NCLAT: Pending PMLA Proceedings Did Not Alone Establish Section 29A Ineligibility

Published: 1 November 2026 · Source checked: 1 November 2026

Pending proceedings under the Prevention of Money Laundering Act, 2002 did not, by themselves, establish the resolution applicant's ineligibility in Suraksha Realty Ltd. v. Amit Gupta and another. NCLAT distinguished investigation from the conviction limb of Section 29A and examined the CoC's informed approval. That is not a general exemption from disclosure or the other statutory disqualifications. Judgment, paragraphs 79–96.

Order and context

The decision concerned the approval of a resolution plan. It did not adjudicate guilt under PMLA or terminate an enforcement investigation. Paragraphs 78–96 and 120–122.

Eligibility and disclosure were connected, but different questions

The appellant objected that the successful resolution applicant had answered negatively a query about criminal proceedings, investigations and inquiries despite the ED-related controversy. NCLAT therefore examined both the statutory eligibility question and what the decision-makers actually knew before approving the plan.

The distinction prevents two misleading shortcuts. An investigation is not a conviction; equally, absence of a conviction does not make every disclosure accurate or render every unresolved proceeding commercially irrelevant. The tribunal considered Section 29A alongside Regulation 39(1)(c), rather than using one to eliminate all inquiry under the other. Paragraphs 79–82 and 95–96.

The conviction-based limb was not triggered merely by investigation

NCLAT referred to the requirements of Section 29A(d), which addresses specified convictions and includes its own qualifications. It held that initiation or pendency of an inquiry, investigation or criminal proceeding alone did not establish the disqualification considered in this case.

That reasoning must remain confined to its statutory context. Section 29A contains other independent grounds of ineligibility. This article does not say that every person without a conviction is eligible, or dispense with scrutiny of connected persons and other applicable clauses. The primary statutory text was checked to preserve that distinction. Paragraphs 79–81.

The tribunal also distinguished the civil character of an attachment action from its possible criminal consequences. It did not accept a simplification under which the entire PMLA controversy became immaterial merely because attachment is a civil action. Paragraphs 78–79.

What made the CoC's decision an informed one on this record

The judgment traced a sequence of CoC deliberations. The issue was raised, further information and clarification were requested, and an eligibility report was obtained from chartered accountants Bagchi and Gupta. Consideration of the issue preceded the eventual plan approval by 78.83% voting share.

NCLAT emphasised that this was not a plan approved by a CoC unaware of the pending proceedings. It found a conscious decision following discussion of the controversy and the eligibility material. That factual history was important to its refusal to interfere. Paragraphs 82–89 and 95–96.

The article does not independently adopt every statement recorded from the resolution applicant, accountant or parties as an adjudicated fact about the ED proceedings. It reports why NCLAT considered the CoC informed for the purpose of the insolvency appeal.

Commercial wisdom did not mean complete immunity from review

The tribunal considered the limits of scrutiny of a CoC-approved plan and the statutory compliance questions available under the Code. It ultimately found no adequate ground to interfere with approval. That conclusion is different from saying that creditor approval cures any unlawful plan or false statement.

For a practitioner, the source-supported distinction is between asking the tribunal to substitute its commercial preference and demonstrating a legally sustainable defect within the permitted review. The actual disclosure history, eligibility analysis and decision record matter to that assessment. Paragraphs 97–119.

This note focuses on the PMLA/eligibility issue. It does not offer a comprehensive current-law account of every valuation, distribution or secured-creditor question raised in the lengthy appeal.

A due-diligence file drawn from the reasoning

Veritect's analysis suggests separately recording the proceeding's actual stage, the precise Section 29A clause invoked, the disclosure made, the information later supplied and the CoC's reasons for proceeding. A press release, attachment order, prosecution, conviction and appellate stay are not interchangeable legal events.

For an objector, show the connection between the alleged omission and the statutory defect relied upon. For an RP or CoC, retain the requests, clarifications and eligibility review rather than relying only on an ultimate voting percentage. Neither an unexamined allegation nor the label commercial wisdom answers those questions by itself.

Questions practitioners may ask

Does a pending ED investigation automatically establish ineligibility?

Not under the conviction-based reasoning applied in this order. Other clauses of Section 29A and other relevant facts still require examination.

Did NCLAT declare the resolution applicant innocent of all PMLA allegations?

No. The appeal concerned plan approval and eligibility. It was not a criminal trial or an order closing ED proceedings.

Can a bidder safely omit pending proceedings because there is no conviction?

That conclusion does not follow. NCLAT considered the actual disclosure controversy and the CoC's later, informed deliberation; it did not announce a general permission to conceal information.

Primary source and scope

The official NCLAT judgment of 17 September 2026, particularly paragraphs 78–96 and 120–122, was checked on 1 November 2026. This note does not certify present ED status, the absence of a later appeal or every subsequent amendment. It analyses the judgment as delivered, preserving the difference between a pending allegation and a statutory finding.