TMI Blog2021 (1) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appellant has been assigned with the loan account and Bajaj Finance Co. Ltd. no longer has any rights, title interest in the Mumbai properties - the Adjudicating Authority neither passed any order of substitution of substituting the present appellant in place of Defendant No. 58. There appears to be non-compliance of the provisions of Sections 8(1) and 8(2)(b) of PMLA, 2002 read with proviso to Section 8(2) of the PMLA, 2002 and also there is violation of principle of natural justice. It appears that the Adjudicating Authority ought to have substituted the present appellant in place of M/s. Bajaj Finance Ltd. and should have considered the submissions made by the present appellant and should have dealt with the same in accordance with law. Having not done so the impugned order, qua the appellant and qua the properties involved herein, is illegal and, therefore, liable to be set aside. The case is remanded to the Adjudicating Authority for re-adjudication of the case qua the appellants and qua the properties involved herein - Appeal allowed y way of remand. - FPA-PMLA-3253/MUM/2019 - - - Dated:- 31-12-2020 - Shri G.C. Mishra Acting Chairman For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciates (6) D.S.K. Construction and (7) other DSK Group of Companies/Partnership firms and their Directors/Officials and others and investigated into the matter. It is further revealed from the record that afore named accused person/entities of the DSK group through their Directors/Partners/Proprietor etc. allegedly offered to gullible general public, attractive interest on the investments in the form of Fixed Deposits or unsecured loan who were subsequently cheated of their invested amount as well as promised interest on the amount invested. During the course of investigation the Enforcement Directorate examined witnesses and recorded their statement under Section 50(2) 50(3) of PMLA and also collected documents. On the basis of investigation, it is revealed from the record that the Respondent issued Provisional Attachment Order (PAO) No. 01/2019 dated 14.02.2019 in respect of immovable and movable properties as mentioned in the impugned order having aggregate value of ₹ 90445.92/- lakhs and in pursuance thereto Original Complaint (O.C.) dated 14.03.2019 has been filed on 15.03.2019 before the Adjudicating Authority vide O.C. No. 1104/2019 and that the attached propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 58 i.e. M/s. Bajaj Finance Ltd. It is also revealed from the record that the appellant has issued notice under Section 13(4) of the SARFAESI Act, 2002 and security interest (Enforcement) Rules, 2002 took constructive/symbolic possession of the mortgaged properties on 07.07.2018 and took the physical possession on 23.04.2019 under the order 14.03.2019 passed by learned CMM, Mumbai under Section 14 of SARAESI Act, 2002 and, thereafter, a sale notice dated 15.05.2019 under Rule 8(6)of the Security Interest (Enforcement) Rules, 2002 was issued to the borrowers for auction of the mortgaged properties and the auction was scheduled to take place on 20.06.2019 but the auction could not be taken place as a notice was received from the Respondent on 10.06.2019 wherein the appellant was directed to refrain from dealing with the mortgaged properties. The aforesaid mortgaged properties were provisionally attached under Section 5 of PMLA, 2002 by the Respondent vide PAO No. 1/2019 dated 14.02.2019 and thereafter Section 8 of PMLA, 2002 proceedings were initiated wherein M/s. Bajaj Finance Ltd. was arrayed as Defendant no. 58. It is also the case of the appellant that it has not rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court at Bombay Letters of Administration dated 10.11.2020 with the Will/Codicil annexed in Testamentary Petition No. 296/2000. The said Shri Prafullachandra Praliabkar Sukthankar, being the sole executor and the trustee of the said Will/Codicil, by a duly registered Deed of Transfer dated 17.04.2001 executed by him in his capacity as executor and trustee, has transferred the said property in favour Ms. Nupuri Prafullachandra Sukthankar. Ms. Nupuri Prafullachandra Sukthankar has vide Development Agreement dated 13.12.2002 and Supplementary Development Agreement dated 21.12.2006 entrusted development rights in respect of said property to DS Kulkarni Company and also executed Irrevocable Power of Attorneys in favour of the said D.S. Kulkarni Company. DS Kulkarni Company vide