Mr. Palaniappan Vs. The Joint Director, Directorate of Enforcement, - The concept of ‘Attachment’ made as per Section 5 (1) of the Prevention of Money Laundering Act, 2002 cannot be a subject matter of proceedings under Section 60(5) of the code, in a way making it clear that this Adjudicating Authority is not the right ‘FORA’ to deal with revocation of attachment made under the PMLA, Act, 2002.

 NCLT Chennai-2 (2024.01.25) in Mr. Palaniappan Vs. The Joint Director, Directorate of Enforcement, [MA/30(CHE)/2021 In CP/129(IB)/2018] held that;

• The concept of ‘Attachment’ made as per Section 5 (1) of the Prevention of Money Laundering Act, 2002 cannot be a subject matter of proceedings under Section 60(5) of the code, in a way making it clear that this Adjudicating Authority is not the right ‘FORA’ to deal with revocation of attachment made under the PMLA, Act, 2002. 

• Thereby, making it obvious that a remedy under PMLA act cannot be claimed before this Adjudicating Authority under the IBC, 2016 Code.

Excerpts of the order;

# 1. Under consideration is an Application filed under Section60(5) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘the code’) by the Applicant, the Liquidator of M/s. Nathella Sampath Jewelry Private Limited (hereinafter referred to as ‘the Corporate Debtor’) against the Joint Director, Directorate of Enforcement seeking reliefs as follows,

a) The Hon'ble Tribunal may be pleased to pass appropriate orders setting-aside/recalling/vacating the provisional attachment Order dated 31st July 2018 bearing No11/2018 in ECIR/CEZO- 1/09/2018 Chennai Zone-I against the asset of the Corporate Debtor and Guarantors and other assets including those purchased out of the proceeds of crime/misuse of funds obtained from the lenders as referred under Schedule I & II (37 immovable properties) of the said provisional attachment Order dated 31 July 2018, as the case may be, and vest such rights in the hands of the Applicant/Liquidator.

b) That the Hon'ble Tribunal may direct the Respondent to provide inter- alia all relevant information and documents already gathered by the Respondent during their search exercise, as may be required by the Applicant in conducting the liquidation proceedings, as the case may be;

c) That the Hon'ble Tribunal direct the Respondent not to take any action that would disrupt the recovery proceedings under the provisions of the Code;

d) Any other orders as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case.

# 2. It is submitted by the Learned Counsel for the Applicant that the Corporate Debtor was admitted into Corporate Insolvency Resolution Process vide order dated 23.04.2018 in CA/129/(IB)/2018 vide an application under Section 10 of the code. The Applicant herein was appointed as the Liquidator of the Corporate Debtor vide order dated 25.02.2020 in MA/547(CHE)/2018 by this Adjudicating Authority. It is stated that the company under Liquidation was engaged in the business of buying, manufacturing and selling all precious metal in the form of jewellery and other accessories. 

# 3. It is submitted by the Learned Counsel for the Applicant that the Credit facilities provided by the members of the CoC, are secured by way of primary security, collateral security and personal guarantees of the Promoters/Directors of the Corporate Debtor. It is stated that the account of Corporate Debtor sometime in April, 2017 revealed signs of sickness due to failure in payment of loans availed. Inspection of showrooms were conducted. During the meeting of SBI led consortium that held of 24.08.2017, it was decided to conduct a forensic audit into the accounts of Corporate Debtor and that M/s. DeloitteTouche Tohmatsu India LLP (DTTILLP) was appointed to conduct the Forensic audit of the Corporate Debtor.

# 4. It is submitted by the Learned Counsel for the Applicant that consequent to the forensic audit, misrepresentation/falsification of financial statements leading to the difference in the value of stock as per the audited financial statements and other transaction with related parties of the Corporate Debtor were revealed. The forensic audit also identified the role of the statutory auditor in the above misrepresentation and that the above facts evidenced that consequent to the above fraudulent activities, Corporate Debtor had caused a loss to the tune of Rs.379.75 Crores (outstanding as on 28.02.2018) plus accrued interest from 01.03.2018 to the above said Banks.

# 5. It is submitted by the Learned Counsel for the Applicant that the account of the Corporate Debtor was declared as NPA by SBI on 28.07.2017, on 29.07.2017 by HDFC Bank and on 31.07.2017 by Union Bank of India

# 6. It is submitted by the Learned Counsel for the Applicant that a Criminal case was filed by State Bank of India, registered vide RC 08/E/2018-BS & FC/BLR on 24 March 2018 by CBI, BS & FC, Bangalore against the below mentioned individuals / firms / company for commission of offences of Criminal Conspiracy, Criminal Breach of Trust, Cheating, Forgery, Using as genuine a forged Document and Criminal misconduct by Public Servants on the basis of a written complaint dated 23.08.2018 from Shri G.D. Chandrashekar, General Manager, (MC-I), Mid Corporate Regional Office-I, State Bank of India, Chennai Region against the Corporate Debtor & others. The under mentioned accused were charged for offences under Section 120B of IPC 1860, read with Section 409, 420, 467, 468 & 471 of Indian Penal Code, 1860 and Section 3(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 in the said FIR.

• a) M/s NathellaSampath Jewelry Private Limited, Corporate Debtor having Registered Office situated at No.54, Nathella Plaza, South Usman Road, T.Nagar, Chennai 600 017;

• b) Shri N.Ranganath Gupta, Promoter cum Managing Director, of Corporate Debtor, Chennai & R/o Door Noi 245 (Old No.4-B) Kilpauk Garden Road, Kilpauk, Chennai;

• c) Shri N. Prasanna Kumar, Director of Corporate Debtor, Chennai & R/o Door No 245 (Old No.4-B) Kilpauk-Garden Road, Kilpauk, Chennai

• d) Shri N. Prapanna Kumar, Director of Corporate Debtor, Chennai & R/o Door No 245 (Old No.4-B) Kilpauk-Garden Road, Kilpauk, Chennai;

• e) V. Shri Sohun C.J. Partner of M/s Jeeravla & Co., Chartered Accountant, No.27, First Floor, Barnaby Road Kilpauk, Chennai being Statutory Auditor of Corporate Debtor.

