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Issues: (i) Whether the moratorium under the Insolvency and Bankruptcy Code bars provisional attachment and confirmation proceedings under the Prevention of Money Laundering Act; (ii) Whether the Insolvency and Bankruptcy Code overrides the Prevention of Money Laundering Act in relation to attachment of proceeds of crime before approval of a resolution plan or liquidation sale.
Issue (i): Whether the moratorium under the Insolvency and Bankruptcy Code bars provisional attachment and confirmation proceedings under the Prevention of Money Laundering Act.
Analysis: The moratorium under Section 14 of the Insolvency and Bankruptcy Code is designed to preserve the insolvency estate, prevent individual recovery actions, and keep the corporate debtor as a going concern. Proceedings under the Prevention of Money Laundering Act, however, are not debt-recovery actions. Provisional attachment under Sections 5 and 8 is a measure directed at proceeds of crime and operates as a statutory restraint to preserve tainted property for possible confiscation. It does not create a creditor-debtor relationship, nor does it amount to recovery of a debt or enforcement of a monetary claim. The nature and object of the two regimes are therefore distinct.
Conclusion: The moratorium does not bar provisional attachment or confirmation proceedings under the Prevention of Money Laundering Act.
Issue (ii): Whether the Insolvency and Bankruptcy Code overrides the Prevention of Money Laundering Act in relation to attachment of proceeds of crime before approval of a resolution plan or liquidation sale.
Analysis: The two enactments operate in different fields and pursue different public purposes. While the Insolvency and Bankruptcy Code focuses on resolution, revival, and value maximisation, the Prevention of Money Laundering Act targets disgorgement and confiscation of proceeds of crime. Section 238 of the Insolvency and Bankruptcy Code does not displace the Prevention of Money Laundering Act in this setting, because the Legislature later introduced Section 32A as the specific point at which immunity from action against the corporate debtor's property arises. That protection becomes effective only on approval of a resolution plan or on liquidation sale, not earlier. Until then, attachment under the Prevention of Money Laundering Act remains legally sustainable, subject to the statutory safeguards available to bona fide third parties.
Conclusion: The Insolvency and Bankruptcy Code does not override the Prevention of Money Laundering Act so as to prevent attachment before the trigger events in Section 32A occur.
Final Conclusion: The Court upheld the impugned attachment orders and held that the enforcement action under the Prevention of Money Laundering Act could continue notwithstanding the moratorium under the Insolvency and Bankruptcy Code, while preserving any lawful remedies available to the petitioner in accordance with law.
Ratio Decidendi: Provisional attachment of proceeds of crime under the Prevention of Money Laundering Act is not a proceeding for recovery of debt and is not interdicted by the moratorium under Section 14 of the Insolvency and Bankruptcy Code; the legislative protection against such action operates only at the stage specified in Section 32A, namely approval of a resolution plan or liquidation sale.
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