2026 INSC 187 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7140 of 2022

S. RAJENDRAN ….APPELLANT(S)

VERSUS

THE DEPUTY COMMISSIONER OF

INCOME TAX (BENAMI PROHIBITION) & ORS.….RESPONDENT(S)

WITH

CIVIL APPEAL NO. 6971 OF 2025

WITH

CIVIL APPEAL NO. 6661 OF 2023

WITH

CIVIL APPEAL NO. 6662 OF 20 23

J U D G M E N T

1. The present batch of appeals arises out of the impugned judgments

and orders dated 18.08.2022 and 13.03.2023 passed by the National

Company Law Appellate Tribunal, Chennai bench (hereinafter referred to

as “NCLAT”). By the said impugned orders, the NCLAT declined to

interfere with the decision of the National Company Law Tribunal

(hereinafter referred to as “NCLT”) and refused to adjudicate the

appellant- liquidators' applications challenging the provisional attachment

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orders passed by the authorities under the Prohibition of Benami Property

Transactions Act, 1988, (“Benami Act”), holding that the NCLT lacks

jurisdiction to entertain such challenges and that the remedy lies

exclusively before the competent forum constituted under the Benami Act.

Accepting the concurrent findings of NCLT and NCLAT, we have held that

orders passed under Benami Act cannot be questioned before authorities

under the Insolvency and Bankruptcy Code, 2016 (“IBC”). For the reasons

to follow, we dismiss these appeals.

I. Factual Background:

2. For the sake of convenience, we shall refer to the factual matrix of

the lead appeal. The facts in the connected appeals, though pertaining to

distinct corporate entity, are substantially similar in their material

particulars and give rise to identical questions of law.

3. When an illegal sale, in the nature of a benami transaction came to

light, investigation by the authorities under the Benami Act revealed that

the promoters of the corporate debtor, M/s Padmaadevi Sugars Ltd.,

formerly S.V. Sugar Mills Ltd., the "Patel Group," had transferred their

100% shareholding to the beneficial owner, V.K. Sasikala, through an

intermediary, an advocate named Mr. S. Senthil, for a consideration of

approximately Rs. 450 Crores, paid in demonetised high- value currency

notes. As investigation concluded into commission of offence, authorities

3

invoked Section 24 of the Benami Act and issued a show cause notice

dated 01.11.2019.

4. The genesis of the controversy as portrayed in the show cause

notice lies in search and seizure operation conducted under Section 132

of the Income Tax Act, 1961 in November 2017 against V.K. Sasikala and

her associates. During these operations, incriminating documents that

were unearthed contained explicit references to asset purchases made

during the demonetization period i.e. November-December 2016, through

entries marked "Patel: Sugar 386 + Bank Loan" and "Sugar Mill,

Kancheepuram". Further, investigation identified advocate S. Senthil as

the intermediary who, upon confrontation, admitted under oath to

authoring these notes at the dictation of V.K. Sasikala for purchasing these

properties using demonetised currency.

5. The documentary trail was further corroborated by a subsequent

search on 18.11.2017 at a serviced apartment used by the intermediary,

where authorities recovered the original share certificates of M/s S.V.

Sugar Mills Ltd. now Padmaadevi Sugars Ltd. standing in the names of

the Patel family members, alongside an unsigned Memorandum of

Understanding (MoU). Confronted with this, Shri Hitesh Shivgan Patel,

representing the management of the corporate debtor, recorded a sworn

statement admitting that the Patel Group had negotiated the sale of the

sugar factory and assumed bank liabilities for a total consideration of Rs.

4

450 Crores. Crucially, he admitted that this consideration was received

entirely in demonetised currency between November and December

2016, and that they had signed a blank MoU to effectuate this transfer.

6. In the meanwhile, the corporate debtor M/s Padmaadevi Sugars Ltd.

was subjected to corporate insolvency resolution proceedings (CIRP) on

the basis of an application instituted by the financial creditors. The

application was admitted by the NCLT on 15.10.2018 and the moratorium

commenced. However, after the failure of the resolution process, NCLT

proceeded further and passed an order for the liquidation of corporate

debtor on 20.04.2021. We may mention at this very stage that in so far as

the other set of appeals arising out of M/s Senthil Papers and Board Pvt.

Ltd., the CIRP commenced on 14.11.2017, and order of liquidation was

passed on 14.02.2019.

7. Returning to the proceedings under the Benami Act, based on the

crystallization of the evidence as discussed above, the authorities issued

a show cause notice dated 01.11.2019 under Section 24(1) of the Benami

Act to the RP, representing the corporate debtor, characterizing it as the

benamidar and the transaction as a “benami transaction”. The rationale

provided was that while the beneficial owner, V.K. Sasikala, had paid the

full consideration of Rs. 450 Crores and obtained physical possession of

the share certificates through her agent, the legal title to the shares and

the underlying assets (the sugar plant and machinery) was deliberately

5

not transferred in the records. This arrangement was allegedly designed

to mask the true ownership while holding the property for the immediate

or future benefit of the beneficial owner. This was followed up by a

provisional attachment order on 01.11.2019 under Section 24(3) of the

Benami Act, attaching the immovable properties of the c orporate debtor,

including the factory land and plant machinery.

8. In view of the fact that the corporate debtors came to be represented

by their respective liquidators, the Adjudicating Authority under the

Benami Act also issued notices under Section 26(3) confirming the

attachment of the property held benami by corporate debtor for and on

behalf of the beneficiary V.K. Sasikala.

9. The provisional attachment order dated 01.11.2019, was initially

challenged by the RP on the ground that it is void ab initio due to the

moratorium under Section 14 of the IBC. However, as the corporate debtor

was ordered into liquidation on 20.04.2021, application filed by the RP

was rendered infructuous. Consequently, the liquidator filed a fresh

application seeking a stay on the attachment order and to enable the

liquidation process to continue on the ground that the attached properties

formed part of the liquidation estate.

10. The NCLT took up the application and by its order dated 25.04.2022,

in the case of Padmaadevi Sugars, held that the challenge to the order of

attachment under the Benami Act must be before the statutory authorities

6

under that Act and not before the authorities under the IBC. In other words,

NCLT held that such an application is not maintainable under IBC. Similar

orders were passed by NCLT even in case of M/ s Senthil Papers on

29.03.2022.

11. Despite the clear and categorical order dated 25.04.2022 of the

NCLT, the appellants filed an application for clarification about the forum

before which the application is to be filed. Disposing the application, the

NCLT, by order dated 14.06.2022, held that the parties can approach the

authorities under the Benami Act for lifting the attachment, thereby

reaffirming that it lacked jurisdiction to sit in appeal over decision s of

Benami Authorities.

12. Even after the order dated 25.04.2022 and the clarificatory order

dated 14.06.2022, instead of invoking proceedings under Benami Act, the

appellant liquidator filed an appeal under Section 61 of IBC before NCLAT.

By the judgments impugned before us, the appeals of M/s Padmaadevi

Sugars and M/s Senthil Papers were dismissed on 18.0 8.2022 and

13.03.2023 respectively.

II. Analysis of the Impugned Orders:

13. The concurrent findings of NCLT and the NCLAT, while dismissing

the applications for staying the attachment order under the Benami Act

can be summarised as follows;

7

13.1 Firstly, both forums proceeded on the premise that the Benami Act,

is a special legislation constituting a self-contained code. The NCLAT, in

particular, placed heavy reliance on its earlier decision in Kiran Shah,

Resolution Professional of KSL and Industries Ltd. v. Enforcement

Directorate

1

relating to Prevention of Money Laundering Act, 2002, to hold

that when a statute provides hierarchy of adjudicatory mechanisms,

namely, the Adjudicating Authority, the Appellate Tribunal, and the High

Court, an aggrieved party, even if it is a liquidator or RP, must exhaust the

remedies in that special statute. It is further held that IBC cannot be

converted into a parallel appellate forum to review the validity of

attachment orders passed by a competent authority under a specialised

enactment, as doing so would render the appellate machinery of the

Benami Act otiose.

13.2 Secondly, regarding the applicability of the moratorium, the

Tribunals drew a sharp distinction between actions initiated by creditors

for the recovery of dues and sovereign actions initiated by the State for

the confiscation of tainted property. The NCLT and NCLAT held that the

protection under Section 14 of the IBC is designed to shield the c orporate

debtor from the depletion of assets by individual creditors seeking to

enforce security interests or recover debts. Conversely, an attachment

1

2022 SCC OnLine NCLAT 2.

8

under the Benami Act constitutes a sovereign function exercised in the

public interest to prohibit and punish benami transactions. Since the

Benami proceedings are not in the nature of debt recovery but rather a

statutory forfeiture of property held illegally, the moratorium under the IBC

does not act as an automated stay against such proceedings.

13.3 Thirdly, the impugned orders held that the residuary jurisdiction

conferred upon the NCLT under Section 60(5) of the IBC is not all-

pervasive. While Section 60(5)(c) empowers the NCLT to decide

questions of law or fact "arising out of or in relation to" the insolvency

resolution, this jurisdiction does not extend to reviewing administrative or

quasi-judicial orders passed under independent public law statutes. The

NCLAT opined that determining whether a property is “benami” or not

requires a trial on the pedigree of the title and the source of funds, which

falls exclusively within the domain of the Adjudicating Authority under the

Benami Act. Consequently, a challenge to the legality of the attachment

order is not a question “arising out of” the insolvency, but one arising

dehors the insolvency, and thus falls outside the NCLT's jurisdictional

competence.

III. Submissions of the Parties:

14. Submissions on behalf of the appellants: We have heard Mr.

Krishnan Venugopal, Mr. Sajan Poovayya, and Mr. Rajiv Shakdher, Ld. Sr.

9

Counsels appearing on behalf of the Appellants. The sum and summation

of the submissions put forth can be articulated as:

14.1 Granting precedence to proceedings under the Benami Act over

insolvency proceedings would result in removal or freezing of secured

assets from the liquidation estate. Such depletion directly undermines the

core objective of the IBC, namely maximisation of value of assets and

equitable distribution among stakeholders. The insolvency framework

cannot function effectively if key assets are carved out through parallel

attachment proceedings.

14.2 The IBC constitutes a comprehensive and self-contained “single

window” mechanism for insolvency resolution and liquidation. Section 238

embodies a broad non-obstante clause, expressly providing that the IBC

shall prevail notwithstanding anything inconsistent contained in any other

law. The language employed is of the widest amplitude and is intended to

obviate obstruction of the insolvency process by competing statutory

regimes.

2

14.3 Section 238 of the IBC came into force on 01.12.2016, subsequent

to the enforcement of Section 67 of the Benami Act on 01.11.2016. IBC is

not only the later enactment but also a specialised and exhaustive

legislation governing insolvency and liquidation. In the event of

2

Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407

10

inconsistency, the later and more comprehensive insolvency code must

prevail to ensure uniformity and certainty in the insolvency regime.

