NCLT Revokes Corporate Resolution Order in Alchemist Case, Citing Fraud and Collusion
In an unprecedented decision, the National Company Law Tribunal (NCLT) has withdrawn its corporate resolution order that awarded bankrupt Alchemist Ltd to a related group entity. The order, dated February 3, was rescinded after the tribunal found the insolvency proceedings were "vitiated by fraud, collusion and malicious intent." This marks a rare instance where NCLT has reversed such an order, highlighting serious irregularities in the case.
Enforcement Directorate Uncovers Money Laundering Scheme
The withdrawal came after the Enforcement Directorate (ED) presented evidence to the Delhi bench of NCLT, revealing a complex money laundering operation. The ED investigation showed that promoters of Alchemist Ltd, including former Trinamool Congress MP KD Singh, allegedly created a front entity using "proceeds of crime" to gain control of the company under insolvency proceedings. This entity, Technology Parks Ltd, held 97% voting rights as a financial creditor, dominating the committee of creditors (CoC).
According to ED, Singh and his Alchemist group entities are accused of laundering approximately Rs 1,840 crore collected from small investors. These investors were promised high returns or allotment of plots and villas, but neither were delivered, nor were refunds provided. The money laundering probe is based on an FIR filed by investors in Kolkata, West Bengal, the state Singh represented in the Rajya Sabha.
Assets Attached and Insolvency Facade Exposed
ED has attached assets worth Rs 490 crore over the past few years, including two of Singh's hospitals in Panchkula—Alchemist Hospital and Ojas Hospital. The agency stated that the insolvency process was merely a facade, used as a "device to reclaim attached assets and invoke immunity under Section 32A of the Insolvency and Bankruptcy Code (IBC)."
Further concerns were raised about the independence of the resolution process. Gaurav Misra, a former employee of the Alchemist group, was appointed as the resolution professional, casting doubt on the fairness of the proceedings. The CoC was dominated by group entities accused of money laundering, including:
- Technology Parks Ltd (97% voting share)
- Alchemist Township India Ltd (1.7% voting share)
- Alchemist Realty Ltd (0.6% voting share)
These companies have been named as accused in the prosecution complaint (chargesheet) filed by ED.
NCLT's Strong Stance Against Abuse of Process
Accepting ED's submissions, NCLT emphasized that an insolvency resolution dominated by accused group entities fundamentally undermines the independence and commercial wisdom of the CoC. The tribunal warned that permitting such an insolvency would result in legitimization of proceeds of crime, dilution of PMLA attachments, and abuse of insolvency immunity. This decision underscores the tribunal's commitment to preventing misuse of legal processes for fraudulent purposes.
