NCLT Delhi Rules, Dissolution Under IBC Can't Be Used To Frustrate Ongoing PMLA Proceedings
Pranav B Prem
The National Company Law Tribunal (NCLT), New Delhi Bench–Court III, comprising Shri Bachu Venkat Balaram Das (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), has rejected an application seeking dissolution of M/s Shakti Bhog Snacks Limited under Section 54 of the Insolvency and Bankruptcy Code, 2016, on the ground that such dissolution would frustrate the ongoing criminal prosecution and attachment proceedings initiated under the Prevention of Money Laundering Act, 2002 (PMLA).
The dissolution application was filed by Mr. Umesh Gupta, Resolution Professional of M/s Shakti Bhog Snacks Limited (Corporate Debtor), following the conclusion of the Corporate Insolvency Resolution Process (CIRP). The application sought reliefs under Section 54 of the IBC, including an order of dissolution of the Corporate Debtor and discharge of the Resolution Professional.
In this case, the CIRP was initiated pursuant to an application under Section 9 of the Code filed by M/s Goyal Tea Agencies Private Limited, which was admitted by the Tribunal on 03.01.2023. Upon admission, a moratorium under Section 14 was declared, and Mr. Umesh Gupta was appointed as the Interim Resolution Professional, later confirmed as the RP in the CoC’s first meeting.
Despite public announcements inviting claims from creditors, only one claim was received—from the State Bank of India, a financial creditor, claiming ₹14.62 crores. No claims were filed by operational creditors, employees, or workmen. Accordingly, the Committee of Creditors (CoC) was constituted with SBI as the sole member.
The Resolution Professional made repeated attempts to gain access to the Corporate Debtor’s books and premises but was met with complete non-cooperation from the suspended directors. Emails, calls, and even legal notices under Section 19(2) of the Code were ignored. A physical visit to the registered office revealed that the premises were sealed by the Directorate of Enforcement (ED), and no records were available. The only available financial statements were from 2015–2016, and the Corporate Debtor’s land and building had already been sold by SBI under the SARFAESI Act in 2019.
The CoC, after several meetings, unanimously recommended dissolution under Section 54 of the Code, citing absence of assets, operations, records, and the impracticability of liquidation. The RP accordingly moved the dissolution application, also relying on several precedents where dissolution was permitted in cases with no assets or business operations.
However, the Enforcement Directorate entered appearance and strongly opposed the application. The ED submitted that M/s Shakti Bhog Snacks Limited was a group entity of M/s Shakti Bhog Foods Limited (SBFL) and had been used for laundering loan proceeds against bogus invoices. Investigations revealed that SBSL acquired ₹97.87 crores of proceeds of crime and transferred ₹127.81 crores between FY 2007–08 and 2014–15 to related group entities under the guise of sale-purchase transactions. These transactions lacked actual movement of goods and were used to inflate financials of SBFL for availing further credit from banks.
The ED further submitted that the Corporate Debtor had been named as an accused in the 5th Supplementary Prosecution Complaint filed on 20.09.2024, and the Special Court under the PMLA had taken cognizance and issued summons. Moreover, one of SBSL’s bank accounts had been attached under a Provisional Attachment Order dated 25.08.2021, which was confirmed by the Adjudicating Authority under PMLA on 26.05.2022. Though the balance in the attached account was only ₹3701.81, the ED maintained that the pendency of criminal proceedings and the legal character of the attachment outweighed its monetary value.
The Tribunal took note of the fact that the registered office of the Corporate Debtor was sealed by the ED and that the Corporate Debtor was now an accused in a pending criminal prosecution before the Special Court. The RP, in response, argued that the ED had not attached any substantial assets of the Corporate Debtor and that the meagre amount in the bank account did not justify blocking the dissolution. It was also pointed out that the ED had earlier consented to the release of attached properties of the parent company and that a trial court had allowed the RP of the parent company to take over its assets.
Despite these submissions, the Tribunal held that allowing dissolution at this stage would prematurely extinguish the legal existence of the Corporate Debtor and directly frustrate the ongoing criminal prosecution. The Tribunal emphasized that the PMLA is a special, self-contained legislation that overrides inconsistent laws under Section 71 of the Act. It cited the Supreme Court’s rulings in Embassy Property Developments Pvt. Ltd. v. State of Karnataka and Kiran Shah v. Enforcement Directorate, which clarified that the NCLT has no jurisdiction to interfere with PMLA proceedings. The Tribunal also relied on the NCLAT’s decisions in Sterling Biotech and Manohar Lal Vij, which reaffirmed that the NCLT and NCLAT cannot disrupt enforcement actions under the PMLA.
The Tribunal concluded that the corporate insolvency process cannot be used to insulate corporate entities from criminal liability. Even if no significant assets remain, the fact that the Corporate Debtor stands arraigned as an accused and the Special Court has taken cognizance of the complaint is sufficient to preclude dissolution. The authority of the Special Court to adjudicate on attachments and prosecute money laundering offences must be preserved. Accordingly, the application for dissolution was dismissed by the NCLT.
Appearance
For the Applicant: Ms Swaralipi Deb Roy, Adv.
For the ED: Mr. Zoheb Hossain (Spl Counsel, ED), Mr. Vivek Gurnani, (Panel Counsel, ED)
Cause Title: M/s Goyal Tea Agencies Private Limited V M/s Shakti Bhog Snacks Ltd.
Case No: IA-3695-2023 in IB-1713-2019
Coram: Shri Bachu Venkat Balaram Das [Judicial Member], Dr. Sanjeev Ranjan [Technical Member]
