TaxTMI 
TaxTMI 
2018 (7) TMI 33
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....2013 dated 20.06.2013. The ten appeals are filed by the banks where defendant no. 6 to 16 before the Adjudicating Authority. 2. The appeal no. 11 filed by M/s Century Communications Ltd. who has also challenged the impugned order dated 16.09.2016 on various grounds. Since the facts and legal issues are almost similar, all the above said appeals are being decided by common order. 3. The main allegations in the complaint against borrowers which are recorded in the impugned order is as under: (a) M/s. Century Communication Ltd. (hereinafter also referred to as "CCL"), was originally incorporated on 03.05.1995 as Private Limited Company, with Registration No. 55-68152 (PAN AABCC5986H) and converted into Public Limited Co. on 18.12.1996. M/s. CCL is having its registered office at M-14A, Lajpat Nagar, Part-2, New Delhi-24 and Corporate office at Plot No. 17 B & C, Sector-16A, Film City, NOIDA, Uttar Pradesh and is engaged in the business of Media Industry and is providing Production and Post Production facilities like shooting of films, editing and graphic facilities etc. (b) The directors of the company are; (i) Mr. Prabodh Kumar Tewari, Managing Director, (ii) Mr. Anand Ku....
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...., Cash Credit Limit was also enhanced to Rs. 63.00 Crore, LC limit of Rs. 8.00 Crore and LG limit of Rs. 2.00 Core by IOB. Besides, onetime LG limit of Rs. 8.75 Crore was also sanctioned for advance payment to be received by SPV formed for post-production job abroad. (i) As on 09.01.2012 total outstanding of CCL towards all consortium banks was Rs. 615.56 Crore, out of which lead banks, i.e. IOB, share was Rs. 163.198 Crore. 4. The said ECIR was recorded on 20.06.2013 by the Enforcement Directorate, Delhi Zonal Office upon registration of an FIR No. RC.BD1/2012/E/0003 dated 23.02.2012 filed by CBI, Bank Securities and Fraud Cell, CGO Complex, New Delhi against M/s. Century Communication Ltd. (CCL), under Section 120-B read with 420, 467, 468, 471 of IPC and under Section 13(2) read with 13(1)(d) of PC Act. The said FIR was filed on the basis of complaint dated 22.02.2012 of Shri G. Ravindra Kumar Gandhi, General Manager, Indian Overseas Bank Personnel Administration Department, Central Office, Annasalai, Chennai- 600 002. 5. The Provisional Attachment Order (PAO) No. 02/2016 dated 29.03.2016 passed by the Deputy Director, Enforcement Directorate Delhi Zone New Delhi Pursua....
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....ties attached by the 5 properties stand mortgaged to the ten-banks i.e. Appellants and against the monies lent by the said Appellant Banks for working of the Borrower/Accused Company. The charge of the valid mortgage stands registered with the Registrar of the Companies since the inception of the transaction i.e. from the year 2000 and the same is still continuing. Pertaining to first property i.e. (i) Land & Building, consisting of basement (area- 22,586 sq. ft.), ground floor (area-22910 sq. ft.), first floor (area-9216 sq. ft.), second floor (area- 3416 sq. ft.) and third floor (area- 3416 sq. ft.) situated at Plot No.17B & 17C, Sector-16A, Film City, Noida, District Gautam Budh Nagar, U.P.-201301, there is no denial on behalf of respondent no. 1 that the same was bought by the Borrower/Accused Company much before the enactment of the PMLA and also much before the Borrower/Accused Company approached the Appellants for financial assistance. The year of purchase being 1994, the said property clearly falls out of the preview of the act. The question of attachment of the said property of the borrowers does not arise. (ii) The Enforcement Directorate/ Respondent no. 1, accepts,....
