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TMI Blog2022 (2) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at that the Plan meets the requirements contemplated under Section 30 of the Code, can approve the Resolution Plan . In case the Resolution Plan does not satisfy the ingredients of the Section 30 of the Code, the Adjudicating Authority is to reject the said Plan . Ousting of Civil Court s Jurisdiction - HELD THAT:- In matters relating to Corporate Insolvency Resolution , the petition/application under Section 7 or 9 as the case may be has to be made only before the Adjudicating Authority . The National Company Law Tribunal and the National Company Law Appellate Tribunal have sole jurisdiction in respect of matters arising under the I B Code, 2016 - As per Section 430 of the Companies Act, 2013 the National Company Law Tribunal alone has jurisdiction in relation to the matters coming under the ambit of the Companies Act, 2013 or any other law, which means the I B Code, as opined by this Tribunal. Indeed, the exclusion under Section 63 of I B Code, 2016 limiting the powers of a Civil Court to grant injunction, is taken care of by means of the ingredients of Section 430 of the Companies Act. Prevention of Money Laundering Act, 2002 - HELD THAT:- The goal of Money Laundering op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice the ingredients of Section 32-A(2) of the I B Code - this Tribunal points out that Section 32 A of the I B Code, 2016 in the present form and content in a cocksure manner will negate the action i.e. taken to discharge the criminally acquired asset/property in the considered opinion of this Tribunal . Further more, such Illgotten/ Illegitimate Assets will be legitimised after the Corporate Insolvency Resolution Process was completed. Although, Section 14 of I B Code deals with moratorium , it is not a hindrance for the Authority and the Officers under the Prevention of Money Laundering Act, 2002 to deny a person of the tainted Proceeds of Crime . Suffice it for this Tribunal to point out that a person who is involved in Money Laundering is not to be allowed to enjoy the fruits of Proceeds of Crime with a view to ward off is Civil indebtedness, in respect of his Creditors - As seen from the Prevention of Money Laundering Act, 2002 , the purpose of the Act is to prevent Money Laundering and it deals with confiscation of property derived from or concerned with Money Laundering etc. In fact, The Prevention of Money Laundering Act, 2002 is to fulfill our Country s obligation in ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Earlier, the 'Adjudicating Authority' (National Company Law Tribunal, Ahmedabad Bench, Ahmedabad Court No.2) while passing the impugned order in IA 81/2020 in CP(IB)No.397/NCLT AHM/2018 (Filed by the Anil Kumar, IRP of KSL & Industries Ltd under Sections 14, 18, 25 and 60(5) of the I&B Code 2016) at paragraph 11 to 14 had observed the following:- 11."The Hon'ble High Court of Madras has recently dealt with the issue, in the matter of Deputy Director, Office of the Joint Director, Directorate of Enforcement Vs. Asset Reconstruction Company )India_ Ltd and others (Writ Petition No.29970 of 2019 and WMP Nos 29872 & 34971 of 2019), wherein, the Hon'ble High Court of Madras, observed that "NCLT has no jurisdiction to go into the matters governed under the Prevention of Money Laundering Act, 2001 (PMLA) and, therefore, Section 14, having consequent upon an order passed by the Adjudicating Authority declaring moratorium, would not apply to the PMLA which is a distinct and special statute having its own objective and as such Section 14 would not bar a proceeding under the Act." For the sake of brevity, para 8, 9 and 10 of the said judgement is reproduced hereinbelow: Para 8. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue (i) directions, (ii) orders or (iii) writs. They can be issued to (i) any person or (ii) authority including the Government. They may be issued (i) for the enforcement of any of the rights conferred by Part III and (ii) for any other purpose. But the exercise of the power recognized by Clause (1) of Article 226, is restricted by the territorial jurisdiction of the High Court, determined either by its geographical location or by the place where the cause of action, in whole or in part, arose. While the nature of the power exercised by the High Court is delineated in Clause (1) of Article 226, the jurisdiction of the High Court for the exercise of such power, is spelt out in both Clauses (1) and (2) of Article 226. 24. Therefore in so far as the question of exercise of the power conferred by Article 226, despite the availability of a statutory alternative remedy, is concerned, Anisminic cannot be relied upon. The distinction between the lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (4) and Sub section (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of MMDR Act, 1957 and the Rules issued thereunder. The only provision which can probably throw light on this question would be Sub section (5) of Section 60, as it speaks about the jurisdiction of the NCLT. 13. The learned single Judge of the Delhi High Court in the Deputy Director, Directorate of Enforcement Delhi and others V. Axis Bank and others (Manu/DE/1120/2019) has dealt with the similar issue in extenso. Ultimately, the following conclusion has been arrived at. "171.(i) The process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs parallel to investigation and criminal action vis-a-vis the offence of money-laundering….. (vi)The objective of PMLA being distinct from the purpose of RDBA,SARFAESI Act and Insolvency Code, the latter three legislations do not prevail over the former............ (viii) The PMLA, RDBA,SARFAESI Act and Insolvency Code (or such other laws) must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Jaybharat Textiles, M/s Krishna Knitwear Technology Ltd and M/s Eskay Knot (India) Ltd and the same were forwarded to the CBI BS&FC Cell through letter dated 26.08.2016. 4. According to the Respondent, the 'First Information Reports' revealed that the said Group Companies of the Tayal Group had acquired loan facilities aggregating ₹ 524.61 crores wherein the funds were laundered through a maze of fictitious companies. Based on the 'First Information Reports' the Respondent had recorded ECIR No. KLZO/14/2016 dated 19.10.2016 and initiated an investigation under the Prevention of Money Laundering Act, 2002. 5. It is the version of the Respondent that during the course of investigation it came to light that M/s KSL & Industries was a 'Group Company of Tayal Group' and the 'Competent Authority' passed a 'Provisional Attachment Order' (PAO) on 08.05.2019 as per Section 5 of the Prevention of Money Laundering Act, 2002 thereby 'Express Mall' (Single Property) valued ₹ 483,16,35,696/- was attached being the 'Equivalent Value' of the proceeds of crime. Further, an application in CP(IB) No.397/7/NCLT AHM/2018 was filed (under Section 7 of the I&B Code 2016) by(I) M/s Abhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er PMLA being Civil Proceedings should have been stayed with effect from 06.09.2019. 10. The Learned Counsel for the Appellant proceeds to point out that the Appellate Tribunal, PMLA in Bank of India V. the Deputy Director of Enforcement of Mumbai, reported in 2019 SCC OnLine ATPMLA 23 at paragraph 44 to 46 had observed the following:- 44."This Tribunal is of the considered opinion that the proceeding u/s 8 of the PMLA , 2002 before the Adjudicating Authority is a civil proceeding and the Adjudicating Authority should have stayed the proceedings on passing of the moratorium order by the NCLT. The continuation of the proceedings from the date of commencement of the moratorium order is contrary to the intention of the legislature hence the consequential order of confirmation of PAO is contrary to law. In the facts of the present case, it appears that hurdle has been created in the process after passing the order of NCLT which ought not to have been done. The question of registering ECIR does not arise. The passing of provisional attachment order was not application of mind and without consulting the facts and law. 45. It is a matter of fact that ED has registered the ECIR and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had failed to appreciate that the 'Object of Attachment' as per Section 5 of the Prevention of Money Laundering Act, 2002 is only to prevent the 'Management of the Corporate Debtor', from creating any third party right. Moreover, it is projected on the side of the Appellant that once 'CIRP' is initiated, the IRP/'Resolution Professional' takes 'Control of the Properties of the Corporate Debtor'. Besides this, no third party right can be created after the commencement of 'CIRP' without adhering to the specified procedure, as envisaged under the Code. 13. The Learned Counsel for the Appellant projects an argument that the 'Non-Obstante Clause' contained in the I&B Code, 2016, shall prevail over the Prevention of Money Laundering Act, 2002, as the I&B Code, 2016 being a 'later statute' and refers to the decision of the Hon'ble Supreme Court in Solidaire India Ltd V Fair Growth Financial Services Pvt Ltd reported in (2001) 3 SCC 71 wherein it is observed as under: "Coming to the second question, there is no doubt that the 1985 Act is a special Act. Section 32(1) of the said Act reads as follows: "32. Effect of the Act on other taws-(l) The provisions of this Act and of any ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the later statute, the Legislature was aware of the earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non-obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail then it could and would provide in the later enactment that the provisions of the earlier enactment continue to apply." 14. The Learned Counsel for the Appellant relies on the Judgement in Punjab National Bank Vs. Dy. Director, Directorate of Enforcement, Raipur (Decided on 02.01.2019) reported in 2019 SCC OnLine ATPMLA 5 wherein at paragraph 67 and 68 it is observed as under:- 67. "This Tribunal is of the considered opinion that the proceeding u/s 8 of PMLA,2002 before the Adjudicating Authority is a civil proceeding and the Adjudicating Authority should have stayed the proceedings on passing of the moratorium order by the NCLT. The continuation of the proceedings from the date of commencement of the moratorium order is contrary to the intention of the legislature hence the consequential order of confirmation of PAO is contrary to law. In the facts of the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate debtor; iv. The change in the management or control of the corporate debtor must not be in favour of a person, with regard to whom the relevant Investigating Authority has material which leads it to entertain the reason to believe that he had abetted or conspired for the commission of the offence and has submitted or filed a Report before the relevant Authority or the Court. This last limb may require a little more demystification. The person, who comes to acquire the management and control of the corporate person, must