The Delhi High Court has held that the approval of a resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 triggers the protective shield of Section 32A(2), releasing the corporate debtor's property from a provisional attachment order passed under the Prevention of Money Laundering Act, 2002 even where such attachment preceded the approval. The Court rejected the Appellate Tribunal's view that Section 32A applies only to attachments effected post-approval, affirming that the statutory trigger is the approval itself, provided the new management satisfies the conditions of being unconnected to the erstwhile promoters and not having abetted the offence.
Background & Facts
The Dispute
The appellant, Dash Exports Private Limited, underwent Corporate Insolvency Resolution Process (CIRP) initiated by the National Company Law Tribunal, New Delhi on 26.02.2020. Asteroid Shelter Homes Private Limited submitted a resolution plan approved by the Committee of Creditors with 99.22% voting share on 27.11.2020. Before the NCLT could pronounce its approval order, the Directorate of Enforcement (ED) passed a Provisional Attachment Order (PAO) on 25.08.2021 attaching the appellant's property at 228-P, Village Habibpur, Gautam Buddh Nagar, Uttar Pradesh. The NCLT subsequently approved the resolution plan on 29.09.2021 under Section 31 IBC. The Adjudicating Authority under PMLA confirmed the PAO on 26.05.2022. The appellant challenged this confirmation before the High Court, which disposed of the writ petition on 13.04.2023 directing deposit of Rs.3.01 crores as FDR and granting liberty to appeal before the PMLA Appellate Tribunal. The Tribunal dismissed the appeal on 12.08.2025, leading to the present appeal under Section 42 PMLA.
Key Facts
- 26.02.2020: NCLT initiates CIRP for Dash Exports Private Limited
- 27.11.2020: Committee of Creditors approves Asteroid's resolution plan by 99.22% votes
- 26.03.2021: NCLT reserves order on resolution plan approval application
- 25.08.2021: ED passes Provisional Attachment Order No. 05/2021 attaching property at 228-P, Village Habibpur, Gautam Buddh Nagar, UP
- 29.09.2021: NCLT approves resolution plan under Section 31 IBC, recording satisfaction that Asteroid complied with Section 30(2) and was not disqualified under Section 29A
- 26.05.2022: Adjudicating Authority confirms PAO in OC No. 1526/2021
- 13.04.2023: High Court disposes W.P.(C) 10771/2022, directs deposit of Rs.3.01 crores FDR within four weeks, permits appeal before PMLA Tribunal without limitation bar
- 12.08.2025: PMLA Appellate Tribunal dismisses appeal (FPA-PMLA-5922/DLI/2023) - impugned order
- 06.11.2026: Present judgment pronounced
Procedural History
- 26.02.2020: CIRP commenced by NCLT order
- 27.11.2020: CoC approves resolution plan
- 25.08.2021: ED issues Provisional Attachment Order
- 29.09.2021: NCLT approves resolution plan under Section 31
- 26.05.2022: Adjudicating Authority confirms attachment
- 13.04.2023: High Court writ petition disposed with FDR deposit direction
- 12.08.2025: PMLA Appellate Tribunal dismisses appeal
- 06.11.2026: High Court delivers judgment in MISC. APPEAL(PMLA) 4/2026
Relief Sought
The appellant sought: (a) setting aside the Tribunal's order dated 12.08.2025; (b) direction to release the subject property from attachment and restore all consequential rights, title, and interests free from encumbrance; (c) release of the FDR of Rs.3.01 crores deposited pursuant to the High Court's 13.04.2023 order.
The Legal Issue
The central question was whether Section 32A(2) of the IBC applies to a provisional attachment order passed under Section 5 of the PMLA before the approval of a resolution plan under Section 31 of the IBC, or whether the protection under Section 32A(2) is available only for attachments effected after such approval. The issue turned on the interpretation of the statutory trigger for the immunity conferred by Section 32A(2) - whether it is the approval of the resolution plan or the chronological sequence of attachment vis-à-vis approval.
