LI Network
Published on: November 20, 2023 at 22:05 IST
The Gujarat High Court, in a significant decision, ruled that the protection granted under Sections 32A(2) and 33(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) takes precedence over the Enforcement Directorate’s power to attach properties under Section 5 of the Prevention of Money Laundering Act, 2002 (“PMLA”).
Justice Vaibhavi D. Nanavati, in a single-bench ruling, asserted that the Enforcement Directorate confirmed the provisional attachment order under Section 5(1) of PMLA without due consideration.
The court maintained that the confirmation of attachment interferes with the liquidation process of ABG Shipyard, violating Sections 32A, 33(5), and 238 of the IBC.
The case pertains to a writ petition filed by AM Mining India Private Limited against an order by the Enforcement Directorate provisionally attaching land related to ABG Shipyard under PMLA. The petitioner argued that this attachment contravened IBC sections and impeded the sale process.
Despite Respondent No. 1 citing Section 5 of PMLA, the court opined that the protections afforded by Sections 32A(2) and 33(5) of the IBC override the power of the Enforcement Directorate to attach properties under the PMLA. The court emphasized that Section 238 of the IBC dictates its superiority over inconsistent laws.
The ruling emphasized that Section 32A of the IBC governs the non-obstante clause in the IBC, excluding the operation of PMLA.
The protections under Sections 33(5) and 32A(2) of the IBC supersede the Enforcement Directorate’s power to attach properties under the PMLA. Section 238 reinforces the IBC’s prevalence over conflicting laws.
The case is titled AM Mining India Private Limited vs. Union of India (R/SPECIAL CIVIL APPLICATION NO. 808 of 2023).