Latest news with #NCLAT
Time of India
3 days ago
- Business
- Time of India
Insolvency law cannot override PMLA, says NCLAT; upholds asset attachment by ED
Insolvency & Bankruptcy Code cannot override the Prevention of Money Laundering Act ( PMLA ), said appellate tribunal NCLAT , adding assets of an debt-ridden firm once attached by the Directorate of Enforcement (ED) and confirmed by competent authority cannot be released for its resolution. Under section 14 of IBC, a moratorium is applied on those assets for the purpose of resolution. However, if the property is alleged to be "proceeds of crime" and is already under adjudication by competent authority under a penal statute, such property cannot be deemed to be part of the freely available resolution estate, the National Company Law Appellate Tribunal (NCLAT) said. The appellate tribunal held that if there is any attachment by ED under the PMLA, which is "validly made and confirmed, it cannot be undone under IBC (Insolvency and Bankruptcy Code). by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Farmer Finds Diamond Ring. When He Shows It To His Wife, She Says, 'I Want A Divorce'. Plays Star Undo Citing section 238 of IBC, which has an overriding effect over other laws, a three-member NCLAT bench said it "cannot override the PMLA in respect of proceedings involving proceeds of crime." PMLA and IBC operate in distinct spheres and there is no "irreconcilable inconsistency" exists between the two, said NCLAT adding ED does not act as a creditor, but as a public enforcement agency. Live Events "The attached assets are not to satisfy creditors, but to uphold penal objectives and international obligations under FATF and UN Conventions," said the appellate tribunal, while upholding an order of the National Company Law Tribunal (NCLT). NCLAT also cited a directive issued by the Supreme Court in the Embassy Property matter, saying it "lacks jurisdiction to interfere with the PAO, which has been subsequently confirmed by the Adjudicating Authority under the PMLA". The appellate tribunal's 36-page-order came over a plea filed by the resolution professional of Dunar Foods , challenging an NCLT ruling, which had refused to direct the ED to release provisionally attached assets of the debt-ridden company. On December 22, 2027, the Mumbai bench of NCLT had ordered insolvency proceedings against Dunar Foods, which was engaged in processing and exporting basmati rice. The insolvency petition was filed by a consortium of banks led by public sector lender SBI for a loan repayment default of Rs 758.73 crore. Accordingly, CIRP ( corporate insolvency resolution process ) was initiated against Dunar Foods with the appointment of a resolution professional. Meanwhile, the ED initiated an investigation under PMLA against PD Agroprocessors, an associate company of Dunar Foods. It traced the flow of alleged tainted funds to Dunar Foods based on scheduled offences under the Indian Penal Code and Foreign Exchange Management Act (FEMA), alleging that large export advances received by Dunar Foods from PD Agroprocessors were proceeds of crime. ED then attached Dunar Foods' several immovable and movable assets worth Rs 177.33 crore, prompting the resolution professional (RP) of the firm to move NCLT seeking immediate de-attachment of the provisionally attached properties. However, the NCLT on May 21, 2018 dismissed the RP's application and held that the provisional attachment order issued by the ED under PMLA did not fall within the scope of the moratorium under Section 14 of the IBC. NCLT had said that PMLA is a special penal statute and has a 'distinct adjudicatory mechanism', hence unless and until the attachment was set aside by the PMLA adjudicating authority, the NCLT has no jurisdiction to direct its release. Aggrieved by this decision, Dunar Foods' RP then approached appellate tribunal NCLAT. Meanwhile, the lenders of Dunar Foods approved the resolution plan submitted by Amit Gupta in November 2019 during the pendency of the appeal in NCLAT. The appellate tribunal said though Provisional Attachment Order (PAO) was issued by ED after the commencement of CIRP, ECIR (Enforcement Case Information Report) investigation commenced as far back as 2013.