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....09. 12,000,000.00 By RTGS Recd. From CCL-IOB CC Bank A/c No. 011502000004804 to CCL-Pixion Mumbai OBC Bank A/c No. 1866 on 09.12.2009. 96,000,000.00 By DD issued (for Ajay Devgan) From CCL-IOB Lien Bank A/c No. 011502000004910 to CCL-Pixion Mumbai OBC Bank A/c No. 1866 on 18.12.2009. 131,500,000.00 CENTURY COMMUNICATION LTD. Name of Property (iii) Amount of Property / Registration Date Mode of Payment Amount Property of Century Communicatio n Ltd. Plot No. 370, 2nd Floor, Linking Road, Khar (West) Mumbai (1300 Sq. Ft.) on 29.11.2006 Rs.34,545,0 00.00 05.07.2007 By Ch. No. 699250 dated 05.07.2007 issued from CCL, OBC Bank A/c 1866 500,000.00 23.07.2007 By Ch. No. 723026 dated 21.07.2007 issued to Seagull (Sandeep Sharma) from CCL OBC Bank A/c 1866 10....
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....n 73,157,594.00 28.07.2007 DD issued to Vishranhi Homes Pvt. Ltd. from CCL IOB Non Lien A/c No. 011502000004910 22,500,000.00 23.08.2007 22.08.2007 Amount paid to The Sub Registrar Alandur, Chennai (Vishranthi Homes Pt. Ltd.) From CCL IOB-NON Lien A/c No. 011502000004910 720,553.00 22.08.2007 DD issued to Vishranhi Homes Pvt. Ltd. from CCL IOB Non Lien A/c No. 0115020000049 10 42,637,589.0 0 65,858,142.00 Century communication ltd. Name of Property (V) Amount of Property / Registration Date Mode of Payment Amount Property of Century Communication Ltd. 5th& 6th Floor including 7th Floor Terrace Portion Landmark, Bandra (West Mumbai - 400050) (1433 Sq. Ft. 1913 Sq. Ft. & 4319 Sq. Ft. Terrace ....
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.... By Cheque 577504 dated 30.10.2006 issued from CCL OBC Bank A/c No. 1866 (Pixion Mumbai) in favour of Sajal Kr. Jain, Shree Lekha Jain, Sushila Jain & Sushil Kr. Jain 90,00,000.00 By Cheque 493683, 493684, 493685 & 493686 dated 23.11.2006 issued from CCL - IOB Bank A/c - 1530 to OBC Bank A/c No. 1866 for (Rs. 1400000 + 30000 +1645000 + 30000 =3105000/- (Pixion Mumbai) in Favour of Sajal Kr. Jain & Sushila Jain and Stamp & Duty charges. 31,05,000.00 Cheque No. 442050 dated 1,72,44,877.00 27.11.2006 issued from Pearl Vision Pvt. Ltd. CITI Bank A/c No. 0802742223 to OBC Bank A/c No. 1866 for Rs. 17244877/-(Pixion Mumbai) Cheque No. 442048 dated 27.11.2006 issued from Pearl Vision Pvt. Ltd. CITI Bank A/c No. 0802742223 to OBC Bank A/c No. 1866 for Rs. 265000477.80 (Pixion Mumbai) 2,65,00,477.80 8. From the above it becomes clear that the monies have been given for the purchase of the property by the Appellant Banks. Admittedly the money have gone direc....
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....ue to Banks and Financial Institutions Act and the said Acts reads as under :- '26E. Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cess and other rates payable to Central Government or State Government or State Government or local authority. '31B. 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 by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Governments due including revenues, taxes, cesses and other rates due to the Central Government, State Government or local authority. 14. Though both the SARFAESI Act and PML Act are the special Acts. However, the amendments to the SARFAESI Act has been brought subsequent to the promulgation of PML Act and in particularly on the basis of Central Government notification S.O. 2831(E) dated 01.09.2016, in order to initiate with the recovery due....
