TMI Blog2018 (7) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... egality in the title of the Respondent no. 5 and there is no charge of money laundering against the Respondent no. 5. The mortgaged of property is the transfer under the Transfer of Property Act. Even the appellant 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 no. 5 that the properties in dispute are mortgaged with Bank and it has to go to the Bank ultimately. I do not agree with the argument in this regard in view of amendments in the two statutes. Even otherwise the trial would take number of years. The public money cannot be stalled otherwise Banking system would collapse. 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, all the properties have been mortgaged with the Respondent no. 5 Bank much prior to the date of alleged offence which shows that no ‘proceeds of crime” are involved in acquiring of these properties and hence the same cannot be attached. The Adjudicating Authority has failed to consider that the ED has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of the said property. The appeal filed by the appellant is dismissed accordingly. As far as respondent no.5 is concerned, the properties mentioned at Serial No. 1, 2 and 3, as mentioned in Schedule-A of the provisional attachment order, are the properties outside the purview of Prevention of Money Laundering Act, 2002 (PMLA). The same are governed exclusively under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFESI‟ Act). In view of peculiar facts of this matter, the only remedy left with the respondent no. 5 to approach to Special Court under the amended proviso of Sub-Section 8 of Section8 of the PML Act as prima facie I am of the view that the case of the respondent no. 5 covers the same. Till that time, all partiesto the appeal shall maintain status quo with regard to attachment of properties in relation to mortgaged with the respondent no. 5 by the borrowers. The appellant despite knowledge of the fact that the respondent no.5 had taken possession of the properties in question prior to the order of attachment passed by him, has not dealt with the impact of the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value that prevailed at that time of acquisition of the property is attached. As D3 was not aware of the source of proceeds of crime, his name shall be deleted from the list of Respondent s. 3. The said order, therefore, has been challenged by the ED - appellant. As far as the Respondent No.5 (which is now State Bank of India) is concerned, the counsel appearing on behalf of the Bank states that the provisional attachment order as well as the impugned order ought not to have been passed with regard to the properties which are already mortgaged with the predecessor-in-title i.e. Deputy General Manager, Stressed Assets Recovery Branch, No. 61, 4th Floor, Residency Plaza, Residency Road Bangalore-560025. 4. When the appeal is taken up, no-one appeared on behalf of the Respondent Nos.1 to 4, who were the borrowers/accused parties against whom the criminal complaint is pending in schedule offences before the Special Court. 5. The counsel for the Bank states that the Bank is victim and innocent party and is entitled to recover the amount from the borrowers who have mortgaged the properties. He further stated that Respondent Nos. 1 to 4 are deliberately not appearing before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case as dealt in Indian Bank case are distinct and different from the facts of the present case. The Madras High Court in WP No.4696/2012 and 12854/2012 had set aside the provisional attachment order as being illegal on the ground that further proceedings pursuant to the issue of Provisional Attachment Order was taken while the Hon ble court had granted an interim stay. Hence the Madras High Court Judgement does not have a bearing with this case. Further, the Learned Adjudicating Authority has not considered the written submission dated 11.12.2012 filed by Appellant before the Learned Adjudicating Authority that by virtue of section 71,PMLA has got overriding effect over other Acts. b. The Learned Adjudicating Authority has wrongly observed that after vacation of the stay complainant can file fresh provisional attachment order and complaint. In case the stay is vacated, irrespective of the submission made in Para (a) above, the complainant may not be able to issue fresh provisional attachment order if Hon ble High Court judgement in the case of Indian Bank case is made applicable to the present case. c. According to law (Section 8 (2) (3) of PMLA), the Learned Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or offences involving an amount of ₹ 516.25 lakhs under Section120-B read with 420, 467, 468 and 471 of IPC 1860 and Sections 13(2) read with 13(1)(d) of Prevention of Corruption Act 1988 on the basis of the investigations conducted on the complaint filed by the Assistant General Manager (Vig), Union Bank of India, Central Office, No. 239, Vidhan Bhavan Marg, Mumbai. Based on the said FIR and Charge Sheet, a case under Prevention of Money Laundering Act, 2002 (PMLA) was registered by the Directorate of Enforcement, Bangalore vide ECIR No.98/BZ/2010, dated 08.12.2010 and investigation was initiated under PMLA. ii) During the course of investigation, Shri N. Shrihari in his statement dated 28.02.2012 recorded by the Assistant Director of Enforcement on being asked to give details of his bank accounts, stated that they were maintaining three loan accounts in the name of M/s Rytu Depot Cold Storage Pvt. Ltd. namely Account No. 395406020000005 (Rs. 225 lakhs), one SOD Account bearing No.395404010029321 (for ₹ 75 lakhs) and another Term loan Account No. 395406020000011 (loan amount released ₹ 261.60). He also stated that they were maintaining another two accounts