The National Company Law Tribunal (NCLT), New Delhi, has recalled the Corporate Insolvency Resolution Process (CIRP) initiated against Alchemist Limited, holding that the proceedings were tainted by fraud, collusion, and malicious intent.

The order, dated February 3, 2026, came after the Directorate of Enforcement (ED) intervened and placed material before the tribunal demonstrating that the insolvency process was allegedly being misused to shield proceeds of crime and frustrate proceedings under the Prevention of Money Laundering Act (PMLA).

The ED had launched an investigation under the PMLA based on FIRs registered by the Kolkata Police and Uttar Pradesh Police. Investigations revealed that entities of the Alchemist Group had collected more than ₹1,840 crore from the public by promising high returns and real estate allotments such as plots, villas, and flats. However, investors allegedly neither received the promised assets nor refunds.

According to the investigation, the funds were diverted to other group companies, including Alchemist Limited, in the form of inter-corporate deposits.

The ED filed a prosecution complaint in March 2021 and supplementary complaints in July 2024 and September 2025 before a Special PMLA Court. The agency also provisionally attached movable and immovable properties worth approximately ₹492.72 crore through multiple attachment orders.

Insolvency Proceedings and ED’s Objections

The CIRP against Alchemist Limited had been initiated on an application filed by an operational creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC). During the process, a Committee of Creditors (CoC) was constituted, which the ED alleged was dominated by group entities themselves.

ED informed the tribunal that several CoC members were themselves accused in money-laundering proceedings and beneficiaries of alleged proceeds of crime. It also raised concerns about the appointment of a resolution professional who had previously been associated with the group, questioning the independence of the process.

Another key contention was that the insolvency process was being used to reclaim attached assets and seek immunity under Section 32A of the IBC, which provides protection to corporate debtors and their assets in certain circumstances after resolution.

Key Findings of the Tribunal

Accepting the submissions made by the ED, the NCLT held that the IBC is intended to facilitate genuine insolvency resolution and cannot be used as a mechanism to legitimize tainted transactions or launder proceeds of crime.

The tribunal emphasized that:

• Section 32A of the IBC cannot be invoked to extinguish criminal liability or obstruct PMLA proceedings.
• A CIRP dominated by entities accused of financial wrongdoing undermines the independence and commercial wisdom of the Committee of Creditors.
• Although the IBC and PMLA operate in distinct legal domains, the principle of parallel operation cannot be stretched to allow one statute to be misused to defeat the objectives of another.

The tribunal concluded that the insolvency proceedings had been initiated and conducted with fraudulent and malicious intent, attracting Section 65 of the IBC, which penalizes fraudulent or malicious initiation of insolvency proceedings.

Orders Passed

The NCLT recalled the CIRP, lifted the moratorium imposed under Section 14 of the IBC, and nullified the appointment of the resolution professional along with all actions taken during the process.

The tribunal also imposed a penalty of ₹5 lakh on the operational creditor that had initiated the insolvency proceedings, citing abuse of the legal process.

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