TMI Blog2018 (5) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... ants of the said property which are already in its possession under SARFAESI Act. Even recovery certificate has been issued by DRT. That the definition of “proceeds of crime” as per Section 2(u) of the PML Act comprises of the property which is derived or obtained as a result of criminal activity. In the present case, both the properties have been purchased by the Respondent Sh. Arun Suri and have been mortgaged with the IDBI much prior to the date of alleged offence which shows that no proceeds of crime are involved in the acquiring of these properties and hence the same cannot be attached. Adjudicating Authority has failed to consider that the ED has attached the properties without examining the case of the bank. The evidence on record suggests that the properties were acquired by the borrowers much before the alleged date of crime. No money disbursed by the Bank from its loan account, has been invested in acquiring these properties. Furthermore, the Appellant Bank had created charge over the property prior to the date of the crime. The Bank has already filed the suit for recovery and has also taken the action under SARFAESI Act. The Ld. Adjudicating Authority failed to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Sh. Arun Suri 21.20 lacs 3. Shop no. 130, 1st Floor 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Mrs. Shallu Suri w/o Sh. Arun Suri 21.20 lacs 4. Plot no. 307, 3rd Floor, 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Sh. Arun Suri 1.50 crores 5. Plot no. 8, DLF Industrial Area, Moti Nagar, New Delhi- 110015 M/s S.T. Enterprises, a partnership firm of Sh. Arun Suri and his wife Smt. Shallu Suri 9.71 Crores 6. Plot no. 34, IInd Floor, DLF Industrial Area, Moti Nagar, New Delhi-110015 Mrs. Shallu Suri w/o Sh. Arun Suri 1.67 Crores 7. Shop No. 4,6, DLF Industrial Area, Moti Nagar, Delhi Sh. Arun Suri 1 crore 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i are not Proceeds of Crime and the Appellant Bank is having prior charge over those properties for recovery of its dues; (c) Set aside the Provisional Attachment Order dated 10.08.2017 issued by the Respondent No. 1 qua and the properties of the Respondent No. 2 mortgaged with the Appellant; (d) Pass such other/further relief(s) which this Hon'ble Authority may deem fit and proper under the facts and circumstances of the present case. The aforesaid prayers have been made on the grounds mentioned in the memo of appeal. 6. The following are the contentions raised by the appellant in its written arguments: 6.1 That the Respondent no. 2 being the proprietor of M/s Aryan Electronics had approached the Appellant Bank in the month of January, 2009 for sanction of Cash Credit Facility and upon their specific request, the Appellant Bank Sanctioned the said facility o the respondent no. 2. That Respondent no. 2 had executed various security documents and in order to secure the said facilities had also created a mortgage in respect of six properties including the two properties attached in terms of section 5 by the Adjudicating Authority i.e.:- (a) Shop No.4, 6 DLF Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07.06.2017. 6.6 Not only this, the Appellant Bank has also filed an Original Application (OA) for recovery against the Respondent No. 2, 3, 4 and a partnership firm in the name of M/s Sky Vision for recovery of ₹ 11,19,81,600.44 vide OA bearing No. 582/2014 before the DRT-III, New Delhi, wherein the Respondents and other parties were served and the said case is now at the stage of final arguments before the Debt Recovery Appellate Tribunal, New Delhi. 6.7 As is evident from the complaint filed by Respondent No.1, the Respondent No.2 in collusion with others had committed serious irregularities pertaining to the Foreign Exchange Transaction in the Current Accounts of various firms/companies in overseas foreign exchange remittances amounting to approx. ₹ 3600 Crores as was reported by the Internal Audit Report of Bank of Baroda. In pursuance to the complaint filed by the Bank of Baroda, CBI registered a case/FIR No. RC.BD.F1/2015 dated 09.10.2015 against 59 current account holders as proprietor/directors/companies as per the list mentioned in the impugned order and unknown bank officials/private persons for commission of offences under section 420 read with 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Respondent No.1 that the property which is subject matter of the present Appeal have been purchased on the basis of fraudulent transaction entered by Respondent No.2 to 6 in violation of the foreign exchange rules as reported by Bank of Baroda. In fact, the said properties have been purchased much prior to the period when the Sections 120-B and 420 IPC were not Scheduled Offences under PMLA. That the offences under section 120-B and 420 of IPC as well as section 13 of PC Act only became Scheduled Offences w.e.f. 01.06.2009 by virtue of The Prevention of Money Laundering(Amendment) Act, 2009(21 of 2009). Therefore, it is submitted that the monies which came into the accounts of the Appellant prior to this date, from which ever source, does not certainly qualify as proceeds of crime as Sections 120B and 420 of IPC as well as section 13 of PC Act were not scheduled offence at the time the acquisition of these properties, i.e. prior to 01.06.2009. Thus, the impugned order dated 27.11.2017 is liable to be set aside on this short score alone. 6.12 That on account of Amendment in SARFAESI Act by way of addition of Section 26(E) to the said Act and in Recovery of Debt Due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the Ld. Adjudicating Authority erred in holding that the PMLA would prevail over SARFAESI Act enacted by Legislature. Thus, the impugned order is liable to be set aside. 