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Business Standard
4 days ago
- Business
- Business Standard
Insolvency law cannot override PMLA, ED attachment to stay, says NCLAT
Insolvency & Bankruptcy Code cannot override the Prevention of Money Laundering Act (PMLA), said appellate tribunal NCLAT, adding assets of an debt-ridden firm once attached by the Directorate of Enforcement (ED) and confirmed by competent authority cannot be released for its resolution. Under section 14 of IBC, a moratorium is applied on those assets for the purpose of resolution. However, if the property is alleged to be "proceeds of crime" and is already under adjudication by competent authority under a penal statute, such property cannot be deemed to be part of the freely available resolution estate, the National Company Law Appellate Tribunal (NCLAT) said. The appellate tribunal held that if there is any attachment by ED under the PMLA, which is "validly made and confirmed, it cannot be undone under IBC (Insolvency and Bankruptcy Code). Citing section 238 of IBC, which has an overriding effect over other laws, a three-member NCLAT bench said it "cannot override the PMLA in respect of proceedings involving proceeds of crime." PMLA and IBC operate in distinct spheres and there is no "irreconcilable inconsistency" exists between the two, said NCLAT adding ED does not act as a creditor, but as a public enforcement agency. "The attached assets are not to satisfy creditors, but to uphold penal objectives and international obligations under FATF and UN Conventions," said the appellate tribunal, while upholding an order of the National Company Law Tribunal (NCLT). NCLAT also cited a directive issued by the Supreme Court in the Embassy Property matter, saying it "lacks jurisdiction to interfere with the PAO, which has been subsequently confirmed by the Adjudicating Authority under the PMLA". The appellate tribunal's 36-page-order came over a plea filed by the resolution professional of Dunar Foods, challenging an NCLT ruling, which had refused to direct the ED to release provisionally attached assets of the debt-ridden company. On December 22, 2027, the Mumbai bench of NCLT had ordered insolvency proceedings against Dunar Foods, which was engaged in processing and exporting basmati rice. The insolvency petition was filed by a consortium of banks led by public sector lender SBI for a loan repayment default of Rs 758.73 crore. Accordingly, CIRP (corporate insolvency resolution process) was initiated against Dunar Foods with the appointment of a resolution professional. Meanwhile, the ED initiated an investigation under PMLA against PD Agroprocessors, an associate company of Dunar Foods. It traced the flow of alleged tainted funds to Dunar Foods based on scheduled offences under the Indian Penal Code and Foreign Exchange Management Act (FEMA), alleging that large export advances received by Dunar Foods from PD Agroprocessors were proceeds of crime. ED then attached Dunar Foods' several immovable and movable assets worth Rs 177.33 crore, prompting the resolution professional (RP) of the firm to move NCLT seeking immediate de-attachment of the provisionally attached properties. However, the NCLT on May 21, 2018 dismissed the RP's application and held that the provisional attachment order issued by the ED under PMLA did not fall within the scope of the moratorium under Section 14 of the IBC. NCLT had said that PMLA is a special penal statute and has a 'distinct adjudicatory mechanism', hence unless and until the attachment was set aside by the PMLA adjudicating authority, the NCLT has no jurisdiction to direct its release. Aggrieved by this decision, Dunar Foods' RP then approached appellate tribunal NCLAT. Meanwhile, the lenders of Dunar Foods approved the resolution plan submitted by Amit Gupta in November 2019 during the pendency of the appeal in NCLAT. The appellate tribunal said though Provisional Attachment Order (PAO) was issued by ED after the commencement of CIRP, ECIR (Enforcement Case Information Report) investigation commenced as far back as 2013.
Mint
4 days ago
- Business
- Mint
Insolvency law cannot override PMLA, says NCLAT; upholds asset attachment by ED
New Delhi, Jul 6 (PTI) Insolvency & Bankruptcy Code cannot override the Prevention of Money Laundering Act (PMLA), said appellate tribunal NCLAT, adding assets of an debt-ridden firm once attached by the Directorate of Enforcement (ED) and confirmed by competent authority cannot be released for its resolution. Under section 14 of IBC, a moratorium is applied on those assets for the purpose of resolution. However, if the property is alleged to be "proceeds of crime" and is already under adjudication by competent authority under a penal statute, such property cannot be deemed to be part of the freely available resolution estate, the National Company Law Appellate Tribunal (NCLAT) said. The appellate tribunal held that if there is any attachment by ED under the PMLA, which is "validly made and confirmed, it cannot be undone under IBC (Insolvency and Bankruptcy Code). Citing section 238 of IBC, which has an overriding effect over other laws, a three-member NCLAT bench said it "cannot override the PMLA in respect of proceedings involving proceeds of crime." PMLA and IBC operate in distinct spheres and there is no "irreconcilable inconsistency" exists between the two, said NCLAT adding ED does not act as a creditor, but as a public enforcement agency. "The attached assets are not to satisfy creditors, but to uphold penal objectives and