9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 1007 - HC - Money LaunderingProvisional order of attachment - offences for which the company and its Directors are sought to be prosecuted - Held that - The criminal activity alleged against the company and its Directors relates to scheduled offences, at least at the time of the alleged commission and at the time of the lodging of the complaints (though they are not so any more after the amendment). In so far as the Part B offences are concerned, the offences listed therein would come within the meaning of expression scheduled offence under Section 2(1)(y) only if the total value involved in such offences is ₹ 30 lakhs and more. This condition is also satisfied in the cases on hand. Therefore, the ingredients of the expression proceeds of crimestand satisfied, in view of the fact (i) that the company is charged of committing scheduled offences and (ii) the property in question is allegedly derived as a result of a criminal activity relating to scheduled offences. Hence I cannot sustain the first contention that since the entire sale consideration for the property was paid by the Bank, it cannot be termed as the proceeds of crime. Prima facie, the property represents the proceeds of crime and it is upto the accused to establish, by evidence, before the criminal court that it is not so. I make it clear that the criminal court should independently go into the question without being influenced by my preliminary finding on this question. The Authority had the leverage and obligation to wait till the disposal of the writ petition or at least till the stay order was vacated. The Courts have repeatedly held that any proceeding initiated, conducted or concluded in violation of an order of interim stay or injunction is non- est in the eye of law. The Adjudicating Authority should have at least waited for this Court to dispose of the writ petition filed by the Bank or in the alternative, directed the impleadment of the Bank as a party. By virtue of the interim order dated 28.2.2012, this Court has permitted the Bank to proceed with the auction sale of the property under the SARFAESI Act, 2002. The action of the Adjudicating Authority in proceeding with the hearing of the original complaint despite being aware of the interim stay order and also proceeding to pronounce a final order on 26.6.2012, is clearly in defiance of the interim stay order of this Court. Therefore, the whole proceedings are vitiated and even the order dated 26.6.2012 passed during the pendency of these writ petitions is illegal and are liable to be set aside as null and void. In view of the above, both the writ petitions are allowed, the provisional order of attachment dated 22.2.2012 as well as all further proceedings pursuant thereto including the original complaint and the order of confirmation dated 26.6.2012, are set aside as illegal. I am conscious of the fact that the order of confirmation dated 26.6.2012 was passed during the pendency of these writ petitions and that the same is not under challenge. But it hardly matters, in view of the fact that once the provisional order of attachment dated 22.2.2012 goes, there is nothing for the Adjudicating Authority to confirm. There will be no order as to costs. However, the findings recorded herein shall not have a bearing on the criminal prosecution. Consequently, connected miscellaneous petitions are closed.
Issues Involved:
1. Whether the property sought to be attached represents the proceeds of crime. 2. The standing of the Indian Bank's claim if the property represents the proceeds of crime. 3. The validity of proceedings before the Adjudicating Authority in light of an interim stay order. 4. The failure to make the Indian Bank a party to the proceedings before the Adjudicating Authority. Issue-wise Detailed Analysis: 1. Whether the property sought to be attached represents the proceeds of crime: The court examined the provisions of the Prevention of Money Laundering Act, 2002 (PMLA). The definition of "proceeds of crime" under Section 2(1)(u) includes any property derived from criminal activity related to a scheduled offence. The company argued that since the entire sale consideration for the property was paid by the Indian Bank, it could not be considered proceeds of crime. However, the respondents contended that the property was purchased with funds obtained fraudulently from multiple banks. The court found that the entire sale consideration for the property had indeed come from the Indian Bank. Despite this, the court concluded that prima facie, the property represented the proceeds of crime, and it was up to the accused to prove otherwise in the criminal court. 2. The standing of the Indian Bank's claim if the property represents the proceeds of crime: The court noted that the PMLA did not account for the victims of crime, such as the banks defrauded by the company. The court expressed concern that the Act's provisions could result in victims losing their property to the Central Government upon confiscation. The court highlighted that both the PMLA and the SARFAESI Act, 2002, have overriding effect clauses, creating a conflict. The court emphasized that the PMLA's primary objective was to prevent money laundering related to drug crimes and terrorism, not to punish victims of fraud. Therefore, the court concluded that the banks should not be left without recourse and should be able to recover their dues. 3. The validity of proceedings before the Adjudicating Authority in light of an interim stay order: The court found that the provisional order of attachment was passed on 22.2.2012, and the Indian Bank filed a writ petition on 27.2.2012, obtaining an interim stay on 28.2.2012. Despite being aware of the stay order, the Directorate of Enforcement filed the original complaint on 15.3.2012. The court held that this action was in defiance of the interim stay order and that the proceedings before the Adjudicating Authority were null and void. 4. The failure to make the Indian Bank a party to the proceedings before the Adjudicating Authority: The court noted that the Directorate of Enforcement did not make the Indian Bank a party to the proceedings before the Adjudicating Authority, despite being aware of the bank's claim and the interim stay order. The court held that the Adjudicating Authority was obligated to hear the bank and that the failure to do so rendered the proceedings invalid. Conclusion: The court allowed both writ petitions, setting aside the provisional order of attachment dated 22.2.2012 and all subsequent proceedings, including the original complaint and the order of confirmation dated 26.6.2012, as illegal. The court emphasized that its findings should not influence the criminal prosecution. Consequently, the connected miscellaneous petitions were closed.
|
