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NATIONAL COMPANY LAW TRIBUNAL
SMT. BIDISHA BANERJEE, CMDE. SIDDHARTH MISHRA, JJ
ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED – Appellant
Versus
CORPORATE POWER LIMITED – Respondent
Company Petition (IB) No. 23/KB/2019 | APPEAL (IBC)/1(KB)2025
The case did not explicitly hold that an attachment under Section 5 of the PMLA is a civil sanction. Instead, the judgment clarified that proceedings under the PMLA, including provisional attachment orders, are distinct from civil sanctions and are primarily aimed at confiscation of property derived from or involved in criminal activity. The court emphasized that attachment orders under PMLA do not confer a superior or overriding right in the property and do not result in civil sanctions.
The court recognized that the objectives of the PMLA are related to criminal proceedings and confiscation measures, and such attachment actions are part of the criminal law framework rather than civil sanctions. It also acknowledged that the attachment under PMLA is a provisional, investigative measure that does not necessarily equate to a civil penalty or sanction.
Therefore, the case's analysis indicates that attachment orders under Section 5 of PMLA are not considered civil sanctions but are procedural measures within a criminal law context aimed at investigating and confiscating proceeds of crime.
ORDER
Per Bidisha Banerjee, Member (Judicial):
1. The Court congregated through a hybrid mode.
2. Ld. Sr. Counsels/ Counsels were heard at length.
A. Parties to the proceedings:
3. The present application preferred by Mr. Pankaj Dhanuka, liquidator of the corporate debtor – Corporate Power Limited, hereinafter referred to as “Applicant”/ “Liquidator” under Section 60 (5) read with Rule 35(1)(F) of the Insolvency and Bankruptcy Code, 2016 , for brevity “I&B Code” against the Deputy Director of Directorate of Enforcement, hereinafter referred to as “Respondent No. 1” and Assets Care and Reconstruction enterprise Limited, hereinafter referred to as “Respondent No. 2”.
B. Reliefs sought:
4. The Applicant liquidator has sought for the following reliefs:
a. permit the Liquidator to carry out the sale of the Corporate Debtor, Corporate Power Limited, as a going concern, on an ’as is where is’ basis, as per the directions of this Hon’ble Tribunal as contained in the order dated 20.12.2024 passed in I.A. No. 447/2024, notwithstanding the provisional attachment order no. 06/2024 dated 24.10.2024 in ECIR/NGSZO/02/2023 passed by the Respondent No.1, or any subsequent confirmation thereof, and any proceeding in relation thereto;
b. grant approval to the Liquidator under the proviso to 33(5) of the Code, to institute appropriate legal proceedings against the provisional attachment order no. 06/2024 dated 24.10.2024 in ECIR/NGSZO/02/2023 passed by the Respondent No.1, or any subsequent confirmation thereof, before a competent forum; and/ or pass any order(s) that this Hon’ble Tribunal may deem fit and proper.
C. Factual Matrix:
5. The facts lie in a narrow compass:
5.1 The liquidator has rushed to this Tribunal vide an application alleging interdiction and interference caused in the sale process of the corporate debtor – Corporate Power Limited by the Provisional Attachment Order being 06/2024 dated 24.10.2024 (“PAO”) in ECIR/NGSZO/02/2023, issued by the Deputy Director, Directorate of Enforcement, Nagpur (“ED”) during the liquidation process of the Corporate Debtor.
5.2 By way of the said PAO, the Directorate of Enforcement had provisionally attached certain assets and properties, inter alia, of the Corporate Debtor, under the provisions of Section 5 of the Prevention of Money Laundering Act, 2002 (“PMLA”).
5.3 After issuance of the PAO, the ED also preferred an original complaint, being Original Complaint No. 2481/2024 on 21.11.2024 (OC) before the Learned Adjudicating Authority, PMLA, under Section 5 (5) of the PMLA, 2002, seeking inter alia, confirmation of the PAO.
5.4 Resultantly, the Learned PMLA Adjudicating Authority commenced proceedings under Section 8 of PMLA, 2002 and issued a Notice to Show Cause on 04.12.2024 in this regard. The Corporate Debtor was arrayed as Defendant No. 26 in the said Original Complaint.
5.5 Hence, this application.
5.6 During the pendency of the instant application, the Learned Adjudicating Authority (PMLA) adjudicated the Original Complaint and confirmed the PAO by its order dated 16.04.2025.
5.7 During the course of arguments, the ED has clarified that it does not have any objection to prayer (b) above. However, the ED has raised vehement objection to the grant of prayer (a) due to pendency of investigation with regard to the properties of the corporate debtor required out of “proceeds of crime” and accordingly, the ED says that no adverse order that will cause unnecessary interference during the course of investigation and will jeopardise the entire PMLA proceedings, be passed.
5.8 In counter, the applicant – liquidator would submit that the Applicant is not seeking lifting or vacation of the attachment by ED, but merely seeking permission from this Tribunal to carry out the sale process of the Corporate Debtor on an ‘as is where is’ basis, which is permissible in terms of settled law.
D. Contentions of the Applicant – Liquidator:
6. In course of argument, Ld. Sr. Counsel Ms. Manju Bhuteria appearing on behalf of the liqu
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