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2018 (9) TMI 1478 - Tri - Insolvency and BankruptcyAttachment under PMLA act - Release the attachment of the assets of the Corporate Debtor - Liquidator under section 35(1)(n) of the Insolvency & Bankruptcy Code, 2016 seeking orders against the Directorate of Enforcement, New Delhi to described in the list attached to this petition - Held that - The Court established under PMLA Act being a criminal Court can only decide whether the properties attached during investigation from possession of the Corporate Debtor could be said to be the properties acquired by them using proceeds of crime. It is for this Tribunal to decide as to how the properties and assets of the Corporate Debtor under liquidation can be appropriated. The Liquidator must get possession of those properties attached by the Enforcement Director, New Delhi. ORDER - The Enforcement Directorate, Delhi Zonal Office-II, New Delhi to hand over the possession of attached properties of the Corporate Debtor under liquidation to the Liquidator, which he has attached by Order no.04/2018 dated 21.02.2018 along with the title deeds.
Issues involved:
Liquidator seeking release of assets from Directorate of Enforcement under I&B Code due to attachment under PMLA Act. Analysis: The Liquidator filed an application under section 35(1)(n) of the Insolvency & Bankruptcy Code, 2016, requesting the release of assets of the Corporate Debtor from the Directorate of Enforcement, New Delhi, which were attached during an investigation under the Prevention of Money Laundering Act. The Liquidator argued that without the release of the attachment, the liquidation process could not proceed effectively. The Enforcement Director confirmed that the properties were indeed attached as proceeds of the crime under the orders of the PMLA Court, New Delhi, and stated that the attachment could not be removed. During the hearing, the Ld. Pr.CS for the Liquidator and the Ld. Counsel for the Enforcement Directorate presented their arguments. Reference was made to Section 238 of the Insolvency & Bankruptcy Code, emphasizing that the provisions of the Code prevail over any other law. A precedent from a previous case was cited where the Apex Court held that the properties of a company in liquidation cannot be sold to benefit only certain creditors to the exclusion of others as it would contradict the Companies Act. The Tribunal noted that the current dispute involved assets attached under the PMLA Act, as opposed to the MPID Act in the referenced case, but the underlying issue remained the same regarding the distribution of assets in liquidation. The Tribunal concluded that it had the authority to consider the matter concerning the distribution of assets of the Corporate Debtor under liquidation. It was highlighted that while the criminal Court under the PMLA Act could determine if the attached properties were acquired using proceeds of crime, the Tribunal was responsible for deciding how the assets of the Corporate Debtor could be appropriated. Consequently, the Tribunal allowed the application and ordered the Enforcement Directorate to hand over the possession of the attached properties to the Liquidator for the effective continuation of the liquidation process. In summary, the Tribunal's decision clarified the jurisdictional aspects between the criminal Court under the PMLA Act and the Tribunal under the I&B Code regarding the distribution of assets in liquidation, emphasizing the need for a balanced and fair distribution among all stakeholders involved in the insolvency process.
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