Priority of secured creditor's mortgage rights over money-laundering attachment; interim protection granted and insolvency process allowed to continue.

An innocent bona fide secured creditor with an admitted equitable mortgage was treated as entitled to priority under later security-interest recovery statutes, which were considered to prevail over the earlier non-obstante clause in the money-laundering law. On that basis, the mortgaged properties were granted interim protection and operation of the impugned attachment order was stayed as to those assets. The Corporate Insolvency Resolution Process was also directed to continue, as it was time-bound and there was no basis to halt it merely because enforcement proceedings were pending. Attachment remained in force for the present in respect of the other properties, with status quo maintained.

---

---

Issues: (i) Whether the mortgaged properties of a secured creditor could be kept under challenge against provisional attachment under the Prevention of Money Laundering Act, 2002 in view of the priority conferred by the later security-interest recovery statutes; (ii) Whether the Corporate Insolvency Resolution Process was to continue pending the appeal and interim consideration.

Issue (i): Whether the mortgaged properties of a secured creditor could be kept under challenge against provisional attachment under the Prevention of Money Laundering Act, 2002 in view of the priority conferred by the later security-interest recovery statutes.

Analysis: The secured creditor was accepted as an innocent and bona fide secured creditor, with admitted equitable mortgage over the properties in issue. The amended provisions conferring priority on secured creditors were treated as operating with overriding effect, and the later non-obstante clauses in the security-recovery enactments were held to prevail over the earlier non-obstante clause in the money-laundering statute. The reasoning proceeded on the basis that, where no illegality was attributable to the bank and the property stood mortgaged in its favour, the secured asset should not be frustrated by attachment so as to defeat recovery of the secured debt.

Conclusion: The secured creditor was entitled to interim protection in respect of the mortgaged properties, and operation of the impugned order regarding those properties was stayed.

Issue (ii): Whether the Corporate Insolvency Resolution Process was to continue pending the appeal and interim consideration.

Analysis: The insolvency process was treated as time-bound and already underway, and no basis was accepted for stopping it merely because the enforcement proceedings were pending. The order therefore preserved the existing position while allowing the resolution process to move forward.

Conclusion: The Corporate Insolvency Resolution Process was directed to continue and status quo was maintained for the other properties.

Final Conclusion: Interim relief was granted only to the limited extent of staying the impugned order as to the mortgaged properties, while maintaining the attachment in force for the present and allowing the insolvency resolution process to proceed.

---