Supreme Court Held That Attachment Orders Under Benami Act Cannot Be Challenged Under IBC

The Supreme Court, through its judgment dated 24.02.2026 in S. Rajendran v. The Deputy Commissioner of Income Tax (Benami Prohibition) & Ors.,¹ dismissed the order passed by National Company Law Appellate Tribunal, Chennai and held that attachment orders passed under the Prohibition of Benami Property Transactions Act, 1988 ("Benami Act") cannot be challenged before the adjudicating authorities under the IBC. The Court held that the Benami Act is a complete and self-contained code and the provisions under IBC cannot be invoked to bypass the statutory mechanism provided under the Benami Act.

The Court held that proceedings under the Benami Act fall within the public law domain and the validity of attachment and confiscation orders can only be challenged under the appellate framework provided under that Benami Act.

The Court observed that once the adjudicating authority under the Benami Act concludes that the CD is a benamidar, such property does not form part of the liquidation estate, and insolvency proceedings cannot be used to convert such property into distributable assets for creditors.

Footnote

1. Civil Appeal No. 7140 of 2022

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