9911796707
TMI Blog2018 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty during the trial of the case. In the facts of the present case, the mortgaged properties are not purchased from the proceed of crime. Those were purchased prior to FIR against borrower/accused and even prior to execution of mortgaged deed agreement. The question of proceed of crime qua those properties does not arise. Even the stand of the respondent in almost in all the cases where it was found that the attached properties are mortgaged properties which were not purchased from proceeds of crime, the Bank are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the respondent no. 1 is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. In case the Special Court passes the order to release the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016, FPA-PMLA-1552/DLI/2016, FPA-PMLA-1553/DLI/2016, FPA-PMLA-1554/DLI/2016, FPA-PMLA-1555/DLI/2016, FPA-PMLA-1556/DLI/2016, FPA-PMLA-1566/DLI/2016, FPA-PMLA-1581/DLI/2016 & FPA-PMLA-1528/DLI/2016 1. By this common order, all the above-mentioned appeals have been filed challenging the impugned order dated 22nd September, 2016 passed by the Adjudicating Authority in O.C. No.-588/2016 & PAO No.-02/2016 dated 29.03.2016, ECIR No. DLZO/10/2013 dated 20.06.2013. The ten appeals are filed by the banks where defendant no. 6 to 16 before the Adjudicating Authority. 2. The appeal no. 11 filed by M/s Century Communications Ltd. who has also challenged the impugned order dated 16.09.2016 on various grounds. Since the facts and legal issues are almost similar, all the above said appeals are being decided by common order. 3. The main allegations in the complaint against borrowers which are recorded in the impugned order is as under: (a) M/s. Century Communication Ltd. (hereinafter also referred to as "CCL"), was originally incorporated on 03.05.1995 as Private Limited Company, with Registration No. 55-68152 (PAN AABCC5986H) and converted into Public Limited Co. on 18.12.1996. M/s. CCL is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crore was sanctioned by Consortium Members including ₹ 45.00 Crore of IOB for setting up another studio at Mumbai and a studio at Chennai. The balance loan amount was sanctioned by other member Banks. (g) On 21.08.2009, another Term Loan of ₹ 275.00 Crore was sanctioned by Consortium banks including ₹ 60.00 Crore by IOB for refurbishment of Studio at NOIDA and the expansion of Studio at Mumbai. The balance loan amount was sanctioned by other member Banks. (h) Apart from above in 2010, Cash Credit Limit was also enhanced to ₹ 63.00 Crore, LC limit of ₹ 8.00 Crore and LG limit of ₹ 2.00 Core by IOB. Besides, onetime LG limit of ₹ 8.75 Crore was also sanctioned for advance payment to be received by SPV formed for post-production job abroad. (i) As on 09.01.2012 total outstanding of CCL towards all consortium banks was ₹ 615.56 Crore, out of which lead banks, i.e. IOB, share was ₹ 163.198 Crore. 4. The said ECIR was recorded on 20.06.2013 by the Enforcement Directorate, Delhi Zonal Office upon registration of an FIR No. RC.BD1/2012/E/0003 dated 23.02.2012 filed by CBI, Bank Securities and Fraud Cell, CGO Complex, New Delhi agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The said provisional order was confirmed by the Adjudicating Authority by 22nd September, 2016 which has been challenged by the 10 banks i.e. Sr. No. 1 to 10 mentioned above and M/s Century Communications Ltd. which is referred as appellant of Sr. No. 11 of my order. The case of all the bank are that:- (i) Out of the 6 properties attached by the 5 properties stand mortgaged to the ten-banks i.e. Appellants and against the monies lent by the said Appellant Banks for working of the Borrower/Accused Company. The charge of the valid mortgage stands registered with the Registrar of the Companies since the inception of the transaction i.e. from the year 2000 and the same is still continuing. Pertaining to first property i.e. (i) Land & Building, consisting of basement (area- 22,586 sq. ft.), ground floor (area-22910 sq. ft.), first floor (area-9216 sq. ft.), second floor (area- 3416 sq. ft.) and third floor (area- 3416 sq. ft.) situated at Plot No.17B & 17C, Sector-16A, Film City, Noida, District Gautam Budh Nagar, U.P.-201301, there is no denial on behalf of respondent no. 1 that the same was bought by the Borrower/Accused Company much before the enactment of the PMLA and also muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By RTGS Recd. From CCL-IOB CC Bank A/c No. 011502000004804 to CCL-Pixion Mumbai OBC Bank A/c No. 1866 on 09.12.2009. 96,000,000.00 By DD issued (for Ajay Devgan) From CCL-IOB Lien Bank A/c No. 011502000004910 to CCL-Pixion Mumbai OBC Bank A/c No. 1866 on 18.12.2009. 