TaxTMI 
TaxTMI 
2018 (10) TMI 1012
X X X X Extracts X X X X
X X X X Extracts X X X X
....30/MUM/2018(COD) 1. The State Bank of India and 11 others bank have filed the present appeal against the order dated 22.02.2017 passed in O.C. No. 639/2016 by the Adjudicating Authority, New Delhi (under the Prevention of Money Laundering Act, 2002) inter alia confirming the Provisional Attachment Order bearing PAO No. 16/2016 dated 03.09.2016 passed by the Respondent No. 1 on the basis of case registered bearing ECIR No. ECIR/07/MBZO/2016 attaching various movable and immovable properties of the Respondent Nos. 2 to 5. 2. The State Bank of India and other banks have also filed the appeal under Section 26 of the PMLA against the order dated 1.12.2016 passed in O.C. No. 612/2016 issued by the Adjudicating Authority, New Delhi (under the Prevention of Money Laundering Act, 2002) inter alia confirming the Provisional Attachment Order bearing PAO No.11/2016 dated 11.06.2016 passed by the Respondent No.1 in the criminal case bearing ECIR No. ECIR/03/MBZO/2016 inter alia attaching immovable properties of the Respondent No. 4. 3. Along with the appeal, the appellants have also filed three applications for condonation of delay, seeking exemption from filing certified copy of the impugne....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Recovery Certificate in favour of Appellants." "5. It is submitted that the Appellants received a copy of the Impugned Order only on June 22, 2018 when the Respondent No. 4 filed it before the Hon'ble High Court of Karnataka in O.S.A. No.5/2017. It is further submitted that on June 29,2-18 the Appellants have filed an intervention application bearing no. MP-PMLA-4307/MUM/2018 in FPA-PMLA-1767/MUM/2017 (an appeal filed by Respondent No. 4) wherein the Appellants have sought to intervene in the said appeal and for release of the movable and immovable properties of Respondent Nos. 2 to 5 attached by the Respondent No. 1 in favour of the Appellants for recovery of the outstanding dues pursuant to the Final Order passed by the DRT in O.A. No. 766/2013." "6. The Appellants have immediately thereafter taken steps to file the instant appeal." 7. Admittedly, no notice under section 8(1) was issued to the appellant, nor any opportunity was granted to the banks before passing the impugned order. 8. This Tribunal in „Amanpreet Singh Gandhi vs. Deputy Director, Enforcement Directorate,FPA-PMLA-582/JL/2014 has held as follows: "The second proviso to section 8(1) requires that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inal decision by the Adjudicating Authoirty." 10. I have gone through the application filed by the appellants for condonation of delay. This Tribunal is of the considered opinion that as a matter of fact, ED has failed to perform his duty not to implead the appellants (lenders) banks despite of having full knowledge that the loan amounts have to be returned by Vijay Mallya and his associate company to the banks who are the mortgagees of the attached properties. One is failed to understand why have not done so when they were full aware. Thus, the prayer made in the application for condonation of delay is liable to be allowed as the sufficient cause has been shown, the Misc. Petition is disposed of. (i) MP-PMLA-4931/MUM/2018 (EXEM.) & (ii) MP-PMLA-4932/MUM/2018 (STAY) in FPA-PMLA-2538/MUM/2018 11. Issue notice in the appeals as well as in the stay application. The learned counsel for the respondent no.1 accepts the notice. Reply be filed by respondent no. 1 within 6 weeks. Notice be issued to the other respondents for the next date. Exemption is allowed. M.P. 4931/2018 is disposed of. 12. With regard to stay application, the facts are that the Respondent No. 2 to 5 are M/s King....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Capital Facility. The Working Capital and Rupee Term Loan facilities were governed by the terms and conditions contained in the MDRA and the Financing Documents and the same were secured by the Security created pursuant to/as required in terms of MDRA and other Security Documents. It was also agreed upon that the MDRA and the Financing Documents constitute the entire agreement between the parties concerning the Various Facilities, and superseded all previous proposals, agreements, understandings, negotiations and other written and oral communications in relation thereto. 