Delhi High Court Quashes PMLA Proceedings Against BPSL
- ByAdmin --
- 10 Feb 2025 --
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The Delhi High Court has quashed the Prevention of Money Laundering Act (PMLA) proceedings against Bhushan Power & Steel Limited (BPSL) in a ₹47,000 crore bank fraud case. The decision was based on the successful completion of the Corporate Insolvency Resolution Process (CIRP), which provided a resolution for the company’s financial issues.
The Enforcement Directorate (ED) had initiated proceedings against BPSL over allegations of money laundering linked to bank fraud. However, the High Court ruled that once a company undergoes insolvency resolution under the Insolvency and Bankruptcy Code (IBC), any criminal liabilities of the corporate entity do not survive unless explicitly stated otherwise. The resolution process, which led to JSW Steel acquiring BPSL, had been approved by the National Company Law Tribunal (NCLT), making further PMLA proceedings unnecessary.
The court's decision aligns with previous Supreme Court rulings that emphasized that once a company is resolved through insolvency proceedings, it is freed from past liabilities. The ruling strengthens the legal standing of the IBC in ensuring that companies in financial distress are revived rather than penalized indefinitely.
This judgment is significant as it clarifies the scope of PMLA in insolvency cases and reassures businesses and investors about the sanctity of the insolvency process. It also highlights the need for investigative agencies to align their actions with the legal framework governing corporate resolutions.
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