not be a person who has abetted or conspired for the commission of the offence committed by the corporate debtor prior to the commencement of the CIRP. Therefore, abetting or conspiracy by the person, who acquires management and control of 330 the corporate debtor, under a Resolution Plan, which is approved under Section 31 of the Code and the filing of the report, would remove the protective umbrella or immunity erected by Section 32A in regard to an offence committed by the corporate debtor before the commencement of the CIRP. To make it even more clear, if either of the conditions, namely abetting or conspiring followed by the report, which have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinue to haunt the persons, who were in in-charge of the assets of the corporate debtor, or who were responsible for the conduct of its business or those who were associated with the corporate debtor in any manner, and who were directly or indirectly involved in the commission of the offence, and they will continue to be liable. 254. Coming to sub-Section (2) of Section 32A, it declares a bar against taking any action against property of the corporate debtor. This bar also contemplates the connection between the offence committed by the corporate debtor before the commencement of the CIRP and the property of the corporate debtor. This bar is conditional to the property being covered under the Resolution Plan. The further requirement is that a Resolution Plan must be approved by the Adjudicating Authority and, finally, the approved plan, must result in a change in control of the corporate debtor not to a person, who is already identified and described in sub-Section (1). In other words, the requirements for invoking the bar against proceeding against the property of the corporate debtor in relation to an offence committed before the commencement of the CIRP, are as follows: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The bar against action against the property of the corporate debtor is also available in the case of a person subject to the same limitation as prescribed in sub-Section (1) and also in subSection (2), if he has purchased the property of the corporate debtor in the proceedings for the liquidation of the corporate debtor. 255. The last segment of Section 32A makes it obligatory on the part of the corporate debtor or any person, to whom immunity is provided under Section 32A, to provide all assistance to the Investigating Officer qua any offence committed prior to the commencement of the CIRP 256. The contentions of the petitioners appear to be that this provision is constitutionally anathema as it confers an undeserved immunity for the property which would be acquired with the proceeds of a crime. The provisions of the Prevention of Money-Laundering Act, 2002 (for short, the PMLA) are pressed before us. It 337 is contended that the prohibition against proceeding against the property, affects the interest of stakeholders like the petitioners who may be allottees or other creditors. In short, it appears to be their contention that the provisions cannot stand the scrutiny of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remembered that the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or conspiracy for the commission of the offence and the report or complaint filed thereto. These ingredients are also insisted upon for claiming exemption of the bar from actions against the property. Significantly every person who was associated with the corporate debtor in any manner and 340 who was directly or indirectly involved in the commission of the offence in terms of the report submitted continues to be liable to be prosecuted and punished for the offence committed by the corporate debtor. The corporate debtor and its property in the context of the scheme of the code constitute a distinct subject matter justifying the special treatment accorded to them. Creation of a criminal offence as also abolishing criminal liability must ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irs, time for preparation and approval of a reorganization plan and for other steps such as shedding unprofitable activities and onerous contracts, where appropriate." xxx xxx xxx "8.11. Further, the purpose of the moratorium is to keep the assets of the debtor together for successful insolvency resolution, and it does not bar all actions, especially where countervailing public policy concerns are involved. For instance, criminal proceedings are not considered to be barred by the moratorium, since they do not constitute "money claims or recovery" proceedings. In this regard, the Committee also noted that in some jurisdictions, laws allow regulatory claims, such as those which are not designed to collect money for the estate but to protect vital and urgent public interests, restraining activities causing environmental damage or activities that are detrimental to public health and safety to be continued during the moratorium period." 30.It can be seen that paragraph 8.11 refers to the very judgment under appeal before us, and cannot therefore be said to throw any light on the 34 correct position in law which has only to be finally settled by this Court. However, paragraph 8.2 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adverse consequences, given the object of Section 14, and cannot, by any process of interpretation, be allowed to occur." 