6.15 That the Impugned order is per incuriam sine the Ld. Adjudicating Authority has not followed the decision of this Hon'ble Tribunal in State bank of India v. Joint Director (FPA- PMLA-1026/KOL/2015; date of decision: 14.07.2017) wherein it was held that the rights of secured creditors to recover their dues would take precedence over the state's right to attach alleged proceeds of crime . This Hon'ble Tribunal had relied heavily on Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act ( RDDBFI Act ) which was inserted vide the Enforcement of security Interest And Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. That the said provision has already been stated above. That since two of the properties of the Respondent no. 2 that have been attached by the Respondent no. 1 have been lying mortgaged with the Appellant Bank since 2009 and the Appellant has also initiated proceedings before the DRT under section 19 of the RDDBFI Act. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal V. SEBI and State of A.P. v. Ch. Gandhi wherein it has been time and again laid down that there can be no retrospective operation of penal laws. 6.18 That unlike SAFEMA and NDPS Act, the PMLA contains no express provision for retrospective application As per express explanation 4 to Section 2 of SAFEMA, facts, circumstances or events (including any conviction or detention) which occurred or took place before the commencement of their Act can be taken into consideration for determining whether or not the provisions of SAFEMA ought to be applied to any person. Even the definition of Illegally acquired property under Section 3(c) of SAFEMA includes any property acquired whether before or after the commencement of this Act . Similarly, the definition of illegally acquired property in section 68(B) (g) of the NDPS Act includes even those properties that were acquired by a person before or after commencement of Chapter VA. This Chapter, which was inserted by virtue of an amendment in 1989, provides for the forfeiture of properties acquired from the income/earnings attributable to the contravention of any provisions of the NDPS Act. Such provisions in the SAFEMA and NDPS Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over all other debts and all other revenue, taxes and cess and other rates payable to the Central Government and State Government and local authority. So what is referred are only (1) The other debts, (2) all (i) revenues (ii) taxes (iii) cesses (iv) other rates payable to the Central Government and local authority. Similarly, section 31(b) above referred provides that notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realize secured debts due and payable to them be sale of assets over which security interest is created shall have priority and shall be paid in priority over all over debts and Government dues including revenues taxes, cesses and other rates due to the Central Government and State Government or local authority. So what is referred are only (1) The debts, (2) all Govt. dues including, (i) revenues (ii) taxes, (iii) cesses, (iv) other rates due to the Central Government and local authority. Thus there is no priority conferred on the secured creditors under the said Acts, in respect of the proceeds of crime in their hands. The PMLA is a Special Act and is an Act to prevent money- laundering and to provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Uttar Pradesh (AIR 1956 Sc 785). The Prevention of Money Laundering Act has been enacted provide for forfeiture of proceeds of crime involved in money laundering which was considered necessary of deprive persons engaged in serious illegal activities and have thereby been increasing their resources for operating in clandestine manner. The Act was created to forfeit illegal properties and to prevent the money laundering activities which are threat to financial system of the county and its integrity and sovereignty. Further the question of prevalence of a subsequent legislation will only come into picture when there is a conflict between the two statutes. The Securitization Act has been enacted for the purpose of establishing an expeditious system for recovery of debts due to banks and for matters connected therewith or incidental thereto. It only lays down a procedure for recovery of debts due to banks. The Prevention of Money Laundering Act vests the statutory authorities with a power to forfeit proceeds of crime involved in money laundering to the State. There is thus no apparent conflict between the two statutes. The two statutes operate in their exclusive fields. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The huge public money, lying deposited with the banks in trust, is allowed to be faded and evaporated by acting in collusion, irresponsibly and negligently by the bank officers. There cannot be any justification in giving any clean chit to the defaulting officers and the Banks, they should have been conscious and more responsible in respect of account with this magnitude of money. The provisions of Section 7 1 of PMLA have overriding effect. The interest of a victim is protected under the scheme of the Act. The following provisions of PMLA ensures that the claimant, with a legitimate interest in the property confiscated, may be restored such property or rights therein. 7.8 Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as result of the offence of money laundering. 