9911796707
TMI Blog2019 (8) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... shall have priority over all other debts and all revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. On the other hand, in PMLA there are no dues, debts, revenues, taxes, cesses and other rates which is payable to the Central Government, State Government or local authorities. Properties are attached under PMLA, they being proceeds of crime - 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 bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants 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 Ludhiana alleging that M/s. Jaldhara Exports, Ludhiana had fraudulently claimed a VAT refund of ₹ 1.64 crores from the State Government vide its application dated 11.02.2013 (although they were granted ₹ 1.56 crore as refund). On the basis of above, the Police registered a FIR No. 126 of 26.07.2013. Since the refund was filed on 11.02.2013, the offences under Section 420, 467 and 471 of IPC did not form part of Part B of the Schedule of the PML Act. Vide amendment made to the PMLA w.e.f. 15.02.2013 offences under Section 420, 467 and 471 were notified under Para 1 of Part A of the Schedule. Hence, from 01.06.2009 to 14.02.2013, the offences under Section 420, 467 and 471 were not covered either in Part A or Part B of the Schedule and since the refund application is dated 11.02.2013, the PMLA does not apply to them as the alleged offence was not a scheduled offence at the time of the commission of the same. ii. That Shri Raman Kumar Garg in his statement dated 23.10.2017 has disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in FPA-PMLA- 449/BNG/2013 dated 11.05.2018. 4. Arguing on behalf of M/s. Peagsus Reconstruction Pvt. Ltd., the learned counsel for the petitioner stated that loans were taken from the Allahabad Bank with regard to the two properties in Plot No. 800 Street No. 2, Baba Gajja Jain Colony, Moti Nagar, Ludhiana. That they vide deed of assignment dated 27.09.2013 duly executed between them and Allahabad Bank and registered on 30.04.2014 took over assignment of debt of M/s. Jaldhara Exports. That as per SARFAESI Act, 2002 every asset reconstruction company on such acquisition would be deemed to be the lender and all the rights of such bank shall vest on such company in relation to such financial asset. That as per the registered deed of assignment, the appellant in appeal No. 2419 i.e. Smt. Seema Garg and the appellant in appeal No. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gsus 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 by them and as per law proceeds of crime includes value of such property the adjudicating authority has rightly attached the values of both these properties. v. With regard to the judgment cited, he stated that the facts in each of these cases was entirely different and hence cannot be taken as having precedent value. 6. I have carefully examined the documents and records of the appeal and also heard the parties at length. The first contention of the appellant that since the predicate offences were not schedule offences on the day they filed their refund application with the State Government i.e. 11.03.2013, therefore the impugned order is illegal, appears to be a too stretched out argument. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation and the flow chart of how this refund money, which is the proceeds of crime, was processed and disbursed. The VAT refund amount of ₹ 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, ₹ 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 same day. Similar details have been provided in the impugned order with regard to the others which is depicted in the flow chart as below: 9. The appellants have not controverted the above and not disputed any of the details in the flow chart as above. In this background, it can be concluded that the refund money received fraudulently has been disbursed/used by the appellants or their companies and therefore, stands the test of money laundering as defined under the PMLA. The appellants stating that the properties pertaining to 511.22 sq. yd. and 488.88 sq. yd. of Plot No. 800, Moti Nagar, Ludhiana were purchased in 1991 and cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly 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 the Hon ble Delhi High Court which was a remand order, does not unequivocally support the claim of M/s. Peagsus Reconstruction Pvt. Ltd., although it does recognize its claim under SARFAESI as long as it does not override the actions under PMLA. The Hon ble Supreme Court in the case of KSL and Industries Ltd. vs. Arihant Threads Ltd. ors. [(2015) 1 SCC, 166] decided by three- Member Bench at para 41 stated Indeed, the question as to which Act shall prevail must be considered with respect to the purpose of the too enactments; which of the two Acts is the general or special; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deal with debts due to any secured creditor which shall have priority over all other debts and all revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. On the other hand, in PMLA there are no dues, debts, revenues, taxes, cesses and other rates which is payable to the Central Government, State Government or local authorities. Properties are att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 SC 778 had observed:- Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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