international obligations under FATF and UN Conventions," said the appellate tribunal, while upholding an order of the National Company Law Tribunal (NCLT). NCLAT also cited a directive issued by the Supreme Court in the Embassy Property matter, saying it "lacks jurisdiction to interfere with the PAO, which has been subsequently confirmed by the Adjudicating Authority under the PMLA". The appellate tribunal's 36-page-order came over a plea filed by the resolution professional of Dunar Foods, challenging an NCLT ruling, which had refused to direct the ED to release provisionally attached assets of the debt-ridden company. On December 22, 2027, the Mumbai bench of NCLT had ordered insolvency proceedings against Dunar Foods, which was engaged in processing and exporting basmati rice. The insolvency petition was filed by a consortium of banks led by public sector lender SBI for a loan repayment default of ₹ 758.73 crore. Accordingly, CIRP (corporate insolvency resolution process) was initiated against Dunar Foods with the appointment of a resolution professional. Meanwhile, the ED initiated an investigation under PMLA against PD Agroprocessors, an associate company of Dunar Foods. It traced the flow of alleged tainted funds to Dunar Foods based on scheduled offences under the Indian Penal Code and Foreign Exchange Management Act (FEMA), alleging that large export advances received by Dunar Foods from PD Agroprocessors were proceeds of crime. ED then attached Dunar Foods' several immovable and movable assets worth ₹ 177.33 crore, prompting the resolution professional (RP) of the firm to move NCLT seeking immediate de-attachment of the provisionally attached properties. However, the NCLT on May 21, 2018 dismissed the RP's application and held that the provisional attachment order issued by the ED under PMLA did not fall within the scope of the moratorium under Section 14 of the IBC. NCLT had said that PMLA is a special penal statute and has a 'distinct adjudicatory mechanism', hence unless and until the attachment was set aside by the PMLA adjudicating authority, the NCLT has no jurisdiction to direct its release. Aggrieved by this decision, Dunar Foods' RP then approached appellate tribunal NCLAT. Meanwhile, the lenders of Dunar Foods approved the resolution plan submitted by Amit Gupta in November 2019 during the pendency of the appeal in NCLAT. The appellate tribunal said though Provisional Attachment Order (PAO) was issued by ED after the commencement of CIRP, ECIR (Enforcement Case Information Report) investigation commenced as far back as 2013.
Mint
01-07-2025
- Business
- Mint
ED says search on Raheja Developers yielded incriminating documents
New Delhi: The Enforcement Directorate (ED) said on Tuesday that its Delhi zonal office's search operations into Raheja Developers Ltd, one of its senior executives, and others under the anti-money laundering law have yielded incriminating documents. An official statement from ED said search operations were held on Sunday at 13 locations in Delhi, the National Capital Region and Mohali under the provisions of the Prevention of Money Laundering Act (PMLA) in an ongoing investigation against Raheja Developers, its directors, and others. ED said it initiated an investigation based on multiple first information reports (FIRs) registered by the Economic Offences Wing, Delhi, under various sections of the Indian Penal Code against Raheja Developers, a senior executive, and others. Also read | NCLT starts insolvency proceedings against Raheja Builders 'The FIRs allege that substantial sums were fraudulently collected from investors and homebuyers by Raheja Developers on the promise of delivering residential flats in various group housing projects but failed to hand over the promised flats,' the ED statement said. Incriminating documents recovered 'During the searches, several incriminating documents, digital devices, and details of movable and immovable properties were found and seized. Further investigation is in progress,' the statement said. Queries emailed on Tuesday evening to Raheja Developers and phone calls made remained unanswered at the time of publishing. NCLT Principal Bench had in November 2024 admitted the bankruptcy resolution petition filed by financial creditors against Raheja Developers. The petition was filed by 43 homebuyers of the Raheja Shilas Low Rise project in Gurugram for ₹112.9 crore in dues. Also read | Raheja Developers planning IPO in a year However, in a relief to Raheja Developers, the appellate tribunal NCLAT confined the insolvency proceedings against the realty firm to only one of its projects, Raheja Shilas, Business Standard reported on 22 November. NCLAT directed Raheja Developers to provide details regarding the other incomplete projects and the status of all ongoing projects, enabling appropriate orders to be passed, the Business Standard report had said. Separately, in a significant precedent, the Supreme Court ruled on 2 May in the case of Kalyani Transco vs Bhushan Power and Steel Ltd that neither NCLT nor NCLAT has jurisdiction to question or overturn provisional attachment orders made by the ED under PMLA and that this power lies exclusively with the court. Also read | Raheja Developers moves NCLAT against insolvency
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Business Standard
22-06-2025
- Business
- Business Standard
JSW Energy joins race for Raigarh Champa Rail Infra after NCLAT nod
