NCLT Under IBC Is Not Empowered To Direct De-Attachment Of Property Attached Under PMLA By ED: NCLT Bengaluru
The National Company Law Tribunal (NCLT), Bengaluru Bench of Justice Shri. Sunil Kumar Aggarwal (Judicial Member) and Shri. Radhakrishna Sreepada (Technical Member) has held that the NCLT under the IBC is not empowered to direct the de-attachment of property attached under the PMLA by the Enforcement Directorate, as such power falls within the realm of public law over which the NCLT has...
The National Company Law Tribunal (NCLT), Bengaluru Bench of Justice Shri. Sunil Kumar Aggarwal (Judicial Member) and Shri. Radhakrishna Sreepada (Technical Member) has held that the NCLT under the IBC is not empowered to direct the de-attachment of property attached under the PMLA by the Enforcement Directorate, as such power falls within the realm of public law over which the NCLT has no jurisdiction.
The present application has been filed by the Resolution Professional under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking direction to the Enforcement Directorate (ED) to de attach and release the property attached under the Provisional Attachment Order (PAO) and hand over the property to the Resolution Professional (RP).
The Applicant submitted that provisions of the IBC, especially Sections 14, 32A, 63, and 238, override the Prevention of Money Laundering Act, 2002 (PMLA), making the attachment by ED invalid post commencement of Corporate Insolvency Resolution Process (CIRP).
The Tribunal noted that the Appellate Tribunal in Anil Kohli held that section 238 of the IBC does not override the PMLA when there is inconsistency concerning resolution processes involving tainted assets. The ED under the PMLA is not a creditor but is a public enforcement agency to uphold penal objectives of the PMLA and international obligations. The PMLA and the IBC operate in a different sphere and no irreconcilable conflict exists between the two enactments. A valid attachment under the PMLA cannot be set aside merely because CIRP proceedings are going on. The NCLT/NCLAT are not empowered to set aside the confirmed attachments under the PMLA.
It relied on the Supreme Court's judgment in Kalyani Transco Vs. M/s. Bhusan Power and Steel Ltd and Others wherein it was held that the NCLT is constituted under section 408 of the Companies Act, not under the IBC. The NCLT cannot travel beyond the scope laid down under sections 31 and 60 of the IBC. While the NCLT is empowered to judicially review decisions of the Statutory or Government Authorities related to public law, section 60(5) of the IBC mandates it to deal with the matters relating to or arising out of the Insolvency Resolution Process only.
The Apex Court also held that decisions taken in the realm of public law by the statutory or government authorities do not fall within the remit of the scope of the NCLT under the IBC. Therefore, where rights of the corporate debtor arise outside the IBC especially in public law, the NCLT cannot be approached under the IBC to enforce such rights to bypass other forums.
Accordingly, the present application was dismissed.
Case Title: Ramanathan Bhuvaneshwari, RP of M/s Dreamz Infra India Private Limited Versus Enforcement Directorate
Case Number: IA NO. 28 of 2024
Order Date: 28/07/2025