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2025 (3) TMI 1354 - HC - Money LaunderingCondonation of delay of 708 days in filling the Appeal - Money Laundering - challenge to provisional attachment order - sufficient cause for delay or not - merger of ING Vysya Bank with Kotak Mahindra Bank - HELD THAT - There is no doubt that the order confirming the provisional attachment was passed on 01st June 2016 and it is the admitted position that the same was received on 03rd June 2016 by the bank - In the opinion of this Court the merger of the Transferor Bank (ING Vysya Bank) with Kotak Mahindra Bank in April 2015 is a justifiable reason and cause that could have resulted in the delay. Upon the perusal of Section 26 of the PMLA it would show that after the initial period of 45 days there is no outer limit prescribed and the question would be whether there is sufficient cause or not - firstly there is no outer limit and there is also no negative stipulation that delay beyond a particular period would not be condonable. A Coordinate Bench of this Court in Directorate of Enforcement v. O P Nahar 2022 (5) TMI 1362 - DELHI HIGH COURT while adjudicating an appeal from an order of the Appellate Tribunal wherein the appeal under Section 26 of the PMLA was rejected due to delay of 204 days in its filing. The Court condoned the delay and inter alia held that the Appellant therein sufficiently explained the delay for not filing the appeal within the prescribed period. This Court takes into consideration the fact that the Appellant is a bank and since it was going through the merger process it cannot be said that the delay is completely inexplicable. Mergers of banks would involve complicated processes technological integration customer integration staff related issues compliances etc. have to be put in place. This could have delayed the filing of the appeal due to various procedural and administrative reasons. Conclusion - The merger process provides a sufficient cause for the delay thereby condoning it and restoring the appeal for adjudication on merits. The merger process provided a sufficient cause for the delay thereby condoning it and restoring the appeal for adjudication on merits - The appeal shall now be restored to its original number before the Appellate Tribunal and shall be adjudicated on merits in accordance with law.
ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this judgment is whether the delay of 708 days in filing an appeal by Kotak Mahindra Bank Ltd. under Section 42 of the Prevention of Money Laundering Act, 2002 (PMLA) should be condoned. The appeal was against an order confirming the provisional attachment of a property under the PMLA. Key sub-issues include:
ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 26 of the PMLA stipulates a 45-day period for filing an appeal against orders of the Adjudicating Authority or Director. However, it allows the Appellate Tribunal to entertain appeals filed beyond this period if "sufficient cause" is shown. The Court referenced the absence of an outer limit for condonation of delay under this section and compared it with precedents where delays were condoned based on the specific circumstances of each case. Court's Interpretation and Reasoning The Court interpreted the lack of an explicit outer limit in Section 26 as indicative of legislative intent to allow flexibility in condoning delays. It emphasized that the determination of "sufficient cause" is fact-specific and should consider the unique circumstances of each case. The Court was persuaded by the argument that the merger process between ING Vysya Bank and Kotak Mahindra Bank involved complex administrative and procedural changes, which could justify the delay. Key Evidence and Findings The Court noted that the merger involved significant restructuring, management changes, and logistical challenges, which were deemed plausible reasons for the delay. Additionally, the market value of the property in question, stated to be over 5.5 crores, underscored the significance of the case and the potential impact on public interest. Application of Law to Facts Applying Section 26, the Court found that the merger constituted a sufficient cause for the delay. The Court highlighted that the bank's role in representing public interest and the complexities involved in the merger process justified leniency in adhering to the strict timeline for filing appeals. Treatment of Competing Arguments The Respondent argued that the bank was aware of the provisional attachment confirmation and should have acted within the prescribed period. However, the Court found the bank's explanation credible, given the administrative challenges posed by the merger. The Court distinguished this case from others by emphasizing the bank's unique position and the procedural burdens of the merger. Conclusions The Court concluded that the delay was justifiable and condoned it, allowing the appeal to be heard on merits. The decision was conditioned upon the payment of costs to the Delhi High Court Legal Services Committee. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Court stated, "In the facts and the circumstances of the present Appeal, we do not find that the Appellant Bank has satisfactorily explained the delay of 708 days in filling the Appeal. Therefore, we dismiss the Application for Condonation of Delay and, consequently, the Appeal is also dismissed." However, this was overturned by the High Court, which found the delay justifiable. Core Principles Established The judgment reinforces the principle that procedural delays can be condoned if justified by sufficient cause, particularly when public interest is at stake. It underscores the importance of context-specific analysis in determining the sufficiency of cause under Section 26 of the PMLA. Final Determinations on Each Issue The Court determined that the merger process provided a sufficient cause for the delay, thereby condoning it and restoring the appeal for adjudication on merits. The decision was contingent on the payment of costs, reflecting a balance between procedural compliance and substantive justice.
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