Business

‘PMLA and IBC do not overlap’

Strings attached: The IBC provides for moratorium against the firm from transferring its assets.   | Photo Credit: Getty Images/iStock

The National Company Law Appellate Tribunal (NCLAT) said Prevention of Money Laundering Act (PMLA), 2002 gets invoked simultaneously with the Insolvency and Bankruptcy Code and that neither of the laws has an overriding effect over the other.

The observation was made in a case relating to Rotomac Global Private Limited.

Bank of Baroda had initiated insolvency proceedings against Rotomac and since the resolution process did not attract any viable and feasible resolution plan, National Company Law Tribunal, Allahabad had ordered liquidation.

Meanwhile, the Directorate of Enforcement had launched an investigation against the company and its directors on the basis of inputs from the Central Bureau of Investigation (CBI) and found that the accused had misappropriated/diverted bank funds, committed criminal breach of trust and laundered the money so diverted. The agency also made provisional attachments of the properties lying in the name of the company and its directors.

Rejected by NCLT

Anil Goel, liquidator for Rotomac, had sought the release of assets attached by the Directorate of Enforcement, which was rejected by NCLT, Allahabad. Against this, the liquidator moved the NCLAT.

The NCLAT, citing the provisions of the PMLA, said it relates to ‘proceeds of crime’ and the offence relates to ‘money-laundering,’ resulting in the confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.

“Thus, as the ‘Prevention of Money Laundering Act, 2002’ or provisions therein relates to ‘proceeds of crime,’ we hold that Section 14 of the Insolvency and Bankruptcy Code (IBC) is not applicable to such proceeding,” it said.

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Printable version | Oct 20, 2020 2:51:11 PM | https://www.thehindu.com/business/pmla-and-ibc-do-not-overlap/article28275357.ece

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