i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2012 by the Assistant Director Enforcement Bangalore and his statement was recorded in which he was asked to explain regarding the purchase of M/s Roopa Paddy Dryers; to which he explained that M/s Roopa Paddy Dryers was bought by them for an amount of ₹ 52,63,500/- (which is the full sale consideration) on execution of three sale deeds (one in the name of Shri Vijayadurga Weigh Bridge, Proprietor : Smt. N. Vijayalakshmi, second in the name of Sri Vijayadurga Dal Industries Proprietor : Smt. N. Vijayalakshmi and third in the name of Sri Vijayadurga Cold Storage Managing partner Shri N. Shrihari other partner Smt. N. Vijayalakshmi) the sale value of the three sale deeds were ₹ 26,14,000/-, ₹ 21,96,000/- ₹ 4,53,500/- ( as mentioned at Sr No. 1,2 3 of Annexure A to the said provisional attachment order). These sale deeds were registered at Sub-Registrar, Bellary vide document Nos: 5938, 5907,5905, all dated 30-09-2009; that funds for these transactions have been withdrawn from their Current A/c No. 395401010036080 with Union Bank of India, whereby ₹ 89 lakhs has been withdrawn through self cheque (cheque no. 360090) on 12/05/2009 and cash amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idavit). 4.3.2011 The Physical possession of the all the 3 properties were taken by Respondent No. 5. 20.6.2012 The Respondent No.5 informed Assistant Director about its rights and entitlement of all the properties as well as about the possession of the properties. 10.8.2012 Provisional Attachment (PAO) order was passed. 02.01.2013 The Adjudicating Authority confirmed the PAO with certain modification, but refrained from confirming the POA against the properties at Sr No. 1 to 3 which are in possession of the Respondent No. 5. 06.05.2013 The present appeal was filed by the Appellant. 9. From the material placed on record, it is clear tone that the disputed properties at Sr. No. 1 to 3 were mortgage to Respondent No. 5 i.e. State Bank of India by way of Title Deed on 8th July 2008 by M/s Roopa Paddy Dryers as a collateral security for the loan of 1 cr. The 3 properties were allotted to M/s Roopa Paddy Dryers by Karnataka Industrial Areas Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piry of 90 days (now the period is 180 days) from the date of order or (ii) on the date of order u/s 8(2) of the PMLA. The period of 90/180 days have expired and the Adjudicating Authority having not been confirmed the PAO, the same ceases to have any effect in law and therefore it is incorrect on the part of the Appellant to contend that the Adjudicating Authority has refrained from discharging his duty. Further as per the impugned order, liberty was given to the Appellant to file a fresh complaint in the event of the stay order passed by the Hon‟ble Single Bench of the High Court of Madras being vacated. Further, the finding in para 63 of the order can only be interpreted to the means that the Adjudicating Authority has not confirmed the PAO, with the result that the said PAO ceased to have any effect in law. 16. The main object of the PMLA is that the properties which have acquired the character of an untainted property in the hands of the accused which is purchased from the proceeds of crime are liable to be attached. There is no evidence that the disputed properties were purchased from the proceeds of crime. Further, there is no allegation against any of the officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Act 2002 would render meaningless and the Respondent No. 5 would be deprived of remedy available to him in law. 20. The main issue involved in the present appeal are whether the properties mortgaged with the Respondent no. 5 Bank are proceeds of crime as defined u/s 2(1)(u) of PMLA. Secondly, whether the PMLA has priority over SARFEASI and RDDB FI Act. 21. The three member Bench of this Tribunal, to which we were part of the said Bench, decided the appeals on 14.07.2017 in the group of matters i.e. State Bank of India vs. Joint Director, Directorate of Enforcement, Kolkata in appeal no. FPA-PMLA-1026/KOL/2015 followed by several other decision in different matters including recently decided in the matter of IDBI Bank Ltd. Vs. Deputy Director, Directorate of Enforcement, Delhi in FPA-PMLA-2147/DLI/2018 on 10.05.2018. 22. In all the aforesaid matters the aforesaid legal issues were involved and decided. The relevant portions of the orders passed in aforesaid appeals are re- produced below:- FPA-PMLA-1026/KOL/2015 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. Ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier legislation and its non obstante clause. If the Legislature still confers the later enactment with a non obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail then it could and would provide in the later enactment that the provisions of the earlier enactment continue to apply. The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, provides in Section 13. that its provisions are to prevail over any other Act. Being a later enactment, it would prevail over the Sick Industrial Companies (Special Provisions) Act, 1985. Had the Legislature wanted to exclude the provisions of the Sick Companies Act from 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reconstruction whilst considering a .schemefor reconstruction has to keep in mind the fact that it is to be paid off or directed by the Special Court. The Special Court can, if it is convinced, grant time or installments. There can, therefore, be no stay of any proceedings for recovery against a sick company so far as the Special Court under the 1992 Act is concerned. 