3

14.4 Upon commencement of the CIRP, Section 14(1)(a) imposes a

moratorium prohibiting institution or continuation of suits or proceedings

against the corporate debtor. Proceedings under the Benami Act,

including provisional attachment that freezes or depletes assets, squarely

fall within the ambit of “proceedings” and therefore stand interdicted during

the subsistence of the moratorium. Permitting such measures would

defeat the protective shield intended to preserve the debtor’s estate as a

going concern.

14.5 Section 32A of the IBC is pressed into service to demonstrate the

legislative intent to insulate the corporate debtor and its property from past

liabilities upon successful resolution or liquidation sale. Section 32A(2)

expressly prohibits attachment, seizure or confiscation of the property of

the corporate debtor in relation to offences committed prior to

commencement of the CIRP, once a resolution plan is approved or assets

are sold to an unconnected third party.

14.6 The IBC prescribes strict and time-bound completion of the CIRP

within 330 days. Proceedings under the Benami Act, along with the

appellate remedies thereunder, operate on significantly longer timelines.

3

Solidaire India Ltd. v. Fairgrowth Financial Services Ltd, (2001) 3 SCC 71.

11

Allowing attachment proceedings to run parallel to insolvency would stall

the CIRP, frustrate resolution, and prevent attainment of the stage

contemplated under Section 32A, namely approval of a resolution plan or

consummation of liquidation sale. The statutory balance preserves

accountability of wrongdoers under Sections 3 and 53 of the B enami Act,

while ensuring that the insolvency process itself is not derailed.

14.7 Revenue stands in the position of an operational creditor and is

bound by the waterfall mechanism under Section 53 of the IBC.

14.8 On facts, it is contended that the alleged “taint” arising from

shareholders’ funds utilised for share acquisitions in 2016 cannot be

imputed to immovable properties of the corporate debtor that were lawfully

acquired between 1995 and 2013. The company is a distinct juristic entity

and its property cannot be treated as that of its shareholders .

4

14.9 Section 60(5) vests the NCLT with exclusive jurisdiction over all

questions of law or fact arising out of or in relation to the insolvency or

liquidation process. The NCLT is therefore the competent forum to

examine and, where warranted, set aside attachments that interfere with

the orderly conduct of liquidation and distribution of the estate, thereby

preserving the primacy and integrity of the IBC framework.

5

4

Bacha F. Guzdar v. Commissioner of Income Tax, Bombay (1954) 2 SCC 563

5

Indian Overseas Bank v. RCM Infrastructure Ltd (2022) 8 SCC 516

12

15. Submissions on behalf of the Respondent: Appearing on behalf

of respondent/Revenue, we have heard Ld. A.S.G. Mr. S. Dwarakanath

opposing the submissions of the appellants. He would submit that;

15.1 The Benami Act is a self-contained code for identification,

attachment and confiscation of benami property, with exclusive jurisdiction

vested in its authorities. The IBC does not override this regime or

empower the NCLT to revisit such findings

15.2 Sections 24–27 , 46, and 49–50 of the Benami Act establish a

complete adjudicatory and appellate framework, reinforced by the

overriding effect under Section 67. The NCLT’s residuary jurisdiction

cannot bypass this specialised statutory mechanism.

15.3 Once property is provisionally attached and confirmed under

Section 27, it vests in the Central Government, subject to appeal. The

NCLT cannot nullify such statutory vesting through insolvency

proceedings or indirectly challenge sovereign action under a penal law.

15.4 Under Section 36 of the IBC, only assets beneficially owned by the

corporate debtor form part of the liquidation estate. Benami property, held

in a fiduciary capacity without beneficial interest, is excluded and never

becomes distributable in liquidation.

15.5 Section 36(3)(e) further recognises that property “subject to

determination by a court or authority” forms part of the estate only to the

extent of such determination. Once an authority under Benami Act

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declares the debtor a benamidar, beneficial ownership stands negated

and insolvency cannot convert such property into distributable assets for

creditors.

15.6 Confiscation under the Benami Act is a sovereign penal act, not

debt recovery. Upon vesting under Section 27, property passes absolutely

to the State and falls outside the Section 53 waterfall, which presupposes

debtor ownership.

15.7 Section 32A applies only upon approval of a resolution plan or

liquidation sale and does not cure defective title or legitimise benami

property. Section 14 moratorium protects the debtor’s estate from creditor

action, not sovereign in rem proceedings under penal statutes

15.8 The Benami Act governs determination and confiscation of benami

property, while IBC governs insolvency resolution of assets beneficially

owned by the debtor. Where property stands attached and vested under

the Benami Act, it lies outside the liquidation estate and outside NCLT

jurisdiction.

IV. Analysis and Conclusions:

16. The question that arises for consideration is whether, the legality

and validity of an order of attachment under Benami Act can be challenged

before the statutory tribunals under IBC. The enquiry should legitimately

commence with appreciating the scope and ambit of the Benami Act as

well as IBC.

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17. Scheme of the Benami Act: Historically, benami transactions

constituted a recognised and prevalent mode of holding property in India

and were not, per se, unlawful. Such transactions involved the purchase

of property in the name of one person while the consideration was

furnished by another, the latter being the real owner. The practice was

both recognised as a custom and given legislative recognition through

Sections 81 and 82 of the Indian Trusts Act, 1882. However, benami

transactions came to be misused for the concealment of ownership,

evasion of public revenues, and defeating creditors’ claims. In 1976, the

Parliament attempted to address the issue through the introduction of

Section 281A of the Income-Tax Act, 1961, which barred the institution of

suits in respect of benami properties. Further, the Parliament repealed the

aforementioned provisions of the Indian Trusts Act, which had earlier

facilitated the enforcement of benami arrangements. To address the issue

more comprehensively, the President promulgated the Benami

Transactions (Prohibition of the Right to Recover Property) Ordinance on

19.05.1988, pursuant to the recommendations of the Law Commission.

