Khaitan & Co represented Resolution Applicant in Ramsarup Industries Limited ED Order
Khaitan & Co acted as the legal representatives for Ramsarup Industries Limited in an Insolvency matter. The issue involved in the instant Writ Petition was the mutual interplay between the two statutes of the land being the Prevention of Money Laundering Act, 2002 (PMLA) and the Insolvency & Bankruptcy Code, 2016 (IBC).
Ramsarup Industries Limited has undergone Corporate Insolvency Resolution Process (CIRP). The resolution plan submitted by the consortium of S Natural Resources Private Limited along with another Company was approved by the adjudicating authority being the NCLT, Kolkata Bench.
The present writ petition was filed by S S Natural Resources Private Limited, after taking over the affairs of Ramsarup Industries Limited challenging the order dated 16 February 2022 passed by the Enforcement Directorate (ED). By the said order, ED directed the provisional attachment of one property located in Kharagpur where the Steel Plant of the Corporate Debtor was situated.
The Petitioners contended that the said attachment was bad in law as per Section 32-A of the IBC protects the corporate debtor from any liability for an offence committed prior to the commencement of the CIRP, from prosecution for such offence from the date of approval of the Resolution Plan as well as from any action being taken against the property of the corporate debtor in relation to similar offences after the approval of the Resolution Plan. In the instant matter, the order of provisional attachment was passed in relation to an FIR dated 11 September 2014.
It was argued on behalf of the ED authorities that the said provisional attachment was under Section 5 of the PMLA and in light of section 71 of the PMLA, the provisions of PMLA will prevail over the provisions of the IBC.
The Calcutta High Court held that IBC came into existence in 2016 which is 14 years subsequent to the enactment of the PMLA and a presumption operates in favor of the legislature being well-aware and conscious of prevailing legislation at the time of enacting a statute. Hence, vis-à-vis the PMLA, the IBC is a subsequent statute and, even at the first blush, the non obstante clauses in the IBC (Section 238) ought to prevail over that of the PMLA. as Section 32-A of the IBC is concerned, sub-section (1) thereof provides that the same would operate notwithstanding anything to the contrary contained in the IBC or any other law for the time being in force, giving precedence to the said provision even over other Sections of the IBC, apart from other prevailing statutes.
Thus. The Court stayed the operation of the impugned order dated 16 February 2022 passed by the PMLA by way of an injunction.
The Khaitan & Co. team was led by Partner Shounak Mitra, along with Senior Associate Vaibhavi Pandey and Associate Keshav Tibarewalla.