2021 (8) TMI 1176 - HC - Money Laundering

Attachment of property - proceeds of crime - first right or claim over the properties - HELD THAT - The finding recorded is that the attached properties are not proceeds of crime. Mr. Vyas, the learned ASG is prima facie right in his submission that this particular finding recorded by the Appellate Tribunal would put an end to the criminal complaint filed by the appellant under the PMLA. It can be suggested that the Bank and the appellant may jointly put the properties to auction and try to fetch a good price. If successful in this exercise, then the amount shall neither go to the Bank nor shall go to the appellant, but we may ask them to deposit the entire amount with the Registry of this Court or we may ask them to open an Escrow Bank Account and deposit the same. We shall decide above the precedence once the auction is successful. Post this matter on 06.09.2021.

Summary

Issues involved:
1. Stay of operation, implementation, and execution of the order dated 17.01.2019 passed by the Appellate Tribunal, Prevention of Money Laundering Act, New Delhi.
2. Right or precedence over the attached properties.
3. Findings recorded by the Appellate Tribunal in the impugned order.

Analysis:
1. The petitioner sought a stay on the order passed by the Appellate Tribunal under the Prevention of Money Laundering Act. The Court admitted the First Appeal and issued notice to the opponent, maintaining status quo on the attached properties until the next hearing date. The Court stayed the operation of the impugned order to secure the interests of both the Bank as a secured creditor and the Directorate of Enforcement.

2. The principal argument revolved around the Bank's claim over the attached properties. The Bank asserted its right over the properties, emphasizing a Delhi High Court decision regarding the validity of attachment under PMLA concerning secured creditors. The Appellate Tribunal's finding that the attached properties were not proceeds of crime significantly impacted the criminal complaint filed by the appellant under PMLA.

3. The Appellate Tribunal's finding that the attached properties were not derived from criminal activity directly impacted the case. The Court acknowledged the Bank's symbolic possession but noted that physical possession remained with the appellant. The Court proposed options to maintain status quo or auction the properties jointly by the Bank and appellant, with the proceeds to be held in escrow pending further orders.

In conclusion, the Court addressed the issues of stay on the impugned order, the right over attached properties, and the findings of the Appellate Tribunal. The Court proposed a joint auction of properties to secure interests and deferred the decision on the proceeds pending further orders. The matter was adjourned for further discussion between the parties, emphasizing the need to balance the interests of the Bank and the Directorate of Enforcement under the PMLA.