2020 (9) TMI 1030 - HC - Money Laundering

Court allows transfer to National Housing Bank, pending final decision; funds attached subject to further proceedings.

The court maintained the petitioner's challenge to the Provisional Attachment Order but allowed the transfer of a significant amount to the National ... Provisional attachment order - assets in respect of which the said attachment order has been passed are certain fixed deposits - said fixed deposits are currently lying with the HDFC Bank - HELD THAT:- In the peculiar facts and circumstances of this case where the amount, if frozen or attached, would continue to remain under the custody of the ED, this Court deems it appropriate to direct the said amount of ₹ 42,85,32,698.63/- from the provisionally attached bank account to be transferred to the account of the NHB by the HDFC Bank. Remaining amounts provisional attachment order shall continue and the Petitioner would be free to agitate its pleas before the Adjudicating Authority under the PMLA. Payment to the NHB shall be a pro-tem measure in the peculiar facts and shall abide by the final orders of the Adjudicating Authority. If the Adjudicating Authority finally determines that the said amount ought to be paid back to the ED, the NHB shall abide by the said order and shall re-deposit the said amount within a period of six weeks after the passing of the order by the Adjudicating Authority, subject to any orders passed by a superior court/tribunal. If refund is ordered by the adjudicating authority, no interest shall be payable by the NHB. Only the principal amount which is being transferred from the HDFC Bank to the NHB would be liable to be put back into the ED’s account. Amount received from the HDFC Bank shall be credited by the NHB in the account of the Petitioner and if the Adjudicating Authority passes an order for re-deposit of the amount, the same shall be debited from the Petitioner’s account. Issues:Challenge to Provisional Attachment OrderAnalysis:The petitioner sought quashing of a Provisional Attachment Order relating to fixed deposits amounting to Rs. 51,85,94,086.78. A significant portion of this amount was to be repaid to the National Housing Bank (NHB). The Directorate of Enforcement (ED) contended that the writ was not maintainable as per previous orders. The petitioner acknowledged the amount's ownership by NHB and requested the transfer of this sum to avoid increased liabilities. NHB confirmed the amount's origin and purpose for further funding in the housing sector.The court acknowledged ED's objection but clarified that the petition was maintainable. It was inclined to quash the attachment order, with an exception for the amount belonging to NHB. The court directed the transfer of Rs. 42,85,32,698.63 from the attached account to NHB's account maintained by HDFC Bank. The remaining amounts stayed attached, allowing the petitioner to present arguments before the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA).The court emphasized that the payment to NHB was a temporary measure, subject to the Adjudicating Authority's final decision. If the Authority directed repayment to ED, NHB was to redeposit the amount within six weeks without interest. The principal amount transferred to NHB from HDFC Bank would be returned to ED if required. NHB was to communicate bank details promptly for the transfer.The petitioner was to be involved in attachment proceedings before the Adjudicating Authority and given a chance to present their case. The court clarified that it did not delve into the attachment order's merits or the underlying disputes, leaving all rights and remedies open for the parties involved. The petition and related applications were disposed of with these directives.