2022 (5) TMI 399 - AT - Insolvency and Bankruptcy

NCLT dismisses appeal challenging PMLA Provisional Attachment Order, lacks jurisdiction.

Ashok Kumar Sarawagi, Resolution Professional of Kohinoor Steel Private Limited Versus Enforcement of Directorate & Anr.

The National Company Law Tribunal dismissed the appeal challenging a Provisional Attachment Order under the Prevention of Money Laundering Act, 2002. The ... Order of provisional attachment binding on the Corporate Debtor or not - HELD THAT:- The issue which has been raised before us is covered by Three Member Bench Judgment in KIRAN SHAH, ‘RESOLUTION PROFESSIONAL’ OF KSL AND INDUSTRIES LTD VERSUS ENFORCEMENT DIRECTORATE, KOLKATA THROUGH SHRI SHEO DAYAL CHAND, JOINT DIRECTOR GOVT OF INDIA [2022 (2) TMI 583 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. Submissions which are sought to be raised by the Counsel for the Appellant were noticed and answered by Three Member Bench - It was held in the case that this Tribunal makes it candidly clear that filing of Application under Section 60(5) of the I & B Code is not an all pervasive one, thereby conferring Jurisdiction to an Adjudicating Authority (NCLT) to determine any question/issue of priorities, question of Law or Facts pertaining to the ‘Corporate Debtor’ when in reality in Law, the Adjudicating Authority (NCLT) is not empowered to deal with the matters falling under the purview of another authority under PMLA. The Adjudicating Authority did not commit any error in rejecting the application filed by the Resolution Professional challenging the order passed by the PMLA Court - appeal dismissed. Issues:Challenge to Provisional Attachment Order under Prevention of Money Laundering Act, 2002 - Jurisdiction of National Company Law Tribunal - Interpretation of Insolvency and Bankruptcy Code, 2016 in relation to PMLA proceedings.Analysis:1. The appeal was filed against the order passed by the Adjudicating Authority in C.P. (IB) No. 82/KB/2019, challenging the Provisional Attachment Order dated December 30, 2021, under the Prevention of Money Laundering Act, 2002 (PMLA). The Resolution Professional sought various reliefs, including declaring the attachment order null and void, staying its operation, and restraining the Respondents from taking further steps based on the order.2. The Adjudicating Authority considered the submissions and referred to previous judgments, including one by the National Company Law Appellate Tribunal (NCLAT) in Varrsana Ispat Limited case. The Authority noted that NCLT is not empowered to deal with matters falling under PMLA, as per a three-member bench decision. Consequently, the application challenging the attachment order was rejected.3. The Appellant relied on a judgment in 'The Directorate of Enforcement v. Manoj Kumar Agarwal' to support their interpretation of the Insolvency and Bankruptcy Code (IBC) and PMLA. On the other hand, the Respondent cited the Kiran Shah case, which upheld the view that NCLT lacks jurisdiction over PMLA matters, as established in the Varrsana case.4. The Tribunal examined the arguments presented by both parties and referred to the Kiran Shah judgment. It highlighted that the Principle of Stare Decisis should be followed, and clarified that filing an application under Section 60(5) of the IBC does not grant NCLT jurisdiction over PMLA-related issues. The Tribunal found no merit in the appeal and dismissed it, affirming the Adjudicating Authority's decision.5. It was noted that a Civil Appeal against the Varrsana judgment was dismissed, and the Kiran Shah case relied on this precedent. The Tribunal concluded that the Adjudicating Authority did not err in rejecting the Resolution Professional's challenge to the PMLA Court's order, thereby upholding the dismissal of the appeal.