AM MINING INDIA PRIVATE LIMITED Versus UNION OF INDIA
R/SPECIAL CIVIL APPLICATION NO. 808 of 2023
Facts:
1.Applicant is a private company incorporated on 31.10.2019 under the provisions of Companies Act, 2013 and is a part of the Arcelor Mittal Nippon Steel Group.
2.Respondent No. 2 is ABG Shipyard Limited, a company incorporated on 15 March 1985 under the provisions of Companies Act, 1956 (“ABG Shipyard”) which is under liquidation. Advertisements were issued on 14.12.2021, 24.12.2021, 07.01.2022 and 18.01.2022 in accordance with the regulatory framework governing the liquidation process, for initiating a bid process for inter alia sale of the Subject Land admeasuring approximately 2,03,000 square metres, situated near village Gaviar, Taluka Choryas, District Surat, Gujarat.
3.Applicant on 25.01.2022, submitted a bid for an amount of INR 189,50,00,000/- (Rupees One Hundred Eighty-Nine Crore Fifty Lakhs only), for the purchase of the Subject Land (“Sale Consideration”) and was adjudged the “Successful Bidder”. An Agreement to Sell dated 21.03.2022 was executed between ABG Shipyard (through Sh. Sundaresh Bhat in his capacity as the Liquidator) and the writ-applicant herein for sale and purchase of the Subject Land.
4.Applicant under UTR: HSBCR22022082517255864, the writ-applicant herein on 25.08.2022 remitted an amount of INR 18,95,00,000.00 (Rupees Eighteen Crores, Ninety-Five Lakhs only). Subsequent to the aforesaid proceedings undertaken before the NCLT wherein the writ-applicant herein was declared as the highest bidder as referred above and having remitted the amount of INR 18,95,00,000.00.
5.Respondent No.1 by order dated 21.9.2022 provisionally attached the subject land under Section 5 of the Prevention of Money Laundering Act (for short ‘PMLA’) against ABG Shipyard. Against the said attachment applicant has approached the court for issuing necessary directions by way of writ.
Issue: Whether the respondent authority under the PMLA Act, 2002 would retain jurisdiction or authority to proceed against the properties of a corporate debtor once liquidation measures have been approved in accordance with the provisions of IBC Act, 2016 ?
Arguments:
Applicant:
1.Senior Counsel vehemently submitted that the final order dated 14.3.2023 passed by the respondent No.1 is in teeth of Section 33(5) of the IBC. The order impugned is in clear breach of provisions of Section 33(5) of the Indian IBC, the respondent No.1 having initiated proceedings qua the subject land under Section 5 of the PMLA post the liquidation order i.e. after 25.4.2019 i.e. by (i) passing the impugned order on 21.9.2022 (ii) provisionally attaching the subject property for 180 days with effect from 21.9.2022 (iii) initiating attachment proceedings against the subject property vide complaint dated 20.10.2022 under Section 5(5) of the PMLA and (iv) causing issuance of show cause notice dated 25.10.2022.
2.Counsel submitted that the order impugned dated 14.3.2023 passed by the respondent No.1 is in gross violation of Section 32A(2) of IBC. Placing reliance on the aforesaid submissions it was submitted that the order impugned could have been validly passed by the respondent No.1 after the liquidation order. It was submitted that no criminal proceedings can be initiated qua assets acquired under the liquidation process by the writ-applicant herein under under Section 32A(2) of the IBC.
3.Counsel submitted that the protection granted under Section 33(5) and 32A(2) of the IBC override the respondent No.1 power to attach properties under Section 5 of the PMLA, since (i) Section 238 of the IBC provides that the provisions of IBC will override anything inconsistent with any other law in force and (iii) PMLA, despite containing a similar overriding provision under Section 71, is subservient to the provisions of IBC, since IBC was enacted after PMLA.
4.Counsel submitted that the order impugned passed by the respondent No.1 is wholly without jurisdiction as (i) the same is passed in contravention of the procedural mandates and safeguards under Section 5 of PMLA; (ii) in breach of Sections 32A(2), 33(5) and 238 of IBC, as explained in detail above; (iii) it interdicts and seeks to override the Hon’ble Supreme Court’s Order dated 26.08.2022 in Civil Appeal No.7667 of 2021 Sundaresh Bhat, Liquidator Of ABG Shipyard V. Central Board Of Indirect Taxes And Customs.
5.Counsel submitted that order impugned passed by the respondent No.1 under Section 5 of the PMLA has failed to give any reason for attachment of subject land as mandated under Section 5 of the PMLA and the said order fails to demonstrate how the subject land is proceeds of crime in the hands of the writ-applicant herein. It was submitted that the final order passed by the adjudicating authority is silent as regard reasons of the adjudicating authority for confirmation of the order passed of the PAO qua the subject land.
6.Counsel submitted that the final order being wholly without jurisdiction on account of breach of provisions under the IBC the alternative remedy is not a bar to exercise powers under Article 226 of the Constitution of India.
For Respondent:
1.Counsel submitted that no interference is called for in the order impugned passed by the adjudicating authority wherein the adjudicating authority has considered the facts of the dispute in question and passed an order allowing the provisional attachment under Section 5 of the Act.
2.It was submitted that the same could not have been said to be final until the sale deed is executed between the parties. It was submitted that in the facts of the present case at the stage of agreement to sell in view thereof this Court may not interfere with the order impugned passed by the respondent authority.
Decision: Hon’ble High Court allowed the writ and set aside the order passed by Respondent no. 1
Rationale:
1.Hon’ble Court noted that writ-applicant herein was neither a promoter, manager or related party to the ABG Shipyard (corporate debtor) and an appropriate affidavit under Section 29A was submitted by the writ-applicant.
2.It also noted that There are no allegations in the complaint with respect to abatement or conspiracy qua the writ-applicant herein for commission of any offence with ABG Shipyard, the corporate debtor. No steps have been taken by the respondent No.1 for setting aside the process of sale before the adjudicating authority. In terms of Section 60 of the IBC, any challenge to process of sale in course of liquidation, must necessarily lie before the NCLT.
3.It held that confirmation of attachment interdicts and interferes with the consummation of the sale process which is part of liquidation of ABG Shipyard. The aforesaid interjection by the respondent No.1, in the opinion of this Court, is in teeth of the provisions of Sections 32A, 33(5) and 238 of the IBC. Without assigning any reasons, without any independent finding on “reason to believe” the order of provisional attachment under Section 5 of the PMLA has been
confirmed.
4.It held that he respondent authority has erred in not arriving at an independent finding considering the fact that the case of the writ-applicant stands at identical footing to that of the writ-applicant in the Special Civil Application No.19387 of 2022. Though the order under Section 5 is quashed and set aside, the respondent authority has proceeded to confirm the order of provisional attachment passed under Section 5(1) which can be said to be an order passed without any application of mind.
5.Section 32A of the IBC Act would govern to the extent to which the non-obstante clause enshrined in the IBC would
operate and exclude the operation of PMLA.
Order Copy:
