PMLA 2002 & of IBC – Interplay between PMLA attachment of assets of corporator debtor and immunity under Section 32A of IBC once Resolution Plan is approved.
On 20.10.2017, various FIRs for offences of cheating and criminal breach of trust were filed against the Corporate Debtor DSK Southern Projects Pvt Ltd and its erstwhile promoters. On 8.3.2018, the Enforcement Director filed ECIR was filed for the scheduled offences under PMLA, 2002, for the estimated proceeds of crime in the order of Rs.8,522.27 crores. The attachment of the properties under PMLA was confirmed on 5.8.2019. ‘
By the order dated 17.2.2023, NCLT, Mumbai, approved the Resolution Plan against corporate debtor DSK Southern Projects Pvt Ltd at the instance of financial creditor and CIRP initiated on 9.12.2021.
However, PMLA attachment continued after CIRP under IBC.
By the order dated 28.4.2023, the NCLT directed the ED to release the attached properties.
The Resolution Applicants filed writ petition challenging the attachment and the Enforcement Director filed another writ petition challenging order of NCLT invoking Section 32A.
The important issue arose for consideration in respect of the immunity under Section 32A of IBC for corporate debtors and their assets upon approval of RP and their implications also for enforcement agencies which have attached the assets of the corporate debtors.
HELD that a plain reading of Section 32A is non-obstante provision and is attracted only when a resolution plan is approved under section 31. Section 32A gives immunity to the liability of a corporate debtor for an offence committed prior to the commencement of CIRP. In other words, the corporate debtor is protected from prosecution of such an offence from the date of approval of resolution plan. However, such immunity is not available promoters or those in the management or control of CD prior to CIRP continues in management under the approved RP. Therefore, the NCLT had all the powers to raise its attachment of the properties of the corporate debtor once a resolution plan qualifying immunity under Section 32A was approved. This is clear legislative mandate of section 32A of IBC. In our opinion, when a resolution plan with the ingredients of immunity is approved, the quasi judicial authorities including under PMLA must take judicial notice and release their attachment on their own. The role of Adjudicating Authority under PMLA is quasi judicial different from prosecuting executive.
Judgment dated 1.3.2024 in Writ Petition (L) No.9943 of 2023 of Shiv Charan and others Vs. Adjudicating Authority, PMLA and another with connected matter.
