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2018 (5) TMI 925
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....hallu Suri w/o Sh. Arun Suri 28.05 lacs 2. Shop no. 129, 1st Floor 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Sh. Arun Suri 21.20 lacs 3. Shop no. 130, 1st Floor 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Mrs. Shallu Suri w/o Sh. Arun Suri 21.20 lacs 4. Plot no. 307, 3rd Floor, 6 DLF Industrial Area, Moti Nagar, New Delhi-110015 Sh. Arun Suri 1.50 crores 5. Plot no. 8, DLF Industrial Area, Moti Nagar, New Delhi- 110015 M/s S.T. Enterprises, a partnership firm of Sh. Arun Suri and his wife Smt. Shallu Suri 9.71 Crores 6. Plot no. 34, IInd Floor, DLF Industrial Area, Moti Nagar, New Delhi-110015 Mrs. Shallu Suri w/o Sh. Arun Su....
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.... 6 DLF Industrial Area, Moti Nagar, New Delhi are not Proceeds of Crime and the Appellant Bank is having prior charge over those properties for recovery of its dues; (c) Set aside the Provisional Attachment Order dated 10.08.2017 issued by the Respondent No. 1 qua and the properties of the Respondent No. 2 mortgaged with the Appellant; (d) Pass such other/further relief(s) which this Hon'ble Authority may deem fit and proper under the facts and circumstances of the present case. The aforesaid prayers have been made on the grounds mentioned in the memo of appeal. 6. The following are the contentions raised by the appellant in its written arguments: 6.1 That the Respondent no. 2 being the proprietor of M/s Aryan Electronics had approached the Appellant Bank in the month of January, 2009 for sanction of Cash Credit Facility and upon their specific request, the Appellant Bank Sanctioned the said facility o the respondent no. 2. That Respondent no. 2 had executed various security documents and in order to secure the said facilities had also created a mortgage in respect of six properties including the two properties attached in terms of section 5 by the Ad....
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....wal, CMM(West), Tis Hazari Court, Delhi vide order dated 07.06.2017. 6.6 Not only this, the Appellant Bank has also filed an Original Application (OA) for recovery against the Respondent No. 2, 3, 4 and a partnership firm in the name of M/s Sky Vision for recovery of Rs. 11,19,81,600.44 vide OA bearing No. 582/2014 before the DRT-III, New Delhi, wherein the Respondents and other parties were served and the said case is now at the stage of final arguments before the Debt Recovery Appellate Tribunal, New Delhi. 6.7 As is evident from the complaint filed by Respondent No.1, the Respondent No.2 in collusion with others had committed serious irregularities pertaining to the Foreign Exchange Transaction in the Current Accounts of various firms/companies in overseas foreign exchange remittances amounting to approx. Rs. 3600 Crores as was reported by the Internal Audit Report of Bank of Baroda. In pursuance to the complaint filed by the Bank of Baroda, CBI registered a case/FIR No. RC.BD.F1/2015 dated 09.10.2015 against 59 current account holders as proprietor/directors/companies as per the list mentioned in the impugned order and unknown bank officials/private persons for commission....
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....ot the case or matter under investigation with the Respondent No.1 that the property which is subject matter of the present Appeal have been purchased on the basis of fraudulent transaction entered by Respondent No.2 to 6 in violation of the foreign exchange rules as reported by Bank of Baroda. In fact, the said properties have been purchased much prior to the period when the Sections 120-B and 420 IPC were not Scheduled Offences under PMLA. That the offences under section 120-B and 420 of IPC as well as section 13 of PC Act only became Scheduled Offences w.e.f. 01.06.2009 by virtue of The Prevention of Money Laundering(Amendment) Act, 2009(21 of 2009). Therefore, it is submitted that the monies which came into the accounts of the Appellant prior to this date, from which ever source, does not certainly qualify as "proceeds of crime" as Sections 120B and 420 of IPC as well as section 13 of PC Act were not scheduled offence at the time the acquisition of these properties, i.e. prior to 01.06.2009. Thus, the impugned order dated 27.11.2017 is liable to be set aside on this short score alone. 6.12 That on account of Amendment in SARFAESI Act by way of addition of Section 26(E) to th....