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....e Appellant through mortgage since 13.08.2004 and the said fact which has been stated by the Appellant in its appeal has not been disputed by the Enforcement Directorate/ Respondent no. 1. Thus, leaving no scope of doubt as to how the provisional order and the conformation of the same has been passed. 18. The most important issues involved in the present appeal are whether the properties mortgaged with the Appellant Bank are "proceeds of crime" as defined u/s 2(1)(u) of PMLA. Secondly, whether the PMLA has priority over SARFEASI and RDDB & FI Act. 19. The three member Bench of this Tribunal, to which we were part of the said Bench, decided the appeals on 14.07.2017 in the group of matters i.e. State Bank of India vs. Joint Director, Directorate of Enforcement, Kolkata in appeal no. FPA-PMLA-1026/KOL/2015 followed by several other decision in different matters including recently decided in the matter of IDBI Bank Ltd. Vs. Deputy Director, Directorate of Enforcement, Delhi in FPA-PMLA-2147/DLI/2018 on 10.05.2018. In all the aforesaid matters the aforesaid legal issues were involved and decided. The relevant portions of the orders passed in aforesaid appeals are re- produced bel....
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....ese Acts are special Acts. This Court has laid down in no uncertain terms that in such an event it is the later Act which must prevail. The decisions cited in the above context are as follows: 'Maharashtra Tubes Ltd. v. State Industrial & investment Corpn. Of Maharashtra Ltd.; Sarwan Singh v. Kasturi Lal; AllahabadBankv.Canara Bank and Ram Narain v. Simla Banking & Industrial Co. Ltd. 10. We may notice that the Special Court had in another case dealt with a similar contention. In Bhoruka Steel Ltd. v. Fairgrowth Financial Services Ltd. it had been contended that recovery proceedings under the Special Court Act should be stayed in view of the provisions of the 1985 Act. Rejecting this connection, the Special Court had come to the conclusion that the Special Court Act being a later enactment would prevail. The headnote which brings out succinctly the ration of the said decision is as follows: 'Where there are two special statutes 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 ....
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....nd to distribute the assets of the notified persons in the manner set down under Section 11 (2) of the 1992 Act. This can only mean that the Legislature wanted the provisions of Section 11(2) of the 1992 Act to prevail over the provisions of any other law including those of the Sick Industrial Companies (Special Provisions) Act, 1985. It is a settled rule of interpretation that if one construction leads to a conflict, whereas on another construction, two Acts can he harmoniously constructed then the latter must be adopted. If an interpretation is given that the Sick Industrial Companies (Special Provisions) Acy 1985, is to prevail then there would be a clear conflict. However, there would be no conflict if it is held that the 1992 Act is to prevail. On such an interpretation the objects of both would be fulfilled and there would be no conflict. It is clear that the Legislature intended that public monies should be recovered first even from sick companies. Provided the sick company was in a position to first pay back the public money, there would be no difficulty in reconstruction. The Board for Industrial and Financial Reconstruction whilst considering a .scheme for recons....
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....evail over any other Act. This would include the Sick Companies Act. If the legislature wanted to provide otherwise, they would have specifically so provided.' 32. 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. 33. The amended provisions give overriding effect over any other law and priority to the secured condition for the time being in force including the provisions of PMLA in so far as recovery of the loan by the secured creditors is concerned. The amended provisions are reproduced as under: (i) Section 26E of the SARFAESI Act, 2002 : '26E. Priority to secured creditors - Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and othe....
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.... High Court while acknowledging the amount of losses suffered by the Banks and while approving the latest amended Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 held in the case 'The Assistant Commissioner (CT), Anna Salai-III Assessment Circle Vs. The Indian Overseas bank and Ors.' that ' 'There is, thus, no doubt that the rights of a secured creditor to realise 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. Further it was also held that the law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending.' 37. The Assistant Commissioner (CT) Vs. The Indian Overseas Bank, Madras High Court, WP No. 2675 of 2011 (Full Bench) '2 We are of the view that if there was at all any doubt, the same stands resolved by view of the Enforce....
