TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 33
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....ed 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 Kumar Tewari, Full Time Director, (iii) Mr. Abhishek Tew....
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.... 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 Pursuant to which Original Complaint (OC) No. 588/16 is filed before this Auth....
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....strar 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, admits and acknowledges that fact that out of the 6 attached properties, purchase of 4 properties was part of the sanction letter given and the financial facilities made available by the Appellants to the Borrower/Accused Company. (iii) It is not a ....
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....nbsp; 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 10,000,000.0 0 04.08.2007 By DD issued from CCL Non- Lien A/c No. 011502000004 910 60,010.00 04.08.2007 By DD issued 957,610.00 in favour of ICICI Bank A/c from CCL Non- lien A/c No. 011502000004 910 (For Stamp Duty Charges). 08.08.2007 By Ch. No. 458794 dated 04.08.2007 (DD No. 534587940) issued to Sandeep Sharma from CCL Non Lien A/c No. 011502000004 910 9,500,000.00 08.08.20....
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.... (1433 Sq. Ft. 1913 Sq. Ft. & 4319 Sq. Ft. Terrace Portion) on 6,08,42,700.00 19.10.2006 By Cheque No. 714171 issued to Sajal Kumar Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 5,00,000.00 18.03.2004 19.10.2006 By Cheque No. 714170 issued to S. K. Jain from CCI OBC Bank A/c 1866 (Pixion Mumbai) 6,00,000.00 28.10.2006 By Cheque No. 741385 issued to Sajal Kumar Jain from CCL OBC Bank A/c 1866 (Pixion 18,00,000.00 Mumbai) 28.10.2006 By Cheque No. 741386 issued to Shreelekha Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 23,00,000.00 28.10.2006 By Cheque No. 741384 issued to Sushila Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 27,00,000.00 28.10.2006 By Cheque No. 741383 issued to Sushil Kumar Jain from CCL OBC Bank A/c 1866 (Pixion Mumbai) 21,00,000.00 22.11.2006 By Cheque No. 493683 issued to Sajal Kumar Jain from CCL IOB 14,00,000.00 Bank A/c 1530 (fund Trfd. From IOB Worli to CCL A/c in Favour of Bank of Rajasthan A/c Stamp Duty for Plot 2 at Khar Corinthian Bldg. 22.11.2006 By Cheque No. 493685 issued to Sushila Jain from CCL&n....
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....nt Banks had initiated action under the SARFAESI Act, 2002 much before the registration of the case under the PMLA Act. The copy of the ECIR No. DLZO/10/2013 is dated 20.06.2013, whereas the Appellant Bank had issued notice under Section 13(2) of SARFAESI Act, 2002 on 13.08.2012 and in furtherance to the same had issued possession notice under section 13(4) on 22.11.2012, 24.11.2012 and 03.12.2012 which is on the face of prior to registering the ECIR and the respondent no. 1 was fully aware about all factual position. 10. The other undisputed fact is when the POA was passed by the Enforcement Directorate/ Respondent no. 1 in 2016, the recovery suits filed by the Bank before the Ld. Debt Recovery Tribunal and action under SARFAESI Act, 2002 were pending and a stay order passed by the Ld. DRT, Delhi was operational since, 2013. Therefore considering the fact that the property was already under the blanket order of a Judicial Authority, passing off the POA was not legally proper. 11. The Adjudicating authority did not understand the fact that even before the registering of the ECIR, the Appellants had initiated action under the SARFAESI Act, 2002 and also that fact that the Appellan....
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....very of Debt Due to Banks and Financial Institutions Act are at final stage. Therefore the 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. 15. The Adjudicating Authority did not understand that fact the supremacy of special laws/ enactment had been clearly laid down by the Apex Court in KSL & Industries vs. Arihant Threads Ltd. & Ors., in civil appeal no. 5225/2008 passed in the year 2014, thereby clarifying that the later shall prevail on the earlier and the said amendment in the SARFAESI Act was brought in August 2016, thus the said act shall prevail over the PMLA. Infact the Adjudicating Authority, ignored the said law and fact as enacted and amended, since the impugned order was passed subsequent to the amendment of the act. Thereby meaning that the said amendment in the section of SARFAESI Act giving it over ridding effect over PML Act, was in existence on the date of the passing of the impugned order. 16. One cannot deny the fact that the monies of the Banks'/Appellant which are public monies and have been disbursed to the Borrowers are under done under proper s....
