ED has power to attach properties even in the case of moratorium under IBC: Delhi HC




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ED has power to attach properties even in the case of moratorium under IBC: Delhi HC

 

Rajiv Chakraborty, RP of EIEL (W.P.(C) 9531/2020, CM APPL. 30578/2020)

Facts:

  1. Rajiv Chakraborty, a Resolution Professional Of Era Infra Engineering Limited, before the court has challenged the orders of attachment passed by the ED under PMLA.
  1. One of his arguments was that once the moratorium had come into effect, the ED stood denuded of jurisdiction to exercise powers under the PMLA.
  1. Section 14(1)(a) of IBC states that the Adjudicating Authority shall declare moratorium for prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.
  1. So in light of the provisions of Aec 14(1)(a), the moot question was whether the moratorium under IBC would take away the power of ED to attach properties of the company under CIRP.

Delhi HC held as below:

  1. PMLA seeks to subserve a larger public policy imperative and is an enactment representing “a larger public interest, namely the fight against crime and the debilitating impact that such activities ultimately have on the society and the economy of nations as a whole”.
  1. The attachment of property only enables the authorities under the act to restrain any further transactions with respect to the attached property till the time the trial, with respect to the commission of an offence of money laundering, comes to an end.
  1. The tainted property is not a debt owed to the Government. On an overall conspectus of the aforesaid, the Court is of the considered opinion that on a fundamental plane, it would be incorrect to read Section 14 as completely shutting out actions under Sections 5 and 8 of the PMLA.
  1. The power of ED to attach under the PMLA would not fall within the ambit of Section 14(1)(a) of the IBC.




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