Approved Resolution Plan Frees Corporate Debtor’s Property From Earlier PMLA Attachment: Delhi High Court

The Delhi High Court held that Section 32A of the Insolvency and Bankruptcy Code releases a corporate debtor’s property from a PMLA attachment made before the resolution plan was approved.

The Delhi High Court has held that once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC) and control passes to an untainted resolution applicant, Section 32A(2) frees the corporate debtor’s property from a provisional attachment under the Prevention of Money Laundering Act, 2002 (PMLA), even if the attachment was made before the approval [Dash Exports Private Limited v. Directorate of Enforcement, 2026-juristway.com-3397-HC(Delhi)-IBC].

Justice Navin Chawla wrote the judgment for a Bench with Justice Arun Bhardwaj in an appeal under Section 42 of the PMLA. The committee of creditors approved Asteroid Shelter Homes Private Limited’s resolution plan in November 2020, and the National Company Law Tribunal (NCLT) reserved orders on 26 Mar 2021. Before it pronounced approval on 29 Sep 2021, the Directorate of Enforcement (ED) provisionally attached the company’s land on 25 Aug 2021. The Appellate Tribunal under SAFEMA upheld the attachment on 12 Aug 2025.

Section 32A, in force from 28 Dec 2019, ends the corporate debtor’s liability for offences committed before insolvency and bars action against its property, including attachment, once an approved plan changes control to a person who is not a promoter, related party or suspected abettor.

The ED argued that Section 32A protects only against attachments made after approval and cannot retrospectively nullify a lawful earlier attachment. The Appellate Tribunal had also held that relief must await a finding of the Special Court on the exceptions.

Relying on Manish Kumar v. Union of India (2021), the Court held that the distinction drawn by the ED “finds no support either in the plain language of Section 32A of the IBC” or in that judgment. The trigger is approval of the plan; the new owner must get the property free from all encumbrances, including a PMLA attachment, or the object of Section 32A would be defeated. This reading, the Court said, does not operate retrospectively but releases the property prospectively.

Since the ED never alleged that Asteroid fell within any exception, no finding of the Special Court was needed. The Tribunal’s order was set aside, and the ED was directed to release, within two weeks, the fixed deposit of ₹3.01 crore placed in lieu of the attached land.

2026-juristway.com-3397-HC(Delhi)-IBC