# 7. It is further submitted by the Learned Counsel for the Applicant that subsequent to the above, the Directorate of Enforcement ("ED")/the Respondent herein had passed a Provisional Attachment order vide Order No. 11/2018 dated 31.07.2018 after commencement of Corporate Insolvency Resolution Process of the Corporate Debtor. A copy of the said Provisional Attachment Order is annexed as "Annexure 2" along with the typed set of papers. It is submitted by the Learned Counsel for the Applicant that, it was only by way of this Order, that the Resolution Professional has come to know that 37 immovable properties valued to the tune of Rs. 328.44 Crore were acquired out of proceeds of crime.

# 8. It is further submitted by the Learned Counsel for the Applicant that the provisional attachment order by itself categorically states that the Corporate Debtor's funds were used in acquiring properties in  the names of the directors and related parties. The same is evidenced through bank statements, supported by the Transaction Audit report of Deloitte and written statement given by the beneficiaries of the properties to the Respondent, confirming the acquisition of properties out of the funds of the Corporate Debtor. Further, the

funds of the Corporate Debtor was also used in the form of purchase of the properties, payment of registration charges, servicing loan EMIs, payment of property tax, maintenance etc. As such, all the subject properties are the properties of the Corporate Debtor and would naturally come to the liquidation estate assets of the Corporate Debtor.

# 9. It is submitted by the Learned Counsel for the Applicant that the Resolution Professional had already filed an application in MA.No.423 of 2018 before this Adjudicating Authority seeking relief as to raise the Provisional Attachment made vide Order No. 11/2018 dated 31.07.2018 on the file of the Respondent. Simultaneously the RP also moved an application in MA No. 643/2018 before this Adjudicating Authority highlighting 37 immovable properties amounting to Rs 328.44 Crore, acquired by the Directors/Promoters/Guarantors by diverting/siphoning off of the loan amount that was sanctioned to the Corporate Debtor with a clear intention to deceive and defraud the Secured Creditors.

# 10. It is submitted by the Learned Counsel for the Applicant that vide Order dated 16.01.2019 the Adjudicating Authority, PMLA, New Delhi confirmed the Provisional Attachment Order of the Joint Director, Directorate of Enforcement, Chennai Zonal Office - 1.

Challenging the said order, the RP has preferred an appeal on 01.02.2019 before the Hon'ble Appellate Tribunal PMLA. 

# 11. It is further submitted by the Learned Counsel for the Applicant that, in view of the appeal filed before the Appellate Tribunal, PMLA, the RP withdrew MA. No 423 of 2018 on 25.02.2019 which was pending before this Adjudicating Authority seeking raise of Provisional Attachment Order with liberty to file a fresh application once the appeal filed under PMLA with the Appellate Board is disposed. 

# 12. It is further submitted by the Learned Counsel for the Applicant that, the appeal was listed for hearing on 04.08.2020 thereafter, the functioning of the Appellate Tribunal was suspended due to Covid- 19 pandemic and all the matters listed on 04.08.2020 were adjourned to 04.12.2020. Therefore, the Liquidator was not in a position to proceed further in taking the appeal to its logical end. As a result of which the Applicant herein has filed the present Application praying indulgence of this Adjudicating Authority.

# 13. It is submitted by the Learned Counsel for the Applicant that, in view of the Provisional Attachment Order dated 31.07.2018 of the Respondent, the RP could not bring about any kind of a Resolution and as a result of which the Corporate Debtor went into liquidation. 

# 14. It is further submitted by the Learned Counsel for the Applicant that, the impugned order of the Respondent prevents the Liquidator from performing his duties as per the Section 35 of the IBC 2016 which includes: 

• (a) to take into his custody or control all the assets, property, effects and actionable claims of the Corporate Debtor; 

• (b) to evaluate the assets and property of the Corporate Debtor in the manner specified by the Board and prepare a report; 

• (c) to take such measures as to protect and preserve the assets and properties of the Corporate Debtor as he considers necessary.

# 15. It is submitted by the Learned Counsel for the Applicant that, the Corporate Insolvency Resolution Process of the Corporate Debtor commenced on 23.04.2018, whereas the attachment order was passed by the Respondent only on 31.08.2018, which is much after the commencement of Corporate Insolvency Resolution Process.

# 16. It is further submitted by the Learned Counsel for the Applicant that, in terms of the provisions of Section 36 of the code, the Liquidator is empowered to take charge of the assets of the Corporate Debtor. Accordingly, it is imperative for the Applicant to be allowed to

exercise access and control over the assets which are attached by the attachment order issued by the Respondent.

# 17. It is submitted by the Learned Counsel for the Applicant that, th provisions of Section 238 of the code makes it clear that anything inconsistent therewith contained in any other Law shall be overridden by the provisions of Insolvency Code. Reliance is place on Innovative Industries Limited Vs. ICICI Bank 2017 SCC Online SC 1025, that no proceeding under any Law, including PMLA Act 2002 can be continued or initiated against Corporate Debtor till the completion of CIRP. The attachment order comes in the way of smooth functioning of the Applicant under the liquidation process and hence such inconsistency ought to be removed by virtue of the powers vested under the provisions of Section 238 of the Code.

# 18. It is submitted by the Learned Counsel for the Applicant that, further reliance is placed on the Order dated 31.08.2018 passed by the NCLT, Kolkata Bench in case of Surendra Kumar Joshi Vs.REI Agro Limited [CA(IB) No. 455/KB/2018 in CP(IB) No.73/KB/2017 wherein the Adjudicating Authority has clearly directed the ED to handover the possession of the attached properties to the Liquidator along with the title deeds. The Adjudicating Authority while delivering the said decision relied upon the Order of the Apex Court in the case of Solidaire India Private Limited Vs. Fair Growth Financial Services Private Limited Ors (2001) 3 SCC 71 wherein, under a similar controversy the Apex Court held as under:

• “The provisions of MPID Act thus cannot take away the powers under the Companies Act if the properties of the Company in liquidation are allowed to be sold and the sale proceeds are allowed to be distributed through the competent authority only amongst depositors the same would be in teeth of the provisions of the Companies Act, 1956 and the secured creditors and the workmen preferential creditors having statutory dues would be totally deprived of their legitimate claims against the company in liquidation whereas the depositors under the provisions of MPID Act would exclusively benefitted under the provisions of the MPID Act which would result in mischief."

• "The above ruling completely raises the controversy. The only difference is that in that proceedings the properties were attached under MPID Act In this case, they are attached under PMLA Act."

• 
  

# 19. The Applicant also places reliance on the Order dated 16.05.2018 passed by NCLT, Mumbai in case of State Bank of India Vs. Dunar Foods Limited the Adjudicating Authority has clearly stated:

• "The Authorities under PMLA shall cooperate with the Resolution Professional to provide all the information collected by them so that the Insolvency Proceedings can run side by side concurrently without having any conflict with the Authorities. Endeavour should be is that on attachment the properties be dealt with either for "Restructuring' or "Liquidation" within the prescribed time."

# 20. It is submitted by the Learned Counsel for the Applicant that, no prejudice would be caused to the ED upon release/vacation of the said attachment Order since the intent of the Applicant is to secure the said assets for maximization of value for the benefit of the financial creditors and other stakeholders. The Applicant states that the process of liquidation has to be completed in a time bound manner and cannot be kept in abeyance in view of the pendency of the appeal under the PMLA which would defeat the very purpose of the IBC. In light of the above circumstances, the Applicant therefore, seeks to raise the order of provisional attachment passed vide order dated 31.07 2018.

# 21. From the records available it is seen that the Respondent/Directorate of Enforcement neither appeared nor responded in the instant matter despite notices having been served. Therefore, this Adjudicating Authority vide its common order dated 04.05.2023 decided to proceed ex-parte if none is present for the respondent during the next date of hearing i.e., on 04.07.2023. On perusal of the daily proceedings dated 04.07.2023, it is seen that none appeared for the respondent. Hence, this Authority is constrained to proceed in the absence of the respondent.

# 22. Heard the Learned Counsel for the Applicant. Perused the documents including the written statements on record. 

# 23. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process vide order dated 23.04.2018 by this Adjudicating Authority. It is seen that the provisional attachment were made vide Order No. 11/2018 dated 31.07.2018 by the respondent after commencement of Corporate Insolvency Resolution Process of the Corporate Debtor. It is relevant to bring on record that the period of moratorium kicks in right away once the Corporate Insolvency  Resolution Process is initiated.

# 24. In the instant matter, from the above mentioned dates and events, it is evident that the attachment order passed by the respondent is well after the date of commencement of Corporate Insolvency Resolution Process in a way making it obvious that the respondent has acted upon the assets belonging to the Corporate Debtor during the moratorium period.

# 25. On perusal of the attachment order dated 31.07.2018 it is understood that the order is passed under Section 5 (1) of the Prevention of Money Laundering Act, 2002, which by itself has a set of stipulated rules and regulations governing appeals against such attachment orders before the Appellate Tribunal, (PMLA). Moreover, from the submission made by the applicant, it is brought to the knowledge of this Adjudicating Authority that the Resolution Professional of the Corporate Debtor has already preferred an appeal before the Appellate Authority and the same is still pending. Considering the prevailing situation of the Corporate Debtor and the actions taken by the RP/Liquidator, it is seen that nothing herein bothers the Applicant/Liquidator to proceed in the chosen way before the Hon’ble Appellate Tribunal (PMLA) to lift the provisional attachment.

# 26. Thus, it is quite evident that the attachment made is as per the ingredients of the provisions of the PMLA Act, 2002 and that the same is to be dealt with under the relevant provisions of the said act only. Moreover, it is time and again retreated by the Hon’ble NCLAT that the Code only pertains to the questions concerning Corporate Insolvency Resolution Process & Liquidation Proceedings of the Corporate Debtor. Keeping that in mind, the concept of ‘Attachment’ made as per Section 5 (1) of the Prevention of Money Laundering Act, 2002 cannot be a subject matter of proceedings under Section 60(5) of the code, in a way making it clear that this Adjudicating Authority is not the right ‘FORA’ to deal with revocation of attachment made under the PMLA, Act, 2002. Thereby, making it obvious that a remedy under PMLA act cannot be claimed before this Adjudicating Authority under the IBC, 2016 Code.

# 27. Accordingly, in terms of the instant facts and circumstances, we deem it fit to dismiss the application as not maintainable in law and facts.

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Chandra Prakash IRP For MayFair Leisures Ltd. Vs. Director of Enforcement Department of Revenue - Thus, Section 14 would not bar a proceeding under the PMLA.

  NCLT Ahmedabad (06.03.2023) In Chandra Prakash IRP For MayFair Leisures Ltd. Vs. Director of Enforcement Department of Revenue  [IA 608 of 2020 in CP(IB) 213 of 2018 ] held that;

• Therefore, Section 14 of the IBC is consequent upon an order passed by the Adjudicative Authority declaring moratorium. This would not apply to a special enactment which travels on its own path. After all, one cannot presume a conflict between two enactments having it distinct roles with their objections. As stated, it only speaks about the follow up action over a property, which is subject matter of the proceedings before the National Company Law Tribunal under the IBC. Thus, Section 14 would not bar a proceeding under the PMLA.

Blogger’s Comments; All said and done, the principal objective of attachment & confiscation of tainted property in PMLA is that a person/company is not able to enjoy the proceeds of crime. Under IBC, as soon as the application under section 7, 9 or 10 is accepted, the control of the company is divested from its promoters/directors/existing management & the promoters/directors are prevented from taking back the control of the company (Section 29A & section 32A) either during insolvency proceedings or during liquidation process, thus fulfilling the principal objectives of PMLA.

Rather, attachment of company’s property (particularly liquid assets i.e. bank accounts etc.) under the provisions of PMLA, during insolvency/liquidation proceedings, will frustrate the principal objective of the IBC, i.e. to put the assets of insolvent companies in the beneficial use of the society. In contrast due  to protracted proceedings in PMLA the value of the assets gets diminished, which ultimately is the loss of the society.

