NCLT Has No Jurisdiction to Challenge Benami Attachment Orders Under IBC: Supreme Court Affirms Exclusive Benami Act Forum

Case Name: S. Rajendran v. The Deputy Commissioner of Income Tax (Benami Prohibition) & Ors.

Citation: 2026 INSC 187; Civil Appeal No. 7140 of 2022 with Civil Appeal Nos. 6971 of 2025, 6661 of 2023 and 6662 of 2023

Date of Judgment/Order: 24 February 2026

Bench: Hon’ble Mr. Justice Pamidighantam Sri Narasimha and Hon’ble Mr. Justice Atul S. Chandurkar

Held: The Supreme Court held that the National Company Law Tribunal has no jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 to examine or set aside provisional attachment or confiscation orders passed under the Prohibition of Benami Property Transactions Act, 1988. Proceedings under the Benami Act are sovereign, penal and in rem in nature, culminating in statutory vesting of property in the Central Government, and are governed by a complete and self-contained adjudicatory and appellate framework. The IBC cannot be invoked to bypass or dilute this specialised statutory mechanism, and moratorium under Section 14 or immunity under Section 32A does not interdict sovereign confiscatory action against tainted property.

Summary: The appeals arose from orders of the NCLT and NCLAT declining to entertain applications filed by liquidators challenging provisional attachment of corporate debtor properties under Section 24 of the Benami Act. The attachment followed investigation into alleged benami transactions involving transfer of 100% shareholding of M/s Padmaadevi Sugars Ltd. to a beneficial owner through an intermediary for consideration paid in demonetised currency. During pendency of corporate insolvency resolution process and subsequent liquidation under the IBC, the liquidators sought to challenge the attachment before the NCLT, contending that the attached properties formed part of the liquidation estate and that Section 238 of the IBC, being a later enactment with a non-obstante clause, would prevail. The NCLT and NCLAT held that the Benami Act provides a complete code with exclusive jurisdiction vested in its authorities and appellate hierarchy, and that insolvency fora cannot act as parallel appellate authorities over sovereign confiscatory action. Before the Supreme Court, the appellants argued that permitting Benami proceedings would defeat maximisation of asset value and disrupt liquidation. The Court undertook a detailed comparative analysis of the Benami Act and the IBC, applied principles governing conflicts between special statutes, and relied on precedents including Embassy Property Developments, Gujarat Urja Vikas Nigam Ltd., and State Bank of India v. Union of India. It held that attachment and confiscation under the Benami Act fall within the public law domain and operate independently of insolvency proceedings; further, property held benami does not form part of the liquidation estate under Section 36 of the IBC as the corporate debtor lacks beneficial ownership.

Decision: All the appeals were dismissed with exemplary costs quantified at Rs. 5 lakhs each, payable to the Supreme Court Advocates on Record Association within four weeks, and the Court affirmed that challenges to attachment or confiscation under the Benami Act must be pursued exclusively through the statutory remedies provided under that Act.