Dissolution Under IBC Can’t Be Used To Frustrate Ongoing PMLA Proceedings: NCLT Delhi

The Tribunal held: “Dissolution below Part 54 of the IBC ends in the Company Debtor ceasing to exist as a authorized entity. Such a consequence would inevitably frustrate the continuing felony prosecution below the PMLA and defeat the authority and jurisdiction of the Ld. Particular Court docket, which is statutorily vested with the facility to attempt offences below the PMLA and adjudicate upon associated attachments and confiscation proceedings”

Background Details:

M/s Goyal Tea Businesses Non-public Restricted, Operational Creditor filed an utility below Part 9 of the code, for initiation of Insolvency Proceedings in opposition to the Company Debtor ,M/s Shakti Bhog Snacks Restricted. Thereafter, the Insolvency Proceedings commenced on January 3, 2023.On admission, a moratorium below Part 14 of the Code was declared and Mr. Umesh Gupta was appointed as a Decision Skilled.

Pursuant to the general public announcement, claims had been invited from all lessons of collectors, together with Monetary Collectors, Operational Collectors, workers and workmen. Nonetheless, just one declare was obtained from the Monetary Creditor, i.e., State Financial institution of India.

Upon graduation of CIRP, the Decision Skilled tried to take cost of the belongings and information of the Company Debtor. He emailed the suspended administrators, intimating them concerning the graduation of the CIRP and requested needed paperwork and knowledge. He additionally contacted one of many Suspended Administrators, telephonically, in search of cooperation and call particulars of different administrators. Nonetheless, the director refused to offer any help.

Regardless of follow-up reminders by the Decision Skilled there was no response from the Suspended Administrators. This non-cooperation compelled the Decision Skilled to file an utility below Part 19(2) of the Code. The notices of the appliance had been duly served, nonetheless the administrators neither appeared nor filed replies.

Because of repeated non-cooperation, the Decision Skilled visited the registered workplace of Company Debtor. On go to, he discovered that the premises of workplace had been sealed by the Enforcement Directorate and no information or paperwork had been discovered. Additionally monetary statements of solely 12 months 2015–2016 had been obtainable. The land and constructing belonging to the Company Debtor, had been bought by the State Financial institution of India below the SARFAESI Act in December 2019.

Thereafter, the Decision Skilled filed the Dissolution utility, stating that in circumstances the place there are not any belongings to liquidate and no prospects of revival, the Adjudicating Authority is empowered to straight dissolve the Company Debtor below Part 54 of the Code, with out present process the liquidation course of.

Enforcement Directorate’s Objection:

To the dissolution utility, the Enforcement Directorate filed their reply informing in regards to the ongoing proceedings of the Company Debtor and its group entities below the Prevention of Cash Laundering Act, 2002.

They submitted that the Company Debtor which is a group firm was being utilized by M/s Shakti Bhog Meals Restricted to rotate its mortgage funds in opposition to bogus invoices. Investigations revealed that SBSL acquired proceeds of crime price ₹97.87 crore and transferred ₹127.81 crore to different group corporations between FY 2007–08 and 2014–15 with none precise motion of products. These transactions allegedly inflated SBFL’s financials to safe additional financial institution credit score.

They additional contended that one of many financial institution accounts of the Company Debtor had been connected below PMLA proceedings. The Company Debtor, has been arrayed as an accused within the Supplementary Prosecution Criticism filed in September 2024, and a summons had been issued by the Particular Court docket below PMLA. The Court docket has taken cognizance of the criticism and issued summons to all accused, together with SBSL. The ED argued that dissolution would frustrate the continuing trial and the enforcement of connected properties.

Findings:

The Tribunal noticed that the utility below Part 54 of the Code had been filed in search of dissolution of the Company Debtor, on the bottom that there are not any belongings, no ongoing enterprise operations, and no scope for revival.

The Tribunal additional famous that within the midst of ongoing proceedings and grave and substantiated allegations of cash laundering of the Company Debtor earlier than the PMLA, ordering dissolution now would extinguish the Company Debtor’s authorized existence, which might frustrate the continuing felony prosecution.

Additional, the Tribunal emphasised that the PMLA is a particular and self-contained laws designed to forestall, detect, and punish acts of cash laundering. It offers for its personal adjudicatory framework and overrides any inconsistent provisions of different legal guidelines by advantage of Part 71 of the PMLA.

The Supreme Court docket, in Embassy Property Developments Pvt. Ltd. v. State of Karnataka and Kiran Shah v. Enforcement Directorate, in addition to the NCLAT in Sterling Biotech, Manohar Lal Vij, clearly held that the Nationwide Firm Legislation Tribunal and the Nationwide Firm Legislation Appellate Tribunal would not have jurisdiction to intervene with proceedings or orders handed

below the PMLA, together with attachment orders or felony prosecution.

Accordingly, the Tribunal concluded that it could possibly’t train jurisdiction in a manner that removes the Company Debtor from pending felony legal responsibility below the PMLA. The utility for dissolution was due to this fact dismissed.

Case Title: M/s Goyal Tea Businesses Non-public Restricted V/s M/s Shakti Bhog Snacks Ltd.

Case Quantity: IA-3695-2023 in IB-1713-2019

Judgement Date: 30.06.2025

For the Applicant : Ms Swaralipi Deb Roy, Adv.

For the ED : Mr. Zoheb Hossain (Spl Counsel, ED),

Mr. Vivek Gurnani, (Panel Counsel, ED)