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2017 (10) TMI 32 - AT - Money LaunderingProvisional attachment - offence under PMLA Act - whether grant of loan itself by the Bank cannot be termed criminal activity in respect of a scheduled offence? - Held that:- In the present cases, it is clear that in order to treat the loan proceeds obtained by the borrower from the Syndicate Bank as the proceeds of crime, as done by the ED and the Adjudicating Authority is not correct. The said money is not illicit or tainted money, nor is the Bank a party to the criminal conspiracy hatched between the manager of the Bank and the borrower. The Bank is an innocent third party who is to be treated as a victim of the crime, if at all. The money received by the appellants were pure and untainted. It was a public money. It is wholly immaterial if one of the employee is mixed up with the appellant and helped them in order to obtain the loan by virtue of mis-presentation because the fact of the matter is that the money has gone to the appellants from the pocket of the bank and it was public money. The same cannot blocked till the trial in the prosecution complaint before the Special Court is over as it may take number of years. The said proceedings are to be continued even otherwise. The complainant in the criminal case is the Bank who is victim. Had the Bank not filed a criminal complaint, perhaps the conspiracy might not have been discovered. Further if in a case like the present if the security of the Bank, is treated as proceeds of crime and is confiscated under the Act, in future, no Bank in such circumstances would make a complaint to the authorities. The trial in the prosecution complaint would take number of years. The victim cannot wait for such a long period of time, although after trial and final determination, the victim is entitled to recover the amount by selling immovable properties u/s 8(8) of the Act. The intention of the Act could not have been to affect a third person or an innocent person as is sought to be done in the instant case. If the impugned order is correct, it would be a patently absurd situation that the only substantial securities of the bank are not available for the benefit of Bank but are vested in the Central Government as proceeds of crime. Such a result does not advance the objects of the Act. There seems to be no decision in which the matter has been considered in the manner as sought to be explained here. The Bank partly relies on the case of Indian Bank Vs. Government of India and M/s Palpap Ichinichi Software International Ltd., [2012 (7) TMI 1007 - MADRAS HIGH COURT ], wherein it was held in similar circumstances that Sections 5, 8 and 9 of the Act cannot be used by the authorities to inflict injury of the victim on the crime i.e. the Bank (para 33). The Court also held that in such a case it was the duty of the ED/Adjudicating Authority to give notice to the Bank in such a case and hear the Bank and that without having done so the order would be vitiated. The impugned order is set-aside, consequently the provisional attachment also does not survive. The same is quashed. However, it is clarified that this judgement and order is limited to the legality of attachment of properties noted above under the PMLA, 2002. This judgement & order is without prejudice to the matters pending against the appellants in criminal cases before the Special Court.
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