PMLA attachment and SARFAESI enforcement can coexist where prior mortgage rights are protected and surplus value is preserved.

Mortgaged property attached as value property under the PMLA may, in appropriate facts, still be enforced by a secured creditor under SARFAESI where the bank's security interest predates the offence period. The attachment does not automatically bar auction before trial if the secured creditor's rights can be protected and no useful purpose would be served by delaying enforcement. The surplus remaining after satisfaction of the bank's dues must be preserved for the enforcement authority, and prior notice must be given to the co-mortgagee. The decision balances money-laundering attachment with secured creditor enforcement rights.

---

---

Issues: Whether mortgaged properties attached under the Prevention of Money Laundering Act, 2002 could be permitted to be auctioned by the secured creditor for recovery of its dues before conclusion of the trial, and whether the secured creditor's rights under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 could be given effect to in the facts of the case.

Analysis: The attachment was treated as attachment of value property, and it was recognised that property in possession of the accused or connected persons may be attached even if direct proceeds of crime are not traced. At the same time, the properties were mortgaged to the appellant bank long before the relevant offence period, and no useful purpose would be served by requiring the bank to await the end of trial before enforcing its security. The secured creditor was therefore permitted to proceed under the SARFAESI mechanism, with the safeguard that any surplus remaining after satisfaction of its dues would be deposited with the enforcement authority by way of fixed deposit receipt, and prior notice would be given to the co-mortgagee.

Conclusion: The mortgaged properties were allowed to be auctioned by the appellant bank in accordance with SARFAESI, subject to deposit of the surplus with the enforcement authority and notice to the co-mortgagee.

Ratio Decidendi: A mortgaged property attached as value property under the prevention of money laundering regime may, in appropriate facts, be permitted to be enforced by the secured creditor under SARFAESI where the bank's security predates the offence period and the interests of justice are protected by preserving the surplus for the enforcement authority.

---