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....ng to that effect and to allow the provisional order of attachment to lapse. Otherwise, a financial institution will be seriously prejudiced. I do not think that the Directorate of Enforcement or the Adjudicating Authority would expect every financial institution to check up whether the contribution made by the borrowers towards their share of the sale consideration was lawfully earned or represent the proceeds of crime. Today, if the Adjudicating Authority confirms the provisional order of attachment and the property vests with the Central Government, LIC Housing Finance Limited will also have to undergo dialysis, due to the illegal kidney trade that the petitioner in the writ petition is alleged to have indulged in. This cannot be purport of the Act.' 39. In a case contested by one of the branches of the Appellant Bank, the High Court of Madras 'State Bank of India Vs. The Assistant Commissioner, Commercial Tax, Puraswalkam Assistant Circle and Ors.', while upholding the Amendment Act, 2016 to Section 26E of the SARFAESI Act and reaffirming the view of the Full Bench of the same court in The Assistant Commissioner (CT), Anna Salai-III Assessment Circle (supra) lifted the....
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....nore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 56. Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy.' In the subsequent changes in law and amendment in the another Special Act i.e. SARFAESI Act, 2002 the decisions referred by Mr. Matta in the case of Solidaire (Supra) and Bhoruka Steel (Supra) does not help the case of the respondent no. 1 because the effect of overrding the PMLA looses its validity once the amendment is made which even has been interpreted subsequently by the Full-Bench of the Chennai Hi....
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....rges were framed under different provisions of the Prevention of Corruption of Act, 1988. Being dissatisfied with the said order,, the CBI had preferred an appeal by obtaining special leave and in that context the court observed that the accused respondent had been charged under Section 120-B/420 IPC and the civil liability of the respondent to pay the amount had already been settled and further there was no grievance on the part of the bank. Taking note of the fact that offence under Section 420 of IPC is compoundable and Section 120-B is not compoundable, the Court eventually opined thus:- '11. In the present case, having regard to the fact that the liability to make good the monetary loss suffered by the bank had been mutually settled between the parties and the accused had accepted the liability in this regard, the High Court had thought it fit to invoke its power under Section 482 Cr.P.C. We do not see how such exercise of power can be faulted or held to be erroneous. Section 482 of the Code inheres in the High Court the power to make such order as may be considered necessary to, inter alia, prevent the abuse of the process of law or to serve the ends of justice. Whil....
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....y, 1994, titled 'CBI vs. N. Bhojraj Shetty & Ors.', being C.C. No.65/11, pending in the Court of Spl. Judge (CBI), Tis Hazari Courts, Delhi.' The said decision has been upheld by the Hon'ble Supreme Court. 46. In the present case, it is undisputed facts that the attached property were purchased much prior to the period when the facility of loan sanctioned to the borrowers. The banks while rendering the facilities were boanfide parties. It is not the case of the respondent that the attached properties were purchased after the loan was obtained. The mortgaged of the properties were done as bonafide purposes. None of the bank is involved in the schedule offence. No PMLA proceedings are pending except the complainant bank was arrayed as Column;-11 at the time of framing charges. Union Bank of India has not granted sanction against its employee to proceed against him in criminal complaint. There is no criminal complaint under the schedule offence and PMLA is pending against the two banks. In case of failure on the part of borrowers to comply with the terms of settlement, the contempt proceedings are maintainable in the Court where the settlement was recorded. 47. In vi....
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....o be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under subsection (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c)taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub- section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering, section 58 B or sub-section (2 A) of section 60 by the Adjudicating Authority (4) Where the provisional order of attach" 56. There are judicial pronouncements whereby it has been laid down that the innocent parties can approach the Adjudicating Authority for release of property by showing their b....
