TMI Blog2014 (9) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be deprived of his right of first appeal, as contemplated under section 26 of the Act and will be left only with invoking his right of second appeal as contemplated under section 42 of the Act. When an efficacious remedy is available to the appellant, then whether it will be appropriate to entertain his appeal in the facts and circumstances. Therefore, in the facts and circumstances and for the foregoing reasons, the appeal of the appellant is not entertained and it is left to the appellant to invoke the remedy available to him under the Act, in case the Appellant has a right over the property which had been provisionally attached and which attachment order had been confirmed by the Adjudicating Authority. - FPA-PMLA-285/CHN/2011 - - - Dated:- 5-9-2014 - Anil Kumar (Chairman), Arun Kumar Agarwal (Member) and Dr. Rabi Narayan Dash (Member) For the Petitioner : S. L. Gupta, Advocate For the Respondent : Vikas Garg, Advocate JUDGMENT 1. The, Appellant, Central Bank of India has preferred this appeal against the order dated 27th June, 2011 passed in case/OC No. 99/2011 by the Adjudicating Authority confirming the attachment made by the Enforcement Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krishna Rao in collusion with the officials of Central Bank of India, Mogappair Branch, Chennai siphoned away ₹ 25 crores belonging to M/s. Northern Coal Fields Ltd. Singrauli, Madhya Pradesh, (M/s. NCL in short) a subsidiary of M/s. Coal India Ltd. a public sector undertaking, in July 2009. Money so siphoned was transferred soon after to various accounts of different persons in multiple transactions. Acting under Section 5(1) of Prevention of Money Laundering Act the Deputy Director had provisionally attached the following amounts by way of passing five Provisional Attachment Orders No. 03 to 07/2011 dated 30th March, 2011 case file No. ECIR/07/CZ/PMLA/2009(SMM). 3.3. It had transpired that M/s. Northern Coal Fields Ltd. (M/s. NCL), Singrauli, had been parking its surplus funds as per their uniform deposit policy, in 19 Designated Branches of various banks. Sh. Sankara Kumar, Sr. Branch Manager, Central Bank of India, Mogappair, Chennai had offered to pay higher rate of interest @ 6.01% for the Fixed Deposit. Therefore, the Technical Secretary to CMD of M/s. NCL initiated a proposal note dated 23.7.2009 for depositing the surplus fund in the above said Branch of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted by T V Krishna Rao to Central Bank of India, Mogappiar Branch was also recovered from the office premises of M/s. Krishna Builders. 3.5. According to the pleas of the Appellant after the sum of ₹ 25 crores was fraudulently transferred to the account of M/s. Krishna Builders the money has been retransferred to different accounts or has been withdrawn. The appellant contended that the officials of the respondent recorded the statements of various persons and the money now attached is the said money. The appellant has given the details of money which have been attached which are as under: (i) Attachment of ₹ 2,22,00,000/- lying in the a/c No. 12258620000068 of M. Kandaswamy held in HDFC Bank, 995- C, Second Avenue, Annanagar West, Chennai-40. (vide para 12.6.1 of the complaint) According to the Appellant, the respondent has mentioned that out of the sum of ₹ 25 crores siphoned from the Bank Account of M/s. NCL, certain amounts were transferred to M/s. Arvind Traders and M/s. Krishna Traders both belonging to T.V. Krishnarao. Out of the same ₹ 2.32 crores was withdrawn by Shri Krishnarao and the same was deposited in the Bank of account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.6. According to the appellant the fraud perpetrated on the Appellant Bank and the criminal activity had been carried on with the active connivance of other accused, which resulted in siphoning off funds to the tune of ₹ 25,00,00,000/- (Rupees Twenty Five Crores Only), that it was fraudulently obtained by Mr. T.V. Krishna Rao, out of ₹ 25,00,00,000/- (Rupees Twenty Five Crores Only) which did not belong to him and which was methodically siphoned off by T.V. Krishna Rao from the current account No. 3014563150 of Krishna Builders and T.V. Krishna Rao signed the Cheques in his capacity as the Proprietor of the Krishna Builders. The Appellant submits that the amounts have been siphoned off to various parties' accounts by issuance of cheques, remittance through RTGS, issuance of Drafts and as well as by cash by Mr. T.V. Krishna Rao. The funds are transferred to various accounts by Mr. T.V. Krishna Rao by a process of misappropriation and fraud. It is also clear from the trail of transactions that the origin of funds is clear and cannot be considered as layering. It is pertinent to note that the parties who have received the amounts consist of the conspirators. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account or proceeds of the crime originally belonged to Central Bank of India and that these amounts can be returned to the bank. 3.9. According to the appellant, the respondent in its provisional order as well as in the complaint before the Ld. Adjudicating Authority has admitted and acknowledged that the amount of ₹ 2,22,00,000/- lying in the Account No. 12258620000068 of Mr. M. Kandaswamy held in HDFC Bank, 995-C, 2nd Avenue, Anna Nagar, Chennai, ₹ 25,00,000/- (Rupees Twenty Five Lakhs Only) lying in the personal savings Account No. 06871930001328 of Mrs. T.R. Ratna Kumari maintained with HDFC Bank, Gangwali Mansion, J-14, 3rd Avenue, Anna Nagar, Chennai, ₹ 35,30,211/- (Rupees Thirty Five Lakhs Thirty Thousand Two Hundred and Eleven Only) lying in the Account No. 06878640000107 of M/s. Aravind Traders, Chennai maintained with HDFC Bank, Gangwali Mansion, J14, 3rd Avenue, Anna Nagar, Chennai, ₹ 7,00,000/- lying in the account No. 12285620000058 opened in the fictitious name of T. Suresh by Mr. R. Ravishankar, an employee of Respondent No. 7 and ₹ 5,53,254/- lying in the account No. 06878640000011 of M/s. Krishna Traders, Chennai held with HDFC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant bank that the money lying in the accounts of Respondent Nos. 2 to 7 with different banks are not the proceeds of crime and are not liable for attachment. Though there is no admission on the part of the respondent No. 1 about the monies lying in the different banks in the name of respondent Nos. 2 to 4 not being the proceeds of crime, the respondent No. 1 is contesting the appeal, as the appeal cannot be allowed on the plea of the appellant that the CBI has admitted that the monies in the accounts of respondent Nos. 2 to 7 be returned to the Appellant nor on such admission, the impugned order dated 27th June, 2011 is liable to be set aside. If the appellant is claiming some relief on such