Delhi High Court: Section 32A IBC immunity lifts a prior PMLA attachment once a resolution plan is approved

The Delhi High Court has set aside an order of the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 (PMLA), and directed the Enforcement Directorate (ED) to release a property it had provisionally attached, holding that Section 32A of the Insolvency and Bankruptcy Code, 2016 (IBC) extinguishes such an attachment once a resolution plan is approved for the corporate debtor. The ED had provisionally attached land belonging to the appellant company under Section 5 of the PMLA in August 2021, days before the National Company Law Tribunal (NCLT) approved a resolution plan proposed by a new management, Asteroid, under Section 31 of the IBC, finding none of the resolution applicants were promoters of, or alleged to have abetted, the underlying offence — the very conditions Section 32A requires for immunity. The Appellate Tribunal nonetheless upheld the attachment, reasoning that Section 32A applies only to attachments made after a resolution plan's approval, not before. The High Court disagreed.

It held that once Section 32A's conditions are met, the property of the corporate debtor becomes free of attachment under any law, including the PMLA, regardless of when the attachment order was originally passed, since the provision operates prospectively to release the property from the date of approval onward. The PMLA and the IBC were not in conflict, it held, since Section 32A's non-obstante clause, and its Explanation expressly including 'attachment' within its scope, prevail. The Rs. 3.01 crore fixed deposit furnished as security was ordered released to the appellant within two weeks.