1) of PMLA. Arguments by the Applicant The assets of the corporate debtor cannot be attached as they form an integral part of the approved resolution plan as approved by this Tribunal. The same, having been upheld by the Honourable Supreme Court, is now binding on all the stakeholders. Relying on newly introduced Section 32A of the IBC, the applicant contends that a corporate debtor cannot be prosecuted for an offense committed prior to the commencement of the CIRP once the resolution plan has been approved by the Tribunal. By giving reference to Manish Kumar vs. Union of India [(2021) 5 SCC 1], the applicant contends that the applicant cannot be faulted for the offenses committed by the erstwhile promoters of the corporate debtor and that the assets of the corporate debtor under the resolution plan cannot be attached by the Enforcement Directorate (Respondent No. 1). The order of attachment made under Section 5(1) of PMLA by the Enforcement Directorate (respondent no 1) in respect of the assets and properties of the corporate debtor forming part of the approved resolution plan is unsustainable and untenable under law as the said property is immune from the impugned provisional order of attachment under Section 32A of IBC. It was contended by the applicant that they are not concerned with the first PAO since it was passed prior to the approval of the resolution plan. However, the applicant is aggrieved with the second PAO since it was passed after approval of the resolution plan. It was contended that the subject properties do not fall under any of the exemptions enshrined in Section 32A IBC, and the impugned provisional order of attachment, therefore, is liable to be quashed or vacated. It was further contended that if there is any substance in the submissions of the Enforcement Directorate (Respondent No 1),...

NCLT Hyderabad: 'Provisional Order Of Attachment' Made Under PMLA Would Not Nullify The Protection Granted Under Section 32A IBC

Aryan Raj

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Aryan Raj

NCLT Hyderabad: 'Provisional Order Of Attachment' Made Under PMLA Would Not Nullify The Protection Granted Under Section 32A IBC

Aryan Raj

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Aryan Raj

This is a premium content
Available exclusively to
Our subscribers