1. Appeal under Section 26 of PMLA challenging confirmation of provisional attachment order — Resolution plan approved under IBC. (Para 2 , 3 , 8 , 9 )
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2025 Supreme(Online)(ATFP) 13293
APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, V. Anandarajan, Member
M/s Dash Exports Pvt. Ltd. – Appellant
Versus
The Deputy Director Directorate of Enforcement New Delhi – Respondent
FPA-PMLA-5922/DLI/2023
Important Points
Section 32A(2) IBC bars action against property only after resolution plan approval, not nullifying prior provisional attachments. Section 32A(1) immunity is conditional and not automatic.
Subject
Criminal Law - Money Laundering
Act Referred
Prevention of Money Laundering Act, 2002: S.26, S.5
Insolvency and Bankruptcy Code, 2016: S.32A(1), S.31, S.14(1)(a), S.60, S.61
Companies Act, 2013: S.408, S.410, S.2(60)
Limited Liability Partnership Act, 2008: S.2(j)
Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016: Reg.32
Insolvency and Bankruptcy Code, 2016: S.32A(1), S.31, S.14(1)(a), S.60, S.61
Companies Act, 2013: S.408, S.410, S.2(60)
Limited Liability Partnership Act, 2008: S.2(j)
Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016: Reg.32
Headnote
(A) Prevention of Money Laundering Act, 2002 - Section 5 - Provisional Attachment Order - Section 26 - Appeal - Insolvency and Bankruptcy Code, 2016 - Section 32A - Liability for prior offences - Section 31 - Approval of resolution plan - Bar on action against property - Conditional immunity from prosecution.
(B) Section 32A(2) of the IBC, 2016 - A bar against taking any action against property of the corporate debtor arises only upon approval of a resolution plan under Section 31 of the IBC that results in change of control to a qualifying person. This bar does not nullify or invalidate a provisional attachment order passed prior to such approval; it only prevents future attachment or action after the approval. (Paras 9-14)
(C) Section 32A(1) of the IBC, 2016 - The immunity from prosecution for the corporate debtor is not automatic upon approval of the resolution plan. It is subject to the conditions that the person acquiring control is not a promoter, related party, or a person who abetted or conspired in the offence. The competent criminal court must record a finding to that effect before the prosecution ceases. (Paras 12-15)
(D) Interpretation of statutes - Courts cannot rewrite or recast legislation; they must give effect to the plain language of the provision. The legislative intent behind Section 32A is to provide a clean slate only from the date of approval of the resolution plan, not to erase prior valid actions such as attachments. (Paras 16-17)
Facts of the case:
The appellant, a resolution applicant, acquired control of the corporate debtor through a resolution plan approved by the NCLT on 29.09.2021. Prior to that approval, the respondent Enforcement Directorate had provisionally attached a property of the corporate debtor on 25.08.2021, which was confirmed by the Adjudicating Authority on 26.05.2022. The appellant sought release of the property relying on Section 32A of the IBC, arguing that the approval of the resolution plan extinguished the liability and barred any action against the property.
Findings of Court:
The Tribunal held that Section 32A(2) does not nullify a provisional attachment order passed before the approval of the resolution plan; it only bars future action after such approval. The immunity under Section 32A(1) is conditional and requires adjudication by a competent court. The appeal was dismissed, but the Tribunal clarified that the appellant may pursue other remedies including against prosecution if pending.
Issues: 1. Whether Section 32A(2) of the IBC, 2016 nullifies a provisional attachment order passed under the PMLA before the approval of a resolution plan? 2. Whether the immunity from prosecution under Section 32A(1) is automatic upon approval of the resolution plan?
Ratio Decidendi: The bar under Section 32A(2) applies prospectively from the date of approval of the resolution plan; it does not invalidate prior lawful attachments. The conditions for immunity under Section 32A(1) must be satisfied and adjudicated, not presumed automatically. The legislative intent is to protect property covered by a resolution plan only after its approval, not to undo prior actions.
