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TMI Blog2014 (9) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... , Anna Nagar, Chennai, Rs. 7,00,000/-in the account No. 12285620000058 opened in the fictitious name of T. Suresh by Mr. R. Ravishankar and Rs. 5,53,254/- in the account No. 06878640000011 of M/s. Krishna Traders, Chennai held with HDFC Bank, Gangwali Mansion, J-14, 3rd Avenue, Anna Nagar, Chennai. The appellant has contended that the Appellant Bank is entitled to receive the monies lying in the accounts of Respondent Nos. 2 to 7 in different banks. The appellant has averred that though the Appellant is the most affected party, the Enforcement Directorate (ED) has not served any notice on the Appellant and the Ld. Adjudicating Authority has passed the impugned order without hearing the Appellant. The money in question actually belongs to the Appellant and the Appellant is entitled to receive the same. The impugned order is against the facts of the case and law and therefore is liable to be set aside. 2. The counsel for the Appellant had filed an application seeking stay of the provisional attachment order and impugned order confirming the provisional attachment order being MP-PMLA/58/CHN/SP which was withdrawn by the appellant on 10th January, 2012. 3. Facts in brief to comprehen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... message addressed to Mogappair Branch of Central Bank of India Sri S. Sankara Kumar handing over a fax message dated 23.07.2009 purportedly issued by M/s. NCL addressed to Central Bank of India, Mogappiar Branch instructing to transfer the funds that is Rs. 25 crores to current account of M/s. Krishna Builders as an advance for construction contract allotted to the firm. Krishna Rao also submitted a hand written letter dated 23.07.2009 requesting for such transfer. It was claimed that on the next day that is 24.07.2009 one Suresh Malhotra came to the said branch of Central Bank of India introducing himself as the Assistant Manager (finance) of M/s. NCL and handed over the original of the fax message dated 23.07.2009 brought by T.V. Krishna Rao the preceding day. Sri Sankara Kumar did not verify the contradictory instructions and transferred the money to the account of M/S Krishna Builders. These fax messages and the letter referred to above were no longer available with the bank and are presumably destroyed. Sh. T.V. Krishna Rao with the connivance of Shri Shankar Kumar Senior manager of the Bank fabricated FD/TDR receipt No N301436 dated 23.07.2009 in favour of M/s. NCL by using f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/- lying in the account No. 06878640000107 of M/s. Arvindh Traders, Chennai held in HDFC Bank, Gangwal Mansion, J-14, 3rd Avenue, Annanagar, Chennia-102. The respondent has alleged that out of the amount of Rs. 25 crores, Rs. 3 crores was transferred to the account of M/s. Arvindh Traders. Out of the same Sh. Krishanrao has withdrawn various amounts and balance lying in the account that is Rs. 35,30,211/- which has been attached and which attachment order has been confirmed. (iv) Attachment of Rs. 7,00,000/- lying in account No. 12258620000058 opened by Shri R. Ravi Shankar in the name, T. Suresh, HDFC Bank, No. v995-C, Second Avenue, Anna Nagar, Chennai-40. The respondent has noted that out of the sum of Rs. 25 crores fraudulently siphoned from NCL accounts, Rs. 10 lakhs was transferred from M/s. Krishna Builders' account to the account of R. Ravi Shankar on 27.07.2009. Sh. Ravi Shankar, an employee of Sh. Krishna Rao, however, transferred the money back to the personal account of Sh. Krishna Rao on latter's instructions. Sh. T.V. Krishnarao made cash deposits of 7 lakhs in the fictitious name of Sh. T. Suresh which amount has also been attached. (v) Attachment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money. According to the appellant it is a recovery of a stolen property. According to the appellant the Central Bureau of Investigation, Chennai, in the process of investigation, have frozen the following bank accounts, the details of which are furnished hereunder: 3.7. The plea of the appellant is that it is a nationalized Bank and because of the offenses committed by the accused, it has lost Rs. 25,00,00,000/- (Rupees Twenty Five Crores Only) out of which the CBI was able to freeze the above amounts. The appellant has contended that the above amounts actually belong to the Appellant Bank and were transferred fraudulently, therefore, the Appellant Bank is entitled to recover and restore the above said frozen money in order to realize the amount defrauded to some extent. 3.8. The Appellant disclosed that it has already filed a Civil Suit C.S. No. 356 of 2011, against, 52 Defendants before the Hon'ble High Court of Madras seeking the relief of recovery from all the defendants to the tune of Rs. 23,03,89,182/- (Rupees Twenty Three Crore Three Lakh Eighty Nine Thousand One Hundred and Eighty Two Only), interest payable @ 16% p.a. total amounting to Rs. 28,05,82,464/- (Rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent has acknowledged the fact that the Appellant has restored/paid the amount of Rs. 25 crores to NCL with interest from 23.07.2009. NCL in its letter dated 23.11.2009 has acknowledged the receipt of the fresh FDR from the Bank. 3.10. The grievance of the appellant is that despite it being apparent that the money being not the proceeds of crime and is owned by the Appellant, the Adjudicating Authority has upheld the provisional attachment order without giving any notice to the appellant under section 8(1) of PMLA and without giving any hearing to the Appellant. The appellant has contended that since the appellant is aggrieved by the confirmation order of the Adjudicating Authority dated 27th June, 2011 in OC No. 99 of 2011, the appellant is entitled to file the appeal against the said order under section 26 of the Act. The Appellant has therefore, contended that the order dated 27th June, 2011 be set aside and the amounts lying in respective banks be released to the Appellant. 