Provisional attachment of assets post-approval of the resolution plan under IBC Section 32A is impermissible as it undermines the Corporate Insolvency Resolution Process.

JUDGMENT

Prathiba M. Singh, J. (Oral)--This hearing has been done through hybrid mode (physical and virtual hearing).

CM APPL. 4434/2021 (for exemption)

2. Allowed, subject to all just exceptions. Application is disposed of.

W.P.(C) 1547/2021 & CM APPL. 4433/2021 (for stay of the provisional attachment order)

3. The Union Bank of India has approached this Court challenging the provisional attachment order dated 15th October, 2020 passed by the PMLA Adjudicating Authority i.e., Deputy Director, Directorate of Enforcement, under the provisions of Prevention of Money Laundering Act, 2002 (hereinafter referred as "PML Act").

4. The case of the Petitioner, Union Bank of India E Andhra Bank (hereinafter, "Bank"), is that the account of the Respondent No.4 - M/s. Deccan Chronicles Holding Limited, was declared as a Non-Performing Asset ("NPA") on 31st December 2012. Thereafter, proceedings were initiated before the Debt Recovery Tribunal by the Petitioner against Respondent No. 4 and a recovery certificate was issued in its favour by the DRT. Further, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereafter referred as "SARFAESI Act") was also taken by the Petitioner Bank, which at that stage was called the Andhra Bank.

5. During the pendency of the SARFAESI proceedings, Canara Bank, one of the lenders to the said debtor/Respondent No. 4, approached the National Company Law Tribunal, Hyderabad (hereinafter referred as NCLT") under Section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the "IBC") for initiation of the Corporate Insolvency Resolution Process (hereinafter referred as "CIRP") against the debtor. The Resolution plan, submitted by the SREI Multiple Asset Investment Trust-Vision India Fund was finally approved by the NCLT on 3rd June, 2019.

6. However, while the implementation of the resolution plan was in process, the impugned order has been passed by the Directorate of Enforcement (hereinafter referred as "ED") attaching the properties of Respondent No.4, including three properties already mortgaged to the Bank. It is the case of the Petitioner that this has had a negative impact on the CIRP and realization of the debt of the Petitioner from the Respondent No.4.

7. Mr. Alok Kumar, ld. counsel appearing for the Petitioner submits that in another similar matter involving another debtor, titled JSW Steel Ltd. v. Mahender Kumar Khandelwal and Ors., (AT) (Insolvency) No. 957/2019, the present issue of conflict, was raised before the Union of India, Ministry of Corporate Affairs through its Department of Financial Services, and the stand of Ministry of Corporate Affairs, in their Counter Affidavit, was clear that such intervention by the ED or any such authority would have a negative effect on the entire CIRP process. The statement of the Ministry of Corporate Affairs, as recorded in the judgment of the National Company Law Appellate Tribunal, Delhi, in JSW Steel (Supra) is set out below:

"3) That pursuant to the captioned notice, the Ministry had called for meeting of the officials of Department of Financial Services and the Banks who were members of the Committee of Creditors on October 3rd, 2019 to ascertain their views and formalize the response of this Ministry, in view of rippling effects it would have in this case as well as other cases as well. In the meeting, it was unanimously recognized that the rights of Secured Financial Creditors are to be protected in the resolution of the Corporate Debtor and the incumbent resolution applicant is bona fide investor who acquires and takes over the Non-performing Assets (NPA) company as a going concern and facilitates maximization