MUMBAI: An insolvency process cannot be used to free properties attached by the Enforcement Directorate (ED) under the money-laundering law, a special PMLA court has ruled while refusing to release properties of NCS Sugars Ltd that were attached in connection with the alleged ₹ 5,600-crore National Spot Exchange Ltd (NSEL) fraud case.
Sivalingam told the court that two resolution plans were being considered and that the attached properties were important for NCS Sugars’ revival. Special Judge Nitin V Jiwane on Tuesday rejected a plea by resolution professional K Sivalingam, who had sought restitution of the properties so they could be used in the company’s insolvency resolution process.
Because the company was undergoing insolvency proceedings, the court said, however, that assets attached as alleged proceeds of crime could not be released merely.
It observed that “IBC proceedings cannot be used to defeat attachment under PMLA,” citing earlier rulings including those of the Supreme Court and Delhi High Court.
The court order records that NCS Sugars received ₹ 188.06 crore from NSEL and paid back ₹ 133.15 crore. After subsequent repayments, ₹ 47.30 crore remained outstanding and was identified by the ED as proceeds of crime. It allegedly issued stock offer letters and sale invoices despite not possessing the commodities and received funds through the NSEL settlement system. The court clarified that whether the properties ultimately constitute proceeds of crime would be decided at the conclusion of the trial.
NCS Sugars participated in NSEL’s paired contracts without having the corresponding physical stock, according to the ED’s investigation.
