2022 (2) TMI 583 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI

Proceedings under PMLA while CIRP is in process - Provisional Attachment of the Properties - property is a part of Proceeds of Crime or not - it is the plea of the Appellant that the ‘Attachment Proceedings’ and its resultant order under PMLA being Civil Proceedings should have been stayed with effect from 06.09.2019 - constitutional validity of Section 32A of the I&B Code - overriding effect of IBC - HELD THAT:- In the event of ‘Resolution Plan’ is approved by the ‘Committee of Creditors’, the said Plan is to be placed before the ‘Adjudicating Authority’ as per Section 31 of the Code. The ‘Adjudicating Authority’ is to apply his judicial mind in respect of the ‘Resolution Plan’ so submitted, who upon subjective satisfaction being arrived at that the ‘Plan’ meets the requirements contemplated under Section 30 of the Code, can approve the ‘Resolution Plan’. In case the ‘Resolution Plan’ does not satisfy the ingredients of the Section 30 of the Code, the ‘Adjudicating Authority’ is to reject the said ‘Plan’.

Ousting of Civil Court’s Jurisdiction - HELD THAT:- In matters relating to ‘Corporate Insolvency Resolution’, the petition/application under Section 7 or 9 as the case may be has to be made only before the ‘Adjudicating Authority’. The ‘National Company Law Tribunal’ and the ‘National Company Law Appellate Tribunal’ have sole jurisdiction in respect of matters arising under the I&B Code, 2016 - As per Section 430 of the Companies Act, 2013 the National Company Law Tribunal alone has jurisdiction in relation to the matters coming under the ambit of the Companies Act, 2013 or any other law, which means the I&B Code, as opined by this Tribunal. Indeed, the exclusion under Section 63 of I&B Code, 2016 limiting the powers of a Civil Court to grant injunction, is taken care of by means of the ingredients of Section 430 of the Companies Act.

Prevention of Money Laundering Act, 2002 - HELD THAT:- The goal of ‘Money Laundering’ operation is to hide either the source or the destination of money. The aspect of ‘Money Laundering’ involves hiding, moving and investing the proceeds of Criminal Conduct. The ‘proceeds of crime’ is a property derived by any person as a result of criminal activity pertaining to a schedule offence mentioned in Part –A or Part-B or Part-C of the schedule to the ‘Prevention of Money Laundering Act 2002’ - It is pointed out that the ‘Shell Companies’ do exist only on paper and they do not partake in the ordinary commercial sphere of activity. Undoubtedly, ‘Money Laundering’ is a global menace.

This ‘Tribunal’ points out that in the decision Mahanivesh Oils Foods Pvt. Ltd. V. Directorate of Enforcement [2016 (5) TMI 981 - DELHI HIGH COURT], it is held that the concerned Officer must have a ‘Reason to Believe’ on the basis of material in his possession sought to be attached is likely to be concealed, transferred or dealt with in a manner which may result in frustrating any proceedings for confiscation.

It comes to be known that upon ‘Default’ committed by the ‘Corporate Debtor’ in repayment of the loan amount, the Bank of India issued a Notice under Section 13(4) SARFECIE Act. On 23.07.2015 and took symbolic possession of the said property of the ‘Corporate Debtor’ on 16.05.2018. The ‘Corporate Debtor’ being dissatisfied with the action of the ‘Bank of India’ in releasing the ‘Auction Notice’ inviting bids towards sale of the property, filed necessary application before the ‘Debt Recovery Tribunal’, Nagpur which admitted the Application of the ‘Corporate Debtor’ and granted injunction on the sale of the property - The plea of the Appellant is that the property could not be attached as per Section 8(1) of the ‘Prevention of Money Laundering Act’ 2002, especially where there exists ‘charge’ on the property, the fact of the matter is that the ‘mortgaged’ was already created in favour of the Bank.

It is to be relevantly pointed out that Section 32-A ‘Liability for Prior Offences etc.’ was inserted by Act 1 of 2020 S. 10 (with effect from 28.12.2019) and in reality, this Section only bars attachment after approval of ‘Resolution Plan’ by an ‘Adjudicating Authority’ of course subject to the requirement of certain conditions being satisfied. In the instant case in hand, admittedly, there is no approval of ‘Resolution Plan’ till date and as such, it is held by this ‘Tribunal’, that the Appellant cannot press into service the ingredients of Section 32-A(2) of the I & B Code - this Tribunal points out that Section 32 A of the I & B Code, 2016 in the present form and content in a cocksure manner will negate the action i.e. taken to discharge the criminally acquired asset/property in the considered opinion of this ‘Tribunal’. Further more, such Illgotten/ Illegitimate Assets will be legitimised after the ‘Corporate Insolvency Resolution Process’ was completed.

Although, Section 14 of I & B Code deals with ‘moratorium’, it is not a hindrance for the ‘Authority’ and the Officers under the ‘Prevention of Money Laundering Act, 2002’ to deny a person of the tainted ‘Proceeds of Crime’. Suffice it for this ‘Tribunal’ to point out that a person who is involved in ‘Money Laundering’ is not to be allowed to enjoy the fruits of ‘Proceeds of Crime’ with a view to ward off is Civil indebtedness, in respect of his Creditors - As seen from the ‘Prevention of Money Laundering Act, 2002’, the purpose of the Act is to prevent ‘Money Laundering’ and it deals with confiscation of property derived from or concerned with ‘Money Laundering’ etc. In fact, ‘The Prevention of Money Laundering Act, 2002’ is to fulfill our Country’s obligation in adhering to the United Nations Resolutions and in regard to Assets/Properties being the ‘Proceeds of Crime’, it takes a ‘primacy and precedence’ over the ‘Insolvency and Bankruptcy Code, 2016’ which promotes “Resolution’ as its objective over Liquidation in the considered opinion of this ‘Tribunal’.

In the instant case, there is no ‘Resolution Plan’ as approved by the ‘Tribunal’ and further no Liquidation Proceedings had ended in the sale of Liquidation Assets of the ‘Corporate Debtor’ - the objective, purpose of two enactments (1) ‘I & B Code’ and (2) ‘PMLA’ even though at the first blush appear to be at logger heads, there is no repugnancy and inconsistency between them, in lieu of the fact the text, shape and its colour are conspicuously distinct and different, operating in their respective spheres. More importantly, when confiscation of the ‘Proceeds of Crime’ takes place, the said Act is performed by the Government not in its status/capacity/role as Creditor.

There is no two opinion of the fact that the ‘First Appeal’ to the Appellate Tribunal is as per Section 26 of the PMLA against the Order passed by the ‘Adjudicating Authority’ under sub Sections 2 & 3 of Section 8 of the Act.

This ‘Tribunal’ makes it crystalline clear that the proper recourse to be resorted to by the ‘Corporate Debtor’ is to approach the ‘Competent Forum’ by pursuing its remedy in Appeal under the ‘Prevention of Money Laundering Act, 2002’ to its logical end or any other ‘Jurisdictional Forum’ (other than the purview of I & B Code, 2016,) of course in the manner known to Law and in accordance with Law, if it so desires/advised.

Appeal dismissed.