2019 (1) TMI 1873 - Tri - Insolvency and Bankruptcy

Release of attached movable and immovable properties of Corporate Debtor - notice has been issued against the Enforcement Directorate, and the proceeding is still pending - HELD THAT - As Adjudicating Authority under IBC, we cannot exercise the powers of Appellate Authority against the order of PMLA Adjudicating Authority. It is also to be clarified that attachment order has been passed in the criminal case, which has been initiated on the basis of the investigation done by the Enforcement Directorate, on the allegation of dishonest intention to cheat Andhra Bank and other public sector banks and for causing wrongful loss to the banks to the tune of ₹ 5383 crores. No such moratorium order has been passed to stay the criminal proceedings and appeal against the attachment order is already pending before the Appellate Authority of PMLA Adjudicating Authority. Application dismissed.

Summary

Issues:
1. Relief sought to release movable and immovable properties of Corporate Debtor.
2. Relief sought to quash provisional attachment order and related orders.
3. Conflict between IBC moratorium and criminal proceedings under PMLA Act.

Analysis:
1. The Resolution Professional filed MA 1243/2018 seeking relief to release the assets of the Corporate Debtor attached under a provisional attachment order and to quash the said order. The Respondent, Andhra Bank, had initiated CIRP against the Corporate Debtor, leading to the attachment of various assets on grounds of alleged fraudulent activities. The RP argued for the release of assets under Section 14 of the IBC, emphasizing the need for identification of potential resolution applicants and the Steering Committee's role in decision-making regarding settlement offers.

2. The Enforcement Directorate, opposing the release of assets, highlighted a criminal investigation under the PMLA Act against the Corporate Debtor and its directors for fraudulent activities causing significant financial loss to banks. The Enforcement Directorate argued that the moratorium under IBC does not apply to criminal cases and that the attachment order was justified based on investigations revealing fraudulent transactions and loan fraud. The Tribunal noted the pending appeal against the attachment order before the Appellate Tribunal of PMLA, emphasizing the limitations of the IBC Adjudicating Authority in interfering with PMLA proceedings.

3. The Tribunal deliberated on the conflict between the IBC moratorium provisions and criminal proceedings under the PMLA Act. It clarified that the moratorium did not extend to criminal cases initiated by enforcement agencies, and the appeal against the attachment order was under the jurisdiction of the PMLA Adjudicating Authority. Consequently, the Tribunal rejected MA 1243/2018, citing the ongoing criminal proceedings and the appeal process before the Appellate Tribunal as reasons for the dismissal of the relief sought by the Resolution Professional.