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2017 (9) TMI 54 - AT - Money LaunderingPrevention of Money Laundering - Provisional Attachment - accused of criminal proceedings - Held that - Admittedly, neither the banks nor employees of these appellants are accused in any criminal proceedings nor there is any allegations against them that they are involved in the commission of alleged crime or generating proceeds of crime . The amounts of loan sanctioned are public money and they are entitled to get back their money by selling the mortgaged property as a first charge. The Parliament has amended the SARFAESI Act, 2002 by inserting the section 31 B in the said Act w.e.f. 01.09.2016. The effect of the said amendment has already been discussed in our judgment dated 14th July, 2017 (Supra). The facts and the legal issues involve in the present appeals are identical to the facts and the legal issues involved in the groups of matter which has been decided by this tribunal on 14.07.2017 (Supra). Keeping in view, the facts and circumstances of the present appeals and the judgments cited herein above in the group of matters of State Bank of India and 11 others Banks (Supra), we are of the considered view that the Impugned Order dated 16.06.2016 and the Provisional Attachment Order dated 17.12.2015 are not legally correct and liable to be set aside. Accordingly the appeal is allowed. The schedule property is released from the attachment and the appellant‟s Bank may take the possession of the property mortgaged with them as secured assets.In the circumstance, the allegation of money laundering prima facie found to be unsustainable for the purpose of attachment under the PMLA, 2002.
Issues Involved:
1. Legality of the attachment made by the Enforcement Directorate. 2. Overriding effect of SARFAESI Act, 2002 over PMLA Act, 2002. 3. Validity of the provisional attachment order dated 08.12.2015. 4. Confirmation of the attachment order by the Adjudicating Authority. 5. Rights of secured creditors under SARFAESI Act, 2002. 6. Involvement of the attached property in the alleged crime. Detailed Analysis: Legality of the Attachment: The Tribunal examined the legality of the attachment made by the Enforcement Directorate (ED) and the confirmation of the same by the Adjudicating Authority. The appellant, HDFC Bank Ltd., contended that the scheduled property was purchased in 2005, prior to the registration of the FIR against GIL and the reference from the Central Vigilance Commission. The property was mortgaged with the appellant before the passing of the Provisional Attachment Order (PAO) and the impugned order. The Tribunal found that the property was purchased before the alleged commission of scheduled offences and that the loan was availed from Centurion Bank of Punjab, which later merged with HDFC Bank. The Tribunal concluded that the attachment of the property was not justified as it was not acquired from the "proceeds of crime." Overriding Effect of SARFAESI Act, 2002 Over PMLA Act, 2002: The Tribunal referred to its recent judgment in the case of State Bank of India Vs. Enforcement Directorate, where it was held that the SARFAESI Act, 2002 has an overriding effect over the PMLA Act, 2002. The Tribunal discussed the amendment of the SARFAESI Act in 2016, which inserted section 31(B) giving priority to secured creditors over other debts and government dues. The Tribunal reiterated that the SARFAESI Act, being a later enactment with a non-obstante clause, prevails over the PMLA Act. Validity of the Provisional Attachment Order Dated 08.12.2015: The appellant challenged the PAO on the grounds that it was non-est in law and lacked reasons to believe that the property was acquired from the "proceeds of crime." The Tribunal found that the PAO and the impugned order did not contain any reasons to believe that the property was involved in money laundering. The Tribunal held that the PAO was not legally correct and was liable to be set aside. Confirmation of the Attachment Order by the Adjudicating Authority: The Adjudicating Authority confirmed the PAO on the premise that other assets of the accused could be confiscated if the proceeds of crime were not easily traceable. The Tribunal found this reasoning to be contrary to law and held that the confirmation of the PAO was not justified. Rights of Secured Creditors Under SARFAESI Act, 2002: The Tribunal emphasized that the SARFAESI Act gives priority to secured creditors to realize their debts over other debts and government dues. The Tribunal referred to several judgments, including those of the Supreme Court and the Full Bench of the Madras High Court, which supported the priority of secured creditors. The Tribunal concluded that the appellant bank, being a secured creditor, had the right to recover its dues by selling the mortgaged property. Involvement of the Attached Property in the Alleged Crime: The Tribunal found that the property in question was purchased before the alleged commission of the scheduled offences and was mortgaged with the appellant bank for bonafide purposes. There was no evidence to suggest that the property was acquired from the proceeds of crime. The Tribunal held that the attachment of the property was not justified as it was not involved in money laundering. Conclusion: The Tribunal allowed the appeal, set aside the impugned order dated 30.05.2016, and the provisional attachment order dated 08.12.2015. The scheduled property was released from attachment, and the appellant bank was allowed to take possession of the mortgaged property as secured assets. The Tribunal found the allegation of money laundering to be prima facie unsustainable for the purpose of attachment under the PMLA, 2002.
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