The Ordinance barred suits, claims, and defences based on benami

ownership. In this background, to replace the said Ordinance and

incorporate the recommendations of the Law Commission in its 130th

Report, the Benami Transactions (Prohibition) Act, 1988, was enacted. It

prohibited the entering into of benami transactions and rendered them an

15

offence, and provided for the acquisition of benami properties without

compensation, thereby extinguishing the rights arising from such

transactions and preventing undue enrichment through the mere lending

of one’s name.

17.1 However, in its unamended form, the Benami Act had merely 9

sections. Experience in the administration of the unamended Act revealed

significant structural deficiencies in its original framework. Although

enacted to prohibit benami holdings and enable acquisition of such

property without compensation, the statute lacked critical operational

mechanisms, including an express provision for vesting of confiscated

property in the Central Government, a structured appellate remedy

against orders of attachment or confiscation, conferment of civil court

powers upon authorities for effective adjudication, and adequate rule-

making authority. The absence of these features rendered enforcement of

the Act difficult. Comprehensive amendment therefore became necessary

to transform the Act from a declaratory prohibition into an effective

confiscatory and adjudicatory regime, with a defined procedure for

attachment, adjudication, vesting and appeal, thereby strengthening the

statutory response to benami transactions.

17.2 The Statement of Objects and Reasons of the Amending Act makes

it succinctly clear as to why a sea of changes were brought in, thereby

expanding the old Act from 9 Sections to now 70 Sections divided in 8

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Chapters. The relevant portion of Statement of Objects is reproduced

below for ready reference:

“Statement of Objects and Reasons Amending Act 43 of

2016.—

The Benami Transactions (Prohibition) Act, 1988 was enacted to

prohibit benami transactions and the right to recover property

held benami. The said Act, inter alia, provides that—(a) all the

properties held benami shall be subject to acquisition by such

authority in such manner and after following such procedure as

may be prescribed; (b) no amount shall be payable for the

acquisition of any property held benami; (c) the purchase of

property by any person in the name of his wife or unmarried

daughter for their benefit would not be benami transaction; (d)

the securities held by a despository as registered owner under

the provisions of the Depositories Act, 1996 or participant as an

agent of a depository would not be benami transactions.

2. During the administration of the Benami Transactions

(Prohibition) Act, 1988, it was found that the provisions of the

aforesaid Act are inadequate to deal with benami transactions as

the Act does not—(i) contain any specific provision for vesting of

confiscated property with Central Government; (ii) have any

provision for an appellate mechanism against an action taken by

the authorities under the Act, while barring the jurisdiction of a

civil court; (iii) confer the powers of the civil court upon the

authorities for its implementation; and (iv) provide for adequate

enabling rule making powers.

3. In view of the circumstances stated above,

comprehensive amendments to the Benami Transactions

(Prohibition) Act, 1988 has become necessary in order to prohibit

holding property in benami and restrict right to recover or transfer

property held benami and also to provide a mechanism and

procedure for confiscation of property held benami. It is,

therefore, felt necessary to bring comprehensive amendments to

the Benami Transactions (Prohibition) Act, 1988 to deal with

benami transactions.”

17.3 In its post-amendment avatar, Benami Act, by virtue of Section 2(9)

defines a benami transaction. While Section 3 prohibits entering into

benami transactions and renders such conduct punishable, Section 4 bars

17

any suit, claim or defence to enforce rights in respect of property held

benami. The definition clause further defines ‘beneficial owner’ under

Section 2(12), ‘property’ under Section 2(26) and ‘transfer’ under Section

2(29).

17.4 Section 5 declares that property which is the subject matter of a

benami transaction is liable to confiscation by the Central Government.

The statutory intent is thus to invalidate both the transaction and any

derivative civil claims, while exposing the property itself to State action.

17.5 Chapter IV embodies the machinery provisions of the enactment

and delineates the course to be followed before property is divested.

Section 24 empowers the Initiating Officer, upon forming a reasoned belief

that a person is a benamidar, to issue notice and, with the requisite

approval, provisionally attach the property so as to prevent its alienation

pending inquiry. The matter is then placed before the Adjudicating

Authority under Section 26, which, after notice and hearing to the

concerned parties, records a finding as to whether the property is benami

in nature.

17.6 If such a finding is returned, Section 27 provides for confiscation of

the property, and sub-section (3) makes it clear that upon confiscation the

property vests absolutely in the Central Government, free from all

encumbrances and without compensation. Section 29 enables the

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Administrator to take possession and deal with the confiscated property

in accordance with law. The statutory progression, starting from issuance

of notice, to provisional attachment, to adjudication, and finally to

confiscation and possession, reflects a structured process in which

deprivation of title follows only upon compliance with the prescribed

safeguards.

17.7 The Act also establishes a distinct adjudicatory hierarchy and

demarcates jurisdictional boundaries. Section 45 bars the jurisdiction of

civil courts in respect of matters that the authorities or the Appellate

Tribunal are empowered to determine. Section 46 provides for appeals to

the Appellate Tribunal against orders of the Adjudicating Authority, with a

further appeal to the High Court on questions of law. Section 53 prescribes

stringent punishment for benami transactions entered into to defeat law,

avoid statutory dues or defraud creditors. While Section 60 clarifies that

the provisions of the Act are in addition to, and not in derogation of, any

other law, Section 67 confers overriding effect in the event of

inconsistency. The legislative scheme thus discloses a complete code.

