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2024 (12) TMI 1198 - SCH - Money LaunderingMoney Laundering - Jurisdiction of the E.D. to attach the properties of the Corporate Debtor, which was undergoing Corporate Insolvency Resolution Process, particularly in the light of Section 32A of the Insolvency and Bankruptcy Code, 2016 - provisional attachment of the properties - proceeds of crime as defined u/s 2 (1) (u) of the PMLA - HELD THAT - In view of the submissions made by the learned counsel for the E.D. and the learned counsel for the CoC and for the successful Resolution Applicant JSW, following order is passed without expressing any opinion on the merits of the Appeals and without prejudice to the rights and contentions of the respective parties in the connected Appeals and other proceedings, including the right of the E.D. to investigate into the cases registered against the accused-Promoters of the Corporate Debtor, under the PMLA. The Appellant-E.D. is directed to handover and the Respondent successful Resolution Applicant JSW is directed to take over the control of the properties of Corporate Debtor-Bhushan Power and Steel Ltd., provisionally attached vide the order dated 10.10.2019 passed by the E.D., immediately in view of Section 8 (8) of the PMLA read with Rule 3A of the said Rules. Appeal disposed off.
Issues: Jurisdiction of Enforcement Directorate to attach properties of Corporate Debtor undergoing insolvency resolution process
Analysis: The judgment involves Civil Appeals filed by the Committee of Creditors against the Directorate of Enforcement challenging the provisional attachment of properties of a Corporate Debtor under the Prevention of Money Laundering Act, 2002. The Appeals also challenge the judgment of the National Company Law Appellate Tribunal staying the attachment order. Another Civil Appeal by the Enforcement Directorate challenges the NCLAT's approval of a Resolution Plan submitted by a successful Resolution Applicant. The issue at hand is the jurisdiction of the Enforcement Directorate to attach properties of a Corporate Debtor undergoing insolvency resolution, especially in light of Section 32A of the Insolvency and Bankruptcy Code, 2016. The counsel for the Enforcement Directorate and the Solicitor General submitted an Affidavit and argued that Section 32A of the IBC, not having retrospective effect, allowed the successful Resolution Applicant to take control of the attached properties as restitution under the PMLA. The counsels for the Committee of Creditors and the Resolution Applicant expressed no objection to this submission. Consequently, the Court passed an order directing the Enforcement Directorate to hand over control of the attached properties to the successful Resolution Applicant, based on Section 8(8) of the PMLA. This decision was made with the consensus of all parties involved, acknowledging the timing of the attachment order post the approval of the Resolution Plan by the NCLT. The Court clarified that its order was made without expressing any opinion on the interpretation of Section 32A(2) of the IBC or the Enforcement Directorate's powers to attach property of a Corporate Debtor under insolvency resolution. The judgment disposed of all three Appeals in light of the agreed-upon resolution. Additionally, any pending applications were to be disposed of accordingly. The judgment focused on the specific circumstances of the case and did not delve into broader legal issues pending before the Court.
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