Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ATFP) 244

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Viceroy Hotels Ltd. – Appellant
Versus
Deputy Director, Directorate Of Enforcement – Respondent
MP-PMLA-6562/CHN/2019|FPA-PMLA-3282/CHN/2019

Advocates:
For the Appellants/Petitioners: R. V. Yogesh
For the Respondents: Aditya Singla

Section 32-A of the Insolvency and Bankruptcy Code grants immunity to a corporate debtor and its assets from attachment or prosecution for pre-existing offences upon the approval of a resolution plan that results in a change of management, provided the new management is unconnected to the previous offences.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 32-A - Prevention of Money Laundering Act, 2002 - Sections 5 and 8 - Immunity from prosecution and attachment - Successful resolution plan - Change in management - The provision confers immunity to the corporate debtor and its assets from attachment, seizure, or confiscation in relation to offences committed prior to the commencement of the corporate insolvency resolution process, provided the resolution plan results in a change of management and the new management was not involved in the alleged offence, nor was a promoter or related party. (Paras 11, 12, 13)

(B) Appellate Jurisdiction - Scope - Appellate authority is required to examine whether the lower authority ignored binding procedural protections and statutory immunities afforded to a corporate entity under insolvency legislation. (Para 10, 11)

Facts of the case:
The appellant entity underwent a corporate insolvency resolution process. During the pendency of this process, property belonging to the entity was attached by the enforcement agency on the grounds that such assets were derived from proceeds of crime. Upon the approval of a resolution plan and the subsequent takeover of the entity by new management, the appellant sought the lifting of the attachment, invoking the protection of immunity granted under the insolvency statute for prior offences.

Findings of Court:
The court observed that the insolvency legislature intended to provide a clean slate to a successful resolution applicant. It held that once a resolution plan is approved and control is transferred to an unconnected entity, the property of the corporate debtor is shielded from enforcement actions arising from pre-existing offences. The refusal to recognize this immunity would hinder the revival of the corporate entity and undermine the legislative intent of the insolvency framework.

Issues: Whether the attachment of properties by enforcement authorities constitutes a valid action after the approval of a resolution plan, and if such attachment is barred by the statutory protections afforded to the corporate debtor under the insolvency legal regime.

Ratio Decidendi: Where a corporate debtor is successfully resolved and there is a transfer of management to a party not involved in the commission of prior offences, the immunities under Section 32-A are fully operational. This protection includes a bar against proceedings against the properties of the corporate debtor, as the entity is treated as a cleansed legal personality for the purpose of moving forward with its business operations.

Result: Appeal allowed; Provisional attachment orders set aside.

Table of Content
1. summary of pmla case initiated against properties of the corporate debtor. (Para 1)
2. appellant arguments invoking ibc section 32a immunity and successful cirp completion. (Para 2 , 3 , 4 , 5 , 6 , 7)
3. respondent (ed) arguments that pmla proceedings are independent and survive cirp. (Para 8 , 9 , 10)
4. legal interpretation of section 32a ibc and supreme court precedent on immunity. (Para 11 , 12)
5. application of 'clean slate' principle and immunity granted to resolution applicants. (Para 13)
6. final order allowing the appeal and setting aside provisional attachment. (Para 14 , 15)

This Order disposes of the Appeal No. FPA-PMLA-3282/CHN/2019 filed by M/s. Viceroy Hotels Ltd. being represented by its Managing Director, against the Order dated 11.09.2019 (Impugned Order) passed by the Ld. Adjudicating Authority (AA) under Section 8 (3) of the Prevention of Money Laundering Act, 2002 (PMLA) in the Original Complaint No. 1118/2019 (OC). The Provisional Attachment Order No. 04/2019 dated 26.03.2019 (PAO), which was confirmed vide the Impugned Order, had attached immovable properties valued at Rs. 315,39,25,225/- from M/s Viceroy Hotels Ltd. along with movable property of a Skoda vehicle valued at Rs. 11,00,000/-. The immovable properties were in the name of M/s Minerva Enterprises Pvt. Ltd., but owned by M/s Viceroy Hotels Ltd., as the said properties stood transferred to M/s Viceroy Hoteles Ltd. through an Order dated 01.05.2007 of the Hon’ble Andhra Pradesh High Court. The CBI had registered FIRs and filed a chargesheet in the Ld. Court of Additional Chief Metropolitan Magistrate, Egmore, Chennai on 16.06.2017 against M/s Best & Crompton Engineering Project Ltd. (BCEPL) among other persons. The investigation by CBI was done on the basis of the complaint filed for the loss of Rs. 364 Crores caused to the consortium of the Banks including Central Bank of India, Andhra Bank and Corporation Bank.

2. Ld. Counsel for the Appellant filed an Application dated 07.02.2024 under Section 32A of the Insolvency and Bankruptcy Code, 2016 (IBC) in the said Appeal. Ld. Counsel stated that M/s Viceroy Hotels Limited ("VHL") had entered into a Business Transfer Agreement ("BTA") dated 02.04.2011 with M/s Mahal Hotels Pvt. Ltd. ("MHPL") towards the Chennai hotel and its business (along with the concomitant assets and liabilities). The total agreed consideration for the BTA was Rs. 480 Crores. The BTA stipulated a Long Stop Date of 30.06.2011 for completion of the transaction. This Long Stop Date was subsequently extended till 31.12.2011. The transaction could not be completed even by the extended Long Stop Date of 31.12.2011. Therefore, VHL and MHPL mutually decided not to take forward the deal. MHPL is stated to have paid a total sum of Rs. 124,52,70,862/- to VHL towards the BTA. As BTA was mutually terminated, it was stated that these amounts were decided to be treated as advances from MHPL to VHL, which were decided to be repaid. Towards this purpose, a deed of confirmation was executed on 16.09.2013 between VHL and MHPL.

3. Ld. Counsel for the Appellant further argued that around 2016, allegations were levelled against the holding company of MHPL, being M/s Best and Crompton Engineering Project Ltd ("BCEPL"). It was alleged that BCEPL along with other companies belonging to M/s Sujana Group defrauded banks and obtained loans. It was alleged that the funds so obtained from Banks by BCEPL and its group companies were invested using several subsidiaries. The amounts invested in VHL, as a part of the BTA transaction with MHPL, were sourced from such loans. On the premise that the advances supposedly received by VHL as a part of BTA and the interest thereon still continued on the books of VHL, ED proceeded against VHL under PMLA.

4. Ld. Counsel for the Appellant submitted that in the meantime, Corporate Insolvency Resolution Process (CIRP) proceedings were admitted against VHL on 12.03.2018 and moratorium was imposed under Sectio

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2026 Supreme(Online)(ATFP) 244

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYBalesh Kumar, Member, Rajesh Malhotra, MemberViceroy Hotels Ltd. – AppellantVersusDeputy Director, Directorate Of Enforcement – RespondentMP-PMLA-6562/CHN/2019|FPA-PMLA-3282/CHN/2019

Cases Referred (1)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Viceroy Hotels Ltd. – Appellant
Versus
Deputy Director, Directorate Of Enforcement – Respondent
MP-PMLA-6562/CHN/2019|FPA-PMLA-3282/CHN/2019