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2017 (8) TMI 754
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.... Bansal Member For the Appellant : Shri S.L. Gupta, Advocate For the Respondent : Shri N.K. Matta, Advocate JUDGEMENT FPA-PMLA-1026/KOL/2015, FPA-PMLA-1072/KOL/2015, FPA-PMLA- 1153/KOL/2015, FPA-PMLA-1148/KOL/2015, FPA-PMLA-1149/KOL/2015, FPA-PMLA-1150/KOL/2015, FPA-PMLA-1151/KOL/2015, FPA-PMLA-1152/KOL/2015, FPA-PMLA-1154/KOL/2015, FPA-PMLA-1155/KOL/2015 & FPA-PMLA-1156/KOL/2015, 1. By this common single Judgement we propose to decide the above- mentioned appeals as the facts and legal issues in all the appeals are connected with each other. 2. The brief relevant facts are that:- (a) on the basis of written complaint filed by Chief Vigilance Officer. Union Bank of India, Central Office, Union Bank of India, Union Bank Bhawan, 239, Vidhan Bhawan Marg, Mumbai-400021 vide reference no. VIG/NKA/RCEZ-PC-94/937 dated 1st September, 2009, Central Bureau of Investigation, BS&FC, Kolkata registered FIR No. RCBSK2009E008 against the following accused persons under section 120B read with Section 420, 409 of IPC Section 13(2) read with 13(1)(c ) & (d) of Prevention of Corruption Act. (i) Shri S. Govindan, the then Dy. GM, Nodal Regional Office, Union Bank of India, Kol....
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....IR/41/2009/Kol/PMLA dt. 23.12.2009 on the basis of CBI"s FIR, under PMLA, 2002 since the offence under Section 420 & 120B of IPC are Scheduled offences as mentioned in section 2(1)(y) of PMLA, 2002 (as amended). 5. The ED investigated the case and issued Provisional Attachment Order (PAO) dt. 04.02.2015 with the attachment of 08 (eight) Nos. of immovable properties concluding that these properties are involved in money laundering. 6. The Respondent/Department, based on the material collected and with reasonable belief recorded in writing, has issued the Provisional Attachment Order on 04.02.2015 under sub-Section (1) of Section 5 of the PMLA in respect of the immovable properties, as detailed below, to the tune of Rs. 10.82 Crore. Immoveable Properties S. No. Name of Property Year of possession Attached with the company Value 1. Flat No. 9C, Paramount Building, 25, Ballygunge Circular Road, Kolkata- 700 019 2000 Flat owned by Shri Bharat Jain, Director of M/s. Nik Nish Retail Ltd. and other companies Rs. 56 lakhs 2. Flat No. 9D, Paramount Building, 25, Ballygunge Circular Road, Kolkata- 700 019 (Area: 3215 Sq. ft.) 2000 Flat owned ....
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....as well as in the complaint before the Ld. Adjudicating Authority has admitted and acknowledged that the properties at Serial No. 1 to 5 which are mortgaged with the appellant bank i.e. State Bank of India were acquired and possessed by the respective owners since 2000 which is much before the respondents availed the loan from Union Bank of India and therefore no proceeds of crime are invested in these properties and even prior to the coming in force of the Act of 2002. Serial no. 6-8 are mortgaged with Union Bank of India. 10. The provisional attachment orders were confirmed by the impugned order dated 02.07.2015. The order is challenged by banks as well as the borrowers on various grounds by filing of above-referred relevant appeals. The borrowers are also arrayed as respondents in the appeals filed by the two banks as mentioned in serial no. 1 and 2. The appeals at serial no. 2 to 11 are independently filed by the borrowers challenging the impugned orders. 11. State Bank of India The appellant at serial no. 1 i.e. State Bank of India has filed the above appeal u/s 26 of the Money Laundering Act, 2002 against the order dated 22nd July, 2015 in OC No. 421/2015 passed by t....
