Top Stories NCLT have No Jurisdiction to Direct ED to Defreeze Corporate Debtor’s Account Frozen under PMLA: NCLT [Read Order] The panel ruled that when the Corporate Debtor’s account was frozen in accordance with the Adjudicating Authority’s instructions under the PMLA, it lacked the authority to order the ED to defreeze it By Yogitha S. Yogesh – On March 9, 2025 10:38 am – 2 mins read

The Tribunal ruled that only the authorities specified under the PMLA have the authority to handle cases pertaining to account freezing and attachment under the PMLA. The National Company Law Tribunal (NCLT), New Delhi has held that the NCLT, the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC/the Code), lacks the authority to order the Directorate of Enforcement (ED) to unfreeze a corporate debtor’s account after it has been frozen in accordance with the Adjudicating Authority’s directives under the Prevention of Money Laundering Act, 2002 (PMLA). Read More: No Service Tax on Freight & Cartage Expenses under GTA Services: CESTAT On 03.02.2023, the Adjudicating Authority appointed Mr. Shailendra Singh (Applicant) as Interim Resolution Professional (IRP) after accepting the petition filed by M/s. Shimping Technology Pvt Ltd (Financial Creditor) against M/s.

Foxdom Technologies Pvt Ltd (Corporate Debtor) under section 7 of the Code. The Committee of Creditors (CoC), which included the only Financial Creditor, was formed by the Resolution Professional (RP). Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now On February 11, 2023, a public announcement in Form A was published in Jansatta and Financial Express. On June 29, 2023, the applicant, Mr. Shailendra Singh, Resolution Professional of Foxdom Technologies Pvt Ltd, republished Form G in the newspapers. The resolution plan was to be submitted by July 7, 2023. The Applicant started paying the Corporate Insolvency Resolution Process (CIRP) charges using checks drawn from the Corporate Debtor’s ICICI Bank Account after the CoC approved the payment of CIRP expenses from that bank account on June 2, 2023. Read More: Bank Guarantee Charges for Raw Material Procurement Covered Under Input Service u/r 2(l): CESTAT allows Bajaj’s CENVAT Claim The applicant found on July 11, 2023, that ICICI Bank Ltd. had returned the check he had written out of the bank account unpaid or dishonoured (Respondent No. 2). The applicant was notified that the Assistant Director of the Directorate of Enforcement had frozen the aforementioned Corporate Debtor account on written orders.

There was an ongoing PMLA investigation. Among the defendants was the director of the Corporate Debtor. Under Section 60(5) of the Code, the Resolution Professional of the Corporate Debtor submitted an application, requesting that the corporate debtor’s bank account be freed from the debit freeze and that the applicant be permitted to continue using it. Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now The bench comprising Justice Bachu Venkat Balaram Das (Judicial Member) and Atul Chaturvedi (Technical Member) noted that whereas IBC aims to resolve corporate debt, PMLA primarily focuses on preventing money laundering and recovering proceeds of crime. As a result, the NCLT, which derives its jurisdiction from the IBC, is unable to decide a case involving an order from the Adjudicating Authority under the PMLA or force the ED to release the attachment. The panel ruled that when the Corporate Debtor’s account was frozen in accordance with the Adjudicating Authority’s instructions under the PMLA, it lacked the authority to order the ED to defreeze it. It concluded that only the authorities authorized by the aforementioned statute have the authority to handle issues pertaining to the attachment and freezing of accounts under the PMLA.