7. The Respondent No.2, the Appellants and SBICAP Trustee Company Ltd., entered into a Security Trustee Agreement dated 21.12.2010 under which the Respondent No.2 settled a trust and appointed SBICAP Trustee Company Ltd. as the security trustee for the benefit of the Appellants and to, inter alia, hold the Encumbrances created/ to be created pursuant to the Security Documents in accordance with the respective terms thereof, for the benefit of the Appellants (excluding Appellant No.7). It is pertinent to note that Respondent No.2 created, the Securities in favour of SBICAP Trustee Company Ltd. for the benefit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting the Corporate Guarantee Agreement dated 21.12.2010 with Appellant No.1. A copy of the Corporate Guarantee Agreement dated 21.12.2010 is herewith produced as Annexure No. A-4. 13. Further, Respondent No.3 provided personal guarantee in favour of the Appellant No.1 i.e. State Bank of India as Lender and Lenders' Agent, for securing the obligations of KAL under the MDRA and other Financing Documents by executing the Personal Guarantee Agreement dated December 21, 2010 with Appellant No.1. A copy of the Personal Guarantee Agreement dated 21.12.2010 is herewith produced and marked as Annexure No. A-5. 14. It is pertinent to note that amongst the Appellants herein Appellant No. 7 is on different footing in comparison to the other Appellant Banks as it had separate securities solely in its favour. However, they are also covered under the Corporate Guarantee Agreement and the Personal Guarantee Agreement executed by Respondent No.4 and Respondent No.3 respectively on December 21, 2010 and was a party to the MDRA. The details of the separate securities solely in their favour to secure their loans as follows: Pledgor Name of company whose shares are pledged No. of Shares pled....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l is over or the Special Court would pass the orders in this regard. 17. The question before the Tribunal is to whether the banks should wait till the trial is over or recover the amount by enforcing the decree forthwith once decree is become final. 18. The main active-director Shri Vijay Mallya who himself has chosen to leave the country without paying debts to the creditors. Though in connecting appeal, he has offered to clear the entire amount after disposing of assets attached and such issue is also pending before the Hon‟ble Karnataka High Court. 19. However, the fact of the matter is that as of today the banks are going pillar to post to recover the amount against the decree passed in their favour. 20. Earlier, the State Bank of India and other banks have appreciated the investigation of the ED and were also satisfied with the Provisional Attachment Order passed by the ED and the confirmation order. Once the State Bank of India and other banks have come to the notice that the ED may not agree to dispose of the properties by the banks (in view of the decree passed) till the completion of trial under Section 5(5) of the Act, the banks have decided to challenge the imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....full or part after notice of 90 days served upon the Borrower by the Debenture Trustee or any other authority in whose favour security interest is created for the benefit of holders of Debt Securities or;" is added which makes the said amendment or the 1993 Act applicable to all the debts which remains unpaid. 25. The amendment prima facie gives the Secured Creditor, a priority over the rights of Central or State Government or any other Local Authority. 26. It is evident that the amendment has been introduced to facilitate the rights of the Secured Creditors which are being hampered by way of attachments of properties, belonging to the Financial Institutions/Secured Creditors, done by/in favour of the Government institutions. 27. The Full Bench of the Madras 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. MANU/TN/3743/2016" that "There is, thus, no doubt that the rights of a Secured Creditor to realize secu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsideration 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." 30. The Supreme Court in (2010)8 Supreme Court Cases 110 (Before G.S. Singhvi and A.K. Ganguly, JJ) in the case of United Bank of India V/s. Satyawati Tondon and Ors. In paras no. 6, 55 & 56 has held as under:- 6. To put it differently, the DRT Act has not only brought into existence special procedural mechanism for speedy recovery of dues of banks and financial institutions, but also made provision for ensuring that defaulting borrowers are not able to invoke the jurisdiction of the civil courts for frustrating the proceedings initiated by the banks and other financial institutions. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAES....