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Issues: (i) Whether the provisional attachment of the corporate debtor's property could survive after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016 in view of Section 32-A; (ii) Whether the writ petition was liable to be declined on the ground of availability of alternative remedy under the Prevention of Money-Laundering Act, 2002.
Issue (i): Whether the provisional attachment of the corporate debtor's property could survive after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016 in view of Section 32-A.
Analysis: The corporate insolvency resolution process had commenced prior to the impugned attachment, and the resolution plan had already been approved. Section 32-A of the Insolvency and Bankruptcy Code, 2016 gives overriding protection to the corporate debtor and bars action against its property in relation to offences committed before commencement of the corporate insolvency resolution process, once a resolution plan is approved. The Court also noted the overriding character of Section 238 of the Insolvency and Bankruptcy Code, 2016 and held that the later enactment prevails over the earlier inconsistent regime. On the facts, the alleged offences and the attachment were traceable to a period prior to commencement of the corporate insolvency resolution process.
Conclusion: The provisional attachment and consequential action were held to be prima facie unsustainable and without lawful authority, in favour of the petitioner.
Issue (ii): Whether the writ petition was liable to be declined on the ground of availability of alternative remedy under the Prevention of Money-Laundering Act, 2002.
Analysis: Although an appellate mechanism under the Prevention of Money-Laundering Act, 2002 was available, the Court found that the present challenge turned on the interaction between the two statutes and on the effect of Section 32-A of the Insolvency and Bankruptcy Code, 2016. In that setting, the Court held that the writ petition deserved to be heard on merits and that the cited precedent did not govern the controversy, since the validity of the Prevention of Money-Laundering Act, 2002 or its procedure was not in issue.
Conclusion: The objection based on alternative remedy was rejected, in favour of the petitioner.
Final Conclusion: Interim protection was granted and the impugned attachment was stayed pending further hearing, while the writ petition was directed to proceed on merits.
Ratio Decidendi: Where a resolution plan has been approved after commencement of the corporate insolvency resolution process, Section 32-A of the Insolvency and Bankruptcy Code, 2016 bars coercive action against the corporate debtor's property for pre-CIRP offences, and the later code prevails over an inconsistent earlier statute by virtue of its overriding clause.
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