18. The Learned Counsel for the Appellant refers to the judgment of this Tribunal in Directorate of Enforcement Vs Manoj Kumar Aggarwal and Others 2021 SCC OnLine NCLAT 121 wherein at paragraph 61, 62 it is observed as under:- 61.If this Section is perused, the provisions of this Code would have effect notwithstanding anything inconsistent therewith contained "in any other law" for the time being in force. Section 238 of IBC does not give over riding effect merely to Section 14. The other provisions also are material, and will 44 Company Appeal (AT)(Insolvency) No.575 and 576 of 2019 have effect if there is anything inconsistent therewith contained in any other law for the time being in force. Thus if the Authorities under PMLA on the basis of the attachment or seizure done or possession taken under the said Act resist handing over the properties of the Corporate Debtor to the IRP/RP/Liquidator the consequence of which will be hindrance for them to keep the Corporate Debtor a going concern till resolution takes place or liquidation proceedings are completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the Resolution Plan would be approved by the Adjudicating Authority, the Resolution Applicant and the Company/Corporate Debtor would automatically benefit from the immunity provided under Section 32A of the I&B Code. 21. The Learned Counsel for the Appellant comes out with a plea that the Insolvency & Bankruptcy Code, 2016 is a complete Code in itself but a 'Special Statute' being promulgated later to the Prevention of Money Laundering Act, 2002. Hence, the moratorium imposed under Section 14 of the I&B Code will apply even on the Respondent and actions initiated under the Prevention of Money Laundering Act, 2002. 22. The Learned Counsel for the Appellant points out that the order dated 24.10.2019 passed by the 'Adjudicating Authority', (Prevention of Money Laundering Act, 2002) affirming the Provisional Attachment which was passed after the commencement of 'CIRP' in the Company, is a nullity and non est in Law, in the light of Sections 14(1), 63 and 238 of the I&B Code. RESPONDENT'S CONTENTIONS 23. The Learned Counsel for the Respondent submits that the 'National Company Law Appellate Tribunal' has no jurisdiction to entertain a challenge by the 'Appellant/Resolution Profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the NCLT, instead of moving a statutory appeal under Section 260A of the Income Tax Act, 1961, Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. 38. It was argued by all the learned Senior Counsel on the side of the appellants that an Interim Resolution Professional is duty bound under Section 20(1) to preserve the value of the property of the Corporate Debtor and that the word "property' is interpreted in Section 3(27) to include even actionable claims as well as every description of interest, present or future or vested or contingent interest arising out of or incidental to property and that therefore the Interim Resolution Professional is entitled to move the NCLT for appropriate orders, on the basis that lease is a property right and NCLT has jurisdiction under Section 60(5) to entertain any claim by the Corporate Debtor. . 39. But the said argument cannot be sustained for the simple reason that the duties of a resolution professional are entirely different from the jurisdiction and powers of NCLT. In fact Section 20(1) cannot be read in isolation, but has to be read in conjunction with Section 18(f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the corporate debtor with third parties and exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial, and arbitration proceedings. Section 25(1) and 25(2)(b) reads as follows: "25. Duties of resolution professional - (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of subsection (1), the resolution professional shall undertake the following actions: (a)…………. (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi judicial and arbitration proceedings." This shows that wherever the corporate debtor has to exercise rights in judicial, quasijudicial proceedings, the resolution professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). 41.Therefore in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the corporate debtor has to exercise a right that falls outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Ltd V. State Bank of India reported 2007 8 SCC Page 449 wherein at paragraph 35 it is observed as follows:- 35. "It is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a Writ Court will indeed bear in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the Court, the Court may dismiss the action without adjudicating the matter. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of Court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible." 28. According to the Learned Counsel for the Respondent, in view of the fact that the Resolution Professional had already approached the 'Appellate Tribunal' under 'PMLA' the instant Company Appeal (AT)(Ins) No.817/2021 is barred by the 'Doctrine of Election of Remedy' and falls back upon d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n vs. Wells, in the Court of Appeal, observed that the rule of estoppel was founded on the well-known principle that one cannot approbate and reprobate. The doctrine was further explained by Lord Justice Salmon by holding "it is founded also on this consideration, that it would be unjust to allow the man who has taken full advantage of a lease to come forward and seek to evade his obligations under the lease by denying that the purported landlord was the landlord". (See page 530) 29. Expatiating his submission, the Learned Counsel for the Respondent proceeds to point out that the remedy of the Appellant is to