TMI Blog2019 (1) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been released by the Adjudicating Authority under Section 8(2) of PMLA, but despite of the same, the impugned order is passed which is against the law. The Respondent has since the Reply dated 24.09.2018 filed who is silent except stating that the PMLA has got overriding effect in the matter of attachment of any property, as value of proceeds of crime, by virtue of the non-obstante clause contained therein, as against the legal dictum created in all other enactments, the Department had failed to address as to how the property (mortgaged property) can be attached in the facts of present case - It appears that it is mere case of harassment to the financial institution. If it will continue which bank and financial institution would lend the loan against the mortgaged property. The order has been passed without appreciating the law and the judgement rendered by the Supreme Court. The attached property is released forthwith - impugned order set aside - appeal allowed. - MP-PMLA-4613/CHN/2018 (Stay) And FPA-PMLA-2385/CHN/2018 - - - Dated:- 2-1-2019 - Justice Manmohan Singh Chairman For the Appellant : Shri L.S. Shetty, Advocate For the Respondent : Shri Atul Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Company with the Appellant, by creating Security Interest in favour of the Appellant Bank. 8. The said Fixed Deposit Receipt of the Defendant No. 3 Company has thus become a Secured Asset within the meaning of Section 2(zf) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act‖). 9. The outstanding loan with interest as of now worked out to ₹ 61,09,049/- and ₹ 4,03,516/- and thus the total liability of the borrower in respect of the said two loans as of now became ₹ 65,12,565/. The value of the Fixed Deposit of ₹ 50,00,000/- with accrued interest as on date is worked out to be ₹ 59,85,395/-. Since, the said Fixed Deposit along with accrued interest thereon, being the Secured Asset of the Appellant Bank, the same is the property of the Bank itself, over which the Appellant Bank has got the First Charge as per the amended provisions of the SARFAESI Act, 2002. 10. The Deputy Director, Directorate of Enforcement, Chennai in case No. ECIR/CEZO/02/2016 dated 12.02.2016 passed the Provisional Attachment Order No. 20/2017 dated 25.10.2017 under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 15. The above mentioned provisions had come into force w.e.f. 16.08.2016, empowering this Appellant - Bank to have priority over the mortgaged property. 16. In view of the amended provisions of Section 26B of SARFEASI Act, 2002 and amended provisions of Section 31B of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 has particularly stated in the Memo of Appeal and in the light of the law laid down by the Supreme Court in its decision reported in (2001) 3 SCC 71 (Solidaire India Ltd. vs. Fairgrowth Financial Services Ltd.), wherein the decision of the Bombay High Court reported in (1997) 83 Comp cases 547 stood approved and which Supreme Court's decision was followed by the full Bench of the Madras High Court as well as by the Andhra Pradesh High Court as specified in Parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the said case of Solidaire India Ltd. vs. Fairgrowth Financial Services Ltd. has approved the decision rendered by the Hon'ble Mr. Justice Variava, as he was then of the Bombay High Court reported in (1997) 89 Comp cases 547 clarifying that the nonobstante clause in the later enactment will prevail over the nonobstante clause in the earlier enactment. The following is the relevant - portion of the decision of the Special Court, as appearing at Para 10 of the said Supreme Court Judgment:- 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 Legislature was aware of the earlier Legislation and its non-obstante clause. If the legislature still confers the later enactment with a nonobstante 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. 20. The aforesaid afore-stated principle laid down by the Hon'ble Supreme Court has been followed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision passed by the Hon'ble Andhra Pradesh High Court :- 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 thereof 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, assests 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. 23. The principle laid down in the above decisions of the Hon'ble Supreme Court and the Hon'ble Madras High Court has been followed by this Appellate Tribunal, Prevention of Money Laundering Act, New Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties which were purchased before sanctioning the loan. Thus no case of moneylaundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority as secured creditors to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. 24. The Appellant - Bank further submits that this Tribunal in the above Judgment dated 14.07.2017 has also relied upon its own earlier Judgment dated 22.06.2017 in the case Indian Performing Right Society Ltd. vs. The Deputy Director, Directorate of Enforcement, Mumbai, wherein the Hon'ble Tribunal held as follows :- 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 purpose 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 Adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d facts that the attached property were purchased much prior to the period when the facility of loan sanctioned to the borrowers. The banks while rendering the facilities were bona fide parties. It is not the case of the respondent that the attached properties were purchased after the loan was obtained. The mortgages of the properties were done as bonafide purposes. None of the bank is involved in the schedule offence. No PML4 proceedings are pending except the complainant bank was arrayed as Column;-11 at the time of framing charges. Union Bank of India has not granted sanction against its employee to proceed against him in criminal complaint. There is no criminal complaint under the schedule offence and PMLA is pending against the two banks. In case of failure on the part of borrowers to comply with the terms of settlement, the contempt proceedings are maintainable in the Court where the settlement was recorded. 47. In view of the entire gamut of the dispute, we are of the considered opinion that the conduct of the banks are always bonafide. Both banks are innocent parties. They were legally entitled to inform the Adjudicating Authority about their innocence and they ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties involved in this appeal are concerned, found to be unsustainable for the purpose of attachment under the PMLA, 2002. 55. In view of aforesaid facts and circumstances and for reasons recorded above, I set aside the Impugned Order dated 13.09.2017 and the Provisional Attachment Order dated 05.04.2017 in P.A.0 03/2017. 29. In a recent Judgment dated 04.07.2018, this Appellate Tribunal under PMLA in the case of Goa State Co-Operative Bank Vs. The Deputy Director, Directorate of Enforcement, Ahmadabad has categorically held as follows: - 35. I am also of the view that once it was found that the appellant is an innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to dispose of the said property. 36. In the fact and circumstances and material available in the present case, the allegation of money laundering, so far as present appellant properties involved in this appeal are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the Bank and further that by no stretch of imagination the said Secured Asset was not at all involved in any proceeds of crime, still without any valid reason and without following the law on the issue, the impugned order is passed/confirmed. The order is also liable to be quashed. In the present appeal, the appellant is pressing the relief only against the impugned order and PAO. As far as recovery is concerned, the same is to be conducted as per law and procedure. 33. The Respondent has since the Reply dated 24.09.2018 filed who is silent except stating that the PMLA has got overriding effect in the matter of attachment of any property, as value of proceeds of crime, by virtue of the non-obstante clause contained therein, as against the legal dictum created in all other enactments, the Department had failed to address as to how the property (mortgaged property) can be attached in the facts of present case. It appears that it is mere case of harassment to the financial institution. If it will continue which bank and financial institution would lend the loan against the mortgaged property. The order has been passed without appreciating the law and the judgement render ..... X X X X Extracts X X X X X X X X Extracts X X X X
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