9911796707
TMI Blog2019 (1) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass anOrder of confirmation of the provisional attachment. The Adjudicating Authority also has no power to confirm the Attachment under Section8(2) of PMLA. Similarly, it is a simple case of recovery by the Appellant-Bank from its Borrower its own stressed Asset, since the Bank had already lent the money owned by it, which the Bank is entitled to recover the same - 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. The provisions of The Prevention of Money-Laundering Act, 2002 cannot be construed and implemented to the detriment of third parties having no connection with and involvement in the scheduled offences which fall within the domain of the Act. The provisions of the Act can only entail penal consequences on those who are not guilty of committing of scheduled offences - The rights of a third party having no involvement in the scheduled offences cannot be jeopardized and decimated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Ltd, Valued at ₹ 266,59,72,781/- situated at Katghora, District- Korba, Chattisgarh ₹ 266,59,72,781/- 3. Land Valued at ₹ 1,13,79,809/- of M/s Vandana Vidhyut situated at Katghira, District- Korba, Chhatisgarh. ₹ 1,13,79,809/- TOTAL Rs. 603,19,76,500/- 6. The Respondent no.1 lodged original complaint no.952/2018 before the Adjudicating Authority (PMLA). The appellant was arrayed as defendant no.3 in the original complaint no.952/2018. 7. The Adjudicating Authority, Pursuant to the original complaint no.952/2018 filed by the Respondent No.1 has issued a show cause notice dated 16.05.2018, inter alia, directing the Appellant herein to appear before Ld Adjudicating Authority. 8. The NCT Mumbai, vide order dated 26.04.2018 has declared Moratorium against the Respondent No.2 Company on the Application made by SBI [Being a Financial Creditor as well as a member of the Consortium of Banks] under Section 7 of the IBC Code, 2016. 9. The appellant on 30.07.2018 filed a detailed reply to the original complaint no.952/2018 filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or StateGovernment or local authority. 17. The amended provisions of Section31B of the Recovery of Debts due to Banks and Financial' Institutions Act, 1993 as amended by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 which reads as under:- 31B. - Priority to secured creditors. Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realize secured debts due 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 other debts and government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. 18. It was brought to our notice of this Tribunal that the above mentioned provisions had come into force w.e.f. 16.08.2016, empowering this Appellant Bank to have priority over the mortgaged property. 19. The Hon'ble Supreme Court, wherein it has been categorically held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revail. If the Legislature does not want the later enactment to prevail, then it could and would provide inthe later enactment that the provisions of the earlier enactment continue to apply. 24. The afore-stated principle laid down by the Hon'ble Supreme Court has been followed by the Full Bench of the Hon'ble Madras High Court in a recent decision dated 10.11.2016 in W.P. Nos. 2675 (authored by Hon ble Mr. Justice S.K. Koul, who is now the Hon ble Judge of Supreme Court). The Assistant Commissioner (Commercial Taxes) Vs. Indian Overseas Bank], in which the Hon'ble High Court upheld the provisions of the amended Section 31B of Recovery of Debts due to Banks and Financial Institutions Act, 1993. The following is the relevant portion of the said decision:- 3. There is, thus, no doubt that the right* of a secured creditor to realize secured debts due and payable by sale of assests 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. 25. The said principle laid down by the Hon'ble Supreme Court has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property, relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment. 29. The Adjudicating Authority also has no power to confirm the Attachment under Section8(2) of PMLA. Similarly, it is a simple case of recovery by the Appellant-Bank from its Borrower its own stressed Asset, since the Bank had already lent the money owned by it, which the Bank is entitled to recover the same. 30. 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 has held that as per the amended provisions of Section 26E of SARFAESI Act and 31B of the Recovery of Debts due to Banks and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon its own earlier Judgment dated 22.06.2017 in the case Indian Performing Right Society Ltd. vs. The Deputy Director, Directorate of Enforcement ,Mumbai, wherein the Tribunal held as follows :- 55. Whether innocent party whose properties i.e.movable or immovable are attached can approach the Adjudicating Authority for release of attached property. The Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating Authority for the purpose of release of properties which have been attached in terms of the provisions of Section 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. 32. 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03/2018 dated 28.03.2018. 38. The Adjudicating Authority did not appreciate that the provisions of The Prevention of Money-Laundering Act, 2002 do not constitute any overriding statutory charge so as to defeat and make sub servient the rights of the bank as a secured creditor. It is no longer res integra that crown debts have no priority over the claim of a secured creditor under a contract of loan. 39. The Prevention of Money-Laundering Act, 2002 does not override the provisions of The Securitisation Reconstruction of Financial Assets Enforcement of Security Interest. Act, 2002 should be construed harmoniously so as to give effect to both. The realization of public money through the Securitization Reconstruction of Financial Asset Enforcement of Security Interest Act, 2002 cannot be held to be, in any manner, inconsistent with and violative of the purpose and enforcement of provisions of The Prevention of Money-Laundering Act, 2002. 40. The PMLA Act cannot be applied to the detriment of the Appellant being a Secured creditor (Public Sector bank) as held by this tribunal in a catena of judgments. The Adjudicating Authority did not appropriate that even if the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that a bare perusal of the afore mentioned section 2(1)(u) of PMLA very clearly stipulates that the property can be attached under the provisions only when, such property has either been derived or obtained, directly or indirectly as a result of a criminal activity relating to a scheduled offence. However, the complainant has failed to prove/establish that the moveable/immoveable property that has been lawfully hypothecated/Equitably Mortgaged with the Appellant Bank has either been derived or obtained, directly or indirectly as a result of a criminal activity relating to a scheduled offence. The only reason given by the Respondent No.1 in the present OC 952/2018 is that ₹ 603,19,76,500/- as received by the Respondent No.2 Company as equity shares and premium amount by issuance of fresh shares after the allocation of the Fatehpur East Coal Block‖ during FY 2007-08 to 2013-14 is considered to have been derived out of criminal activity relating to schedule offences and thus the same constitute as Proceeds of Crime, and that the Respondent No.2 Company had used the said Proceeds of crime amount towards the purchase of land, construction of Factory Building, plant and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of crime at all. It is further submitted that the same was acquired by obtaining Consortium Finance facilities from the Appellant i.e. PNB ( being a Public sector Bank and the Lead Bank in the consortium of Banks). He also admits that the banks are victim parties who are entitled to recover the money from the borrowers. However, they are entitled only when the trial against the borrowers is over before the Special Court. The same would take number of years. The second submission of the counsel for respondent no. 1 is that the banks should approach to the Special Court if they wish to dispose of the mortgaged properties before trial. The said argument is without any force as no-one would purchase the said attached properties unless they attachment is lifted. The only jurisdiction in this regard lies with this Tribunal. 48. The Appellant Bank cited the judgments passed by this Appellate Tribunal at the time of arguments i.e. judgment and order dated 14.07.2017 in the case of State Bank of India vs. Joint Director, Directorate of Enforcement Kolkata‖, judgment and order dated 25.01.2018 in the case FPA PMLA 1373/GOA/2016 titled as Punjab National Bank vs. Joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Adjudicating Authority could not have confirmed the PAO bearing No. 03/2018 dated 28.03.2018 passed by the Respondent No.1. 54. By virtue of Section 4A of the RDB Act, 1993, the property of the Borrowers/mortgagors/guarantors becomes the custodial egis on the institution of the OA for recovery of dues under the Act. It is admitted fact in the present case that the OA bearing No. 410/2017 has been filed by the Appellant Bank before the DRT, Jabalpur and the Ld DRT has been pleased to issue notice to the Respondent No.2 Company on the said OA, therefore, the Respondent No.1 could not have attached the property in issue as the same is now the custodial egis. 55. The NCLT passed Moratorium order 26.04.2018 under Section 14 of the IBC, 2016, inter alia, prohibiting institution or continuation of pending suits or proceedings against the Corporate Debtor i.e. M/s Vandana Vidhyut Ltd. including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority, therefore, in view of the order passed by the NCLT under section 14 of the IBC, 2016, the Respondent No.1 i.e. Enforcement Directorate could not have passed the PAO 03/2018 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal, who on the basis of decisions of Hon ble Supreme Court and various High Courts, has delivered orders. Unless each and every judgment is distinguished or are on different facts, the different conclusion cannot be arrived. The facts and legal issues are almost same and the Adjudicating Authority has incorrectly passed the impugned order by saying that it cannot Concur ‖ with the law laid down by this Tribunal. The appellant is a Public Sector Bank. The money must come to the public forthwith not after the trial of criminal case against the borrowers which may take many years. The banks are in crisis, no attempt should be made to block the loan amount in order to avoid worsen positions in the commercial market. The trial may continue against the borrowers. One is failed to understand why the bank loan amount be blocked in view of settled law. 64. This Tribunal is of the considered opinion that the proceeding u/s 8 of PMLA,2002 before the Adjudicating Authority is a civil proceeding and the Adjudicating Authority should have stayed the proceedings on passing of the moratorium order by the NCLT. The continuation of the proceedings from the date of commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
