2014 (9) TMI 1123 - AT - Money Laundering

Provisional attachment - PMLA Act - alternate remedy - Held that - The plea of the Appellant that he has no other right before any other forum to agitate his right except to file the present appeal under section 26 of the Act cannot be accepted. In the circumstances the appropriate course for the Appellant would have been to file an appropriate application invoking his right to be heard under proviso to section 8(2) of the Act and to establish before the Adjudicating Authority that he has a right in the property which has been provisionally attached and for which provisional attachment order has also been confirmed. Entertaining the Appeal of the Appellant, though he has a right to approach the Adjudicating Authority seeking a right of hearing under proviso to section 8(2) of the Act can have serious consequences leading to deprivation of rights to the opposite parties. If this Tribunal entertains the appeal of the Appellant and comes to the conclusion that the appellant has a right in the property which has been attached and the said property is not liable for attachment, then the respondent shall be deprived of his right of first appeal, as contemplated under section 26 of the Act and will be left only with invoking his right of second appeal as contemplated under section 42 of the Act. When an efficacious remedy is available to the appellant, then whether it will be appropriate to entertain his appeal in the facts and circumstances. Therefore, in the facts and circumstances and for the foregoing reasons, the appeal of the appellant is not entertained and it is left to the appellant to invoke the remedy available to him under the Act, in case the Appellant has a right over the property which had been provisionally attached and which attachment order had been confirmed by the Adjudicating Authority.

Issues Involved:
1. Provisional Attachment Order
2. Hearing Rights under Section 8(1) and 8(2) of PMLA
3. Ownership and Recovery of Attached Money
4. Jurisdiction and Powers of Adjudicating Authority Post-Confirmation of Attachment Order

Issue-Wise Detailed Analysis:

1. Provisional Attachment Order:
The Central Bank of India (Appellant) appealed against the Adjudicating Authority's order dated June 27, 2011, which confirmed the attachment made by the Enforcement Directorate (ED) of various amounts lying in the accounts of Respondents Nos. 2 to 7. The attached amounts included Rs. 2,22,00,000 in Mr. M. Kandaswamy's account, Rs. 25,00,000 in Mrs. T.R. Ratna Kumari's account, Rs. 35,30,211 in M/s. Aravind Traders' account, Rs. 7,00,000 in a fictitious account opened by Mr. R. Ravishankar, and Rs. 5,53,254 in M/s. Krishna Traders' account. The appellant contended that the attached money belonged to them and was fraudulently transferred by Mr. T.V. Krishna Rao in collusion with bank officials.

2. Hearing Rights under Section 8(1) and 8(2) of PMLA:
The appellant argued that they were not served any notice under Section 8(1) of PMLA before the confirmation of the provisional attachment order, thus violating their right to a hearing. The Tribunal highlighted that the Adjudicating Authority must provide a hearing to any party with a right in the attached property, even if no notice under Section 8(1) was issued. The Tribunal clarified that the Adjudicating Authority does not become functus officio (without further authority) after confirming the attachment order and can still entertain applications for hearings under the proviso to Section 8(2).

3. Ownership and Recovery of Attached Money:
The appellant claimed that the attached money was fraudulently siphoned from their account and should be returned to them. They argued that the money was not laundered and belonged to the Appellant Bank. The Tribunal noted that the appellant had already filed a civil suit and a criminal petition seeking recovery of the defrauded amount. The Tribunal emphasized that the appellant should approach the Adjudicating Authority to establish their right to the attached property and seek a hearing under Section 8(2).

4. Jurisdiction and Powers of Adjudicating Authority Post-Confirmation of Attachment Order:
The Tribunal rejected the argument that the Adjudicating Authority loses its power to hear claims after confirming the provisional attachment order. The Tribunal explained that the Act's scheme allows the Adjudicating Authority to give a hearing to any party with a right in the attached property, even after confirmation. The Tribunal emphasized that the Adjudicating Authority must ensure that no person's property is attached without a reasonable opportunity for a hearing, as mandated by the Act.

Conclusion:
The Tribunal concluded that the appellant should file an appropriate application before the Adjudicating Authority to seek a hearing and establish their right to the attached property. The Tribunal did not entertain the appeal, emphasizing that the appellant had an efficacious remedy available under the Act. The Tribunal disposed of the appeal and all pending applications, allowing the appellant to pursue their claim before the Adjudicating Authority.

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