approach the Appellate Tribunal under the Prevention of Money Laundering Act, 2002, as per Section 26 of the Act, against the adverse findings of the 'Adjudicating Authority, PMLA. 30. It is represented on behalf of the Respondent that the Prevention of Money Launder Act, 2002 is a Special Legislation aimed at dealing with the offence of Money Laundering and hence it has a primacy over the I&B Code 2016 in proceedings relating to 'Money Laundering' 31. The Learned Counsel for the Respondent refers to the order dated 04.09.2020 of the Hon'ble High Court of Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Delhi V. Axis Bank and others reported in 2019 SCC Online Delhi 7854 wherein at paragraph 141, 143, 146 and 1476 it is observed as under:- 141. "This court finds it difficult to accept the proposition that the jurisdiction conferred on the State by PMLA to confiscate the "proceeds of crime" concerns a property the value whereof is "debt" due or payable to the Government (Central or State) or local authority. The Government, when it exercises its power under PMLA to seek attachment leading to confiscation of proceeds of crime, does not stand as a creditor, the person alleged to be complicit in the offence of money-laundering similarly not acquiring the status of a debtor. The State is not claiming the prerogative to deprive such offender of ill gotten assets so as to be perceived to be sharing the loot, not the least so as to levy tax thereupon such as to give it a colour of legitimacy or lawful earning, the idea being to take away what has been illegitimately secured by proscribed criminal activity. 143. The proceeds of crime, there is no doubt, are not even remotely covered by the expressions "revenues, taxes, cesses" or other "rates&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Special Statute enacted by the Parliament for dealing with money laundering and refers to the Judgement of the Hon'ble Supreme Court Y.S. Jagan Mohan Reddy V. Central Bureau of Investigation (2013) 7 SCC 439 wherein at paragraph 15 it is observed as under:- 15) "Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country." 35. Apart from the above, the Learned Counsel for the Respondent refers to the decision of the Hon'ble Supreme Court in P. Chidambaram V. Directorate of Enforcement (2019) 9 SCC 24 and the decision of Hon'ble Supreme Court in Gautam Kundu V Directorate of Enforcement reported in (2015) 16 SCC 1 to put forward a plea that the Prevention of Money Laundering Act is a Special Statute enacted by the Parliament. 36. The Learned Counsel for the Respondent cites the judgement of this Tribunal dated 02.05.2019 in Varrsana Ispaat Ltd V. Dy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulting confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. Thus, as the 'Prevention of Money Laundering Act, 2002' or provisions therein relates to 'proceeds of crime', we hold that Section 14 of the 'I&B Code' is not applicable to such proceeding. 14. As the 'Prevention of Money Laundering Act, 2002' relates to different fields of penal action of 'proceeds of crime', it invokes simultaneously with the 'I&B Code', having no overriding effect of one Act over the other including the 'I&B Code'. 37. The Learned Counsel for the Respondent refers to the order of this Tribunal dated 28.08.2019 in the matter of Andhra Bank & Ors V. Sterling Biotech Ltd & Ors (vide Company Appeal (AT)(Ins) Nos.601, 612 and 527 of 2019) reported in MANU/SL/0408/2019 wherein at paragraph 15, 16 and 18 it is observed as under:- 15. In so far the assets of the 'Corporate Debtor' is concerned, if it is based on the proceeds of crime, it is always open to the 'Enforcement Directorate' to seize the assets of the 'Corporate Debtor' and act in accordance with the 'Prevention of Money Laundering Act, 2002' (for short, 'the PMLA'). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Delhi in Rai Foundation Thr. Its Trustees Mr. Suresh Sachdev V. The Directorate of Enforcement and Others reported in 2015 SCC OnLine DEL 7626 wherein at paragraph 12 it is observed and held as under:- 9. In view of the availability of alternative remedies available to the petitioner under the this Act, I am not inclined to entertain this writ petition under Article 226 of the Constitution of India at this nascent stage, more so when complete mechanism has been provided under the Act to safeguard the interest of aggrieved person. The petitioner has effective and efficacious statutory remedies to prove the nature of acquisition of assets and to ventilate their grievances. Furthermore, at the stage of provisional attachment, the person concerned is not divested of the property, but is only prevented from dealing with the same till orders are passed by the adjudicating authority under Section 8(2). Against order of adjudicating authority appeal shall lie to the Appellate Tribunal under Section 26 and further appeal to High Court under Section 42, the statute has provided enough safeguards and redressal mechanism. The writ court cannot go into the merits of the issue at this st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Act envisages appeal before the Appellate Tribunal. Section 42 of the Act provides further appeal to the High Court. Thus, it is clear that petitioner has an effective alternative remedy upto the High Court by way of adjudicating proceedings, appeal to the Appellate Tribunal and finally, appeal to the High Court. Petitioner can raise all the pleas including that of the jurisdiction before the Adjudicating Authority. 