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....dering or not if the person before the Tribunal/ Adjudicating Authority is able to demonstrate that he neither directly nor indirectly has attempted to indulge nor with knowledge or ever assisted any process or activity in connection with proceeds or crime and the question of his involvement does not arise as he is third party, then the Tribunal/ Adjudicating Authority can consider the said plea depending upon whether there exist bona fide in the said plea or not and proceed to adjudicate the plea of innocence of the said party. 57. This is due to the reason that Section 8 allows the Adjudicating Authority to only retain the properties which are involved in money laundering which means as to whether properties attached are involved in money laundering or not is a pre-condition prior to confirming or attachment by Adjudicating Authority. Therefore, at that time, if the plea is raised that the party whose property is attached is innocent or is without knowledge of any such transaction with respect to money laundering, then the Tribunal can consider the said plea and proceed to release the said property out of the properties by holding that the said property is not involved i....
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....ention' and 'attempt' on the part of any of the petitioners. B. RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY: In JotiParshad v. State of Haryana, MANU/SC/0161/1993 : 1993 Supp (2) SCC 497 the Hon'ble Supreme Court has held as follows- "5. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of "intention" or "knowledge" or "reason to believe". We are now concerned with the expressions "knowledge" and "reason to believe". "Knowledge" is an awareness on the part of the person concerned indicating his state of mind. "Reason to believe" is another facet of the state of mind. "Reason to believe" is not the same thing as "suspicion" or "doubt" and mere seeing also cannot be equated to believing. "Reason to believe" is a higher level of state of mind. Likewise "knowledge" will be slightly on a higher plane than "reason to believe". A person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has sufficient cause to believe the same." The same test therefore applies in the instant case where there is absolutely ....
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....the participant in the said transaction ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/ indirect involvement in the proceeds of the crime or its dealings can be made to suffer by mere attachment of the property at the initial stage and later on its confirmation on the basis of mere suspicion when the element of mens rea or knowledge is missing. 60. Similar principle has been laid down by Chennai High Court in the case of C. Chellamuthu (Appellants) Vs The Deputy Director, Prevention of Money Laundering Act, Directorate of Enforcement (Respondent) MANU/TN/4087/2015 decided on 14.10.2015, relevant portion of which are reproduced below:- " 20. The said sections read as follows:-- "23. Presumption in inter-connected transactions Where money-laundering involves two or more interconnected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation (under section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the A....
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....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 and borrowed monies to purchase the property in question. There is nothing on record to show that the respondent had verified these statements. Especially, the respondent has not verified the Bank statement produced by the Appellants to ascertain the genuineness of the same and whether the money deposited came from genuine purchasers or from the persons involved in fraud and Money Laundering. The respondent does not allege that Appellants are Benamies of G. Srinivasan or no sale consideration passed to the vendor. 23. Considering the materials on record and judgments reported in MANU/MH/1011/2010: 2010 (5)Bom CR 625 [supra] and : [2011] 164 Comp Cas 146(AP) [supra], I hold that appellants have rebutted the presumption that the property in question is proceeds of crime. The respondent failed to prove any nexus or link of Appellants with G. Srinivasanand his benamies. Once a person proves that his purchase is genuine and the property in his hand is untainted property, the only course open to the respo....
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....he 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 bought by any person against clean money and without any knowledge that properties have been acquired directly or indirectly though scheduled offence could be subject matter of provisional attachment order. 24. It is an admitted position that the Defendants (D-2 to D-8) had no knowledge that the properties in the hands of the vendor was proceeds of crime. They have also verified the papers relating to these properties before the deal. No point has been raised with regard to the financial capability of these Defendants to buy these properties. However, the Bombay High Court decision in Radha Mohan Lakhotia has been pressed into service to make out a plea that the properties could be attached in such circumstances under the PMLA." Provisional attachment was sought to be continued only based on the judgment of Bombay High Court in Radha Mohan Lakhotia's case. 25. A reading of paragraphs 21 to 24 clearly reveals that both the Adjudicating Authority as w....
