Critically analyse role of NCLAT/NCLT vis-à-vis specialised statutes like PMLA.

Q. Critically analyse role of NCLAT/NCLT vis-à-vis specialised statutes like PMLA. (15 marks, 250-350 words)

The NCLT and NCLAT are the adjudicating and appellate authorities under the Insolvency and Bankruptcy Code, 2016, mandated to resolve stressed assets and maximise creditor value. Their overlap with penal statutes like the PMLA, 2002 raises a core question: how far may a commercial tribunal travel into public law? Recent rulings have settled this boundary largely against the tribunals.

Mandate and jurisdictional reach - NCLT admits insolvency and declares a moratorium under Section 14, staying suits, recovery and alienation of the debtor's assets [1]. - Section 32A (2020 amendment) grants "clean slate" immunity to the corporate debtor and its assets once a resolution plan brings a change of management — but not to erstwhile promoters [1]. - NCLAT sits in appeal over NCLT; further appeal lies to the Supreme Court.

Friction with the PMLA - Section 5, PMLA empowers the Enforcement Directorate to provisionally attach proceeds of crime [2]; courts treat this as a penal action, not debt recovery, hence outside the Section 14 bar. - In Kalyani Transco v. Bhushan Power & Steel (2025) the Supreme Court held PMLA to be public law and found NCLAT had exceeded jurisdiction in reviewing ED action [3]. - NCLAT's Principal Bench (June 2026, Siddhi Vinayak Logistics) reiterated that the IBC is not a "holy Ganges" washing away criminality, upholding attachment made before CIRP admission [4].

Merits of this position - Preserves separation of commercial and penal regimes; blocks insolvency as an escape route for economic offenders. - Section 32A still shields bona fide resolution applicants, keeping promoters answerable.

Limitations - Attached assets shrink the resolution pool, depressing bids and creditor realisation. - No statutory mechanism sequences ED attachment against the CIRP timeline; RP–ED coordination remains informal. - Multiplicity of fora (NCLAT, PMLA Appellate Tribunal, High Courts) prolongs litigation.

Tribunals are specialised commercial fora, not courts of general jurisdiction, so deference to the PMLA is jurisdictionally sound. The way forward lies in a statutory ED–Resolution Professional coordination protocol and time-bound adjudication of attachments during CIRP, so that value maximisation under the IBC and India's anti-money-laundering commitments reinforce, rather than obstruct, each other.

(~330 words)

Sources: 1. The Insolvency and Bankruptcy Code, 2016 (updated) — IBBI — Section 14 moratorium; Section 32A immunity and its exclusion of erstwhile promoters 2. The Prevention of Money-Laundering Act, 2002 — India Code — Section 5 provisional attachment of proceeds of crime by the ED 3. Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC 621 — Supreme Court of India — PMLA as public law; NCLAT lacking jurisdiction to review ED action 4. NCLAT, Principal Bench order in Siddhi Vinayak Logistics Ltd. (30 June 2026) — IBC moratorium does not bar PMLA attachment