12. It is trite law that Article 226 of the Constitution of India vests wide discretion in the Writ Court to entertain the writ petition on any grievance and to grant appropriate relief. It is an extraordinary jurisdiction vested in the writ Court. The Writ Courts observe self-imposed restraint in exercising the jurisdiction under Article 226 Availability of alternative remedy is not a bar to entertain a writ petition. However, ordinarily, the writ petition is not entertained under Article 226 if the aggrieved person has an efficacious and effective remedy provided by concerned statute where under an adverse decision is taken against the person, which he seeks to assail in the writ petition. Notwithstanding, availability of alternative remedy in a case of except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal dated 2.5. 2019 in Varrsana Ispaat Ltd V. Dy. Director of Enforcement (Company Appeal (AT)(Ins) No.493/2018) reported in 2019 SCC OnLine NCLAT 236 was later followed. 42. The Learned Counsel for the Respondent adverts to the order of the Hon'ble Supreme Court dated 22.7.2019 in Varrsana Ispaat Ltd V. Dy. Director of Enforcement vide Civil Appeal No.5546/2019 (Filed against the Judgement of this Tribunal dated 2.5.2019) in Varrsana Ispaat Ltd V Dy. Director of Enforcement (Company Appeal (AT)(Ins) No.493/2018 whereby and where under the Hon'ble Supreme Court had dismissed the Civil Appeal (Filed by the Appellant/Varrsana Ispaat Ltd. 43. The Learned Counsel for the Respondent puts forward a plea that when a Civil Appeal filed by the concerned party is dismissed by the Hon'ble Supreme Court of India, the 'Doctrine of Merger' applies and the Judgement of this Tribunal stands merged with the Judgement of the Hon'ble Supreme Court of India, becoming the Law' of the Land' as per Article 141 of the Constitution of India. To lend support to this contention, the Learned Counsel for the Respondent cites the decision of the Hon'ble Supreme Court in VM Salgaocar & Brothers Pvt Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissal must, by necessary implication, be taken to be that the Supreme Court had decided only that it was not a fit case where special leave petition should be granted, in Union of India V. All India Services Pensioners Association, [1988] 2 SCC 580 this Court has given reasons for dismissing the special leave petition. When such reasons are given, the decision becomes one which attracts Article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India. It, therefore, follows that when no reason is given, but a special leave petition is dismissed simpliciter, it cannot be said that there has been a declaration of law by this Court under Article 141 of the Constitution." 9 It was, therefore, contended that once this Court in Civil Appeal No. 424 of 1999 has dismissed the appeal it has upheld the order of the High Court in the case of Assessment Year 1980-81 and it cannot take a different view for the Assessment Year 1979-80. There appears to be subsistence in the submission of the assesse." 44. The Learned Counsel for the Respondent contends that the Judgement of this Tribunal in Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efers to the decision of the Hon'ble Supreme Court in Manish Kumar V. Union of India 2021 5 SCC 1 wherein the Hon'ble Supreme Court at paragraph 320 to 320.2 had observed the following:- 320. "Coming to sub-Section (2) of Section 32A, it declares a bar against taking any action against property of the corporate debtor. This bar also contemplates the connection between the offence 333 committed by the corporate debtor before the commencement of the CIRP and the property of the corporate debtor. This bar is conditional to the property being covered under the Resolution Plan. The further requirement is that a Resolution Plan must be approved by the Adjudicating Authority and, finally, the approved plan, must result in a change in control of the corporate debtor not to a person, who is already identified and described in sub-Section (1). In other words, the requirements for invoking the bar against proceeding against the property of the corporate debtor in relation to an offence committed before the commencement of the CIRP, are as follows: 320.1 There must be Resolution Plan, which is approved by the Adjudication Authority under Section 31 of the Code; 320.2 The approved Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of creditors by entrusting them with the responsibility to seek resolution through a professional (RP), failure on his part leading eventually to the liquidation process." xxx xxx xxx "141. This court finds it difficult to accept the proposition that the jurisdiction conferred on the State by PMLA to confiscate the "proceeds of crime" concerns a property the value whereof is "debt" due or payable to the Government (Central or State) or local authority. The Government, when it exercises its power under PMLA to seek attachment leading to confiscation of proceeds of crime, does not stand as a creditor, the person alleged to be complicit in the offence of money-laundering similarly not acquiring the status of a debtor. The State is not claiming the prerogative to deprive such offender of ill-gotten assets so as to be perceived to be sharing the loot, not the least so as to levy tax thereupon such as to give it a colour of legitimacy or lawful earning, the idea being to take away what has been illegitimately secured by proscribed criminal activity." (emphasis in original) This raison d'être is completely different from what has been advocated by Shri Mehta. The confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that it is not authorised by law the action of the tribunal pursuant to an erroneous order will not be open to challenge for the reason that its action arises out of the exercise of a judicial power and is thus authorised by law, State action though it be. When, Under the provisions of a law, the State exercises judicial power, as for instance, by entertaining an appeal or revision or assessing or levying a tax it acts as a quasi-judicial tribunal and its decision even though erroneous will not be a nullity and cannot be ignored. It can be corrected only under Art. 226 or Art 227 by the High Court or under Art. 136 by this Court inasmuch as the State would then be acting as a quasi- judicial tribunal." 