### NCLT Lacks Jurisdiction to Challenge Benami Property Attachment Orders or Sovereign Forfeiture Actions The Supreme Court of India held that the National Company Law Tribunal (NCLT) does not have the jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) to adjudicate challenges against attachment orders passed under the Prohibition of Benami Property Transactions Act, 1988 (Benami Act). The Court clarified that while the IBC is an exhaustive code for insolvency, it cannot override sovereign penal actions or determinations of title under public law. Furthermore, the moratorium under Section 14 of the IBC applies to creditor recovery actions but does not interdict proceedings for the confiscation of "tainted" assets held in a benami capacity, as such properties do not form part of the liquidation estate. Aggrieved parties, including liquidators, must exhaust the specialized appellate remedies provided under the Benami Act.

The Appellant-Liquidators challenged provisional attachment orders issued by authorities under the Prohibition of Benami Property Transactions Act, 1988 ("Benami Act").

Investigations revealed that promoters of the corporate debtor (M/s Padmaadevi Sugars Ltd.) had transferred 100% shareholding to a beneficial owner, V.K. Sasikala, via an intermediary for ₹450 Crores in demonetized currency.

While the Corporate Insolvency Resolution Process (CIRP) and subsequent liquidation were ongoing under the Insolvency and Bankruptcy Code, 2016 ("IBC"), the Benami authorities attached the company's assets, alleging it was a 'benamidar'.

The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) concurrently held that they lacked jurisdiction to adjudicate challenges against the Benami Act proceedings, prompting this appeal.

1. Whether the legality and validity of an order of attachment under the Benami Act can be challenged before the statutory tribunals (NCLT/NCLAT) under the IBC.

2. Whether the moratorium under Section 14 of the IBC or the immunity under Section 32A extends to sovereign actions initiated for the confiscation of "tainted" benami property.

The Court applied the principle that the Benami Act is a "self-contained code" and a special legislation governing the identification and confiscation of benami property.

It relied on Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, which held that NCLT's jurisdiction under Section 60(5)(c) of the IBC does not extend to disputes arising dehors the insolvency, specifically those in the public law domain.

The Court further applied the doctrine from Embassy Property Developments (P) Ltd. v. State of Karnataka, asserting that NCLT cannot exercise judicial review over sovereign administrative actions.

Section 36(4)(a)(i) of the IBC was applied to exclude assets held in trust or fiduciary capacity (benami holdings) from the "liquidation estate".

The Court reasoned that the Benami Act and the IBC operate in distinct spheres; while the IBC manages insolvency resolution of lawfully owned assets, the Benami Act is a sovereign penal exercise aimed at extinguishing illegal titles.

The Court determined that Section 60(5) of the IBC does not empower the NCLT to act as an appellate forum for the Benami Act because the determination of whether a property is "benami" is a matter of public law, not a transaction-linked dispute "arising out of" insolvency.

Furthermore, the Court observed that a benamidar lacks beneficial interest; thus, such property cannot be included in the "liquidation estate" under Section 36 of the IBC.

It rejected the Section 14 moratorium claim, clarifying that the moratorium protects against "creditor actions" for debt recovery, not "sovereign actions" against criminal proceeds or "tainted assets".

The Court held that orders passed under the Benami Act cannot be questioned before IBC authorities; the remedy lies exclusively before the competent forums under the Benami Act.

The Court affirmed that the IBC cannot be used to circumvent public law procedures or "shield" tainted assets from confiscation.

Due to the abuse of process in pursuing a "clearly settled" legal position through multiple forums, the Court imposed exemplary costs of ₹5 lakhs per appeal.