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TMI Blog2019 (9) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... r passing the order of NCLT which ought not to have been done. The question of registering ECIR does not arise. The passing of provisional attachment order was not application of mind and without consulting the facts and law. Orders are set-aside by allowing the appeals. The attachment order with regard to the mortgaged property is quashed. The appellants are at liberty to take further steps in accordance with law. - FPA-PMLA-1859/DLI/2017 And FPA-PMLA-1950/DLI/2017 - - - Dated:- 6-8-2019 - Justice Manmohan Singh, Chairman And Shri G.C. Mishra, Member For the appellant: Ms. Kirti Uppal, Sr. advocate with Ms. Nishi Chaudhary, Shri Shailendra Bhardwaj, Shri Yashartha Gupta, Shri Raghav Sharma, Adv. For the respondent: Shri Nitesh Rana, Advocate Shri Atul Tripathi. JUDGEMENT FPA-PMLA-1859 1950/DLI/2017 Appeal No. 1859/2017 1. The above-mentioned appeal has been filed by the appellant against the impugned dated 14.03.2017 thereby confirming the Provisional Attachment Order no. 08/2016 (in ECIR no. DLZO/01/2015/AD (BKS) vide F. No. DLZO/01/2015/AD(VM)/2996 dated 30.09.2016, passed under sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of Money Laundering Act, 2002. 5. The appellant submits as under:- a) It is submitted that present appellant, the Punjab National Bank is a body corporate constituted under the banking Companies (acquisition and transfer of undertakings) Act, 1970 having its head office at 7, Bhikhaji Cama Place, New Delhi-110066 and a branch office amongst other places at ARMB, Mayur Vihar, Phase-II, New Delhi-110091. The present appeal is being filed by Shri P.K. Gupta, who is Principal Officer of the Bank/attorney of Bank and is competent to institute suit and engage counsel and take all steps for the conduct of the case and is also duly authorized by the Bank through an Authorization Letter to sign, verify, plaint, replication, swear affidavits, applications etc. and to execute all documents connected with legal proceedings and to do all acts necessary for the prosecution of the case. Further, he is a duly constituted attorney authorized to sign and verify the present appeal and do the needful on behalf of the Punjab National Bank. b) On 18.04.2017, the appellant Bank being the Lead Bank of PNB Consortium served with a Show Cause Notice of hearing through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,02,792.48 along with interest as due and recoverable from M/s. Divine Infracon Pvt. Ltd. has already filed a T.A. No.07/2016 (previously O.A. No. 730/2015) before the DRT-I, New Delhi for the determination of the debt due and recoverable. 6 The enforcement of the security interest created by M/s. Divine Infracon Pvt. Ltd upon the secured asset i.e. plot no. 4, Sector-13, Dwarka City Centre, Dwarka, Delhi with superstructure thereon created for the due repayment of all the Term Loans of ₹ 401.84 Crores, the appellant (PNB Consortium) has already initiated measures under section 13 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and possession of the attached property was taken over on 7.7.2015 under the provisions of section 13(4) OF SARFAESTI Act, 2002. 7. As far as relevant dates and events are concerned, the appellant in both appeals have common details. The same are mentioned below:- Dates Events 10.02.2009, 06.03.2009 07.03.2009 04.06.2009 11.07.2009 14.12.2011/ 15.12.2011 PNB Consor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. hereby failed to deposit the first instalment of ₹ 7.50 Cr. till 30.06.2015, hence thereafter the Petitioner Bank took symbolic possession of the property bearing Plot No. 14, Dwarka City Centre, Sec-13, Dwarka New Delhi under section 13(4) of SARFAESI Act, 2002. August 2015 SA No. 162/2015 was filed by M/s Divine Infracon Pvt. Ltd. challenging the measures of Section 13(4) of SARFAESI Act, 2002 (pending before DRT-I, Delhi) November 2015 TA No. 7/2016 (Old OA No 730/2015) was filed by PNB Consortium against M/s Divine Infracon Pvt. Ltd. for the recovery of a sum of ₹ 262,57,87,628.28/- (pending before DRT-I, Delhi) January 2016 Writ Petition bearing No 147/ 2016 filed by PNB Consortium against M/s Divine Infracon Pvt. Ltd. inter alia praying for the physical possession of the secured asset which was denied by the Ld. CMM, Dwarka under section 14 of the SARFAESI Act, 2002. (pending before High Court of Delhi) 14-03-2017 (PAO 05/2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk of India under the Code is ought to be given precedence over the proceedings initiated under PMLA Act in respect of the aforementioned properties. The said position has been clarified by the Hon‟ble High Court of Delhi in the matter of Deputy Directorate of Enforcement Delhi and Ors. vs Axis Bank in CRL.A. 143/ 2018 Crl.M.A. 2262 of 2018 dated April 02, 2019 wherein in Paragraph 171, the court held that: (xv): If the bona fide 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 inter-connected transactions) as involve(s) criminal activity relating to a scheduled offence, such third party (secured creditor) having initiated action in accordance with law for enforcement of such interest prior to the order of attachment under PMLA, the directions of such attachment under PMLA shall be valid and operative s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be tainted property . Since in the present case, the bona fide third party claimant, secured creditor, had initiated action in accordance with law for enforcement of interest prior to the order of attachment under PMLA, the PMLA attachment takes a back seat allowing the secured creditor to enforce its claim and only the remainder to be made available for purposes of PMLA. The properties in the present case are thus not liable to be attached even as alternative attachable property , as held in Para 165 of the judgment of Hon`ble Delhi High Court in the case of Deputy Directorate of Enforcement Delhi and Ors. vs Axis Bank in CRL.A. 143/ 2018 Crl.M.A. 2262 of 2018 dated April 02, 2019. 