NCLT Bengaluru: Tribunal Under IBC Cannot Order De-Attachment Of Property Attached By ED Under PMLA
Pranav B Prem
The National Company Law Tribunal (NCLT), Bengaluru Bench comprising Justice Shri Sunil Kumar Aggarwal (Judicial Member) and Shri Radhakrishna Sreepada (Technical Member), has held that the NCLT under the Insolvency and Bankruptcy Code, 2016 (IBC) is not empowered to direct the de-attachment of property attached under the Prevention of Money Laundering Act, 2002 (PMLA) by the Enforcement Directorate (ED). Such powers fall in the realm of public law, beyond the jurisdiction of the NCLT under the IBC.
Background of the Case
The application (IA No. 28 of 2024) was filed by the Resolution Professional (RP), Smt. Ramanathan Bhuvaneshwari of Dreamz Infra India Pvt. Ltd., under Section 60(5) of the IBC read with Rule 11 of the NCLT Rules, 2016. The RP sought directions for de-attachment and release of the “Dreamz Samhita Project” property, attached under Provisional Attachment Order (PAO) No. 03/2022 dated 04.07.2022 by the ED, later confirmed by the PMLA Adjudicating Authority on 23.12.2022.
The corporate debtor, Dreamz Infra India Pvt. Ltd., was admitted into CIRP on 24.08.2023 based on a Section 7 petition filed by the Apartment Buyers Consumer Association representing homebuyers. The RP discovered that the project property was already attached by the ED under PMLA proceedings against the directors of the corporate debtor. Despite several written requests in October 2023, ED refused to release the property.
Applicant’s Submissions
The RP argued that provisions of IBC—particularly Sections 14, 32A, 63, and 238—override the PMLA, making such attachments invalid post-commencement of CIRP. It was contended that continuation of PMLA attachment proceedings after CIRP violates the moratorium under Section 14 and undermines the resolution process. The RP relied on several precedents, including:
Directorate of Enforcement v. Manoj Kumar Agarwal (NCLAT, 2019) where it was held that Section 238 of IBC prevails over PMLA and attachment cannot continue once CIRP is initiated.
AM Mining India Pvt. Ltd. v. Union of India (2023) holding that IBC’s non-obstante clause has primacy over PMLA in case of conflict.
Rajiv Chakraborty v. Directorate of Enforcement (2022, Delhi HC) which clarified that IBC as a later special statute prevails over PMLA in case of conflict, especially with the protection under Section 32A.
Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. (2001) where the Supreme Court held that between two special statutes with non-obstante clauses, the later in time prevails.
Thus, the RP claimed that ED’s attachment was unenforceable once CIRP commenced.
Tribunal’s Observations
The Bench noted that the ED had attached the property on 04.07.2022, whereas CIRP was initiated later on 24.08.2023. The question before the Tribunal was whether ED is bound to release the attached project property in favor of the RP in light of IBC’s overriding provisions.
The Tribunal referred to the NCLAT decision in Anil Kohli and the Supreme Court’s ruling in Kalyani Transco v. Bhushan Power & Steel Ltd. (2025). It observed:
PMLA and IBC operate in distinct spheres; ED under PMLA is not a creditor but a public enforcement agency upholding penal objectives and international obligations.
Section 238 of IBC cannot override PMLA in respect of valid attachments involving proceeds of crime.
NCLT/NCLAT are constituted under the Companies Act, 2013, and their jurisdiction under IBC is limited to matters arising out of insolvency resolution. They do not have powers of judicial review over statutory or governmental actions in the realm of public law.
As held in Embassy Property Developments Pvt. Ltd. v. State of Karnataka, issues relating to rights outside IBC and in public law cannot be adjudicated by NCLT under Section 60(5) of the Code.
Applying the above principles, the Tribunal held that a valid attachment under PMLA, if confirmed, cannot be undone merely because CIRP is ongoing. The RP cannot seek bypass of PMLA proceedings through NCLT. Accordingly, IA No. 28 of 2024 filed by the RP was dismissed.
Appearance
For the Resolution Professional: Mrs. Chithra Niramala, Mrs. R Bhuvaneshwari
For I.A No.543/2024: Ms. Ragini
For R1 in I.A No.397/2024: Shri Theerthesh
Cause Title: Ramanathan Bhuvaneshwari, RP of M/s Dreamz Infra India Private Limited V. Enforcement Directorate
Case No: IA NO. 28 of 2024
Coram: Hon’ble Shri Sunil Kumar Aggarwal [Member (Judicial)], Hon’ble Shri Radhakrishna Sreepada [Member (Technical)]
