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2019 (9) TMI 224 - AT - Money LaunderingOffence under PMLA - Provisional Attachment Order - recovery of amounts outstanding against Respondent no.4 from the sale of the Mortgaged Properties - HELD THAT:- It is not denied on behalf of the respondent that the Appellant being the mortgagee and secured Creditor is entitled to recover amounts outstanding against Respondent no.4 from the sale of the Mortgaged Properties as it was never the case of the ED that the attached properties were purchased out of proceeds of crime. It has also come on record that the Appellant acted bonafidly while rendering the facilities and mortgage of the Properties was done for bonafide purposes. The Appellant is not involved in the schedule offence. There is also no criminal complaint under the schedule offence under PMLA is pending against the Appellant or any of its officials. Thus, the mortgaged properties are security to the loans and cannot be subject matter of attachment particularly when the same were purchased much prior to the commission of alleged offences. Respondent has failed to consider that it has attached all the properties without properly examining the case of the Appellant. The mortgaged properties of the Appellant cannot be attached or confiscated unless link and nexus directly or indirectly established and there is no illegality or unlawfulness in the title of the Appellant and there is no charge of money laundering against the Appellant. The mortgaged of properties are under the Transfer of Property Act as there is no dispute as regards the origin of funds or the title of the Property. The Respondent does not have any lien over the said properties as the Appellant is now the Legal transferee of said Properties. The Respondent cannot retain the properties over which they have no legal title and the property is to be returned to the persons lawfully entitled as the Appellant is the victim. As such the properties acquired by Appellant before the initiation of the proceeding under PML Act and properties 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 properties as it exceeds the claim of the bona-fide third party. In the present case once it has been showed by the Appellant that proper and due diligence was conducted before the properties 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. The Appellant undertakes to deposit any amount realized, which is in excess of its outstanding dues, with the ED if such situation would arise. The Appellant is a Public Limited Government Company. The money must come to the public forthwith not after the trial of criminal case against the borrowers which may take many years. The trial may continue against the borrowers. No material has been placed before us to show that the properties attached are part of any prosecution complaint arising out of the present ECIR. Impugned Order of attachment and the PAO are not in accordance with law, so not sustainable. Hence, the appeal is allowed.
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