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2019 (5) TMI 919 - Tri - Insolvency and BankruptcyInitiation of corporate insolvency resolution process (CIRP) - Corporate Debtor - section 7 of the Insolvency and Bankruptcy Code, 2016 - whether the financial creditor is to first approach the Adjudicating Authority under Section 8 of PMLA, 2002 for seeking appropriate orders/permission to take any action for resolution of the assets of the corporate debtor attached under provisional attachment order passed by the ED? - whether the proceedings in CP(IB) No. 73/Chd/CHD/2018 be kept in abeyance till the final decision of the Adjudicating Authority under Section 8 of the PMLA Act, 2002? HELD THAT:- The plea in the instant application is that in view of the provisional attachment order dated 15.03.2017 under Section 5(1) of the PMLA, 2002, the RP will not be able to perform his duties under Section 18(1)(f) of the Code of taking control and custody of any assets over which the corporate debtor has ownership rights. The provisional attachment order directs that the properties provisionally attached under Section 5(1) of PMLA, 2002 shall not be removed, parted with or otherwise dealt with without prior permission of the Deputy Director, ED. Therefore, the ownership rights of the corporate debtor are not affected by the provisional attachment order. The possession also continues to remain with the corporate debtor. It is only the right of removing, parting with or otherwise dealing with the properties has been reduced to the extent that the prior permission of the Deputy Director ED would be required. Therefore, there is no impediment to the initiation of the CIRP consequent to order made by the Adjudicating Authority under the Code. An order of attachment under PMLA does not ipso facto render illegal a prior charge of encumbrance of a secured creditor and the secured creditor can prove and as and when the secured creditor proves his bonafides and satisfies the other conditions, the property to the extent of such interest of the secured creditor would not be subjected to confiscation. Thus, the proceedings in CP (IB) No. 73/Chd/CHD/2018 for initiation of CIRP in the case of the corporate debtor be continued and not kept in abeyance and that the financial creditor and/or the Resolution Professional who may be appointed may take necessary action as deemed fit for declaration under the PMLA, 2002 that the property to the extent of the interest of the respective secured creditor is not to be subjected to confiscation. Application disposed off.
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