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2020 (12) TMI 1334 - Tri - Insolvency and BankruptcySeeking to set aside the attachment of the property of the corporate debtor by the respondent (E.D.) - whether NCLT can set aside the order passed by Enforcement Directorate? - HELD THAT - It is clear that this Adjudicating Authority has no jurisdiction under section 60(5) and/or 32A(2) of the IB Code or under Rule 11 of the NCLT, to quash and/or set aside the order so passed by a Competent Authority of Enforcement Directorate (ED) under the PMLA. This Adjudicating Authority is not vested with the power of judicial review over administrative action or s sitting as an Appellate Authority for the order so passed by the Competent Authority. Section 32A of the IBC does not envisages any right upon this Adjudicating Authority to interfere in order passed by some Competent Authority. For this purpose, Applicant may approach the Appellate/Higher Authority of the concerned Competent Authority, who has passed the order in question. In view of this, it is opined that the Applicant may put forward his grievances before the concerned authority, who has passed the order and/or their Higher/Appellate Authority, as the case may be. There are no merit in the Application, hence, the instant application is not maintainable - application dismissed.
Issues Involved:
1. Jurisdiction of NCLT to quash orders passed by the Enforcement Directorate under PMLA. 2. Conflict between the Insolvency and Bankruptcy Code (IBC) and the Prevention of Money Laundering Act (PMLA). 3. Applicability of Section 14 and Section 32A of IBC in cases involving PMLA. Detailed Analysis: 1. Jurisdiction of NCLT to Quash Orders Passed by the Enforcement Directorate under PMLA: The application was filed under sections 14, 18, 25, and 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking to quash the attachment of the corporate debtor's property by the Enforcement Directorate (ED). The applicant argued that the attachment was arbitrary and the property was acquired before the alleged offenses. The NCLT examined whether it had jurisdiction to set aside the ED’s order under PMLA. It was noted that the matter of jurisdiction was complex and lacked clarity, with cases pending before the Supreme Court. The NCLT referred to judgments, including the Madras High Court's ruling that NCLT has no jurisdiction over matters governed by PMLA, reinforcing that Section 14 of IBC does not apply to PMLA proceedings. 2. Conflict Between the Insolvency and Bankruptcy Code (IBC) and the Prevention of Money Laundering Act (PMLA): The applicant contended that Section 238 of the IBC, which provides for the IBC to prevail over other laws, should apply. Conversely, the respondent argued that PMLA has overriding effect due to Section 71 of PMLA. The NCLT acknowledged the conflicting provisions but emphasized that PMLA, being a special statute with its own objectives, operates independently of IBC. The NCLT cited the Delhi High Court's decision that PMLA proceedings run parallel to and are distinct from insolvency proceedings, and that PMLA does not automatically yield to IBC. 3. Applicability of Section 14 and Section 32A of IBC in Cases Involving PMLA: The applicant argued that the moratorium under Section 14 of IBC should prevent the attachment of the corporate debtor's property. However, the NCLT referred to the Madras High Court's interpretation that Section 14 does not bar proceedings under PMLA. Additionally, Section 32A of IBC, which provides immunity to new directors and prohibits actions against the corporate debtor’s property post-resolution plan approval, was discussed. The NCLT noted that this section does not grant authority to interfere with orders passed by competent authorities under PMLA. The NCLT concluded that it lacked the jurisdiction to quash the ED's attachment order and advised the applicant to approach the appropriate appellate authority. Conclusion: The NCLT dismissed the application, stating it had no jurisdiction under Section 60(5) and/or 32A(2) of IBC or Rule 11 of NCLT to quash the ED’s order under PMLA. The applicant was directed to seek redress from the appellate/higher authority of the concerned competent authority. The application was found to be without merit and dismissed as not maintainable.
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