Rejecting the plea for dissolution of Shakti Bhog Snacks, which is below the lens of the Enforcement Directorate (ED) with a particular PMLA Courtroom taking cognisance of the criticism filed by the probe company, NCLT mentioned it “would quantity to judicial overreach”.
This may also “impair the ED's skill to finish its investigation, pursue trial, and recuperate proceeds of crime,” mentioned NCLT whereas dismissing the plea of the Decision Skilled of Shakti Bhog Snacks.
A two-member NCLT bench additional mentioned the Supreme Courtroom has already held that NCLT and the appellate tribunal NCLAT would not have jurisdiction to intrude with proceedings or orders handed below the PMLA, together with attachment orders or prison prosecution.
“In view of the foregoing, we're of the thought-about opinion that allowing dissolution regardless of the pendency of the Particular Courtroom's cognizance over the Company Debtor would quantity to judicial overreach and would impair the ED's skill to finish its investigation, pursue trial, and recuperate proceeds of crime,” mentioned a 14-page-long order by NCLT.
NCLT can't assume jurisdiction in a way that may render Shakti Bhog Snacks unavailable for prison legal responsibility, significantly when it stands named as an accused, and property, nonetheless meagre, are below attachment.”It isn't the quantum however the character of the proceedings that's determinative,” mentioned the NCLT bench comprising Members Sanjeev Ranjan and B V Balram Das.Shakti Bhog Snacks Ltd (SBSL) is the group firm of Shakti Bhog Meals Ltd (SBFL), which was as soon as a frontrunner within the wheat flour phase.
Insolvency proceedings in opposition to SBSL had been initiated by NCLT in January 2023 after default was established by certainly one of its operational collectors. It additionally appointed an interim decision skilled, who additionally shaped the Committee of Collectors (CoC) as per the provisions of the IBC.
Nonetheless, RP couldn't get management of SBSL's bodily property and data because it was sealed by the Enforcement Directorate. Furthermore, the corporate was not in operation. No particular person was out there, and its land and constructing located at Noida had been already offered by the State Financial institution of India below the SARFAESI Act.
Furthermore, in CoC, SBI was the only real member, and it couldn't even liquidate SBSL as a result of absence of property, data, operations, and personnel. The CoC really helpful dissolution of SBSL as an alternative of liquidation and the RP approached NCLT, submitting plea below Part 54 of the IBC for dissolution.
NCLT on August 20, 2024, issued discover to the Registrar of Corporations, Revenue Tax Division and others. After that, ED filed its reply earlier than NCLT, opposing the dissolution of Shakti Bhog Meals, in view of the continuing proceedings below the Prevention of Cash Laundering Act, 2002 (PMLA).
ED submitted that SBFL defaulted in repaying its mortgage obligations, and its account was categorized as NPA and complete excellent dues to the consortium of banks stand at roughly Rs 3,269.42 crores as on 31.03.2020.
ED submitted earlier than NCLT that investigation revealed that Shakti Bhog Snacks, together with Shakti Bhog Meals was concerned within the actions associated to cash laundering.
SBSL acquired and possessed proceeds of crime to the tune of Rs 97.87 crore from six group entities of SBFL, the probe company submitted earlier than the insolvency tribunal. It transferred Rs 127.81 crore to those six group entities from FY'08 to FY'15 within the guise of funding and sale-purchase.
The identify of Shakti Bhog Snacks was utilized by Shakti Bhog Meals to rotate its mortgage funds in opposition to bogus invoices. The corporate layered and siphoned off the proceeds of crime obtained from Shakti Bhog Meals and additional transferred them to the administrators/promoters and their family members.
“The ED additional submitted that SBSL carried out these transactions with none precise motion of products. The group corporations of SBFL concerned in these transactions had been shell entities, and no real enterprise actions had been carried out therein,” mentioned NCLT order whereas recording ED's submission.
These transactions had been carried out to inflate the financials of SBFL in order that extra credit score amenities might be availed from banks,” it mentioned.
Consenting to it, NCLT mentioned: “Dissolution below Part 54 of the IBC leads to the Company Debtor ceasing to exist as a authorized entity. Such a consequence would inevitably frustrate the continuing prison prosecution below the PMLA and defeat the authority and jurisdiction of the Ld. Particular Courtroom, which is statutorily vested with the facility to attempt offences below the PMLA and adjudicate upon associated attachments and confiscation proceedings,” it mentioned.