Agreement dated 15.07.2008 sold Flat No. 101 201 in favour of Mr. Shirlsh Deepak Kulkarni and Mrs. Hemanti Deepak Kulkarni in confirmation with Ms. Nupuri Prafullachandra Sukthankar. [Sale Deed dated 15.07.2008 of Flat No. 101 and 201] Similarly, DS Kulkarni Company vide Agreement dated 24.09.2007 sold Flat No. 501 in favour of Mrs. Hemanti Deepak Kulkarni in confirmation with Ms. Nupuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the secured creditor bonafide third party to enforce its claim by disposal of the mortgaged properties, the remainder of its value, if any, thereafter to be made available for the purpose of PMLA. The appellant has quoted the relevant observations of the Hon ble High Court of Delhi in the case of Axis Bank (Supra) particularly referring to para 163 165 of the judgment. The fourth legal submissions made by the appellant is that the FIR against the borrower registered in 2017 under provisions which were/are either not scheduled offences or were inserted much later from the date of purchase of mortgaged properties. In this regard, it is pleaded by the appellant that the mortgaged properties were purchased in 2007/2008 by the borrowers while the FIRs have been registered against the borrowers and other persons in 2017 under Sections 406, 420, 34 of IPC and section 3 4 of MPID Act, 1999. The Section 406 of IPC and Section 3 4 of MPID Act, 1999 are not scheduled offences under PMLA, 2002. Section 420 of IPC was inserted in the schedule under PMLA vide Section 13 of the Prevention of Money Laundering (Amendment) Act, 2009 (w.e.f. 06.03.2009) and that in the scheduled o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that this Tribunal is bound by the judgment passed by the Territorial Jurisdictional High Court and further submitted that since this Tribunal is situated in Delhi so the judgment of Hon ble High Court Delhi is binding and not the decision of the other High Court. The learned counsel for the appellant has placed on relying following judgments:- (i) J. Sekar v/s. Union of India Ors. 2018 SCC OnLine Del 6523. (ii) Sita Ram Khemka v/s. K.K. Banerji Ors. MANU/UP/0038/1958. (iii) Astik Dyestuff (P) Limited v/s. Commissioner of Central Excise Customs, MANU/GJ/1062/2013. (iv) Income Tax officer, Ward-8(4), Ahmedabad v/s Upkar Retail Private Limited, 2018 SCC Online ITAT 12911. Respondent s Case in brief:- On the other hand, the Respondent in their pleadings through reply to the appeal before this Tribunal, inter-alia, submitted that the ECIR was registered on the basis of three FIRs against Deepak Sakharam Kulkarni, Smt. Hemanti Deepak Kulkarni, Shirish Deepak Kulkarni and DSK Group of Companies/Partnership firms under Sections 406, 420, 34 of IPC and Section 3 4 Maharashtra Protection Interests of Depositors (MPID) Act, 1999 and that these perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money laundering as described above if are not attached immediately under first proviso of Section 5(1) of Prevention of Money Laundering Act, 2002 and if the accused transfers these properties without the knowledge/intimation to this agency during the investigation under PMLA, then these properties would have been concealed, transferred or dealt with in any manner which could have resulted in frustrating the proceedings relating to confiscation of such properties involved in money laundering. Thus all the action taken in this regard was within the ambit of statutory provisions of law. Further investigation under PMLA with regard to further siphoning off funds and properties derived out of the same is on. It is also pleaded in the reply that out of the total proceeds of crime in the present case amounting to ₹ 1129.46 Crores, attachment of properties till date is for ₹ 909.10 Crores only and the balance proceeds of crime are yet remaining to be attached. In addition to above, the Respondent has filed a voluminous reply, the salient points of the reply in brief are as below:- (a) The investigation revealed that the offences were committed during the period 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 the Respondent made submission with respect to reasons to believe which is a repetition of what is stated above. However it is to mention here that the appellant has relied on the following judgments to substantiate its submission on this legal point. (i) Three Judge bench of Hon`ble Supreme Court in the case of S. Narayanappa Vs. The Commissioner of Income-tax reported in AIR 1967 SC 523. (ii) Dr. Partap Singh and Another versus