131,500,000.00 CENTURY COMMUNICATION LTD. Name of Property (iii) Amount of Property / Registration Date Mode of Payment Amount Property of Century Communicatio n Ltd. Plot No. 370, 2nd Floor, Linking Road, Khar (West) Mumbai (1300 Sq. Ft.) on 29.11.2006 Rs.34,545,0 00.00 05.07.2007 By Ch. No. 699250 dated 05.07.2007 issued from CCL, OBC Bank A/c 1866 500,000.00 23.07.2007 By Ch. No. 723026 dated 21.07.2007 issued to Seagull (Sandeep Sharma) from CCL OBC Bank A/c 1866 10,000,000.0 0 04.08.2007 By DD issued from CCL Non- Lien A/c No. 011502000004 910 60,010.00 04.08.2007 By DD issued 957,610.00 in favour of ICICI Bank A/c from CCL Non- lien A/c No. 011502000004 910 (For Stamp Duty Charges). 08.08.2007 By Ch. No. 458794 dated 04.08.2007 (DD No. 534587940) issued to Sandeep Sharma from CCL Non Lien A/c No. 011502000004 910 9,500,000.00 08.08.2007 By Ch. No. 458792 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 28.10.2006 By Cheque No. 741384 issued to Sushila Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 27,00,000.00 28.10.2006 By Cheque No. 741383 issued to Sushil Kumar Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 21,00,000.00 22.11.2006 By Cheque No. 493683 issued to Sajal Kumar Jain from CCL IOB 14,00,000.00 Bank A/c 1530 (fund Trfd. From IOB Worli to CCL A/c in Favour of Bank of Rajasthan A/c Stamp Duty for Plot 2 at Khar Corinthian Bldg. 22.11.2006 By Cheque No. 493685 issued to Sushila Jain from CCL IOB Bank A/c 1530 (fund Trfd. From IOB Worli to CCL A/c in Favour of Bank of Rajasthan A/c Stamp Duty for Plot 2 at Khar Corinthian Bldg 16,45,000.00 29.11.2006 By Cheque No. 695172 issued to Sajal Kumar Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 1,17,00,000.00 29.11.2006 By Cheque No. 695173 issued to Sajal Kumar Jain from CCL OBC Bank A/c 1,17,00,000.00 1866 (Pixion Mumbai) 29.11.2006 By Cheque No. 695171 issued to Sushila Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 1,37,00,000.00 29.11.2006 By Cheque No. 695170 issued to Sushila Kumar Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 1,38,00,000.00 Amount Received Details Total: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of a Judicial Authority, passing off the POA was not legally proper. 11. The Adjudicating authority did not understand the fact that even before the registering of the ECIR, the Appellants had initiated action under the SARFAESI Act, 2002 and also that fact that the Appellant Bank is a Public Sector Institution and by initiating the action is only recovering public exchequer and hence the Appellant is within its right to enforce the dues and thus, the impugned order is liable to be set aside. 12. On account of Amendment in SARFAESI Act by way of addition of Section 26(E) to the said Act and in Recovery of Debt Due to Banks and Financial Institutions Act by Section 31B of the Amended Act, the Appellant Bank would have superior right of recovery of debt dues and the debt due to the Secured Creditors shall be paid in priority of all other debts and other revenue/taxes/cess payable to the Central Government/State Government/Local Authorities. 13. After the promulgation of PML Act, amendments were brought to the SARFESI Act by the Legislature whereby Section 26(E) was introduced to the SARFASI Act and Section (31B) Recovery of Debt Due to Banks and Financial Institutions Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act giving it over ridding effect over PML Act, was in existence on the date of the passing of the impugned order. 16. One cannot deny the fact that the monies of the Banks'/Appellant which are public monies and have been disbursed to the Borrowers are under done under proper sanction, thus under no circumstances, the same can be made to fall within the ambit of section 3 of the PML Act. 17. It appears from record that Respondent no. 1 and the Ld. Adjudicating authority is quite evident from the fact that in provisional attachment order at page C-48 and in the conformation order of Adjudicating Authority at Page 41 of 85 where in the payment in regard to property of Century Communication Ltd. at 5th& 6th Floor including 7th Floor Terrace Portion Landmark, Bandra (West Mumbai - 400050) (1433 Sq. Ft. 1913 Sq. Ft. & 4319 Sq. Ft. Terrace Portion) the payment trail is shown to be made in 2006, whereas the Enforcement Directorate/ Respondent no. 1, itself records that fact the ownership of the said property is with Respondent No.4/Century Communication is since 18.03.2004. The said property is under the control of the Appellant through mortgage since 13.08.2004 and the said fact which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any /law other than this Act.' 8. The effect of this provision is that the said Act will have effect notwithstanding anything inconsistent therewith contained in any other law except to the provisions of the Foreign Exchange Regulation Act, 1973 and the Urban Land (Ceiling and Regulation) Act, 1976. A similar non obstante provision is contained in Section 13 of the Special Court Act which reads as follows: '13. Act to have overriding effect.'The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or order of any Court, tribunal or other authority.' 