ED must release attached properties after NCLT approves resolution plan under Section 32A IBC 2016

The Bombay HC held that ED's attachment of corporate debtor's properties must be released following NCLT's approval of resolution plan under Section 32A of IBC, 2016. The court ruled that once the resolution plan was approved, there was no scope for ED's attachment to continue over bank accounts worth Rs. 3,55,298/- and 14 flats valued at Rs. 32,47,55,298/-. NCLT correctly exercised jurisdiction in ordering release of attached properties. ED failed to appeal the approval order within limitation period. The attachment ended by operation of Section 32A on the approval date, though corporate debtor remains obligated to cooperate in ongoing investigation against other accused persons.

---

---

Issues Involved:
1. Jurisdiction of NCLT to direct the ED to release attached properties under Section 32A of the IBC, 2016.
2. Conflict between Section 32A of the IBC, 2016 and the PMLA, 2002.
3. Validity and implications of the attachment of properties by the ED under the PMLA, 2002 post-approval of a resolution plan.

Summary of Judgment:

1. Jurisdiction of NCLT to Direct Release of Attached Properties:
- The NCLT had the jurisdiction to direct the ED to release the attached properties invoking Section 32A of the IBC, 2016. Section 32A provides immunity to corporate debtors and their assets from prosecution and attachment once a resolution plan is approved under Section 31 of the IBC, 2016.
- The NCLT's April 2023 Order, which directed the ED to release the attached properties, was based on the provisions of Section 32A and was within its jurisdiction.
- Section 60(5) of the IBC, 2016, empowers the NCLT to decide any question of law or fact arising out of or in relation to insolvency resolution or liquidation proceedings, including the implications of Section 32A.

2. Conflict Between Section 32A of the IBC, 2016 and the PMLA, 2002:
- Section 32A of the IBC, 2016, being a non-obstante provision, overrides the provisions of the PMLA, 2002. Once a resolution plan is approved, the immunity under Section 32A applies, and the corporate debtor and its properties are protected from further prosecution and attachment.
- The Hon'ble Supreme Court in Manish Kumar Vs. Union of India upheld the legislative intent behind Section 32A, emphasizing the need for corporate debtors to start with a clean slate post-resolution.
- The NCLT's interpretation of Section 32A does not render the provisions of the PMLA, 2002 nugatory but ensures that the legislative intent of providing immunity to corporate debtors under the IBC, 2016, is upheld.

3. Validity and Implications of the Attachment of Properties by the ED:
- The attachment by the ED over the properties of the corporate debtor, which was initially levied under the PMLA, 2002, came to an end upon the approval of the resolution plan on 17th February 2023, by operation of Section 32A of the IBC, 2016.
- The ED's continued attachment of properties post-approval of the resolution plan was contrary to the provisions of Section 32A.
- The ED must release the attached properties forthwith, as mandated by the NCLT's orders and the provisions of Section 32A.

Conclusion:
- The NCLT was within its jurisdiction to direct the ED to release the attached properties under Section 32A of the IBC, 2016.
- Section 32A of the IBC, 2016, overrides the provisions of the PMLA, 2002, providing immunity to corporate debtors and their properties post-approval of a resolution plan.
- The attachment by the ED over the properties of the corporate debtor must be released, and the properties should be communicated as bankable assets for the revival of the corporate debtor.

---