9911796707
TMI Blog2025 (2) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... Axis Bank [2019 (4) TMI 250 - DELHI HIGH COURT].
The underlying issue is squarely covered by the judgement of this Appellate Tribunal in the case of JM Financial Asset Reconstruction Company Ltd. [2024 (4) TMI 1228 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] where it was held that 'the interference in the order of the attachment order, on a challenge by the financial institution, should not be persuaded by the sentiments and only on the ground that once there is a mortgage of the property, it should go to the financial institution.'
Conclusion - The attachment under PMLA is lawful and does not transfer title unless the property is confiscated. The rights of financial institutions are protected under Section 8(8), and they may pursue their claims in accordance with the provisions of PMLA.
Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... alance in the accounts through unauthorized and false transactions, and his subsequent letter dated 01.01.2014, revealed that the Sanjay Minocha & family firms/individuals and the Vijay Kushwaha group had got undue funds to the tune of Rs. 30,68,38,618/- from the bank with the help of Shri Manoj Kumar R., the then Branch Manager & Senior Manager of SIB and Shri Jacob Kovoor, Ex. Additional Manager of SIB by way of fraudulent transactions, which are not permissible within normal practice of banking. Most of these funds were transferred directly or indirectly to the various accounts of Minocha & Kushwaha Groups maintained with the SIB and other banks. 5. On the basis of perusal of the material on record, including copy of the FIR No. 389/2012 dated 23.11.2012, copy of said Internal Investigation Report dated 07.11.2013 & 10.01.2013 on misappropriation of account balances through unauthorized and false transactions, subsequent letters of the internal investigator dated 01.01.2014 & 19.02.2014, replies of several banks, statements of bank accounts, statements of accused persons and material both oral and documentary collected during the course of investigation under PMLA, 2002, it app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waha while Mr. Kamal Singh was his tenant. 8. Facts revealed that Sh. Vijay Kumar Kushwaha received an amount of Rs.4 crores vide pay order no. 157753 dated 16.05.2012 issued by South Indian Bank in Over Draft account 01144015000188 of M/s. Computer Mart, his proprietorship concern, maintained with Oriental Bank of Commerce, Kharkari Branch, Haridwar on 18.05.2012. 9. On 15.05.2012, a fake FSLD (fully secured loan against deposits) of Rs.9 crore was created against ten fixed deposits of Rs.1 crore each, standing in the name of Uttaranchal State Co-operative Bank Ltd., Dehradun. The aforesaid amount of Rs.9 crore was generated by creation of fake loans. Thereafter, two pay orders bearing Nos. 157752 & 157753, both dated 15.05.2012, for Rs.4 crore each, were issued to the firms of Sanjay Minocha and Vijay Kumar Kushwaha. The remaining amount of Rs.1 crore was used to set off earlier adjustments made in clearing. 10. A sum of Rs.9,99,99,800/- was received by Sh. Vijay Kumar Kushwaha, Mrs. Rekha Kushwaha, their firms, i.e., M/s. IT Computer Park, M/s. Computer Mart, M/s. Uttarakhand IT Services & Trading Co. from SIB by various methods, during the period 2009-2012. Funds to the tune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dwar, Ballupur Chowk, Dehradun and Rajpur Road, Dehradun.On going through the bank statement of the current account 27120200000503 of M/s. Uttarakhand IT Services and Trading Co maintained with Ballupur Chowk, Dehradun, it has been revealed that on 20.10.2011, a cheque bearing number 817229 of Oriental Bank of Commerce, Kharkhari Branch, Haridwar of amount Rs. 2.10 Cr. was clearedand the said amount was used to purchase properties, cash withdrawals and was parked in accounts of different firms related to Sh. Vijay Kushwaha. 15. Further, the aforesaid properties purchased were kept as collateral security along with some other properties in Bank of Baroda, Ballupur Branch and an overdraft account having limit of Rs.3.00 crore was sanctioned by the Ballupur branch on 05.11.2011 in the firm M/s. Uttarakhand IT Services & Trading Co. On the same day Rs.2.10 crore were adjusted from the OD account 27120400003568. 16. The Bank of Baroda, Ballupur Branch, vide their letter dated 28.01.2016, confirmed that cheque no.817229 drawn on Oriental Bank of Commerce, Haridwar was not sent for clearing. Further, during the course of investigation it was also revealed that the cheque 817229 pertains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further revealed that Sh. Vijay Kumar Kushwaha has acquired many immovable properties in his name and his family member's names (Mrs. Rekha Kushwaha and Sh. Vimlesh Kumar). Most of the immovable properties identified were mortgaged with the Banks. The total value of the aforementioned properties is 2,35,51,500/-. The utilization of the remaining proceed of crime was not found, therefore, the value equivalent to such proceeds of crime was found to be liable for attachment in view of clause (u) of Section 2(1) of the PMLA, 2002 by considering that "proceeds of crime" also means the "value" of any such property derived or obtained from predicate offence. 21. The Ld. AA confirmed the attachment of the said properties vide order dt. 03.03.2017. 22. Aggrieved by the said order of the Ld. AA, the Appellant Bank has filed the present appeal challenging the same on various factual and legal grounds Arguments on behalf of the Appellant 23. It is contended from the side of the appellant that the Appellant Bank is the victim of the fraud played by Vijay Kumar Kushwaha & others in conspiracy with some of the officials of the Appellant Bank. The Appellant Bank is the Complainant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.05.2015 the Appellant Bank had initiated the proceedings u/s 19(1) of Recovery of Debts Due to Banks & Financial Institutions Act 1993 (RDDB Act) by filing OA No. 224 of 2015 before the Debt Recovery Tribunal to further secure the losses of public monies suffered by the Appellant Bank. Thus, the Appellant Bank initiated action in accordance to law for enforcement of such interest prior to the order of attachment under PMLA. The PAO was passed by the Respondent on 28.09.2016 and thereafter OC No. 335/2014 was filed on 26.10.2016. The PAO acknowledges the fact that the proceeds of crime in the possession of Mr. Vijay Kumar Kushwaha amount to INR 10,71,08,200. However, INR 50,09,000 was remitted back to the Appellant Bank and, therefore, the PAO attaches immovable properties for the remainder amount of INR 10,20,99,800, including the attached properties. 