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2018 (2) TMI 413 - AT - Money LaunderingAttachment orders - offence under PMLA - Held that - There is no nexus whatsoever between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against Bank who has sanctioned the amount which is untainted and pure money. They have priority to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The Ld. Adjudicating Authority has not appreciated the facts and law involved in the matter and the primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contentions raised by Mr. Neeraj Atri, Advocate has no substance. The provisional attachment in the present matter is bad and against the law. In the circumstances available in the present case, the allegation of money laundering prima facie, so far as present appellant & properties involved in this appeal, found to be unsustainable for the purpose of attachment under the PMLA, 2002. We set aside the Impugned Order dated 30.05.2016 and the Provisional Attachment Order dated 08.12.2015. The mortgaged properties attached under the PAO 03/2015, so far as, properties concern in this appeal are released from attachment forthwith.
Issues Involved:
1. Quashing and setting aside the impugned order dated 30.05.2016. 2. Overriding effect of PMLA and SARFAESI over each other. 3. Determination of whether the properties in question are proceeds of crime. 4. Rights of secured creditors under SARFAESI Act versus PMLA. Issue-wise Detailed Analysis: 1. Quashing and Setting Aside the Impugned Order Dated 30.05.2016: The appellant sought to quash the impugned order dated 30.05.2016 passed by the Adjudicating Authority under PMLA, which confirmed the attachment of properties mortgaged with the appellant bank. The properties in question were attached by the Enforcement Directorate under PAO No. 03/2015. The appellant argued that these properties were mortgaged before the alleged commission of the scheduled offenses and were not proceeds of crime. 2. Overriding Effect of PMLA and SARFAESI Over Each Other: The appellant contended that the SARFAESI Act, being a special Act with an overriding effect, should prevail over PMLA due to the amendment in 2016. The Enforcement Directorate argued that PMLA, also a special Act, has an overriding effect as per Section 71. The Tribunal referred to prior judgments, including the Supreme Court's decision in Solidaire India Ltd. v. Fair Growth Financial Services Ltd., which held that the later enactment with a non-obstante clause prevails. The Tribunal also cited amendments to the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, 1993, which prioritize secured creditors' rights over other debts, including government dues. 3. Determination of Whether the Properties in Question Are Proceeds of Crime: The Tribunal found no material evidence in the impugned order or PAO to establish that the properties mortgaged with the appellant bank were acquired out of proceeds of crime. The properties were purchased in 1996, well before the alleged commission of the scheduled offenses. The Tribunal noted that the Adjudicating Authority failed to elucidate how these properties were considered proceeds of crime. 4. Rights of Secured Creditors Under SARFAESI Act Versus PMLA: The Tribunal emphasized that the SARFAESI Act, as amended in 2016, gives priority to secured creditors over other debts, including government dues. The Tribunal referred to several judgments, including those from the Madras High Court, which upheld the priority of secured creditors under the amended SARFAESI Act. The Tribunal concluded that the appellant bank, being a secured creditor with a mortgage on the properties, had a rightful claim over the properties, which should not be overridden by PMLA. Conclusion: The Tribunal set aside the impugned order dated 30.05.2016 and the Provisional Attachment Order dated 08.12.2015. The properties mortgaged with the appellant bank were released from attachment, recognizing the appellant bank's priority as a secured creditor under the SARFAESI Act. The Tribunal highlighted the importance of protecting the rights of secured creditors and ensuring that their interests are not unjustly hampered by attachments under PMLA.
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