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....o the tune of Rs. 14.15 Crores. (ix) The Union Bank of India filed the complaint with the Central Bureau of Investigation against Shri Bharat Jain, Shri Pradeep Kumar Hirawat, Shri Pawan Kumar Jain, Smt. Neera Bhojnagarwala and the officer of the Union Bank, Shri S. Govindan. In the complaint the allegations were that the accused persons had availed various credit facilities/overdrafts from Union Bank of India in the names of their various concerns. The loan amount was withdrawn on transferred to the accounts maintained with the Appellant/State Bank of India; the amounts diverted to the accounts of the Sister concerns; the limits sanctioned to M/s Nik Nish Retails Ltd., M/s Vishi Commercial Pvt. Ltd. and M/s NB Services E.com to the benefit of Shri Bharat Jain of M/s Nik Nish Retail Ltd. have all turned NPA and from the investigation that Shri Bharat Jain in active connivance with Shri S. Govindam, diverted the bank"s funds through his connected accounts and outstanding in the accounts, where credit facilities are sanctioned as on 23.07.2009 was claimed as Rs. 1428.24 lacs. (x) On the registration of the FIR by CBI and further investigations the Respondent no. 1 also recorded....
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....oan, the mortgage of the properties has been created in favour of the Bank. The ED has attached the property at Serial No. 1 owned by Sh. Bharat Jain. This property is mortgaged with the Bank in the Loan Account of M/s Bansilal Leisure Park Ltd. M/s Bansilal Leisure Park Ltd. was availing the loan/credit facility from Central Bank of India. They approached the Appellant/State Bank of India for sanctioning of the credit facilities and take over the Loan/ Credit facilities from State Bank of India. The Appellant/State Bank of India on 11.05.2005 has sanctioned the limits. The question of money-laundering or any amount paid by it as proceeds of crime does not arise within the meaning of Section 3 of the Act. 15. Union Bank of India The above mentioned appeal in serial no. 2 has been filed by the Union Bank of India under section 26 of Prevention of Money Laundering Act, 2002 against the order dated 2nd July, 2015 in O.C. No. 421/2015 passed by the Adjudicating Authority thereby upholding the Provisional Attached Order dated 4th February, 2015. 16. The Appellant Bank i.e. Union Bank of India who is appellant in appeal no. 1072/2015 provided the following loan facilities in the....
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....ant is concerned with properties at serial no. 6-7 attached vide provisional attachment orders on which it claims mortgage. 18. In view of default in repayment of loan, the said appellant bank issued two different notices under section 13(2) of the SARFAESI Act, 2002. 18.1 The first notice under section 13(2) of the SARFAESI Act, 2002 dated 26.02.2009 bearing reference no. NRO:KOL:CRLD:2266-A was issued to M/s MSB Mercantiles Pvt. Ltd. and M/s N.B. Services E.Com through its proprietor Ms. Neera Bhojnagarwala in reference to A/c No. 301506310008018 whereby the appellant bank demanded an amount of Rs. 1,56,66,812.00 together with interest till the date of realization from the respondents and their companies within 60 days failing which it was apprised that the appellant shall take steps under section 13(4) of the SARFAESI act including taking of possession of the mortgaged properties. 18.2. The second notice under 13(2) of the SARFAESI Act, 2002 dated 09.10.2009 bearing reference no. adv:erza:506103:09 was issued to M/s Nick Nish Retail Ltd. as well as M/s Akhil Orchards Pvt. Ltd. and M/s Bansilal Credits Pvt. Ltd. whereby the appellant bank demanded an amount of Rs. 10,28,....
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....nd other credit facilities and laundered a huge sum of money. 19. Case of borrowers The main case of the borrowers in appeals no. FPA-PMLA-1026/KOL/2015, FPA-PMLA-1072/KOL/2015, FPA-PMLA-1153/KOL/2015, FPA-PMLA-1148/KOL/2015, FPA-PMLA-1149/KOL/2015, FPA-PMLA-1150/KOL/2015, FPA-PMLA-1151/KOL/2015, FPA-PMLA-1152/KOL/2015, , FPA-PMLA-1154/KOL/2015, FPA-PMLA-1155/KOL/2015, FPA-PMLA-1156/KOL/2015, (who were also the respondents in the appeal filed by the banks i.e. State Bank of India and Union Bank of India) is that they obtained the loan from the two banks i.e. appellants at Sr. No. 1 & 2 and however as far as the attached properties Sr. No. 1 to 5 are concerned they admit that they were mortgage to the State Bank of India (SBI) towards loan provided by the SBI. These properties were not part of the collateral securities towards loan given by the Union Bank of India. With regard to properties at serial no. 6 to 8 it is stated that the property at serial no. 6 is a Flat which was given as a collateral security by M/s NB Services to the Union Bank of India. Properties at Serial no. 7 & 8 were given as collateral securities to the Union Bank of India against the loan obtained....
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....oods. Therefore, the question of the said amount being laundered does not arise. iii. M/s NikNish Retail Ltd. : An amount of Rs. 10 crore and Rs. 5 crore was obtained as CC and LC respectively. The allegations of the respondent that an amount of Rs. 9crore approx. was laundered stand fully nullified for the following reasons: a. It is a matter of record that an amount of Rs. 3.61 crore was paid to unsecured creditors who are neither family members nor relatives of the appellants in any manner. These transactions are normal business transactions; b. The unsecured loans at the time of sanction was Rs. 5.15 crore as on 31.03.2007 which increased to Rs. 7.16 crore on 31.03.2008. This shows that money has actually been infused and not withdrawn and allegations of the respondent to this effect do not survive. Infusion of the funds is duly reflected in the respective Balance sheets. It is pertinent to note that the Short Term loans / Inter corporate loans were obtained as and when required in order to meet the additional fund requirements of the appellants; c. As regards payments to M/s Bansilal Credit Ltd. / Eco Orchards, it is submitted that the payments were made towards....
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....sues for consideration before the Court. 19.5. It is also submitted that the alleged period of commission of scheduled offence is January- August 2008 as is evident from the FIR/Charge sheet filed by the CBI. Even the date of acquisition and possession of the attached properties is admittedly prior to 01.06.2009 i.e. date of inclusion of section 420 and 120B of IPC as scheduled offences. It is settled legal position that the provisions of PMLA cannot be given retrospective effect. Hence, the impugned order is also liable to be quashed and set aside on this ground alone. 20. It is stated by the counsel appearing on behalf of borrowers that since the account became irregular and was classified as NPA on 30.11.2008. These properties of Sh. Bharat Jain are mortgaged with the Bank since 11.05.2005 and even before this date, It was mortgaged with State Bank of India. This property has been acquired by Sh. Bharat Jain on 04.12.2001 i.e. much-much before the alleged date of crime. No money disbursed by the Union Bank of India from its Loan Accounts, has been invested in acquiring his property. Furthermore, the Appellant/State Bank of India had mortgaged charge over the property pr....
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....of the properties which shows about the date of acquisition. The alleged date of alleged if any is of subsequent dates, hence, it cannot be said that the claim in any manner that these properties has been acquired out of the funds/loans availed from Union Bank of India. There is no allegation even of diversion of funds to this Company. At para 6C of the Complaint, the ED has given a Chart of Diversion of Funds and the name of M/s Midvale Systems Pvt. Ltd. is not appearing therein. These properties, hence, cannot be attached. Even before the date of occurrence of crime, the Defendant State Bank of India already has charge over the properties. 24. In the case of properties of M/s Midvale Systems Pvt. Ltd., the mortgage charge in favor of the Bank is also duly recorded with the Registrar of Companies. The Bank obtained the Search Report of the records of the Registrar of Companies which duly shows the Registration of Charge in favor of the appellants. The documents showing the creation of the mortgage of the property, much prior to the date of the crime, as alleged. The original title deeds of all the 5 properties are lying with the Bank. 25. Admittedly the banks had taken actio....
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....r discussion in para 7-11 it was held that later enactment would prevail with a non- obstante clause. Paras 7-11 reads as under:- "7. Coming to the second question, there is no doubt that the 1985 Act is a special Act. Section 32(1) of the said Act reads as follows: "32. Effect of the Act on other laws.-(1) The provisions of this Act and of any rules or schemes made there under shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any /law other than this Act." 8. The effect of this provision is that the said Act will have effect notwithstanding anything inconsistent therewith contained in any other law except to the provisions of the Foreign Exchange Regulation Act, 1973 and the Urban Land (Ceiling and Regulation) Act, 1976. A similar non obstante provision is contained in Section 13 of the Special Court Act which reads as follows: "13....
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....hat the provisions of the said Act were to prevail even over the provisions of the Sick Companies Act. Under Section 3 of the 1992 Act, all properly of notified persons is to stand attached. Under Section 3(4), it is only the Special Court which can give directions to the Custodian in respect of property of the notified party. Similarly, under Section 11(1), the Special Court can give directions regarding property of a notified party. Under Section 11(2), the Special Court is to distribute the assets of the notified party in the manner set out thereunder. Monies payable to the notified parties are assets of the notified party and are, therefore, assets which stand attached. These are assets which have to be collected by the Special Court for the purposes of distribution under Section 11(2). The distribution can only take place provided the assets are first collected. The whole aim of these provisions is to ensure that monies which are siphoned off from hanks and financial institutions into private pockets are returned to the banks and financial institutions. The time and manner of distribution is to be decided by the Special Court only. Under Section 22 of the 1985 Act, recovery....
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....he 1985 Act the applicability of the Foreign Exchange Regulation Act and the Urban Land (Ceiling and Regulation) Act is not excluded. It is clear that in the instant case there was no intention of the legislature to permit the 1985 Act to apply, notwithstanding the fact that proceedings in respect of a company may be going on before the BIFR. The 1992 Act is to have an overriding effect notwithstanding any provision to the contrary in another Act." 31. The similar view was taken by the Bombay High Court in the case of Bhoruka Steel Ltd. Vs. Fairgrowth Financial Services Ltd. The judgment rendered on 09.02.2016 reported in 1997 (89) company cases 547 (BOM) para 15 of the said judgment read as under: 15. To be noted that in both the judgments, relied upon by counsel, the Supreme Court has held that generally where there are two special statues, which contain non-obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non- obstante clause it means that the Legislature wanted that ena....
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....e to the Central Government, State Government or local authority. Explanation : For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code." 34. In Section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 after the words "the date of the application", "and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;" is added which makes the said amendment or the 1993 Act applicable to all the debts which remains unpaid. 35. Thus, it is very clear from above that the secured creditor, get a priority over the rights of Central or State Government or any other Local Authority. The amendment has been introduced to facilitate the rights of the....
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....t Code." "3 There is, thus, no doubt that the rights of a secured creditor to realize secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This section introduced in the Central Act is with "notwithstanding" clause and has come into force from 01.09.2016" "4 The law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending." "5 The aforesaid would, thus, answer question (a) in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged property." 38. In another Madras High Court judgment in the case of "Dr. V. M. Ganesan vs. The Joint Director, Directorate of Enforcement" has explained the grievances faced by the financial institutions while holding that "For instance, if LIC Housing Finance Limited, which has advanced money to the petitioner in the first writ petition and which consequently has a right over the property, is able to satisfy the Adjudicating Authority that t....
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....ee in response to a notice issue under Section 8(1) and the material or evidence furnished along therewith to establish his earnings, assets or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property, relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment; either in respect of the whole or such part of the property provisionally attached in respect whereof bona fide acquisition by a person is established, at the stage of the section 8(2) process..." 41. The Supreme Court in (2010)8 Supreme Court Cases 110 (Before G.S. Singhvi and A.K. Ganguly, JJ) in the case of United Bank of India V/s. Satyawati Tondon and Ors. In paras no. 6, 55 & 56 has held as under:- 6. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the jurisdiction of the civil courts for frustrating the proceedings initiated by the banks and other financial institutions. ....
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....l attachment was made, the proceedings of recovery of amount were pending before the DRT for recovery against the borrowers and for sum of the properties, possession were with the bank. The mortgaged deeds are also not disputed or/and validity of the same are not challenged on behalf of ED. 44. It is settled law that generally when the civil dispute between the parties are settled before the court particularly pertaining to the recovery of out-standing amount, on joint petition, the High Court while exercising its discretion may quash the criminal petition u/s 482 Cr. P.C. at the joint request of the parties. 45. Three Judge Bench in Narendra Lal Jain & Ors., (supra) held that during the investigation pertaining to the culpability of the accused in the crime, the concerned bank had instituted suits for recovery of the amount claimed to be due from the respondents and the said suits were disposed of in terms of the consent decrees. On the basis of the said consent decrees an application for discharge was filed which was rejected by the trial court but eventually was allowed by the High Court. The charges in the matter were framed under Section 120-B/420 IPC by the learned tria....
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....The complainant bank in choosing to enter into such consent terms under the provisions of OTS Scheme has not only exonerated the petitioners, but for all intents and purposes given up the perusal of the complaint and having no grievance against them in any other proceeding whether civil or criminal on the same set of issues." "70. There is no doubt that the trial has been proceeding for offences for the last about 20 years ago. The dispute between the petitioner and complainant Bank 33 years old. A long time has in fact been elapsed since the alleged commission of offences. Still the trial continues. The present petition is maintainable as the same has been filed also on additional grounds and circumstances. No useful purpose would be served if such oppressive trial may continue for many more years. Thus, ends of justice are served by quashing such a proceeding, as the parties cannot be allowed to go through the rigmarole of criminal prosecution for long numbers of years in a matter, it is doubtful in the mind of the Court in whose favour it would be decided." "71. In view of above mentioned reasons, this Court is inclined to quash the proceedings pending against the petition....
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....viso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties referred to in the notice are involved in money laundering or not. "8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a c....
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....the complainant in such a case is not required to wait for the result of trial being held for the scheduled offence. A complaint can still be filed against such person, but if ultimately the person is acquitted of the charge for the scheduled offence, his prosecution under section 3 of the Act for the offence of Money-Laundering would also come to an end. It has also been kept open by the Karnataka High Court that a person against whom complaint under section 3 of the PML Act has been filed and he is being prosecuted for the offence of money- laundering, he can show before the court that he is innocent and has not received any proceeds of crime." It is clear that innocent person can approach the Adjudicating Authority of any competent court to demonstrate his innocence that he has not received any proceeds of crime. The consequence of this is that while considering whether all or any of the properties provided under notice issued u/S 8(1) are involved in money laundering, the Adjudicating Authority can take into consideration the plea of innocence raised by any person and also the fact as to whether the property which has been attached has any nexus whatsoever with that of money....
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.... 38. The first of the two pre-requisite to attract Section 3 of PMLA shall thus satisfy any of the following necessary ingredients- "A. RE: DIRECT OR INDIRECT ATTEMPT: In State of Maharashtra v. Mohd.Yakub, MANU/SC/0239/1980 : (1980) 3 SCC 57, the Hon'ble Supreme Court observed that- "13. Well then, what is an "attempt"? ...In sum, a person commits the offence of "attempt to commit a particular offence" when (i) he intends to commit that particular offence and (ii) he, having made preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence." Thus, an "attempt to indulge" would necessarily require not only a positive "intention" to commit the offence, but also preparation for the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such 'intention' and 'attempt' on the part of any of the petitioners.....
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....ost necessary, which however is lacking in the instant case." 59. These are four ingredients which are determinative factors on the basis of which it can be said that whether any person or any property is involved in money laundering or not. If there is no direct / indirect involvement of any person or property with the proceeds of the crime nor there is any aspect of knowledge in any person with respect to involvement or assistance nor the said person is party to the said transaction, then it cannot be said that the said person is connected with any activity or process with the proceeds of the crime. The same principle should be applied while judging the involvement of any property of any person in money laundering. This is due to the reason that if the property has no direct involvement in the proceeds of the crime and has passed on hands to the number of purchasers which includes the bona fide purchaser without notice, the said purchaser who is not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said transaction ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of t....
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.... or material to disprove the statement of Gunaseelan. There is nothing on record to show that the transaction in favour of the said Gunaseelan, is not genuine. It is not the case of respondent that the said Gunaseelan is a Benami or employee of G. Srinivasan and that Gunaseelan did not pay any amount as sale consideration or the sale consideration paid by Gunaseelan was not legitimate money. There is no material to show nexus and link of Gunaseelan with G. Srinivasan and his Benamies. In the absence of any verification or investigation by respondent with regard to genuineness or otherwise of the purchase by Gunaseelan; whether he was connected with G. Srinivasan or the sale consideration is legitimate or not the property in the hands of Gunaseelan cannot be termed as proceeds of crime. 22. Further, the appellants have given statements under Section 50 of the Act. They have categorically stated that they possess agricultural lands, cultivate GloriosaSuperba seeds and sell the same and derive considerable income. They have named the persons to whom they have sold the GloriosaSuperba seeds and produced Bank statements. Some of the Appellants have stated that they sold their lands a....
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....ly Def No. 2 to 8 is that the landed properties attached by the complainant are not proceeds of crime. These properties were purchased by these defendants without having any knowledge, whatsoever, that these properties were derived or obtained through criminal activities relating to schedule offence. It has been demonstrated by them that they verified the title deeds relating to the properties and after due verification of every details entered into the sale transactions as such these are bona fide deals entered by them against proper sale consideration and the money paid to the seller is also well explained. 22. Against the above arguments vehemently raised by the defendants, the complainant without disputing that the deals are bona fide heavily relied on the judgment of the Bombay High Court, dated 05.08.2010 in Mr. Radha Mohan Lakhotia Vs. Deputy Director, PMLA, Directorate of Enforcement, Mumbai in first appeal No. 527/2010. In this case it held by the Bombay High Court that the property bought without the knowledge that the same is tainted could be subjected to Provisional Attachment Order. 23. In the instant case the only point to be decided is whether the properties bo....
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....ing Authority. Having considered the Additional documents, the appellate authority failed to give any finding on merits after verifying with the concerned Bank." 49. From the scheme of the Prevention of Money Laundering Act, 2002 and its object, it is clear that the intention of the legislation was not to apply the Act to the transaction subject matter of the present case. 50. The ED in its provisional order as well as in the complaint before the Ld. Adjudicating Authority admitted that the properties which are subject matter are mortgaged with the appellants banks. The borrowers acquired and possessed by the respective owners since 2000, much before the borrowers availed the loan from the appellants banks and therefore no proceeds of crime were invested in these properties and even prior to the coming in force of the act of 2002. The copies of the sale deed/title deed of the properties show the date of acquisition to be prior to dates of alleged fraud committed in 2008-2009 as per the case of the respondent no. 1. Hence, it cannot be said the claim in any manner that these properties have been acquired out of the funds/loans availed from Union Bank of India. 51. The mortg....
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....dings for recovery have been initiated back in the year 2009. The ED in its provisional order as well as in the complaint filed before the Ld. Adjudicating Authority has admitted and acknowledged that the Properties which are mortgaged with the Banks were acquired and possessed by the respective owners much before the Respondents availed the loan from the Appellant Banks and therefore no proceeds of crime are invested in these properties. These properties have been purchased even prior to the coming in force of the PML Act in the year 2002. 55. The ED has also filed the copies of the sale deeds/ title deeds of the properties which shows the date of acquisition of all the properties. The original title deeds of all the properties are lying with the Appellant Bank. The Appellant Banks are having the mortgage charge over the properties. 56. That the definition of "proceeds of crime" as per Section 2(u) of the PML Act comprises of the property which is derived or obtained as a result of criminal activity. In the present case, all the properties have been purchased by the Respondents and have been mortgaged with the Appellant Bank much prior to the date of alleged offence which sh....
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....as security with the Appellant Bank. Thus, making the Appellant Bank the rightful owner of the said properties which are already in the possession of the Appellant Bank under the SARFAESI Act. The origin of the funds is not illegal or unlawful in any manner. The funds were only deposited in the accounts with the Appellant Bank against the drawings already availed or availed subsequently. 60. We also find that the Adjudicating Authority has not examined the law on mortgage and securities. The Appellants Banks are liable to recover huge amounts in the above loan accounts and the appellant bank being the mortgagee/transferee of the interest in the properties is entitled to recover its dues with the sale of the properties. The properties stood transferred by way of mortgage to the Appellant Bank much before the alleged criminal action. The alleged proceeds of crime has not been used for acquiring the mortgage properties. It is even not the allegation of respondent no. 1 that the accused has acquired the mortgage properties with the proceeds of crime. The meaning of money laundering as mentioned in the objects of the Act will have to be read as part of the statute because as per S....
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....o the Appellant Bank it is liable to be recovered by the Appellants Banks. 63. The property of the Appellant Bank cannot be attached or confiscated when there is no illegality or unlawfulness in the title of the Appellant and there is no charge of money laundering against the Appellant. The mortgage of property is the transfer under the transfer of property act as there is no dispute as regards the origin of funds or the title of the properties. As far as the bank is concerned, the bank had to recover its outstanding dues by taking over the possession of the mortgaged properties in case the Respondents are not able to pay back the credit facilities availed by the Respondents and by way of the SARFAESI provisions these properties are being taken in possession by the appellant bank so that recovery can be made from the accounts which have become NPA. 64. The respondent has no lien over the said properties as the Appellants banks are now the Legal transferee of said properties. Even in the criminal jurisprudence the stolen property when it is in the hands of unauthorized person that person cannot claim title to the property. The said recipient cannot retain the property over whi....