29. The above-mentioned facts were brought to the knowledge of the Respondent by the Appellant Bank vide its representation dated 02.11.2016. However, the Ld. Adjudicating Authority failed to consider the same while passing the impugned order on 03.03.2017. 30. It is further submitted that the Hon'ble Debt Recovery Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted property) is targeted by the enforcement authority for attachment under the second or third part of the definition of "proceeds of crime", for the reason that such asset is equivalent in value to the tainted asset that was derived or obtained by criminal activity but which cannot be traced, the third party having a legitimate interest may approach the adjudicating authority to seek its release by showing that the interest in such property was acquired bona fide and for lawful (and adequate) consideration, there being no intent, while acquiring such interest or charge, to defeat or frustrate the law, neither the said property nor the person claiming such interest having any connection with or being privy to the offence of money-laundering." 165. Situation may also arise., as seems to be the factual matrix of some of the cases at hand, wherein a secured creditor, it being a Bonafide third party claimant vis-a-vis the alternative attachable property (or deemed tainted property) has initiated action in accordance with law for enforcement of such interest prior to the order of attachment under PMLA, the initiation of the latter action unwittingly having the effect of frustrating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the Respondents 37. The Respondenthas strongly contested the arguments put forward on behalf of the Appellant. 38. It is argued on behalf of the Respondent that during the investigation it was revealed that Sh. Vijay Kumar Kushwaha has acquired many immovable properties in his name and in the names of his family members, namely, Mrs. Rekha Kushwaha and Sh. Vimlesh Kumar. Properties to the tune of Rs. 6,07,33,200/- have been identified till date which were under the possession of Vijay Kumar and his family. In view of these facts, the Deputy Director, Directorate of Enforcement, issued two provisional attachment orders provisionally attaching the properties of accused amounting to Rs. 11,60,88,834/- and Rs. 6,07,33,200/- respectively, under section 5 of PMLA, 2002. The Directorate filed Original Complaint before the Adjudicating Authority, New Delhi vide No. 335/2014 dated 15.07.2014 in Provisional Attachment order No.01/2014 dated 23.06.2014. The Ld. Adjudicating Authority has confirmed the Provisional Attachment Order No.01/2014 vide its order dated 07.11.2014.During the course of further investigation, another attachment order, vide No. 03/2016 dt.28.9.2016 was issued, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mischief of PMLA. The PMLA, declares, by virtue of Section 71, that it has over-riding effect over other existing laws, such provision containing non-obstante clause with regard to inconsistency apparently to be construed as referable to the dealings in "money-laundering" and "proceeds of crime" relating thereto." 149. An order of attachment under PMLA, if it meets with the statutory pre-requisites, is as lawful as an action initiated by a bank or financial institution, or a secured creditor, for recovery of dues legitimately claimed or for enforcement of secured interest in accordance with RDBA or SARFAESI Act. 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...." 41. The Hon'ble Court further held that "if the order confirming the attachment has attained finality, or if the order of confiscation has been passed or, further if the trial of a case for the offence under Section 4 PMLA has commenced, the claim of a party asserting to have acted bonafide or having legitimate interest will have to be inquired into and adjudicated upon only by the special court". In the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the title or the ownership of the property rather it can be when it is confiscated. The Special Court and the Central Government are having power to settle the interest of the claimant and accordingly to release the property in favour of those who are entitled for it. Thus, financial institution would not be affected and if the property is released at the initial stage and ultimately someone else also make a claim of the same property, it would remain un addressed. Therefore, proper safeguards for the properties attached under the Act of 2002 have been given." ***** 21. We have already recorded finding that the attachment of the property does not effect or transfer the title unless the property is confiscated and it can be when the accused is convicted. The settlement of the property, if confiscated is provided under section 8 (8) of the Act of 2002. If the prayer of the financial institution for protection of their right and for that to lift the attachment or quash it is accepted that it may be in ignorance of section 8 (8) of the Act of 2002. 22. It may be that mortgage of the property is to secure the loan amount, but there may be cases where the property so mortgaged w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than what is due to the financial institution. In that case, the financial institution can retain the amount to the extent it is due to them and remaining has to be given to the person who mortgaged the property which would be none but can be the accused and thereby the accused would be benefited on release of the property in a given case by getting the amount over and above secured, out of the auction to settle the dues of financial institutions. In that case again victim would suffer whereas if the mechanism given under section 8 (8) is applied, safeguard would exist to settle the amount in favour of the rightful claimant". 27. We don't wish to comment as to what happens in the auction conducted by the bank, that is as to whether the real value of the property is achieved or not. The proposition above may have exception in case of a clean claim having no consequence to others. It can be in a case of rightful claimant. 28. The aforesaid illustration has been given to analyze the consequence of the release of the property at the instance of financial institutions. Though invariably pleas raised that the property was mortgaged much prior to the commission of crime and is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
