In an appeal filed by the Rotomac Global Private Limited, the National Company Law Appellate Tribunal (NCLAT) has held that Section 14 of the Insolvency and Bankruptcy Code (IBC) does not apply to properties attached as proceeds of crime under the Prevention of Money Laundering Act. In the instant matter, the Bank of Baroda had initiated insolvency proceedings against Rotomac Global Private Limited. Upon receipt of information from the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED) started the investigation and attached the company's properties as ‘proceeds of crime’ under Section 5 of the Prevention of Money Laundering Act. The Appellate body relied on its own judgment in Varrsana Ispat Limited vs. Deputy Director, Directorate of Enforcement, which categorically held that Section 14 is not applicable to the criminal proceedings or any penal action taken pursuant to the criminal proceedings. The Tribunal commenting on the possible over-riding effect of one Act over the other, opined that as PMLA deals with different actions relating to ‘proceeds of crime’ it is simultaneously invoked with IBC.
Tags : #Insolvency #Legal