9911796707
TMI Blog2018 (12) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... MW-0005MH43AP was bought by the M/s SVLL out of the loan borrowed by it from the appellant Bank (Bank of Baroda) and was hypothecated to the Bank (Bank of Baroda). Since the M/s SVLL failed to refund the same, the said car has become the property of the Bank (Bank of Baroda)and cannot be said be bought out of the proceeds of crime as alleged. In view of the aforesaid submissions, the provisional attachment order, so far as the properties mortgaged with the appellant banks are concerned, confirmed by the Adjudicating Authority is liable to be quashed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,54,000/- 30,94,325/- 2 2004 Owned by RupchandB aid Flat No.1002, Sanskrit „A/1‟, Dumas Road, Piplod, Surat 1635 Sq. Ft. super Build up Area 6,54,000/- 30,94,325/- 3. 2011 Jointly owned by RajkumarB aid with Laxmi Devi Vaid Pawan Hotel, Block No.39, village-Varediya, Tal: Bharuch, Distt: Bharuch (jointly owned with Laxmi Devi Vaid) 13676 Sq. mts along with the construction erected thereon 43,50,000/- 43,36,459/- 4.4 The properties at Serial No. 1 to 3 are mortgaged with the Appellant Bank and its charge is duly registered with Sub Registrar Office, Surat/1 (Athwa) much prior to the commission period of the alleged crime by the M/s SVLL at all. 4.5 As per books of the Appellant Bank following amount is due and outstanding against the said M/s SVLL, its Directors and other corporate guarantors, personal guarantors at all: (1) Term Loan-IV Account showing the debit balance of ₹ 10,51,82,767/- as on 30/09/2015 (inclusive interest applied up to 30/06/2015), (2) Term Loan-V Account showing the debit balance of ₹ 53,36,24,3013/- as on 30/09/2015 (inclusive interest applied up to 30/06/2015), (3) Term Loan-VI Account showing the debit balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s SVLL/ Borrower/ its Directors, Guarantors/ Securities/ Mortgage Properties/ Personal Assets. However, inspite of service of the statutory demand notice issued by Appellant Bank the said borrowers failed to pay the outstanding dues of ₹ 307,73,40,872/- as on 30.11.2015. 4.8 By Notice dated 17.02.2016 u/s 13(4) of SARFAESI Act. 2002, it also took over the symbolic possession of the Securities mortgaged/ charged/ hypothecated with it to recover its dues of over ₹ 307,73,40,872/-. A copy of the said Notice dated 17.02.2016 issued by the Appellant Bank u/s 13 (4) of the SARFAESI Act-2002 is filed as ANNEXURE-A/3. 4.9 The Appellant Bank submits that it filed an O. A. No: 86/2016 in the DRT-II, Ahmedabad for recovery of its dues from aforesaid borrowers M/s SVLL, and its Directors besides other guarantors, corporate guarantors, personal guarantors etc. The DRT-II, Ahmedabad granted a status-quo order in respect of the securities in the hand of the Bank as on the date of the order dated 02.08.2016. A true copy of the O. A. No:86/2016 filed by the Appellant Bank and order dated 02.08.2016 passed by the DRT-II, Ahmedabad in O.A. No:86/2017 is filed as ANNEXURE-A/4 & A/5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SI Act and other related statutes. 4.15 While the adjudication proceedings in the O. C. No:787/2017 were pending, the insolvency proceedings were initiated against the M/s SVLL in the NCLT, Ahmedabad Bench by the Punjab National Bank. The NCLT, Ahmedabad vide its order dated 12.09.2017 ordered a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (I & B Code hereinafter), whereby continuation of all pending suits or proceedings against the Corporate Debtor i.e. M/s SVLL were prohibited. 4.16 The Adjudicating Authority, PMLA passed the impugned order dated 24.10.2017 in O.C. No:787/2017 confirming the provisional attachment Order No.MBZO-II/05/2017 dated 08.06.2017 and addendum dated 13.06.2017. 4.17 There is no denial on behalf of respondent no. 1 that the Appellant Bank also took measures for recovery of the secured debts under the SARFAESI Act-2002 and issued a Demand Notice dated 05.11.2015 u/s. 13(2) of the SARFAESI Act-2002 to the M/s SVLL/ Borrower/ its Directors, Guarantors/ Securities/ Mortgage Properties/ Personal Assets. However, said M/s SVLL/Borrowers failed to pay the outstanding dues of ₹ 307,73,40,872/- as on 30.11.2015. 4.18 The App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mortgage Deed dated 26.09.2012 was executed by the respondent no.3 in favour of the UBI is annexed herewith and marked as Annexure A-3. 5.5 That it is one of the terms of the conditions of the loan that the proceeds of loan shall be utilized for expansion of business and accordingly UBI has disbursed a loan/limit of ₹ 102.50 Crs. (Term Loan of ₹ 99.90 Crs and Term Loan Rental Discounting ₹ 2.60 Crs) towards expansion of business. 