2020 (3) TMI 1006 - AT - Money Laundering

Restoration of possession of property - legal question raised by Respondent that this Tribunal is not empowered to restore the possession is not agreed to on the ground that the power of this Tribunal to issue stay order as well as order consequential thereto is inherent - HELD THAT - The section 35(2)(h) of the PMLA, 2002 has empowered this Tribunal to set aside any order of dismissal of any representation for default or any order passed ex-parte. The restoration of possession in the present case is consequential to the order of restoration of appeal which was dismissed for default. The restoration of possession is an order during the pendency of the appeal and the status of the order of restoration of possession is same as in the case of passing of stay order. The main allegation against the appellant with respect to this property is that the appellant has liquidated the loan out of proceeds of crime. But the fact is that the appellant was staying with his family which consists of aged parents and that after being evicted they are staying with the family of sister of the appellant in a difficult condition. There is nothing on record that the appellant or their family members have any other accommodation to stay. The appellant has a prima facie case for restoration of possession of the property mentioned above and there will be injustice and irreparable injury would be caused if the possession of the house is not restored - the Respondent is directed to restore the possession of the property in question to the appellant within two weeks from today, subject to conditions imposed.

Summary

Issues: Restoration of Possession of Property under PMLA, 2002

Analysis:

Issue 1: Restoration of Possession Application
The appellant filed an application for the restoration of possession of a property located in Chandigarh, which was acquired in 2003 and allotted by the Chandigarh Housing Board. The appellant argued that the property was purchased after obtaining a loan from IDBI and that the Enforcement Directorate had taken possession of the property, causing the appellant and his family to face difficulties and embarrassment by staying in rented accommodation. The appellant contended that restoring possession was crucial to avoid irreparable injury.

Issue 2: Objection Raised by Respondent
The respondent objected to the restoration of possession, arguing that the Tribunal lacked the power to restore possession under the Prevention of Money Laundering Act, 2002 (PMLA). The respondent claimed that the loan for the property had been paid off using proceeds of crime, making it unjust for the appellant to enjoy the property. The respondent also highlighted that a stay application was pending and the stay order was issued before the reply to the application was filed.

Issue 3: Tribunal's Decision
After considering both parties' arguments, the Tribunal disagreed with the respondent's claim that it lacked the power to restore possession. The Tribunal invoked Section 35(2)(h) of the PMLA, 2002, stating that it had the authority to set aside dismissal orders for default. The Tribunal emphasized that restoring possession was akin to passing a stay order and was consequential to the restoration of the appeal. The Tribunal noted that the respondent did not challenge the status quo order previously issued, and after the appeal was restored, the appellant sought restoration of possession.

Issue 4: Prima Facie Case for Restoration
The Tribunal found that the appellant had a prima facie case for restoring possession of the property. It acknowledged that the appellant had no other accommodation after being evicted and staying in difficult conditions. Considering the legal and factual aspects, the Tribunal concluded that failure to restore possession would cause irreparable injury and injustice to the appellant.

Conclusion:
The Tribunal directed the respondent to restore possession of the property to the appellant within two weeks, subject to certain conditions to maintain legal and constructive possession. The application for restoration of possession was disposed of, and the appeal was listed for a future date. The Tribunal's decision aimed to address the appellant's immediate need for the property while upholding legal constraints under the PMLA, 2002.