9. It is clear that both these Acts are special Acts. This Court has laid down in no uncertain terms that in such an event it is the later Act which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to distribute the assets of the notified party in the manner set out thereunder. Monies payable to the notified parties are assets of the notified party and are, therefore, assets which stand attached. These are assets which have to be collected by the Special Court for the purposes of distribution under Section 11(2). The distribution can only take place provided the assets are first collected. The whole aim of these provisions is to ensure that monies which are siphoned off from hanks and financial institutions into private pockets are returned to the banks and financial institutions. The time and manner of distribution is to be decided by the Special Court only. Under Section 22 of the 1985 Act, recovery proceedings can only be with the consent of the Board for Industrial and Financial Reconstruction or the appellate authority under that Act. The Legislature being aware of the provisions of Section 22 under the 1985 Act still empowered only the Special Court under the 1992 Act of the 1992 Act to give directions to recover and to distribute the assets of the notified persons in the manner set down under Section 11 (2) of the 1992 Act. This can only mean that the Legislature want ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bombay High Court in the case of Bhoruka Steel Ltd. Vs. Fairgrowth Financial Services Ltd. The judgment rendered on 09.02.2016 reported in 1997 (89) company cases 547 (BOM) para 15 of the said judgment read as under: 15. To be noted that in both the judgments, relied upon by counsel, the Supreme Court has held that generally where there are two special statues, which contain non-obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non-obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail then it could and would provide in the later enactment that the provisions of the earlier enactment continue to apply. In the present case, the said Act is later. The said Act provides that its provisions are to prevail over any other Act. This would include the Sick Companies Act. If the legislature wanted to provide otherwise, they would have specifically so provided.' 32. Recently, the Parliament h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Financial Institutions Act, 1993 after the words "the date of the application", "and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;" is added which makes the said amendment or the 1993 Act applicable to all the debts which remains unpaid. 35. Thus, it is very clear from above that the secured creditor, get a priority over the rights of Central or State Government or any other Local Authority. The amendment has been introduced to facilitate the rights of the secured creditors which are being hampered by way of attachments of properties, belonging to the financial institutions/secured creditors, done by/in favour of the government institutions. 36. The Full Bench of the Madras High Court while acknowledging the amount of losses suffered by the Banks and while approving the latest amended Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 held in the case 'The Assistant Commissioner (CT), Anna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome into force, naturally it would govern the rights of the parties in respect of even a lis pending.' '5 The aforesaid would, thus, answer question (a) in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged property.' 38. In another Madras High Court judgment in the case of 'Dr. V. M. Ganesan vs. The Joint Director, Directorate of Enforcement' has explained the grievances faced by the financial institutions while holding that 'For instance, if LIC Housing Finance Limited, which has advanced money to the petitioner in the first writ petition and which consequently has a right over the property, is able to satisfy the Adjudicating Authority that the money advanced by them for the purchase of the property cannot be taken to be the proceeds of crime, then, the Adjudicating Authority is obliged to record a finding to that effect and to allow the provisional order of attachment to lapse. Otherwise, a financial institution will be seriously prejudiced. I do not think that the Directorate of Enforcement or the Adjudicating Authority would expect every financial institution to check up whether the contribution made by the borrowers tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect whereof bona fide acquisition by a person is established, at the stage of the section 8(2) process…' 41. The Supreme Court in (2010)8 Supreme Court Cases 110 (Before G.S. Singhvi and A.K. Ganguly, JJ) in the case of United Bank of India V/s. Satyawati Tondon and Ors. In paras no. 6, 55 & 56 has held as under:- 6. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the jurisdiction of the civil courts for frustrating the proceedings initiated by the banks and other financial institutions. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt while exercising its discretion may quash the criminal petition u/s 482 Cr. P.C. at the joint request of the parties. 