8. Both the parties have made their submission and they have also referred various documents and cited judgments in their written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her rates due to the Central government and State Government or local authority. So what is referred are only (1) The other debts, (2) all Govt. dues including, (i) revenues (ii) taxes, (iii) cesses (iv) other rates due to the Central Government and the local authority. Thus there is no priority conferred on the secured creditors under the said Acts, in respect of the proceeds of crime in their hands. The PMLA is a Special Act and is an Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in money laundering and for matters connected there with or incidental thereto. Section 3 of Act defines money laundering as Whosever directly or indirectly attempts to indulge or knowingly assists or knowingly is a partly or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money- laundering. Thus the secured creditors does not and cannot have any priority over the attachment, confirmation and confiscation of proceeds of crime. It would be against a public policy to permit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter of Smt. Nasreen Taj vs. Deputy Director, Directorate of Enforcement Ors., Bengalaure, in FPA-PMLA-382/BNG/2012 vide common order dt. 18.09.2017. 13. The relevant portions of the tribunal order in state Bank of India matter (Supra) are re-produced below: 7. Coming to the second question, there is no doubt that the 1985 Act is a special Act. Section 32(1) of the said Act reads as follows: 32. Effect of the Act on other laws.-(1) The provisions of this Act and of any rules or schemes made there under shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any /law other than this Act. 8. The effect of this provision is that the said Act will have effect notwithstanding anything inconsistent therewith contained in any other law except to the provisions of the Foreign Exchange Regulation Act, 1973 and the Urba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of the said Act, the Legislature would have specifically so provided. The fact that the Legislature did not specifically so provide necessarily means that the Legislature intended that the provisions of the said Act were to prevail even over the provisions of the Sick Companies Act. Under Section 3 of the 1992 Act, all properly of notified persons is to stand attached. Under Section 3(4), it is only the Special Court which can give directions to the Custodian in respect of property of the notified party. Similarly, under Section 11(1), the Special Court can give directions regarding property of a notified party. Under Section 11(2), the Special Court is to distribute the assets of the notified party in the manner set out thereunder. Monies payable to the notified parties are assets of the notified party and are, therefore, assets which stand attached. These are assets which have to be collected by the Special Court for the purposes of distribution under Section 11(2). The distribution can only take place provided the assets are first collected. The whole aim of these provisions is to ensure that monies which are siphoned off from hanks and financial institutions int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing effect to the 1993 Act it is specifically provided that the said Act will be in addition to and not in derogation of a number of other Acts including the 198.5 Act. Similarly under Section 32 of the 1985 Act the applicability of the Foreign Exchange Regulation Act and the Urban Land (Ceiling and Regulation) Act is not excluded. It is clear that in the instant case there was no intention of the legislature to permit the 1985 Act to apply, notwithstanding the fact that proceedings in respect of a company may be going on before the BIFR. The 1992 Act is to have an overriding effect notwithstanding any provision to the contrary in another Act. 31. The similar view was taken by the Bombay High Court in the case of Bhoruka Steel Ltd. Vs. Fairgrowth Financial Services Ltd. The judgment rendered on 09.02.2016 reported in 1997 (89) company cases 547 (BOM) para 15 of the said judgment read as under: 15. To be noted that in both the judgments, relied upon by counsel, the Supreme Court has held that generally where there are two special statues, which contain non- obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. Explanation : For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code. 34. In Section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 after the words the date of the application , and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or; is added which makes the said amendment or the 1993 Act applicable to all the debts which remains unpaid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code. 3 There is, thus, no doubt that the rights of a secured creditor to realize secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This section introduced in the Central Act is with notwithstanding clause and has come into force from 01.09.2016 4 The law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending. 5 The aforesaid would, thus, answer question (a) in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged property. 