Packwell (India) Ltd. Vs Emgee Cables And Communication Ltd (Himachal Pradesh High Court)
Himachal Pradesh High Court held that PMLA [Prevention of Money Laundering Act, 2002] would cease the power to attach the property when the order of liquidation has already been passed.
Facts- This Interlocutory Application (‘IA’) bearing the IA No. 15/JPR/2022 is filed by Mr. Satyendra P. Khorania (‘Applicant’), the Liquidator of the Corporate Debtor, M/s Emgee Cables and Communication Limited (‘ECCL’) under Section 35(1)(n) of Insolvency and Bankruptcy Code, 2016 (the ‘IBC’/ ‘Code’) and r/w Rule 11 of NCLT Rules for seeking directions to carry out the auction of properties of the Corporate Debtor which are attached by the order of Deputy Director, Directorate of Enforcement (‘Respondent’)
Conclusion- Held that PMLA would cease to have the power to attach the property at this juncture when the order of the Liquidation has already been passed.
Thus, the IBC [Insolvency and Bankruptcy Code, 2016] creates a specific bar with respect to proceedings that may be initiated under the PMLA [Prevention of Money Laundering Act, 2002] by virtue of the provisions contained in Section 32A. Moreover, Section 32A cannot possibly be read as being applicable prior to a Resolution Plan being approved or a liquidation measure being enforced. Further, it can therefore be construed that the objective and intention of the Code is providing a free hand to the creditors if the properties of the Corporate Debtor are attached then it will jeopardize the Liquidation Process.
FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT
1. This Interlocutory Application (‘IA’) bearing the IA No. 15/JPR/2022 is filed by Mr. Satyendra P. Khorania (‘Applicant’), the Liquidator of the Corporate Debtor, M/s Emgee Cables and Communication Limited (‘ECCL’) under Section 35(1)(n) of Insolvency and Bankruptcy Code, 2016 (the ‘IBC’/ ‘Code’) and r/w Rule 11 of NCLT Rules for seeking directions to carry out the auction of properties of the Corporate Debtor which are attached by the order of Deputy Director, Directorate of Enforcement (‘Respondent’) in the matter mentioned above.
2. This Adjudicating Authority vide order dated 27.07.2018 commenced the Corporate Insolvency Resolution Process (‘CIRP’) of M/s Emgee Cables and Communication Limited under section 9 of the Insolvency and Bankruptcy Code (‘IBC’). Thereafter Mr. Pankaj Mahajan (‘Resolution Professional’) filed an application for the liquidation of M/s Emgee Cables and Communication Limited on 22.04.2019. The order for liquidation was passed on 18.09.2019 whereby Applicant has been appointed as Liquidator of the Corporate Debtor vide order dated 25.09.2019.
3. The Applicant has moved the present Application on the following set of facts:
i. The Applicant submits that the Deputy Directorate Enforcement under section 5(1) of the Prevention of Money Laundering Act, 2002 (‘PMLA’) has passed provisional attachment order on 12.12.2019 with respect to the properties of the Corporate Debtor.
ii. Subsequently, the said order was set aside by this Adjudicating Authority vide order dated 07.09.2020 under IA NO. 444/JPR/2019 stating in the order:
“9. It is observed that if even after initiation of proceedings under this code the creditors are still required to knock other doors, which is time consuming and financially deleterious, it would defeat the object of the Insolvency and Bankruptcy Code, 2016.
10. Having regard to the above material and having heard the arguments, we direct the respondent to withdraw the provisional attachment of the movable and immovable properties belonging to the Corporate Debtor (M/s Emgee Cables and Communication Limited) vide order dated 12.12.2019, so that the liquidator can take them being part of the Liquidation Estate of ECCL.”
iii. Further the Applicant contends that the Respondent has filed a Writ Petition No. 14476/2020 before the Hon’ble High Court of Rajasthan, Jaipur against the order of this Adjudicating Authority dated 07.09.2020 and it is pending before the Hon’ble High Court.
iv. The Applicant further mentions that a Contempt Petition has been filed against the Respondent for not complying with an order dated 07.09.2020 passed by this Adjudicating Authority wherein notices have been issued.
v. The Applicant relied on the Judgements of the National Company Law Appellant Tribunal (‘NCLAT’) in Company Appeal (AT) (Insolvency) No. 575/2019 titled The Directorate of Enforcement Vs Manoj Kumar Agarwal & Ors. and in Company Appeal (AT) (Insolvency) No. 576/2019 titled The Directorate of Enforcement Vs Vishal Ghisulal Jain and Others dated 09.04.2021 held that:
“ In our view, there is no conflict between PMLA and IBC and even if a property has been attached in the PMLA which is belonging to the Corporate Debtor, if CIRP is initiated, the property should become available to fulfill objects of IBC till a resolution takes place or sale of liquidation asset occurs in terms of Section 32A.”
vi. The details of the properties elucidated below for which the Applicant is seeking direction from this Adjudicating Authority for auction:
(A) IMMOVABLE PROPERTY
