Insolvency and Bankruptcy Code, 2016 — Section 60(5) — Jurisdiction of NCLT — Challenge to attachment under Prohibition of Benami Property Transactions Act, 1988 — Maintainability. (Paras 16, 20–20.8, 26) The question was whether provisional attachment and confirmation orders passed under the Prohibition of Benami Property Transactions Act, 1988 (“Benami Act”) could be assailed before the NCLT/NCLAT by invoking Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The Court held that the Benami Act is a complete and self-contained code with its own adjudicatory and appellate hierarchy. The NCLT, being a creature of statute under IBC, cannot sit in appeal over attachment or confiscation proceedings undertaken under a distinct public law enactment. Section 60(5) does not extend to reviewing sovereign actions undertaken under penal statutes. Permitting such adjudication would amount to elevating NCLT into a judicial review forum over statutory authorities under the Benami Act, which is impermissible. Ratio Decidendi: Orders of attachment and confiscation under the Benami Act cannot be challenged before NCLT/NCLAT under IBC; the exclusive remedy lies within the statutory framework of the Benami Act.

Insolvency and Bankruptcy Code, 2016 — Section 60(5) — Jurisdiction of NCLT — Challenge to attachment under Prohibition of Benami Property Transactions Act, 1988 — Maintainability. (Paras 16, 20–20.8, 26)

The question was whether provisional attachment and confirmation orders passed under the Prohibition of Benami Property Transactions Act, 1988 (“Benami Act”) could be assailed before the NCLT/NCLAT by invoking Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The Court held that the Benami Act is a complete and self-contained code with its own adjudicatory and appellate hierarchy. The NCLT, being a creature of statute under IBC, cannot sit in appeal over attachment or confiscation proceedings undertaken under a distinct public law enactment.

Section 60(5) does not extend to reviewing sovereign actions undertaken under penal statutes. Permitting such adjudication would amount to elevating NCLT into a judicial review forum over statutory authorities under the Benami Act, which is impermissible.

Ratio Decidendi: Orders of attachment and confiscation under the Benami Act cannot be challenged before NCLT/NCLAT under IBC; the exclusive remedy lies within the statutory framework of the Benami Act.

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Benami Act — Nature of proceedings — Sovereign, in rem, penal character — Vesting under Section 27. (Paras 17–17.6, 20.6–20.8)

The Benami Act, especially post-amendment, provides a structured mechanism: notice (Section 24), adjudication (Section 26), confiscation and vesting (Section 27), and appellate remedies (Sections 46–49).

Confiscation results in vesting of property in the Central Government free from encumbrances. Proceedings are in rem and operate in the public law domain, distinct from inter se civil disputes or debt recovery.

Ratio Decidendi: Attachment and confiscation under the Benami Act are sovereign statutory actions in rem, and once property vests under Section 27, it stands outside the insolvency estate and beyond IBC jurisdiction.

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IBC — Section 36 — Liquidation estate — Beneficial ownership — Exclusion of benami property. (Paras 21–22)

Under Section 36, only assets beneficially owned by the corporate debtor form part of the liquidation estate. Property held benami is held in a fiduciary or representative capacity; beneficial ownership lies with the real owner.

Section 36(4)(a)(i) excludes assets held in trust for third parties. Once the Benami Adjudicating Authority determines that the corporate debtor is a benamidar, beneficial ownership is negated.

Ratio Decidendi: Property determined to be held benami does not form part of the liquidation estate under Section 36 of the IBC and cannot be distributed among creditors.

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IBC — Section 14 (Moratorium) — Scope — Applicability to sovereign proceedings. (Paras 13.2, 24)

The moratorium under Section 14 protects the corporate debtor from creditor enforcement actions. It does not bar sovereign proceedings undertaken in public interest for confiscation of tainted property under penal statutes.

Benami proceedings are not debt recovery proceedings but statutory forfeiture actions.

Ratio Decidendi: Section 14 moratorium does not interdict attachment or confiscation proceedings initiated under the Benami Act.

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IBC — Section 32A — Limited immunity — Event-based operation. (Para 23)

Section 32A operates only upon approval of a resolution plan or completion of liquidation sale to an unconnected third party. It does not cure defective title or legitimise benami property.

Ratio Decidendi: Section 32A does not prevent attachment or confiscation of benami property unless statutory conditions are fulfilled; it does not override independent findings under the Benami Act.

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Conflict between Special Statutes — Harmonious construction — Dominant purpose test. (Paras 19–20.5)

Both the IBC and the Benami Act are special enactments. The Court applied principles governing conflicts between special statutes, emphasising harmonious construction and dominant purpose.

IBC governs insolvency resolution of lawfully owned assets. The Benami Act governs identification and confiscation of illegally held property. Each statute operates in its own field.

Ratio Decidendi: Where property is subject to sovereign confiscatory proceedings under the Benami Act, the IBC cannot be invoked to override or bypass the statutory mechanism; both statutes must operate within their respective spheres.

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Disposition

1. Appeals dismissed.

2. Costs of ₹5 lakhs imposed in each appeal.

3. Amount to be deposited with the Supreme Court Advocates on Record Association within four weeks