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TMI Blog2019 (6) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... innocent bonafide claimant and not involved in the money laundering activity and bank is at liberty to move its claim before the Special Court for disposal of the properties in order to recover its dues pending in the loan accounts. 2. The Hon'ble High Court of Delhi in Crl. A. No 076/2018 vide Judgement dated 02.04.2019 allowed the appeal of the respondent inter-alia on the reasons that SARFAESI Act and RDB Act do not prevail over PMLA as these 3 Special Acts operate in their separate respective fields and upon doing harmonious construction of the provisions of these Special Acts remanded the present case back to this Appellate Tribunal for further construction on the specific facts of the present case and directed the parties to appear on 15.04.2019. 3. In view of Hon'ble Delhi High Court Judgement, both parties through their counsels have re-argued both appeals. Various paras of the said judgement have been referred by both sides. 4. The facts are already recorded in earlier order dated 28.6.2018 which may be read in the present order. However, para 1 to 15 are reproduced below:- 1. Two set of Appellants have filed the present appeals under Section 26(1) of the Prevention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (NPA) as per RBI guidelines. 7. Since the Respondent No. 4 failed to regularise its account and did not provide a list of its debtors, the core committee of the Consortium of Banks decided to verify the assets of the company and get a Techno Economic Viability Study ("TEVS") conducted for the same. The PNB led Consortium vide letter dated 20.12.2013 engaged reputed financial consultant M/s Ernst & Young to conduct a forensic audit and study of the accounts of the Respondent No. 4Company. 8. The audit report submitted by M/s. Ernst & Young revealed that the Defendants had committed various financial irregularities including misrepresentation of value of stocks and book debts. 9. It later transpired that the statement of stock as well as debtors and receivables of the company, on the basis of which they had obtained the credit facilities, were false and fabricated. Accordingly, then Assistant General Manager of the Appellant No. 1 filed a written complaint dated 09.12.2013 with the DIG, Banking Securities and Fraud Cell, Central Bureau of Investigations (CBI), New Delhi requesting CBI to enquire into the fraudulent activities of the Company and its directors. Pursuant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used person prima facie for commission of offence of money laundering under Section 3, punishable under Section 4 of PMLA. 13. Despite the said attachment orders of the DRT, the Respondent No. 1 issued the Provisional Attachment Order dated 31.03.2016 and subsequently, Original Complaint, being OC No. 600/2016, was filed before the Ld. Adjudicating Authority in terms of Section 5(1) of the Act for confirmation of the said Provisional Attachment Order. 14. In the table below, the Appellant set out the dates of acquisition of such properties by Respondent Nos. 2 to 4 and thereafter, date of creation of first mortgages by deposit of title deeds in favour of its secured creditors, including the Appellant in respect of the properties for which the Provisional Attachment Order is confirmed by the Ld. Adjudicating Authority vide the Impugned Order: Properties mortgaged to secure Credit facilities extended to Surya Vinayak Industries Limited S. No. Property details Owner Date of acquisition Date of Mortgage 1. Plot No. 38, Khaitian No. 2, Industrial Growth Centre, Zone- II, Bodhjung Nagar, Tripura (West), Agartala, measuring 6271 Sq. mtrs (1.52 acres) Surya Vinayak Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority, in turn, is amendable to appeal to the appellate tribunal. The said forum (i.e. the appellate tribunal) may pass such orders as it thinks fit "confirming, modifying or setting aside the order appealed against" [Section 26(4)]. Undoubtedly, an aggrieved party is entitled in law to invoke the said jurisdiction of the appellate tribunal to bring a challenge to the orders of attachment (as confirmed) but, the law in PMLA, at the same time, also confers jurisdiction on the special court to entertain such claim for purposes of restoration of the property during the trial of the case [Section 8). The jurisdiction to entertain objections to attachment conferred on the appellate tribunal on one hand and, on the special court, on the other, thus, may be co-ordinate, to an extent. 168. An argument, however, was raised, by the appellants that the respondents herein should have approached the special court, instead of the appellate tribunal, for consideration of their respective claims. 