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2019 (12) TMI 1019 - AT - Money LaunderingMoney Laundering - proceeds of crime - attachment of property - charge or encumbrance of a third party in a property attached under PMLA - scheduled offences - privity/complicity of contract - HELD THAT:- The appellant is a third party bonafide claimant of the property - The security interest has been created on the property in question and there are legitimate banking transactions. There is no allegation on the part of Enforcement Directorate that the appellant has not exercised due diligence in sanctioning loan. Such facilities were extended after conducting due diligence and the necessary checks and balances. The security interest has been created in the year on 29.03.2007, whereas the ECIR has been registered much later and the Provisional Attachment Order has been passed on 24.03.2017. Much prior to the year 2017, Section 13(2) notice under SARFAESI Act, 2002 was issued on 25.08.2009 and the DRT proceedings have been finally concluded in the year 2015. The Hon‟ble High Court of Delhi in the recent decision of “The Deputy Director, Directorate of Enforcement, Delhi Vs. Axis Bank & Ors.,” reported in [2019 (4) TMI 250 - DELHI HIGH COURT] (hereinafter referred to as the “Axis Bank Decision”) has rightly held that the interest of a third party in the property of an accused, acquired prior to the commission of the proscribed offence cannot be defeated or frustrated by attachment of such property under Section 8 of the Act - The Hon‟ble High Court further recognized the right of such third party to proceed with enforcement of its interest in accordance with law such that while the order of attachment under the Act would not be rendered irrelevant, yet it would take a backseat such that the State action would be restricted to such part of the value of the property as exceeds the claim of the third party, if any. In terms with the statutory safeguards incorporated in the Act, any party aggrieved by the confirmation of the Provisional Attachment Order by the Adjudicating Authority may challenge such confirmation in an appeal to this Tribunal U/s 26 of the Act and then before the Hon‟ble High Court U/s 42 of the Act against the order of this Tribunal - Accordingly, under the legislative and statutory scheme of the Act, unless a party has exhausted its remedies in appeal right up to the Hon‟ble High Court, an order confirming the attachment cannot be said to have attained finality. This Tribunal is fully equipped and 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 - the Adjudicating Authority by the Impugned Judgment has erred in failing to recognise the legitimate claim of the Appellant at the stage of confirmation of the PAO itself as the Appellant Bank is a victim of the fraud by M/s. SSPL the effect of the Impugned Judgment, depriving it of pursuing its legal claims against property mortgaged to it. The Appellant has nothing to do and has no connection with the allegation of crime committed by the borrower. They are not involved for the offences of money-laundering. The secured property is admittedly not derived from criminal activities or proceeds 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 appellant is not charge sheeted nor any prosecution complaint has been filed against the appellant - There is no nexus whatsoever, between the alleged crime and the appellant who has secured property and is a victim of the fraud and is innocent party. The definition of proceeds of crime as per Section 2 (u) of the Act comprises of the property which is derived or obtained as a result of criminal activities. The secured property is not acquired from proceeds of crime. Provisional attachment order set aside - appeal allowed.
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