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.... and Financial Institutions Act are at final stage. Therefore, the Ld. Adjudicating Authority erred in holding that the PMLA would prevail over SARFAESI Act enacted by Legislature. Thus, the impugned order is liable to be set aside. 6.15 That the Impugned order is per incuriam sine the Ld. Adjudicating Authority has not followed the decision of this Hon'ble Tribunal in State bank of India v. Joint Director (FPA- PMLA-1026/KOL/2015; date of decision: 14.07.2017) wherein it was held that the rights of secured creditors to recover their dues would take precedence over the state's right to attach alleged "proceeds of crime". This Hon'ble Tribunal had relied heavily on Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act ("RDDBFI Act") which was inserted vide the Enforcement of security Interest And Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. That the said provision has already been stated above. That since two of the properties of the Respondent no. 2 that have been attached by the Respondent no. 1 have been lying mortgaged with the Appellant Bank since 2009 and the Appellant has also initiated proceedings before....
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....na, Varinder Singh v. State of Punjab, Ritesh Agarwal V. SEBI and State of A.P. v. Ch. Gandhi wherein it has been time and again laid down that there can be no retrospective operation of penal laws. 6.18 That unlike SAFEMA and NDPS Act, the PMLA contains no express provision for retrospective application As per express explanation 4 to Section 2 of SAFEMA, "facts, circumstances or events (including any conviction or detention) which occurred or took place before the commencement of their Act" can be taken into consideration for determining whether or not the provisions of SAFEMA ought to be applied to any person. Even the definition of "Illegally acquired property under Section 3(c) of SAFEMA includes any property acquired "whether before or after the commencement of this Act". Similarly, the definition of "illegally acquired property" in section 68(B) (g) of the NDPS Act includes even those properties that were acquired by a person before or after commencement of Chapter VA. This Chapter, which was inserted by virtue of an amendment in 1989, provides for the forfeiture of properties acquired from the income/earnings attributable to the contravention of any provisions of the NDP....
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....terest the debt due to any secure creditors shall be paid in priority over all other debts and all other revenue, taxes and cess and other rates payable to the Central Government and State Government and local authority. So what is referred are only (1) The other debts, (2) all (i) revenues (ii) taxes (iii) cesses (iv) other rates payable to the Central Government and local authority. Similarly, section 31(b) above referred provides that notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realize secured debts due and payable to them be sale of assets over which security interest is created shall have priority and shall be paid in priority over all over debts and Government dues including revenues taxes, cesses and other rates due to the Central Government and State Government or local authority. So what is referred are only (1) The debts, (2) all Govt. dues including, (i) revenues (ii) taxes, (iii) cesses, (iv) other rates due to the Central Government and local authority. Thus there is no priority conferred on the secured creditors under the said Acts, in respect of the proceeds of crime in their hands. The PMLA is a....
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....em Sarvan Singh. V. Kasturilal (AIR 1977 SC 265); Kamayu Motor Association v. State of Uttar Pradesh (AIR 1956 Sc 785). The Prevention of Money Laundering Act has been enacted provide for forfeiture of proceeds of crime involved in money laundering which was considered necessary of deprive persons engaged in serious illegal activities and have thereby been increasing their resources for operating in clandestine manner. The Act was created to forfeit illegal properties and to prevent the money laundering activities which are threat to financial system of the county and its integrity and sovereignty. Further the question of prevalence of a subsequent legislation will only come into picture when there is a conflict between the two statutes. The Securitization Act has been enacted for the purpose of establishing an expeditious system for recovery of debts due to banks and for matters connected therewith or incidental thereto. It only lays down a procedure for recovery of debts due to banks. The Prevention of Money Laundering Act vests the statutory authorities with a power to forfeit proceeds of crime involved in money laundering to the State. There is thus no apparent conflict between....
