Properties of a corporate debtor under attachment for money laundering can still be utilized in insolvency resolution, emphasizing the non-conflict between IBC and PMLA.

ORDER

1. This is an application filed by the ‘Enforcement Directorate, Hyderabad Zone’ (hereinafter referred as ‘Applicant’) under Section 60 (5) of ‘The Insolvency and Bankruptcy Code, 2016 ’ (hereinafter referred as ‘IBC') read with Rule 11 of The National Company Law Tribunal Rules, 2016 against the Resolution Professional of M/s. G.S. Biotech Limited seeking the following reliefs:

i. Allow the Applicant herein to be impleaded in the C.P. (IB) No. 335/7/HDB/2022 and direct the Respondent to provide the Applicant i.e., Directorate of Enforcement, Hyderabad Zone with copies of all relevant/required documents

ii. Exclude the properties attached by the Applicant under PMLA from the IM and purview of CIRP.

iii. Consequently, provide an opportunity to the Applicant herein to submit its contentions elaborately pertaining to the properties of CD that are attached under the PAO.

2. The core contention of the applicant is that, the assets of the Corporate Debtor which is under CIRP by virtue of the order of this Tribunal dated 24.03.2023 were provisionally attached by the applicant under the provisions of PMLA vide the order No. 07/2017 dated 29.09.2017 and order No. 09/2022 dated 25.03.2022 and the same were later confirmed vide confirmation order dated 19.03.2018 and 16.09.2022 respectively by the Adjudicating Authority under the PMLA. As such the said properties are amenable to the jurisdiction of this Tribunal under the IB Code, however as the Resolution Professional is proceeding with the said assets, the present application is filed seeking to implead the applicant in the company petition and for exclusion of the said assets from CIRP of the Corporate Debtor.

3. This application is resisted by the Resolution Professional of Corporate Debtor contending, inter alia, that mere attachment of the properties of the Corporate Debtor by the competent authority under PMLA by itself will not take away the rights of the Resolution Professional to deal with the said properties under the provisions of the IB Code.

4. In the light of the contest as above we have framed the following point.

POINT:

Whether the applicant is necessary and proper party for the just and proper adjudication of the company petition?

5. We have heard the Learned Counsel Mr Narendra Naik, for the applicant and Learned Counsel Mr B Ravi Teja, for the Respondent.

POINT:

Whether the applicant is necessary and proper party for the just and proper adjudication of the company petition?

6. At the outset it is to be stated that this Tribunal having found that the Corporate Debtor defaulted in repaying a financial debt exceeding one crore rupees, has ordered for CIRP of the Corporate Debtor.

7. This Tribunal observes that mere attachment of the properties of the corporate Debtor under the provisions of the PMLA Act, will not divest the corporate debtor, its “ownership and other rights” over the said properties. It is observed that an attachment is only a legal embargo created over the said property. Moreover, the final Adjudication by the Competent Authority under the PMLA is pending.

8. Therefore, when the title as well as the other rights of corporate debtor over the subject property in this case remain with the Corporate Debtor, the said properties are to be invariably made available for CIRP of the Corporate Debtor. In this regard, we wish to refer to The Directorate of Enforcement vs Manoj Kumar Agarwal & Ors., The Hon'ble National Company Law Appellate Tribunal, New Delhi, Company Appeal (AT) (Ins) No.575/2019 & Company Appeal (AT) (Ins) No.576/2019, dated 09 April 2021, wherein it was held as follows:

“42. In our view, there is no conflict between PMLA and IBC and even if a property has been attached in the