TMI Blog2018 (12) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... PMLA is a statue which came into effect much prior to the coming into force of IB &C. The IB&C is a later statute which came into effect in the year 2016. The aim and object of both the statutes are not doubt different but they are in operation in their respective fields. The legislature while framing the IB&C is quite aware of the existence of PMLA and other statutes. Thus it is held it is held that the IB&C has overriding effect over PMLA. Whether the proceedings before Adjudicating Authority PMLA is a civil proceedings or a criminal proceedings? - Held that:- The proceedings before the Adjudicating Authority(PMLA) are quasijudicial in nature. It is not bound by the procedure laid down by the Code of Civil Procedure(CPC), 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Adjudicating Authority shall have powers to regulate its own procedure as provided under section 6(15) of PMLA. At the same time section 11 of PMLA has empowered the Adjudicating Authority to exercise certain powers (of civil courts under CPC) prescribed in section 11 of PMLA. It is held that the proceeding u/s 8 of PMLA,2002 before the Adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspiracy to cheat the banks, Pune and in pursuance to the said criminal conspiracy, the accused directors/officials of M/s SVLL induced the Bank of Maharastra to sanction the disbursed 2804 vehicle loans (under Chalak se Malak scheme devised by M/s SVLL) to M/s SVLL and its employees and its drivers on the basis of the false assurances and forged vehicle registration documents, thereby availing credit facilities aggregating to ₹ 651.17 crore in the form of loans sanctioned to individuals drivers/employees of the said M/S. SVLL in Model Colony Branch Deccan Gymkhana Branch, Bank of Maharashtra, Pune. 3. On the basis of the above, the Enforcement Directorate i.e. respondent no. 1 registered ECIR no. ECIR/MBZO/10/2016 dated 16.11.2016 and attached the properties involved in these appeals vide P.A.O./MBZO/II/05/2017 dated 08/06/2017 ordering to attach immovable and movable properties as detailed in the P.A.O. 4. Consequent to the above, a common O.C. bearing 787/2017 was filed before the Adjudicating Authority praying for confirmation of the P.A.O.. The Adjudicating Authority, by the impugned order, allowed the O.C. confirming the P.A.O. on dated 24.10.2017 which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 8,9 10 of the PMLA before the Adjudicating Authority are not criminal proceedings but quasi-judicial proceedings which is guided by the principal of natural justice, therefore, the present proceedings under sanctions 8, 9 10 of the PMLA against the appellant cannot continue pursuant to the order of the Moratorium passed by the NCTL. VII. The Appellant has quoted the provisions of U/Ss 6(15) and 11 of the PMLA and submitted that the Adjudicating Authority being quasi-judicial proceedings is largely guided in letter and spirit of the Code of Civil Procedure, 1908 and natural justice, the same cannot be considered as criminal proceedings and accordingly it is bound by the moratorium ordered by the Hon'ble NCLT under Section 14 of the Insolvency and Bankruptcy Code, 2016. That, in the meanwhile the Directors of the Company filed an Appeal before this Hon'ble Appellate Tribunal against the Order dated 20.09.2017 passed by the learned Adjudicating Authority refusing to stay the proceedings in view of the order passed by learned Adjudicating Authority, NCLT dt. 12.09.2017. The Hon ble Appellant Tribunal vide order dt. 05.10.2017 disposed of the Appeal directing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tour and Travels Pvt. Ltd. Smt. Lakshmi Devi Baid. These appellants are original defendant no. 1,3 to 6 and 8 in the O.C. 787/2017. 6.2. These appellants are guarantors in all loans sanctioned in favour of SVLL(Appellant in appeal no. 1). It is the contention of the appellants that in case of the recovery proceedings, upon failure of principal borrowers to repay the debts even after attachment and sale of property, it shall be the personal liability of the guarantors i.e. the present appellants. 6.3. These appellants assailed the impugned order almost on similar facts and grounds as contended by M/s SVLL (appellant in appeal no. 1) Hence are not repeated. 6.4. In addition these appellants have contended that the properties which are the subject matter was acquired and possessed by the owners much prior to the period when the facility of the loan sanctioned to the borrowers and therefore no proceeds of crime were invested in these properties. Hence, It cannot be said the claim in any manner these properties have been acquired out of the funds/loans availed from the complainant bank. 6.5 . On the basis of the said factual and legal grounds these appellants (app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 1. 9.1 The Enforcement Directorate has contested in all the appeals and verbally submitted its arguments before this Tribunal. The ED has not filed any reply in any of the appeals except in the appeal filed by Rajkumar Baid vide appeal no. FPA-PMLA-2137/MUM/2017. Since the factual and legal issues in all these appeals are same so we have taken the contents of the reply herein as the reply in all these appeals. 9.2 The contention of the ED in the said reply are as follows:- 9.2.(a) The ED has filed complaint bearing no. 08/2017 under section 44(1) (b) read with section 45 of the PMLA, 2002 was filed before the PMLA Special Court on 17.06.2017 for the offence of money laundering against the appellant which is triable under the Code of Criminal Procedure, 1973 for the offence of money laundering punishable under section 4 of the PMLA, 2002. 9.2.(b). Under the provisions of section 44(1)(d) of the PMLA,2002, a Special Court while trying the scheduled offence or the offence of money laundering shall hold trial in accordance of with the provisions of the Code of Criminal Procedure, 1973, as it applies to a trial before a Court of Session. 9.2.(c) . Under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to a scheduled offence or the value of such property. In the present case the properties of the appellants were attached in terms of the provisions of the section 2(1)(u) being value of such property. 9.2.(h). That the respondent submitted that the Hon ble Adjudicating Authority, NCLT is para 14 had held that, The moratorium declared by this Adjudicating Authority is not applicable to the criminal proceedings, if any, initiated under the provisions of Prevention of Money Laundering Act, 2002 by the Enforcement Directorate and to the criminal case, if any, initiated by the Central Bureau of Investigation against the Respondent Company . That, in the present case, the complaint (08 of 2017) under section 43 of the PMLA, 2002 was filed before the PMLA Special Court on 17.06.2017 for the offence of money laundering against the appellants. Therefore, as the criminal proceedings were initiated against the appellants, the moratorium declared is not applicable as ordered by the Adjudicating Authority, NCLT. 9.2.(i). That, further the objective of the IBC, 2016 and PMLA, 2002 are to consolidate and amend the laws relating to reorganization and insolvency r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings before Adjudicating Authority are civil or criminal proceedings. 12. It is seen from the impugned order that these questions were also raised by the appellants and contested by the Enforcement Directorate before the Adjudicating Authority under PMLA. 13. The appellants contended that the proceedings before the Adjudicating Authority under PMLA are quasi-Judicial and not criminal proceedings as criminal proceedings are held only before criminal courts which culminate either by acquittal or conviction whereas the proceedings before the Adjudicating Authority does not lead to acquittal or conviction and that not against the persons themselves. The appellant has relied upon the judgment of hon ble High Court of Gujarat at Ahmedabad in the matter of Foziya Samir Godil Vs UOI Ors. in Special Criminal Application no. 1725/2014, dated 9/05/2014 wherein it is held that the proceeding under 5,8 17 of the PMLA are civil in nature. 14. On the other hand it is the contention of the Enforcement Directorate that the proceedings before the Adjudicating Authority under PMLA are criminal proceedings. The ED has referred to the order of learned Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, with regards to overriding effect, the respondent(ED) has contended that; (a) In this connection, the objective of the IBC, 2016 and PMLA, 2002 are IBC, 2016 An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such person, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an insolvency and Bankruptcy Board of Inida, and for matters connected therewith or incidental thereto. PMLA,2002 An Act to Prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. (b) Therefor as seen from the objectives of IBC, 2016 and PMLA, 2016, the provisions therein are independent and therefore the contention of the IRP that since IBC is a recent legislation and having non obstante clause, the same shall override the PMLA is not maintainable. (c) It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates 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 s a party 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 posses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant paras of our common judgment and findings in the matter of Stressed Assets Stabilization Funds (SASF) and Life Insurance Corporation of India vs. Joint Director, Directorate of Enforcement, Hyderabad (FPA0PMLA-664/HYD/2014 FPA-PMLA-924/HYD/2015) respectively. The relevant paras of this judgment are re-produced below:- 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 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 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 who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses 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 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 propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haran, 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 moneylaundering. 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SICA may be considered to be a general law in this regard. For this purpose we rely on the decision in LIC Vs. Vijay Bahadur (supra). Normally the latter of the two would prevail on the principle that the Legislature was aware that it had enacted the earlier Act and yet chose to enact the subsequent Act with a non- obstante 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 and its provisions have been given effect from 01.09.2016. The Parliament in its wisdom has not excluded the application of the amended provisions to the proceedings under PMLA. In other words, had the Parliament intended to exclude the application of non-obstante 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed against them. 19. The Respondent has also heavily relied on the judgment or order passed by this Tribunal in the matter of Chief Manager, Syndicate Bank Vs. Dy. Director , PMLA in Appeal no. FPA-PMLA-A-34/CAL/2009 . We have gone through the said order from which it appears that the facts of that appeal are quite different from the facts of the present appeal. In the said appeal proceeds of crime were used to acquired 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the amendment of 2016 made in SARFAESI Act RDDB Act. The IDBI Bank is the rightful claimants of the said property which are already in its possession under SARFAESI Act. Even recovery certificate has been issued by DRT. 23. The Hon ble Supreme Court of India in the case of Attorney General of India and Ors. (AIR 1994 SC 2179) while dealing with the matter under Conservation of Foreign Exchange and 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscated when there is no illegality or unlawfulness in the title of the Appellant Bank and there is no charge of money laundering against the Bank. The mortgage of property is the transfer under the Transfer of Property Act as there is no dispute as regards the origin of funds or the title of the properties. As far as the bank is concerned, the bank had to recover its outstanding dues by taking over the possession of 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he properties in question which were purchased before sanctioning the loan, no case of money laundering is made out so far as these properties in question are concerned. The appellants have priority of right to recover the loan amount/debts. In the given facts and circumstances of the case, the Provisional Attachment in the present matter is bad and against the law. j) In the circumstances the allegation of money laundering, prima facie, so far as present appellants and properties are involved in these appeals are concerned, we find that the impugned order is not sustainable under law, for the purpose of attachment under the PMLA, 2002. k) We have not gone into other legal issues such as retrospective application of provisions of PMLA. l) In view of the aforesaid facts circumstances and for the reasons mentioned above, we set aside the impugned order dated 12.08.2014 passed by Adjudicating Authority in O. C. No. 288/2014. The mortgaged properties attached under the PAO No. 01/HZO/2014 dated 19.03.2014 in ECIR No. 03/HZO/2010, so far as properties concerned in these appeals, are released from attachment forthwith.No Cost 23 . The facts of the present case so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucture of the financial facilities Respondent executed necessary loan and security documents, Deed of guarantee on 26.3.2015 in favour of the Applicant Bank. Pursuant to the fresh Sanction Letter dated 9.3.2015 the account of the Respondent Company became irregular since July 2015. Applicant classified the Respondent Company as *Non Performing Asset on 23.7.2015. Applicant issued notice under Section 13(2) of the SARFAESI Act against the Respondent Company, its Directors and Guarantors to pay outstanding amount of ₹ 98,48,76,598/- as on 23.7.2015 with further interest thereon. i 5. Applicant proposed the name of Shri Dushyant C. Dave as Interim Resolution Professional' and filed his Written Communication. 6. Applicant filed all the documents executed by the Respondent Company pursuant to both the Sanction Letters. Applicant also filed Certificate of Charge and CIBIL Report. Applicant stated that Bank filed Original Application No. 108 of 2017 before Debt Recovery Tribunal under Section 19 of the Recovery of Debts Due to Banks Financial Institutions Act, 1993, praying for order against the Respondent, its Directors and Guarantors for an amount of ₹ 1,06,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate under the Bankers' Books Evidence Act. 8.5. Respondent's learned Counsel stated that all the books of the Respondent Company were taken over by the Enforcement Directorate under the provisions of Prevention of Money Laundering Act, 2002 and therefore Respondent is handicapped in making defence in this case. It is also stated in the Objections that CBI investigation is going on against the Company on a complaint filed by Bank of Maharashtra. 8.5(a) . 9 . 10 .. 11 .. 12. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of the initiation of 'Corporate Insolvency Resolution Process' and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 13. This Adjudicating Authority hereby order moratorium under section 13(1)(a) of the IB Code prohibiting the following as referred to in section 14 of the Code; (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any other law for the time being in force or any instrument having effect by virtue of any such law. Placing these provisions in IB C the legislature is clearly indicated its intentions to give this law with overriding effect over other statutes which are in effect before the coming into force of IB C. 29. The intention of the legislature is more clear in this regard if the provisions of section 238 is read with section 14(1)(a) of IB C. Section 14(1)(a) of IB C provides as below: 14. Moratorium .-(1) Subject to provisions of sub-section (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: a. The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgments decree or order in any court of law, tribunal, arbitration panel or other authority; 30. The Adjudicating Authority under IB C has passed an order of moratorium on the institution of suits and continuation of suits or proceedings against the corporate debtor including execution of any judgments decree or order in any court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorized to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in [first proviso], any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.] (2.) The Director, or any other officer not below the rank of Deputy D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h property is held jointly by more than one person, such notice shall be served to all persons holding such property. 2. The Adjudicating Authority shall, after- (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 under section 17 or section 18 and record a finding to that effect, such attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering; 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.] 37. These two provisions do not empower the Adjudicating Authority under PMLA, 2002 either to levy any penalty or impose punishment to any persons involve in the proceedings. The Adjudicating Authority does not decide on the criminality of the offence. 38. The proceedings before the Adjudicating Authority(PMLA) are quasijudicial in nature. It is not bound by the procedure laid down by the Code of Civil Procedure(CPC), 1908, but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Adjudicating Authority shall have powers to regulate its own procedure as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that have entered the adjudication have spawned quasicriminal cases. Yet criminal proceedings have certain tell-tale signs: (a) usually the person accused of a crime faces a formal charge; the state--not the victim, with certain exceptions though--prosecutes--for the crime is supposed to be an offence against the society; (b)the State must establish the accused's guilt beyond reasonable doubt, but occasionally the accused may have an evidential burden; (c)the punishment usually is corporeal, such as jail term, though sometimes only penalty is levied; (d)the accused has constitutional or statutory safeguards, such as the presumption of innocence, the right to silence, with no legal or persuasive burden. 106. Examined further, the Act also reveals that the predicate offences, as well as the offences of money laundering, are triable by Special Courts. Section 44 of the Act mandates that the Special Court may, upon perusal of a police report or upon a complaint made by an authority under this Act, take cognizance of offence under section 3 of the Act. So the proceedings under Section 8 have nothing to do with the trying of offences under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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