Excerpts of the order; 

# 1. This application is filed by the Applicant under section 60(5) and 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 11 of NCLT Rules, 2016 (NCLT Rules) seeking release of attachment of property by the Enforcement Directorate, Ahmedabad. 

# 2. M/s. Mayfair Leisure Limited is the Corporate Debtor and was admitted in Corporate Insolvency Resolution Process (CIRP) vide order dated 02.06.2020 by this Adjudicating Authority in Petition No. CP (IB) 47 of 2017 filed by the Financial Creditor i.e. Bank of India under section 7 of the IBC. The Adjudicating Authority appointed the Applicant i.e. Mr. Chandra Prakash Jain as the Interim Resolution Professional (IRP). 

# 3. The Applicant issued public announcement in “Business Standard” (English) edition and “Gujarat Samachar” (Gujarati) edition on 13.06.2020 inviting claims from Creditors of the Corporate Debtor. The Applicant received claim from only one Financial Creditor i.e. Bank of India and thus constituted Committee of Creditors (CoC) consisting of one Financial Creditor. 

# 4. It is submitted by the Applicant that he received an email from Suspended Management on 22.06.2020 wherein it was informed that the property of the Corporate Debtor, situated at Survey No. 619, village Atladara, disctrict, Vadodara had been attached by Central Bureau of Investigation (CBI) on 05.04.2018 and the same was confirmed by the Hon’ble Gujarat High Court in 2019. It was further informed in the email dated 22.06.2020 that the property is also attached by the Enforcement Directorate (ED) vide its provisional attachment order dated 24.04.2018. The said order was confirmed by the Hon’ble PMLA Appellate Tribunal vide its order dated 03.12.2018. The Hon’ble PMLA Appellate Tribunal vide order dated 12.05.2020 had directed that the status of the property of the Corporate Debtor has to be maintained as it was on 07.04.2018 during the course of investigation of the money laundering under PMLA, 2002 which was initiated vide ECIR/AMZO/03/2018 based on CBI, ACB, Gandhinagar, FIR no. 029 2018 A 0006. 

# 5. It is further submitted by the Applicant that in view of order dated 12.05.2020 passed by Hon’ble PMLA Appellate Tribunal, he is not able to take the possession of the property nor he is able dispose it off. Further, the ED has not even filed its claim with the Applicant. Further, the Applicant submitted that vide letter dated 17.06.2020 he had intimated ED about initiation of CIRP of the Corporate Debtor. In response to the letter, ED confirmed vide letter dated 26.06.2020 that the immovable assets of the Corporate Debtor are attached by their office. The Applicant in response issued another letter dated 21.07.2020 and requested the ED to release the attached property in order to take charge of the Corporate Debtor. 

# 6. It is submitted by the Respondent that a money laundering case under ECIR/AMZO/03/2018 dated 05.04.2018 has been recorded by ED, Ahmedabad zonal office, on the basis of registration of FIR no. 0292018A0006 dated 26.03.2018 by the CBI, against M/s. Diamond Power Infrastructure Ltd. (DPIL), Shri Suresh Narain Bhatnagar, Founder of DPIL, Shri Amit Suresh Bhatnagar, Managing Director of DPIL, Shri Sumit Suresh Bhatnagar, joint Managing Director of DPIL, unknown public servants of various banks and unknown others for commission of offence under section 420, 467, 468, 471 read with 120-B of Indian Penal Code, 1860 and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1998. Further, DPIL used its related parties including the Corporate Debtor i.e. M/s. Mayfair Leisures Ltd. by indulging in suspicious transactions during the period 2010-2011 to 2016-2017. The investigation indicated that these transactions were mere paper transactions without any transfer of goods in order to present false picture of their business health to the banks. DPIL and its related parties have diverted huge amount of funds received as loan/cash, credit to sister concern including M/s. Mayfair Leisures Ltd. and utilized these funds for real estate business of these companies. 

# 7. It is also submitted by the Respondent that the office of the Respondent traced immovable properties valued at Rs. 1122.72 crores and provisionally attached the same vide Provisional Attachment Order No. 02/2018 on 24.04.2018. Subsequently, a complaint was made before the Hon’ble Adjudicating Authority, PMLA, New Delhi for confirmation of the attachment. The Hon’ble Adjudicating Authority, PMLA, New Delhi confirmed the provisional attachment of the properties valued at Rs. 1122.72 crores vide order dated 01.10.2018. The Respondent has also filed a Prosecution Complaint (PC) no. 21 of 2018 in the designated Special Court under Prevention of Money Laundering Act, 2002 (PMLA). 

# 8. Further, it is also submitted by the Respondent that the money laundering case was recorded by ED on 05.04.2018 and the provisional attachment order of the immovable assets was issued on 24.04.2018, which is prior to the admission of the instant application before this Adjudicating Authority. Further, the moratorium vide directions issued by the Hon’ble Tribunal are in respect of proceedings of civil nature as well as disposal of the properties of the Corporate Debtor, whereas the action taken by the Directorate under PMLA, is a criminal matter as the said properties are derived from criminal activities. 

# 9. Moreover, it is submitted by the Respondent that a complaint has already been filed before Hon’ble Special Court vide PC No. 21 of 2018 and the immovable properties attached by the ED are required to be available before Hon’ble Special Court under PMLA for the purpose of confiscation of the same to the Central Government as well as for imposition of penal action against M/s. DPIL and its directors/responsible officers under the provisions of PMLA, 2002. 

# 10. It is also submitted by the Respondent that the objectives of PMLA, 2002 and IBC are different. The concerns of the Applicant regarding availability of the properties is already covered under the provisions of PMLA, 2002. Once it is established that the money involved in the case is laundered, the said properties which are provisionally attached will stand confiscated and will be dealt as per section 8(8) of PMLA, 2002. The claimants with a legitimate interest in the property may be considered during the proceedings before the Special Court under PMLA Act, 2002. Hence, the Respondent has submitted that the present application is not maintainable. 

# 11. Further, it is submitted by the Respondent that the Applicant has cited his inabilities in performing his duties on account of the attachment of property by the ED. However, the Applicant has failed to note that the Respondent has already submitted a prosecution complaint before Hon’ble Special PMLA Court, Ahmedabad in the instant case for confiscation of the properties and prosecution of the accused persons. Further, as per section 8 of the PMLA, 2002, the Applicant can submit their claims before the Hon’ble Special PMLA Court. 

# 12. We have heard the learned counsels of the Applicant and Respondents and perused the material on record. It has been noted that M/s. Mayfair Leisure Limited who is the Corporate Debtor was admitted in CIRP vide order dated 02.06.2020 by this Adjudicating Authority in Petition No. CP (IB) 47 of 2017 filed by the Financial Creditor i.e. Bank of India under section 7 of the IBC. However, the property was already attached by the ED vide its provisional attachment order dated 24.04.2018. The said order was confirmed by the Hon’ble PMLA Appellate Tribunal vide its order dated 03.12.2018. The Hon’ble PMLA Appellate Tribunal vide order dated 12.05.2020 had directed that the status of the property of the Corporate Debtor has to be maintained as it was on 07.04.2018 during the course of investigation of the money laundering under PMLA, 2002 which was initiated vide ECIR/AMZO/03/2018 based on CBI, ACB, Gandhinagar, FIR no. 029 2018 A 0006. 

# 13. Further, it is also noted that a complaint has already been filed before Hon’ble Special Court vide PC No. 21 of 2018 under PMLA, 2002 for confiscation of the attached properties and prosecution of the accused persons. Hence, criminal action under PMLA, 2002 was already taken by the Respondent on 24.04.2018 which is prior to the admission of the instant application by this Adjudicating Authority. 

# 14. The Hon’ble High Court of Madras in the matter of Deputy Director, office of the Joint Directorate of Enforcement vs. Asset Reconstruction Company of India Ltd. and others (Writ Petition No. 29970 of 2019 and WMP Nos. 29872 and 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 PMLA, 2002 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 benevolent reference the relevant extract of which is reproduced below: 

• “8. Section 14 of the IBC speaks of moratorium. A declaration has to be made through an order by the Adjudicatory Authority in this regard. If one carefully goes through the said section, there is no way professional attachment order passed under the provisions of the PMLA would automatically invite a moratorium. This provision only speaks about the consequence for institution of the suit, for continuance and other proceedings against the Corporate Debtor. Therefore, Section 14 of the IBC is consequent upon an order passed by the Adjudicative Authority declaring moratorium. This would not apply to a special enactment which travels on its own path. After all, one cannot presume a conflict between two enactments having it distinct roles with their objections. As stated, it only speaks about the follow up action over a property, which is subject matter of the proceedings before the National Company Law Tribunal under the IBC. Thus, Section 14 would not bar a proceeding under the PMLA.” 

# 15. It is clear that the proper recourse to be resorted by the ‘Corporate Debtor’ is to approach the ‘Competent Forum’ under the PMLA, 2002 to its logical end or any other ‘Jurisdictional Forum’ (other than the purview of IBC, 2016,) in the manner known to Law and in accordance with Law. 16. In view thereof, this application stands rejected.

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Imp. Rulings - Attachment of Assets under PMLA & Section 32A

Imp. Rulings - Attachment of Assets under PMLA & Section 32A

Index;

1. NCLT Kolkata (2025.07.24) in Pankaj Dhanuka vs Deputy Director of Directorate of Enforcement (ED) and Anr. [(2025) ibclaw.in 1204 NCLT, I.A. (IB) No. 162/KB/2025 in Company Petition (IB) No. 23/KB/2019]

2. HC Bombay (2024.03.01) in Mr. Shiv Charan & Ors Vs. Deputy Director, Directorate of Enforcement & Ors. [Writ Petition (L) No.9943 Of 2023] [Liquidation Process]

3. HC Gujarat (2023.08.24) In AM Mining India Private Limited vs Union of India  [R/Special Civil Application No. 808 of 2023] 

4. HC Gujarat (2023.02.17) In Welspun Steel Resources Pvt. Ltd. Vs. Union of India [R/Special Civil Application No. 19387 of 2022 ]

5. NCLT Jaipur (2022.12.05) in M/s Packwell (India) Ltd. Vs. M/s Emgee Cables And Communication Ltd. [IA No. 15/JPR/2022 in CP No. (IB)- 601/ND/2018] held that;

6. HC Delhi (2022.11.11) in Rajiv Chakraborty RP of EIEL Vs. Directorate of Enforcement [W.P.(C) 9531/2020]

7. NCLAT  (2022.01.03) in Kiran Shah,‘RP’ of KSL and Industries Ltd  Vs Enforcement Directorate, Kolkata [Company Appeal  (AT)(Insolvency) No.817/2021 ]

8. High Court Delhi (2021.12.15) in Nitin Jain Liquidator PSL Limited Vs. ED Through Raju Prasad Mahawar, Assistant Director PMLA [W.P.(C) 3261/2021, CM APPLs. 32220/2021, 41811/2021, 43360/2021, 43380/2021]

9. Supreme Court (2021.01.19) Manish Kumar Vs. Union of India & Ors. [Writ Petition (C) No.26 of 2020] 

10. NCLAT (2020.02.17) in JSW Steel Ltd. Vs. Mahender Kumar Khandelwal & Ors. [Company Appeal (AT) (Insolvency) No. 957 of 2019]

11. High Court Delhi  (2019.04.02) in Deputy Director, Directorate of Enforcement Delhi and others V. Axis Bank and others  [CRL.A. 143/2018 & Crl.M.A. 2262/2018 ]

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Blogger’s Comments; All said and done, the principal objectives of attachment & confiscation of tainted property in PMLA is that a person/company is not able to enjoy the proceeds of crime. Under IBC, as soon as the application under section 7, 9 or 10 is accepted, the control of the company is divested from its promoters/directors/existing management & the promoters/directors are prevented from taking back the control of the company (Section 29A & section 32A) either during insolvency proceedings or during liquidation process, thus fulfilling the principal objectives of PMLA.

