The Delhi High Court has held that the Prevention of Money Laundering Act (PMLA) prevails over the Bankruptcy Act and insolvency code when it comes to attachment of properties obtained as “proceeds of crime”.
This order came after the appeal was made by The Enforcement Directorate (ED) against the orders of PMLA appellate tribunal on the pleas of various banks.
The tribunal had held that third parties, banks in this case, which have legitimately created rights such as a charge, lien or other encumbrances, have a superior claim over such properties.
The Delhi High Court has set aside the verdict of the PMLA tribunal and held that the objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and IBC.
Delhi High Court has stated that by the virtue of Section
71, PMLA has the overriding effect over other existing laws in the matter of
dealing with money-laundering and proceeds of crime.