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TMI Blog2017 (8) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside. The appeal is accordingly allowed. The application filed by the appellant in view of order dated 12th January, 2016 is allowed. Even the provisional attachment order is also set aside. In case, the respondent no. 1 & 2 still wish to attach the properties in question under the PMLA as canvassed by them before us, they are at liberty to approach the Bombay High Court to seek liberty, where the properties are in the possession of the Court Receiver. However such application, if filed, will have to be decided on merit. - FPA-PMLA-1448/HYD/2016 - - - Dated:- 17-4-2017 - Justice Manmohan Singh Chairman And Shri Anand Kishore Member For the Appellant : Shri Shravanth Paruchori, Advocate For the Respondent : Shri S.A. Saud, Advocate JUDGEMENT FPA-PMLA-1448/HYD/2016 1. The appellant M/s Tata Capital Financial Services Ltd. at the request off one M/s. Indu Projects Limited ( Borrower ), provided Credit Facility (in the nature of term loan facility). 2. The appellant sanctioned to the Borrower various credit facilities by way of First Term Loan Agreement dated 10th July, 2009 and Second Term Loan Agreement dated 30th March, 2010. 3. The Resched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver was not to dispossess the Borrower or any third party found in possession but shall take formal possession until further orders. 11. As the Court Receiver, High Court Bombay was unable to take formal possession of the property, the Hon ble Court by its Order dated 3rd February 2015, in the Appellant s Application) clarified that the Court Receiver shall visit the premises on 6th February, 2015 at 11:00 a.m. to comply with the order passed by the Hon ble Court dated 23rd July 2014. 12. Accordingly, formal possession of the property was taken by the Court Receiver, High Court, Bombay on 6th February, 2015. The Court Receiver s report was filed by the Appellant s Application before the Adjudicating Authority. The contention of the appellant before the High Court was that the Borrower and Guarantors are liable to pay the Appellant, the outstanding dues aggregating to ₹ 35,85,39,403/- (Indian Rupees Thirty Five Crores, Eighty Five Lakhs Thirty Nine Thousand Four Hundred and Three Only) as on 10th June 2014 along with a further interest at the rate of 13.25% per annum from 11/06/2014. 13. On or about April, 2015, the Appellant learnt of the order passed by the Joint Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the fact the properties in question were under the possession of the Hon ble High Court as per orders passed by the Court from time to time prior to PMLA proceedings. The Adjudicating Authority thereafter passed an impugned order dated 24th July, 2015 whereby the Provisional Attachment of the Property in question is converted into a Final Attachment without appreciating or considering the Representation filed before the Respondent. 18. For the safety side the appellant took the steps to implead Respondent no. 1 as a party to the Section 9 proceedings before the Hon ble High Court at Bombay pursuant to the Order dated 5th August, 2015 passed by the Hon ble Court directing the to file its Affidavit and disclose the status of attachment levied. 19. Thereafter, the appellant preferred an appeal before the Appellate Tribunal, New Delhi challenging the impugned order made by the Adjudicating Authority on 23rd November, 2015. The said appeal bearing no. 1145 was heard on 8th January, 2016 and 12th January, 2016 respectively. 20. The Appellate Tribunal by its Order dated 12th January 2016 observed that the said Appeal was not maintainable as the Appellant was not a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Though the Applicant has shown that prima-facie the Applicant has a claim in respect of some of the properties attached, however the Applicant has failed to prove that the property is not involved in money laundering. In fact there are no grounds raised in the Application itself to show that the property is not involved in money-laundering. Nor are any arguments advanced to the said effect. A party may be having claim over a property which is involved in moneylaundering, but merely because a party has a claim, it cannot be said or concluded that because of such claim the property is not involved in money-laundering. The Applicant has miserably failed to prove the said aspect. On the other hand there is adequate evidence, which justifies that the properties Provisionally Attached are involved in money-laundering. Hence there is no question of exempting any property from the attachment, which attachment is duly confirmed by the Adjudicating Authority. The application of the applicant therefore fails and the same is rejected. In view of the consideration of the Application filed in terms of section 8(2), the Applicant having raised a claim in respect of part of the properties; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisional orders. The said act of the Adjudicating Authority is not in accordance with orders of the Hon ble High Court. 27. Respondent no. 2 ought to have understood that on 6th February, 2015, the Court Receiver of the Hon ble Bombay High had already taken possession of this mortgaged property when even provisional attachment order was not passed. It is matter of fact that with effect from 6th February, 2015 the mortgaged property was Cusodia Legis and thus, it was not open for any authority to attach the property which was in the possession/custody of the Court Receiver, High Court Bombay. 28. Respondent No.2 without appreciating that once the Court Receiver is appointed as Receiver for any property as per settled law by the Apex Court, no other rights can be created and/or no attachment can be levied on the same till such property continues to be in possession / custody of the Court Receiver. Any authority without the permission of the same very court as the property in question is in the custody of the Court. 29. The Respondent No. 2 was wrong in coming to the conclusion that there is nothing brought on record by the Appellant in the present proceedings to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also settled law that proceedings taken in respect of a property which is in the possession and management of a Receiver appointed by Court under Order 40, Rule 1 of the Code of Civil Procedure, without the leave of that Court, are illegal in the sense that the party proceeding against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the proceedings so held, do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who, ultimately, may be adjudged by the Court to be entitled to the same. The learned counsel for the respondent was not able to bring to our notice any ruling of any Court in India, holding that a sale held without notice to the Receiver or without the leave of the Court appointing the Receiver in respect of the property, is void ab initio. In the instant case, we do not think it necessary to go into the question raised by the learned counsel for the respondents that a sale of a property in the hands of the Court through its Receiver, without the leave of the Court, is a nullity. The American Courts appear to have taken the view that such a sale is void ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be only too anxious to see that: property in custodia legis is not subjected to uncontrolled attack, while, at the same time, protecting the rights of all persons who may have claims to the property. 