5.6 That the Respondent no.3 executed a loan agreement dated 26.09.2012 in favour of the UBI and a loan/limit of ₹ 99,99,00,000.00 was disbursed to the Respondent no.3 in good faith. 5.7 That after completion of necessary formalities, the sanctioned loan amount was disbursed in the name of Respondent no.3, M/s. Siddhi Vinayak Logistics and the mortgage in favour of the Union Bank of India was created on 26.09.2012 at Surat by execution of Simple Mortgage Deed. The Respondent no.3 has been regularly making payment of loan installments earlier but later on defaulted in making payment of the same. 5.8 That it is admitted fact that Respondent no.3 is the owner of the property and had acquired possession and ownership of property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AESI Act, 2002 give over ridding effect over and above any other law and priority to the secured creditor, including the provisions of PMLA in so far as by the secured assets are concerned. The relevant provision of the SARFAESI Act, 2002 is narrated herein below for the sake of convenience this Honorable Court: "26-E. Priority to secured creditors-Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. Explanation:-For the purpose of this section, it is hereby clarified that on or after the commencement of the Insolvency or Bankcruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that code." It is clear from the above mentioned provision that the Union Bank of India will get priority over the rights of Central or State or any other Local Authority. 5.14 That, there is no finding as to how th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s engaged in the business of transportation and logistics service provider. 6.4 It is stated that M/s SVLL, initially approached and requested the appellant Bank in the year 2007 for grant of credit facilities in the shape of Term Loan for purchase of vehicle (Trucks), Cash Credit (Hypothecation) facility and Bank Guarantee facility for smooth functioning of its business activities. Thereafter, at the request of the Respondents, the facilities were renewed, enhanced and fresh Loans were granted by the Appellant Bank the as detailed in the appeal memo and the written submissions filed on behalf of the OBC bank. 6.5 It is stated that the appellant bank sanctioned various financial facilities beginning from 19/12/2007 to 26/12/2012 and in all, apart from working capital facility, Seven Term Loans were sanctioned to the Respondent No.2 for purchase of 1527 vehicles . Out of the Seven Loan accounts by the Appellant Bank four of the accounts have been adjusted with 3 of them remains outstanding. 6.6 It is stated that as on 30.11.2017 ₹ 510,04,22,371.06 is outstanding against the Respondent no.2 namely M/s SVVL excluding expenses from the date of NPA.The bank has also initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All That Piece and Parcel of Land Bearing Survey/ KhasraNo.341 admeasuring 2.00 hectares (4.941 acres), Bhogwatdar Class I, Land Revenue ₹ 10.23/- of Mouza - Gumthala, Tahsil-Kamptee, District- Nagpur admeasuring 4.941 acre belonging to M/s Siddhi Vinayak Logistic Limited. 2.73 3 2011 All That Piece and Parcel of Land Bearing Survey / Khasra No.338 admeasuring 1.02 hectares (2.52 acres), Bhogwatdar Class I, Land Revenue ₹ 7.00/- of Mouza - Gumthala, Tahsil - Kamptee, District - Nagpur admeasuring 2.52 acre belonging to M/s Siddhi Vinayak Farm Fresh Private Limited. 0.85 4 2000-2001 Land and Building at Plot no.14,15,16,35,36 and 37 at GIDC, BhatporeSurat, registered in the name of M/s Raj International, Proprietorship firm of ShriRoopchandBaid. 4.77 5 2010 B-903/904, 9th Floor, Happy Residency, MojeVesu Bearing R.S.No.551, 552/1, 552/2 & 552/3, Revised Survey No.347, 349/1, 349/2 & 349/3, T.P.No.29,F.PNo. & 36, UdhanaMagdalla Road, Surat admeasuring 2051 Sq.ft. belonging to Mrs.Laxmi Devi Baid. 1.21 Also, the amount of ₹ 29,00,173/- lying in the a/c no. 0102113101069 with Oriental Bank of Commerce, being the lead bank, is the amount to be disburse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Enforcement Directorate i.e. respondent no. 1 registered ECIR no. ECIR/MBZO/10/2016 dated 16.11.2016 and attached the properties involved in these appeals vide P.A.O./MBZO/II/05/2017 dated 08/06/2017 ordering to attach immovable and movable properties as detailed in the P.A.O. 8.3 Consequent to the above, a common O.C. bearing 787/2017 was filed before the Adjudicating Authority praying for confirmation of the P.A.O.. The Adjudicating Authority, by the impugned order, allowed the O.C. confirming the P.A.O. on dated 24.10.2017 which is under challenge before this Tribunal. 8.4. That all these above appeals involves identical facts and similar questions of law. This is the reasons why these appeals are taken up for consideration together and for common order. 