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....eeds of crime which is defined as specified above, are attached by virtue of the PAO. The huge public money, lying deposited with the banks in trust, is allowed to be faded and evaporated by acting in collusion, irresponsibly and negligently by the bank officers. There cannot be any justification in giving any clean chit to the defaulting officers and the Banks, they should have been conscious and more responsible in respect of account with this magnitude of money. The provisions of Section 7 1 of PMLA have overriding effect. The interest of a victim is protected under the scheme of the Act. The following provisions of PMLA ensures that the claimant, with a legitimate interest in the property confiscated, may be restored such property or rights therein. 7.8 Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as result of the offence of money laundering. 8. Both the parties have made their submission a....
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....riority over all over debts and Government dues including revenues taxes, cesses and other rates due to the Central government and State Government or local authority. So what is referred are only (1) The other debts, (2) all Govt. dues including, (i) revenues (ii) taxes, (iii) cesses (iv) other rates due to the Central Government and the local authority. Thus there is no priority conferred on the secured creditors under the said Acts, in respect of the proceeds of crime in their hands. The PMLA is a Special Act and is an Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in money laundering and for matters connected there with or incidental thereto. Section 3 of Act defines money laundering as Whosever directly or indirectly attempts to indulge or knowingly assists or knowingly is a partly or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money- laundering. Thus the secured creditors does not and cannot have any priority over the attachment, confirmation a....
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....Directorate of Enforcement, Kolkata in appeal no. FPA-PMLA-1026/KOL/2015 and others and also in the matter of Smt. Nasreen Taj vs. Deputy Director, Directorate of Enforcement & Ors., Bengalaure, in FPA-PMLA-382/BNG/2012 vide common order dt. 18.09.2017. 13. The relevant portions of the tribunal order in state Bank of India matter (Supra) are re-produced below: "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 t....
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....actions in Securities) Act, 1992, provides in Section 13. that its provisions are to prevail over any other Act. Being a later enactment, it would prevail over the Sick Industrial Companies (Special Provisions) Act, 1985. Had the Legislature wanted to exclude the provisions of the Sick Companies Act from the ambit of the said Act, the Legislature would have specifically so provided. The fact that the Legislature did not specifically so provide necessarily means that the Legislature intended that 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 a....
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....foresaid decision of the case, more so when we find that whenever the legislature wishes to do so it makes appropriate provisions in the Act in that behalf. Mr Shiraz Rustomjee has drawn our attention to Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 wherein after giving an overriding effect to the 1993 Act it is specifically provided that the said Act will be in addition to and not in derogation of a number of other Acts including the 198.5 Act. Similarly under Section 32 of the 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 1....
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....priority to secured creditors in payment of debt shall be subject to the provisions of that Code." (ii) Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 : 31B. Priority to secured creditors - Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and other rates due 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 ....
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....d creditors to realize secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due 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, 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." "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, n....
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....es including revenues, taxes, etc., should hold good qua 2002 Act as well." 40. B. RAMA RAJU V. UOI AND ORS. Reported in (2011) 164 company case 149(AP)(DB) who has dealt with the aspect of bonafide acquisition of property in para 103. The same read as under:- "103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the adjudicating authority must carefully consider the material and evidence on record (including the Reply furnished by a noticee 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; ei....
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....ainant - i.e. Union of India in order to pay the remaining out- standing amount. The undertaking in this regard is recorded in Court. It is written agreement and the statement of the parties were recorded. Counsel for the borrowers has also informed us that his client also intent to pay the remaining out-standing amount to the State Bank of India in order to clear their liabilities once the attached properties are sold and even otherwise. Copy of the settlement of the borrowers and the complainant Bank of India was filed before us. As far as the schedule offence is concerned, we do not wish to make any comment. But we can only observe that in case of settlement, joint petition for quashing of FIR in the High Court u/s 482 Cr. P.C. could be filed. 43. It is not denied on behalf of department that these provisional 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 disput....
