The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, in Value Wise Consultancy Pvt. Ltd. v. Deputy Director, Directorate of Enforcement & Ors.¹, has delivered a significant ruling on the interplay between the Insolvency and Bankruptcy Code, 2016 (“IBC”) and the Prevention of Money Laundering Act, 2002 (“PMLA”). The Tribunal held that the moratorium under Section 14 of the IBC cannot be invoked to restrain proceedings under the PMLA concerning proceeds of crime and as a shield to protect ill-gotten wealth from attachment. The Tribunal also reaffirmed that challenges to actions taken by the Enforcement Directorate (“ED”) lie exclusively before the adjudicatory mechanism established under the PMLA.

Brief Facts
The appeals were filed by the Liquidator of M/s Siddhi Vinayak Logistics Ltd., challenging an order of the National Company Law Tribunal (NCLT), Ahmedabad, which had dismissed applications seeking, inter alia, refund of Rs. 2.29 Crores withdrawn by the ED from the Corporate Debtor's bank account during the subsistence of the Corporate Insolvency Resolution Process (“CIRP”), withdrawal of attachment orders issued under the PMLA, and directions permitting the Corporate Debtor's customers to release outstanding receivables.

The controversy arose against the backdrop of allegations of large-scale bank fraud and diversion of loan funds exceeding Rs. 1,600 Crores. Prior to commencement of the CIRP, the ED had provisionally attached several assets of the Corporate Debtor under the PMLA. Although the attachment order was subsequently set aside by the Appellate Tribunal under the PMLA, the ED challenged that decision before the Bombay High Court, where the proceedings were pending.

During the moratorium under Section 14 of the IBC, the ED withdrew approximately Rs. 2.29 Crores from the Corporate Debtor’s bank account and had earlier issued communications under Section 50 of the PMLA directing several customers not to release payments due to the Corporate Debtor. The Liquidator contended that these actions violated the statutory moratorium and frustrated both the CIRP and subsequent liquidation process.

Core Issue
The principal question before the NCLAT was whether the moratorium under Section 14 of the IBC, or the protection available during liquidation under Section 33(5), restrains the ED from attaching or dealing with assets alleged to constitute proceeds of crime under the PMLA. A related issue was whether the NCLT and NCLAT possess jurisdiction under Section 60(5) of the IBC to examine or interfere with actions taken by the Enforcement Directorate under the PMLA.

Decision
The NCLAT dismissed the appeals and upheld the order of the NCLT, holding that the dispute essentially represented a conflict between two parliamentary enactments operating in distinct legal spheres rather than a simple dispute between the Corporate Debtor and the ED. The Tribunal remarked that the dispute is not appellant vs the ED, but IBC vs PMLA, when both the legislations are in action.

PMLA was enacted to combat money laundering, confiscate proceeds of crime and fulfil India's international obligations under global anti-money laundering conventions. In contrast, the IBC is a statute for resolving the insolvency situation of a debt-ridden company. According to the Tribunal, Parliament never intended the IBC to be a “holy ganges” capable of washing a corporate debtor of its sins under the PMLA or to legitimise ill-gotten wealth.

Rejecting the Liquidator's contention that Section 14 of the IBC overrides the ED’s actions, the Tribunal observed that the moratorium is designed to preserve the Corporate Debtor's legitimate insolvency estate by preventing proceedings that may increase its civil liabilities or disrupt the insolvency resolution process. Proceedings under the PMLA, however, are penal in nature and concern confiscation of proceeds of crime rather than recovery of civil debts. Consequently, such proceedings fall outside the protective ambit of Sections 14 and 33(5) of the IBC, even if they ultimately diminish the asset pool available to creditors.

The Tribunal further relied upon Embassy Property Developments Pvt. Ltd. Vs State of Karnataka & Ors.², reiterating that the jurisdiction of the NCLT under Section 60(5) is not unlimited and cannot extend to reviewing decisions taken by statutory authorities exercising powers under independent legislations. Any challenge to attachment orders, notices issued under Section 50 of the PMLA, or other coercive measures adopted by the Enforcement Directorate must therefore be pursued before the authorities and appellate forums specifically constituted under the PMLA.

Notably, the Tribunal also referred to the Insolvency and Bankruptcy Board of India's Circular dated 4th November 2025, which advises insolvency professionals to seek restitution of attached assets before the Special Court under Sections 8(7) and 8(8) of the PMLA, thereby recognising that the appropriate forum for such relief lies within the PMLA framework itself.

Conclusion
This decision marks another important milestone in defining the relationship between insolvency law and anti-money laundering legislation. By drawing a clear distinction between the objective of insolvency resolution and the State's sovereign interest in confiscating proceeds of crime, the NCLAT has reaffirmed that the moratorium under the IBC cannot operate as a protective shield against penal proceedings under the PMLA.

By - Gurdev Singh Tung and Shreyash Dube