11. We are in agreement with the aforesaid decision of the case, more so when we find that whenever the legislature wishes to do so it makes appropriate provisions in the Act in that behalf. Mr Shiraz Rustomjee has drawn our attention to Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 wherein after giving an overriding 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, cesses and other rates payable to the Central Government or 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. (ii) Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 : 31B. Priority to secured creditors Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, Section 41 of the same seeking to introduce Section 31B in the Principle Act, Which reads as under:- 31B. 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 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 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, 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 Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only should the amendment apply to pending lis, but the declaration that the right of a secured creditor to realise the secured debts, would have priority over all debts, which would include, Government dues including revenues, taxes, etc., should hold good qua 2002 Act as well. 40. B. RAMA RAJU V. UOI AND ORS.Reported in (2011) 164 company case 149(AP)(DB) who has dealt with the aspect of bonafide acquisition of property in para 103. The same read as under:- 103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority 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 prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts in the present matter. 42. It is also a matter of fact that after passing the impugned order the borrowers have also settled the loan amount with the complainant i.e. Union of India in order to pay the remaining out-standing amount. The undertaking in this regard is recorded in Court. It is written agreement and the statement of the parties were recorded. Counsel for the borrowers has also informed us that his client also intent to pay the remaining out-standing amount to the State Bank of India in order to clear their liabilities once the attached properties are sold and even otherwise. Copy of the settlement of the borrowers and the complainant Bank of India was filed before us. As 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 mort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power available under Section 482 CR.P.C.it must be remembered that continuance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482 Cr. P.C. In Sanjay Bhandari V/s. CBI, Crl. M.C. M.C. 5798/2014, Delhi High Court, dated 29.06.2015 69 ..By consent the parties have settled all disputes in the recovery suit, the consent decree of DRT stood to be disposed off as duly satisfied. There is hence no force in the submission of respondents that the complainant bank has not exonerated the petitioners, first being the Civil Procedure Code, and the second being 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e innocent parties. They were legally entitled to inform the Adjudicating Authority about their innocence and they rightly did so but their contention was rejected as appeared from the impugned order. 48. This Tribunal in the case of IPRS in appeal no. FPA-PMLA- 1302/MUM/2016 decided on 22.06.2017 had dealt with the similar issue as to whether the innocent party whose immovable properties are attached by the ED can approach the Adjudicating Authority for release of the same in para no. 55 to 60 the same read as under:- 55. Whether innocent party whose properties i.e. movable or immovable are attached can approach the Adjudicating Authority for release of attached property. The 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 by Allahabad High Court, it has been observed by the Ld. Single Judge after noticing the judgment of Karnataka High Court that the element of knowingly or mens rea have been provided under the Act so that the aspect of implicating any innocent person can be ruled out. Relevant para 26 of judgment is reproduced below:- 26. Thus, upon consideration of the law laid down by the Hon'ble Karnataka High Court, it is clear that the amendment incorporated in the Money Laundering Act was not held unconstitutional and ultra virus, but it was observed by the Karnataka High Court that the property of a person can be attached without there being any prosecution for the offence of Money Laundering, 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... define offence of money laundering. The aspect of knowledge or involvement has been discussed by Ld. Single Judge of Gujarat High Court in the case of Jafar Mohammed Hasanfatta and Ors (Appellants) Vs Deputy Director and Ors. (Respondents) MANU/GJ/0219/2017wherein Ld Single Judge has observed as under:- 37. A holistic reading of this definition of 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive 'and', makes it luminous that any persons concerned in any process or activity connected with such proceeds of crime relating to a scheduled offence including its concealment, possession, acquisition or use can be guilty 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 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally involved into any process or activity connected with the proceeds of crime and thus scheduled offence, including its concealment, possession, acquisition or use. There is absolutely no material or circumstantial evidence whatsoever, oral or documentary, to substantiate any such allegation qua the petitioners, D. Neither any of the petitioners is arraigned as accused in the 'Scheduled Offences' punishable under Indian Penal Code for direct or indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of them. 39. The second of the two pre-requisite to attract Section 3 of PMLA would be satisfied 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering. 