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TMI Blog2019 (5) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 8 of the Prevention of Money Laundering Act, 2002 (PMLA, 2002) for seeking appropriate orders/permission to take any action for resolution of the assets of the corporate debtor under the Code, attached under provisional attachment order No. 03/2017 dated 15.03.2017 passed by Directorate of Enforcement, Government of India, Mumbai (ED) and for passing appropriate order for keeping the proceedings in the petition CP(IB) No. 73/Chd/CHD/2018 in abeyance till the final decision of the Adjudicating Authority under the PMLA, 2002 in the interest of justice. It has been submitted that the financial creditor has filed the petition on 12.02.2018 (date as per record is 16.02.2018) mainly on the allegation that the accounts of the corporate debtor had become Non Performing Asset (NPA) as on 31.12.2016 and that the total outstanding amount as on 31.12.2016 is Rs. 160,59,91,092.35 and that recall notice had been sent on 05.01.2018 demanding an amount of Rs. 177,77,60,053.15 outstanding as on 31.12.2017 and that the financial creditor had issued a notice under Section 13(2) of SARFAESI Act, 2002 demanding the alleged amount due as on 31.12.2017. It is stated that in Part-IV of the petition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 15.03.2017 is still in operation and has not been vacated, modified or rescinded or varied in any manner whatsoever and is also the subject matter of CWP No. 12371 of 2017, wherein the Hon'ble High Court was pleased to grant interim protection but the attachment was allowed to operate. It is submitted that the writ petition is pending for adjudication. Reference has been made to the minutes of the Joint Lenders Forum meeting on 22.12.2016 and 13.05.2015 and it is submitted that the Financial Creditor and other bank members of the Joint Lenders Forum are fully aware of the attachment order dated 15.03.2017. It is stated that the financial creditor suppressed the material facts and information while filing the petition under section 7 of the Code. It is submitted that the assets of the corporate debtor cannot be taken control. of or in custody for any purpose whatsoever in view of the attachment order dated 15.03.2017 passed by the ED under PMLA, 2002 and moreover, all the properties are now notified assets by the Central Government and thus stand excluded from the purview of the Resolution Professional (RP) in terms of the Explanation appended to Section 18 of the Code. Relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention and sought to rely on the judgement delivered on 02.04.2019 of the Hon'ble Delhi High Court in CRL.A.143/2018 and Crl.M.A.2262/2018 - The Deputy Director, Directorate of Enforcement, Delhi Vs. Axis Bank & Ors. Rehearing was, therefore, made on 12.04.2019. The learned counsel for the corporate debtor relied on the judgement dated 02.04.2019 of the Delhi High Court (supra) and pleaded that in view of the conclusion summarised in para 171 (xvii), the claim of a party asserting to have acted bonafide or having legitimate interest would be enquired into and adjudicated only by the Special Court. The learned Senior Counsel for the financial creditor pleaded that the judgement of the Hon'ble Delhi High Court is not applicable to initiation of CIRP proceedings under Section 7 of the Code. In rejoinder, the learned counsel for the corporate debtor pleaded that in view of the provisions of PMLA, 2002, the claimant has to approach the Adjudicating Authority under PMLA, 2002 and therefore, the prayers made in CA No. 191/2019 be allowed. We have carefully considered the submissions of the learned counsel for the corporate debtor and the learned senior counsel for the financial cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities under PMLA, 2002 and seek order to release the properties from the attachment on the ground that the properties attached are not proceeds of crime and the lenders are bonafide lenders and it is for the authorities under PMLA, 2002 to decide such issues based on the record of investigation and other material placed on record before them. Therefore, the decision in the order of Hon'ble NCLT, Allahabad is based upon directions being sought by the Liquidator for withdrawal of the provisional attachment order of ED. The prayer in the application filed by the Liquidator was answered by the Hon'ble NCLT, Allahabad that the matters relating to offence of money laundering being prima-facie made out and whether security interest are "proceeds of crime" is to be decided only by the authorities under PMLA, 2002 and therefore, the Liquidator was given liberty to approach the authorities under PMLA. The present case stands on an entirely different footing since the prayer is for keeping the proceedings for initiation of the CIRP in abeyance till the final decision of the Adjudicating Authority under Section 8 of the PMLA, 2002. In para 49 of its order dated 10.01.2019 (supra), the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the ownership rights of the corporate debtor are not affected by the provisional attachment order. The possession also continues to remain with the corporate debtor. It is only the right of removing, parting with or otherwise dealing with the properties has been reduced to the extent that the prior permission of the Deputy Director ED would be required. Therefore, there is no impediment to the initiation of the CIRP consequent to order made by the Adjudicating Authority under the Code. It has been pleaded that the financial creditor has suppressed material facts and information while filing application under Section 7 of the Code. The issue whether there is material suppression of facts relates to the proceedings in respect of petition CP (IB) No. 73/Chd/CHD/2018 and not the present application - CA No. 191/2019. During the rehearing, the learned counsel for the corporate debtor relied upon the judgement dated 02.04.2019 of the Hon'ble Delhi High Court (supra). Part No. 1 of the judgement inter alia states that the five appeals presented under Section 42 of the PMLA, 2002 are against more or less similar order of the appellate tribunal constituted under Section 25 of PMLA, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with) the offence of money-laundering objects to the attachment, his claim being that the property attached was not acquired or obtained (directly or indirectly) from criminal activity, the burden of proving facts in support of such claim is to be discharged by him. (vi). The objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and Insolvency Code, the latter three legislations do not prevail over the former. (vii). The PMLA, by virtue of section 71, has the overriding effect over other existing laws in the matter of dealing with "moneylaundering" and "proceeds of crime" relating thereto. (viii). The PMLA, RDBA, SARFAESI Act and Insolvency Code (or such other laws) must co-exist, each to be construed and enforced in harmony, without one being in derogation of the other with regard to the assets respecting which there is material available to show the same to have been "derived or obtained" as a result of "criminal activity relating to a scheduled offence" and consequently being "proceeds of crime", within the mischief of PMLA. (ix). If the property of a person other than the one accused of (or charged with) the offence of money-laundering, i.e. a th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t evidence by the bonafide third party claimant (as aforesaid), staking interest in an alternative attachable property (or deemed tainted property) claiming that it had acquired the same at a time anterior to the commission of the proscribed criminal activity, the property to the extent of such interest of the third party will not be subjected to confiscation so long as the charge or encumbrance of such third party subsists, the attachment under PMLA being valid or operative subject to satisfaction of the charge or encumbrance of such third party and restricted to such part of the value of the property as is in excess of the claim of the said third party. (xv). If the bonafide third party claimant (as aforesaid) is a "secured creditor", pursuing enforcement of "security interest" in the property (secured asset) sought to be attached, it being an alternative attachable property (or deemed tainted property), it having acquired such interest from person(s) accused of (or charged with) the offence of money-laundering (or his abettor), or from any other person through such transaction (or interconnected transactions) as involve(s) criminal activity relating to a scheduled offence, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge or encumbrance of a secured creditor, the claim of the latter for release (or restoration) from PMLA attachment being dependent on its bonafides. Reference is also made to para-171 (xiv) of the order that in cases where it is shown by cogent evidence by the bonafide third party claimant staking interest in an alternative attachable property (or deemed tainted property) claiming that it had acquired the same at a time anterior to the commission of the prescribed criminal activity, the property to the extent of such interest of the third party will not be subjected to confiscation so long as the charge or the encumbrance of such third party subsists, the attachment under PMLA being valid or operative subject to satisfaction of the charge of encumbrance of such third party and restricted to such part of the value of the property as is in excess of the claim of the said third party. Therefore, it has been held by the Hon'ble Delhi High Court that an order of attachment under PMLA does not ipso facto render illegal a prior charge of encumbrance of a secured creditor and the secured creditor can prove and as and when the secured creditor proves his bonafides and satisfies the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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