2018 (9) TMI 191 - AT - Money Laundering

Court Condoned Appeal Delay, Imposed Costs, Maintained Status Quo

ICICI Bank Versus The Joint Director Directorate of Enforcement, Hyderabad

The court condoned the delay in filing the appeal, imposed a cost of Rs. 20,000 on the appellant bank, and directed both parties to maintain the status ... Prevention of Money Laundering - provisional attachment - no notice under section 8(1) or 8(2) has been issued - right of the bank as involved already initiated action under the SARFAESI Act - Held that:- There is no denial that the Respondent No. 1 and the Adjudicating Authority failed to issue notice to the Appellant or to afford a hearing to her, during the adjudication proceedings. Thus, the Respondent No. 1 and the Adjudicating Authority have failed to comply with the mandatory statutory requirement of the Proviso to Section 8(2), PMLA. It is not understood why the requisite notice was not issued by the respondent no. 1 and Adjudicating Authority. Despite being Appellant’s claim, Respondent No. 1 failed to fulfill its statutory duty. In the present case, admittedly, no notice under section 8(1) or 8(2) has been issued. No opportunity was given to the appellant bank who was also not made party in the complaint under section 5(5) of the Act despite of having the knowledge by the respondent as well as the adjudicating authority. The provisional attachment order would show that the respondent was fully aware that the said property is mortgaged with the appellant bank. It is immaterial if the borrower bank in the SARFAESI Act proceeding has informed that the bank was aware about the attachment order in 2010. As a matter of fact, as per the mandatory provision, it was the duty by the respondent to inform the joint owner or the complainant about the proceeding initiated against the borrower so that the claimant or the joint owner can take his stand and clarify the position before the authority. This thing has not happened in the present case. The substantial right of the bank is involved as the bank has already initiated action under the SARFAESI Act and order under section 13(4) has been passed, it has become necessary to hear the appeal on merit. Such delay, in fact, has happened due to non-compliance of the provisions by respondent no. 1. The same cannot be attributed to the appellant. Issues Involved:1. Delay in Filing the Appeal2. Attachment of Property3. Compliance with Statutory Notice Requirements4. Substantial Rights of the Appellant Bank5. Costs Imposed for DelayIssue-wise Detailed Analysis:1. Delay in Filing the Appeal:The appeal was filed against the Order dated 12.08.2010, with a delay of 54 days as per the appellant. However, the respondent argued that the delay was over 7 years, as the appellant was aware of the attachment order since 2010. The appellant cited various dates and actions taken, including legal remedies pursued under the SARFAESI Act and a writ petition filed in 2016. The court acknowledged the delay but attributed it to the respondent's failure to comply with statutory provisions, thus condoning the delay subject to a cost of Rs. 20,000.2. Attachment of Property:The appeal pertains to the attachment of a specific property located at Nandagiri Hills Layout, Hyderabad, valued at Rs. 1,66,10,048. The property was mortgaged to the appellant bank, and the attachment was part of a provisional attachment order issued by the respondent. The appellant argued that it was not properly informed about the attachment, affecting its rights as a mortgagee.3. Compliance with Statutory Notice Requirements:The court highlighted the mandatory provisions under Section 8(1) and 8(2) of the PMLA, which require serving notice to all interested parties and providing an opportunity to be heard. The respondent and the Adjudicating Authority failed to issue notice to the appellant bank, despite knowing its claim on the property. This non-compliance was deemed a significant oversight, as the appellant was a joint owner/interested party under the law.4. Substantial Rights of the Appellant Bank:The appellant bank had initiated action under the SARFAESI Act and obtained an order under Section 13(4). The court recognized the bank's substantial rights in the mortgaged property, emphasizing that the failure to issue statutory notice deprived the bank of its right to contest the attachment. The court found it necessary to hear the appeal on merits due to the substantial rights involved.5. Costs Imposed for Delay:The delay of 54 days in filing the appeal was condoned, but the court imposed a cost of Rs. 20,000 on the appellant bank, payable to the respondent's counsel. This cost was imposed due to the procedural delay, although attributed to the respondent's non-compliance with statutory duties.Conclusion:The court condoned the delay in filing the appeal, imposed a cost of Rs. 20,000 on the appellant bank, and directed both parties to maintain the status quo regarding the attached property. The matter was listed for final disposal on 8th October 2018, with instructions for both parties to file written submissions. The judgment emphasized the importance of complying with statutory notice requirements and recognized the substantial rights of the appellant bank in the mortgaged property.