Insolvency protections do not automatically defeat money-laundering attachment, and secured creditor priority cannot override the attachment regime.

Moratorium under section 14 of the Insolvency and Bankruptcy Code does not automatically bar attachment proceedings under the Prevention of Money-Laundering Act because the two statutes operate in distinct fields. Section 32A protection was unavailable where no approved resolution plan satisfying the statutory conditions was shown, so mere commencement of CIRP did not defeat attachment. Properties acquired or mortgaged before the alleged offence were not immune from attachment merely on that basis. Section 26E of SARFAESI gave secured creditors priority in debt recovery, but it did not override attachment under the money-laundering regime. The attachment order and its confirmation were upheld.

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Issues: (i) Whether the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 barred attachment proceedings under the Prevention of Money-Laundering Act, 2002. (ii) Whether section 32A of the Insolvency and Bankruptcy Code, 2016 protected the attached properties in the absence of an approved resolution plan satisfying the statutory conditions. (iii) Whether mortgaged properties acquired before the alleged offence could not be attached as not being proceeds of crime. (iv) Whether the secured creditors could rely on section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to override attachment under the Prevention of Money-Laundering Act, 2002.

Issue (i): Whether the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 barred attachment proceedings under the Prevention of Money-Laundering Act, 2002.

Analysis: The moratorium under section 14 is directed against actions that impede the insolvency process and the enforcement of security interests. Attachment under the Prevention of Money-Laundering Act, 2002 serves a different legislative purpose, namely identification and eventual confiscation of proceeds of crime. The two statutes operate in distinct fields, and the moratorium cannot be read as an embargo on attachment under the money-laundering . The absence of any such bar was treated as settled by the authorities relied upon in the order.

Conclusion: The moratorium did not bar the attachment proceedings under the Prevention of Money-Laundering Act, 2002.

Issue (ii): Whether section 32A of the Insolvency and Bankruptcy Code, 2016 protected the attached properties in the absence of an approved resolution plan satisfying the statutory conditions.

Analysis: Section 32A contains a non obstante clause and grants immunity only in the limited circumstances specified in sub-sections (1) and (2). The protection against action on the property of the corporate debtor under sub-section (2) is conditioned on approval of a resolution plan under section 31 and satisfaction of the further statutory requirements regarding change in control and the status of the acquirer. On the record, no approved resolution plan meeting those conditions was shown, and sub-section (1) does not deal with attachment of property. Mere commencement of CIRP was therefore insufficient to defeat the attachment.

Conclusion: Section 32A did not bar the attachment in the absence of an approved resolution plan satisfying the statutory requirements.

Issue (iii): Whether mortgaged properties acquired before the alleged offence could not be attached as not being proceeds of crime.

Analysis: The order proceeds on the basis that proceeds of crime is not confined to the originally tainted asset alone and may extend, in appropriate cases, to property equivalent in value where the actual proceeds are not traceable. The Tribunal held that prior purchase or mortgage by itself does not confer immunity if the statutory conditions for attachment are otherwise met. At the same time, the rights of bona fide secured creditors and other interested parties remain protected by the mechanism under section 8(8) at the stage of confiscation and release.

Conclusion: The mortgaged properties were not immune from attachment merely because they were acquired prior to the alleged offence.

Issue (iv): Whether the secured creditors could rely on section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to override attachment under the Prevention of Money-Laundering Act, 2002.

Analysis: Section 26E gives priority to secured creditors in the context of recovery of debts, but it does not create an absolute override over the money-laundering regime. The non obstante clause operates within its own field and does not nullify attachment under the Prevention of Money-Laundering Act, 2002. The Tribunal therefore declined to accept the submission that the SARFAESI framework displaced the attachment order.

Conclusion: Section 26E did not override the attachment under the Prevention of Money-Laundering Act, 2002.

Final Conclusion: The attachment order and its confirmation were upheld, while the secured creditors were left free to pursue their remedies for release of the properties in accordance with the statutory scheme under the money-laundering law.

Ratio Decidendi: Moratorium and insolvency protections do not automatically displace attachment under the money-laundering law, and release from attachment requires satisfaction of the specific statutory preconditions governing that law.

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