The Delhi High Court has ruled that a moratorium under the Insolvency and Bankruptcy Code (IBC) will not prevent the attachment of properties of a corporate debtor under the Prevention of Money Laundering Act (PMLA). This means that even if a company is under a moratorium (a period of protection from creditors) during the insolvency process, its assets can still be seized by authorities if they are suspected to be involved in money laundering activities.

The case that prompted this ruling involved a company that had been declared a "willful defaulter" by a public sector bank and was subsequently placed under a moratorium under the IBC. The Enforcement Directorate (ED), which is responsible for enforcing the PMLA, had attached the company's properties in an effort to recover money that had been laundered. The company argued that the moratorium under the IBC should have prevented the attachment of its properties, but the court rejected this argument.

The court held that the purpose of the PMLA is to prevent money laundering and to recover the proceeds of crime, and that this purpose is distinct from the purpose of the IBC, which is to provide a framework for the resolution of corporate insolvency. As a result, the court ruled that the attachment of the company's properties under the PMLA was not affected by the moratorium under the IBC.

This ruling by the Delhi High Court is significant because it clarifies the relationship between the IBC and PMLA and how they interact with each other. The IBC is a law that provides a framework for resolving insolvency and bankruptcy cases in India, while the PMLA is a law that aims to prevent money laundering and the financing of terrorism. It confirms that the moratorium under the IBC does not provide complete protection for the assets of a corporate debtor. It also highlights the importance of the ED's role in enforcing the PMLA and recovering the proceeds of crime.

Previously, there was some uncertainty about whether a moratorium under the IBC would also protect a company's assets from being attached under the PMLA. The court's ruling makes it clear that the two laws operate independently of each other, and that a moratorium under the IBC does not provide any protection for a company's assets in cases where they are suspected of being involved in money laundering activities.

This decision also has implications for the Insolvency and Bankruptcy Board of India (IBBI), which is the regulator for the IBC, and the Enforcement Directorate (ED), which is responsible for enforcing the PMLA. It means that the IBBI and the ED will have to coordinate their efforts in order to ensure that the interests of all stakeholders are protected and that the insolvency process is not hindered by the attachment of assets under the PMLA.

In summary, the Delhi High Court ruled that a moratorium under the Insolvency and Bankruptcy Code (IBC) will not prevent the attachment of properties of a corporate debtor under the Prevention of Money Laundering Act (PMLA). This means that even if a company is under a moratorium (a period of protection from creditors) during the insolvency process, its assets can still be seized by authorities if they are suspected to be involved in money laundering activities.