Validity of Provisional Attachment Order under PMLA upheld despite IBC moratorium

The Tribunal held that the Provisional Attachment Order under PMLA was valid and unaffected by the moratorium under Section 14 of IBC. It determined that proceedings under PMLA concerning 'proceeds of crime' operate independently of IBC. The Tribunal also found that Section 32A of IBC did not apply as no resolution plan was approved when the attachment was issued. Therefore, the application to remove the Provisional Attachment Order was dismissed.

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Issues Involved:
1. Validity of Provisional Attachment Order under PMLA during CIRP.
2. Jurisdiction of NCLT over orders passed under PMLA.
3. Applicability of moratorium under Section 14 of IBC to proceedings under PMLA.
4. Overriding effect of IBC over PMLA.
5. Interpretation of newly enacted Section 32A of IBC.

Issue-wise Detailed Analysis:

1. Validity of Provisional Attachment Order under PMLA during CIRP:
The application was filed by the Resolution Professional seeking the removal of the Provisional Attachment Order imposed under PMLA. The corporate debtor was undergoing CIRP, and a moratorium was in effect. The Provisional Attachment Order was issued to attach the assets of the corporate debtor, including land, buildings, and machinery, under Section 5(1) of PMLA. The applicant contended that the attachment violated the moratorium under Section 14 of the IBC, which prohibits any transfer, encumbrance, or alienation of the assets of the corporate debtor.

2. Jurisdiction of NCLT over orders passed under PMLA:
The respondents contended that the NCLT does not have jurisdiction to interfere with the Provisional Attachment Order issued under PMLA. They argued that such orders could only be confirmed or set aside by the Adjudicating Authority under PMLA. The respondents further argued that the attachment process under PMLA is a quasi-criminal process and not purely civil in nature, thus falling outside the jurisdiction of NCLT.

3. Applicability of moratorium under Section 14 of IBC to proceedings under PMLA:
The applicant argued that the moratorium under Section 14 of IBC strictly prohibits any encumbrance on the assets of the corporate debtor, and the Provisional Attachment Order under PMLA violates this moratorium. The applicant relied on various decisions, including the Supreme Court's ruling in "PR. COMMISSIONER OF INCOME TAX Vs. MONNET ISPAT AND ENERGY LTD.," which upheld the overriding nature of IBC over other statutes. The respondents, however, relied on decisions like "VARRSANA ISPAT LIMITED Vs. DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT," where it was held that Section 14 of IBC does not apply to proceedings under PMLA as they relate to 'proceeds of crime.'

4. Overriding effect of IBC over PMLA:
The applicant contended that Section 238 of IBC provides an overriding effect over other laws, including PMLA. They argued that once a moratorium is declared under Section 14 of IBC, no proceedings, including those under PMLA, can be initiated against the corporate debtor's assets. The respondents countered this by stating that PMLA deals with 'proceeds of crime,' and its provisions operate independently and simultaneously with IBC, without one overriding the other.

5. Interpretation of newly enacted Section 32A of IBC:
The applicant also relied on Section 32A of IBC, which provides immunity to the corporate debtor's assets from actions related to offences committed prior to CIRP, once a resolution plan is approved. The respondents argued that Section 32A is applicable only after a resolution plan is approved by the Tribunal, which was not the case at the time of issuing the Provisional Attachment Order. They emphasized that the attachment under PMLA was valid as there was no approved resolution plan covering the attached assets.

Conclusion:
The Tribunal concluded that the Provisional Attachment Order under PMLA was valid and not affected by the moratorium under Section 14 of IBC. It held that the proceedings under PMLA relate to 'proceeds of crime' and operate independently of the IBC. The Tribunal also noted that Section 32A of IBC was not applicable as no resolution plan was approved at the time of the attachment. Consequently, the application seeking to set aside the Provisional Attachment Order was dismissed.

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