NCLT Denies Jurisdiction to Interfere in PMLA Property Attachment
Tribunal Upholds CoC's Decision, Dismisses Resolution Professional's Plea for De-Attachment
In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Bench, has dismissed applications filed by Mr. Vikram Kumar, Resolution Professional for Dr. Jain Video on Wheels Ltd., seeking the de-attachment of properties provisionally attached under the Prevention of Money Laundering Act, 2002 (PMLA). The tribunal ruled that it lacked jurisdiction to interfere with orders passed by the PMLA Adjudicating Authority and upheld the commercial wisdom of the Committee of Creditors (CoC).
The judgment, delivered by Shri Manni Sankariah Shanmuga Sundaram and Shri Atul Chaturvedi, clarified that the NCLT cannot adjudicate matters falling outside the scope of the Insolvency and Bankruptcy Code, 2016 (IBC). The tribunal emphasized that any remedy regarding the attached properties lies before the appropriate forum under PMLA.
The case involved the attachment of an industrial plot in Gautam Budh Nagar, allegedly representing proceeds of crime from inflated bills causing losses to the government exchequer. The Resolution Professional argued that such attachment hindered the Corporate Insolvency Resolution Process (CIRP) and violated the moratorium under Section 14 of the IBC.
However, the Enforcement Directorate (ED) contended that the NCLT has no jurisdiction to entertain challenges against provisional attachment orders confirmed by the PMLA Adjudicating Authority. They argued that the proceedings under PMLA, aimed at preventing money laundering, are distinct and cannot be interfered with by the NCLT.
The tribunal, aligning with precedents from the Supreme Court and the National Company Law Appellate Tribunal (NCLAT), reiterated that the commercial wisdom of the CoC is paramount and cannot be challenged by an unsuccessful Resolution Applicant. It noted that the bar under Section 32A of the IBC, protecting assets from attachment for prior offences, applies only post-approval of a resolution plan.
Consequently, the applications filed by Mr. Vikram Kumar were dismissed, reinforcing the principle that the NCLT does not possess jurisdiction to interfere with decisions made by other statutory authorities, such as those under PMLA.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Commercial wisdom of the Committee of Creditors (CoC) is paramount and cannot be challenged by an unsuccessful Resolution Applicant - NCLT does not have jurisdiction to interfere with decisions of PMLA Adjudicating Authorities regarding attachment of properties.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 14, 60(5), 32A; Prevention of Money Laundering Act, 2002 - Sections 5, 8
