Benefit of S. 32A of IBC to Lift ED’s Attachment Allowable to Successful Resolution Applicant: NCLAT
The Tribunal allowed to lift the properties of the corporate debtor from the attachment by ED under the Prevention of Money Laundering Act (PMLA)
NCLAT – NCLAT New delhi – Section 32A IBC benefit – ED attachment lifted – Successful Resolution Applicant – taxscan
NCLAT – NCLAT New delhi – Section 32A IBC benefit – ED attachment lifted – Successful Resolution Applicant – taxscan
The National Company Law Appellate Tribunal ( NCLAT ), Principal Bench, New Delhi observed that the benefit of section 32A of the Insolvency and Bankruptcy Code ( IBC ), 2016 will be extended to the new management of the Alchemist Infra Reality Ltd., the corporate debtor after the approval of resolution plan. The Tribunal allowed to lift the properties of the corporate debtor from the attachment by ED under the Prevention of Money Laundering Act ( PMLA ).
The corporate debtor was admitted into insolvency on October 10, 2021. Resolution plan submitted by the appellant was approved by Committee of Creditors with 100% vote share on October 18, 2023. Thereafter, a letter of intent was issued to the appellant on October 20, 2023. Consequently, Resolution Professional filed an application bearing IA No. 01/2024 in which the approval of the plan from the NCLT was sought.
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The appellant, Vantage Point Asset Pte. Ltd.in the resolution plan submitted sought to vacate attachments on the assets of corporate debtor by the Enforcement Directorate ( ED ) under Prevention of Money Laundering Act ( PMLA ). This request was made by Successful Resolution Applicant ( SRA ) so that the assets could be monetised and developed as per the resolution plan. The appellant contended that all government related attachments on the corporate debtor's properties should be vacated after the approval of the Resolution Plan.
The resolution plan was approved by the NCLT on July 4, 2024 but it refused to vacate the attachments over the properties by the ED under the PMLA. The Tribunal observed that it will lead to dangerous consequences if the properties attached under the PMLA are released automatically once a resolution plan is approved. The Tribunal concluded that the SRA would be entitled to reliefs, waivers and concessions if any what is explicitly mentioned in section 31(1) and 32A of the IBC therefore properties attached by the ED would not be released.
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It was found by the appellate tribunal that the NCLT erred in not extending the benefit of section 32A of the IBC to the appellant. The tribunal relied on the judgment of the Bombay High Court in Shiv Charan and Ors. vs. Adjudicating Authority and Anr. (2024) in which it was held that once a resolution plan is approved, the corporate debtor is entitled to the benefit of section 32A of the IBC. No assets can be attached of the corporate debtor for the offences committed before commencement of CIRP.
The bench comprising Mr. Justice Ashok Bhushan ( Chairperson ), Mr. Barun Mitra ( Technical Member ) and Mr. Arun Baroka ( Technical Member ),concluded protection of Section 32 of the Insolvency Bankruptcy Code ( IBC ), applicable on successful resolution applicant, the Alchemist Infra Reality Ltd therefore they cannot be attached by the ED under PMLA after the approval of resolution plan. The tribunal directed the ED to release the attached assets.
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