NCLAT upholds ED's PMLA powers over insolvency moratorium

New Delhi: The National Company Law Appellate Tribunal (NCLAT) has said the moratorium available to companies undergoing insolvency cannot be used to shield assets alleged to be proceeds of crime, while upholding actions taken by the ED under the PMLA against Siddhi Vinayak Logistics Ltd. The appellate tribunal said if there has been any attachment by the ED, then the adjudicatory mechanism created under the PMLA alone will have jurisdiction to deal with it.

A bench of NCLAT has upheld the previous order passed by the Ahmedabad bench of the NCLT, saying "tribunals constituted under the IBC are not the forums which can entertain any plea against the ED". The legislative intent behind the scheme of the IBC only aims to deal with the issue of corporate insolvency, either in a CIRP or in a liquidation process, and to pay off the creditors of the corporate debtor through the sale proceeds of the legitimate assets of the corporate debtor either as a going concern or as liquidated assets, and not out of the ill-gotten wealth of the CD.