38. In another Madras High Court judgment in the case of Dr. V. M. Ganesan vs. The Joint Director, Directorate of Enforcement has explained the grievances faced by the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the adjudicating authority must carefully consider the material and evidence on record (including the Reply furnished by a noticee in response to a notice issue under Section 8(1) and the material or evidence furnished along therewith to establish his earnings, assets or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property, relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment; either in respect of the whole or such part of the property provisionally attached in respect whereof bona fide acquisition by a person is established, at the stage of the section 8(2) process 41. The Supreme Court in (2010)8 Supreme Court Cases 110 (Before G.S. Singhvi and A.K. Ganguly, JJ) in the case of United Bank of India V/s. Satyawati Tondon and Ors. In paras no. 6, 55 56 has held as under:- 6. To put it differently, the DRT Act has not only brought into existence special procedural mechanism f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s far as the schedule offence is concerned, we do not wish to make any comment. But we can only observe that in case of settlement, joint petition for quashing of FIR in the High Court u/s 482 Cr. P.C. could be filed. 43. It is not denied on behalf of department that these provisional attachment was made, the proceedings of recovery of amount were pending before the DRT for recovery against the borrowers and for sum of the properties, possession were with the bank. The mortgaged deeds are also not disputed or/and validity of the same are not challenged on behalf of ED. 44. It is settled law that generally when the civil dispute between the parties are settled before the court particularly pertaining to the recovery of out-standing amount, on joint petition, the High Court while exercising its discretion may quash the criminal petition u/s 482 Cr. P.C. at the joint request of the parties. 45. Three Judge Bench in Narendra Lal Jain Ors., (supra) held that during the investigation pertaining to the culpability of the accused in the crime, the concerned bank had instituted suits for recovery of the amount claimed to be due from the respondents and the said suits were d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the OTS Scheme of the Reserve Bank of India, which the petitioners have extensively referred to in the original petition. The provisions of OTS Scheme prevent the complainant bank from entering into any compromise or settlement under the said OTS Scheme in the cases of willful default, fraud and malfeasance. The complainant bank in choosing to enter into such consent terms under the provisions of OTS Scheme has not only exonerated the petitioners, but for all intents and purposes given up the perusal of the complaint and having no grievance against them in any other proceeding whether civil or criminal on the same set of issues. 70. There is no doubt that the trial has been proceeding for offences for the last about 20 years ago. The dispute between the petitioner and complainant Bank 33 years old. A long time has in fact been elapsed since the alleged commission of offences. Still the trial continues. The present petition is maintainable as the same has been filed also on additional grounds and circumstances. No useful purpose would be served if such oppressive trial may continue for many more years. Thus, ends of justice are served by quashing such a proceeding, as the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating Authority for the purposes of release of properties which have been attached in terms of the provisions of Section 5 of the Act. This can be seen by reading Section 8(1) and the proviso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties referred to in the notice are involved in money laundering or not. 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undering, but so far as the prosecution of a person for the offence of money laundering is concerned, the proceedings under section 3 of the PML Act can be initiated only in case the person is held guilty of receiving proceeds of crime as a result of commission of scheduled offence. The Karnataka High Court has also held that the complainant in such a case is not required to wait for the result of trial being held for the scheduled offence. A complaint can still be filed against such person, but if ultimately the person is acquitted of the charge for the scheduled offence, his prosecution under section 3 of the Act for the offence of Money-Laundering would also come to an end. It has also been kept open by the Karnataka High Court that a person against whom complaint under section 3 of the PML Act has been filed and he is being prosecuted for the offence of money- laundering, he can show before the court that he is innocent and has not received any proceeds of crime. It is clear that innocent person can approach the Adjudicating Authority of any competent court to demonstrate his innocence that he has not received any proceeds of crime. The consequence of this is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of money laundering, only if both of the two prerequisites are satisfied i.e.- (i) Firstly, if he- (a) directly or indirectly 'attempts' to indulge, (b) knowingly either assists or is a party, or (c) is actually involved in such activity; and (ii) Secondly, if he also projects or claims it as untainted property; 38. The first of the two pre-requisite to attract Section 3 of PMLA shall thus satisfy any of the following necessary ingredients- A. RE: DIRECT OR INDIRECT ATTEMPT: In State of Maharashtra v. Mohd.Yakub, MANU/SC/0239/1980 : (1980) 3 SCC 57, the Hon'ble Supreme Court observed that- 13. Well then, what is an attempt ...In sum, a person commits the offence of attempt to commit a particular offence when (i) he intends to commit that particular offence and (ii) he, having made preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence. Thus, an attempt to indulge would necessarily require not only a positive intention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied only if the person also projects or claims