6

18. Insolvency and Bankruptcy Code, 2016: Preamble of the IBC

states that the objects of the IBC are “... to consolidate and amend the

laws relating to reorganization and insolvency resolution of corporate

6

Kailash Assudani v. Commissioner of Income Tax, 2017 SCC OnLine MP 2384;

19

persons, partnership firms and individuals in a time- bound manner for

maximization of value of assets of such persons and to promote

entrepreneurship, availability of credit and balance the interest of all

stakeholders including alteration in the order of priority of payment of

Government dues.” Hence, the scope and ambit of IBC is to speed up the

process providing for insolvency , and achieving maximisation of value of

the asset of the entity undergoing CIRP.

7

18.1 Expounding the core principles of the IBC, this Court in Swiss

Ribbons (P) Ltd. v. Union of India

8

noted;

“27. … The Code is first and foremost, a Code for reorganisation

and insolvency resolution of corporate debtors. Unless such

reorganisation is effected in a time-bound manner, the value of

the assets of such persons will deplete. Therefore, maximisation

of value of the assets of such persons so that they are efficiently

run as going concerns is another very important objective of the

Code. This, in turn, will promote entrepreneurship as the persons

in management of the corporate debtor are removed and

replaced by entrepreneurs. When, therefore, a resolution plan

takes off and the corporate debtor is brought back into the

economic mainstream, it is able to repay its debts, which, in turn,

enhances the viability of credit in the hands of banks and

financial institutions. Above all, ultimately, the interests of all

stakeholders are looked after as the corporate debtor itself

becomes a beneficiary of the resolution scheme – workers are

paid, the creditors in the long run will be repaid in full, and

shareholders/investors are able to maximise their investment.

Timely resolution of a corporate debtor who is in the red, by an

effective legal framework, would go a long way to support the

development of credit markets. Since more investment can be

7

Innoventive Industries Ltd. v. ICICI Bank & Anr. (2018) 1 SCC 407.

8

(2019) 4 SCC 17.

20

made with funds that have come back into the economy,

business then eases up, which leads, overall, to higher economic

growth and development of the Indian economy. What is

interesting to note is that the Preamble does not, in any manner,

refer to liquidation, which is only availed of as a last resort if there

is either no resolution plan or the resolution plans submitted are

not up to the mark….

28. It can thus be seen that the primary focus of the legislation is

to ensure revival and continuation of the corporate debtor by

protecting the corporate debtor from its own management and

from a corporate death by liquidation. The Code is thus a

beneficial legislation which puts the corporate debtor back on its

feet, not being a mere recovery legislation for creditors. The

interests of the corporate debtor have, therefore, been bifurcated

and separated from that of its promoters/those who are in

management. Thus, the resolution process is not adversarial to

the corporate debtor but, in fact, protective of its interests….”

18.2 The legislative scheme of IBC has also been explained in Embassy

Property Developments (P) Ltd. v. State of Karnataka

9

in following

manner;

“11. It is beyond any pale of doubt that the IBC, 2016 is a

complete code in itself. As observed by this Court in Innoventive

Industries Ltd. v. I CICI Bank [it is an exhaustive code on the

subject-matter of insolvency in relation to corporate entities and

others. It is also true that the IBC, 2016 is a single Unified

Umbrella Code, covering the entire gamut of the law relating to

insolvency resolution of corporate persons and others in a time -

bound manner. The Code provides a three-tier mechanism,

namely, (i) the NCLT, which is the adjudicating authority, (ii)

the NCLAT, which is the appellate authority, and (iii) this Court as

the final authority, for dealing with all issues that may arise in

relation to the reorganisation and insolvency resolution of

corporate persons. Insofar as insolvency resolution of corporate

debtors and personal guarantors are concerned, any order

passed by the NCLT is appealable to N CLAT under Section 61 of

the IBC, 2016 and the orders of the N CLAT are amenable to the

appellate jurisdiction of this Court under Section 62…..”

9

(2020) 13 SCC 308

21

18.3 It is, hence, evident that the IBC constitutes a self-contained and

exhaustive code governing all facets of insolvency resolution and

liquidation of corporate persons. The legislative intent is to ensure that

issues relating to the insolvency estate, its preservation, management and

distribution are determined within the framework and hierarchy

contemplated by the Code.

19. The above analysis demonstrates that both, 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. It is in

this backdrop that the apparent inconsistency between the two statutory

regimes requires examination.

20. Two Conflicting Statutory Regime: It has been argued by the

appellants that IBC being a special statue must prevail over Benami Act

22

and hence NCLT is competent to adjudicate upon a challenge made to

attachment proceedings under Benami Act by virtue of it being a special

as well as later law. To this extent, reliance is placed on Solidaire India

Ltd. v. Fairgrowth Financial Services Ltd.

10

At the same time, it must be

borne in mind that the Benami Act is also a special legislation aimed at

prohibiting and penalising benami transactions. What therefore must be

seen is the dominant purpose and object of both the enactments.

20.1 In a recent decision, this Court had the occasion to examine the

competing application of two special statutes. Analysing the position of

law, in State Bank of India v. Union of India

11

summarised the principles

to be followed in case there is a conflict between two statutory regimes.

The relevant paragraphs are as under:

“64. When confronted with a situation where two statutory

enactments appear to operate in conflict, this Court is enjoined

to interpret the concerned legislations in a manner that gives

effect to both, to the extent such reconciliation is reasonably

possible. Only where such harmonious construction is not

feasible does the Court proceed to determine which enactment

must prevail. Conflicts of this nature may arise either between a

general statute and a special statute, or between two statutes

each possessing a special character. Over time, this Court has

evolved settled principles to guide the resolution of such inter se

inconsistencies which are as;

(I) Where two enactments are attracted to the same factual

matrix, the initial inquiry must be directed towards determining

whether either statute is general or special in relation to the

subject-matter in issue. This determination is not made in the

abstract, but by examining the dominant subject -matter of the

statute, viewed through the prism of its legislative intent. An

10

(2001) 3 SCC 71.