Result: Appeal dismissed.
(B) Section 32A(2) of the IBC, 2016 - A bar against taking any action against property of the corporate debtor arises only upon approval of a resolution plan under Section 31 of the IBC that results in change of control to a qualifying person. This bar does not nullify or invalidate a provisional attachment order passed prior to such approval; it only prevents future attachment or action after the approval. (Paras 9-14)
(C) Section 32A(1) of the IBC, 2016 - The immunity from prosecution for the corporate debtor is not automatic upon approval of the resolution plan. It is subject to the conditions that the person acquiring control is not a promoter, related party, or a person who abetted or conspired in the offence. The competent criminal court must record a finding to that effect before the prosecution ceases. (Paras 12-15)
(D) Interpretation of statutes - Courts cannot rewrite or recast legislation; they must give effect to the plain language of the provision. The legislative intent behind Section 32A is to provide a clean slate only from the date of approval of the resolution plan, not to erase prior valid actions such as attachments. (Paras 16-17)
Facts of the case:
The appellant, a resolution applicant, acquired control of the corporate debtor through a resolution plan approved by the NCLT on 29.09.2021. Prior to that approval, the respondent Enforcement Directorate had provisionally attached a property of the corporate debtor on 25.08.2021, which was confirmed by the Adjudicating Authority on 26.05.2022. The appellant sought release of the property relying on Section 32A of the IBC, arguing that the approval of the resolution plan extinguished the liability and barred any action against the property.
Findings of Court:
The Tribunal held that Section 32A(2) does not nullify a provisional attachment order passed before the approval of the resolution plan; it only bars future action after such approval. The immunity under Section 32A(1) is conditional and requires adjudication by a competent court. The appeal was dismissed, but the Tribunal clarified that the appellant may pursue other remedies including against prosecution if pending.
Issues: 1. Whether Section 32A(2) of the IBC, 2016 nullifies a provisional attachment order passed under the PMLA before the approval of a resolution plan? 2. Whether the immunity from prosecution under Section 32A(1) is automatic upon approval of the resolution plan?
Ratio Decidendi: The bar under Section 32A(2) applies prospectively from the date of approval of the resolution plan; it does not invalidate prior lawful attachments. The conditions for immunity under Section 32A(1) must be satisfied and adjudicated, not presumed automatically. The legislative intent is to protect property covered by a resolution plan only after its approval, not to undo prior actions.
Result: Appeal dismissed.
Legal Category Hierarchy
- crime and sentencing
- insolvency and bankruptcy code
- practice and procedure
Advocates:
For the Appellants/Petitioners: Mannat Arora, Anand Mishra, Aditya V. Bajpai
For the Respondents: Aditya Singla, Raghav Bakshi
For the Appellants/Petitioners: Mannat Arora, Anand Mishra, Aditya V. Bajpai
For the Respondents: Aditya Singla, Raghav Bakshi
Table of Contents
2. Appellant argued Section 32A IBC ceases liability and bars attachment after resolution plan approval. Respondent argued attachment valid prior to approval. (Para 4 , 5 , 6 , 7 , 9 )
3. Appeal dismissed — no interference with provisional attachment order — appellant not precluded from pursuing other remedies. (Para 18 , 19 )
4. Does Section 32A(1) of IBC automatically cease prosecution of the corporate debtor upon approval of resolution plan?
No, it is subject to conditions that the acquirer is not an abettor or conspirator; a finding by the Special Court is required. (Para 12 , 15 )
5. Does Section 32A(2) of IBC nullify a provisional attachment order passed prior to approval of resolution plan?
No, it bars future action but does not undo prior attachments; the bar applies only to attachments after approval. (Para 14 , 16 )
6. What is the trigger event for the bar under Section 32A(2) of IBC?
The approval of the resolution plan under Section 31 of IBC is the seminal event; attachment before that remains valid. (Para 13 , 14 , 15 )
7. Can a court read down Section 32A of IBC to extend immunity to prior attachments?
No, the court cannot rewrite or recast legislation; it must interpret the plain language of the statute. (Para 16 )
8. What is the effect of the recall of the Supreme Court judgment in Kalyani Transco?
The judgment was recalled and cannot be relied upon as binding precedent. (Para 17 )
ORDER
12.08.2025
By this appeal filed under Section 26 of the Prevention of Money Laundering Act, 2002 ( in short “the Act of 2002”), a challenge has been made to the order dated 26.05.2022 passed by the Adjudicating Authority confirming the Provisional Attachment Order (‘PAO’) dated 25.08.2021.
