Advocates appeared:
For the Appellant(s) : Mr. Sajan Poovayya, Sr. Adv. Mr. Bharadwajaramasubramaniam R., Adv. Mr. Diwaagar R.s., Adv. Mr. Priyadarshi Banerjee, Adv. Mr. Rishabh Singhle, Adv. Ms. Leelavathi P., Adv. Ms. Shrinithi S.r., Adv. Mr. Gokulnath S., Adv. Ms. Vibha Shyam, Adv. Ms. Raksha Agrawal, Adv. Mr. Harshvardhan Sharma, Adv. Mr. Sujoy Chatterjee, AOR Mr. Rajiv Shakdher, Sr. Adv. Mr. B.dhanaraj, Adv. Mr. G.ananda Selvam, Adv. Mr. Habib Muzaffar, Adv. Mr. Karan Khetani, Adv. Mr. Jonathan Ivan Rajan, Adv. Ms. Sangamithra Loganathan, Adv. Mr. Anand Dilip Landge, AOR Mr. Krishnan Venugopal, Sr. Adv. Mr. Krishnan Agarwal, Adv. Ms. Elamathi M.s., Adv. Mr. Harnoor Singh, Adv. Mr. Shivendra Singh, AOR Mr. Labeeb Faaeq, Adv. Ms. Nandini Kaushik, Adv. Mr. Siddharth Venugopal, Adv. Ms. Umang Motiyani, Adv. Ms. Prakriti Rastogi, Adv. Ms. Aryama Singh Rajput, Adv.
For the Respondent(s): Mr. S Dwarakanath, A.S.G. Mr. Rajat Nair, Adv. Mr. Zoheb Hussain, Adv. Mrs. Gargi Khanna, Adv. Mr. Sachin Sharma, Adv. Mrs. Madhulika Upadhyay Aor, Adv. Mr. Shashank Bajpai, Adv. Mr. Raj Bahadur Yadav, AOR Mr. S. Dwarakanath, A.S.G. Mr. Rajat Vaishnaw, Adv. Mr. Prabhakar Yadav, Adv. Mr. H. Siddharth Bhandari, Adv. Mr. Mudit Bansal, Adv. Mr. S. Vijay Adithya, Adv. Mr. Abhyudey Kabra, Adv. Ms. Madhulika Upadhyay, AOR Mr. P B Suresh, Sr. Adv. Mr. Balaji Srinivasan, AOR Mr. K Gowtham Kumar, Adv. Mr. Vishwaditya Sharma, Adv. Ms. Deeksha Gupta, Adv. Ms. Harsha Tripathi, Adv. Ms. Kanishka Singh, Adv. Mr. Subornadeep Bhattacharjee, Adv. Mr. K Shiva, Adv. Mr. Rohan Dewan, Adv. Ms. Aakriti Priya, Adv. Mr. Udayaditya Banerjee, Adv. Ms. Suganya T.s., Adv. Mr. Parikshit Pitale, Adv. Mr. Krishnan Venugopal, Sr. Adv. Mr. Krishnan Agarwal, Adv. Ms. Elamathi M.s., Adv. Mr. Harnoor Singh, Adv. Mr. Shivendra Singh, AOR Mr. Labeeb Faaeq, Adv. Ms. Nandini Kaushik, Adv. Mr. Siddharth Venugopal, Adv. Ms. Umang Motiyani, Adv. Ms. Prakriti Rastogi, Adv. Ms. Aryama Singh Rajput, Adv. Mr. P. S. Sudheer, AOR Ms. Aanchal Tikmani, AOR

Summary of the Judgment

The Supreme Court of India, in a batch of civil appeals arising from NCLAT orders dated 18.08.2022 and 13.03.2023, dismissed challenges by liquidators of corporate debtors (including M/s Padmaadevi Sugars Ltd. and M/s Senthil Papers and Board Pvt. Ltd.) against provisional attachment orders issued under Sections 24 and 27 of the Prohibition of Benami Property Transactions Act, 1988 (Benami Act). (!) The NCLT and NCLAT had concurrently held that they lacked jurisdiction to entertain such challenges, directing appellants to pursue remedies exclusively under the Benami Act. (!) (!) (!) (!)

Factual Background

Investigations under the Income Tax Act revealed benami transactions where promoters transferred 100% shareholding of the corporate debtors to a beneficial owner (V.K. Sasikala) via an intermediary, using demonetized high-value currency (approx. Rs. 450 crores). Incriminating documents, share certificates, and sworn statements confirmed the use of demonetized notes during November-December 2016. (!) (!) (!) Corporate insolvency resolution processes (CIRP) commenced (e.g., 15.10.2018 for Padmaadevi Sugars), leading to liquidation orders (e.g., 20.04.2021). Post-liquidation, authorities issued show-cause notices under Section 24(1) and provisional attachments under Section 24(3), characterizing corporate debtors as benamidars holding properties for the beneficial owner. (!) (!) (!) Liquidators' applications before NCLT for stay were rejected for want of jurisdiction. (!) (!)

Issues and Tribunals' Findings

The core issue was whether NCLT has jurisdiction under the Insolvency and Bankruptcy Code, 2016 (IBC) to adjudicate challenges to Benami Act attachments during IBC liquidation. (!) NCLT/NCLAT ruled: (i) Benami Act is a complete self-contained code with its own adjudicatory hierarchy (Initiating Officer, Adjudicating Authority, Appellate Tribunal, High Court); (ii) IBC moratorium (Section 14) shields against creditor recovery but not sovereign penal actions for confiscation; (iii) NCLT's residuary jurisdiction (Section 60(5)) excludes review of public law determinations like benami status. (!) (!) (!) (!)

Parties' Submissions

Appellants contended IBC's primacy as a later comprehensive code (Section 238 non-obstante), moratorium applicability, Section 32A immunity post-resolution/liquidation sale, NCLT's exclusive jurisdiction over liquidation estate disputes, and Revenue's status as operational creditor under Section 53 waterfall. They argued attachments deplete estate value, frustrating IBC objectives. (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) Respondents countered that Benami Act (Sections 24-27, 46, 49-50, 67 non-obstante) provides exclusive remedies; benami-held property lacks beneficial ownership, excluding it from liquidation estate (Sections 36(3)(e), 36(4)(a)(i)); attachments are sovereign in rem actions vesting property in Central Government, unaffected by moratorium or IBC. (!) (!) (!) (!) (!) (!) (!) (!) (!)

Court's Analysis and Ratio Decidendi

Both enactments are special laws: Benami Act targets prohibition/penalization of benami holdings via structured attachment-adjudication-confiscation-vesting process (Sections 2(9), 3, 5, 24-27, 29, 45-46, 53, 60, 67); IBC focuses on time-bound insolvency resolution/maximization of debtor's beneficially owned assets. (!) (!) (!) (!) (!) (!) (!) In conflict, Benami Act prevails for benami determinations as its dominant public law purpose (confiscation of tainted property) cannot be subordinated to IBC; NCLT cannot exercise judicial review over such sovereign actions or bypass Benami Act's hierarchy. (!) (!) (!) (!) (!) (!) (!) (!) Benami property is not part of liquidation estate due to absence of beneficial ownership; moratorium/Section 32A inapplicable to penal confiscations (not creditor actions). (!) (!) (!) (!) Appellants' forum-shopping was an abuse of process. (!) (!)

Result

Appeals dismissed; exemplary costs of Rs. 5 lakhs per appeal imposed, payable to Supreme Court Advocates on Record Association within four weeks. (!) (!)