The NCLT's Kolkata Bench reaffirmed that the adjudicating authority lacked the capacity to consider cases of money laundering in Rahul Carbon Commercials Private Limited v. Kohinoor Steel Pvt. Ltd., supporting the decision of the appellate authority.
In the instant case titled Rahul Carbon Commercials Private Limited v. Kohinoor Steel Pvt. Ltd the issue raised for clarification before the NCLAT was:
Can the NCLT hear money-laundering cases that contest an earlier NCLAT ruling that rendered a negative decision in this instance under the Prevention of Money Laundering Act (PMLA), 2002? And if CIRP has already been started, may PMLA proceedings be started concurrently?
With regard to this issue, in the case of Directorate of Enforcement v. Manoj Kumar Agarwal, it was determined that no asset of the corporate debtor could be attached under PMLA while the CIRP was still in effect. According to PMLA, the process includes attaching "proceeds of crime" and ultimately selling the confiscated property. Even under the PMLA, no specific compensation is taken into account to make up for any person who might have been harmed by an act of money laundering. There will be no compensation for the victims because the confiscated assets are sold to other people. However, the creditors of the Corporate Debtor receive direct benefits under CIRP.
The primary goal of CIRP is "to resolve the insolvency on a 'clean slate basis,' with the control of the Corporate Debtor being vested with a fresh Resolution Applicant, rather than to deliver any benefit to the ex-promoters of the Corporate Debtor."
This ruling makes it clear that NCLT cannot hear matters involving money laundering. The greatest explanation for this is that the CIRP proceedings and PMLA action may drag on and the victim/sufferer will not receive adequate and prompt compensation, which contradicts the intent of the statute.
The NCLAT categorically stated that,
“We are of the opinion that this Adjudicating Authority… is bound by the judgment dated January 3, 2022, passed by a three-member Bench of the NCLAT which held that NCLT is not entitled to deal with matters arising under the PMLA.”