45. Three Judge Bench in Narendra Lal Jain & Ors., (supra) held that during the investigation pertaining to the culpability of the accused in the crime, the concerned bank had instituted suits for recovery of the amount claimed to be due from the respondents and the said suits were disposed of in terms of the consent decrees. On the basis of the said consent decrees an application for discharge was filed which was rejected by the trial court but eventually was allowed by the High Court. The charges in the matter were framed under Section 120-B/420 IPC by the learned trial Judge against the private parties. As far as bank officials are concerned, charges were framed under different provisions of the Prevention of Corruption of Act, 1988. Being dissatisfied with the said order,, the CBI had preferred an appeal by obtaining special leave and in that context the court observed that the accused respondent had been charged under Section 120-B/420 IPC and the civil liability of the respondent to pay the amount had already been settled and further there was no grievan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A long time has in fact been elapsed since the alleged commission of offences. Still the trial continues. The present petition is maintainable as the same has been filed also on additional grounds and circumstances. No useful purpose would be served if such oppressive trial may continue for many more years. Thus, ends of justice are served by quashing such a proceeding, as the parties cannot be allowed to go through the rigmarole of criminal prosecution for long numbers of years in a matter, it is doubtful in the mind of the Court in whose favour it would be decided.' '71. In view of above mentioned reasons, this Court is inclined to quash the proceedings pending against the petitioners, arising out of R.C. No. 4A/94/SIU(X) dated 23rd May, 1994, titled 'CBI vs. N. Bhojraj Shetty & Ors.', being C.C. No.65/11, pending in the Court of Spl. Judge (CBI), Tis Hazari Courts, Delhi.' The said decision has been upheld by the Hon'ble Supreme Court. 46. In the present case, it is undisputed facts that the attached property were purchased much prior to the period when the facility of loan sanctioned to the borrowers. The banks while rendering the facilities were boanfide parties. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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 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 any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under subsection (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c)taking into account all relevant materials placed on record before hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the offence of money-laundering, he can show before the court that he is innocent and has not received any proceeds of crime." It is clear that innocent person can approach the Adjudicating Authority of any competent court to demonstrate his innocence that he has not received any proceeds of crime. The consequence of this is that while considering whether all or any of the properties provided under notice issued u/S 8(1) are involved in money laundering, the Adjudicating Authority can take into consideration the plea of innocence raised by any person and also the fact as to whether the property which has been attached has any nexus whatsoever with that of money laundering or not if the person before the Tribunal/ Adjudicating Authority is able to demonstrate that he neither directly nor indirectly has attempted to indulge nor with knowledge or ever assisted any process or activity in connection with proceeds or crime and the question of his involvement does not arise as he is third party, then the Tribunal/ Adjudicating Authority can consider the said plea depending upon whether there exist bona fide in the said plea or not and proceed to adjudicate the plea of innocence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence." Thus, an "attempt to indulge" would necessarily require not only a positive "intention" to commit the offence, but also preparation for the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such 'intention' and 'attempt' on the part of any of the petitioners. B. RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY: In JotiParshad v. State of Haryana, MANU/SC/0161/1993 : 1993 Supp (2) SCC 497 the Hon'ble Supreme Court has held as follows- "5. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of "intention" or "knowledge" or "reason to believe". We are now concerned with the expressions "knowledge" and "reason to believe". "Knowledge" is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce nor the said person is party to the said transaction, then it cannot be said that the said person is connected with any activity or process with the proceeds of the crime. The same principle should be applied while judging the involvement of any property of any person in money laundering. This is due to the reason that if the property has no direct involvement in the proceeds of the crime and has passed on hands to the number of purchasers which includes the bona fide purchaser without notice, the said purchaser who is not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said transaction ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/ indirect involvement in the proceeds of the crime or its dealings can be made to suffer by mere attachment of the property at the initial stage and later on its confirmation on the basis of mere suspicion when the element of mens rea or knowledge is missing. 