11

2026 INSC 153. (Hereinafter, SBI)

23

enactment may, depending on the context, operate as a general

law for certain purposes and as a special law for others.

The

optimal outcome is achieved where each statute is allowed to

function within its designated sphere, without trenching upon the

field occupied by the other.

12

Bearing this in mind, the provisions

of both enactments must be scrutinised to assess whether they

can be construed in a manner that permits harmonious

construction.

13

(II) Where it is evident that one enactment is intended to function

as a special law governing a defined subject, while the other is a

general law operating in a broader or overlapping domain, the

established principle embodied in the maxim generalia

specialibus non derogant applies. In such circumstances, the

general provision must give way to the special provision.

14

(III) In an eventuality where the contestation is between two

special enactments, both having non-obstante clauses, the

general rule is that later enactment must prevail over the earlier

one.

15

12

LIC of India v. DJ Bahadur, (1981) 1 SCC 315. Relevant paragraph is as follows:

“52. In determining whether a statute is a special or a general one, the focus must be on the

principal subject-matter plus the particular perspective. For certain purposes, an Act may be general

and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer

points of law. In law, we have a cosmos of relativity, not absolutes — so too in life….

57. What is special or general is wholly a creature of the subject and context and may vary with

situation, circumstances and angle of vision. Law is no abstraction but realises itself in the living setting

of actualities. Which is a special provision and which general, depends on the specific problem, the

topic for decision, not the broad rubric nor any rule of thumb. The peaceful coexistence of both

legislations is best achieved, if that be feasible, by allowing to each its allotted field for play. Sense and

sensibility, not mechanical rigidity gives the flexible solution……”

13

Gobind Sugar Mills Ltd. v. State of Bihar, (1999) 7 SCC 76. Relevant paragraph is as fllows:

“10. While determining the question whether a statute is a general or a special one, focus must

be on the principal subject-matter coupled with a particular perspective with reference to the intendment

of the Act….”

14

State of Gujarat v. Patel Ramjibhai Danabhai, (1979) 3 SCC 347; C ommercial Tax Officer, Rajasthan

v. Binani Cements Ltd., (2014) 8 SCC 319; Vodafone Idea Cellular Ltd. v. Ajay Kumar Agarwal, (2022)

6 SCC 496

15

Sarwan Singh v. Shri Kasturi Lal, (1977) 1 SCC 750. Relevant portion of the judgment is as follows:

“20…..When two or more laws operate in the same field and each contains a non- obstante

clause stating that its provisions will override those of any other law, stimulating and incisive problems

of interpretation arise. Since statutory interpretation has no conventional protocol, cases of such conflict

have to be decided in reference to the object and purpose of the laws under consideration….

21. For resolving such inter se conflicts, one other test may also be applied though the

persuasive force of such a test is but one of the factors which combine to give a fair meaning to the

language of the law. That test is that the later enactment must prevail over the earlier one…..”

24

(IV) However, this is not an absolute rule. In the event of a conflict

between special acts, the dominant purpose of both statutes

would have to be analyzed to ascertain which one should prevail

over the other. The primary effort of the interpreter must be to

harmonise, not excise.

16

Hence, where both the enactments

have the non obstante clause then in that case, the proper

perspective would be that one has to see the subject and the

dominant purpose for which the special enactment was made

and in case the dominant purpose is covered by that

contingencies, then notwithstanding that the Act might have

come at a later point of time still the intention can be ascertained

by looking to the objects and reasons.

17

”

(emphasis supplied)

20.2 On behalf of the appellants, it was urged that in present case, IBC,

being the later and more comprehensive insolvency legislation, must

therefore govern in the event of conflict on basis of the principle of le ges

posteriores priores contrarias abrogant. However, the fact that, the

property which is sought to be included in the liquidation estate has been

provisionally attached for being a benami property, cannot be lost sight of.

20.3 Benami Act is a complete and self-contained code governing

identification, provisional attachment, adjudication and confiscation of

16

S. Vanitha v. Deputy Commissioner, Bengaluru Urban District & Ors. (2021) 15 SCC 730. Relevant

portion of the judgment is as follows:

“34…Principles of statutory interpretation dictate that in the event of two special acts containing

non obstante clauses, the later law shall typically prevail. In the present case, as we have seen, the

Senior Citizen‟s Act 2007 contains a non obstante clause. However, in the event of a conflict between

special acts, the dominant purpose of both statutes would have to be analyzed to ascertain which one

should prevail over the other. The primary effort of the interpreter must be to harmonise, not excise…. ”

17

Bank of India v. Ketan Parekh, (2008) 8 SCC 148. Relevant portion of the judgment is as follows:

“28. …But cases might arise where both the enactments have the non obstante clause then in

that case, the proper perspective would be that one has to see the subject and the dominant purpose

for which the special enactment was made and in case the dominant purpose is covered by that

contingencies, then notwithstanding that the Act might have come at a later point of time still the

intention can be ascertained by looking to the objects and reasons….”

25

benami property, supported by a distinct appellate hierarchy. Exclusive

jurisdiction over such determinations is conferred upon authorities

constituted under the Benami Act. The IBC neither displaces this statutory

mechanism nor empowers the NCLT to reopen findings rendered

thereunder.