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....o credible evidence has been adduced by the Enforcement Directorate that the mortgaged properties have been acquired out of 'proceeds of crime'. 19. That though some of the bank officials are alleged to have been involved in the commission of the alleged crime, the appellant banks as an institution cannot be punished. 20. The Appellant Bank had initially unearthed the commission of alleged crime and has taken prompt action against the borrower and others and lodged complaint with the CBI for investigation and prosecution. The Appellant Bank is infact the victim in this case in the given fact and circumstances. The Appellant Bank's huge money is at stake and unless they are allowed to recover the same through legal process they will be put to huge financial loss. The money that has been advanced to the borrower is public money. 23. From the above i.e. the principle enunciated in the judgments discussed by us and the observations made by Hon'ble Supreme Court in the matter of KSL & Industries ltd. (supra) we do not find any departure. When two special Acts have non-obstante clauses, the later statue will prevail over the earlier statute. At the same....
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....gnty. 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 a 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 the two statues. The two statues operate in their exclusive fields. The question is only who will have his first claim on any property where the claim of the State concurs with the claim of any other person. In the light of above a harmonious construction has to be arrived that keeping in view the facts of the case vis. a vis the statutes involved. In the present case the aforesaid principle suggest that the amendments carried out in SARFAESI Act and RDDB Act in 2016 will prevail over PML Act, 2002 because the properties involved in the present appeal were untainted when the same were acquired....
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....ney laundering which was considered necessary to deprive persons engaged in serious illegal activities and have thereby been increasing their resources for operating in clandestine manner. The PML Act was created to forfeit illegal properties and to prevent the money laundering activities which are threat to financial system of the country 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 a 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 the two statues. The two statues operate in their exclusive fields. The question is only who will have his first claim on any property where the claim of the State concurs with the claim of any other person. In the light of above....
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....arge of money laundering against the appellant. The mortgaged of property is the transfer under the Transfer of Property Act. Even the respondent is not denying the fact that the Bank is a victim party who is also innocent and is entitled to recover the loan amount. It is also not disputed by the respondent that the properties in dispute are mortgaged with Bank and it has to go to the Bank ultimately. I do not agree with the argument in this regard in view of amendments in the two statutes. Even otherwise the trial would take number of years. The public money cannot be stalled otherwise Banking system would collapse. 25. 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 mortgaged with the Appellant Bank much prior to the date of alleged offence which shows that no "proceeds of crime" are involved in acquiring of these properties and hence the same cannot be attached. 26. The Adjudicating Authority has failed to consider that the ED has attached the properties without examining the case of the bank. The evidence ....
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....ssets over which security interest is created, which remains unpaid. 30. The Adjudicating Authority has not appreciated the facts and law involved in the matter. The primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contentions raised by the Respondent's Advocate have no substance. The provisional attachment in the present matter is bad in law hence liable to be set aside. 31. Recently there are amendments in the Prevention of Money Laundering Act, 2002 (15 of 2003) as amended by Finance Act, 2018 (13 of 2018) including in the proviso of Sub-section 8 of Section 8 of PMLA, 2002 by adding another proviso which is read as under:- 'Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering: Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in ....
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....irmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. 36. In view of the reasons amendment in the PMLA and once the provisional attachment order is set aside, the property is released the borrower/accused and the banks can only dispose of the said property after passing the order by the special court in favour of the complaint. In case the provisional attachment order and impugned orders are set- aside, the complainant may not be able to dispose of the property in order recover the loan amount even if the special court restore such properties during the trial. 37. In view of the amendment of sub section 8 of Section 8 proviso (1) and (2) the bank is at liberty to move its claim in relation to mortgaged property before the Special Court for disposing in accordance with the law. The present ten appeals are at serial no. 1 to 10 accordingly disposed of in view of aforesaid directions. Till that time, the order is passed, all parties to the appeal shall not sell and dispose of the property in any manner directly or indirectly. 38. FPA-PMLA-1528/DLI/2016 The appellant in the above said appeal ha....