60. Similar principle has been laid down by Chennai High Court in the case of C. Chellamuthu (Appellants) Vs The Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gunaseelan with G. Srinivasan and his Benamies. In the absence of any verification or investigation by respondent with regard to genuineness or otherwise of the purchase by Gunaseelan; whether he was connected with G. Srinivasan or the sale consideration is legitimate or not the property in the hands of Gunaseelan cannot be termed as proceeds of crime. 22. Further, the appellants have given statements under Section 50 of the Act. They have categorically stated that they possess agricultural lands, cultivate GloriosaSuperba seeds and sell the same and derive considerable income. They have named the persons to whom they have sold the GloriosaSuperba seeds and produced Bank statements. Some of the Appellants have stated that they sold their lands and borrowed monies to purchase the property in question. There is nothing on record to show that the respondent had verified these statements. Especially, the respondent has not verified the Bank statement produced by the Appellants to ascertain the genuineness of the same and whether the money deposited came from genuine purchasers or from the persons involved in fraud and Money Laundering. The respondent does not allege that Appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into the sale transactions as such these are bona fide deals entered by them against proper sale consideration and the money paid to the seller is also well explained. 22. Against the above arguments vehemently raised by the defendants, the complainant without disputing that the deals are bona fide heavily relied on the judgment of the Bombay High Court, dated 05.08.2010 in Mr. Radha Mohan Lakhotia Vs. Deputy Director, PMLA, Directorate of Enforcement, Mumbai in first appeal No. 527/2010. In this case it held by the Bombay High Court that the property bought without the knowledge that the same is tainted could be subjected to Provisional Attachment Order. 23. In the instant case the only point to be decided is whether the properties bought by any person against clean money and without any knowledge that properties have been acquired directly or indirectly though scheduled offence could be subject matter of provisional attachment order. 24. It is an admitted position that the Defendants (D-2 to D-8) had no knowledge that the properties in the hands of the vendor was proceeds of crime. They have also verified the papers relating to these properties before the deal. No point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L & Industries vs. Arihant Threades Ltd. & Ors. in civil appeal no. 5225/2008 passed in the year 2014 as well as the Judgment & order of this Tribunal in the matter of Cheif Manager of Syndicate Bank vs. Deputy Director, PMLA in appeal no. FPA- PMLA/A-34/CAL/2009. 18. In the present case it is an admitted fact that the properties in question were acquired much prior to the period of alleged money laundering. The said properties are also mortgaged prior to the said period of money laundering. No credible evidence has been adduced by the Enforcement Directorate that the mortgaged properties have been acquired out of 'proceeds of crime'. 19. That though some of the bank officials are alleged to have been involved in the commission of the alleged crime, the appellant banks as an institution cannot be punished. 20. The Appellant Bank had initially unearthed the commission of alleged crime and has taken prompt action against the borrower and others and lodged complaint with the CBI for investigation and prosecution. The Appellant Bank is infact the victim in this case in the given fact and circumstances. The Appellant Bank's huge money is at stake and unless they are allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Money Laundering Act has been enacted for forfeiture of crime involved in the money laundering which was considered necessary to deprive persons engaged in serious illegal activities and have thereby been increasing their resources for operating in clandestine manner. The PML Act was created to forfeit illegal properties and to prevent the money laundering activities which are threat to financial system of the country and its integrity and sovereignty. Further the question of prevalence of a subsequent legislation will only come into picture when there is a conflict between the two statutes. The Securitization Act has been enacted for the purpose of establishing a expeditious system for recovery of debts due to Banks and for matters connected therewith or incidental thereto. It only lays down a procedure for recovery of debts due to Banks. The Prevention of Money Laundering act vests the statutory authorities with a power to forfeit proceeds of crime involved in money laundering to the State. There is thus no apparent conflict between the two statues. The two statues operate in their exclusive fields. The question is only who will have his first claim on any property where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts in the RDDB Act because of the fact that the non-obstante provision of RDDB Act has specifically excluded SICA from its application. 