9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 830 - AT - Money LaunderingOffence under PMLA - provisional attachment order - Held that - It is nothing less than a case of daylight robbery by the Sandesara Group of companies, including Sterling Biotech Limited and their respective owners. As mentioned, large number of properties have been mortgaged with the above mentioned banks and financial institutions, who are admittedly the secured creditors of the said amount. Some of them are public sector banks. The money due must go to the banks so that the banks should run the system in smooth manner. At present, no-one is known when they would return back and when the extradition proceedings are initiated against them and who will pass the orders thereon. Trial may take number of years. Therefore, blocking the process to receive the loan cannot be stopped as suggested by the ED. The present case is a classic example as to how the public money has been swindled by these groups and individuals. No one knows when enquired why they have left the country and how they have managed to flee recently in pending investigation by various agencies, no one is aware whether they will ever return to home country and pay their debts, every one appearing is clueless on this question. Thus, the submission of ED can be accepted that unless the trial of accused parties is over, mortgage properties against the loan amount should not be dealt with. The borrowers will celebrate the said order if their properties to be kept in safe heaven for couple of decades In the light of above, till the next date of hearing, operation of the impugned order with regard to the mortgaged properties shall remain stayed. However, the Provisional Attachment Order dated 29th May, 2018 shall continue. With regard to the other properties status quo shall be maintained by all the parties. It is directed that CIRF process under the Insolvency Code shall continue.
Issues Involved:
1. Priority of secured creditors' rights under SARFAESI Act and RDDBFI Act vs. attachment under PMLA. 2. Validity of the impugned order and its compliance with legal provisions. 3. Applicability of the definition of "proceeds of crime" under PMLA. 4. Impact of Corporate Insolvency Resolution Process (CIRP) under IBC on the attachment under PMLA. 5. Jurisdiction and authority of the Adjudicating Authority and Appellate Tribunal under PMLA. Detailed Analysis: 1. Priority of Secured Creditors' Rights: The appellants argued that as secured creditors, they have priority over the mortgaged properties under the SARFAESI Act and RDDBFI Act, which should override the provisions of the PMLA. They cited sections 26E and 31B, which grant priority to secured debts over government dues. The Tribunal acknowledged that the secured assets cannot be attached or confiscated when there is no illegality in the title of the bank and no charge of money laundering against the bank. The Tribunal emphasized that the bank is entitled to recover its dues by proceeding against the mortgaged properties under the SARFAESI Act and RDDBFI Act. 2. Validity of the Impugned Order: The appellants contended that the impugned order suffers from non-application of mind and is a non-speaking order, failing to address the rights under the SARFAESI Act. The Tribunal noted that the Adjudicating Authority and Respondent No.1 admitted the properties were equitably mortgaged in favor of the appellant. The Tribunal found that the impugned order did not adequately consider the legal provisions and the bona fide acquisition of the properties by the appellant. 3. Applicability of "Proceeds of Crime": The appellants argued that the properties must have been acquired as a result of criminal activity to be considered "proceeds of crime" under Section 2(u) of PMLA. The Tribunal agreed that the definition requires the property to be acquired as a result of criminal activity and noted that the appellant was not involved in any acts of money laundering. The Tribunal referred to previous judgments where properties acquired bona fide and legitimately were relieved from provisional attachment. 4. Impact of CIRP under IBC: The appellants highlighted the ongoing CIRP under the IBC for Sterling Biotech Limited and argued that the CIRP process should continue, allowing the secured creditors to recover their dues. The Tribunal acknowledged the CIRP process and noted that the IBC is a time-bound process, emphasizing the need to complete it within the stipulated period. The Tribunal rejected the argument that the properties should not be dealt with under the CIRP process and allowed the process to continue. 5. Jurisdiction and Authority: The Tribunal asserted its jurisdiction to examine the issue of attached properties and noted that the secured creditors have priority over other debts, including government dues. The Tribunal referred to various Supreme Court and High Court judgments supporting the precedence of later enactments with non-obstante clauses over earlier ones. The Tribunal emphasized that the secured creditors' rights to realize secured debts have priority over all other debts and government dues. Conclusion: The Tribunal stayed the operation of the impugned order regarding the mortgaged properties till the next hearing date, while the provisional attachment order continued. The CIRP process under the Insolvency Code was allowed to proceed. The Tribunal directed the parties to maintain the status quo regarding other properties and scheduled the next hearing for 18th March 2019. The Tribunal's decision reinforced the priority of secured creditors' rights under the SARFAESI Act and RDDBFI Act over the attachment provisions of the PMLA, ensuring the secured creditors could proceed with recovering their dues.
|
