2017 (11) TMI 1499 - AT - Money Laundering

Tribunal overturns Adjudicating Authority's order under PMLA Act

The Tribunal allowed the appeal against the Adjudicating Authority's order under the PMLA Act. It found the appellant's case similar to a previous case ... PMLA proceedings against banks - bonafide conduct of banks - attached property was purchased much prior to the period when the facility of offending loans were sanctioned to the borrowers - Held that:- As decided in State Bank of India and Ors. Vs. The Joint Director, Directorate of Enforcement, Kolkata [2017 (8) TMI 754 - ATPMLA] at somewhat similar situation held that in the conduct of the banks are always bonafide. Both banks are innocent parties. There is no nexus whatsoever between the alleged crime and the two bank who are mortgagee of all the properties which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority to the secured creditors to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The said Judgment passed by us has not been considered and followed by the Adjudicating Authority. It is a very serious matter. The Authority is supposed to give due respect to the judgment of the higher Authority and Courts. Issues:- Appeal against order passed by Adjudicating Authority under PMLA Act- Non-consideration of Tribunal's judgment by Adjudicating AuthorityAnalysis:1. The appeal was filed under section 26 of the PMLA Act against the order dated 13.09.2017 passed by the Adjudicating Authority. The appellant's case was found similar to a previous case decided by the Tribunal, where it was established that the attached properties were purchased before the offending loans were sanctioned, and the banks were not involved in the scheduled offense. The Tribunal emphasized that the mortgaged properties, being security for loans, should not be subject to attachment when purchased prior to the events of fund diversion and fraud by the borrowers.2. The Tribunal expressed concern that its previous judgment was not considered or followed by the Adjudicating Authority, highlighting the importance of respecting higher authorities' decisions. The Authority failed to discuss the judgments of the Supreme Court and High Courts, which were referred to in the Tribunal's decision. It raised a serious issue of non-compliance with judgments from higher courts and the Tribunal, emphasizing the need for consultation with legal members before disregarding such precedents.3. The Tribunal noted that the member who passed the impugned order was not a judicial member and should have consulted at least the legal member before ignoring judgments from higher authorities. The respondent accepted the notice and requested time to file a reply, which was granted. The appeal was scheduled for final disposal on 15th January, 2018, with the operation of the impugned order stayed in the appellant's case until then.4. The Tribunal directed the copy of the order to be sent to the Ministry and provided 'Dasti' copies to both parties. The issues raised in the appeal highlighted the importance of adherence to legal precedents and the need for proper consideration of judgments from higher authorities to ensure fair and just decisions in matters under the PMLA Act.