Tribunal quashes attachment order, upholds bank's right as secured creditor, protecting properties from criminal allegations.

The tribunal set aside the impugned order and quashed the provisional attachment order regarding the bank's mortgaged properties. It affirmed the bank's right to recover its dues as a secured creditor, emphasizing that the properties were not linked to the alleged criminal activities. The tribunal highlighted the need to safeguard the banking system from unjustified encumbrances, allowing the bank to proceed with recovery efforts while maintaining the borrowers' liability under the law.

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Issues Involved:
1. Legality of the attachment of properties mortgaged to the bank.
2. Priority of secured creditors under SARFAESI Act and RDDBFI Act.
3. Applicability of non-obstante clauses in conflicting statutes.
4. Bank's entitlement to recover dues from mortgaged properties.
5. Bank's role and connection with alleged money laundering offenses.

Detailed Analysis:

1. Legality of the attachment of properties mortgaged to the bank:
The appellant, Union Bank of India, challenged the order dated 24th April 2018 by the Adjudicating Authority, which affirmed the attachment of properties mortgaged to the bank. The properties were mortgaged in 2011, well before the alleged offenses during demonetization in 2016. The bank argued that these properties could not be considered proceeds of crime as they were acquired before the alleged criminal activities.

2. Priority of secured creditors under SARFAESI Act and RDDBFI Act:
The tribunal emphasized that the bank, as a secured creditor, has priority over all other debts and government dues under the amended Section 26E of the SARFAESI Act and Section 31B of the RDDBFI Act. These provisions, effective from 16.08.2016, grant secured creditors precedence in recovering their dues from the sale of mortgaged assets.

3. Applicability of non-obstante clauses in conflicting statutes:
The tribunal referred to the principle established by the Supreme Court in Solidaire India Ltd. vs. Fairgrowth Financial Services Ltd., where it was held that the non-obstante clause in the later enactment prevails over the earlier one. Thus, the non-obstante clauses in the SARFAESI Act and RDDBFI Act take precedence over the PMLA, ensuring the bank's priority in recovering its dues.

4. Bank's entitlement to recover dues from mortgaged properties:
The tribunal reiterated that the bank is entitled to recover its dues from the mortgaged properties under the SARFAESI Act and RDDBFI Act. The properties were mortgaged as security for loans, and the bank had initiated proceedings under these acts to recover the outstanding amounts. The tribunal noted that the properties were legally transferred to the bank, and the Directorate of Enforcement had no lien over them.

5. Bank's role and connection with alleged money laundering offenses:
The bank maintained that it had no connection with the alleged offenses under the Prevention of Money Laundering Act (PMLA). The tribunal supported this stance, stating that the bank is an innocent party that lent money in good faith and is now seeking to recover its dues. The mortgaged properties were not acquired from the proceeds of crime, and the bank's actions were in line with its recovery policy and RBI guidelines.

Conclusion:
The tribunal set aside the impugned order dated 24.04.2018 and quashed the provisional attachment order concerning the bank. It clarified that the bank's prayer was limited to the attachment of mortgaged properties, and proceedings against the borrowers could continue as per the law. The bank, as a secured creditor, has the right to recover its dues from the mortgaged properties, which were not acquired from the proceeds of crime. The tribunal emphasized the importance of protecting the banking system and ensuring that financial institutions are not prejudiced by unwarranted attachments.

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