2019 (2) TMI 1362 - AT - Money Laundering

Offence under PMLA - Attachment orders - Appellant Bank has the right to recover the loan amount against the mortgaged properties, under law - HELD THAT - As per admitted position as that the attached properties are the mortgaged /Hypothecation/pledge agreements and deeds of corporate and personal guarantee, the due amount alongwith the interest is to be realized by the banks/lenders. The trial in the matter against the borrowers may take number of years. The borrowers have cheated not only the bank but also appropriated the public money and left the country by playing the fraud upon this country. No one is aware when the borrowers will return back, and pay the due amount and face the criminal trial and how much time will take to complete the trial. The amount due against the security cannot be delayed. Therefore the resolution process cannot be blocked. The amount must come to the banks/public sector banks being public money. The approach of the government is appreciable for bringing the law on this as aspect of Resolution process. Under these circumstance till the next date of hearing the operation of the impugned order shall remain stayed. The Resolution process shall continue but the properties shall not be finally disposed without the permission of this Tribunal till the next date.

Summary

Issues Involved:
1. Application for condonation of delay in filing the appeal.
2. Application for stay on the operation of the order confirming Provisional Attachment Order.
3. Legitimacy of banking transactions and the right to recover dues.
4. Impact of the Impugned Order on the appellant bank's ability to recover dues.
5. Resolution process and its continuation amidst the trial.

Issue-wise Detailed Analysis:

1. Application for Condonation of Delay:
The appellant no. 2 filed an application for condonation of a 14-day delay in filing the appeal. The respondent opposed this application. However, the tribunal allowed the application, stating, "For the reasons stated in the appeal as well as COD application, the application is allowed and delay is condoned." Consequently, the Miscellaneous Petition (MP) was disposed of.

2. Application for Stay:
The appellants also filed an application for a stay on the operation of the order confirming the Provisional Attachment Order dated 11.12.2018. The respondent's counsel opposed this prayer. The tribunal noted that the attached properties were mortgaged/hypothecated/pledged in favor of the appellant bank and other consortium lenders. The tribunal issued a notice to the respondent to file a reply within four weeks and stated, "Till the next date of hearing the operation of the impugned order shall remain stayed." The properties shall not be finally disposed of without the tribunal's permission until the next hearing.

3. Legitimacy of Banking Transactions and Right to Recover Dues:
The appellants argued that the bank and other consortium lenders had entered into legitimate banking transactions with M/s Gitanjali Gems Ltd. (GGL), M/s Gitanjali Exports Corporation Ltd. (GECL), and M/s Nakshatra World Ltd. (NWL). These transactions were secured by various agreements and guarantees. The failure of these entities to repay the outstanding amounts led the appellant to issue Recall and Statutory Notices under Section 13(2) of SAFAESI, declare the accounts as Non-Performing Assets (NPA), and file applications before the Debt Recovery Tribunal (DRT) and National Company Law Tribunal (NCLT).

4. Impact of the Impugned Order:
The appellants contended that the Impugned Order confirming the Provisional Attachment Order hindered their ability to recover dues. The tribunal acknowledged the appellant's argument, noting, "The Appellant Bank finds itself unable to recover inter alia, the Principal and interest amounts, handicapped by the operation of the Impugned Order." The tribunal emphasized that the bank is a victim party entitled to recover the due amount, and the attached properties were mortgaged with the bank.

5. Resolution Process:
The tribunal highlighted the importance of continuing the resolution process, stating, "The trial in the matter against the borrowers may take a number of years... The amount due against the security cannot be delayed." The tribunal appreciated the government's approach in bringing laws to facilitate the resolution process and emphasized that public money must be recovered by public sector banks. Therefore, the tribunal ordered that the resolution process shall continue, but the properties shall not be finally disposed of without the tribunal's permission until the next hearing.

Conclusion:
The tribunal allowed the application for condonation of delay, issued a notice to the respondent regarding the stay application, and temporarily stayed the operation of the impugned order. The tribunal emphasized the legitimacy of the banking transactions, the appellant bank's right to recover dues, and the necessity of continuing the resolution process while ensuring that the properties are not disposed of without permission. The next hearing was scheduled for 25th March 2019 for final disposal.