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....ance of a criminal proceeding which is likely to become oppressive or may partake the character of a lame prosecution would be good ground to invoke the extraordinary power under Section 482 Cr. P.C. In Sanjay Bhandari V/s. CBI, Crl. M.C. M.C. 5798/2014, Delhi High Court, dated 29.06.2015 "69..... By consent the parties have settled all disputes in the recovery suit, the consent decree of DRT stood to be disposed off as duly satisfied. There is hence no force in the submission of respondents that the complainant bank has not exonerated the petitioners, first being the Civil Procedure Code, and the second being the OTS Scheme of the Reserve Bank of India, which the petitioners have extensively referred to in the original petition. The provisions of OTS Scheme prevent the complainant bank from entering into any compromise or settlement under the said OTS Scheme in the cases of willful default, fraud and malfeasance. 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 a....
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....form the Adjudicating Authority about their innocence and they rightly did so but their contention was rejected as appeared from the impugned order. 48. This Tribunal in the case of IPRS in appeal no. FPA-PMLA- 1302/MUM/2016 decided on 22.06.2017 had dealt with the similar issue as to whether the innocent party whose immovable properties are attached by the ED can approach the Adjudicating Authority for release of the same in para no. 55 to 60 the same read as under:- "55. Whether innocent party whose properties i.e. movable or immovable are attached can approach the Adjudicating Authority for release of attached property. The Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating Authority for the purposes of release of properties which have been attached in terms of the provisions of Section 5 of the Act. This can be seen by reading Section 8(1) and the proviso 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)....
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....lahabad High Court, it has been observed by the Ld. Single Judge after noticing the judgment of Karnataka High Court that the element of knowingly or mens rea have been provided under the Act so that the aspect of implicating any innocent person can be ruled out. Relevant para 26 of judgment is reproduced below:- "26. Thus, upon consideration of the law laid down by the Hon'ble Karnataka High Court, it is clear that the amendment incorporated in the Money Laundering Act was not held unconstitutional and ultra virus, but it was observed by the Karnataka High Court that the property of a person can be attached without there being any prosecution for the offence of Money Laundering, but so far as the prosecution of a person for the offence of money laundering is concerned, the proceedings under section 3 of the PML Act can be initiated only in case the person is held guilty of receiving proceeds of crime as a result of commission of scheduled offence. The Karnataka High Court has also held that 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....
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....e Court may consider the ingredients of Section 3 which define offence of money laundering. The aspect of knowledge or involvement has been discussed by Ld. Single Judge of Gujarat High Court in the case of Jafar Mohammed Hasanfatta and Ors (Appellants) Vs Deputy Director and Ors. (Respondents) MANU/GJ/0219/2017 wherein Ld Single Judge has observed as under:- "37. A holistic reading of this definition of 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive 'and', makes it luminous that any persons concerned in any process or activity connected with such "proceeds of crime" relating to a "scheduled offence" including its concealment, possession, acquisition or use can be guilty of money laundering, only if both of the two prerequisites are satisfied i.e.- "(i) Firstly, if he- (a) directly or indirectly 'attempts' to indulge, (b) „knowingly" either assists or is a party, or (c) is „actually involved" in such activity; and (ii) Secondly, if he also projects or claims it as untainted property;" 38. The first of the two pre-requisite to attract Sectio....
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....ers, 'Knowingly', assisted or was a party to, any offence. C. Actually involved: Actually involved would mean actually involved into any process or activity connected with the proceeds of crime and thus scheduled offence, including its concealment, possession, acquisition or use. There is absolutely no material or circumstantial evidence whatsoever, oral or documentary, to substantiate any such allegation qua the petitioners, D. Neither any of the petitioners is arraigned as accused in the 'Scheduled Offences' punishable under Indian Penal Code for direct or indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of them." 39. The second of the two pre-requisite to attract Section 3 of PMLA would be satisfied only if the person also projects or claims proceeds of crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowledge of tainted nature i.e. the property being 'proceeds of crime' derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offen....