Director of Enforcement, Foreign Exchange Regulation Act and others reported in (1985) 3 SCC 72 (iii) Hon`ble Supreme Court in the case of Calcutta Discount Company v. Income Tax Officer reported in 1961 SCR (2) 241 (iv) Presidency Talkies Ltd., ... vs First Addl. Income-Tax Officer reported in AIR 1954 Mad 872, Division bench of the Hon`ble Supreme Court (v) Brizo Reality Company Pvt. Ltd versus Aditya Birla Finance Ltd. - MANU/MH/0845/2014, Hon`ble Bombay High Court (vi) Gautam Khaitan another versus Union of India another - 2015 Supreme (Del) 165), the Delhi High Court (vii) Madurai bench of Madras High Court in the case of G. Gopalakrishnan vs The Deputy Director vide its order dated 03.01.2019 in W.P.(MD) Nos.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings before the Adjudicating Authority and filed substitution application on 04.07.2019 seeking its substitution in place of M/s. Bajaj Finance Ltd. and further sought time to file its reply to the complaint. It is revealed from the paper that only one day time was granted to the appellant to file reply which was complied on the next day i.e. 05.07.2019. Even the appellant argued the matter on 18.07.2019. It is also revealed that on 23.07.2019 the appellant had filed written synopsis alongwith compilation of judgments. In the Appeal Memo at paras 3(viii) to 3(xv), the appellant has explained the details of how it was prevented from auctioning the property till the passing of the impugned order and other sequences. The same are reproduced below for convenience:- (viii) That subsequently the appellant herein has issued a notice dated 15.05.2019 for sale of the mortgaged properties by e-auction under relevant provisions of SARFAESI Act read with, which was scheduled to take place on 20.06.2019. However, a few days prior to the said auction, a notice dated 31.05.2019 issued by the Deputy Director, Directorate of Enforcement, Mumbai Zone, was received by the Appellant on 10.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present appellant by the Ld. Adjudicating Authority, the present Appellant has filed its reply to the original complaint and a copy of the same was served upon the Advocate of the Respondent through e-mail on 05.07.2019. Copy of the objections/reply filed by the present appellant to the complaint filed by the Respondent is annexed herewith and marked as Annexure-K while the copy of proof of service of the reply on the advocate for the Respondent is annexed herewith. (xii) That the Respondent/Directorate of Enforcement has filed a rejoinder to the reply of present appellant. Copy of rejoinder filed by the Respondent/Directorate of Enforcement was supplied to office of Advocate of the present appellant through email on 15.07.2019. Copy of the rejoinder filed by the respondent before the Adjudicating Authority is annexed herewith. (xiii) That the final arguments before the Ld. Adjudicating Authority took place on 18.07.2019 wherein the present appellant specifically brought it to the notice of the Ld. Adjudicating Authority that the attempts have been made by the Respondent/Directorate of Enforcement to apply the provisions of Prevention of Money Laundering Act, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of said loan account, appellant has become secured creditor qua said property. RR. Because the Adjudicating Authority has failed to consider all relevant facts and grounds mentioned in the reply/objection filed by the appellant and has proceeded to pass the impugned attachment order which infact is without reasoning qua the property mortgaged with the appellant. As per the submission of appellant it appears that no order on appellant s application for substitution has been passed nor the contention raised in the reply, oral arguments advanced and the written submissions filed by the appellant is found placed in the impugned order. The Adjudicating Authority in the internal page 306 to 311 of the impugned order has reflected only the reply/written submissions filed on behalf of Defendant No. 58 i.e. (M/s. Bajaj Finance Limited) wherein it is specifically mentioned in internal page no. 311 para (ix) that the present appellant has been assigned with the loan account and Bajaj Finance Co. Ltd. no longer has any rights, title interest in the Mumbai properties. Inspite of all the above the Adjudicating Authority neither passed any order of substitution of substituting the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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