21. In the present case, one G. Srinivasan is accused of having played fraud and obtained a loan of ₹ 15,00,00,000/- by producing bogus and fabricated documents. From and out of the said amount, the property in question was purchased by him in the names of his Benamies. One Ayyappan was appointed as their Power Agent. One Gunaseelan purchased the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of their vendor was proceeds of crime. It was also not disputed by complainant that the appellants did not have financial capacity to buy properties. Paragraphs 21, 22, 23 and 24 of order of Adjudicating Authority is extracted herein for better appreciation. 21. The CBIBS FC (BLR) has filed a charge sheet in the court of Spl. Judge for CBI cases Coimbatore, against Sh. Arivarasu, Sh. R. Manoharan, Sh. R. Selvakumar, Sh. G. Srinivasan, Sh. K. Martha Muthu, Sh. V. InduNesan, Sh. K. Vignesh, Sh. A. Sainthil Kumar, Sh. M. Ram Krishnan, for the offences punishable under Section 120-B read with 420, 467, 471 IPC and section 13(2) read with 13(1)(d) of PC Act 1988. 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 Respondent s, particularly Def No. 2 to 8 is that the landed properties attached by the complainant are not proceeds of crime. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohan Lokatia's case, Department had proved the nexus and link between the person possessing the property and person accused of having committed an offence. All the persons involved in that case were close relatives. 26. In the present case, the respondent failed to prove that the appellants did not have sufficient financial capacity to buy the property or that the money paid by them as sale consideration was not legitimate money derived by agricultural activities. No material was produced to show that the appellants are close relatives of person, who involved in criminal activities and the person, who sent monies to purchase the property did not possess financial capacity to provide 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two statutes. The Securitization Act has been enacted for the purpose of establishing a 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 statues. The two statues operate in their exclusive fields. 26. The question is only who will have his first claim on any property where the claim of the State concurs with the claim of any other person. In the light of above a harmonious construction has to be arrived that keeping in view the facts of the case vis. a vis the statutes involved. In the present case the aforesaid principle suggest that the amendments carried out in SARFAESI Act and RDDB Act in 2016 will prevail over PML Act, 2002 because the properties involved in the present appeal were untainted when the same were acquired. 27. Even when the properties were mortgaged with the Respondent no. 5 Bank the same were not tainted. The allegation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not agree with the argument in this regard in view of amendments in the two statutes. Even otherwise the trial would take number of years. The public money cannot be stalled otherwise Banking system would collapse. 32. 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, all the properties have been mortgaged with the Respondent no. 5 Bank much prior to the date of alleged offence which shows that no proceeds of crime are involved in acquiring of these properties and hence the same cannot be attached. 33. The 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 borrower/guarantors 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 Respondent no. 5 Bank had created charge over the property prior to the date of the crime. 34. The Bank has already filed the suit for recovery and has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant's Advocate have no substance. The provisional attachment in the present matter is bad. 40. Recently there are amendments in the Prevention of Money Laundering Act, 2002 (15 of 2003) as amended by Finance Act, 2018 (13 of 2018) including in the proviso of Sub-section 8 of Section 8 of PMLA, 2002 by adding another proviso which is read as under:- Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering: Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as ma be prescribed. 41. It is admitted position that the loan was given by the Respondent no. 5 in good faith who has suffered a loss because of non-return of money by the borrower. It is evident from the said proviso that incase the claimant would be able to satisfy the Special Court that it has acted in good faith and suffered the loss despite of having taken al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Security Interest Act, 2002 ( SARFESI‟ Act). 46. In view of peculiar facts of this matter, the only remedy left with the respondent no. 5 to approach to Special Court under the amended proviso of Sub-Section 8 of Section8 of the PML Act as prima facie I am of the view that the case of the respondent no. 5 covers the same. Till that time, all partiesto the appeal shall maintain status quo with regard to attachment of properties in relation to mortgaged with the respondent no. 5 by the borrowers. 47. The appellant despite knowledge of the fact that the respondent no.5 had taken possession of the properties in question prior to the order of attachment passed by him, has not dealt with the impact of the action of the respondent No.5 under the SARFAESI Act while passing the impugned order. The said order has been passed without hearing the respondent No. 5 and thereby has violated the principles of natural justice. The prescribed period of 180 days provided under Section 5 has already been expired. 48. The appellant has failed to proceed strictly in accordance with the provisions of the PMLA and has passed the impugned order in an undue haste and by committing pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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