AI Overview...
- Prosecution Cannot Proceed Against a Company in Liquidation Under PMLA
Courts and tribunals have clarified that once a company is under liquidation, proceedings under the Prevention of Money Laundering Act (PMLA) cannot be initiated or continued against the corporate debtor. The Insolvency and Bankruptcy Code (IBC), particularly Sections 32A and 60(5), provide that assets of a company in liquidation can be sold or transferred, and such actions are protected from prior criminal proceedings or attachments under PMLA. For instance, ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED vs CORPORATE POWER LIMITED - National Company Law Tribunal, Anil Goel Liquidator - M/s Varrsana Ispat Ltd. VS Stata Mater Investments Limited and Anr. - National Company Law Tribunal, and Deputy Director vs Sanjay Kumar Agarwal - National Company Law Tribunal emphasize that liquidation proceedings and sale of assets proceed unhindered despite prior PMLA attachments or investigations. - The tribunal and courts have held that once a resolution plan is approved under IBC, the corporate debtor is immune from prosecution for prior offenses, and assets attached under PMLA can be sold or transferred during liquidation (Shiv Charan VS Adjudicating Authority under the Prevention of Money Laundering Act, 2002, Department of Revenue, Ministry of Finance, New Delhi - Bombay, ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED vs CORPORATE POWER LIMITED - National Company Law Tribunal, Anil Goel Liquidator - M/s Varrsana Ispat Ltd. VS Stata Mater Investments Limited and Anr. - National Company Law Tribunal).
- The jurisdiction of PMLA authorities over assets diminishes once liquidation proceedings are initiated and approved, as the IBC's provisions take precedence, and the liquidation process is protected from criminal attachments or investigations (Deputy Director vs Sanjay Kumar Agarwal - National Company Law Tribunal, Nitin Jain Liquidator PSL Limited VS Enforcement Directorate - Delhi, Anil Goel Liquidator - M/s Varrsana Ispat Ltd. VS Stata Mater Investments Limited and Anr. - National Company Law Tribunal).
- Legal Principles Supporting Immunity During Liquidation
- Section 32A of the IBC explicitly bars prosecution for prior offenses against a corporate debtor once a resolution plan is approved, reinforcing that assets and proceedings are protected during liquidation (Shiv Charan VS Adjudicating Authority under the Prevention of Money Laundering Act, 2002, Department of Revenue, Ministry of Finance, New Delhi - Bombay, ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED vs CORPORATE POWER LIMITED - National Company Law Tribunal).
- The courts have also observed that the mere status of being a shareholder does not immunize individuals from prosecution if sufficient evidence of involvement or knowledge exists (S. Jayalakshmi vs Directorate of Enforcement, Chennai Zone-I, rep. by its Deputy Director - Madras).
- Proceedings under PMLA, including attachment and investigation, are subordinate to the liquidation process once it is underway and approved, with the Liquidator empowered to proceed with asset sale despite prior attachments or investigations (Anil Goel Liquidator - M/s Varrsana Ispat Ltd. VS Stata Mater Investments Limited and Anr. - National Company Law Tribunal, Deputy Director vs Sanjay Kumar Agarwal - National Company Law Tribunal).
- Analysis and Conclusion
- The consensus across these rulings is that once a company enters liquidation and a resolution plan is sanctioned under the IBC, proceedings under PMLA cannot proceed against the company or its assets.
- The legislative intent is to protect bona fide resolution applicants and ensure smooth liquidation without interference from prior criminal investigations or attachments under PMLA.
- Therefore, prosecution under PMLA cannot proceed against a company under liquidation, and assets attached under PMLA can be lawfully sold or transferred during liquidation proceedings, as confirmed by various tribunal and court rulings (Deputy Director vs Sanjay Kumar Agarwal - National Company Law Tribunal, ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED vs CORPORATE POWER LIMITED - National Company Law Tribunal, Anil Goel Liquidator - M/s Varrsana Ispat Ltd. VS Stata Mater Investments Limited and Anr. - National Company Law Tribunal).
Search Results for "Prosecution under Pmla Cannot Proceed against a Company under Liquidation"
2025 Supreme(Online)(NCLT) 2258 • India - National Company Law Tribunal
SHRI SANJIV DUTT, SHRI ASHISH KALIA, JJ
context of liquidation proceedings. ... (Paras 6.1, 6.2, 6.8) ... ... (B) Jurisdiction - The Tribunal cannot adjudicate matters that fall within the exclusive ... ... ... Ratio Decidendi: The Tribunal ruled that it cannot modify its own orders under Section 60(5) and that jurisdiction over attached ... [WPA No. 6575/2020] wherein it was observed that when two separate jurisdictions, such as the NCLT and another statutory authority, are involved, all issues concerning a company in liquidation #HL_STA....
