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2019 (6) TMI 1026 - AT - Money LaunderingOffence under PMLA - provisional attachment orders - whether no nexus whatsoever between the alleged crime and the PNB Consortium who is the mortgagee of the properties in question and purchased prior to the sanctioning of the loan and bank is a victim of fraud and it is an innocent bonafide claimant and not involved in the money laundering activity and bank is at liberty to move its claim before the Special Court for disposal of the properties in order to recover its dues pending in the loan accounts? - HELD THAT:- Admittedly, the mortgaged properties in question were purchased much prior to the commission of Offence of Money Laundering as they were purchased in the years 1994, 1997, 1998, 1999, 2000, 2002, 2003, 2005 when the Borrowers had not been sanctioned any credit limits, therefore, the same do not come within the scope of Proceeds of crime in terms of Section 2(u) of PMLA, 2002. There is no denial that the commencement of alleged commission of offence of Money Laundering was started by the Company and its promoters from the end of the year 2011 and 2012 onwards which is much later to the acquisition of the mortgaged properties in question. Prior mortgage charge of secured creditors have also been registered qua the mortgaged immovable properties stating that these are under the mortgage charge of the Bank since 2005. SARFAESI Act measures under Section 13(2) and Section 13(4) were initiated in the year 2013 and Bank’s OA for recovery of dues under RDB, Act was filed in the year 2014 and DRT order dated 20.01.2014 restraining the Borrowers and Guarantors to deal with the mortgaged properties are much prior to the passing of the PAO order 31.03.2016 by the ED. Bank’s OA for recovery. The appellant is always at liberty to approach the Special Court to initiate the proceeding for disposal of mortgaged property, if so desired, who is agreeable to deposit the excess amount if such situation will arise. Counsel for appellants after taking the instructions from his clients stated that his clients are duty bound to deposit the excess amount with the respondent. Appellants have nothing to do and has no connection with the allegation of crime committed by the borrowers. They are not involved for the offences of money-laundering. The mortgage properties are admittedly not derived from criminal activities or proceed of crime. The scope of the PMLA is to punish the accused person and not to punish the innocent person who is not involved in the crime within the meaning of Section 2 (v) read with Section 3 of the Act. The appellants are not charge sheeted nor any prosecution complaint has been filed against the appellants. There is no nexus whatsoever, between the alleged crime and the appellants who are mortgagee of the properties and is a victim of the fraud and is innocent party. The definition of proceed of crime as per Section (u) of the Act comprises of the property which is derived or obtained as a result of criminal activities. The mortgaged properties are not acquired from proceed of crime. This Tribunal possesses the requisite jurisdiction in terms with the Act as the court of first appeal, to adjudicate upon the pleas of the Appellant and determine the bonafides and legitimacy of its claims as well as the legality of the Provisional Attachment Order. No doubt the bank and financial institutions are always at liberty to approach the Special Court (if so desired) in order to invoke the amended provision of sub section 8 of Section 8, however, it is wrong to suggest that the bank and financial institutions are not entitled to challenged the order of attachment because this tribunal is only exclusively having jurisdiction to examine the validity of attachment and to decide the same under section 26 of the Act as to whether attachment was valid or not. The bank and financial institution are entitled to take the remedy before the Special Court after the decision of appeal or during the pendency of appeals. Provisional Attachment Order passed by ED and impugned order passed by the Adjudicating Authority, PMLA, confirming the Provisional Attachment Order are to be quashed and set aside.
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