proceeds of crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowledge of tainted nature i.e. the property being 'proceeds of crime' derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, would be utmost necessary, which however is lacking in the instant case. 59. These are four ingredients which are determinative factors on the basis of which it can be said that whether any person or any property is involved in money laundering or not. If there is no direct / indirect involvement of any person or property with the proceeds of the crime nor there is any aspect of knowledge in any person with respect to involvement or assistance nor the said person is party to the said transaction, then it cannot be said that the said person is connected with any activity or process with the proceeds of the crime. The same principle should be applied while judging the involvement of any property of any person in money laundering. This is due to the reason that if the property has no direct involvement in the proceeds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property through the Power Agent Ayyappan. The said Gunaseelan was examined and his statement was recorded Under Section 50 of the Act. He had stated that he purchased the property for cultivation. He developed the property but geologist gave opinion that property will not yield proper income. In the circumstances, he sold the property to appellants. The respondent has not produced any document or material to disprove the statement of Gunaseelan. There is nothing on record to show that the transaction in favour of the said Gunaseelan, is not genuine. It is not the case of respondent that the said Gunaseelan is a Benami or employee of G. Srinivasan and that Gunaseelan did not pay any amount as sale consideration or the sale consideration paid by Gunaseelan was not legitimate money. There is no material to show nexus and link of Gunaseelan with G. Srinivasan and his Benamies. In the absence of any verification or investigation by respondent with regard to genuineness or otherwise of the purchase by Gunaseelan; whether he was connected with G. Srinivasan or the sale consideration is legitimate or not the property in the hands of Gunaseelan cannot be termed as proceeds of crime. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The offences punishable under section 120-B, 420, 471 are schedule offence under Section 2(1)(y) of the PMLA and therefore on of the condition for issuing provisional attachment order is satisfied. The other important point to be determined is whether the properties attached vide Provisional attachment order are involved in money-laundering. The only defense or explanation raised by Defendants, particularly Def No. 2 to 8 is that the landed properties attached by the complainant are not proceeds of crime. These properties were purchased by these defendants without having any knowledge, whatsoever, that these properties were derived or obtained through criminal activities relating to schedule offence. It has been demonstrated by them that they verified the title deeds relating to the properties and after due verification of every details entered into the sale transactions as such these are bona fide deals entered by them against proper sale consideration and the money paid to the seller is also well explained. 22. Against the above arguments vehemently raised by the defendants, the complainant without disputing that the deals are bona fide heavily relied on the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de such huge amounts and that they are not genuine purchasers of agricultural products of appellants. The respondent has not made any such investigation and has not produced any such material. Further, the Appellate Authority in fact considered the additional documents produced before it, but rejected the same on the ground that Appellants have not given any valid reasons for not filing the same before the Adjudicating Authority. Having considered the Additional documents, the appellate authority failed to give any finding on merits after verifying with the concerned Bank. 14. The Respondent no. 1 has heavily relied on the judgment of the Hon'ble Supreme Court passed in the matter of KSL Industries Ltd. vs. Arihant Threades Ltd. Others passed in the matter of Civil Appeal no. 5225 of 2008. The Hon'ble Three judges Bench of Hon'ble Supreme Court has discussed various decision of the hon'ble Supreme Court, the RDDB Act and SICA. It is important to refer/quote the relevant paras of the Judgment delivered by the Hon'ble Supreme court in KSL Industries Ltd. vs. Arihant Threaders Ltd. Ors. (supra). 47. In a subsequent decision in Allahabad Bank Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause. In this case, however, the express intendment of Parliament in the non-obstante clause of the RDDB Act does not permit us to take that view. Though the RDDB Act is the later enactment, sub-section (2) of Section 34 specifically provides that the provisions of the Act or the rules thereunder shall be in addition to, and not in derogation of, the other laws mentioned therein including SICA. 50. The term not in derogation clearly expresses the intention of Parliament not to detract from or abrogate the provisions of SICA in any way. This, in effect must mean that Parliament intended the proceedings under SICA for reconstruction of a sick company to go on and for that purpose further intended that all other proceedings against the company and its properties should be stayed pending the process of reconstruction. While the term proceedings under Section 22 did not originally include the RDDB Act, which was not there in existence. Section 22 covers proceedings under the RDDB Act. 51. The purpose of the two Acts is entirely different and where actions under the two laws may seem to be in conflict, Parliament has wisely preserved the proceedings under the SICA, by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. 