Shimping Technology Pvt Ltd Vs Foxdom Technologies Pvt Ltd (NCLT Delhi)
The National Company Law Tribunal (NCLT) Delhi addressed an application filed by the Resolution Professional (RP) of Shimping Technology Pvt Ltd, seeking directions to defreeze the Corporate Debtor’s bank account, which was frozen by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA). The RP argued that the frozen account was hindering the Corporate Insolvency Resolution Process (CIRP) and affecting creditors and stakeholders. The ED, however, contended that the NCLT lacked jurisdiction to entertain such a challenge, citing precedents that established the primacy of PMLA proceedings and the limited scope of the Insolvency and Bankruptcy Code, 2016 (IBC).
The NCLT, after reviewing relevant legal precedents, including judgments from the Supreme Court and NCLAT, concluded that it does not have the jurisdiction to direct the ED to defreeze accounts frozen under PMLA. The tribunal emphasized that the PMLA focuses on preventing money laundering and recovering proceeds of crime, while the IBC aims at the resolution of corporate debtors. It held that the NCLT, deriving its jurisdiction from the IBC, cannot adjudicate orders issued by the PMLA Adjudicating Authority. The NCLT directed the RP to seek remedies under the PMLA before the competent forum, as the jurisdiction to deal with matters related to attachment and freezing of accounts under PMLA vests exclusively with the authorities designated under that enactment. Consequently, the NCLT disposed of the RP’s application, affirming its lack of authority in this matter.
