9911796707
TMI Blog2019 (1) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided under the provisions of Section 26(3) of the Act. 4. The appellant, Bharat Co-operative Bank (Mumbai) Ltd. is a multi-state Scheduled Bank under the provisions of the Multistate Co-operative Societies Act, 2002 having 102 Branches and the appellant bank's branch is one of them. 5. The case of the respondent - Deputy Director of Enforcement is that the Zonal Office - Ahmedabad was investigating a case of illegal cricket betting vide ECIR Bi, 03/AMZO/2015 under the supervision of Joint Director of Enforcement with Assistant Director; that one Bimal Ramgopal Agarwal, in connivance with Joint Director collected Rs. 2.75 crores from one Manoj Jain alias Chusu on 28.07.2015 and Rs. 50,00,000/- from one Surinder Kalra alias R.S. Mandi on 25.05.2015 as bribe/illegal gratification for doing favour to the accused in the above said case of cricket betting; that a sum of Rs. 96.75 lakhs out of Rs. 3.25 Crores was deposited in various bank accounts of companies/firms/individuals related to Bimal Agarwal between 28.07.2015 and 22.09.2015; that on the basis of a complaint dated 21.09.2015 of the Director of Enforcement, New Delhi, an F.I.R. was registered on 22.09.2015 by the CBI und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the properties already mortgaged earlier. vi. Memorandum of Entry dated 19.01.2011 by the Branch Manager of Goregaon (E) Branch of the Bank, by paying requisite amount of stamp duty in respect of the said Pent House. vii. Loan Agreement for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. viii. Letter of General Lien and Set Off for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. ix. Demand Promissory Note for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. 8.1. The said Penthouse No. 2001/2101 was again mortgaged by Bimal Ramgopal Agarwal to the Appellant - Bank for the Second time on 04.03.2011 against the enhancement of the Cash Credit Limit from the then existing Rs. 10 Crores to Rs. 15 Crores and reduction of composite Bank Guarantee Limit and Letter of Credit Limit from Rs. 15 Crores to Rs. 10 Crores. The said mortgage is duly supported by the following legal documents created in favour of the Appellant Bank:- i. Sanction Letter No. BCB/GGE/CC-650/4205/2011 dated 28.02.2011 issued by the Bank. ii. Loan Agreement for Cash Credit of Rs. 15 Crores dated 04.03.2011 iii. Letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 29.01.2013 against the renewal of the Cash Credit Limit of Rs. 25 Crores and enhancement of composite Bank Guarantee Limit and Letter of Credit Limit from Rs. 10 Crores to Rs. 15 Crores. The said mortgage is duly supported by the following legal documents created in favour of the Appellant Bank:- i. Sanction Letter No. BCB/GGE/CC-650/2717/2011 dated 14.01.2013 issued by the Bank. ii. Loan Agreement for Cash Credit of Rs. 25 Crores dated 29.01.2013. iii. Letter of General Lien and Set Off for Cash Credit of Rs. 25 Crores dated 29.01.2013. iv. Demand Promissory Note for Cash Credit Limit of Rs. 25 Crores dated 29.01.2013. v. Borrowers' Forwarding Letter dated 29.01.2013.confirming the deposit and continuation of title deeds in respect of the said Pent House and other properties. vi. Memorandum of Entry dated 29.01.2013 by the Branch Manager of Goregaon (E) Branch of the Bank, by paying requisite amount of stamp duty in respect of the said Pent House. vii. Loan Agreement for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 29.01.2013. viii. Letter of General Lien and Set Off for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 29.01.2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2017. iii. Letter of General Lien and Set Off for Cash Credit of Rs. 21 Crores dated 31.03.2017. iv. Demand Promissory Note for Cash Credit Limit of Rs. 21 Crores dated 31.03.2017. v. Borrowers' Forwarding Letter dated 31.03.2017 confirming the deposit and continuation of title deeds in respect of the said Pent House and other properties. vi. Memorandum of Entry dated 31.03.2017 by the Branch Manager of Goregaon (E) Branch of the Bank, by paying requisite amount of stamp duty in respect of the said Pent House. 8.6. Bimal Ramgopal Agarwal had created legally sustainable Equitable Mortgage by deposit of Title Deeds in respect of the above Penthouse No. 2001/2101 in favour of this Appellant - Bank on (i) 19.01.2011, (ii) 04.03.2011, (iii) 19.12.2011, (iv) 29.01.2013, (v) 23.08.2013, (vi) 15.09.2016 and (vi) 31.03.2017. The required documents are also filed as Exhibit - "D-Colly." is a copy of the Equitable Mortgage created on 19.01.2011, Exhibit - "E-Colly." is a copy of the Equitable Mortgage created on 04.03.2011, Exhibit - "F-Colly." is a copy of the Equitable Mortgage created on 19.12.2011, Exhibit - "G-Colly." is a copy of the Equitable Mortgage created on 29.01.2013, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appreciate that it is not even the value of the proceeds of crime. The said Bimal RamgopalAgarwal through Advocate has raised no objection if the prayer made in the appeal is allowed. 11. It is truethat the Respondent - Deputy Director is empowered to pass Provisional Attachment Order under Section 5(1) of PMLA only if the conditions mentioned therein are satisfied. Sub-Section (1) of Section 5 of PMLA reads as under :- "5. Attachment of property involved in money-laundering.- (1) Where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that - (a) Any person is in possession of any proceeds of crime; and (b) Such proceeds of crime are likely to be concealed, transferred or dealt with any manner which may result in frustrating any proceedings relating to confiscation of such proceeds under this Chapter, he may, by order in writing, provisionally attach such property." ButSection 5(1) of PMLA clearly provides that the Respondent - Deputy Director is empowered to atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or Local Authority. In this connection, the Appellant - Bank relies upon the amended provisions of Section 26E of the SARFAESI Act, 2002 as amended by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 which reads as under:- "26E. 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." Case of appellant in nut-shell 16. The Appellant submits that both the lower authorities, namely, the Deputy Director - Shri Rajesh Kumar Pandey and the Adjudicating Authority - Shri Tushar V. Shah, Member (Law) constituted under PÄLA have passed the Impugned Orders without proper and/or with improper application of mind. In doing so, there is absolute failure on their part in ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own money to the said Bimal Ramgopal Agarwal by way of loan. The Appellant - Bank, therefore, had become secured creditor as far as the property attached under the Impugned Order is concerned. In the face of the rulings laid down by this Tribunal in number of cases referred to in Paragraphs 31 to 34 of the instant Memo of Appeal, which rulings have been handed down by this Tribunal after duly considering the law as laid down by the Hon'ble Supreme Court, followed by the full Bench of the Madras High Court,Andhra Pradesh High Court as stated in Paragraphs 25 to 29 of the Memo of Appeal, this case is quite a fit and proper case deserving it to be allowed by setting aside the Impugned Orders by directing the release of the property from attachment and handing over the property to the Bank. As the records stands, in the absence of any material having been brought on record to support the reasonable belief which is a condition precedent for exercising powers vested in the Authority under Section 5 of PMLA, the entire exercise undertaken leading to the passing of the Impugned Orders by the Respondent Officers of the Directorate of Enforcement and the Adjudicating Authority is sans t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considering the effect of the nonobstante clause contained in Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 and Section 13 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. The Hon'ble Supreme Court has categorically held that the non-obstante clause in the later Act must prevail over the non-obstante clause in the earlier Act. The following is the relevant portion of the decision of the Hon'ble Supreme Court :- "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 must prevail" The Hon'ble Supreme Court, while deciding this issue unequivocally, was pleased to uphold its own catena of decisions echoed earlier, which are reported inFPA- (i) AIR 1956 SC 614 - Ramnarayan vs. Simla Banking andIndustrial Company Ltd. (ii) (1977) I SCC 750 - Sarvan Singh vs Kasturi Lal (iii) (1993) 2 SCC 144 = Maharashtra Tubes Ltd. vs State Industrial Investment Corporation of Maharashtra Ltd. (iv) (2000) SCC 406 - Allahabad Bank vs. Canara Bank 23. The Hon'ble Supreme Court in the said case of Solidaire Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The date of attachment, as indicated above, was 19.01.2015. To be noted, attachment entry was made by respondent No. 3, on 13.08.2015. This apart, the matter is now put beyond the pale of doubt, as during the pendency of the writ petition, an amendment has been made to the 2002 Act with the insertion ofSection 26E. " 26. It is clear from the material placed on record that the Appellant - Bank being a Secured Creditor, since it had lent its own money to the Predicate Offender earlier, is entitled to priority over all other debts and government dues, including revenues, taxes, cesses and rates due to the Central Government, StateGovernment or local authority. Hence, the Respondent - DeputyDirector has no power to attach the property of the mortgagors viz: - Bimal Ramgopal Agarwal and his wife and the Adjudicating Authority has no power to confirm and to continue the attachment any further, as the property in question has already been mortgaged to this Appellant Bank. 27. The Hon'ble Andhra Pradesh High Court in the case of B. Rama Raju vs. Union of India &Ors. reported in (2011) 164 Comp Cases 149 in which the Hon'ble High Court has held that if the Adjudicating Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Agarwal as collateral security. 