The Indian insolvency regime facilitates a market-directed time-bound insolvency resolution process. The Prevention of Money Laundering Act, 2002 (hereinafter “PMLA”) on the other hand endeavours to prevent money-laundering and connected activities. This article engages with the lacuna pertaining to the simultaneous application of IBC and PMLA Wherein the ongoing insolvency proceedings are afflicted by PMLA attachment orders over CD’s property in light of the moratorium and clean slate under section 32A being enforced. The imposition of a moratorium1 bars proceedings against the properties of a corporate debtor (“CD”).2 Alternatively, PMLA bestows power for attachment of property involved in money laundering.3 The conflict transpires in cases where during the ongoing insolvency proceedings PMLA authorities issue summons and notices for attachment of CD’s properties.4 Such orders directly contradict IBC provisions that forbid action against CD’s asset and consequently afflict the proceedings leading to prolonged litigation. The article proceeds by emphasizing that courts have defended the primacy of IBC over PMLA. Further, IBC’s provision of a clean slate and moratorium has undermined the legislative intent of PMLA and created a potential escape route for offenders. Thereafter, the article puts forth a suggestive model to be adopted within the insolvency and money laundering framework to rectify the aforementioned discrepancies. These solutions uphold the objectives of PMLA and ensure that there is no blanket precedence of IBC resolution over PMLA driven attachment of assets. These solutions are conceptualized from a cross – jurisdictional analysis of the insolvency and money laundering frameworks of USA, Canada and UK. The suggested model includes an overall structuralist approach, inter – agency co-ordination, a common database of properties ordered to be attached and proposed amendments to the SCN Notice.
