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TMI Blog2022 (3) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... ring Act, 2002 therefore, this application is not maintainable and the same is hereby rejected. Application dismissed. - I.A (IB) No. 74/KB/2022 In C.P. (IB) No. 82/KB/2019 - - - Dated:- 2-3-2022 - Mr. Rohit Kapoor, Member (Judicial) and Mr. Harish Chander Suri, Member (Technical) For the Applicant : Mr. Ratnanko Banerji, Sr. Adv., Mr. Shaunak Mitra, Adv., Mr. Debabrata Ganguly, Adv., Ms. Debaleena Ganguly, Adv., For the Respondent : Mr. Phiroze Edulji, Adv., Ms. Anamika Pandey, Adv. ORDER PER: Rohit Kapoor, Member (Judicial): 1. The Court is convened by video conference today. 2. The Interlocutory Application No. 74/KB/2022 has been filed by the Applicant Ashok Kumar Sarawagi, the Resolution Professional of Kohinoor Steel Private Limited, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking the following reliefs: a) Declaration that the Provisional Attachment Order dated December 30, 2021 is null and void and not binding on the Corporate Debtor and the same be ordered to be quashed and/ or set aside; b) Stay of operation of the Provisional Attachment Order dated December 30, 2021; c) Order of injunction restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the IBC, 2016 over all other laws. Also PMLA being an older statute, the provisions of the IBC shall prevail over PMLA 2002. 7. Effect of the attachment order is, assets of the Corporate Debtor shall no longer be available for available for resolution and thus there would be no prospect of any resolution plan being approved and there would be no way to pay any dues of creditors. The creditors of the Corporate Debtor would be victimized for no fault on their part. If the attachment order continues, the liquidation of the Corporate Debtor will be the last resort. Even in the event of liquidation, there would be no purpose since there would be no available assets to sell. 8. Furthermore, by the attachment, the control and custody of the Applicant over the assets in question has been wrongfully taken away. Post declaration of a section 14 moratorium, it is settled law that there cannot be any action taken to deprive the CIRP of the assets of the Corporate Debtor. The ultimate intent and result of CIRP is not to confer any benefit on the ex- promoters of the Corporate Debtor but to resolve the insolvency on a clean slate theory with the control of the Corporate Debtor bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue to its logical conclusion and the following issues remain unanswered and not even considered in the said decision:- a) CIRP is a time-bound process and cannot be kept in limbo indefinitely, awaiting final outcome of any proceedings under PMLA; which at present is at very initial stage. b) Unless NCLT decides on the validity / legality of the attachment, there will be nobody to contest or pursue the proceedings on behalf of Corporate Debtor against the attachment order before any other forum, since he suspended Board has no authority to represent the Corporate Debtor and the Applicant cannot continue indefinitely and his role will also come to an end. Thus, in effect, the PMLA attachment will remain unchallenged/ uncontested on behalf of the Corporate Debtor meaning that the prospect of setting aside the attachment order would be bleak, if not non-existent; c) Assuming a situation where the matter goes before the PMLA Adjudicating Authority, even if eventually the said authority ultimately sets aside the attachment, the CIRP will be rendered nugatory in the interregnum, since the proceedings before PMLA may continue for several years. None of the aforesaid vital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that when the matter goes before the Adjudicating Authority and ultimately the proceedings under PMLA are set aside / quashed, the CIRP will be rendered nugatory as the interregnum between the proceedings before the PMLA may continue for several years. It is stated on behalf of the Applicant that if the attachment order by the PMLA is allowed to continue, most adversely impacted shall be the creditors of the Corporate Debtor including this workmen and employees, who will be deprived of the prospect of recovery of any dues whatsoever. Even the liquidation process which will eventually follow will be an empty and an idle formality due to the unavailability of assets being attached by the PMLA. 20. Ld. Counsel has further read this order whereby it was found there is no conflict between PMLA and IBC and even if a property has been attached in PMLA, it is belonging to Corporate Debtor. If CIRP is initiated, the property should become available to fulfil objects of IBC till a Resolution Plan is passed or the sale of liquidation asset occurs in terms of 32A. 21. Ld. Counsel has submitted that in view of these categorical findings of the Appellate Tribunal, the present application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er revealed that in the forwarding letter dated 25.10.2005 of the said application, Shri. Vijay Bothra, Managing Director, M/S KSPL mentioned that the company incorporated on 16.02.2005 was promoted by T.M. Group-a leading business house of Nepal and Kolkata based Bothra Group. Nowhere, it was mentioned about how these 28 group companies (including 21 based in Nepal) become the associated companies of M/s KSPL. Also, it was not clarified that how TM Group and Bothra Group were promoters of the said Applicant company. As per Memorandum of Association of M/s KSPL, the names of promoter shareholders were declared as under: a) Bijay Bothra 5000 shares b) Anjani Agarwal 5000 shares 26. It is also revealed that claim of M/s KSPL on account of Net worth of Rs. 56.99 Cr. was without any material basis. The purpose of claiming the net worth of group companies was to project the better preparedness compared to other competing applicants. 27. The CBI investigation also revealed that to enjoy the net worth of the purported Group Companies, Shri Vijay Bothra, Director, M/s KSPL had manipulated the format of application form and inserted the information of Group Company which was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia, Udyog Bhawan, New , had informed that plant of M/s KSPL was inaugurated by lightening the 1st Kiln of their DRI Unit on 02.03.2006 and all the four Kilns were expected to be made operational for production within two months. During investigation, this fact has been found false and incorrect. 31. The CBI Investigation further revealed that the Jharkhand State Pollution Control Board (JSPCB), Ranchi vide their memo no. V-509 dated 21.09.2005 had issued No Objection Certificate (NOC) u/s 25 26 of the Water (Prevention and Control of Pollution) Act, 1974 and u/s 21 of the Air (Prevention and Control of Pollution), Act, 1981 to M/s Kohinoor Steel Pvt. Ltd. with several conditions mentioned therein for the establishment of Sponge Iron plant of the capacity of 400 MT/ day. CBI Investigation further revealed that Jharkhand State Pollution Control Board, Ranchi vide their Memo No. B-10 dated 19.08.2006 informed to M/s KSPL that consent application (both Air and Water) was rejected due to non-compliance of condition mentioned in the No Objection Certificate (Consent to Establish) issued under Section 25/26 of the Water Act, 1974 and under Section 21 of Air Act and further directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. KS/BRO/RE/MOS/10 dated 17.03.2006 address to the Secretary, Ministry of Steel, Govt. of India, New Delhi falsely informed that the plant of M/s KSPL was inaugurated by lightening the 1st Kiln of DRI unit on 02.03.2006 and all four kilns were expected to be made operational for production within two months and thus induces the Ministry of Steel to Keep M/s KSPL in Category II(a) instead of category VI and during meeting before screening committee on 08.09.2006, M/s KSPL misrepresented that 04 Kilns of 100TPD had become operational. 36. In connivance with others and by furnishing the abovementioned false information to the Ministry of Coal Screening Committee, M/s KSPL dishonestly induced Ministry of Coal and Screening Committee to recommend in their favour for allotment of coal block. Accordingly, M/s KSPL got the coal block recommended on 19.02.2007 and subsequently, allocated in their favour on 28.05.2009. 37. Pursuant to the said criminal conspiracy with others and to present the aforesaid false claim of M/s KSPL as genuine, Shri Vijay Bothra not only started to infuse his unaccounted money in M/s KSPL in the guise of share application money received by M/s KSPL throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vijay Bothra during 2004-05 to 2009-10 and utilized the same for business activity and expansion of company to get allocated coal block in the lines of misrepresentation made by M/s KSPL; As per definition of property under Section 2(1)(v) of PMLA, property the term property includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences. As per definition of proceeds of crime under Section 2(1)(u) of PMLA, proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. In this case, infusion of capital through companies under the control of Shri Vijay Bothra has to be treated as property intended to be used for development of end use of coal mines and creation of other associated infrastructure so as to derive or obtain benefit / business gains from allocated coal mines where allocation of coal block was secured through fraudulent manner. This investment was made in anticipation of undue benefit to be derived or obtained by M/s KSPL as a result of or consequence to criminal activity relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments, decree or order in any court of law, tribunal, arbitration panel or other proceedings ; and as such investigation against the company under PMLA, 2002 should be kept in abeyance. b) Investigation under PMLA being judicial proceedings is prohibited and / or barred in respect of the company. c) ED cannot take steps unless and until the CIRP culminates in a resolution or otherwise. d) And; that if ED has any claims against the Corporate Debtor it should follow the guidelines given in IBC, 2016 for filling the claim. 44. It was argued by Ld. Counsel appearing for the Directorate of Enforcement that the properties which are subject matter of the CIRP process have been purchased out of the proceeds of the crime and after proper investigation, it came to the notice of the Directorate of Enforcement, Govt. of India that the company M/s KSPL has gone under CIRP. Accordingly, the Additional Director, Calcutta Zone (I) Directorate of Enforcement Govt. of India issued a letter dated 27th of October, 2021 to the Resolution Professional to intimate the Directorate of Enforcement conducting investigations under the provision of Prevention of Money Laundering Act, 2002 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the application filed by IRP was found to be not maintainable. It was further observed in this order dated 3rd of January, 2022 that the proper course for the aggrieved person is to approach the Appellate Authority under Prevention of Money Laundering Act, 2002 (PMLA) and according to the Enforcement Directorate this Authority was very much functional as on the date of attachment order. 49. The Ld. Counsel further stated that the present application is liable to be dismissed in view of the fact that the remedy of Appeal has not been exhausted by the Applicant seeking release of the properties attached in terms of the order impugned. 50. The Ld. Counsel appearing for the Enforcement Directorate has also referred to the order dated 2nd of May, 2019 passed by the National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency No. 493 of 2019) titled Varrsana Ispat Limited Vs. Deputy Director of Enforcement passed on 2nd of May, 2019 wherein it was held that it is clear that the Prevention of Money-Laundering Act, 2002 relates to proceeds of crime and the offence relates to money-laundering resulting in confiscation of property derived from, or involved in, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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