New Delhi, February 6: The Enforcement Directorate (ED) has secured a significant victory in the Alchemist Group case. The National Company Law Tribunal (NCLT) has completely revoked the ongoing Corporate Insolvency Resolution Process (CIRP) against Alchemist Limited in its order dated February 3. The tribunal found that the process was initiated with fraudulent intent and conspiracy.
The ED’s investigation revealed that companies within the Alchemist Group, such as Alchemist Holdings Limited and Alchemist Township India Limited, raised over ₹1,840 crores from investors under the pretext of offering high returns, plots, villas, or flats. However, investors received neither the promised properties nor their money back. Instead, these funds were diverted as inter-corporate deposits (ICDs) to other companies in the group, particularly Alchemist Limited. Since 2021, the ED has filed prosecution complaints and seized assets worth ₹492.72 crores.
The CIRP was initiated by Sai Tech Medicare Private Limited under Section 9 of the Insolvency and Bankruptcy Code (IBC). However, companies from the Alchemist Group dominated the committee of creditors, with Technology Parks Limited holding 97% of the voting rights. Other group companies, including Alchemist Township India Limited and Alchemist Realty Limited, were also implicated in the ED’s investigation. The ED presented evidence to the tribunal that the bankruptcy process was being misused to release seized assets and gain exemptions under Section 32A of the IBC. Furthermore, the appointment of Gaurav Mishra, a former employee of the group, as the resolution professional raised questions about impartiality. The ED was not timely included as a party, indicating bad faith.
The NCLT upheld the ED’s arguments, stating that the IBC is a beneficial law aimed at resolving genuine insolvency, not for laundering proceeds of crime or obstructing proceedings under the Prevention of Money Laundering Act (PMLA). The misuse of the IBC to facilitate money laundering cannot be tolerated. The independence of the committee of creditors had been compromised by the control of group companies. Continuing the CIRP would legitimize the proceeds of crime and undermine the seizure. The tribunal exercised its powers under Section 65 of the IBC and deemed the process fraudulent.
In its order, the CIRP was revoked, the stay under Section 14 was lifted, and the appointment of the resolution professional and all his actions were annulled. An operational creditor, Sai Tech Medicare, was also fined ₹5 lakhs. This decision clarifies that the IBC and PMLA are distinct laws that can operate concurrently, but one law cannot be misused to undermine the other. This will help protect investors’ interests and curb criminal activities.