8.5. It is pertinent the mentioned here that the State Bank of India is also a victim of M/s SVLL and its director and is also a party before the Adjudicating Authority in the same P.A.O. and O.C. The State Bank of India had also preferred the appeal before this Tribunal against the same impugned order dated 24.10.2017 vide FPA-PMLA-2121/DLI/2017. This Tribunal had allowed the appeal vide order dated 06.02.2018 after di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and payable to them by sale of assets over which security interest is created shall have priority and shall be paid in priority over all over debts and government dues including revenues taxes, cesses and other rates due to the Central Government and State Government or local authority. So what is referred are only(1) the other debts, (2) all Govt. dues including, (I revenues (ii) taxes, (iii) cesses (iv) other rates due to the Central Government and the local authority. Thus there is no priority conferred on the secured creditors under the said acts, in respect of the proceeds of crime in their hands. The PMLA is a Special Act and is an Act to prevent moneylaundering and to provide for confiscation of property derived from or involved in money laundering and for matters connected there with or incidental thereto. Section 3 of Act defines money laundering as Whosever directly or indirectly attempts to indulge or knowingly assists or knowingly s a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said M/s SVLL in favour of the Banks much prior to the alleged fraud committed by the M/s SVLL and its Directors etc. during the period Sept. 2012- March 2015. Therefore, the allegations of the Respondent that the mortgage properties have anything to do with the proceeds of crime, are totally incorrect. It is also significant to note that even as per the admission of the ED, the properties were acquired by the respective owners much before the alleged fraud committed by the accused persons. Also that the properties Mortgaged/ charged/ hypothecated with the Appellant Bank were acquired before Sept. 2012. In these circumstances any of these properties cannot be attached by the ED under the PMLA. No proceeds of crime have been used for acquiring any of these properties. 10. There is already a Status quo order dated 02.08.2016 passed by the Hon‟ble DRT-II, in O.A. No. 86/2016 in respect of the same immovable securities in the hand of the Appellant Bank i.e. Bank of Baroda, is prior to the provisional attachment. 11. The Appellant Banks have a prior right under the special statutes enacted by the Central Govt. The SARFAESI Act, 2002 has been amended by the Enforcement of Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. Reliance is placed on the Judgment dated 14.07.2017 passed by this Tribunal in State Bank of India Vs Jt. Director, Directorate of Enforcement, Kolkata (emphasis on para 46 & 47). 13. On perusal of the impugned order it is pertinent that the Adjudicating Authority did not consider the same at all. This Tribunal in fact took a strong exception to the same while recording that "… It is a serious matter. The Authority is supposed to give due respect to the judgment of the higher Authority & Courts" in the matter of Bajaj Finance Ltd. Vs. Joint Director, DOE, Lucknow dated 20.11.2017. 14. The Adjudicating Authority erroneously held that: " In the present case the properties which are mortgaged to the defendant were attached not on account of the recovery of the Government dues but were attached being proceeds of crime as defined under the provisions of Section 2 (1) (u) of the PMLA, 2002." 15. The Appellant Banks have never mentioned the attached properties as being "government dues". The Appellant Banks brought up the Statutes mentioned above, (and reiterates the same in these appeals) because of two reasons. Firstly, the properties attached are not proceeds of crime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest in the properties is entitled to recover its dues with the sale of properties. The properties stood transferred by way of mortgage to the Appellant Bank much before the alleged criminal action. The alleged proceeds of crime have not been used for acquiring the mortgaged property." 21. 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 Salai-III Assessment Circle Vs. The Indian Overseas Bank and Ors." that "There is, thus, no doubt that the rights of a secured creditor to realise secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This section introduced in the Central Act is with ''notwithstanding'' clause and has come into force from 01.09.2016. Further it was also held that the law having now come into force, naturally ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
