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TMI Blog2019 (8) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... n, West Bengal, the Customs authorities confirmed that all the shipping bills produced by the firm for the purported export of the readymade garments to Bangladesh were found to be forged and fabricated. After investigation, the Police filed a case under Section 177, 420, 465 etc. of IPC 1860 against one Shri Raman Kumar Garg, the proprietor of M/s. Jaldhara Exports, Ludhiana. As per this, Shri Raman Kumar Garg had obtained VAT refund of Rs. 1,56,76,190/- on the basis of forged and fabricated document from the Department of Excise and Taxation, Ludhiana, Government of Punjab. After receipt of the said money in the accounts of M/s. Jaldhara Exports maintained with the State Bank of India, Ludhiana, it was then transferred into the accounts of various companies and people all owned by his relatives inter alia including his mother, his aunt and his wife who are the above three appellants in the present appeals. 3. Both the parties were heard at length finally as they did not insist on a stay. The learned counsel for the appellants stated as follows: i. That the Assistant Excise & Taxation Commissioner, Ludhiana had lodged a complaint No. 664 dated 18.07.2013 before the Police at L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly stated that the property did not belong to her although the sale deed stands in her name and the said sale deed was signed by her father-in-law Shri Vinod Kumar Garg. Moreover, the payment for the said flat was made in the year 2012, (although the sale deed is of 2014) and the 'VAT refund arose on 05.03.2013 (when the refund amount was transferred in the account)'. It was therefore prior to the alleged scheduled offence and hence the order is not sustainable qua the subject flat. vi. That the value of the properties taken for attachment has been based on different parameters. While in one case it is the market value in the other it is the sale deed value which has been taken and there is no uniformity. vii. They relied on the following judgments: a. Madras High Court in the case of M/s. Indian Bank & Ors. Vs. Government of India dated 11.07.2012 in W.P. Nos. 4696 and 12854 of 2012 and MP Nos. 1, 1 and 2 of 2012. b. The Appellate Tribunal, PMLA judgment in FPA-PMLA- 478/DLI/2013 dated 23.07.2018 in the case of Vinod Kumar Gupta vs. ED. c. The Appellate Tribunal, PMLA judgment in FPA-PMLA- 971/CHD/2015 dated 26.04.2019. d. The Appellate Tribunal, PMLA judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants to counter the same. In fact, they have not challenged the flow chart at all he stated. That a petition was filed by Shri Vinod Kumar Garg, father of Raman Kumar Garg on various grounds including challenging the issuance of summons and the consequential proceedings against them in the present case before the Punjab & Haryana High Court. The Hon'ble Court vide its order dated 22.12.2015 had dismissed their petition and directed to videograph the proceedings of inquiry and interrogation. However, notwithstanding this, the appellants and Shri Raman Kumar Garg and his other relatives failed to comply with the above directions of the Hon'ble High Court which proves the guilt and culpability of all the accused in the case. iii. The submission of M/s. Peagsus Reconstruction Pvt. Ltd. that the two properties 511.22 sq. yd. and 488.88 sq. yd. of Plot No. 800, Moti Nagar, Ludhiana was mortgaged by Seema Garg and Sangeeta Garg to the Allahabad Bank and thereafter to them, shows that the properties belonged to these appellants. iv. Since the flow chart as described in the impugned order proves that the proceeds of crime have travelled into accounts of the appellants/companies owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h for further distribution. Smt. Seema Garg, the mother of Shri Raman Kumar Garg stated in a statement that the 511.22 sq. yd. and 488.88 sq. yd. of Plot No. 800, Moti Nagar, Ludhiana was purchased in her name jointly with Sangeeta Garg by someone in her family and she was not aware about other details of the property, that she was unaware regarding deposits into the account of M/s. VAN Impex of which she was the proprietor. She categorically mentioned that it was her son (Raman Kumar Garg) who could explain the same. Similar statements were given by Smt. Sangeeta Garg and by the third appellant Saiyrah @ Deepika Garg. 8. The impugned order has recorded the details of investigation and the flow chart of how this refund money, which is the proceeds of crime, was processed and disbursed. The VAT refund amount of Rs. 1.56 crores was transferred to the account of M/s. Jaldhara Exports on 26.03.2013 maintained in SBI, Mundian Kalan Branch, Ludhiana. Thereafter, Rs. 32 lakhs was transferred on 26.03.2013 into the DCB Bank account through RTGS of M/s. M.A. Exports, the proprietor of which was Smt. Saiyrah @ Deepika Garg, wife of Raman Garg. The said money was withdrawn in cash on the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said laws over PMLA." With regard to the rights of third party, the Hon'ble Court further observed "an order of attachment under PMLA is not rendered illegal only because a secured creditor has a prior secured interest (charge) in the subject property. Conversely, mere issuance of an order of attachment under PMLA cannot by itself render illegal the prior charge or encumbrance of a secured creditor, this subject to such claim of the third party (secured creditor) being bona fide. In these conflicting claims, a balance has to be struck..........." The Hon'ble Court at para 155, 157 and 158 of its order clearly states that "it is well settled that by hypothecation, no interest of property is transferred to the hypothecatee, the latter acquiring nothing more than equitable and notional charge to have his claim realised by sale of good hypothecated." "The mortgager being the owner who had parted with some rights of ownership has a right to get back the mortgage property and the mortgage deed in exercise of his ownership......... A hypothecatee or a mortgagee, thus, has a limited interest in the property........ There is no ownership, or right to possess." 11. Hence, the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place." 12. Hence, the Supreme Court had talked about harmonious construction. An interpretation of a statute is best when we know why it was enacted. The interpretation given by the financial institution/Assets Reconstruction company would tantamount to making the PMLA redundant. The legislature has come out with the law of PMLA in fulfillment of our international obligations as laid in the Preamble of the PML Act so that money laundering and proceeds of crime could be effectively dealt with. If the interpretation given by M/s. Peagsus Reconstruction Pvt. Ltd. is accepted, then parties would mortgage such properties with the bank and run away with, on the one hand, the loans taken from the bank, and on the other by securing their property by mortgaging it to the bank and hence converting it to an 'innocent' property. This to my mind would be in blatant violation of the PMLA as well as the Hon'ble Supreme Court's judgment. Moreover if we see the intent of PMLA and DRT Act or SARFAESI Act, the purpose of these are entirely different. SARFAESI Act and the DRT Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey-laundering, it shall order release of such property to the person entitled to receive it. So the powers of confiscation or release of the attached property is only vested with the Special Courts and this Appellate Tribunal does not have any such powers. Hence exercise of the powers of confiscation or release of the attached property by this Appellate Tribunal is beyond the scope of activities of this Tribunal and would be grossly illegal. Moreover as per Section 8(8) even the powers of restoration of such confiscated property or thereof to a claimant with a legitimate interest in the property vests with the Special Court. Section 8(8) was amended by the Finance Act, 2018, introducing a separate proviso to reinforce this point giving the court further powers to allow such restoration even during the course of the trial. Usurping this power by the Appellate Tribunal would be a blatant violation of the law itself. 14. The appellants have relied on a number of judgments as mentioned at para 3(vii) supra. However, the facts of those cases are entirely different from the present case. The Supreme Court in Bharat Petroleum Corporation Ltd. & Anr. Vs. N.R. Vairamani and Anr. AIR 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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