RP’s Request to Restrain ED’s Lease Collection Quashed for Suppressing Fact that ED’s had Physical Possession of Property

Case Details: KSL & Industries Ltd. v. Joint Director, Directorate of Enforcement - [2023] 152 taxmann.com 408 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• • Munishwar Nath Bhandari, Chairman & V. Anandarajan, Member
  • Milen Negi, Nikhil Jha & Kiran Shah, Adv. for the Appellant.
  • Nidhi Raman & Akash Mishra, Advs. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor i.e. ‘KSL’ was under the Corporate Insolvency Resolution Process (CIRP) and the appellant had been appointed as its Resolution Professional. The Appellant was collecting lease amounts from tenants of the corporate debtor’s Mall and incurring expenditures for its maintenance.

Also, an Interim application had been filed by the appellant seeking a restraint order on execution of a letter sent by ED to tenants for payment of the lease amount to them only.

Further, the Appellant had also submitted that section 32A gives immunity from provisions of the Prevention of Money Laundering Act 2002 to the corporate debtor and the person in control of the property of the corporate debtor.

It was noted that physical possession of property laid with ED and the appellant suppressed the said fact while moving instant application. Further, the resolution plan had not been approved by the NCLT under section 31 and, thus, section 32A had no application to seek immunity from attachment under the PMLA.

Appellate Tribunal Held

The Appellate Tribunal held that the conduct of the appellant itself was sufficient to deny interim relief and therefore, the prayer of the appellant for the grant of interim order to stay execution of ED’s letter was to be rejected.