Rather, attachment of company’s property (particularly liquid assets i.e. bank accounts etc.) under the provisions of PMLA, during insolvency/liquidation proceedings frustrate the principal objectives of the IBC, to put the assets of insolvent companies in the beneficial use of the society. In contrast due  to protracted proceedings in PMLA the value of the assets gets diminished, which ultimately is the loss of the society.

In my views, the IBC may provide for deemed suspension of PMLA attachment orders during the CIRP & Liquidation process, for smooth conduct of CIRP & Liquidation process.

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1). NCLT Kolkata (2025.07.24) in Pankaj Dhanuka vs Deputy Director of Directorate of Enforcement (ED) and Anr. [(2025) ibclaw.in 1204 NCLT, I.A. (IB) No. 162/KB/2025 in Company Petition (IB) No. 23/KB/2019] held that;

• As both I&B Code and PMLA have non obstante clauses overriding effect of other laws, Section 32A of the I&B Code was introduced to impose a statutory bar on taking any action against the corporate debtor’s property in relation to an offence committed prior to commencement of the CIRP. Thus, power to seize property under Section 5 of PMLA would cease to be exercisable once liquidation is allowed to commence. However, no bar is imposed on continuing investigations.

• In our view, there is no conflict between PMLA and IBC and even if a property has been attached in the PMLA which is belonging to the Corporate Debtor, if CIRP is initiated, the property should become available to fulfill objects of IBC till a resolution takes place or sale of liquidation asset occurs in terms of Section 32A

• Court comes to the conclusion that the approval of the measure to be implemented in the liquidation process by the Adjudicating Authority must be held to constitute the trigger event for the statutory bar enshrined in Section 32A coming into effect. It must consequently be held that the power to attach as conferred by Section 5 of the PMLA would cease to be exercisable once any one of the measures specified in Regulation 32 of the Liquidation Regulations 2016 comes to be adopted and approved by the Adjudicating Authority.

• The power otherwise vested in the respondent under the PMLA to provisionally attach or move against the properties of the corporate debtor would stand foreclosed once the Adjudicating Authority comes to approve the mode selected in the course of liquidation. To this extent and upon the Adjudicating Authority approving the particular measure to be implemented, the PMLA must yield. The Court also bears in mind that the bar that stands created under Section 32A operates and extends only insofar as the properties of the corporate debtor are concerned.

• Section 32A legislatively places vital import upon the decision of the Adjudicating Authority when it approves the measure to be implemented in order to take the process of liquidation or resolution to its culmination. It is this momentous point in the statutory process that must be recognised as the defining moment for the bar created by Section 32A coming into effect. If it were held to be otherwise, it would place the entire process of resolution and liquidation in jeopardy. Holding to the contrary would result in a right being recognised as inhering in the respondent to move against the properties of the corporate debtor even after their sale or transfer has been approved by the Adjudicating Authority. This would clearly militate against the very purpose and intent of Section 32A

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2). HC Bombay (2024.03.01) in Mr. Shiv Charan & Ors Vs. Deputy Director, Directorate of Enforcement & Ors. [Writ Petition (L) No.9943 Of 2023] held that;

• Section 60(5) clearly empowers the NCLT to answer the question of whether the statutory immunity under Section 32A has accrued to a corporate debtor. As a consequence, the NCLT is well within its jurisdiction and power to rule that prior attachment of the property of a corporate debtor that is subject matter of an approved resolution plan, must be released, if the jurisdictional facts for purposes of Section 32A exist.

• No further act, deed or thing is required to be done, since the immunity fastens itself by operation of law from the point in time at which the resolution plan is approved. Therefore, there is no requirement for any partial quashing of the instruments of enforcement under the PMLA, 2002. 

• These instruments of enforcement would simply have no effect whatsoever against the corporate debtor to its detriment. The corporate debtor would indeed be obligated to cooperate in the investigation and prosecution that would continue against the other accused. Summary of Conclusions:

• Consequently, it is but logical that the property of the corporate debtor would have protection from any continued attachment by reason of Section 32A(2).

• As quasi-judicial authorities exercising the powers of civil courts and functioning within the territory of India, the law declared by the Hon’ble Supreme Court would bind the quasi-judicial authorities. 

• As required under Article 141 of the Constitution of India, such quasi judicial authorities must act consistent with the law declared by the Hon’ble Supreme Court rather than disobey the rule of law to give rise to avoidable litigation.

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3). HC Gujarat (24.08.2023) In AM Mining India Private Limited vs Union of India  [R/Special Civil Application No. 808 of 2023] held that;;

• The Court has independently come to the conclusion that the power to attach under the PMLA would not fall within the ken of Section 14(1)(a) of the IBC. Through Section 32A, the Legislature has authoritatively spoken of the terminal point whereafter the powers under the PMLA would not be exercisable.

• The bar against action against the property, is available, not only to the corporate debtor but also to any person who acquires property of the corporate debtor under the CIRP or the liquidation process.

• Sine qua non to arrive at a determination that the assets are proceeds of crime, the foremost requirement is that the author has to have ‘reason to believe’ on the basis of material in his possession. ‘Reason to believe’ cannot arise from mere suspicion, gossip or rumour. Merely because the impugned order records alleged fraudulent transactions and diversion of funds, it cannot automatically lead to a conclusion that the properties acquired by the petitioners are proceeds of crime. In order to arrive at a conclusion that ‘reason to believe’ exists, there must be some material to suggest such formation of opinion.That reason to believe must be founded on sufficient material. It cannot be founded on mere suspicion but based on evidence. It must be held in good faith, cannot be merely a pretense. It is always open for the court to examine whether the reason to believe has a rational connection or a relevant bearing to the formation of the belief and the reasons are not extraneous or irrelevant to the purpose.

• The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the Court should meet with this requirement with higher degree of satisfaction.

• The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. ..."

• Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out.

