A bench of Justice Prathiba Singh in the Delhi High Court has stayed proceedings arising out of the attachment of properties of Deccan Chronicles Holding Ltd by the Enforcement Directorate (ED), on a plea by Union Bank of India (UBI) stating that corporate insolvency resolution process (CIRP) was already initiated against Deccan Chronicles and that the attachment by ED has been done after such initiation.
In this regard, the Supreme Court stated that, "Having regard to the object of the the Insolvency and Bankruptcy Code, 2016, the experience of the working of the code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this Court to interfere. "
In the present matter, there was a tussle between the Enforcement Directorate and the Ministry of Corporate Affairs on the question of attachment of properties undergoing corporate insolvency resolution ever since the Enforcement Directorate attached properties of Bhushan Steel and Power Ltd, after the approval of JSW Steel's resolution plan for the steel giant.
Section 32A of the said Code provides that a Corporate Debtor shall not be prosecuted for an offence committed prior to commencement of Corporate Insolvency Resolution Process (CIRP) once Resolution Plan has been approved by Adjudicating Authority (AA). The government had therefore brought about the Amendment of the code through Section 32A, under which immunity is provided to the new management of a corporate debtor from the criminal liability under PMLA for offences committed before the approval of the resolution plan.
Justice Singh held that, "Considering the fact that the resolution plan has already been approved in this matter, and that the ED's order of provisional attachment of the properties of Respondent No. 4. The issue at hand dealt with criminal liability under the Prevention of Money Laundering Act (PMLA) on one hand, and the corporate insolvency resolution process on the other."
UBI had claimed before the High Court that the proceedings are therefore liable to be stayed, as such attachment has had a "negative impact" on the CIRP and realization of the debt of Deccan Chronicles by the Union Bank of India.
The court granted the stay but mposed the condition it shall be subject to the Bank placing on record any details of steps taken to monetize the assets and the recovery made, if any.
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