The National Company Law Tribunal (NCLT), New Delhi Bench has held that insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) cannot be used as a tool to derail or frustrate criminal investigations under the Prevention of Money Laundering Act, 2002 (PMLA).
The Bench of Bachu Venkat Balram Das (Judicial Member) and Dr Sanjeev Ranjan (Technical Member), made this observation while dismissing an application filed by the resolution professional (RP) of Shakti Bhog Snacks Limited seeking the company’s dissolution. The application was moved under Section 54 of the IBC on the grounds that the company had no assets, no active business operations, and no prospects of revival.
The Enforcement Directorate (ED), however, opposed the move, pointing out that both the company and its former officials are accused in an ongoing money laundering investigation linked to a massive Rs. 3,269 crore loan fraud. The ED argued that dissolution at this stage would impede the pending criminal proceedings and obstruct efforts to recover the proceeds of crime.
“It is not the quantum but the character of the proceedings that is determinative,” the Tribunal observed. “The IBC cannot be used as a mechanism to frustrate or sidestep the legitimate process of law under the PMLA.”
The tribunal underscored that it would be inappropriate to permit the dissolution of a corporate entity that is still under the scrutiny of a special PMLA court. Doing so, the bench held, would amount to judicial overreach and compromise the ED’s ability to complete its investigation and pursue prosecution.
The ED also emphasized that the PMLA, being a special legislation, overrides the IBC when it comes to matters involving money laundering. Its legal team argued that the NCLT does not possess jurisdiction to interfere with proceedings or attachments ordered under the PMLA.
Agreeing with the ED’s contentions, the Tribunal concluded that allowing the company’s dissolution at this juncture would effectively make the corporate debtor unavailable for criminal liability, particularly since its assets remain under attachment, however limited in value.
“In light of the above facts and circumstances, the prayer(s) sought in the present Application cannot be allowed,” the Tribunal ruled, dismissing IA-3695-2023 in IB-1713-2019.
Case Details
Case Title: M/S Goyal Tea Agencies Private Limited Versus M/S Shakti Bhog Snacks Limited
Case No.: IA-3695-2023 In IB-1713-2019
Date: 30.06.2025
Counsel For Petitioner: Swaralipi Deb Roy, Adv.
Counsel For Respondent: Zoheb Hossain (Spl Counsel, ED), Vivek Gurnani, (Panel Counsel, ED)