22. The conflict of non-obstante clause arising in respect of two or more enactments then the same have to be resolved by taking into consideration of policy underlying the enactment and the language used in them. The Prevention of Money Laundering Act has been enacted for forfeiture of crime involved in the money laundering which was considered necessary to deprive persons engaged in serious illegal activities and have thereby been increasing their resources for operating in clandestine manner. The PML Act was created to forfeit illegal properties and to prevent the money laundering activities which are threat to financial system of the country and its integrity and sovereignty. Further the question of prevalence of a subsequent legislation will only come into picture when there is a conflict between the two statutes. The Securitization Act has been enacted for the purpose of establishing a expeditious system for recovery of debts due to Banks and for matters connected therewith or incidental thereto. It only lays down a procedure for recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ways illegal and corrupt, at the cost of the people and the state, hence these properties must justly go back where they belong, the state. In the present case as the money belongs to the Appellant Bank which is public money. The Appellant Bank has the right to property under the Constitution of India. The property of the Appellant Bank cannot be attached or confiscated if there is no illegality in the title of the appellant and there is no charge of money laundering against the appellant. The mortgaged of property is the transfer under the Transfer of Property Act. Even the respondent is not denying the fact that the Bank is a victim party who is also innocent and is entitled to recover the loan amount. It is also not disputed by the respondent that the properties in dispute are mortgaged with Bank and it has to go to the Bank ultimately. I do not agree with the argument in this regard in view of amendments in the two statutes. Even otherwise the trial would take number of years. The public money cannot be stalled otherwise Banking system would collapse. 25. That the definition of "proceeds of crime" as per Section 2(u) of the PML Act comprises of the property which is derived o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the discussion made above, I am of the view that there is no nexus whatsoever between the alleged crime and the Appellant Bank who is the mortgagee of the properties in question which were purchased before sanctioning the loan. Thus, no case of money-laundering is made out against Appellant Bank who has sanctioned the amount which is untainted and pure money. They have priority right to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. 30. The Adjudicating Authority has not appreciated the facts and law involved in the matter. The primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contentions raised by the Respondent's Advocate have no substance. The provisional attachment in the present matter is bad in law hence liable to be set aside. 31. Recently there are amendments in the Prevention of Money Laundering Act, 2002 (15 of 2003) as amended by Finance Act, 2018 (13 of 2018) including in the proviso of Sub-section 8 of Section 8 of PMLA, 2002 by adding another proviso which is read as under:- 'Provided that the Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortgaged property could be disposed of for the purpose of adjustment of the amount due from the borrowers. 35. I am of the view that once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. 36. In view of the reasons amendment in the PMLA and once the provisional attachment order is set aside, the property is released the borrower/accused and the banks can only dispose of the said property after passing the order by the special court in favour of the complaint. In case the provisional attachment order and impugned orders are set- aside, the complainant may not be able to dispose of the property in order recover the loan amount even if the special court restore such properties during the trial. 37. In view of the amendment of sub section 8 of Section 8 proviso (1) and (2) the bank is at liberty to move its claim in relation to mor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