53. The Learned Counsel for the Respondent refers to the decision of the Hon'ble Supreme Court in Authorised Officer, State Bank of Travancore & Another reported in (2018) 3 Supreme Court Cases Page 85 wherein it is observed and held that the discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in given facts of a case and in accordance with Law and further that normally a Writ Petition under Article 226 ought not to be entertained if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not less than 75% as per Section 30(4). 57. To be noted, the 'Committee of Creditors' is not to approve a 'Resolution Plan' where the 'Resolution Applicant' is not eligible under Section 29-A of the Code, and it necessitates the 'Resolution Professional' to invite a fresh 'Resolution Plan', in case no other 'Resolution Plan' is very much available. In the event of 'Resolution Plan' is approved by the 'Committee of Creditors', the said Plan is to be placed before the 'Adjudicating Authority' as per Section 31 of the Code. The 'Adjudicating Authority' is to apply his judicial mind in respect of the 'Resolution Plan' so submitted, who upon subjective satisfaction being arrived at that the 'Plan' meets the requirements contemplated under Section 30 of the Code, can approve the 'Resolution Plan'. In case the 'Resolution Plan' does not satisfy the ingredients of the Section 30 of the Code, the 'Adjudicating Authority' is to reject the said 'Plan'. 58. Section 32-A of I&BC -Liability for prior offences, etc Section 32-A (1) of I&BC is a non-obstante provision granting a blanket immunity to the new Directors who replaces the earlier Directors of the 'Corporate Debtor' in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich means the I&B Code, as opined by this Tribunal. Indeed, the exclusion under Section 63 of I&B Code, 2016 limiting the powers of a Civil Court to grant injunction, is taken care of by means of the ingredients of Section 430 of the Companies Act. Prevention of Money Laundering Act, 2002 63. It is pertinently pointed out that the 'Prevention of Money Laundering Act, 2002 provides for 'Attachment', 'Seizure/Confiscation' of assets derived from or involved in 'Money Laundering'. As a matter of fact, under the scheme of things, the 'Adjudicating Authority' is the 'Competent/Appropriate Authority' under the 'Prevention of Money Laundering Act, 2002' to resolve/controversies/issues pertaining to the 'Attachment Order'. 64. For the offence of 'Money Laundering' mandatorily there has to be 'Proceeds of Crime' arising out of criminal activity. The offence of 'Money Laundering' is not an independent crime and it depends upon another crime which is the 'predicate offence' or the 'Schedule Offence', the proceeds of which are projected as untainted. 65. The goal of 'Money Laundering' operation is to hide either the source or the destination of money. The aspect of 'Money Laundering' invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IL COURT 71. Section 41 of the Prevention of Money Laundering Act, 2002 bars the jurisdiction of Civil Court in matters in which the Director, 'Adjudicating Authority' or the Appellate Tribunal has the power to decide and no injunction shall be granted by any Court in respect of any action pursuant to the power conferred to or under the Act. APPEAL TO HIGH COURT 72. Section 42 of the Prevention of Money Laundering Act, 2002 specifies anyone 'Aggrieved' by any decision or order of an 'Appellate Tribunal' to file an 'Appeal' to the 'Hon'ble High Court' and an 'Appeal' to the 'Hon'ble High Court' is 'Second Appeal', an 'Appeal' to the 'Appellate Tribunal' (being the 'First Appeal') under Section 26 of the 'Prevention of Money Laundering Act' against an 'order' passed by the 'Adjudicating Authority' under sub Section 2 & 3 of Section 8 of the Act 2002. OVERRIDING EFFECT 73. Section 71 of the PMLA, 2002speaks of the provisions of this 'Act' shall have effect notwithstanding anything inconsistent therewith contained in any other law, for the time being in force. A 'Special Law' is defined under Section 41 of the Indian Penal Code, 1860 as a 'Special Law' being a 'Law' applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14.06.2008 considering release of the Credit Facilities to the 'Corporate Debtor'. 78. It comes to be known that upon 'Default' committed by the 'Corporate Debtor' in repayment of the loan amount, the Bank of India issued a Notice under Section 13(4) SARFECIE Act. On 23.07.2015 and took symbolic possession of the said property of the 'Corporate Debtor' on 16.05.2018. The 'Corporate Debtor' being dissatisfied with the action of the 'Bank of India' in releasing the 'Auction Notice' inviting bids towards sale of the property, filed necessary application before the 'Debt Recovery Tribunal', Nagpur which admitted the Application of the 'Corporate Debtor' and granted injunction on the sale of the property. 