Moratorium override and civil adjudication under money-laundering law prevented continuation of attachment proceedings during insolvency.

The Insolvency and Bankruptcy Code's moratorium, supported by its non obstante clause, was treated as overriding inconsistent proceedings under the money-laundering law, so adjudication for attachment and confirmation could not continue once insolvency moratorium had been declared. Proceedings under section 8 of the Prevention of Money Laundering Act were also characterised as civil and quasi-judicial rather than criminal, because the Adjudicating Authority does not impose punishment or determine criminal guilt and the procedure follows natural justice. On that basis, confirmation of provisional attachment could not be sustained and the impugned action was set aside.

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Issues: (i) Whether the moratorium under the Insolvency and Bankruptcy Code, 2016 barred continuation of proceedings before the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 and whether the later enactment prevailed over the earlier statute; (ii) Whether proceedings under section 8 of the Prevention of Money Laundering Act, 2002 before the Adjudicating Authority were civil or criminal in nature.

Issue (i): Whether the moratorium under the Insolvency and Bankruptcy Code, 2016 barred continuation of proceedings before the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 and whether the later enactment prevailed over the earlier statute.

Analysis: The statutory scheme of the Insolvency and Bankruptcy Code, 2016 contains a wide non obstante clause and a moratorium that bars continuation of proceedings against the corporate debtor before any court, tribunal or other authority. The Tribunal held that the Code, being the later enactment, overrides inconsistent provisions of the Prevention of Money Laundering Act, 2002. It further held that the proceedings under the money-laundering law, in so far as they concern adjudication of attachment and confirmation during insolvency, could not continue once moratorium had been declared.

Conclusion: The moratorium under the Insolvency and Bankruptcy Code, 2016 applied and the proceedings ought to have been stayed; this issue was decided in favour of the appellants.

Issue (ii): Whether proceedings under section 8 of the Prevention of Money Laundering Act, 2002 before the Adjudicating Authority were civil or criminal in nature.

Analysis: The Tribunal analysed the nature of attachment, notice, hearing and confirmation under sections 5 and 8 of the Prevention of Money Laundering Act, 2002 and noted that the Adjudicating Authority does not impose punishment or determine criminal guilt. The procedure is guided by natural justice and is appealable, which indicates a quasi-judicial adjudication of civil consequences rather than a criminal trial.

Conclusion: Proceedings under section 8 of the Prevention of Money Laundering Act, 2002 before the Adjudicating Authority were held to be civil in nature and not criminal; this issue was decided in favour of the appellants.

Final Conclusion: The confirmation of provisional attachment could not be sustained in view of the moratorium under the Insolvency and Bankruptcy Code, 2016, and the impugned action under the money-laundering proceedings was set aside.

Ratio Decidendi: Where a later statute contains a broad non obstante clause and an operative moratorium, inconsistent continuation of prior statutory adjudication against the corporate debtor must yield, and adjudicatory attachment proceedings that are civil and quasi-judicial in character cannot continue in breach of that moratorium.

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