TMI Blog2019 (9) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... with the banks prior to the of crime period. ED is not precluded to attach other private properties and all other assets of the alleged accused. It is clarified that this order shall have no bearing in any proceedings initiated against the alleged accused including extradition proceedings pending or proposed to be initiated in any part of the world. Those are to be considered as per law and without any influence of this order which is being passed in the interest of public as bank money is a public money. Most of the banks are public sector banks. Their valid and legal recovery cannot be blocked for years without valid reasons. Therefore, the issue in hand is being decided only for limited purposes The impugned order is pertaining to the appellant is set-aside. Consequently, the provisional attachment order also quashed by allowing the appeal. - MP-PMLA-5460/DLI/2019 (Exem.) MP-PMLA-5461/DLI/2019 (Stay) FPA-PMLA-2792/DLI/2019 - - - Dated:- 16-9-2019 - Justice Manmohan Singh Chairman For the Appellant : Shri Rajshekhar Rao, Advocate Shri Pallav Saxena, Rajendra Beniwal Shri Rakesh Kumar, Advocates For the Respondent : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.36 7.36 1.57% 5 Indian Bank Singapore ECB 35.63 35.63 7.58% 6 JM Financial ARC (assigned by OBC) WC 26.04 26.04 5.54% 7 HDFC Bank WC 6.20 6.20 1.32% 8 L T Financial Services Ltd Corporate Loan 51.28 51.28 10.91% 9 Canara Bank ECB 32.00 31.88 6.78% 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce (later assigned to JM Financial ARC). HDFC Bank Limited, Allahabad Bank for availing working capital of ₹ 104.27 crores. Annexure C: Copy of the Working Capital Agreement dated 02.02.2005. Annexure-D: Copy of Deed of Hypothecation dated 30.03.2005. (Page 49-Para 7: Survey No.152/1B 152/2, City Survey no.5761) 2. The Facility Agreement dated 07.08.2006 executed between PMT Machines with consortium of banks comprising UCO Bank-Hong Kong, UCO Bank Singapore, Canara Bank, State Bank of India, Hua Nan Commercial Bank, Krung Thai Bank Public Co. Ltd, Taiwan Co-operative Bank, The Shanghai Commercial Savings Bank Limited to the tune of USD 50 million. PMT Machines executed Deed of Mortgage, Registration No.2350 dated 20.03.2007 Annexure-E : Copy of Facility Agreement dated 07.08.2006. Annexure-F: Copy of Deed of Mortgage dated 20.03.2007.(Page No.149-150, Survey No.152, Hissa No 1B, village Pimpri Waghare, Nehru Nagar within PCMC Limits, Distrct Pune; Survery No.153, Hissa 1B, village vill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Following are the assets of the PMT Machines, which are attached by the Respondent Enforcement Directorate and further attachment have been confirmed vide the Impugned Order; (a) Sl. No. 1 : Survey no. 153, Hissa No. 2 Pimpri whaghery, Nehru Nagar, Pune. (Land Building Plant machinery) admeasuring 7 acres 24 Gunthas. The Sl.No.1 asset was acquired by the company in the year 1993. (b) Sl. No. 2: Village Kadachala, Taluka Halol, District Panchmahal, Guj. (Land Building Plant machinery) admeasuring 1,24,661 Sq. Mtrs. The Sr. No.2 asset was purchased by PMT Machines Limited vide Sale Deed dated 03.08.2007 executed between M/s. PMT Machines Limited and Official Liquidator, High Court of Gujarat representing M/s, ELB Schliff (India) Limited. The remaining part of the asset was purchased in the year 2009 as stated by the appellant. (c ) Sl. No. 3 : Flat No. 2, 9 and 12 of B-wing and Flat No. 3 and 5 of A-wing at Roop Niwas Co- operative Housing Society, Bandra west, Mumbai. Each Flat Admeasuring 1080 Sq. Feet. Totally 5 Nos. of Flats = 1080 sq. feet each = 5400 sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.06.2018 in additional to the Provisional Attachment Order No. 04/2018 dated 29.05.2018 was issued by the Enforcement Directorate in ECIR/HQ/17/2017. It is submitted that 5 immovable properties and other movables, vehicles etc. belonging to the PMT Machines Ltd. were provisionally attached. 12. On 25.6.2018 the Respondent No.1/Directorate of Enforcement filed an Original Complaint under Section 5(5) of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as PMLA, 2002 ) bearing O.C No.989 of 2018, before the Learned Adjudicating Authority, PMLA. 13. The Enforcement Directorate did not make the consortium of Banks or any member of the consortium of bank as party Respondent to the proceedings before the Adjudicating Authority despite knowing well that the assets are charged / mortgaged with the consortium of banks. It is essential and mandatory in view of the Section 8(1) of the Act. 14. It is informed that currently the PMT Machines Limited is undergoing Corporate Insolvency Resolution Process ( CIRP ). The Committee of Creditors / consortium of banks are taking every possible effort to get viable Resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. It is evident that the members of the CoC have huge financial stakes in PMT Machines and looking at the current operational status the CoC is hopeful of a resolution of the insolvency of PMT Machines, provided the attachment of the assets under Prevention of Money Laundering is set aside. 20. It is not dispute that the Resolution Professional had filed the Appeal seeking release of the assets of the PMT Machines Limited and there is moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, the CoC had supported the Appeal filed by the Resolution Professional and had in fact in the meeting of the CoC held on 5th July, 2019 deliberated upon it and authorized the Resolution Professional to pursue the Appeal as being filing on behalf of the all the lenders. Each member of CoC had submitted affidavit authorizing the Resolution Professional to seek release of the attached assets in order to proceed further in the CIRP. Copy of the minutes of the 7th CoC meeting held on 5th July 2019 are filed. 