TaxTMI 
TaxTMI 
2011 (4) TMI 1490
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....nts for export of goods such as Invoice, Packing List, Quality and Quantity Certificate, SDF Declaration, Undertaking, Origin of Goods Certificate, Shipping Bill, Bill of Lading etc. to the bank and got these bills discounted against L/C(s) and obtained an amount of Rs. 12,28,22,463/- and Rs. 1,30,43,433/- from State Bank of India and Rs. 6,76,65,000/- from Oriental Bank of Commerce. The above funds, which were credited to the above current accounts, were withdrawn from bank for personal gain of Shri Gopinath Das and companies owned and managed by him. Out of these funds, Sh. Gopinath Das has acquired several immovable properties as detailed in the impugned order and mortgaged them with Syndicate Bank, Salt Lake Branch, Kolkata, the present appellant for availing credit facilities to the extent of Rs. 10 crores and got Rs. 4.5 crores fraudulently released from the appellant against fake and forged documents. As the amount of loan given by the appellant was not repaid, the account became Non Performing Asset (NPA) and the appellant proceeded u/s. 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short Securitisation Ac....
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....he three conditions laid down in sub section (1) of section 5 of the Act are not satisfied in this case for making provisional attachment and therefore the attachment order is illegal. He drew our attention to section 5(1) of the Act which reads thus: 5. Attachment of property involved in money laundering- (1) Where the Director, or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding ninety days from the date of the order, in the manner provided in the Second Schedule to the Income Tax Act, 1....
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.... of this Tribunal in its Judgment in the case of Radha Mohan J. Lakhotia & Others vs. Dy. Director, PMLA in FPA-PMLA-2/MUM/2007 where it has been held that the property which is proceeds of crime and is in possession of any person, even though he is not charged of having committed a scheduled offence, can be attached. 7. Relevant portion of this Tribunal's Judgment in the case of Radha Mohan J. Lakhotia & Others (supra) reads thus: 15. Money Laundering has been defined in section 2(p) of the Act. It says that "money laundering" has the meaning assigned to it in section 3. Section 3 of the Act reads thus: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. The ambit of the above section is very wide and even person who is not actually involved in the commission of schedule crime but directly or indirectly involving/assisting/indulging in any process or activity connected with the proceeds of crime and projecting those proceeds as u....
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....tradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity presumably not intended, a construction may be put upon which advances the laudable purpose then to paralyze the provision. Therefore the provisions of the Act which are designed to prevent/suppress money laundering have to be construed in a way which advances the remedy and suppress the mischief. 16. Thus, we are in full agreement with the reasoning of the Adjudicating Authority given in its order in Original Complaint no. 6 of 2007 and hold that property which is proceeds of crime and is in possession of any person, even though he is not charged of having committed a schedule offence, can be attached. Thus, the appellants are covered under the Act and attachment proceedings commenced by the authorities under the Act were valid proceedings. 8. Following the reasoning given in the above judgment and the reasoning given by the Hon'ble Bombay High Court in First Appeal no. 527 of 2010 upholding the above judgment, we are of the view that the attachment proceedings commenced by the authorities under the Act were valid proceedings. 9. It is true that every statute is prima-faci....
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.... bring about the text in conformity with the legislative intent and, therefore, retrospective. Even without the amendment in the Act for insertion of the proviso to section 5(1), considering the object of the Act and purpose to be achieved, one can only interpret the section as clarified by the amendment. What is attached is the alleged proceeds of the crime or the property involved in money laundering. 11. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation or which is declaratory or clarificatory in nature, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given. In this case, a proviso was added only to clarify the existing provisions of the Act. 12. Appellant contended that the Respondent has not taken possession of the attached property as provided under section 8(4) of the Act and the Accused is continuing to enjoy the property and the purpose of the Act is defeated. He submitted that the Bank may be allowed to auction the proper....
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....s been attached by the respondent as they were purchased out of the proceeds of crime and are involved in money laundering and not for the reason that SBI and OBC have raised any objection on sale of properties by the appellant and no such matter is covered by the impugned order which is in appeal before us. 15. The next contention of the appellant is that much before the order of provisional attachment passed on 8.12.2008 by the respondent, the appellant had issued notice u/s. 13(2) of the Securitisation Act on 30.9.2006 and also had taken possession of the properties in question under section 13(4) of the Securitisation Act on 30.11.2006. He argued that in view of the provisions of section 34 of the Securitisation Act, neither the respondent could order provisional attachment of the properties in question nor the Adjudicating Authority could confirm the said provisional attachment or restrain the appellant from selling its secured assets to recover its dues. He further argued that by virtue of section 35 of the Securitisation Act, the provisions of the Securitisation Act has overriding effect on the provisions of the Prevention of Money Laundering Act as the Act was passed by ....
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.... (Cr.) SC 593]. 18. We have examined the relevant dates of passing the Act and Securitisation Act by the Lok Sabha and Rajya Sabha and their dates of coming into force which are tabulated below: 19. As per the legislative procedure for making law, when a Bill is ready to be brought before the House, it can be introduced in either of the two Houses by the minister concerned. The House in which bill is introduced, after passing the Bill transmit the same to other house for its concurrence. The House which receives the Bill can pass the Bill as it is or with amendments. If the Bill is passed with amendments, the Bill is returned to the first House for consideration and passing the amended Bill. If the House agrees to the amendments proposed by the other House, the Bill is deemed to have been passed, as amended, by both the House. If, however, the originating House does not agree to the amendments proposed by the other House, the Bill is sent again to the latter to get its concurrence. If this House continues to insist on its amendments, the result is a deadlock. From the above legislative procedure, it is clear that unless a Bill is passed by both the houses and it gets Presiden....
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....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 statutes. The two statutes operate in their exclusive fields. The question is only who will have his first claim on any property where the claim of the State concur with the claim of any other person. Halsbury explaining the Crown's rights, in relation to property states that where the Crown's right and that of a subject under it meet at one end and at the same time, that of the Crown in general is preferred. 22. At this point it is also essential to consider the provisions of section 9 of the Act which reads thus: 9. Vesting of property in Central Government:-Where an order of confiscation has been made under sub-section (6) of section 8 in respect of any property of a person, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances: Provided that where the Adjudicating Authority, after giving an opportunity of being heard to any other person interested i....