15. As already mentioned in the present case, it has come on record that the that the security interest in respect of the of the aforesaid properties were created much before the date or period of the alleged criminal activity in respect of which the attachment order was passed. 16. The Hon‟ble Delhi High Court on the Axis Bank Judgement (supra) had observed that the charge or encumbrance of third party in property attached under PMLA cannot be treated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 does not apply to the Transactions where the rights of the secured Creditor were created in accordance with the Transfer of property Act, 1882. 23. It is not denied on behalf of the respondent that the Appellant being the mortgagee bank and secured Creditor is entitled to recover amounts outstanding in the loan account of M/s Divine Infracon Pvt Ltd from the sale of the Mortgaged Property as it was never the case of the ED that the attached Property were purchased after the loan was obtained. 24. It has also come on record that the mortgagee bank acted bonafidly while rendering the facilities and mortgage of the Property was done for bonafide purposes. The appellant is not involved in the schedule offence. No PMLA proceedings are pending against the work. There is also no criminal complaint under the schedule offence under PMLA is pending against the bank. In the Reply of the Respondent Bank to the Appeals, it was never urged that the conduct of the bank was malafide all the time. Thus, the mortgaged Property are security to the loans and cannot be subject matter of attachment particularly when the same were purchased and mortgaged prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L Act and properties/ asset in respect of which security interest has been created in favour of the bona fide secured creditor ought not be subjected to attachment in view of the aforesaid observations of the Hon‟ble Delhi High Court and the State Action would be restricted to such part of the value of the property as it exceeds the claim of the bona fide third party. 30. As such, in the present case once it has been showed by the Bank of India that proper due diligence was conducted before the properties/ assets were mortgaged to them, the properties thus cannot be attached, neither as a tainted property‟ nor as alternative attachable property‟ since it is nobody`s case that the secured creditor had not done the due diligence and/or the transactions were not legitimate. 31. It is the case of appellant that the appellant before seeking to create a mortgage of the afore-mentioned properties had conducted due diligence of the purchase of the properties and upon being satisfied that the properties are in no way tainted and or benami got created mortgage in favour of the Appellant. No contrary evidence is available on record to show that the mort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty can be guilty of the offence. S.5(1) shows that before any property can be provisionally attached there must be material prima facie to show any person is in possession of any proceeds of crime which are likely to be concealed, transferred or dealt with in a manner which may frustrate the confiscation proceedings thereof. The primary requirement for invoking S.5(1) is that there must be material to show that some proceeds of crime are in possession of any person. The requirement is that material must indicate that any property of whatever description in possession of any known person is proceeds of crime as defined in S. 2 (u). Finally adjudication proceedings are under S.8. Perusal of S.8 (1) shows that if any person has committed an offence under S. 3 or is in possession of proceeds of crime he may be served notice to indicate the sources of his income etc. out of which or by means of which he has acquired the attached property. This obviously means that if in response to the notice, the person in possession discloses legitimate means for having acquired the property in question, the property cannot deemed to be involved in money laundering. Therefore, the attachment thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SCN, or the provisional attachment order accompanying the SCN under Section 8 of the PMLA, as to how there was reason to believe that the Appellant was in possession of proceeds of crime‟. Adjudicating Authority, in its discussions, did not even consider the reply of the Appellants. 38. The Adjudicating Authority is bound by the law laid down by the higher courts. No authority has any justification to ignore the law laid down by the Supreme Court and various High Courts and 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 not following the orders passed 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 comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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