Skip to content
Free updates Login
SSCBankingUPSC & State PSC

NCLAT: IBC Cannot Override PMLA on ED-Attached Assets

7 July 20251 min read
NATIONAL AFFAIRSNCLAT: IBC CannotOverride PMLA onED-AttachedAssets7 July 2025safalsetu.com

Why in the news

NCLAT decided that insolvency law cannot pull in assets already attached by the ED under money-laundering law.

Key facts

  • Condition: attachment confirmed by a competent authority.
  • Effect: such assets stay out of the resolution estate.
  • Lower forum: NCLT had refused to include them in a resolution plan; NCLAT agreed.

Background

  • Section 14: moratorium on debtor’s assets.
  • Section 238: Code’s overriding clause.

Reasoning

  • IBC and PMLA operate in separate domains with no irreconcilable conflict.
  • ED upholds penal laws and international duties, including FATF and UN conventions.

Exam angle

  • Moratorium: Section 14; override: Section 238.
  • Appellate forum: NCLAT.

Test yourself

1. Which section of the IBC gives the Code overriding powers, which NCLAT held does not apply to PMLA attachments?

Section 238 is the overriding clause and was held inapplicable here.

2. According to NCLAT, in what capacity does the Enforcement Directorate act in PMLA attachments?

The ED is not a creditor but a public enforcement agency.

3. Under IBC Section 14, what is imposed on a debtor's assets during insolvency resolution?

Section 14 imposes a moratorium on the debtor's assets.

This topic is part of Daily Current Affairs 6 & 7 July 2025 (16 topics).

All topics of the dayDay quizJuly 2025

Read more