31. The Respondent no. 2 is not correct while coming the conclusion that Section 9 of the Act has an overriding effect over all other law for the time being in force and the property attached vests free of encumbrances in the Central Government. Under the present facts and circumstances available in the present case, there is no provision and it cannot be held by the authority that the PMLA has overriding effect under these circumstances also one the property in question is in the possession of the Court and the same can be vested with the Central Government without the leave of the Court. 32. Respondent no. 2 was not correct while passing the order of provisional attachment on 25th March 2015, the Adjudicating Authority was not aware of the fact that the Court Receiver had taken possession of the mortgaged property on 6th February 2015. No doubt upto the stage of passing of provisional attachment order, the Adjudicating Authority was not aware, but at the time of confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged property (which is in custody and possession of the Court Receiver) would be contrary to scheme of the Act and is contrary to well settled law. The Appellant has bonafide claim against the Borrower which is secured by the mortgaged property. 36. The Respondent no. 2 was wrong in holding that the property which is allegedly proceeds of crime is liable to be attached irrespective of the claims of innocent third parties and the provisions of Section 9 of the Act has overriding effect over all other laws for time being in force. The said findings are contrary to plain reading of Section 9 of the Act. Section 71 of the Act states that the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. It is evident, the Section does not deal any overriding effect of the provisions of the Act as held by Respondent No. 2. The contentions of the appellant are not in any manner inconsistent with any provision of the Act particularly once the same property is in custody with the court receiver. 37. Counsel for the respondent has referred to the decision of Division Bench in the case of Brizo Reality Company Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier judgment delivered by this Court in South Central Railway Employees Coop. Credit Society Employees' Union v. Registrar of Coop. Societies and the impugned judgment. In our opinion, the High Court has committed a grave error by taking a different view than the one which had been taken by this Court in South Central Railway Employees Coop. Credit Society Employees Union v. Registrar of Coop. Societies, especially when the rules governing the promotion policy had not been amended after the aforestated judgment was delivered by this Court. It is pertinent to note that a review application had been filed in the aforestated South Central Railway Employees Coop. Credit Society Employees Union v. Registrar of Coop. Societies and the same had been rejected and therefore, the judgment delivered by this Court in South Central Railway Employees Coop. Credit Society Employees Union v. Registrar of Coop. Societies had become final. 12. Once in pursuance of a judgment delivered by this Court orders had been issued by the Society to its employees who had been wrongly promoted, the High Court could not have held that the orders were not valid because there were certain other fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was passed on 24th July, 2015. The submissions have force. Firstly, the order dated 12th January, 2016 has not been challenged by the respondent in the higher court. Secondly, the ratio laid down by the Hon ble Supreme Court of India in the matter of Kapra Mazdoor Ekta Union V/s. Birla Cotton Spinning and Weaving Mills Ltd. Anr. (2005 13 SCC 777); South Central Railway Employees Cooperative Credit Society Employees Union V/s. B. Yashobai Ors. (2015 SCC 727); Kanhaiyalal V/s. Dr. D.R. Banaji Ors. (1959 SCR 333). The said three Judgments are applicable to the present case and ought to have been considered by the Respondent No. 2. 43. Kapra Mazdoor Ekta Union Vs. Birla Cotton Spinning and weaving mills ltd and another [2005 13 SCC77]. a. Review on merits and procedural review. Review on merits is permissible only in case forum in question is vested with power of review by statute, expressly or by necessary implications. There exist no inherent power for the same. However, procedural review belongs to a different category, power for which is inherent. In case of procedural review, party seeking the same does not have to prove any of the grounds necessary to warrant review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom appearing when the reference was called on for hearing. The Tribunal set aside the ex parte award on being satisfied that there was sufficient cause within the meaning of Order 9 Rule 13 of the Code of Civil Procedure and accordingly set aside the ex parte award. That order was upheld by the High Court and thereafter in appeal by this Court. 18. It was, therefore, submitted before us, relying upon Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal that even in the absence of an express power of review, the Tribunal had the power to review its order if some illegality was pointed out. The submission must be rejected as misconceived. The submission does not take notice of the difference between a procedural review and a review on merits. This Court in Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal5 clearly highlighted this distinction when it observed: (SCC p. 425, para 13) Furthermore, different considerations arise on review. The expression review is used in the two distinct senses, namely (1) a procedural review , which is either inherent or implied in a court or Tribunal to set aside a palpably erroneous order passed under a misapprehension by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed is liable to be recalled and reviewed not because it is found to be erroneous, but because it was passed in a proceeding which was itself vitiated by an error of procedure or mistake which went to the root of the matter and invalidated the entire proceeding. In Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal5 it was held that once it is established that the respondents were prevented from appearing at the hearing due to sufficient cause, it followed that the matter must be reheard and decided again. 44. Therefore the submissions of the respondent cannot be accepted and the order dated 12.01.2016 was contrary to law in view of the facts and circumstances in the present case. 45. Respondent No. 2 was wrong in coming to the conclusion that the attachment thereof, which is duly confirmed is legitimate and correct. There are no reasons or any possibility of revising, reversing or setting aside the said confirmatory order passed by Respondent No.2. Respondent No. 2 ought to have appreciated that the Appellant had made out a case for setting aside the order dated 24th July 2015. 46. The Appellant in the present case has discharged the burden and in fact, Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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