53. Moreover, we have found nothing contrary in the intention of the SICA to exclude a recovery application from the purview of Section 22, indeed there could be no reason for such exclusion since the purpose of the provision is to protect the properties of a sick company, so that they may be dealt with in the best possible way for the purpose of its revival by the BIFR. In State of Punjab Vs. The Okara Grain Buyers Syndicate Ltd.[7], the Court articulated the importance of preserving the beneficent purpose of the statute and observed:- 14. .. We shall therefore proceed to examine the provisions of the Act on the footing that the test for determining whether the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te clause of SARFAESI Act and RDDB Act to PMLA then it would have done so expressly as has been specifically prescribed in the amended provisions. It may also be noted here that the judgment of Hon'ble Supreme Court in the matter of KSL Industries Ltd (supra) has been delivered in the year 2014 whereas the amendment in aforesaid two Acts have been brought in the year 2016. 17. One more important thing to be noted that the Hon'ble Supreme Court in the aforesaid case KSL Industries Ltd. (supra) matter has held that the provisions of SICA, in particular section 22, shall prevail over the provisions for the recovery of debts in the RDDB Act because of the fact that the non-obstante provision of RDDB Act has specifically excluded SICA from its application. 18. The conflict of non-obstante clause arising in respect of two or more enactments then the same have to be resolved by taking into consideration of policy underlying the enactment and the language used in them. The Prevention of Money Laundering Act has been enacted for forfeiture of crime involved in the money laundering which was considered necessary to deprive persons engaged in serious illegal activities and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al proceeds of crime were used to acquire properties and those acquired properties were mortgaged with the Bank. Para 2 of the said order of this Tribunal which reflects the brief facts of the case is reproduced below to clear the cloud:- 2. Brief facts: M/s Hindustan International, Kolkata proprietor Sh. Gopinath Das operated and maintained current a/c 01000051007 and 03921011000797 with State Bank of India, Overseas Branch, Kolkata (in short SBI) and Oriental Bank of Commerce, Stand Road Branch, Kolkata (in short OBC) respectively with the intention to defraud the bank and submitted fake and forged documents for export of goods such as Invoice, Packing List, Quality and Quantify Certificate, SDF Declaration, Undertaking, Origin of Good Certificate, Shipping Bill, Bill of lading etc. to the bank and god these bills discounted against L/C(s) and obtained an amount of ₹ 12,28,22,463/- and ₹ 1,30,43,433/- from State Bank of India and ₹ 6,76,65,000/- from Oriental Bank of Commerce. The funds which were credited to the above current accounts, were withdrawn from bank for personal gain of Shri Gopinath Das and companies owned and managed by him. Out of these funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Prevention of Smuggling Activities Act has defined the illegally acquired properties and held that such properties are earned and acquired in ways illegal and corrupt, at the cost of the people and the state, hence these properties must justly go back where they belong, the state. In the present case as they money belongs to the IDBI Bank it is public money. The IDBI Bank has the right to property under the Constitution of India. The property of the IDBI Bank cannot be attached or confiscated if there is no illegality in the title of the appellant and there is no charge of money laundering against the appellant. The mortgaged of property is the transfer under the Transfer of Property Act. Even the respondent is not denying the fact that the Bank is a victim party who is also innocent and is entitled to recover the loan amount. It is also not disputed by the respondent that the properties in dispute are mortgaged with Bank and it has to go to Bank ultimately. The only submission of the respondent that u/s 8(8) of PMLA, the possession be given to Bank after the trail and final outcome of criminal matters against the barrowers. We do not agree with the argument in this regard in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mortgaged properties in case the Respondent no 3 to 5 are not able to pay back the credit facilities availed by them and by way of the SARFAESI provisions these properties are being taken in possession by the Appellant Bank so that recovery can be made from the accounts which have become NPA. 28. From the discussion made above, we are of the view that there is no nexus whatsoever between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against Bank who has sanctioned the amount which is untainted and pure money. They have priority right to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The Ld. Adjudicating Authority has not appreciated the facts and law involved in the matter and the primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contention raised by Mr. N.K. Mata, Advocate has no substance. The provisional attachment in the present matter is bad and against the law. 29. In view of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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