2025 Supreme(Online)(NCLT) 3683 • India - National Company Law Tribunal
SMT. BIDISHA BANERJEE, CMDE. SIDDHARTH MISHRA, JJ
Liquidator permitted to proceed with sale; Section 32A bars prosecution for prior offenses. ... actions during liquidation. ... Process - Claimed no prohibition on liquidation process during ongoing PMLA investigation, citing statutory overrides in favor of ... The Liquidator is held entitled in law to proceed further with the liquidation process in accordance with the provisions of the IBC. ... Permission to proceed with the sale process is necessa....
2024 0 Supreme(Bom) 406 • India - Bombay
B. P. COLABAWALLA, SOMASEKHAR SUNDARESAN
for prior offences and its assets cannot be attached under the PMLA - The NCLT's authority to direct the release of attached properties ... Insolvency and Bankruptcy Code, 2016 - Section 32A - Prevention of Money Laundering Act, 2002 - Corporate debtor's immunity from prosecution ... examined the implications of Section 32A, affirming that once a resolution plan is approved, the corporate debtor is immune from prosecution ... The new management cannot be the disguised avatar of the old management. It #H....
2021 0 Supreme(Del) 2417 • India - Delhi
YASHWANT VARMA
IBC in the context of corporate liquidation - Court addresses whether PMLA authorities retain jurisdiction over corporate debtor’ ... s assets post-IBC liquidation approval - Ruling establishes that a resolution plan approval or sale of assets under IBC protects ... on proceeds of crime - The Legislature aims to protect bona fide resolution applicants from past liabilities. ... The Committee also noted that in furtherance of a criminal investigation and prosecution, the property of a company#H....
2025 0 Supreme(Mad) 2908 • India - BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dr.Justice G.Jayachandran, Ms.Justice R.Poornima, JJ
IPC, the enforcement Directorate collected inforamation and being satisfied, proceed under PMLA, registered ECIR No.4/CE ZO-11/2019 on 07.08.1969 and had filed complaint against the company M/s.Cethar Limited and 7 others and the Special Court had taken cognizence in C.C.No.11 of 2022 is
2024 0 Supreme(Mad) 2509 • India - IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M.Subramaniam, V.Sivagnanam
11, 21, 38) ... ... Facts of the case: ... The petitioner, as a major shareholder in a company ... The complaint contained sufficient material to proceed to trial and the dismissal of the discharge petition was upheld. ... The court emphasized that mere shareholder status does not immunize one from prosecution if evidence indicates knowledge or consent ... Therefore, a general principle that shareholder is not liable for prosecution under general penal law cannot have any implication with reference t....
2023 0 Supreme(Guj) 280 • India - Gujarat
BIREN VAISHNAV
on petitioners once the adjudicating authority decides to take action and therefore section 8 cannot be a ground on which petitioner ... believe’ is a jurisdictional fact and in absence of such ‘reason to believe’ arrived at by the authorities, bar of alternative remedy cannot ... oust jurisdiction of this court - As far as section 8 of PMLA is concerned, what is evident on reading provision is that onus shifts ... Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot#HL....
2025 Supreme(Online)(NCLT) 2899 • India - National Company Law Tribunal
Assets were attached by the ED under PMLA before and during liquidation. ... ... ... Ratio Decidendi: The interim stay on prior orders lapsed, empowering the Liquidator to proceed with asset sales while granting ... (A) Insolvency and Bankruptcy Code, 2016 - Sections 32A, 35(1)(e), 35(1)(f), 60(5) - Corporate Debtor under liquidation - Sale of ... , the Liquidator’s action to initiate and conclude the sale process cannot be faulted. ... Despite the ED’s possession and attachment of assets, the Liquida....
2025 Supreme(Online)(NCLT) 616 • India - National Company Law Tribunal
Mr. Praveen Gupta, Mr. Ashish Verma, JJ
) ... ... Facts of the case: ... The Applicant sought relief from the tribunal to release assets provisionally attached under PMLA ... Assistant Director of ED has served a reply dated 02.06.2021 on the RP/applicant and informed that the Respondent cannot handover the custody of the assets of the CD because Bank has challenged the order dated 08.05.2019 passed by Special Court, PMLA, Lucknow, by which the Special Court has rejected ... regard to whom the relevant investigating authority has, on the basis of material in its possession,....
2024 Supreme(Online)(MAD) 22823 • India - High Court of Madras
S.M. SUBRAMANIAM, J
Fact of the Case: The petitioner, a shareholder of a company involved in loans from IDBI Bank for refinancing purposes ... , was charged under the PMLA. ... Discharge - Money Laundering - PMLA Sections [3, 5(1), 24, 70] - The court upheld the trial court's dismissal of discharge under ... Therefore, a general principle that shareholder is not liable for prosecution under general penal law cannot have any implication with reference to a shareholder against whom a prosecution is launch....
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