The National Company Law Appellate Tribunal (NCLAT), Principal Bench, has held that the National Company Law Tribunal (NCLT) and the NCLAT do not possess jurisdiction to interfere with attachment proceedings initiated by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA).
The bench of Justice N. Seshasayee (Member Judicial), Arun Baroka (Member Technical), and Indevar Pandey (Member Technical) ruled that any challenge to attachment orders, seizure of assets, or notices issued by the ED must be pursued before the adjudicatory forums constituted under the PMLA and not before insolvency tribunals.
The dispute originated from investigations initiated by the Enforcement Directorate into allegations of large-scale bank fraud and diversion of loan funds by the corporate debtor and its promoters.
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In April 2017, the ED issued notices under Section 50 of the PMLA directing customers and debtors of the corporate debtor not to release payments. Subsequently, on 8 June 2017, the ED provisionally attached the company’s movable and immovable properties. The attachment was confirmed by the PMLA Adjudicating Authority on 24 October 2017.
Meanwhile, the corporate debtor entered the Corporate Insolvency Resolution Process (CIRP) on 12 September 2017, resulting in the statutory moratorium under Section 14 of the IBC.
Although the PMLA Appellate Tribunal later set aside the attachment order on 12 December 2018, the Enforcement Directorate challenged that decision before the Bombay High Court, where the matter remains pending without any stay on the appellate order.
One of the principal grievances of the liquidator concerned the ED’s withdrawal of ₹2.29 crore from the corporate debtor’s ICICI Bank account on 2 August 2018, during the subsistence of the CIRP moratorium.
Following failure of the resolution process, the company entered liquidation on 19 November 2018. The ED thereafter issued another provisional attachment order covering over 6,000 vehicles belonging to the corporate debtor, a part of which was later confirmed by the PMLA Adjudicating Authority.
The liquidator approached the NCLT seeking withdrawal of the attachment orders, refund of ₹2.29 crore withdrawn by the ED, quashing of notices issued under Section 50 of the PMLA restraining customers from making payments to the corporate debtor, and directions to various customers, including Ashok Leyland, Haldia Petrochemicals, Sonalika International Tractors and Hindustan Coca-Cola Beverages, to release outstanding dues.
The central issue before the NCLAT was whether insolvency tribunals can interfere with actions taken by the Enforcement Directorate under the PMLA on the ground that such actions violate the moratorium imposed under Section 14 of the IBC.
The Tribunal identified three questions for determination whether attachment and removal of assets during the moratorium are legally sustainable; whether the ED could retain money withdrawn after the PMLA Appellate Tribunal had set aside the attachment order; and whether notices under Section 50 of the PMLA restraining debtors from paying the corporate debtor could be challenged before the NCLT.
Rejecting the liquidator’s contentions, the NCLAT observed that the dispute was fundamentally one concerning the relationship between the IBC and the PMLA rather than merely a dispute between the liquidator and the Enforcement Directorate.
The Tribunal emphasized that the PMLA serves a completely different legislative purpose—preventing money laundering, confiscating proceeds of crime, and protecting the integrity of India’s financial system pursuant to international obligations.
According to the Bench, the IBC is intended to resolve corporate insolvency using the legitimate assets of a corporate debtor and cannot be used as a mechanism to protect or legitimise assets alleged to be proceeds of crime.
The Tribunal held that Sections 14 and 33(5) of the IBC are designed to preserve the insolvency estate only in relation to legitimate civil liabilities and cannot impede criminal proceedings or actions involving proceeds of crime under public law statutes like the PMLA.
It observed that criminal proceedings which do not create or enhance the civil debt liability of the corporate debtor cannot be stalled merely because a CIRP or liquidation is pending.
The Bench relied upon several precedents, including Deputy Director, Enforcement Directorate v. Axis Bank, Varrsana Ispat Ltd., Kiran Shah v. Enforcement Directorate, and Ashok Kumar Sarawagi v. Enforcement Directorate, to conclude that attachment proceedings under the PMLA remain outside the scope of the IBC moratorium.
The Appellate Tribunal further held that the Supreme Court’s decision in Embassy Property Developments Pvt. Ltd. v. State of Karnataka conclusively establishes that the jurisdiction of the NCLT is confined to matters necessary for implementation of the IBC and does not extend to examining actions taken by statutory authorities exercising powers under independent legislation.
The Tribunal noted that the Insolvency and Bankruptcy Board of India (IBBI), through its Circular dated 4 November 2025, has itself advised insolvency professionals that where assets are attached under the PMLA, appropriate relief should be sought before the Special Court constituted under Sections 8(7) and 8(8) of the PMLA rather than before insolvency tribunals.
Finding no infirmity in the order of the NCLT, the NCLAT dismissed both appeals.
The Tribunal concluded that questions relating to attachment of assets, withdrawal of funds, or notices issued under Section 50 of the PMLA must be adjudicated exclusively within the statutory framework of the PMLA. Even where the PMLA Appellate Tribunal has granted relief and the matter is pending before a High Court, any further remedy must be pursued before the competent forum under the PMLA and not before the NCLT or NCLAT.
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