Case Note & Summary
The Supreme Court dismissed a batch of civil appeals filed by liquidators challenging provisional attachment orders issued under the Prohibition of Benami Property Transactions Act, 1988 (Benami Act) during corporate insolvency resolution proceedings (CIRP) and liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC) -- The Court upheld the concurrent findings of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) that the NCLT lacks jurisdiction to entertain challenges to orders passed under the Benami Act -- The controversy involved benami transactions where promoters of corporate debtors transferred shareholdings to beneficial owners using demonetised currency, leading to provisional attachment of properties under the Benami Act -- Despite the corporate debtors entering CIRP and liquidation under IBC, the Court ruled that the exclusive remedy for challenging Benami Act orders lies before the statutory authorities under that Act, not before IBC authorities -- The Court emphasized the jurisdictional boundaries between the two statutory regimes and dismissed all appeals
Headnote
The Supreme Court dismissed appeals challenging orders of the National Company Law Appellate Tribunal (NCLAT) which upheld that the National Company Law Tribunal (NCLT) lacks jurisdiction to entertain challenges to provisional attachment orders under the Prohibition of Benami Property Transactions Act, 1988 (Benami Act) during insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) -- The Court held that orders passed under the Benami Act cannot be questioned before authorities under the IBC, and the exclusive remedy lies before the competent forum constituted under the Benami Act -- The appeals arose from NCLAT orders dated 18.08.2022 and 13.03.2023 that declined to interfere with NCLT decisions refusing to adjudicate applications by liquidators challenging provisional attachment orders under the Benami Act -- The Court accepted the concurrent findings of NCLT and NCLAT, emphasizing the jurisdictional separation between the Benami Act and IBC regimes
Issue of Consideration
The Issue of jurisdictional conflict between the Prohibition of Benami Property Transactions Act, 1988 and the Insolvency and Bankruptcy Code, 2016 regarding authority to adjudicate challenges to provisional attachment orders during corporate insolvency proceedings
Final Decision
The Supreme Court dismissed all appeals, upholding the concurrent findings of NCLT and NCLAT that orders passed under the Prohibition of Benami Property Transactions Act, 1988 cannot be questioned before authorities under the Insolvency and Bankruptcy Code, 2016 -- The Court held that the remedy lies exclusively before the competent forum constituted under the Benami Act
Law Points
- Jurisdictional separation between Prohibition of Benami Property Transactions Act
- 1988 and Insolvency and Bankruptcy Code
- 2016
- Exclusive remedy principle for statutory challenges
- Concurrent findings doctrine in appellate review
- Forum non conveniens application in specialized tribunals
Case Details
2026 LawText (SC) (02) 58
Civil Appeal No. 7140 of 2022, Civil Appeal No. 6971 of 2025, Civil Appeal No. 6661 of 2023, Civil Appeal No. 6662 of 2023
PAMIDIGHANTAM SRI NARASIMHA J. , ATUL S. CHANDURKAR J.
Mr. Krishnan Venugopal, Mr. Sajan Poovayya, and Mr. Rajiv Shakdher, Ld. Sr. Counsels appearing on behalf of the Appellants, Mr. S. Senthil,
The Deputy Commissioner of Income Tax (Benami Prohibition) & Ors
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Nature of Litigation
Civil appeals challenging orders of the National Company Law Appellate Tribunal (NCLAT) regarding jurisdiction to entertain challenges to provisional attachment orders under the Prohibition of Benami Property Transactions Act, 1988 during insolvency proceedings
Remedy Sought
Appellants (liquidators) sought to challenge provisional attachment orders issued under the Benami Act and enable liquidation process to continue by claiming attached properties formed part of liquidation estate
Filing Reason
Liquidators filed applications before NCLT seeking stay on attachment orders under Benami Act, which were dismissed on jurisdictional grounds, leading to appeals before NCLAT and Supreme Court
Previous Decisions
NCLT held applications challenging Benami Act attachment orders not maintainable under IBC (orders dated 25.04.2022 and 29.03.2022) -- NCLAT dismissed appeals under Section 61 of IBC (orders dated 18.08.2022 and 13.03.2023)
Issues
Whether the National Company Law Tribunal (NCLT) has jurisdiction to entertain challenges to provisional attachment orders passed under the Prohibition of Benami Property Transactions Act, 1988 during corporate insolvency resolution proceedings (CIRP) and liquidation under the Insolvency and Bankruptcy Code, 2016
Whether the remedy for challenging orders under the Benami Act lies exclusively before the statutory authorities constituted under that Act rather than before authorities under the IBC
Submissions/Arguments
Appellants argued that provisional attachment orders under Benami Act should be challenged before NCLT as they affected liquidation estate under IBC
Respondents maintained that exclusive jurisdiction for Benami Act matters lies with authorities under that Act, not IBC tribunals
Ratio Decidendi
Orders passed under the Prohibition of Benami Property Transactions Act, 1988 cannot be questioned before authorities under the Insolvency and Bankruptcy Code, 2016 -- The National Company Law Tribunal lacks jurisdiction to entertain challenges to provisional attachment orders issued under the Benami Act -- The exclusive remedy for challenging Benami Act orders lies before the statutory authorities constituted under that Act -- Jurisdictional boundaries between the Benami Act and IBC regimes must be respected, with each statutory framework having its own designated forums for adjudication
Judgment Excerpts
Accepting the concurrent findings of NCLT and NCLAT, we have held that orders passed under Benami Act cannot be questioned before authorities under the Insolvency and Bankruptcy Code, 2016 (IBC)
NCLT held that the challenge to the order of attachment under the Benami Act must be before the statutory authorities under that Act and not before the authorities under the IBC
The NCLAT declined to interfere with the decision of the National Company Law Tribunal and refused to adjudicate the appellant-liquidators' applications challenging the provisional attachment orders passed by the authorities under the Prohibition of Benami Property Transactions Act, 1988
Procedural History
Corporate insolvency resolution proceedings (CIRP) commenced against corporate debtors -- NCLT admitted applications and moratorium commenced under Section 14 of IBC -- Provisional attachment orders issued under Section 24(3) of Benami Act on 01.11.2019 -- Corporate debtors ordered into liquidation (20.04.2021 for Padmaadevi Sugars Ltd., 14.02.2019 for Senthil Papers and Board Pvt. Ltd.) -- Liquidators filed applications before NCLT challenging attachment orders -- NCLT dismissed applications holding lack of jurisdiction (25.04.2022 and 29.03.2022) -- NCLAT dismissed appeals under Section 61 of IBC (18.08.2022 and 13.03.2023) -- Supreme Court heard batch of civil appeals and dismissed them
Acts & Sections
- Prohibition of Benami Property Transactions Act, 1988: Section 24, Section 24(1), Section 24(3), Section 26(3)
- Insolvency and Bankruptcy Code, 2016: Section 14, Section 61
- Income Tax Act, 1961: Section 132
