TaxTMI 
TaxTMI 
2014 (9) TMI 1123
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....C Bank, Gangwali Mansion, J14, 3rd Avenue, Anna Nagar, Chennai, Rs. 7,00,000/-in the account No. 12285620000058 opened in the fictitious name of T. Suresh by Mr. R. Ravishankar and Rs. 5,53,254/- in the account No. 06878640000011 of M/s. Krishna Traders, Chennai held with HDFC Bank, Gangwali Mansion, J-14, 3rd Avenue, Anna Nagar, Chennai. The appellant has contended that the Appellant Bank is entitled to receive the monies lying in the accounts of Respondent Nos. 2 to 7 in different banks. The appellant has averred that though the Appellant is the most affected party, the Enforcement Directorate (ED) has not served any notice on the Appellant and the Ld. Adjudicating Authority has passed the impugned order without hearing the Appellant. The money in question actually belongs to the Appellant and the Appellant is entitled to receive the same. The impugned order is against the facts of the case and law and therefore is liable to be set aside. 2. The counsel for the Appellant had filed an application seeking stay of the provisional attachment order and impugned order confirming the provisional attachment order being MP-PMLA/58/CHN/SP which was withdrawn by the appellant on 10th Jan....
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....n 23.07.2009, the Anna Nagar Branch of the Appellant Bank received a fax message addressed to Mogappair Branch of Central Bank of India Sri S. Sankara Kumar handing over a fax message dated 23.07.2009 purportedly issued by M/s. NCL addressed to Central Bank of India, Mogappiar Branch instructing to transfer the funds that is Rs. 25 crores to current account of M/s. Krishna Builders as an advance for construction contract allotted to the firm. Krishna Rao also submitted a hand written letter dated 23.07.2009 requesting for such transfer. It was claimed that on the next day that is 24.07.2009 one Suresh Malhotra came to the said branch of Central Bank of India introducing himself as the Assistant Manager (finance) of M/s. NCL and handed over the original of the fax message dated 23.07.2009 brought by T.V. Krishna Rao the preceding day. Sri Sankara Kumar did not verify the contradictory instructions and transferred the money to the account of M/S Krishna Builders. These fax messages and the letter referred to above were no longer available with the bank and are presumably destroyed. Sh. T.V. Krishna Rao with the connivance of Shri Shankar Kumar Senior manager of the Bank fabricated FD....
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....930001328) from the current account of his company M/s. Krishna Builders. (iii) Attachment of Rs. 35,30,211/- lying in the account No. 06878640000107 of M/s. Arvindh Traders, Chennai held in HDFC Bank, Gangwal Mansion, J-14, 3rd Avenue, Annanagar, Chennia-102. The respondent has alleged that out of the amount of Rs. 25 crores, Rs. 3 crores was transferred to the account of M/s. Arvindh Traders. Out of the same Sh. Krishanrao has withdrawn various amounts and balance lying in the account that is Rs. 35,30,211/- which has been attached and which attachment order has been confirmed. (iv) Attachment of Rs. 7,00,000/- lying in account No. 12258620000058 opened by Shri R. Ravi Shankar in the name, T. Suresh, HDFC Bank, No. v995-C, Second Avenue, Anna Nagar, Chennai-40. The respondent has noted that out of the sum of Rs. 25 crores fraudulently siphoned from NCL accounts, Rs. 10 lakhs was transferred from M/s. Krishna Builders' account to the account of R. Ravi Shankar on 27.07.2009. Sh. Ravi Shankar, an employee of Sh. Krishna Rao, however, transferred the money back to the personal account of Sh. Krishna Rao on latter's instructions. Sh. T.V. K....
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....cept which is applicable to the subject case. The Appellant contended that since the trail of money has been traced, the Appellant is entitled to recover the money. According to the appellant it is a recovery of a stolen property. According to the appellant the Central Bureau of Investigation, Chennai, in the process of investigation, have frozen the following bank accounts, the details of which are furnished hereunder: 3.7. The plea of the appellant is that it is a nationalized Bank and because of the offenses committed by the accused, it has lost Rs. 25,00,00,000/- (Rupees Twenty Five Crores Only) out of which the CBI was able to freeze the above amounts. The appellant has contended that the above amounts actually belong to the Appellant Bank and were transferred fraudulently, therefore, the Appellant Bank is entitled to recover and restore the above said frozen money in order to realize the amount defrauded to some extent. 3.8. The Appellant disclosed that it has already filed a Civil Suit C.S. No. 356 of 2011, against, 52 Defendants before the Hon'ble High Court of Madras seeking the relief of recovery from all the defendants to the tune of Rs. 23,03,89,18....
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....ondent, charge sheet filed and in the reply to the Application of the Appellant Bank has acknowledged this fact. In the complaint filed before the Ld. Adjudicating Authority, the respondent has acknowledged the fact that the Appellant has restored/paid the amount of Rs. 25 crores to NCL with interest from 23.07.2009. NCL in its letter dated 23.11.2009 has acknowledged the receipt of the fresh FDR from the Bank. 3.10. The grievance of the appellant is that despite it being apparent that the money being not the proceeds of crime and is owned by the Appellant, the Adjudicating Authority has upheld the provisional attachment order without giving any notice to the appellant under section 8(1) of PMLA and without giving any hearing to the Appellant. The appellant has contended that since the appellant is aggrieved by the confirmation order of the Adjudicating Authority dated 27th June, 2011 in OC No. 99 of 2011, the appellant is entitled to file the appeal against the said order under section 26 of the Act. The Appellant has therefore, contended that the order dated 27th June, 2011 be set aside and the amounts lying in respective banks be released to the Appellant. 3.11....
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.... appellant, the Adjudicating Authority will not give any hearing to the appellant after confirmation of provisional attachment order. 5. Surprisingly, even the learned counsel for the respondent/Enforcement Directorate on instructions from the respondent states that after expiry of 180 days or on or after the date an order u/s. 8(2) & (3) of PMLA is made whichever is earlier, the Adjudicating Authority will become functus Officio and will not be left with any power to give hearing to the appellant. 6. This plea of the parties is not in consonance with the provisions contained under Chapter III of the Act. The provisional attachment order is for a period as prescribed u/s. 5(1) of PMLA and at present in the amended Act, the period prescribed is 180 days. As per the provisions of section 5(3) of PMLA, every order of attachment u/s. 5(1) of PMLA shall cease to have effect after the expiry of the period specified in section 5(1) or on the date, an order is made under Sub-section (2) & (3) of section 8, whichever is earlier. The time limit of 180 days or 150 days as may be applicable is for the benefit of the person whose property is provisionally attached on the basis of the reas....
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....cating Authority has reason to believe, it may serve a show-cause notice of not less than thirty days to the concerned person(s) to file the reply. After considering the response and all related information, the Adjudicating Authority can give finality to the order of attachment or confirm the retention of property or record seized or frozen for further proceedings under the Act which is reproduced here for the sake of reference: "Section 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 sub-section (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] it 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 2 [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause wh....
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....rthwith take the[possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of.]. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced ....
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....ea that the provisional attachment order has to be confirmed or adjudicated within the time contemplated under said section. Such a time which the Adjudicating Authority will take in appropriate cases for adducing evidence and documents under section 11, therefore, has to be excluded from time prescribed in said section. In the scheme of said provision, such rights of the party cannot be denied on the plea that the provisional attachment order will lapse after 180 days. If the party against whom provisional attachment order is operating, makes out a case for exercise of power by the Adjudicating Authority under section 11, then the time taken for exercising the power under section 11 of the Act, normally is to be excluded for computing the time prescribed for confirmation of the order, as a party who has invoked the power under section 11 cannot be allowed to defeat the purpose of provisional attachment and confirmation in such and facts and circumstances. The power by the Adjudicating Authority under section 11 has to be exercised sparingly, where it will be imminently necessary even on prima facie consideration of the pleas of such a party and not in every case. 10. The scheme....
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....der. There is nothing in the Act which will demonstrate that the Adjudicating Authority will become functus officio after confirmation of the provisional attachment order within the time stipulated under section 5(1)(b) of the Act. Though proviso to section 8(2) contemplates that the hearing shall be given to the person to whom the notice has not been given under section 8(1). No order of the Adjudicating Authority has been brought to the notice of this Tribunal where it has held that it would not hear a person whom the notice was not given under section 8(1) of the Act, after confirmation of the provisional attachment order. No precedent of any Hon'ble High Courts or Hon'ble Supreme Court has also been relied on by any of the parties for such an interpretation of said section. 12. It was also feebly argued that the Adjudicating Authority does not have the power to review its order of confirmation and therefore, the hearing cannot be given to a person who though had not been given a notice under section 8(1) of the Act, after confirmation of provisional attachment order. A distinction is apparent and should be drawn between an application for review and an application se....
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....not liable for attachment, then the respondent shall be deprived of his right of first appeal, as contemplated under section 26 of the Act and will be left only with invoking his right of second appeal as contemplated under section 42 of the Act. When an efficacious remedy is available to the appellant, then whether it will be appropriate to entertain his appeal in the facts and circumstances. 15. This Tribunal does not have the power under Article 226 or Article 32 of the Constitution of India, but the reasoning of the Hon'ble Courts can be applied in considering whether the appellate jurisdiction should be invoked or not when a party has equally efficacious remedy available to him. While invoking the jurisdiction of the Hon'ble Courts in writ petitions, the Courts insist on exhaustion of alternative remedy except in three contingencies i.e. (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or vires of an Act is challenged. However, this Tribunal which does not have such powers as the Hon'ble High Court ....
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....learned counsel for the appellant has raised various grounds seeking quashing of attachment of property which has been attached. However, those grounds are not being considered, as it will be for the appropriate authority to consider after giving hearing to the appellant, if the appellant is able to make out prima facie case about his rights in the property attached. 19. Therefore, in the facts and circumstances and for the foregoing reasons, the appeal of the appellant is not entertained and it is left to the appellant to invoke the remedy available to him under the Act, in case the Appellant has a right over the property which had been provisionally attached and which attachment order had been confirmed by the Adjudicating Authority. Anything stated here in above is not the expression of final opinion by this Tribunal on the merits of the alleged claim of the appellant on the property which has been attached by the Respondent. With these observations the appeal is disposed off and the parties are left to bear their own costs. All the pending applications are also disposed of. ============= Document 1 S. છà«àª‚ છà«àª‚. No. Attachme Name....