31. The principle laid down in the above decisions of the Hon'ble Supreme Court and the Hon'ble Madras High Court has been followed by this Appellate Tribunal, Prevention of Money Laundering Act, New Delhi, in its catena of decisions, including the decision dated 14.07.2017 in a batch of Appeals filed by various Banks, namely, the State Bank of India vs. The Joint Director Directorate of Enforcement (and connected Appeals) against the Provisional Attachment Order. The Tribunal was pleased to hold that as per the amended provisions of Section 26E of SARFAESIAct and 31B of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, a secured creditor will have priority over all other debts and government dues, including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority and accordingly, set aside the Provisional Attachment Orders. 32. The following are the relevant Paragaphs of the said Judgment dated 14.07.2017 :- "46. In the present case, it is undisputedfact that the attached property were purchased much prior to the period when the facility of loan was sanctioned to borrow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n attached in terms ofthe provisions ofSection 5 of the Act. This can be seen by reading Section 8(1) and the proviso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties referred to in the notice are involved in money laundering or not. 34. In the present case, this Appellant - Bank is an innocent party since it had already lent its own money to the Predicate Offender and the property in question being mortgaged to the Bank which is provisionally attached by the Respondent- Deputy Director ought to have been released by the Adjudicating Authority under Section 8(2) of PMLA. 35. In Appeal No. FPA-PMLA-1756/KOL/2017 decided by this Appellate Tribunal, PMLAon 09.11.2017 in the case of Adtiya Birla Finance Ltd. vs. The Deputy Director, Directorate of Enforcement, Kolkata, while allowing the Appeal preferred by the Aditya Birla Finance Ltd., it was clearly held as follows - - "When the properties do not even remotely or prima facie bear a link with the proceeds of crime or the criminal activity, then the said properties are not liable to be attached under the false pretext of 'national security'. 36. The Appellant - Bank also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the conduct of the banks are always bonafide. Both banks are innocent parties. They were legally entitled to inform the Adjudicating Authority about their innocence and they rightly did so but their contention was rejected as appearedfrom the impugned order." 37. The said Judgment passed by us has not been considered and followed by the Adjudicating Authority. It is a very serious matter. The Authority is supposed to give due respect to the judgment of the higher Authority and Courts. The said judgment was passed by referring the decisions of Supreme Court, Full Bench of the High Court of Madras and other High Court. But the same has not been discussed at all. 38. However, it appears that in many matters, the judgments of the Tribunal and higher courts are not being followed. The Member who has passed the impugned order is not a judicial member, he should have consulted at least the Member (legal) before ignoring the judgment of higher authority and courts. 39. In a recent Judgment dated04.07.2018, this Appellate Tribunal under PMLA in the case of Goa State Co-operative Bank vs. The Deputy Director, Directorate ofEnforcement, Ahmadabad has categorically held as follows: - " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not purchased from the proceeds of crime; that the said property not being owned by Bimal Agarwal, cannot form the value of proceeds of crime. Thus, the question of provisional attachment order and confirmation thereof, does not arise and the Bank being the legal owner. Thus, the appellant is entitled to recover the amount if not paid, the same can be recovered from mortgaged of the said property by disposing the same as per court of law. 43. The ED and Adjudicating Authority did not understand the real issue of the mortgages executed in favour of the Appellant - Bank by its Customer. The Bank had, while executing the mortgages in its favour, already parted with its own money as loans to its Customer-Shri Bimal Ramgopal Agarwal and his wife-Barkha Bimal Agarwal. It is further respectfully submitted that the Respondent-Department despite very well knowing the above fact of loans given by the Bank out of its own funds, against which the collateral security stood created by its Customer in favour of the Bank and further that by no stretch of imagination the said Secured Asset was not at all involved in any proceeds of crime, still harassing the Appellant-Bank without any rhyme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