3.11. The respondent in reply to the pleas and contentions of the appellant, as notice was not issued to the appellant under section 8(1) of PMLA by the Adjudicating Authority, has filed the copie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/Enforcement Directorate on instructions from the respondent states that after expiry of 180 days or on or after the date an order u/s. 8(2) & (3) of PMLA is made whichever is earlier, the Adjudicating Authority will become functus Officio and will not be left with any power to give hearing to the appellant. 6. This plea of the parties is not in consonance with the provisions contained under Chapter III of the Act. The provisional attachment order is for a period as prescribed u/s. 5(1) of PMLA and at present in the amended Act, the period prescribed is 180 days. As per the provisions of section 5(3) of PMLA, every order of attachment u/s. 5(1) of PMLA shall cease to have effect after the expiry of the period specified in section 5(1) or on the date, an order is made under Sub-section (2) & (3) of section 8, whichever is earlier. The time limit of 180 days or 150 days as may be applicable is for the benefit of the person whose property is provisionally attached on the basis of the reasons to believe which are reduced into writing by the Enforcement Directorate that such person is in possession of proceeds of crime which are likely to be concealed, transferred or dealt with in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation, the Adjudicating Authority can give finality to the order of attachment or confirm the retention of property or record seized or frozen for further proceedings under the Act which is reproduced here for the sake of reference: "Section 8 - Adjudication (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an [offence under section 3 or is in possession of proceeds of crime] it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized 2 [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation shall have the same effect as if the property had been taken possession of.]. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the scheme of said provision, such rights of the party cannot be denied on the plea that the provisional attachment order will lapse after 180 days. If the party against whom provisional attachment order is operating, makes out a case for exercise of power by the Adjudicating Authority under section 11, then the time taken for exercising the power under section 11 of the Act, normally is to be excluded for computing the time prescribed for confirmation of the order, as a party who has invoked the power under section 11 cannot be allowed to defeat the purpose of provisional attachment and confirmation in such and facts and circumstances. The power by the Adjudicating Authority under section 11 has to be exercised sparingly, where it will be imminently necessary even on prima facie consideration of the pleas of such a party and not in every case. 10. The scheme of the Act, therefore, cannot be construed in a manner that on confirmation of provisional attachment order the Adjudicating Authority will become functus officio and will not have any power to do anything, though the Adjudicating Authority is mandated to give hearing under the Act. Such an interpretation will also result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the notice has not been given under section 8(1). No order of the Adjudicating Authority has been brought to the notice of this Tribunal where it has held that it would not hear a person whom the notice was not given under section 8(1) of the Act, after confirmation of the provisional attachment order. No precedent of any Hon'ble High Courts or Hon'ble Supreme Court has also been relied on by any of the parties for such an interpretation of said section. 12. It was also feebly argued that the Adjudicating Authority does not have the power to review its order of confirmation and therefore, the hearing cannot be given to a person who though had not been given a notice under section 8(1) of the Act, after confirmation of provisional attachment order. A distinction is apparent and should be drawn between an application for review and an application seeking hearing by a person who has not been given any notice under section 8(1) of the Act but who has rights in the property in respect of which provisional attachment order has been passed which has also been confirmed without giving any hearing to him. A Tribunal or adjudicatory body should be considered to be endowed with su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate to entertain his appeal in the facts and circumstances. 15. This Tribunal does not have the power under Article 226 or Article 32 of the Constitution of India, but the reasoning of the Hon'ble Courts can be applied in considering whether the appellate jurisdiction should be invoked or not when a party has equally efficacious remedy available to him. While invoking the jurisdiction of the Hon'ble Courts in writ petitions, the Courts insist on exhaustion of alternative remedy except in three contingencies i.e. (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or vires of an Act is challenged. However, this Tribunal which does not have such powers as the Hon'ble High Court or Hon'ble Supreme Court, there are no exceptions to this proposition. Therefore, normally if the Adjudicating Authority has power to give an opportunity of hearing to a person whose properties have been attached and to whom the notice under section 8(1) of the Act has not been given, such a person should normally approach the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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