Resolution-plan assets receive restitution protection, while corporate-debtor immunity preserves proceedings against former management and other liable persons.

Attached assets covered by an approved resolution plan may be restored to successful resolution applicants under the second proviso to Section 8(8) of the Prevention of Money Laundering Act where they are bona fide claimants with a legitimate interest. The consensual restitution arrangement released the covered bank balances and residential units, and excluded any enforcement lien over assets forming part of the plan. Section 32A of the Insolvency and Bankruptcy Code protected the corporate debtor after resolution, provided the successful applicants lacked links to former management and were not beneficiaries of proceeds of crime. The corporate debtor was removed from the prosecution complaint, while proceedings against former management and other liable persons continued. Questions of law remained open and the order was non-precedential.

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Issues: (i) Whether attached assets forming part of an approved resolution plan could be restored to the Successful Resolution Applicants under the second proviso to Section 8(8) of the Prevention of Money Laundering Act, 2002; (ii) Whether the Corporate Debtor was entitled to protection under Section 32A of the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether attached assets forming part of an approved resolution plan could be restored to the Successful Resolution Applicants under the second proviso to Section 8(8) of the Prevention of Money Laundering Act, 2002.

Analysis: The parties agreed that Section 8(8) is intended to restore attached property to bona fide claimants having a legitimate interest. The Successful Resolution Applicants had assumed the position of the Corporate Debtor following successful completion of the corporate insolvency resolution process. A consensual restitution arrangement was therefore accepted under the second proviso to Section 8(8).

Conclusion: The attached bank balances and residential units covered by the resolution plan were directed to be restored and released to the Successful Resolution Applicants. The enforcement authority was held to have no right or lien over those assets or other assets forming part of the approved resolution plan.

Issue (ii): Whether the Corporate Debtor was entitled to protection under Section 32A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The statutory protection was applied to the Corporate Debtor following resolution, while preserving proceedings against erstwhile directors, persons in control, conspirators and abettors. The protection remained conditional upon the Successful Resolution Applicants having no connection with the erstwhile management and not being beneficiaries of proceeds of crime.

Conclusion: The Corporate Debtor was directed to be deleted from the prosecution complaint, subject to the statutory conditions under Section 32A; proceedings against the erstwhile management and other liable persons were to continue.

Final Conclusion: The consent-based restitution protected the assets transferred under the implemented resolution plan while preserving investigation and enforcement proceedings against the erstwhile management. Questions of law were expressly kept open and the order was not to operate as a precedent.

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