The Chennai Bench of the National Company Law Tribunal ( NCLT ) held that adjudicating authority under the Insolvency and Bankruptcy Code, 2016 ( IBC ) is not appropriate forum to decide revocation of attachment made by Enforcement Directorate ( ED ) during Corporate Insolvency Resolution Process (CIRP).
The Counsel for the Applicant submitted 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 was 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. Deloitte Touche Tohmatsu India LLP ( DTTILLP ) was appointed to conduct the Forensic audit of the Corporate Debtor.
It was also argued that the 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.
A Two-Member Bench comprising Ravichandran Ramasamy, Technical Member and Jyoti Kumar Tripathi, Judicial Member observed that “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” the Bench noted.
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