79. It is the stand of the Appellant that before the Final Hearing of the Original Complaint no. 1150/2019 filed (under Section 5(5) of PMLA) before the Adjudicating Authority, PMLA, an Order for initiating CIRP was issued against the 'Corporate Debtor' by the 'Adjudicating Authority', Ahmedabad and the IRP through his Advocate argued the matter by pointing out that the property of the 'Corporate Debtor' could not be attached against whom CIRP was initiated particularly, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the 'Prevention of Money Laundering Act, 2002' was continuing. 86. Apart from that, based on the materials in its possession of the Respondent, the 'Attachment of the Property' of the 'borrower' was justified as per the definition of the 'Proceeds of Crime', as per Section 2(1)(u) of PMLA. Further that the properties are covered under definition of Section 5(1) of PMLA, as they represent the value of 'Proceeds of Crime' which is inclusive of definition of 'Proceeds of Crime'. 87. According to the Respondent, the conduct of the authorised representative of the 'Operational Creditor' indicators that he is hand in glove with the 'Promotors of the Corporate Borrowers' and its 'Associated Companies' and had preferred the Application before the 'Adjudicating Authority' (National Company Law Tribunal) with mala fide intent to thwart the proceedings under PMLA. 88. It is the stand of the Respondent that under the Money Laundering Act, 2002, an 'Appeal' can be filed and without exercising an alternate remedy, the Appellant/Applicant cannot approach the 'Adjudicating Authority' (National Company Law Tribunal) to determine the matter relating to an 'Offence of Money Laundering'. 89. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Crime'. It is to be remembered that only when an endeavour is made to show the source of that money as something legitimate, it would amount to projecting the 'Proceeds' as untainted property. 94. One cannot brush aside a primordial fact that 'Money Laundering' is an 'Unlawful Bustle Activity' through which the Illegal/Illegitimate Proceeds take an outward appearance of 'Legitimacy'. In this connection, this Tribunal worth recalls and recollects the decision of Hon'ble Supreme Court in Binoy Viswam vs. Union of India reported in 2017 7 SC 59 where in it is observed that 'unearthing black money' or checking money laundering is to be achieved to whatever extent possible. 95. Although, Section 14 of I & B Code deals with 'moratorium', it is not a hindrance for the 'Authority' and the Officers under the 'Prevention of Money Laundering Act, 2002' to deny a person of the tainted 'Proceeds of Crime'. Suffice it for this 'Tribunal' to point out that a person who is involved in 'Money Laundering' is not to be allowed to enjoy the fruits of 'Proceeds of Crime' with a view to ward off is Civil indebtedness, in respect of his Creditors. 96. As seen from the 'Prevention of Money Launderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance, then, he has no legal or justiciable claim to hang on, he is not a person aggrieved and has no locus standi to challenge the order". 102. Moreover, in the decision of the Hon'ble Supreme Court in Kanwar Singh Saini v High Court of Delhi 2012 4 SCC page 307 it is held that "when a statute gives a right and provides a forum for adjudication of claims remedy has to be sought under the provisions of the Act". 103. In so far as anyone aggrieved against any decision or order of the 'Adjudicating Authority' of the PMLA, then it is open to him to prefer an Appeal before the Appellate Tribunal, PMLA by resorting to the relevant provision(s) of the 'Prevention of the Money Laundering Act, 2002'. Moreover, as against any decision or order of the Appellate Tribunal, PMLA, the concerned person/entity may file an 'Appeal' to the Hon'ble High Court under Section 42 of the PMLA. 104. There is no two opinion of the fact that the 'First Appeal' to the Appellate Tribunal is as per Section 26 of the PMLA against the Order passed by the 'Adjudicating Authority' under sub Sections 2 & 3 of Section 8 of the Act. 105. The Hon'ble Supreme Court had confirmed the Judgment of this Tribunal in Varr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though has filed Company Appeal (AT)(Ins) No. 817 of 2021 being dissatisfied with the order dated 31.12.2020 in IA 81 of 2020 in CP(IB) No. 397/NCLT/AHM/2018 [filed by the Applicant/IRP for KSL Industries Ltd./Corporate Debtor under Sections 14,18,25 & 60(5) of Code] seeking to set aside the 'Attachment of the Property of the 'Corporate Debtor' by the Respondent/Enforcement Directorate vide order dated 24.10.2019 passed by the 'Adjudicating Authority' PMLA etc., this 'Tribunal' makes it candidly clear that filing of Application under Section 60(5) of the I & B Code is not an 'all pervasive' one, thereby conferring 'Jurisdiction' to an 'Adjudicating Authority' (NCLT) to determine 'any question/issue of priorities', question of Law or Facts pertaining to the 'Corporate Debtor' when in reality in 'Law', the 'Adjudicating Authority' (NCLT) is not empowered to deal with the matters falling under the purview of another authority under PMLA. Viewed in that perspective, IA 81 of 2020 in CP(IB) No. 397/NCLT/AHM/2018 filed by the Applicant/IRP for KSL & Industries Ltd is held by this 'Tribunal' as not maintainable in law. Resultantly, the Appeal fails. DISPOSITION 111. In fine, Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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