2017 (10) TMI 567 - AT - Money Laundering

Appeal outcome: Adjudicating Authority to decide after hearing. Parties to appear by 10th Oct. Final order within 180 days.

The Tribunal concluded that the issues should be decided by the Adjudicating Authority after a hearing. The appeal was disposed of with a direction for ... Insolvency and Bankruptcy procedure - provisional attachment order - maintainability of petition - Held that:- The provisional attachment order not be interfered with by this Tribunal as validity of the provisional attachment order is to be determined by the Adjudicating Authority, who has the competent jurisdiction to decide the issue. Accordingly the appeal is not maintainable before this Tribunal We are of the view that the above submission of learned Mr. Pankaj Vijayan, IRP has a force . However, we are of the view that all the issues raised by the parties are to decided by the Adjudicating Authority after hearing. Under these circumstances, the present appeal is disposed of with the direction that the parties shall appear before the Adjudicating Authority on 10th October, 2017, the date already fixed. The Adjudicating Authority shall hear all the parties on all the issues raised by the appellant and Mr. Pankaj Vijayan, IRP before us and pass the final order but positively before expiry of 180 days from the date of PAO. Issues Involved:1. Nature of proceedings under Sections 5 and 8 of PMLA.2. Overriding effect of Insolvency and Bankruptcy Code, 2016 over PMLA, 2002.3. Validity and jurisdiction of the provisional attachment order by the Enforcement Directorate.4. Compliance with procedural directions issued by higher authorities.Detailed Analysis:1. Nature of Proceedings under Sections 5 and 8 of PMLA:The appellant argued that the proceedings under Sections 5, 8, and 17 of the PMLA are civil in nature, referencing a Gujarat High Court order which stated, 'The main purpose of Section 5 appears to be provisional attachment of the properties where prosecution is intended.' It was emphasized that the legislative intent indicates that the Adjudicating Authority under Section 8 is authorized to undertake civil proceedings and adjudicate accordingly. The appellant contended that since the proceedings are civil, para 14 of the NCLT’s order, which excludes the moratorium's application to criminal proceedings under PMLA, should not apply.2. Overriding Effect of Insolvency and Bankruptcy Code, 2016:The appellant further argued that the Insolvency and Bankruptcy Code, 2016 (IBC) is a special act with an overriding effect over the PMLA, 2002. Citing Supreme Court precedent, it was argued that 'the later enactment would prevail with a non-obstante clause,' as seen in the case of Solidaire India Ltd. v. Fair Growth Financial Services Ltd. The appellant maintained that since the IBC is a subsequent statute, it should take precedence, and the provisional attachment order by the Enforcement Directorate should be set aside to comply with the NCLT’s order.3. Validity and Jurisdiction of the Provisional Attachment Order:The IRP’s counsel agreed that the IBC has an overriding effect over PMLA but argued that the validity of the provisional attachment order should be determined by the Adjudicating Authority with competent jurisdiction. The IRP suggested that the appeal should not be maintainable before the Tribunal and should instead be filed by the IRP, who has already submitted a reply to the provisional attachment order for consideration on merits by the Adjudicating Authority.4. Compliance with Procedural Directions Issued by Higher Authorities:The Tribunal noted that despite its direction to adjourn the matter after 5th October 2017, the Adjudicating Authority proceeded to hear the matter. The Tribunal emphasized that the Adjudicating Authority must follow directions issued by higher authorities carefully in the future.Conclusion:The Tribunal concluded that the issues raised by the parties should be decided by the Adjudicating Authority after a hearing. The present appeal was disposed of with a direction for the parties to appear before the Adjudicating Authority on 10th October 2017. The Adjudicating Authority was instructed to hear all parties on the issues raised and pass a final order before the expiry of 180 days from the date of the Provisional Attachment Order (PAO). The appeal and miscellaneous applications were accordingly disposed of, and a specific line from the last order dated 26th September 2017 was deleted with the consent of the parties. Copies of the order were provided to both parties.