The division bench held that the appellants could not use the IBC framework to contest an attachment order issued under the Benami Act. 

The Supreme Court on Tuesday dismissed appeals challenging attachment effected under Benami Transactions (Prohibition) Act, 1988 when moratorium under Insolvency & Bankruptcy Code (IBC) is in force.

The division bench comprising Justices P S Narasimha and Atul Chandurkar held that the appellants could not use the IBC framework to contest an attachment order issued under the Benami Act.

“We have no doubt in our mind that such invocation is not bona fide and is actually intended to circumvent and interdict the procedures contemplated under the Benami Act,” the bench said.

Furthermore, the bench said, by appealing to the NCLAT despite being informed that the Benami Act authorities, not the NCLT, held jurisdiction, the appellants have clearly abused the legal process.

The appellants have taken the precious time of the NCLT, NCLAT and also of this court when the position of law is amply clear and there was no doubt whatsoever about the availability of the statutory remedies under the Benami Act, the bench said, while dismissing appeals with exemplary costs.

The bench noted that the Benami Act and the IBC are special legislations operating within distinct yet potentially intersecting fields. The Benami Act is concerned with identifying and extinguishing benami holdings through a confiscatory mechanism, while the IBC is directed at resolution and liquidation of assets belonging to a corporate debtor within a time-bound framework.

The present controversy arises at the point where property subjected to proceedings under the Benami Act is asserted to form part of the liquidation estate under the IBC.

“The issue, therefore, is not one of abstract supremacy, but of determining whether the two enactments can be harmoniously construed, and, if not, which statutory regime must prevail in the limited sphere of conflict, the bench said while emphasising that the apparent inconsistency between the two statutory regimes requires examination.

According to Amit Maheshwari, Managing Partner at AKM Global, in another case of Senthil Papers and Boards Pvt Ltd, NCLAT had held that attachment under the Benami Act is not a debt-recovery exercise but a statutory determination regarding the nature of property.

In the context of attachments under PMLA during the moratorium period, there have been cases where it has been held from time to time that these economic offences stand at a different pedestal and more importantly, attachment is not a recovery action.

“The IBC should not become an amnesty route for the corporate debtor to discharge the civil liability owned to creditors,” he said.

Published on February 24, 2026