Aditi Anup, OP Jindal Global University
In recent years, a persistent source of debate and conflict has arisen from the interplay between three key statutes: the Prevention of Money Laundering Act (PMLA), the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), and the Insolvency and Bankruptcy Code (IBC). The crux of the issue lies in situations where the provisions of these Acts collide, leading to a fundamental question of which Act should take precedence. The IBC offers a framework resolving insolvency case and recovery debts from financially troubled corporations, while SARFESI Act’s objective is to expedite the recovery of non-performing assets by banks and financial institutions. On the other hand PMLA was enacted with the aim of penalizing money laundering offenders and outlining procedures for confiscating property acquired through illicit funds. Even though each of these statutes have distinct legislative purposes, they tend to intersect if parallel proceedings under any of these legislations are invoked against a person1. Conflicting judgements regarding the hierarchy of these statutes have emerged. In numerous cases, PMLA was deemed subordinate to the IBC and SARFAESI Act, but there are instances where the IBC and SARFAESI Act were given precedence over the PMLA. In this paper, the authors aim to delve into the longstanding debate by analyzing relevant judgments and the judicial approach up to this point.2 The author instead of proposing a hierarchy for these statutes, advocates for a balanced approach. This implies that, wherever possible, the provisions of the statutes should be interpreted in harmony, and if no conflicts exist, all the Acts should operate concurrently. This is also evident in the recent judgements where the courts have emphasised on a balanced approach where all three Acts are applicable, highlighting the importance of harmonizing their interpretations.
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