NCLT Refuses to Order Release of ED-Attached Assets in MBS Impex Liquidation

Hyderabad, September 7 – The National Company Law Tribunal (NCLT), Hyderabad Bench , has ruled that it cannot direct the release of assets attached by the Enforcement Directorate (ED) in the liquidation of MBS Impex Private Limited , leaving the liquidator to pursue the PMLA Appellate Tribunal . In a related order, the tribunal directed the return of gold, diamonds, and silver held by a struck-off company .

The bench of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri partly allowed an application filed by liquidator Santosh Bhatia under Section 60(5) read with Section 35 of the Insolvency and Bankruptcy Code (IBC), 2016 .

Background of the Case

MBS Impex was admitted into Corporate Insolvency Resolution Process (CIRP) on November 13, 2019 , and ordered into liquidation on March 1, 2022 . The company's assets, as per its 2018-19 financial statements, comprised land and inventory of precious metals and stones.

The liquidator sought possession of ten land parcels secured by financial creditors and inventory consigned to Shreemukh Gold Private Limited – 131.063 kg of gold, 6,281.99 carats of diamonds, and 2,933.09 kg of silver.

The Core Issue: ED Attachment

All land assets were attached by the ED under the Prevention of Money Laundering Act (PMLA) in ECIR No.05/HYZO/2014. The liquidator had challenged the attachment before the Delhi High Court , which directed him to approach the PMLA Appellate Tribunal . An appeal was pending at the time of the NCLT hearing.

Arguments of the Parties

The liquidator argued that secured creditors – including RARE Assets Reconstruction Limited , INVENT Assets Securitisation & Reconstruction Pvt Ltd , Axis Bank , and Punjab National Bank – failed to realize their security within 180 days from the liquidation commencement date . Consequently, the assets vested in the liquidation estate . He alleged non-cooperation from creditors in handing over documents and possession, stalling the liquidation process.

Respondent No.2 (RARE Assets) countered that the liquidator had not taken timely steps and that the properties lacked proper demarcation, with pending litigation and ED attachment hindering realization. It denied any lack of cooperation and attributed delays to inherent difficulties.

NCLT's Ruling on ED Attachment

The tribunal noted that under Regulation 21A of the IBBI (Liquidation Process) Regulations, secured creditors who do not realize their security within 180 days must hand over the assets. Since none of the creditors intimated relinquishment or realized their security within the prescribed period, the assets became part of the liquidation estate .

However, the NCLT declined to order release from the ED attachment , observing:

"Therefore, we are of the considered opinion that this Tribunal is not the appropriate forum for directing release of the Schedule Assets , or the documents relating thereto, from the attachment imposed by the Enforcement Directorate."

It directed the liquidator to pursue the pending appeal before the PMLA Appellate Tribunal , citing an IBBI circular permitting insolvency professionals to approach the PMLA Special Court for restitution .

Return of Inventory Ordered

On the inventory, the tribunal found that Shreemukh Gold and its director Naidu Prakash had confirmed possession in August 2023 but failed to return the goods. Their claims of paying secured creditors directly – shifting from Rs.8 crores to over Rs.15 crores – were unsupported by any evidence. The tribunal declared their inaction " illegal, unjust and unlawful " and directed them to hand over the gold, diamonds, and silver to the liquidator.

Key Observations

"We accordingly declare the inaction of Respondent Nos.13 and 14 in handing over the inventory to be illegal, unjust and unlawful , and direct the erstwhile management of the Respondent No.13 and Respondent No.14 to hand over the said gold, diamonds/gemstones and silver articles to the Liquidator."

The tribunal also noted that Shreemukh Gold had been struck off from the register of the Registrar of Companies .

Implications

The ruling clarifies that the NCLT cannot override PMLA attachments and that liquidators must seek remedies under the PMLA framework. It also reinforces the obligation of third parties holding corporate assets to return them during liquidation, irrespective of claims of direct payments to creditors.

IA (IBC) 23/2026 was partly allowed and disposed of.