Section 32A of the IBC, 2016 grants corporate debtors immunity from prosecution and asset attachment upon resolution plan approval, overriding provisions of the PMLA, 2002.

JUDGMENT :

Somasekhar Sundaresan, J.

1. Rule. Respondents in each petition, waive service. By consent of parties, rule made returnable forthwith, and both the petitions are taken up for hearing and final disposal.

2. The implications of Section 32A of the Insolvency and Bankruptcy Code, 2016 (for short, the "IBC, 2016") for corporate debtors and their assets, upon approval of resolutions, and indeed for enforcement agencies that have attached assets of such corporate debtors, fall for consideration in the captioned Writ Petitions. Section 32A of the IBC, 2016 provides for immunity to corporate debtors and their assets, upon approval of a resolution plan, subject to certain conditions stipulated in that provision.

Factual Matrix:

3. The case at hand involves resolution of DSK Southern Projects Private Limited ("Corporate Debtor") under the IBC, 2016. The Corporate Debtor had been subjected to a Corporate Insolvency Resolution Process (“CIRP”) since 9th December, 2021 at the instance of a financial creditor. Eventually, a resolution plan propounded by Mr. Shiv Charan, Ms. Pushpalata Bai and Ms. Bharti Agarwal ("Resolution Applicants") came to be approved by the Learned National Company Law Tribunal, Mumbai (“NCLT”) by an order dated 17th February, 2023 (“Approval Order”) passed under Section 31 of the IBC, 2016.

4. On 20th October, 2017 i.e. nearly four years prior to the commencement of the CIRP, various First Information Reports alleging, among others, offences of cheating and criminal breach of trust had been filed against the Corporate Debtor and its erstwhile promoters. The offences alleged, being "scheduled offences" under the Prevention of Money Laundering Act, 2002 (for short the "PMLA, 2002"), an Enforcement Case Information Report being ECIR/01/MBZO-II/2018 dated 8th March, 2018 (“ECIR”) came to be filed by the Directorate of Enforcement (“ED”). The ECIR estimated the "proceeds of crime" to be in the order of Rs. 8,522.27 crores. Pursuant to the ECIR, an “original complaint” being O.C.No.1104/2019 came to be filed by the ED, leading to attachment proceedings, amongst others, against the assets of the Corporate Debtor. Four bank accounts of the Corporate Debtor with an aggregate balance of Rs.3,55,298/-, and 14 flats constructed by the Corporate Debtor valued at Rs.32,47,55,298/- (aggregating to Rs. 32,51,10,596/-) were attached (“Attached Properties”). The attachment was levied initially, by way of a provisional attachment under Section 5 of the PMLA, 2002 on 14th February, 2019, and subsequently continued, by a confirmatory order dated 5th August, 2019 passed by the Adjudicating Authority under Section 8 of the PMLA, 2002. The attachment continued even after the commencement of the CIRP, and further continued even after approval of the resolution plan. It is the continuation such attachment that lies at the heart of these proceedings.

5. Writ Petition (L) No.9943 of 2023 (“WP 9943”), is filed by the Resolution Applicants against the Adjudicating Authority under the PMLA, 2002 as Respondent No.1 and the Deputy Director, ED, as Respondent No.2. The Resolution Applicants seek quashing of the ECIR, the orders attaching the Attached Properties and the “original complaint”, based on which the attachment was effected – all, insofar as they relate to the Corporate Debtor and its assets. The Resolution Applicants seek a writ directing the Respondents to release the Attached Properties, pursuant to the Approval Order. The Approval Order [at Paragraph 17(e)], by relying upon Section 32A of the IBC, 2016, had explicitly directed the ED to release the Attached Properties.

6. Writ Petition (L) No.29111 of 2023 (“WP 29111”) is filed by the ED challenging the authority and legal capacity of the NCLT to pass orders invoking Section 32A of the IBC, 2016 in a manner that (according to the ED) renders nugatory, the PMLA, 2002 and its legislative objective. The ED did not seek quashing of the Approval Order, but has sought quashing of a subsequen