NCLT, NCLAT can't review PMLA decision

The National Company Law Tribunal (NCLT) and its appellate body, the National Company Law Appellate Tribunal, do not have the powers of judicial review of the Prevention of Money Laundering Act (PMLA), 2002, the Supreme Court observed in its judgment on Bhushan Power and Steel Ltd (BPSL) on May 2.

- ISHITA AYAN DUTT & BHAVINI MISHRA

While rejecting JSW Steel's (henceforth JSW) resolution plan for BPSL and directing its liquidation—four years after its (BPSL's) acquisition under the Insolvency and Bankruptcy Code (IBC)—the court held that as the PMLA was a public law (law governing relations between individual and government and its arms), the National Company Law Appellate Tribunal (NCLAT) did not have the powers or jurisdiction to review the decision of the statutory authority under the PMLA.

The NCLT and NCLAT are constituted under Sections 408 and 410 of the Companies Act, 2013, and not under the IBC, noted the court.

How it unfolded The reference to the PMLA in the BPSL matter cropped up after the Enforcement Directorate (ED) issued a provisional attachment order (PAO) of BPSL's assets, valued at ₹4,025.23 crore, in October 2019 for alleged violation by its erstwhile promoters under the PMLA. It came a month after the NCLT approved JSW's resolution plan.

JSW had challenged the powers of the ED to pass the PAO by appealing to the NCLAT. The appellate tribunal in an order dated October 14, 2019, stayed the PAO.

The Supreme Court noted that a couple of months later Section 32A came to be inserted into the IBC with effect from December 12, 2019.