Sterling SEZ Infrastructure Ltd. Vs. Deputy Director, Directorate of Enforcement. Prevention of Money Laundering Act (MA 1280/2018 in C.P. 405 of 2018) - Synopsis
Team SoOLEGAL 11 Jan 2021

In this case, Sterling SEZ Infrastructure Ltd. Vs. Deputy Director, Directorate of Enforcement. Prevention of Money Laundering Act (MA 1280/2018 in C.P. 405 of 2018), the appellant Sterling SEZ and Infrastructure Limited was the corporate debtor and it is a subsidiary company of Sterling Biotech Limited. SBL is a public limited company situated at Baroda. The Corporate Insolvency Resolution process was initiated against the corporate debtor by the financial creditor SREI Infrastructure Financial Limited in July 2018.  The SBL Group had acquired more than Rs. 5000 Crores from banks and financial institutions and these loans had been transformed into non-performing assets. In addition, the credit facilities used by the SBL Group to the amount of Rs.8100 Crores were deemed to be fraud accounts by the banks concerned. The Enforcement Directorate began charges against the Corporate Debtor on 29.05.2018. As part of the proceedings, the Enforcement Directorate, pursuant to Section 2(1)(u) of the PMLA Act, attached the properties belonging to the corporate debtor on order dated 29.05.2018. An application under section 7 of Insolvency and Bankruptcy Code, 2016, which was filed by the financial creditor, was admitted by the Tribunal. Resolution Professional was appointed and a moratorium was also imposed under the Code. A request was being made by the Resolution Professional to the Enforcement Directorate to revoke the attachment of the assets of the Corporate Debtor, as he was expected to take care of and hold the same assets as the Resolution Professional in this case. An application was filed in NCLT for a direction to release the provisional attachment against properties of the Corporate Debtor.
NCLT had held that the annexation order of the Enforcement Directorate under the PMLA Act was null and void and would therefore have no binding effect. The Bench had also stated that, in the current proceedings of the Corporate Debtor under the CIRP, the Enforcement Directorate constituted under the PMLA Act had no authority with respect to properties and assets. The Bench eventually ordered the Resolution Professional to continue to take care of the assets and monitor and to comply with them under IBC considering that there was no attachment order.


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