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....such inter-connected transaction. 24. Burden of proof In any proceeding relating to proceeds of crime under this Act, (a) in the case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering. 21. In the present case, one G. Srinivasan is accused of having played fraud and obtained a loan of Rs. 15,00,00,000/- by producing bogus and fabricated documents. From and out of the said amount, the property in question was purchased by him in the names of his Benamies. One Ayyappan was appointed as their Power Agent. One Gunaseelan purchased the property through the Power Agent Ayyappan. The said Gunaseelan was examined and his statement was recorded Under Section 50 of the Act. He had stated that he purchased the property for cultivation. He developed the property but geologist gave opinion that property will not yield proper income. In the circumstances, he sold th....
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....hands of genuine legitimate bona fide purchaser without knowledge. 24. Before the Adjudicating Authority it was admitted by complainant that appellants had no knowledge that properties in the hands of their vendor was proceeds of crime. It was also not disputed by complainant that the appellants did not have financial capacity to buy properties. Paragraphs 21, 22, 23 and 24 of order of Adjudicating Authority is extracted herein for better appreciation. "21. The CBIBS & FC (BLR) has filed a charge sheet in the court of Spl. Judge for CBI cases Coimbatore, against Sh. Arivarasu, Sh. R. Manoharan, Sh. R. Selvakumar, Sh. G. Srinivasan, Sh. K. Martha Muthu, Sh. V. InduNesan, Sh. K. Vignesh, Sh. A. Sainthil Kumar, Sh. M. Ram Krishnan, for the offences punishable under Section 120-B read with 420, 467, 471 IPC and section 13(2) read with 13(1)(d) of PC Act 1988. The offences punishable under section 120-B, 420, 471 are schedule offence under Section 2(1)(y) of the PMLA and therefore on of the condition for issuing provisional attachment order is satisfied. The other important point to be determined is whether the properties attached vide Provisional attachment order are ....
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....a's case. In that case, the Department had placed substantial and acceptable facts to prove that the property in the hands of third party was proceeds of crime. It is pertinent to note that in Mr. Radha Mohan Lokatia's case, Department had proved the nexus and link between the person possessing the property and person accused of having committed an offence. All the persons involved in that case were close relatives. 26. In the present case, the respondent failed to prove that the appellants did not have sufficient financial capacity to buy the property or that the money paid by them as sale consideration was not legitimate money derived by agricultural activities. No material was produced to show that the appellants are close relatives of person, who involved in criminal activities and the person, who sent monies to purchase the property did not possess financial capacity to provide such huge amounts and that they are not genuine purchasers of agricultural products of appellants. The respondent has not made any such investigation and has not produced any such material. Further, the Appellate Authority in fact considered the additional documents produced before it, ....
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....ind that, the purpose of the two enactments is entirely different. As observed earlier, the purpose of one is to provide ameliorative measures for reconstruction of sick companies, and the purpose of the other is to provide for speedy recovery of debts of banks and financial institutions. Both the Acts are "special" in this sense. However, with reference to the specific purpose of reconstruction of sick companies, the SICA must be held to be a special law, though it may be considered to be a general law in relation to the recovery of debts. Whereas, the RDDB Act may be considered to be a special law in relation to the recovery of debts and the SICA may be considered to be a general law in this regard. For this purpose we rely on the decision in LIC Vs. Vijay Bahadur (supra). Normally the latter of the two would prevail on the principle that the Legislature was aware that it had enacted the earlier Act and yet chose to enact the subsequent Act with a non- obstante clause. In this case, however, the express intendment of Parliament in the non-obstante clause of the RDDB Act does not permit us to take that view. Though the RDDB Act is the later enactment, sub-section (2) o....
