# In the matter of Welspun Steel Resources Private Limited R/SPECIAL CIVIL APPLICATION NO. 19387 of 2022

> HC judgment dated 2023-02-17. Citation: TCN-2023-HC-00081. The case involves a challenge to a provisional attachment order issued by the Directorate of…

- **Court:** HC
- **Order date:** 17 Feb 2023
- **Citation:** TCN-2023-HC-00081
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/welspun-steel-resources-private-limited-rspecial-civil-application-no-19387-of-2-ea903269

## Summary

### Background

The case involves a challenge to a provisional attachment order issued by the Directorate of Enforcement (Respondent No. 1) against assets acquired by the Petitioners. ABG Shipyard Limited (the corporate debtor) was undergoing liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC). The Petitioners were successful bidders for specified assets of ABG Shipyard in a sale process conducted under the orders of the Apex Court. After the Petitioners paid the entire sale consideration, the Directorate of Enforcement attached the assets, alleging that the loans raised by ABG Shipyard were transferred to group companies and used for purposes other than intended, leading to circular transactions and overseas investments. The Petitioners contend that the attachment is

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## Facts

ABG Shipyard Limited, the corporate debtor, was in the business of ship building in Dahej, Gujarat. ICICI Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the Corporate Debtor, which was admitted by the National Company Law Tribunal, Ahmedabad (NCLT). An Interim Resolution Professional (IRP) was appointed and later confirmed as RP. The Corporate Insolvency Resolution Process (CIRP) was unsuccessful, and the corporate debtor was ordered to be liquidated on 2019-04-25. The NCLT passed an order on 2021-08-16 permitting the liquidator to complete the sale of assets. The liquidator issued a bid document for the sale of specified assets of ABG Shipyard on 2021-08-24. The petitioners submitted their expression of interest on

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## Issues and analysis

### Issue 1: Whether the assets acquired by the petitioners through a liquidation process under the IBC can be …

**Ratio:** The legal principle is that 'proceeds of crime' must be derived or obtained directly or

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**Reasoning:** The court reasoned that the only allegation was that the corporate debtor used credit

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**Interpretation:** The court interpreted Section 2(1)(u) of the PMLA to require a direct nexus

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**Application:** The court applied the principle to the facts by noting that the petitioners

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## Parties

- **Judges:** BIREN VAI…
- **Appellants:** Welspun Steel…
- **Respondents:** ABG Shipyard…; Union of…
- **Other parties:** Kohi…

## Timeline

- **2016-01-01 — IBC Enac…**: The Insolvency and…
- **2019-04-25 — Liquidation…**: The NCLT ordered the corporate debtor,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 2(1) — Application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-2)

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