Arguments Presented
For the Appellant
Mr. Sanjay Jain, Senior Advocate, relied on Manish Kumar v. Union of India, 2021 (5) SCC 1, Shiv Charan v. Adjudicating Authority, 2024 SCC OnLine Bom 701, and the Supreme Court order dated 16.07.2026 in Deputy Director, ED v. Shiv Charan (Civil Appeal Nos. 9692-9693/2024). He contended that once a resolution plan is approved under Section 31 and results in change of control to a person satisfying Section 29A and not accused of abetment or conspiracy, Section 32A(2) mandates that no action shall be taken against the property of the corporate debtor in relation to offences committed prior to CIRP commencement. The protection is prospective - it operates from the date of approval to release the property from existing attachments. The Tribunal's requirement of a Special Court finding before granting relief was unsustainable where the ED had not even alleged that Asteroid fell within the Section 32A exceptions.
For the Respondent
Mr. Rajat Nair argued that Section 32A IBC gets attracted only when the attachment order is passed post-approval of the resolution plan. He submitted that PMLA and IBC operate in distinct fields with distinct objects, and property attached as proceeds of crime cannot be treated at par with unencumbered assets available for insolvency resolution. Relying on Deputy Director, ED v. Axis Bank, 2019 SCC OnLine Del 7854; Varrsana Ispat Ltd. v. Deputy Director, ED, 2019 SCC OnLine NCLAT 236; P. Mohanraj v. Shah Brothers Ispat, (2021) 6 SCC 258; S. Rajendran v. Deputy Commissioner of Income Tax, (2026) 5 SCC 563; Rajiv Chakraborty v. Directorate of Enforcement, 2022 SCC OnLine Del 3703; and Embassy Property Developments v. State of Karnataka, (2020) 13 SCC 308, he contended that the power of attachment under PMLA does not fall within Section 14(1)(a) IBC, and the NCLT cannot exercise judicial review over governmental action under public law. Section 32A is conditional and triggered only upon approval of a resolution plan or liquidation sale to an unconnected third party; in the absence of a statutory trigger, the immunity does not arise.
The Court's Analysis
The Court undertook a detailed examination of Section 32A IBC, inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2019 with retrospective effect from 28.12.2019. The provision contains three sub-sections: (1) cessation of corporate debtor's liability for pre-CIRP offences upon approval of a resolution plan resulting in change of control to a qualifying person; (2) bar against any action against the property of the corporate debtor in relation to such offences where the property is covered under the approved resolution plan; (3) obligation of cooperation with investigating authorities notwithstanding the immunity.
The Court extensively quoted Manish Kumar, wherein the Supreme Court upheld the constitutional validity of Section 32A, emphasizing its object: to give a clean break to successful resolution applicants from the erstwhile management by shielding them from prosecution and liabilities for pre-CIRP offences, subject to ample safeguards. The Supreme Court identified five safeguards: (i) immunity only upon approval of resolution plan under Section 31 resulting in change of management/control; (ii) immunity only for corporate debtor and its property covered under the approved plan; (iii) erstwhile promoters, management, related parties, and officers in default continue to be liable; (iv) action against property of persons other than the corporate debtor or qualifying acquirers is not barred; (v) cooperation with investigation continues.
"Section 32A was inserted to give a clean break to successful resolution applicants from the erstwhile management by shielding them and immunizing them from prosecution and liabilities for offences that may have been committed prior to the commencement of the CIRP. Further, ample safeguards have been incorporated in the said provision to prevent any exploitation..."
The Court relied on Nitin Jain v. Enforcement Directorate, 2021 SCC OnLine Del 5281, where this Court held that Section 32A assures the resolution applicant that it shall not be held liable for any offence committed by the corporate debtor prior to CIRP initiation, and similarly extends that warranty in respect of the properties of the corporate debtor once a resolution plan stands approved.