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....n application for recovery made under the provisions of the RDB Act. We might remind ourselves of the oft- quoted statement of the principles of contextual construction laid down by this Court in Reserve Bank of India Versus Peerless General Finance and Investment Co. Ltd. & Ors.[6], where this Court has observed:- "33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and d....
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....en two special Acts have non-obstante clauses, the later statue will prevail over the earlier statute. At the same time the aim and object of both the special Acts are to be looked into to decide such issue in the manner and harmonious construction has to be arrived 16. In the present case, the SARFAESI Act, RDDB Act and PMLA are special Acts. The SARFAESI Act and RDDB Act are enacted earlier to PMLA. The RDDB Act and PMLA have non-obstante clause. Recently, the parliament has amended the twin legislations viz. (i) the SARFAESI Act, 2002 and (ii) the DRT Act, 1993 (after amendment titled as the Recovery of Debts and Bankruptcy Act, 1993) by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 and its provisions have been given effect from 01.09.2016. The Parliament in its wisdom has not excluded the application of the amended provisions to the proceedings under PMLA. In other words, had the Parliament intended to exclude the application of non-obstante clause of SARFAESI Act and RDDB Act to PMLA then it would have done so expressly as has been specifically prescribed in the amended provisions. It may also be noted her....
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....e properties involved in the present appeal were untainted when the same were acquired. Even when the properties were mortgaged with the appellant Bank the same were not tainted. The allegation of commission money laundering is after the mortgage of the said properties with the appellant Bank. After the mortgage of the aforesaid properties a legal right has been accrued in favour of the appellant Bank over the said properties which cannot be taken away in the given facts and circumstance of the case. As far as borrowers are concerned (who are the accused parties) even we stress that as per law, they must face the trail in the complaint filed against them. 19. The Respondent has also heavily relied on the judgment or order passed by this Tribunal in the matter of Chief Manager, Syndicate Bank Vs. Dy. Director, PMLA in Appeal no. FPA-PMLA-A-34/CAL/2009. We have gone through the said order from which it appears that the facts of that appeal are quite different from the facts of the present appeal. In the said appeal proceeds of crime were used to acquire properties and those acquired properties were mortgaged with the Bank. Para 2 of the said order of this Tribunal which reflects t....
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....esent case. 22. In the present case the Adjudicating Authority has come to a conclusion at para nos. 61, 63 & 65 of the impugned order that the defendants are in possession of proceeds of crime and are involved in money laundering. The aforesaid conclusion has not be elucidated by the Ld. Adjudicating Authority in his order. It appears that the only thing was in his mind that section 71 of PMLA has an overriding effect. The provisions of PMLA shall have effect and prevail over provisions of any other Act or its provisions. To this we are not in agreement with the Ld. Adjudicating Authority because of the amendment of 2016 made in SARFAESI Act RDDB Act. The IDBI Bank is the rightful claimants of the said property which are already in its possession under SARFAESI Act. Even recovery certificate has been issued by DRT. 23. The Hon"ble Supreme Court of India in the case of Attorney General of India and Ors. (AIR 1994 SC 2179) while dealing with the matter under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act has defined the illegally acquired properties and held that such properties are earned and acquired in ways illegal and corrupt, at the cost of th....
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....raud would be legally unjustified. 26. The properties attached cannot be attached under Section 5 of the PML Act because the properties are not purchased from the alleged proceeds of crime. As per the provisions of Section 5(1) (c) the primary requirement for the attachment is that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner. In this case there was absence of such requirement. The said properties are already in the possession of the Appellant Bank under the SARFAESI Act. 27. The property of the Appellant Bank cannot be attached or confiscated when there is no illegality or unlawfulness in the title of the Appellant Bank and there is no charge of money laundering against the Bank. 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 Respondent no 3 to 5 are not able to pay back the credit facilities availed by them and by way of the SARFAESI provisions these properties are being ....