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.... 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 below:- "FPA-PMLA-1026/KOL/2015 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 havi....
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....hat 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 assets which have to be collected by the Special Court for the purp....
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....s 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 15 of the said judgment read as under: 15. To be noted that in both the judgments, relied upo....
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....kruptcy 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 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 who....
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....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, 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 C....
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....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; 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 & 5....
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....en 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 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 insti....
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....d 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 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.....
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....ating 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) 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....
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.... 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 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....
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....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 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 ....
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....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 offence, would be utmost 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 ....
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....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 the property to appellants. The respondent has not produced any document 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 ....
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....er 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 involved in money-laundering. The only defense or explanation raised by Defendants, particularly 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 Direct....
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....ants. 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, but rejected the same on the ground that Appellants have not given any valid reasons for not filing the same before the Adjudicating Authority. Having considered the Additional documents, the appellate authority failed to give any finding on merits after verifying with the concerned Bank." FPA-PMLA-2147/DLI/2018 : In appeal no. FPA-PMLA-2147/DLI/2018 this tribunal not only relied on the judgment and order of this tribunal passed in State Bank of India (supra) matter but also discussed and considered the judgment of Hon'ble Supreme Court passed in the matter of KSL & Industries vs. Arihant Threades Ltd. & Ors. in civil appeal no. 5225/2008 passed in the year 2014 as well as the Judgment & order of this Tribunal in the matter of Cheif Manager of Syndicate Bank vs. Deputy Director, PMLA in appeal no. FPA- PMLA/A-34/CAL/2009. 18. In the present case it is an admitted fact that the properties in question were acquired much prior to the period of alleged money laundering. The said proper....
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....tter of KSL & Industries Ltd (supra) has been delivered in the year 2014 whereas the amendment in aforesaid two Acts have been brought in the year 2016. 25. One more important thing to be noted that Hon'ble Supreme Court in the aforesaid case KSL & Industries Ltd. (supra) matter has held that the provisions of SICA, in particular section 22, shall prevail over the provisions for the recovery of debts in the RDDB Act because of the fact that the non- obstante provision of RDDB Act has specifically excluded SICA from its application. 26. The conflict of non-obstante clause arising in respect of two or more enactments then the same have to be resolved by taking into consideration of policy underlying the enactment and the language used in them. The Prevention of Money Laundering Act has been enacted for forfeiture of crime involved in the money 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 ....
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....om 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 here that the judgment of Hon'ble Supreme Court in the matter of KSL & Industries Ltd (supra) has been delivered in the year 2014 whereas the amendment in aforesaid two Acts have been brought in the year 2016. 21. The Hon'ble Supreme Court in the aforesaid case KSL & Industries Ltd. (supra) matter has held that the provisions of SICA, in particular section 22, shall prevail over the provisions for the recovery of debts in the RDDB Act because of the fact that the non-obstante provision of RDDB Act has specifically excluded SICA from its application. 22. The conflict of non-obstante clause arising in respect of two or more enactments then the same have to be resolved by taking into consideration of policy underlying the enactment and the language used in them. The Prevention of Money Laundering Act has been enacted for forfeiture of c....
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....perties mortgaged were acquired prior to the alleged commission of crime. 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 Adjudicating Authority because of the amendments of 2016 made in SARFAESI Act RDDB Act and discussion made in the preceding paras. 24. 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 the people and the state, hence these properties must justly go back where they belong, the state. In the present case as the money belongs to the Appellant Bank which is public money. The Appellant Bank has the right to property under the Constitution of India. The property of the Appellant Bank cannot be attached or confiscated if there is no illegality in the title of the appellant....
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....llant 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 Appellant Bank is concerned, the Bank has to recover its outstanding dues by taking over the possession of the mortgaged properties in case the concerned Respondents are not able to pay back the credit facilities availed by them 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. 29. From the discussion made above, I am of the view that there is no nexus whatsoever between the alleged crime and the Appellant Bank who is the mortgagee of the properties in question which were purchased before sanctioning the loan. Thus, no case of money-laundering is made out against Appellant Bank who has sanctioned the amount which is untainted and pure money. They have priority right to recover the loan amount/debts by ....
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.... the Bank are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the respondent no. 1 is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. 34. I am of the considered opinion that in case the Special Court passes the order to release the property of the victim and innocent party is mortgaged property could be disposed of for the purpose of adjustment of the amount due from the borrowers. 35. I am of the view that once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof ....