Court permits bank to sell property under PAO due to COVID-19 impact, upholding SARFAESI Act rights.

The court allowed the petitioner, a bank, to proceed with the sale of an immovable property challenged under a Provisional Attachment Order (PAO). Emphasizing the urgency to recover loan amounts in public interest due to the COVID-19 pandemic's economic impact, the court permitted the sale to proceed with a proposed buyer. The petitioner's priority rights as a secured creditor under the SARFAESI Act were recognized, and the court addressed jurisdictional issues related to the Adjudicating Authority (PMLA). Additionally, a separate judgment directed the petitioner to establish the property's innocence regarding money laundering allegations before the Adjudicating Authority.

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Issues involved:
The challenge to the Provisional Attachment Order (PAO) dated 2nd September, 2019 regarding the sale of an immovable property, ownership dispute, priority rights of a secured creditor under the SARFAESI Act, jurisdiction of the Adjudicating Authority (PMLA), and the impact of the COVID-19 pandemic on the economy.

Ownership Dispute:
The petitioner, a bank, challenged the PAO concerning the sale of an immovable property owned by individuals and mortgaged with the petitioner. The petitioner argued that the property was purchased and mortgaged before the allegations of money laundering arose against the purchasers. The court allowed the petitioner to sell the property, emphasizing the urgency to recover the loan amount in public interest due to the impact of the pandemic on the economy. The court also noted that the petitioner had conducted valuations of the property and permitted the sale to proceed with a proposed buyer.

Priority Rights of Secured Creditor:
The petitioner claimed to be a secured creditor under the SARFAESI Act, asserting priority rights over the subject property. The respondent contended that the property could not be released without an order from the Special Judge, PMLA, citing Section 8(8) of the PMLA. The court considered the statutory position and the petitioner's grounds for challenging the attachment order, highlighting the need for recovery of loan amounts and public interest. The court allowed the sale of the property by the petitioner to proceed with a proposed buyer.

Jurisdiction of Adjudicating Authority (PMLA):
The court addressed the jurisdiction of the Adjudicating Authority (PMLA) in dealing with the subject property, which was purchased and mortgaged before the FIR registration that led to the PAO. The court permitted the petitioner to finalize the sale of the property, emphasizing the urgency to recover loan amounts in light of the economic impact of the pandemic. The court noted the valuations conducted by the petitioner and allowed the sale to proceed with a proposed buyer.

Impact of COVID-19 Pandemic:
Acknowledging the economic impact of the COVID-19 pandemic, the court emphasized the urgent need for banks to recover loan amounts from defaulters. The court allowed the petitioner to sell the subject property to recover the loan amount, considering the valuations conducted and the willingness of a proposed buyer to purchase the property at a specified price. The court directed the petitioner to finalize the sale through a private treaty and subject to court orders regarding the utilization of sale proceeds.

Separate Judgement Highlight:
A separate judgment was delivered by the court, allowing the petitioner to proceed with the sale of the subject property and directing the matter to proceed before the Adjudicating Authority under the provisions of the PMLA Act, 2002. The petitioner was granted the opportunity to file an application before the Adjudicating Authority to establish that the subject property was not involved in money laundering activities and was purchased before the allegations arose. The respondent, Directorate of Enforcement, was directed to take necessary steps post the passing of the PAO regarding the petitioner. The time spent in the writ petition was excluded for calculating the limitation period under the PMLA Act, 2002.

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