• Section 32A of the IBC Act would govern to the extent to which the non-obstante clause enshrined in the IBC would operate and exclude the operation of PMLA.

• The protection granted under Section 33(5) and Section 32A(2) of the IBC Act would override the power of the respondent No.1 to attach the properties under the PMLA Act.

• Further Section 238 of the Act provides that the provisions of IBC would override anything inconsistent with any other law. Though the PMLA has similar provision under Section 71, the same is subservient to the provisions of IBC Act, since IBC Act was enacted after PMLA Act.

• When there are two enactments of non-obstante clauses, like the present one, the enactment which is subsequent in time overrides the other in line with the ratio as laid down in (2008) 8 SCC 148.

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4). High Court of Gujarat (2023.02.23) In Welspun Steel Resources Pvt. Ltd. Vs. Union of India [R/Special Civil Application No. 19387 of 2022 ] held that;

• The bar against action against the property, is available, not only to the corporate debtor but also to any person who acquires property of the corporate debtor under the CIRP or the liquidation process. 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 sub- Section (2), if he has purchased the property of the corporate debtor in the proceedings for the liquidation of the corporate debtor.

• The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate.

• Therefore, what is clear is that it is only such property which is derived or obtained directly or indirectly as a result of a criminal activity can be regarded as proceeds of crime.

• In the facts of the case, obviously apparent it is that the only allegation and the gist that had been discussed is that the corporate debtor used the credit raised from the bank for purposes other than intended purposes to carry out circular transactions with various group companies and making overseas investments. 

• There is no explanation as to how the properties standing in the name of corporate debtor and which form part of the assets sold to the petitioners are proceeds of crime especially since these assets are neither overseas assets or that of the group companies.

• Merely because the impugned order records alleged fraudulent transactions and diversion of funds, it cannot automatically lead to a conclusion that the properties acquired by the petitioners are proceeds of crime.

• That reason to believe must be founded on sufficient material. It cannot be founded on mere suspicion but based on evidence. It must be held in good faith, cannot be merely a pretense. It is always open for the court to examine whether the reason to believe has a rational connection or a relevant bearing to the formation of the belief and the reasons are not extraneous or irrelevant to the purpose.

• When the assumption of jurisdiction by the authorities itself is non-existent and the respondent proceeds on facts which have no nexus to the objects sought to be achieved, and the opinion is not based on any tangible material, ‘reason to believe’  is a jurisdictional fact and in absence of such ‘reason to believe’ arrived at by the authorities, the bar of alternative remedy cannot oust the jurisdiction of this court.

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5). NCLT Jaipur (2022.12.05) in M/s Packwell (India) Ltd. Vs. M/s Emgee Cables And Communication Ltd. [IA No. 15/JPR/2022 in CP No. (IB)- 601/ND/2018] held that; 

• Notwithstanding the above, the Legislature chose to structure that provision in a manner that the authorities under the PMLA would cease to have the power to attach or confiscate only when a Resolution Plan had been approved or where a measure towards liquidation had been adopted. 

• The statutory injunct against the invocation or utilisation of the powers available under the PMLA was thus ordained to come into effect only once the trigger events envisaged under Section 32A came into effect. 

• The Legislature thus in its wisdom chose to place an embargo upon the continuance of criminal proceedings including action of attachment under the PMLA only once a Resolution Plan were approved or a measure in aid of liquidation had been adopted.

• The PMLA would cease to have the power to attach the property at this juncture when the order of the Liquidation has already been passed. Further, the attachment of the properties of the Corporate Debtor under the PMLA has to be lifted in lieu of section 32A of the IBC.

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6). HC Delhi (2022.11.11) in Rajiv Chakraborty RP of EIEL Vs. Directorate of Enforcement [W.P.(C) 9531/2020] held that; 

• # 105. The introduction of Section 32A constitutes an event of vital import since it embodies a provision which effectively shut out criminal proceedings including those under the PMLA upon the CIRP reaching the defining moment specified therein. However, when the Legislature introduced the said provision, it was conscious and aware of the fact that the provisions of the PMLA could be enforced against the properties of a corporate debtor notwithstanding the pendency of the CIRP. This the Court notes in light of the extent to which Section 14 could be recognised to legally operate under the statutory scheme and as has been explained hereinabove. Notwithstanding the above, the Legislature chose to structure that provision in a manner that the authorities under the PMLA would cease to have the power to attach or confiscate only when a Resolution Plan had been approved or where a measure towards liquidation had been adopted. The statutory injunct against the invocation or utilisation of the powers available under the PMLA was thus ordained to come into effect only once the trigger events envisaged under Section 32A came into effect. The Legislature thus in its wisdom chose to place an embargo upon the continuance of criminal proceedings including action of attachment under the PMLA only once a Resolution Plan were approved or a measure in aid of liquidation had been adopted.

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7). NCLAT  (2022.01.03) in Kiran Shah,‘RP’ of KSL and Industries Ltd  Vs Enforcement Directorate, Kolkata [Company Appeal  (AT)(Insolvency) No.817/2021 ] Held that;

• 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

• 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.

• An order of attachment under PMLA is not illegal only because a secured creditor has a prior secured interest (charge) in the property, within the meaning of the expressions used in RDBA and SARFAESI Act. 

• Similarly, mere issuance of an order of attachment under PMLA does not ipso facto render illegal a prior charge or encumbrance of a secured creditor, the claim of the latter for release (or restoration) from PMLA attachment being dependent on its bonafides.” 

• Thus, we have no hesitation in holding that the NCLT has got no jurisdiction to go into the matters governed under the PMLA.

• Adjudicating Authority has no jurisdiction under Section 60(5) and/or 32A(2) of the IB Code or under Rule 11 of the NCLT, to quash and/or set aside the order so passed by a Competent Authority of Enforcement Directorate (ED) under the PMLA. 

• This Adjudicating Authority is not vested with the power of judicial review over administrative action or is sitting as an Appellate Authority for the order so passed by the Competent Authority.

• Further, Section 32A of the IBC does not envisages any rights upon this Adjudicating Authority to interfere in order passed by some Competent Authority. For this purpose, Applicant may approach the Appellate/Higher Authority of the concerned Competent Authority, who has passed the order in question.