Appellate tribunal NCLAT has quashed an NCLT order that denied permission to the lenders of debt-ridden Raigarh Champa Rail Infrastructure to start a fresh bidding process. The development has come as a relief to JSW Energy which had sought permission to participate in the insolvency resolution process of Raigarh Champa Rail Infrastructure Pvt Ltd (RCRIPL), an ancillary company of KSK Mahanadi. JSW Energy has already acquired KSK Mahanadi Power, a 3,600 MW thermal power plant in Chhattisgarh, for Rs 16,084 crore through the insolvency process, earlier in March this year. The Chennai-bench of the NCLAT said it sees no demerits in the decision of the lenders' body CoC to invite fresh Expression of Interest (EoI) by re-issuing fresh Form G, inviting new prospective buyers as it "will certainly increase competition and in all likelihood, result in higher bids." ".... since, the EoI is proposed to be reopened for everybody and not for JSW alone, it is fair and transparent and not discriminatory and that since, existing PRAs (Prospective Resolution Applicants) are proposed to be retained with option given to them to participate in challenge mechanism, it is also fair to the existing Resolution Applicants," it said. Moreover, the tribunal over the bid submitted by Medha group, which was the highest and also approved earlier by RCRIPL lenders with 100 per cent votes earlier, said it is "proposed to be the Reserve Price, there cannot be any value erosion of the Corporate Debtor, if EoI process is reopened." Five companies, including Adani Power, Jindal Power, Medha Servo Drives, Sherisha Technologies and Vedanta, were in the race to acquire the special Purpose Vehicle (SPV) promoted by KSK group. Earlier, on April 3, 2025, the Hyderabad bench of the National Company Law Tribunal (NCLT) denied permission to the RP and the lenders' body Committee of Creditors (CoC) for issuance of a fresh Form G and invitation of EoI from new eligible Prospective Resolution Applicants, including JSW Energy. Instead, in fresh bidding, NCLT directed to conduct the challenge mechanism amongst the bidders as earlier decided by the CoC. However, NCLAT said it sees no demerits in the proposal of the RP and decision of the CoC, as going by previous decisions, the lenders' body has the power to call for fresh Form G and permit other PRAs to participate even after submission of EoI. "The Impugned Order of April 3, 2025, is hereby quashed and as a consequence. The relief as sought for, by the Resolution Professional, to be permitted to issue fresh Form G and to invite Expression of Interest (EoI) from new and interested eligible Prospective Resolution Applicants is granted," said the NCLAT order passed on June 19, 2025 by a two member comprising Justice Sharad Kumar Sharma and Jatindranath Swain. Form G under IBC is an Invitation for Expression of Interest (EoI) and is published by the Resolution Professional (RP) to invite potential resolution applicants to submit their proposals for taking over a company undergoing CIRP. JSW Energy has already acquired KSK Mahanadi Power, a 3,600 MW thermal power plant in Chhattisgarh, for Rs 16,084 crore through the insolvency process, earlier in March this year. RCRIPL is an SPV promoted by the KSK group to construct, lay a railway line and associated infrastructure from coal fields in Mand Raigarh to the power stations in Janjgir Champa. It passes through the Indian Railways Network for transporting coal, associated fuels and such other raw materials, as well as fly ash and other. CIRP was started against RCRIPL on January 1, 2021, and the first final Form G was issued on 24.08.2021. However, the EoI submission process remained pending till May 2024, because NCLT directed the RP of KMPCL (KSK Mahanadi Power Company Ltd) not to receive any resolution pending adjudication of various proceedings seeking consolidation of the CIRP of KMPCL and KWIPL (KSK Water Infrastructures). Later on July 4, 2024, CoC approved the resolution plan submitted by Medha with 100 per cent voting share and moved a plea before NCLT. However, before the Hyderabad bench of NCLT could approve Medha's bid, the RP of RCRIPL filed another plea seeking permission for undertaking a challenge mechanism among the resolution applicants/bidders in accordance with the CIRP Regulations. This application for withdrawal of Plan Approval by lenders was approved by a majority voting share of 78.59 per cent of CoC, and NCLT allowed it. However, instead of proceeding with the challenge mechanism, the RP then filed another plea, wherein permission for reopening of the bidding process for RCRI was sought, for the purpose of inviting an EoI from JSW Energy, enabling them to participate in the CIRP. This new request of the RP to allow to opening bidding process and add JSW Energy was denied by NCLT, saying it was contrary to the principles of fairness and the timelines of the CIRP process. Later, JSW Energy also approached NCLT by filing applications seeking permission to participate in the CIRP of Raigarh Champa Rail Infrastructure by requesting issuance of a fresh Form G, which was again dismissed. Finally, a third application was moved by RP to facilitate the entry of JSW as a Resolution Applicant in the CIRP of RCRI. It sought permission of the tribunal for issuance of a fresh Form G and invitation of EoI from new, interested, and eligible Prospective Resolution Applicants for submission of Resolution Plans. This was again rejected by a two-member bench of NCLT comprising Members Sanjay Puri and Rajeev Bhardwaj on April 3, 2025. This was challenged before the appellate tribunal NCLAT, which on June 16 quashed the NCLT order.
