Tribunal Upholds Bank's Priority in Appeal, Excludes Period for Insolvency Resolution Process

The Tribunal set aside the impugned order and Provisional Attachment Order, allowing the appeal. It emphasized the Appellant Bank's priority as a secured creditor over the mortgaged property and the need to stay PMLA proceedings during the NCLT's moratorium. The Tribunal excluded the proceeding period from the limitation period calculation for the Corporate Insolvency Resolution Process.

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Issues Involved:
1. Legality of the Provisional Attachment Order (PAO) under PMLA.
2. Priority of Secured Creditors over other debts under SARFAESI Act and RDDBFI Act.
3. Impact of Moratorium under IBC on proceedings under PMLA.
4. Adjudicating Authority's power and jurisdiction under PMLA.

Detailed Analysis:

1. Legality of the Provisional Attachment Order (PAO) under PMLA:
The Appellant Bank challenged the PAO No. 03/2018 dated 28.03.2018, confirmed by the Adjudicating Authority on 17.09.2018, arguing that the attached property was hypothecated/equitably mortgaged to the bank and not acquired through "proceeds of crime." The Tribunal highlighted that the bank's money was "untainted and pure," and the Adjudicating Authority failed to establish a nexus between the alleged criminal activity and the hypothecated properties.

2. Priority of Secured Creditors over other debts under SARFAESI Act and RDDBFI Act:
The Tribunal emphasized that under Section 26E of SARFAESI Act and Section 31B of RDDBFI Act, secured creditors have priority over all other debts and government dues. The Tribunal referred to the Supreme Court's ruling in Solidaire India Ltd. vs. Fairgrowth Financial Services Ltd., which held that the non-obstante clause in the later enactment prevails over the earlier one. Consequently, the Appellant Bank, being a secured creditor, had a priority claim over the mortgaged property.

3. Impact of Moratorium under IBC on proceedings under PMLA:
The Tribunal noted that the NCLT Mumbai had declared a moratorium against the Respondent No.2 Company under Section 14 of the IBC, 2016, which prohibits the continuation of pending suits or proceedings against the corporate debtor. The Tribunal held that the Adjudicating Authority should have stayed the proceedings under PMLA following the moratorium order and that the continuation of such proceedings was contrary to the intention of the legislature.

4. Adjudicating Authority's power and jurisdiction under PMLA:
The Tribunal criticized the Adjudicating Authority for confirming the PAO despite the bank's secured creditor status and the absence of any charge of money laundering against the bank. The Tribunal reiterated that the Adjudicating Authority has no power to confirm the attachment of properties that are not "proceeds of crime" as defined under Section 2(1)(u) of PMLA. The Tribunal also highlighted that the Adjudicating Authority is bound by the law laid down by higher courts and should not ignore established legal precedents.

Conclusion:
The Tribunal set aside the impugned order dated 17.09.2018 and the PAO No. 03/2018, allowing the appeal. The Tribunal emphasized that the Appellant Bank, being a secured creditor, has priority over the mortgaged property and that the proceedings under PMLA should have been stayed following the NCLT's moratorium order. The Tribunal also excluded the period of continuation of proceedings before the Adjudicating Authority and the Tribunal from the date of commencement of the moratorium order while calculating the limitation period for the Corporate Insolvency Resolution Process.

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