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of <h1>Money-laundering case against corporate debtor in CIRP after approved resolution plan: Section 32A blocks continuation; debtor removed</h1> Section 32A IBC was held to bar continuation of money-laundering proceedings against a corporate debtor undergoing CIRP once a resolution plan is approved ... Money Laundering - seeking to restore any attached properties to bona fide claimants who have a legitimate interest in the property attached - HELD THAT:- In view of Section 32A of the IBC, the name of the Corporate Debtor shall be deleted from the array of accused while continuing with the prosecution of the erstwhile directors and/or persons in control or conspirators or abettors and confiscation of their attached/restrained properties/entitlements, if any. Needless to state, the benefit of Section 32A of IBC is subject to the condition that the SRA is neither connected with the erstwhile Directors of the Corporate Debtor nor is the SRA a beneficiary of proceeds of crime derived from the alleged scheduled offence. If this foundation is eroded in the ongoing investigation, the Directorate of Enforcement shall be at liberty to take appropriate steps in accordance with law, including questioning the resolution plan. Thus, any challenge of the Directorate of Enforcement to the approval of the Resolution Plan by the National Company Law Tribunal, Mumbai, shall stand closed, and accordingly the Directorate of Enforcement shall have no right or lien either on the properties of the Corporate Debtor attached under Provisional Attachment Order No. 18/2024 dated 25.04.2024 in ECIR/MBZO-I/38/2020 (as modified through the Original Complaint dated 22.05.2024), or on any other assets of the Corporate Debtor that form part of the resolution plan approved by NCLT. The Resolution Plan already stands substantially implemented in accordance with law. The amounts deposited by the Respondent No. 2 with the Directorate of Enforcement, in terms of this Court's directions dated 02.07.2025, shall be released to the Respondent No. 2 along-with accrued interest, if any, within a period of two weeks from the date of this order. Appeal disposed off. Issues: (i) Whether attached properties substituted with a deposit could be restored to the Successful Resolution Applicant under the second proviso to Section 8(8) of the Prevention of Money Laundering Act, 2002; (ii) Whether the name of the Corporate Debtor should be deleted from the array of accused in ongoing prosecution proceedings in terms of Section 32A of the Insolvency and Bankruptcy Code, 2016 and whether the Directorate's challenge to the approval of the Resolution Plan stands closed.Issue (i): Whether attached properties (substituted with a deposit) are to be restored to the Successful Resolution Applicant under the second proviso to Section 8(8) of the PMLA.Analysis: The order applies the objective of Section 8(8) PMLA to restore attached properties to bona fide claimants and notes parity with prior restitutions in similar matters. By consent of the parties, and without deciding merits of the underlying High Court judgment, the Provisional Attachment Order was set aside and the substituted deposit directed to be released to the Successful Resolution Applicant; questions of law on the correctness of the impugned judgment were left open.Conclusion: Restitution of the substituted attached properties to the Successful Resolution Applicant is ordered under the second proviso to Section 8(8) of the PMLA; conclusion is in favour of Respondent.Issue (ii): Whether the Corporate Debtor's name shall be deleted from the array of accused and whether the Directorate's challenge to the Resolution Plan is closed in view of Section 32A IBC.Analysis: Applying Section 32A IBC, the order directs deletion of the Corporate Debtor from the array of accused while permitting continuation of prosecution against erstwhile directors or others; the benefit is subject to the SRA not being connected with the erstwhile directors or being a beneficiary of proceeds of crime, and investigative findings may prompt appropriate action. The Directorate's challenge to the approval of the Resolution Plan is held closed and the Directorate shall have no lien on properties forming part of the approved resolution plan.Conclusion: The Corporate Debtor is deleted from the array of accused under Section 32A IBC and the Directorate's challenge to the Resolution Plan is closed; conclusion is in favour of Respondent.Final Conclusion: By consent and on the specific facts, substituted attached properties are restored to the Successful Resolution Applicant and the Corporate Debtor is removed from the prosecution array under Section 32A IBC; questions of law arising from the impugned judgment remain open and the order is not to be treated as precedent.Ratio Decidendi: Where a Successful Resolution Applicant has stepped into the shoes of the Corporate Debtor following a valid CIRP and subject to safeguards against connection with proceeds of crime, the second proviso to Section 8(8) PMLA permits restitution of attached properties (including substituted deposits) to the SRA, and Section 32A IBC permits deletion of the Corporate Debtor from prosecution while preserving prosecution against responsible individuals.
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