Delhi High Court Releases PMLA-Attached Asset After IBC Resolution Plan Approval

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 07.11.2026

Delhi High Court Releases PMLA-Attached Asset After IBC Resolution Plan Approval

The Delhi High Court has held that a property attached under the Prevention of Money Laundering Act, 2002 (PMLA) cannot remain under attachment once a qualifying resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC) and Section 32A’s conditions are met.

The ruling at a glance

In Dash Exports Private Limited v. Directorate of Enforcement, the Court set aside the PMLA Appellate Tribunal’s decision and directed the release of property attached by the Enforcement Directorate (ED). It also ordered the return of a Rs. 3.01 crore fixed deposit furnished by the successful resolution applicant.

The central holding is significant: Section 32A(2) protects corporate-debtor property from attachment, seizure, retention, or confiscation for pre-CIRP offences after approval of a qualifying resolution plan. This protection applies even where the PMLA attachment was imposed before the plan was approved.

Background: insolvency resolution and a subsequent PMLA attachment

Dash Exports Private Limited entered the corporate insolvency resolution process (CIRP) on 26 February 2020. Asteroid Shelter Homes Private Limited submitted a resolution plan that received 99.22% approval from the Committee of Creditors on 27 November 2020.

Before the National Company Law Tribunal (NCLT) could pronounce its order on the plan, the ED issued a provisional attachment order on 25 August 2021 over a property in Gautam Buddh Nagar, Uttar Pradesh. The NCLT later approved Asteroid’s resolution plan on 29 September 2021.

The attachment was confirmed in May 2022. In earlier proceedings, the Delhi High Court allowed the parties to challenge the attachment before the PMLA Appellate Tribunal and required a fixed deposit of Rs. 3.01 crore, representing the ED’s attributed value of the property. The Tribunal, however, dismissed the appeal, holding that Section 32A did not displace an attachment made before plan approval.

What Section 32A protects

Section 32A was introduced to give a bona fide successful resolution applicant a clean break from offences allegedly committed by the former management before CIRP began.

For the statutory protection to apply, the resolution plan must:

• be approved by the NCLT under Section 31 of the IBC;
• result in a change in management or control of the corporate debtor; and
• transfer control to a person who is not a former promoter, part of the earlier management or control, a related party, or a person against whom the investigating authority has material and has filed a report or complaint alleging abetment or conspiracy.

Where those conditions are satisfied, Section 32A(1) ends the corporate debtor’s liability for pre-CIRP offences. Section 32A(2) separately prevents action against the corporate debtor’s property in relation to such offences. The provision expressly includes attachment, seizure, retention, and confiscation within the meaning of prohibited action.

Importantly, the immunity does not protect the individuals responsible for the alleged wrongdoing. Former promoters, officers, persons in charge of the business, and others directly or indirectly involved in the offence may still be investigated, prosecuted, and punished.

Court rejects the timing-based distinction

The ED argued that Section 32A could protect only against attachments imposed after approval of a resolution plan. The Tribunal accepted this position.

The High Court rejected it. It found no support in either the wording of Section 32A or the Supreme Court’s decision in Manish Kumar v. Union of India. The relevant statutory trigger is approval of the resolution plan, not the date on which an attachment order was made.

Once an approved plan transfers control to an eligible, unconnected resolution applicant, the acquirer must receive the corporate debtor’s property free of encumbrances, including a PMLA attachment. A contrary interpretation, the Court held, would defeat Section 32A’s purpose: ensuring that viable businesses can be acquired and revived without unknown or historic liabilities depressing value or deterring bidders.

No retrospective invalidation, but a prospective release

The judgment draws an important distinction. It does not say that a PMLA attachment was unlawful when initially imposed. Rather, it holds that after the statutory conditions under Section 32A are fulfilled, the attachment can no longer continue against the corporate debtor’s property.

In other words, Section 32A operates prospectively from the approval of the qualifying plan. The attachment ceases to subsist from that point onward.

This approach reconciles the IBC and the PMLA. The PMLA continues to permit investigation and action against the persons allegedly responsible for money laundering. At the same time, the IBC’s later and specific protection ensures that a legitimate resolution applicant does not inherit the consequences of the previous management’s alleged misconduct.

Why the Court granted relief to Dash Exports

The ED did not contend that Asteroid was linked to Dash Exports’ former management, was a related party, or had abetted or conspired in the alleged offence. Nor did it dispute that the property was covered by the approved resolution plan or that the plan brought about a change in control.

Because the conditions for Section 32A protection were undisputed, the Court held that the Tribunal could not insist on a separate finding by the Special Court. Such a finding would be required only if the ED had actually alleged that the new management fell within one of Section 32A’s exceptions.

The Court therefore:

• set aside the PMLA Appellate Tribunal’s order;
• held that the provisional attachment could no longer continue against Dash Exports’ property; and
• directed release of the Rs. 3.01 crore fixed deposit to the appellant within two weeks.

Business and insolvency implications

The decision strengthens certainty for resolution applicants, lenders, and insolvency professionals. It confirms that a successful bidder meeting Section 32A’s safeguards should obtain the corporate debtor and its covered assets on a clean slate after plan approval.

The practical implications include:

• Greater bidder confidence: Potential acquirers can assess the target without assuming that pre-CIRP criminal allegations will permanently burden its assets.
• Improved asset value: Removing continuing enforcement uncertainty can support more competitive resolution-plan valuations and creditor recoveries.
• Clearer enforcement boundary: Investigative agencies retain the power to pursue alleged wrongdoers, but cannot continue action against protected corporate-debtor property after a qualifying plan is approved.
• Focus on eligibility evidence: The key dispute in future cases will likely be whether the incoming management is genuinely unconnected and whether the statutory exceptions apply.

The ruling reinforces Section 32A as the decisive protection at the point of plan approval: it preserves accountability for past wrongdoers while allowing a bona fide new owner to revive the business and use its assets free from historic PMLA attachments.

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Source: Delhi High Court

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi