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2019 (8) TMI 680

..... me - first contention of the appellant that since the predicate offences were not schedule offences on the day they filed their refund application with the State Government i.e. 11.03.2013, therefore the impugned order is illegal - principles of harmonious construction. HELD THAT:- An interpretation of a statute is best when we know why it was enacted. The interpretation given by the financial institution/Assets Reconstruction company would tantamount to making the PMLA redundant. The legislature has come out with the law of PMLA in fulfillment of our international obligations as laid in the Preamble of the PML Act so that money laundering and proceeds of crime could be effectively dealt with. If we see the intent of PMLA and DRT Act or SARFAESI Act, the purpose of these are entirely different. SARFAESI Act and the DRT Act deal with debts due to any secured creditor which shall have priority over all other debts and all revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. On the other hand, in PMLA there are no dues, debts, revenues, taxes, cesses and other rates which is payable to the Central Government, State Government or l .....

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..... M/s. Jaldhara Exports, Ludhiana. As per this, Shri Raman Kumar Garg had obtained VAT refund of ₹ 1,56,76,190/- on the basis of forged and fabricated document from the Department of Excise and Taxation, Ludhiana, Government of Punjab. After receipt of the said money in the accounts of M/s. Jaldhara Exports maintained with the State Bank of India, Ludhiana, it was then transferred into the accounts of various companies and people all owned by his relatives inter alia including his mother, his aunt and his wife who are the above three appellants in the present appeals. 3. Both the parties were heard at length finally as they did not insist on a stay. The learned counsel for the appellants stated as follows: i. That the Assistant Excise & Taxation Commissioner, Ludhiana had lodged a complaint No. 664 dated 18.07.2013 before the Police at Ludhiana alleging that M/s. Jaldhara Exports, Ludhiana had fraudulently claimed a VAT refund of ₹ 1.64 crores from the State Government vide its application dated 11.02.2013 (although they were granted ₹ 1.56 crore as refund). On the basis of above, the Police registered a FIR No. 126 of 26.07.2013. Since the refund was filed on 1 .....

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..... was transferred in the account) . It was therefore prior to the alleged scheduled offence and hence the order is not sustainable qua the subject flat. vi. That the value of the properties taken for attachment has been based on different parameters. While in one case it is the market value in the other it is the sale deed value which has been taken and there is no uniformity. vii. They relied on the following judgments: a. Madras High Court in the case of M/s. Indian Bank & Ors. Vs. Government of India dated 11.07.2012 in W.P. Nos. 4696 and 12854 of 2012 and MP Nos. 1, 1 and 2 of 2012. b. The Appellate Tribunal, PMLA judgment in FPA-PMLA- 478/DLI/2013 dated 23.07.2018 in the case of Vinod Kumar Gupta vs. ED. c. The Appellate Tribunal, PMLA judgment in FPA-PMLA- 971/CHD/2015 dated 26.04.2019. d. The Appellate Tribunal, PMLA judgement in FPA-PMLA- 449/BNG/2013 dated 11.05.2018. 4. Arguing on behalf of M/s. Peagsus Reconstruction Pvt. Ltd., the learned counsel for the petitioner stated that loans were taken from the Allahabad Bank with regard to the two properties in Plot No. 800 Street No. 2, Baba Gajja Jain Colony, Moti Nagar, Ludhiana. That they vide deed of assignment dated 27. .....

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..... t. The Hon ble Court vide its order dated 22.12.2015 had dismissed their petition and directed to videograph the proceedings of inquiry and interrogation. However, notwithstanding this, the appellants and Shri Raman Kumar Garg and his other relatives failed to comply with the above directions of the Hon ble High Court which proves the guilt and culpability of all the accused in the case. iii. The submission of M/s. Peagsus Reconstruction Pvt. Ltd. that the two properties 511.22 sq. yd. and 488.88 sq. yd. of Plot No. 800, Moti Nagar, Ludhiana was mortgaged by Seema Garg and Sangeeta Garg to the Allahabad Bank and thereafter to them, shows that the properties belonged to these appellants. iv. Since the flow chart as described in the impugned order proves that the proceeds of crime have travelled into accounts of the appellants/companies owned by them and as per law proceeds of crime includes value of such property the adjudicating authority has rightly attached the values of both these properties. v. With regard to the judgment cited, he stated that the facts in each of these cases was entirely different and hence cannot be taken as having precedent value. 6. I have carefully examine .....

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..... ing deposits into the account of M/s. VAN Impex of which she was the proprietor. She categorically mentioned that it was her son (Raman Kumar Garg) who could explain the same. Similar statements were given by Smt. Sangeeta Garg and by the third appellant Saiyrah @ Deepika Garg. 8. The impugned order has recorded the details of investigation and the flow chart of how this refund money, which is the proceeds of crime, was processed and disbursed. The VAT refund amount of ₹ 1.56 crores was transferred to the account of M/s. Jaldhara Exports on 26.03.2013 maintained in SBI, Mundian Kalan Branch, Ludhiana. Thereafter, ₹ 32 lakhs was transferred on 26.03.2013 into the DCB Bank account through RTGS of M/s. M.A. Exports, the proprietor of which was Smt. Saiyrah @ Deepika Garg, wife of Raman Garg. The said money was withdrawn in cash on the same day. Similar details have been provided in the impugned order with regard to the others which is depicted in the flow chart as below: 9. The appellants have not controverted the above and not disputed any of the details in the flow chart as above. In this background, it can be concluded that the refund money received fraudulently has bee .....

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..... annot by itself render illegal the prior charge or encumbrance of a secured creditor, this subject to such claim of the third party (secured creditor) being bona fide. In these conflicting claims, a balance has to be struck……….. The Hon ble Court at para 155, 157 and 158 of its order clearly states that it is well settled that by hypothecation, no interest of property is transferred to the hypothecatee, the latter acquiring nothing more than equitable and notional charge to have his claim realised by sale of good hypothecated. The mortgager being the owner who had parted with some rights of ownership has a right to get back the mortgage property and the mortgage deed in exercise of his ownership……… A hypothecatee or a mortgagee, thus, has a limited interest in the property…….. There is no ownership, or right to possess. 11. Hence, the decision of the Hon ble Delhi High Court which was a remand order, does not unequivocally support the claim of M/s. Peagsus Reconstruction Pvt. Ltd., although it does recognize its claim under SARFAESI as long as it does not override the actions under PMLA. The Hon ble Supreme Court in the case o .....

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..... by the financial institution/Assets Reconstruction company would tantamount to making the PMLA redundant. The legislature has come out with the law of PMLA in fulfillment of our international obligations as laid in the Preamble of the PML Act so that money laundering and proceeds of crime could be effectively dealt with. If the interpretation given by M/s. Peagsus Reconstruction Pvt. Ltd. is accepted, then parties would mortgage such properties with the bank and run away with, on the one hand, the loans taken from the bank, and on the other by securing their property by mortgaging it to the bank and hence converting it to an innocent property. This to my mind would be in blatant violation of the PMLA as well as the Hon ble Supreme Court s judgment. Moreover if we see the intent of PMLA and DRT Act or SARFAESI Act, the purpose of these are entirely different. SARFAESI Act and the DRT Act deal with debts due to any secured creditor which shall have priority over all other debts and all revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. On the other hand, in PMLA there are no dues, debts, revenues, taxes, cesses and other rates .....

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..... e of the attached property by this Appellate Tribunal is beyond the scope of activities of this Tribunal and would be grossly illegal. Moreover as per Section 8(8) even the powers of restoration of such confiscated property or thereof to a claimant with a legitimate interest in the property vests with the Special Court. Section 8(8) was amended by the Finance Act, 2018, introducing a separate proviso to reinforce this point giving the court further powers to allow such restoration even during the course of the trial. Usurping this power by the Appellate Tribunal would be a blatant violation of the law itself. 14. The appellants have relied on a number of judgments as mentioned at para 3(vii) supra. However, the facts of those cases are entirely different from the present case. The Supreme Court in Bharat Petroleum Corporation Ltd. & Anr. Vs. N.R. Vairamani and Anr. AIR 2004 SC 778 had observed:- Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid s theorems nor as provisions of the statute and that too t .....

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