• ‘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.

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8). High Court Delhi (2021.12.15) in Nitin Jain Liquidator PSL Limited Vs. ED Through Raju Prasad Mahawar, Assistant Director PMLA [W.P.(C) 3261/2021, CM APPLs. 32220/2021, 41811/2021, 43360/2021, 43380/2021] held that;

• Regard must also be had to the fact the cessation of prosecution stands restricted to the corporate debtor and not the individuals in charge of its affairs. The PMLA and its provisions stand steadfast and do not stand diluted in their rigour and application against persons who were in control of the corporate debtor. It was this delicate balance struck by the Legislature which met approval in Manish Kumar. Section 32A in unambiguous terms specifies the approval of the resolution plan in accordance with the procedure laid down in Chapter II as the seminal event for the bar created therein coming into effect.

• It must consequently be held that the power to attach as conferred by Section 5 of the PMLA would cease to be exercisable once any one of the measures specified in Regulation 32 of the Liquidation Regulations 2016 comes to be adopted and approved by the Adjudicating Authority.

• The power otherwise vested in the respondent under the PMLA to provisionally attach or move against the properties of the corporate debtor would stand foreclosed once the Adjudicating Authority comes to approve the mode selected in the course of liquidation.

• The Court thus comes to hold that from the date when the Adjudicating Authority came to approve the sale of the corporate debtor as a going concern, the cessation as contemplated under Section 32A did and would be deemed to have come into effect.

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9). Supreme Court (2021.01.19) Manish Kumar Vs. Union of India & Ors. [Writ Petition (C) No.26 of 2020] held that;

Head Notes; The Insolvency and Bankruptcy Code (Amendment) Act, 2020, among others, inserted three provisos to section 7(1), an additional explanation to section 11, and section 32A in the Insolvency and Bankruptcy Code, 2016 (Code). These provisions were challenged in these writ petitions under Article 32 of the Constitution of India. The Hon’ble Supreme Court, in its 465-page judgment, while upholding these amendments, made important findings and observations, and issued directions as under:

• # 257. We are of the clear view that no case whatsoever is made out to seek invalidation of Section 32A. The boundaries of this Court’s jurisdiction are clear. The wisdom of the legislation is not open to judicial review. Having regard to the object of the Code, the experience of the working of the code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this this Court to interfere. The provision is carefully thought out. It is not as if the wrongdoers are allowed to get away. They remain liable. The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. We must also not overlook the principle that the impugned provision is part of an economic measure. The reverence courts justifiably hold such laws in cannot but be applicable in the instant case as well. The provision deals with reference to offences committed prior to the commencement of the CIRP. With the admission of the application the management of the corporate debtor passes into the hands of the Interim Resolution Professional and thereafter into the hands of the Resolution Professional subject undoubtedly to the control by the Committee of Creditors. As far as protection afforded to the property is concerned there is clearly a rationale behind it. Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision

• # 258. It must be 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 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 ordinarily be left to the judgement of the legislature. Erecting a bar against action against the property of the corporate debtor when viewed in the larger context of the objectives sought to be achieved at the forefront of which is maximisation of the value of the assets which again is to be achieved at the earliest point of time cannot become the subject of judicial veto on the ground of violation of Article 14. We would be remiss if we did not remind ourselves that attaining public welfare very often needs delicate balancing of conflicting interests. As to what priority must be accorded to which interest must remain a legislative value judgement and if seemingly the legislature in its pursuit of the greater good appears to jettison the interests of some it cannot unless it strikingly ill squares with some constitutional mandate suffer invalidation.

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10). NCLAT (2020.02.17) in JSW Steel Ltd. Vs. Mahender Kumar Khandelwal & Ors. [Company Appeal (AT) (Insolvency) No. 957 of 2019] deliberated & ordered on the following issues;

1. Whether after approval of a ‘Resolution Plan’ under Section 31 of the Insolvency and Bankruptcy Code, 2016, is it open to the Directorate of Enforcement to attach the assets of the ‘Corporate Debtor’ on the alleged ground of money laundering by erstwhile Promoters.

2. Persons/ Authorities empowered to decide whether a ‘Resolution Applicant’ is ineligible being ‘related party’ in terms of Section 29A or not

3. Distribution of profit during the ‘Corporate Insolvency Resolution Process’.

4. Distribution of monies to be recovered on account of the Identified Transaction

5. Interim management of the ‘Corporate Debtor’ until the implementation of the ‘Resolution Plan’.

6. Can a Successful Resolution Applicant’ be asked to face with undecided claims after the Resolution Plan’ submitted by him and accepted by the ‘Committee of Creditors’

7. Whether ‘JSW Steel Limited” is to be treated as promoter of ‘Nova Iron Steel’.

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11). High Court Delhi  (2019.04.02) in Deputy Director, Directorate of Enforcement Delhi and others V. Axis Bank and others  [CRL.A. 143/2018 & Crl.M.A. 2262/2018 ] held that;

• An order of attachment under PMLA is not illegal only because a secured creditor has a prior secured interest (charge) in the property, within the meaning of the expressions used in RDBA and SARFAESI Act. 

• Similarly, mere issuance of an order of attachment under PMLA does not ipso facto render illegal a prior charge or encumbrance of a secured creditor, the claim of the latter for release (or restoration) from PMLA attachment being dependent on its bonafides.

• A party in order to be considered as a "bonafide third party claimant" for its claim in a property being subjected to attachment under PMLA to be entertained must show, by cogent evidence, that it had acquired interest in such property lawfully and for adequate consideration, 

• The party itself not being privy to, or complicit in, the offence of money-laundering, and that it has made all compliances with the existing law including, if so required, by having said security interest registered.

• If the order confirming the attachment has attained finality, or if the order of confiscation has been passed, or if the trial of a case under Section 4 PMLA has commenced, the claim of a party asserting to have acted bonafide or having legitimate interest in the nature mentioned above will be inquired into and adjudicated upon only by the special court.

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