PMLA proceedings prevail over insolvency moratorium, barring IBC tribunals from upsetting attachment, retention, or section 50 notices.

Insolvency moratorium and liquidation protections under the IBC do not bar proceedings under the PMLA concerning proceeds of crime. Attachment and physical removal of tainted assets by the ED were held not to be vulnerable before insolvency fora, and the challenge had to be pursued within the PMLA framework. The insolvency fora also lacked jurisdiction to order refund or restitution of monies retained after vacation of attachment, because that issue lay in the PMLA appellate and High Court process. Section 50 notices to customers were likewise not interfered with under IBC jurisdiction.

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Issues: (i) Whether attachment and physical removal of assets by the Enforcement Directorate during the moratorium under the Insolvency and Bankruptcy Code were legally sustainable. (ii) Whether the Enforcement Directorate could retain monies withdrawn from the corporate debtor's bank account after the attachment order was vacated by the appellate authority under the Prevention of Money Laundering Act, while the challenge before the High Court remained pending. (iii) Whether the notice issued under section 50 of the Prevention of Money Laundering Act to the corporate debtor's customers, directing them not to release dues, was sustainable before the insolvency fora.

Issue (i): Whether attachment and physical removal of assets by the Enforcement Directorate during the moratorium under the Insolvency and Bankruptcy Code were legally sustainable.

Analysis: The insolvency moratorium protects the corporate debtor's legitimate assets and proceedings capable of augmenting civil debt-liability, but it does not nullify criminal or public law action concerning proceeds of crime. The Prevention of Money Laundering Act and the Insolvency and Bankruptcy Code operate in different domains. Assets alleged to be tainted and attached under the Prevention of Money Laundering Act are not insulated by the moratorium merely because the corporate debtor is under corporate insolvency resolution or liquidation.

Conclusion: The attachment and related action during moratorium were held not to be vulnerable before the insolvency fora; the challenge could not be entertained under the Insolvency and Bankruptcy Code.

Issue (ii): Whether the Enforcement Directorate could retain monies withdrawn from the corporate debtor's bank account after the attachment order was vacated by the appellate authority under the Prevention of Money Laundering Act, while the challenge before the High Court remained pending.

Analysis: Once the attachment and its vacation fall within the statutory mechanism under the Prevention of Money Laundering Act, the proper forum for examining consequential retention or restitution is the forum created under that Act, with further challenge lying in the High Court. The insolvency fora cannot reopen or control that exercise through section 60(5) of the Insolvency and Bankruptcy Code.

Conclusion: The insolvency fora lacked jurisdiction to order refund or restitution of the amount withdrawn and retained in the context of the Prevention of Money Laundering Act proceedings.

Issue (iii): Whether the notice issued under section 50 of the Prevention of Money Laundering Act to the corporate debtor's customers, directing them not to release dues, was sustainable before the insolvency fora.

Analysis: Directions issued under section 50 of the Prevention of Money Laundering Act were part of the statutory process connected with investigation and attachment of proceeds of crime. Such notices, like attachment proceedings themselves, fall within the exclusive domain of the authorities constituted under that Act and cannot be interdicted by insolvency tribunals.

Conclusion: The section 50 notices were not open to interference under the Insolvency and Bankruptcy Code jurisdiction.

Final Conclusion: The appeals failed because the insolvency fora were held incompetent to interfere with proceedings, attachment, retention, or notices issued under the Prevention of Money Laundering Act, even though the corporate debtor was in moratorium or liquidation under the Insolvency and Bankruptcy Code.

Ratio Decidendi: Insolvency moratorium and liquidation protections do not extend to proceedings under the Prevention of Money Laundering Act relating to proceeds of crime, and challenges to attachment or consequential action under that statute must be pursued before the statutory PMLA forum and the High Court, not under section 60(5) of the Insolvency and Bankruptcy Code.

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