The National Company Law Tribunal (NCLT) recalled the Corporate Insolvency Resolution Process (CIRP) initiated against Alchemist Limited on 3 February 2026 after the Directorate of Enforcement (ED) intervened in the proceedings. The ED demonstrated that the insolvency process was allegedly being misused to shield proceeds of crime, prompting the Tribunal to set aside its earlier order admitting the company into CIRP under the Insolvency and Bankruptcy Code, 2016 (IBC).
Background
The intersection of the Insolvency and Bankruptcy Code, 2016 and the Prevention of Money Laundering Act, 2002 (PMLA) has been a contested area of law. While the IBC provides a time-bound resolution mechanism for financially distressed companies, the PMLA empowers the Enforcement Directorate to attach, seize, and confiscate property involved in money laundering. Conflicts arise when assets subject to ED proceedings simultaneously become part of an insolvency resolution process.
Alchemist Limited was admitted into CIRP on 3 February 2026 pursuant to an application filed under the IBC. Following the admission, the Directorate of Enforcement sought to intervene, contending that the corporate insolvency process was being instrumentalised to frustrate ongoing money laundering proceedings and to place tainted assets beyond the reach of the PMLA enforcement machinery.
The Supreme Court has previously observed in several cases that the IBC and PMLA operate in different domains — corporate resolution and criminal law enforcement respectively — and that the objectives of one statute cannot be permitted to defeat the purposes of the other. However, the precise circumstances under which an insolvency process may be recalled on money laundering grounds have not been comprehensively settled.
Key Holdings
The NCLT's order establishes the following:
CIRP recalled: The Tribunal recalled its earlier order admitting Alchemist Limited into CIRP, effectively terminating the insolvency resolution process.
ED's intervention upheld: The Tribunal accepted the Enforcement Directorate's submission that the CIRP was being misused to shield assets that constitute proceeds of crime under the PMLA.
IBC not a laundering vehicle: The order affirms the principle that the insolvency resolution framework under the IBC cannot be deployed as a mechanism to launder or protect proceeds of crime from enforcement action.
Tribunal's recall jurisdiction: By exercising its power to recall the admission order, the NCLT has demonstrated that the initiation of CIRP is not irreversible where supervening circumstances — such as evidence of criminal misuse — come to light after admission.
Implications for Practitioners
This order carries significant implications for the interplay between insolvency and money laundering proceedings. Insolvency professionals appointed in CIRP matters should be alert to the possibility of ED intervention, particularly in cases involving companies with a history of enforcement action or investigation.
Resolution applicants and members of the Committee of Creditors should factor in the risk that a CIRP may be recalled if the ED establishes that the corporate debtor's assets are tainted. Due diligence on the criminal and enforcement history of the corporate debtor assumes heightened importance in light of this order.
For defence counsel representing companies facing parallel IBC and PMLA proceedings, the Alchemist order narrows the scope for using insolvency as a procedural shield. Practitioners must anticipate ED objections at the admission stage itself and advise clients accordingly.
The order also raises the broader question of whether NCLT benches should conduct a preliminary PMLA screening before admitting companies into CIRP, particularly where the ED has active proceedings. This procedural safeguard, if adopted, could prevent the administrative costs and disruption of initiating and then recalling a CIRP.