169. In view of afore-noted legislative scheme, it must be clarified that if the order confirming the attachment has attained finality, or if the order of confiscation has been passed or, furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue Copy of Extract of Mortgage Register of PNB dated 24.06.2008 in respect of creation of equitable mortgage by deposit of Original Title deeds of Land and building at Mauza-Naya Bans, Tehsil Sampla, Distt. Rohtak, measuring an area of 6050 sq. yards (10 Kanal) part of Killa No.39/14, Khewat No. 73, Khatoni No.104 in the name of Surya Vinayak Industries Limited (Borrower Company). d) True Copy of Extract of Mortgage Register of PNB dated 21.12.2005 in respect of creation of equitable mortgage by deposit of Original Title deeds of Land and building at D-259, Ground Floor, Ashok Vihar - 1, Delhi - 10 052 measuring 167.22 sq. mts., in the name of Sh. Rajiv Jain, Promoter/Director of the above said Borrower Company with true copies of Letters dated 22.12.2005 and 27.12.2005. e) True Copy of Extract of Mortgage Register of PNB dated 27.05.2005 in respect of creation of equitable mortgage by deposit of Original Title deeds of Land bearing Khewat No. 45, Khatoni No.58, Kila No.38/7/3, Khewat No. 40/39, Khatoni No.51-53, Khewat No. 35, Kila No.22/1/1, Khewat No.73, 35, 90 145,134 situated at Village Naya Bans Sampla, District Rohtak, Haryana, total measuring 32,790 sq. yds, in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AGM, PNB filed the complaint dt. 09.12.2013 to CBI. FIR No. RCBDI/2014/E/0001 dt. 01.01.2014 was registered by CBI under Section 420 and 120-B of the IPC. PNB and other member Banks filed OA No. 29/2014 before DRT-II, New Delhi for recovery of Rs. 2071, 01, 79, 990/- against the Company and its Promoters under Section 19 of the RDB, 1993 and vide order dt. 20.01.2014, they were restrained from dealing with the mortgaged properties in question/secured assets along with other immovable properties of the borrowers. One of the Secured Creditor filed a Winding up Petition before Hon'ble High Court of Delhi and Provisional Official liquidator was appointed in Co. Pet. No. 84/2013, vide Order dated 12.02.2014 and OL took possession of the mortgaged properties in question. 14. ED recorded ECIR No. DLZO/2001/2015/AD (VM) on 12.02.2015 for the offence of money-laundering. 15. Provisional Attachment Order dated 31.03.2016 was issued by ED qua the mortgaged properties in question alleging that the secured assets in question are proceeds of crime as the Company had provided fake list of debtors, creditors, fake invoices and indulged in diversion of funds to Overseas and the offence of money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imits, therefore, the same do not come within the scope of Proceeds of crime in terms of Section 2(u) of PMLA, 2002. 20. There is no denial that the commencement of alleged commission of offence of Money Laundering was started by the Company and its promoters from the end of the year 2011 and 2012 onwards which is much later to the acquisition of the mortgaged properties in question. Prior mortgage charge of secured creditors have also been registered qua the mortgaged immovable properties stating that these are under the mortgage charge of the Bank since 2005. 21. SARFAESI Act measures under Section 13(2) and Section 13(4) were initiated in the year 2013 and Bank's OA for recovery of dues under RDB, Act was filed in the year 2014 and DRT order dated 20.01.2014 restraining the Borrowers and Guarantors to deal with the mortgaged properties are much prior to the passing of the PAO order 31.03.2016 by the ED. Bank's OA for recovery. 22. The appellant is always at liberty to approach the Special Court to initiate the proceeding for disposal of mortgaged property, if so desired, who is agreeable to deposit the excess amount if such situation will arise. Counsel for appellants after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal u/s 26 of the Act and then before the Hon'ble High Court U/s 42 of the Act against the order of this Tribunal. Accordingly, under the legislative and statutory scheme of the Act, unless a party has exhausted its remedies in appeal right up to the Hon'ble High Court, an order confirming the attachment cannot be said to have attained finality. This tribunal is only concerned with the validity of the impugned order and provisional attachment order which has been confirmed. 28. Therefore, this Tribunal possesses the requisite jurisdiction in terms with the Act as the court of first appeal, to adjudicate upon the pleas of the Appellant and determine the bonafides and legitimacy of its claims as well as the legality of the Provisional Attachment Order. Upon an argument being raised by the Enforcement Directorate that claims of third parties are to be solely adjudicated by the Special Court before whom trial is pending, the Hon'ble High Court of Delhi in the Axis Bank Decision has held that the claim of a party asserting a bonafide and legitimate claim would be inquired into by the Special Court only if the order confirming the attachment "has attained finality". An order cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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