(MENAFN- KNN India) New Delhi, Jul 7 (KNN) The National Company Law Appellate Tribunal (NCLAT) has ruled that the Insolvency and Bankruptcy Code (IBC) cannot supersede the Prevention of Money Laundering Act (PMLA) when it comes to assets attached by the Directorate of Enforcement (ED).

The appellate tribunal declared that assets of debt-ridden companies, once attached by ED and confirmed by competent authorities, cannot be released for resolution purposes under insolvency proceedings.

The three-member NCLAT bench clarified that while Section 14 of the IBC typically imposes a moratorium on assets for resolution purposes, properties alleged to be 'proceeds of crime' and already under adjudication by competent authorities under penal statutes cannot be considered part of the freely available resolution estate.

The tribunal emphasised that validly made and confirmed attachments by ED under PMLA cannot be undone under IBC provisions.

Despite citing Section 238 of the IBC, which provides an overriding effect over other laws, the NCLAT maintained that this provision cannot override the PMLA in respect of proceedings involving proceeds of crime.

The tribunal noted that PMLA and IBC operate in distinct spheres with no 'irreconcilable inconsistency' between them, highlighting that ED functions as a public enforcement agency rather than a creditor.

The appellate tribunal stressed that attached assets serve not to satisfy creditors but to uphold penal objectives and fulfil international obligations under Financial Action Task Force (FATF) and United Nations Conventions.

The ruling upheld an earlier order by the National Company Law Tribunal (NCLT) and referenced a Supreme Court directive in the Embassy Property matter, stating it lacks jurisdiction to interfere with Provisional Attachment Orders confirmed by PMLA adjudicating authorities.

(KNN Bureau)

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