Issue(s) raised by the appellant:
2. This order would address the issue raised by the Ld. Counsel of the appellant, M/s Dash Exports Pvt. Ltd. which underwent a Resolution Plan approved by the National Company Law Tribunal (‘ in short ‘ NCLT’) and therefore the Ld. Counsel for the appellant made arguments only in reference to Section 32A of the Insolvency and Bankruptcy Code, 2016 ( in short “IBC 2016’). It was submitted that in the proceedings before the NCLT, the appellant No.2 M/s Asteroid Shelter Homes Private Limited remained successful Resolution applicant in Corporate Insolvency Resolution Process (CIRP) of M/s Dash Exports Pvt. Ltd.. The Resolution Plan was approved by the NCLT on 29.09.2021 and in the light of the approval of the Resolution Plan, there was change of control of the management of the Corporate Debtor.
3. Prior to approval of the Resolution Plan, an order for Provisional Attachment of the property was passed on 25.08.2021 and on account of the said order followed by its confirmation by the Adjudicating Authority vide its impugned order, the appellant could not get the property. The prayer was made for release of the property in light of the Section 32A of the IBC 2016.
4. A reference of Section 32A(1) of the IBC 2016 was given to indicate that the liability of the Corporate Debtor for an offence committed prior to commencement of CIRP shall cease and the Corporate Debtor shall not be prosecuted for a such offence from the date, the Resolution Plan is approved by the Adjudicating Authority under Section 31 of the IBC 2016 subject to the condition given under clause (a) and (b) of Section 32A(1) of the IBC. The emphasis of the Ld. Counsel for the appellant was that on the initiation of the process for Resolution Plan, the respondent should not have taken action in furtherance to the allegation against the Corporate Debtor for criminal activity. The respondent ignored the aforesaid and caused PAO subsequent to it.
5. Ld. Counsel for the appellant has referred the judgment of the High Court of Delhi in Rajiv Chakraborty Resolution Professional of EIEL versus Directorate of Enforcement reported in MANU/DE/4428/2022 to submit that the judgment aforesaid is in conflict to the judgment of the Supreme Court. Ld. Counsel for the appellant relied on the judgment of the Supreme Court in the case of Kalyani Transco versus Bhushan Power and Steel Ltd. and Others reported in 2025 SCC Online SC 1010 where it has been held that NCLT and National Company Law Appellate Tribunal (NCLAT) have been constituted under Section 408 and 410 of the Companies Act, 2013 and not under the IBC 2016. The jurisdiction and powers of the NCLT and NCLAT are well defined under Sections 31, 60 and 61 of the IBC,2016. Neither NCLT nor NCLAT are vested with the powers of the judicial review over the decision taken by the Government or the Statutory authority in relation to a matter in the realm of public law. In the light of the judgment of the aforesaid, the appellant had no option but to seek relief from this Tribunal in reference to Section 32A of the IBC 2016 to cause interference in the impugned order.
6. Ld. Counsel for the appellant made a reference to a Writ Petition to challenge the impugned order before the High Court of Delhi when this Tribunal was not functional. The High Court of Delhi relegated the applicant to take remedy before the Tribunal. The prayer was made to cause interference in the PAO so as the order passed by the Adjudicating Authority in reference to Section 32A of the IBC 2016.
7. Ld. Counsel for the appellant did not raise any other issue than referred to above despite an opportunity and even pleaded in the appeal in reference to S