admissions or the civil proceedings initiated by the appellant, then appellant may perhaps be first liable either to obtain a decree for the said sum of money in their civil suit filed by the appellant or some order before the Special Judge, where such concession has been made by the CBI. In any case, since the appellant was not given any notice under section 8(1) before confirmation of the provisional attachment order and the appellant is claiming an opportunity of being heard, will it be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h provisional attachment may not continue for long period which is passed only on the basis of reason to believe of the Enforcement Directorate without giving any opportunity to the person whose property is so attached. Section 5(4) of the Act also provides that nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached u/s. 5(1) and the Enforcement Directorate is empowered to take possession only u/s. 8(4) on confirmation of provisional attachment order by the Adjudicating Authority. The Adjudicating Authority under the Act must confirm it or vacate it within the period prescribed under the Act. 7. This scheme of the Act as is apparent cannot be construed to mean that if some other duty has been cast on the Adjudicating Authority under the Act, the power to perform that duty will become redundant and otiose after the provisional attachment order is confirmed by the Adjudicating Authority. The section 8 of the Act does not state directly or indirectly that the duty to give hearing to a person who has not been given a notice under section 8(1) of the Act would be only before the confirmation of the provisional attachment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall-- (a) continue during the pendency of the proceedings relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the Adjudicating Authority to give hearing to a party which claims to have a right in the property which is sought to be attached whom notice under section 8(1) has not been given. The Act does not contain any limitation for giving hearing to a person who has a right in the property who has to be heard under proviso to section 8(2) and who has not been given any notice u/s. 8(1) of the Act and who is not a party to the complaint filed by the Enforcement Directorate. 9. The time limit as prescribed under section 5(1)(b) does not curtails the powers of the Adjudicating Authority to give hearing to a person who has not been heard before confirmation of his attachment of his asset. Provisions of section 5(3) of the Act mandates that a provisional attachment order shall cease to have effect, if the same is not confirmed within the time as contemplated under said section. This time limit as contained in section 5(1)(b) of the Act cannot be construed to the detriment of a party whose property is sought to be attached so as to deny him the rights, which a party may have under section 11 of the Act to adduce certain documents and facts which will establish prima facie that the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisional attachment order. The Act does not contemplate any such restriction that the hearing to person who has right in the property and who has not been given notice under section 8(1) of the Act must seek his right to be heard before confirmation of provisional attachment order. Such a construction of the scheme of the Act will lead to classification, one class of persons who have approached the Adjudicating Authority before confirmation order and those who have not been able to meet the alleged deadline of 180 days or before confirmation of the provisional attachment order for the purpose of claiming hearing under proviso to section 8(2) of the Act. Such a classification would not have any reasonable nexus to the object of the proviso to the section 8(2) of the Act which is that the property of no person shall be attached unless such a person is given a reasonable opportunity of being heard and no person should be condemned unheard because the attachment proceedings can have severe consequences as the possession of attached property can be recovered by the Enforcement Directorate. Such a classification is not founded on any intelligible criteria nor such a differentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a person who is seeking hearing on the ground that he had not been given any notice under section 8(1) of the Act and the property which is attached is not liable for attachment as the property is not involved in money laundering and such a person has a right in the said property. Before giving hearing to such a person who has not been given any notice under section 8(1) of the Act, the Adjudicating Authority has to be satisfied that such a person has a tangible right in the property which is attached and if prima facie he is able to show his right, the Adjudicating Authority will give hearing to such a person and thereafter will have to decide whether the order of confirmation of the property is to be sustained or modified or vacated. 13. In the circumstances, the plea of the Appellant that he has no other right before any other forum to agitate his right except to file the present appeal under section 26 of the Act cannot be accepted. In the circumstances the appropriate course for the Appellant would have been to file an appropriate application invoking his right to be heard under proviso to section 8(2) of the Act and to establish before the Adjudicating Authority that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' under section 26 may be very wide and may include even the Appellant, however, it may not be appropriate to entertain the appeal of the appellant in the facts and circumstances. Therefore, in the present facts and circumstances it is incumbent upon the Appellant to approach the Adjudicating Authority to seek the relief claimed by the appellant, in case the appellant has any right on the property/money which has been attached by the respondent. 16. In case the appellant files an appropriate application before the Adjudicating Authority, the Appellant will have to prima facie satisfy the Adjudicating Authority that it has a right in the property/money which has been attached, as a suit for recovery has also been filed by the Appellant which is pending adjudication. Merely because the CBI in the criminal case has made some admission will not deprive the respondent to refute the pleas and contentions of the Appellant. Therefore, will be for the Adjudicating Authority to determine, in case the Appellant approach the Adjudicating Authority, whether the Appellant, prima facie has any rights or lien on the properties which are sought to be attached and thereafter on being satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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