20.4 This Court in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta

18

has held

that when proceedings are to be initiated dehors the insolvency of the

corporate debtor, the RP must approach the relevant competent authority.

The Court held:

"74. Therefore, we hold that the RP can approach NCLT for

adjudication of disputes that are related to the insolvency

resolution process. However, for adjudication of disputes that

arise dehors the insolvency of the corporate debtor, the RP

must approach the relevant competent authority . For instance,

if the dispute in the present matter related to the non-supply

of electricity, the RP would not have been entitled to invoke

the jurisdiction of NCLT under IBC. However, since the dispute

in the present case has arisen solely on the ground of the

insolvency of the corporate debtor, NCLT is empowered to

adjudicate this dispute under Section 60(5)(c) of IBC.".

(emphasis supplied)

20.5 Further, in SBI (supra) resolving the apparent conflict between the

IBC regime and regime under telecommunication laws, this Court

observed that;

“66. The scope and ambit of IBC is to speed up the process

providing for insolvency

19

, and achieving maximisation of value

of the asset of the entity undergoing CIRP. The focus is on the

18

(2021) 7 SCC 209

19

Innoventive Industries Ltd. v. ICICI Bank & Anr. (2018) 1 SCC 407.

26

company. On the other hand, Telegraph Act, Wireless

Telegraphy Act and TRAI Act forms a complete and exhaustive

code for all matters relating to telecom sector…..

67. The statutory regime under IBC cannot be permitted to

make inroads into telecom sector and re-write and restructure

the rights and liabilities arising out of administration, usage, and

transfers of spectrum which operate under exclusive legal

regime concerning telecommunications. The disharmony

caused by applying IBC to the telecom sector which operates

under a different legal regime was never intended by the

Parliament.

68. Statutory interpretation adopted by the corporate debtors for applying IBC to the material resource of the nation, the spectrum

by referring to it as an asset in its books of account, the License

Agreement, Tripartite Agreement, or the Spectrum Trading

Guidelines is like the tail wagging the dog. Statutory

interpretation cannot be based on a myopic approach of reading

the definition clauses out of its context. Merely because

spectrum can be treated as an “asset” on the basis of certain

attributes, such as possession and usage, lease and

assignment, claim and liability or credit and debt, the entirety of

the telecom sector cannot be brought under the sweep of IBC.

The two statutes have different subjects to deal with, different

purposes to subserve, different laws to abide, protect different

rights and create different liabilities. It is necessary for the

constitutional courts to recognise their respective provinces and

to ensure that they operate with harmony and without conflict.”

(emphasis supplied)

20.6 What emerges from the foregoing analysis is that the jurisdiction of

authorities under IBC cannot be expansively construed so as to trench

upon fields that are founded in public law domain. Where the subject

matter of the dispute pertains to the exercise of sovereign statutory power,

particularly in relation to determination of legality of title, attachment, or

confiscation and vesting thereof, the adjudicatory fora under the IBC must

necessarily yield to the specialised mechanism created by such statute.

27

Proceedings under Benami Act squarely fall within the public law domain.

They are not in the nature of inter se disputes between private parties

concerning proprietary rights, nor are they recovery proceedings capable

of being subsumed within insolvency resolution. The Benami Act

represents a sovereign exercise aimed at identifying and extinguishing

benami transactions. The attachment and eventual confiscation of

property thereunder operate in rem and culminate in vesting of the

property in the Central Government free from encumbrances. Such

consequences are penal and deterrent, rooted in statutory illegality, and

are enforced through a distinct adjudicatory hierarchy whose jurisdiction

is expressly insulated from ordinary civil fora. In similar circumstances

when proceedings under MMDR Act were sought to be interdicted by

invoking IBC, this Court in Embassy Property (supra) rejected the

argument and held as under;

“29. Therefore as rightly contended by the learned Attorney

General, the decision of the Government of Karnataka to refuse

the benefit of deemed extension of lease, is in the public law

domain and hence the correctness of the said decision can be

called into question only in a superior court which is vested with

the power of judicial review over administrative action. The

NCLT, being a creature of a special statute to discharge certain

specific functions, cannot be elevated to the status of a superior

court having the power of judicial review over administrative

action…..

37….. But a decision taken by the Government or a statutory

authority in relation to a matter which is in the realm of public

law, cannot, by any stretch of imagination, be brought within the

fold of the phrase “arising out of or in relation to the insolvency

resolution” appearing in clause (c) of sub-section (5)…..

28

40. If NCLT has been conferred with jurisdiction to decide all

types of claims to property, of the corporate debtor, Section

18(1)(f)(vi) would not have made the task of the interim

resolution professional in taking control and custody of an asset

over which the corporate debtor has ownership rights, subject to

the determination of ownership by a court or other authority. In

fact an asset owned by a third party, but which is in the

possession of the corporate debtor under contractual

arrangements, is specifically kept out of the definition of the term

“assets” under the Explanation to Section 18. This assumes

significance in view of the language used in Sections 18 and 25

in contrast to the language employed in Section 20. Section 18

speaks about the duties of the interim resolution professional

and Section 25 speaks about the duties of resolution

professional. These two provisions use the word “assets”, while

Section 20(1) uses the word “property” together with the word

“value”. Sections 18 and 25 do not use the expression “property”.

Another important aspect is that under Section 25(2)(b) of the

IBC, 2016, the resolution professional is obliged to represent and

act on behalf of the corporate debtor with third parties and

exercise rights for the benefit of the corporate debtor in judicial,

quasi-judicial and arbitration proceedings. Sections 25(1) and

25(2)(b) reads as follows:

“25. Duties of resolution professional.—(1) It shall be the

duty of the resolution professional to preserve and protect

the assets of the corporate debtor, including the continued

business operations of the corporate debtor.