21. The prayer is strongly opposed by Mr. Nitesh Rana learned counsel appearing on behalf of respondent. He has supported the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter , he may, by order in writing, provisionally attach such property for a period not exceeding 9 [one hundred and fifty days] from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule: 10 [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, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Company. As held by the Hon ble Delhi High Court in Deputy Directorate of Enforcement Vs. Axis Bank Ors., A Resolution Professional appointed under the Insolvency Code does not have any personal stake. He only represents the interest of creditors, their committee having appointed and tasked with him certain responsibility under the said law. 29. Therefore, in the event of the attachment being lifted, the RP would take steps to get a viable Resolution Plan. A Resolution Plan is a scheme and provides for payment of debts owed to various creditors of the company. The Committee of Creditors ( CoC ) is vested with the power to take a decision to approve, or reject a Resolution Plan. In the event that the CoC approves a particular Resolution Plan, it requires confirmation and approval by the Adjudicating Authority (National Company Law Tribunal). After approval of the Resolution Plan, the enterprise as a going concern would be handed over to the Resolution Applicant, under the supervision of the Monitoring Committee, which would oversee the implementation of the Resolution Plan. 30. The relief sought by both appellants are covered by the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other with regard to the assets respecting which there is material available to show the same to have been derived or obtained as a result of criminal activity relating to a scheduled offence and consequently being proceeds of crime , within the mischief of PMLA . 31. This tribunal has already decided the issues in various appeals, one set of appeal in the case of Punjab National Bank V/s. The Deputy Director, Directorate of Enforcement, Delhi decided on 6th August, 2019 wherein it was held as under: 8. It is submitted on behalf of the appellants that in view of the recent judgment passed by the Hon ble Delhi High Court in the matter of Deputy Directorate of Enforcement Delhi and Ors. v/s Axis Bank ( Judgment ), the impugned order is liable to be set aside. 9. The Hon ble High Court in its Judgment has held that the charge or encumbrance of third party in property attached under PMLA cannot be treated or declared void unless material is available to show that it was created to defeat the PMLA, such declaration rendering such properties available for attachment and confiscation under PMLA, free from encumbr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty as is in excess of the claim of the said third party. 12. The rights of Appellant Bank being the secured creditor would survive in spite of the order of the attachment under PMLA remains operative. Therefore, the Appellant being the lawful mortgagee/transferee of the interest in the Subject Properties are entitled to recover its dues with the sale of the Subject Properties as the Hon ble High Court in the Judgment has also held that mere issuance of an attachment order does not ispo facto render illegal prior charge of encumbrance of secured creditor, the claim of the latter of release (or restoration) from PMLA attachment being dependent on its bonafides. the court further held if it is shown by the cogent evidence by bonafide third party claimant (as aforesaid), staking interest in an alternate attachable property (or deemed tainted property), claiming that it had acquired the same at a time around or after the commission of prescribed criminal activity, in order to establish a legitimate claim for its release from attachment it must additionally prove that it had taken due diligence (eg taking reasonable precautions and after due enquiry) to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s created to defeat the PMLA, such declaration rendering such properties available for attachment and confiscation under PMLA, free from encumbrance The Hon ble Delhi High Court further observed that a party in order to be considered as a bonafide third party claimant for its claim in a property being subjected to attachment under PMLA to be entertained must show, by cogent evidence, that it had acquired interest in such property lawfully and for adequate consideration, the party itself not being privy to, or complacent in, the offence of money laundering, and that it had made all compliances with the existing law including, if so required, by having said security interest registered 26. The Respondent has failed to consider that the Respondent has attached all the Property without examining the case of the banks. The mortgaged Property of the Appellant Bank cannot be attached or confiscated unless link and nexus directly or indirectly established and there is no illegality or unlawfulness in the title of the Appellant Bank and there is no charge of money laundering against the Appellant. The mortgage of property is the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and restricted to such part of the value of the property as is in excess of the claim of the said third party. In the situations covered by the preceding, the bonafide third party claimant shall be accountable to the enforcement authorities for the excess value of the property subjected to PMLA attachment. Counsel for the appellant is agreeable to deposit the excess value with the respondent no. 1. Therefore, it is not possible to hold that the mortgaged properties claimed by the Appellant in no way can be considered to be Proceed of Crime under Section 2(u) of PMLA. The impugned order does not disclose any reasoning. There is no application of mind whatsoever and it is assumed that the properties in question are the proceeds of the crime. There is no reasoning to show as to how the attached properties mortgaged prior to the date of alleged offence are the subject matter of proceeds of crime. The Adjudicating Authority has not analysed the facts at all. The order suffers from a fundamental error. There is no understanding by the Adjudicating Authority of the contents of the statute, much less its application to the facts of the case. 33. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 36. The Appellant undertakes to dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