In Rajiv Chakraborty v. Directorate of Enforcement, 2022 SCC OnLine Del 3703, this Court held that Section 32A constitutes the pivot as the later expression of legislative intent, embodying the terminal point whereafter powers under PMLA would not be exercisable. The legislature chose to place an embargo upon continuance of criminal proceedings including attachment under PMLA only once a resolution plan is approved or a liquidation measure adopted.
The Bombay High Court in Shiv Charan held that Section 32A is a non-obstante provision whose jurisdiction is attracted only when a resolution plan gets approved under Section 31. Section 32A(2) explicitly protects property from attachment, seizure, retention, or confiscation under any law, including PMLA. Once a resolution plan is approved with the attendant conditions met, further prosecution against the corporate debtor and its properties ceases.
The Court rejected the artificial distinction drawn by the respondent and accepted by the Tribunal - that Section 32A(2) applies only to attachments passed after approval. The plain language of Section 32A(2) states: "No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the CIRP... where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31." The trigger is the approval of the resolution plan. The Explanation clarifies that "action against the property" includes attachment, seizure, retention, or confiscation under any applicable law. The immunity operates prospectively from the date of approval to release the property from subsisting attachments.
The Court further held that the Tribunal's requirement of a Special Court finding before granting relief was erroneous. The occasion for such a finding arises only if the ED sets up a case that the appellant/Asteroid falls within the Section 32A exceptions. In the absence of any such case, the Special Court cannot give an academic finding. It must be presumed that the respondent conceded satisfaction of all Section 32A conditions.
The Verdict
The appellant succeeded. The Court set aside the impugned order dated 12.08.2025 passed by the PMLA Appellate Tribunal in Appeal No. 5922/DLI/2023. It held that with the approval of the resolution plan on 29.09.2021 under Section 31 IBC, and Asteroid satisfying all conditions of Section 32A (unconnected to erstwhile management, not a promoter/related party, no allegation of abetment/conspiracy), the Provisional Attachment Order dated 25.08.2021 could no longer subsist against the corporate debtor's property. The Court directed release of the FDR of Rs.3.01 crores deposited by Asteroid on behalf of the appellant in favour of the ED within two weeks of the judgment. No orders as to costs.
What This Means For Similar Cases
Approval of Resolution Plan Is the Sole Trigger for Section 32A Immunity
The judgment conclusively settles that the approval of a resolution plan under Section 31 IBC is the statutory trigger for the protective bar under Section 32A(2) against actions on the corporate debtor's property, including PMLA attachments. The chronological priority of the attachment vis-à-vis the approval is irrelevant. Once the resolution plan is approved and results in change of control to a qualifying person, the property covered under the plan must be released from pre-existing attachments. Practitioners should frame arguments around the approval date as the operative moment, not the attachment date.
No Separate Special Court Finding Required Where Exceptions Not Pleaded
The Court clarified that the burden lies on the enforcement agency to allege and prove that the new management falls within the Section 32A exceptions (promoter, related party, abettor/conspirator with report filed). Where the ED does not even set up such a case, the Tribunal or adjudicating authority cannot demand a Special Court finding as a precondition for releasing the attachment. This removes a procedural hurdle often used to delay the clean-slate benefit. Counsel should press for release once approval and qualifying change of control are established, shifting the burden to the agency to invoke exceptions.
Prospective Operation Does Not Mean Retrospective Invalidation
The Court's characterization of Section 32A(2) as operating prospectively to release property from subsisting attachments (rather than retrospectively annulling the attachment order) is a crucial doctrinal distinction. It preserves the validity of the attachment during the CIRP period while mandating its cessation upon approval. This reconciles the PMLA's investigative powers during CIRP with the IBC's resolution finality. Practitioners should adopt this framing: the attachment was valid when passed but must abate upon the Section 32A trigger event, as continued attachment serves no purpose when confiscation (the attachment's ultimate object) is legally impossible post-immunity.