(2) For the purposes of sub-section (1), the resolution

professional shall undertake the following actions:

(a) ***

(b) represent and act on behalf of the corporate debtor

with third parties, exercise rights for the benefit of the

corporate debtor in judicial, quasi-judicial and arbitration

proceedings;”

(emphasis supplied)

This shows that wherever the corporate debtor has to exercise

rights in judicial, quasi-judicial proceedings, the resolution

professional cannot short-circuit the same and bring a claim

before NCLT taking advantage of Section 60(5).

41. Therefore in the light of the statutory scheme as culled

out from various provisions of the IBC, 2016 it is clear that

wherever the corporate debtor has to exercise a right that falls

outside the purview of the IBC, 2016 especially in the realm of

29

the public law, they cannot, through the resolution professional,

take a bypass and go before NCLT for the enforcement of such

a right.”

(emphasis supplied)

20.7 In view of the above discussion, permitting the NCLT to examine the

correctness of attachment or adjudication under the Benami Act by

invoking Section 60(5) of the IBC would amount to elevating it to the status

of a judicial review forum over sovereign action, a course expressly

disapproved in the line of authority commencing from Embassy Property

(supra) and consistently reiterated thereafter. The IBC, concerned as it is

with insolvency resolution and value maximisation of lawfully owned

assets, cannot be employed as a mechanism to dilute or override statutory

proceedings undertaken in the public law sphere for confiscation of tainted

property.

20.8 The properties in question, having been provisionally attached and

confirmed by the Adjudicating Authority under the Benami Act, stand

vested in the Central Government under Section 27, subject to statutory

appeal. Those determinations remain operative. The NCLT cannot, in

exercise of insolvency jurisdiction, disregard or nullify a statutory vesting

effected under another enactment. The IBC does not provide an indirect

route to challenge sovereign acts validly undertaken under a penal

statute.

30

21. A more fundamental objection is raised with reference to Section 36

of the IBC. The liquidation estate comprises only assets beneficially

owned by the corporate debtor. Property held benami is, by definition, held

in a fiduciary or representative capacity for the real owner. Section

36(4)(a)(i) excludes assets held in trust for third parties from the liquidation

estate. In Controller of Estate Duty, Lucknow v. Aloke Mitra

20

this Court

reiterated that a benamidar possesses no beneficial interest and that title

vests in the person who provided consideration. Where the corporate

debtor is merely an ostensible holder, the property never forms part of its

estate and cannot be administered in liquidation.

22. Section 36(3)(e) further recognises that property “subject to

determination by a court or authority” forms part of the estate only to the

extent of such determination. Once the Adjudicating Authority under the

Benami Act has concluded that the corporate debtor is a benamidar,

beneficial ownership stands negated. The legality and validity of such

determinations are subject matter of appeal under the provisions of

Benami Act alone. Insolvency proceedings cannot be utilised to convert

property held for another into distributable assets for creditors. The IBC

contemplates distribution of the debtor’s estate, not assets impressed with

a trust or held on behalf of a third party.

20

(1981) 2 SCC 121

31

23. The reliance placed on Section 32A and the moratorium under

Section 14 is answered on statutory grounds. Section 32A is event-based

and triggered only upon approval of a resolution plan or completion of a

liquidation sale to an unconnected third party. Absent such approval, the

immunity does not arise. The provision does not validate defective title nor

retrospectively convert benami property into assets of the corporate

debtor.

24. Likewise, the moratorium under Section 14 is intended to preserve

the debtor’s estate for orderly resolution; it does not interdict sovereign

proceedings in rem for attachment or confiscation under penal statutes.

Such proceedings are distinct from creditor enforcement and proceed on

an independent statutory footing. The contention of the appellants that the

attachment order is impermissible as the moratorium under Section 14 of

the Act commenced on 15.10.2018 is not acceptable because the

mandate of moratorium must be understood in the context of the

applicability of the Act. The moratorium is intended to protect the

corporate debtor from "creditor actions" aimed at debt recovery, not to

shield "tainted assets" from sovereign actions against crime. In any event

of the matter, the liquidator would have power and jurisdiction to deal with

the property only when the c orporate debtor has a beneficial interest in

the said property.

32

25. Mr. Dwarakanath, also brought to our notice certain questionable

transactions including statement of witnesses that were recorded. We are

not inclined to examine the facts of the case in detail in order to ensure

that the appellants’ remedies are not prejudiced in any way.

26. Returning to the facts of the case, we are of the opinion that the

appellants could not have challenged the attachment order passed under

the Benami Act before the statutory authorities under the IBC. We have

no doubt in our mind that such invocation is not bonafide and is actually

intended to circumvent and interdict the procedures contemplated under

the Benami Act. Further, filing of appeal before NCLAT, despite the finding

that the appropriate forum is not NCLT, but the statutory authorities under

the Benami Act, leaves no doubt that it is a complete abuse of the 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.

27. Under these circumstances, the appeals have to be dismissed with

exemplary costs.

28. For the reasons stated above, all the appeals are dismissed with

costs quantified at Rs. 5 lakhs each. The amount shall be deposited with

33

the Supreme Court Advocates on Record Association (SCAORA) within

four weeks from the date of passing of this judgment.

……………………………….J.

[PAMIDIGHANTAM SRI NARASIMHA]

……………………………….J.

[ATUL S. CHANDURKAR]

NEW DELHI;

FEBRUARY 24, 2026