Case Note & Summary
The National Company Law Appellate Tribunal addressed appeals filed by the Liquidator of Siddhi Vinayak Logistics Ltd. against a common order from the NCLT, Ahmedabad, which dismissed applications concerning the Enforcement Directorate's (ED) withdrawal of funds during the moratorium under the Insolvency and Bankruptcy Code (IBC). The appeals arose from the ED's actions related to alleged bank fraud and diversion of funds, leading to the attachment of the corporate debtor's assets under the Prevention of Money Laundering Act (PMLA). The Liquidator argued that the ED's withdrawal of ₹2,29,10,131.06 from the corporate debtor's bank account violated the moratorium imposed under Section 14 of the IBC. The ED contended that its actions were independent of the IBC and that the PMLA had overriding effect. The Tribunal found that the IBC and PMLA serve different purposes and operate in distinct domains, with the PMLA focusing on preventing money laundering and the IBC addressing corporate insolvency. The court emphasized that the moratorium under the IBC does not extend to criminal proceedings or actions concerning proceeds of crime under the PMLA. Ultimately, the Tribunal dismissed the appeals, affirming the Adjudicating Authority's decision and directing the Liquidator to seek remedies under the appropriate forum established under the PMLA.
Headnote
A) Company Law - Jurisdictional Conflict - Enforcement Directorate's Authority vs. IBC Jurisdiction - Insolvency and Bankruptcy Code, 2016, Sections 14, 60(5) - The court examined the jurisdiction of the NCLT/NCLAT to interfere with actions taken under the PMLA during the moratorium period under the IBC, concluding that the PMLA operates independently and does not fall under the purview of the IBC. Held that the ED's actions were lawful and did not violate the moratorium (Paras 9-17).
Issue of Consideration
Whether the Enforcement Directorate could withdraw amounts from the corporate debtor's account during the moratorium under the IBC.
Final Decision
The Tribunal dismissed the appeals, affirming the Adjudicating Authority's ruling that the ED's actions were lawful and did not violate the moratorium under the IBC.
Law Points
- jurisdiction under IBC
- attachment under PMLA
- moratorium under IBC
- proceeds of crime
- statutory protection of assets
