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TaxTMI 
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2018 (11) TMI 1398
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....ainst the impugned order dated 13.09.2017 being Appeal No. FPA-PMLA-2058/LKW/2017 titled Bajaj Finance Ltd. Vs. Directorate of Enforcement. 3. The Appeal was filed by M/s Bajaj Finance primarily on two main grounds,firstly,that the property bearing No. B-42, Ashok Vihar, Phase -I, New Delhi was under mortgage with them and they have first charge over the property and secondly, on the ground that the property was acquired by the Appellant on 17.10.2002 i.e much prior to coming into effect of Prevention of Money Laundering Act, 2002 [Sale Deed dated 17.10.2002 of the residential accommodation bearing no. B-42, Ashok Vihar, Phase- I, New Delhi]. 4. This tribunal has by its Judgment and order dated 28.06.2018 allowed the Appeal of Bajaj Finance Ltd. while setting aside the order passed by the Adjudicating Authority dated 13.09.2017 while observing that the property was purchased much prior to the commission of crime in the year 2010-11 and that the Property is mortgaged with Bajaj Finance Limited. Many decisions on the subject were referred passed by High Courts and this tribunal. 5. Sh. Pankaj Grover, son of Naresh Grover in his Statement under Section 50 of the Prevention of Money....
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.... activity, hence, these cannot be proceeds of crime. ii) The Adjudicating Authority has failed to appreciate that the term "reason to believe" is not defined in the Act but is explained in section 26 of the Indian penal code, 1860. iii) The Adjudicating Authority failed to appreciate that that the Appellant No. 2, Mr. Pankaj Grover, has been arrayed as a Defendant even though no cause of action has arisen against him under Prevention of Money Laundering Act, 2002. It is submitted that the Appellant No. 2 is neither the owner of the properties in question nor has he ever been forwarded to the Magistrate under section 173 of the Code of Criminal Procedure, 1973 for any of the predicate or scheduled offences. The impleadment of the Appellant No. 2 is a misjoinder of party and his name shall be struck of from the Memo of Parties. iv) The Adjudicating Authority did not at all return a finding as to whether there was at all any "proceed of crime" available for attachment. The appellant humbly submits that the properties purchased and acquired in the year 2002 even prior to the coming in to operation of the PMLA on 01/07/2005 could not have been the properties derived or obtained ....
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....d as party. Even on 28.09.2018 when the Bank of Baroda was impleaded as respondent no. 2, this tribunal has passed the detailed order, the same is reproduced here-under:- ORDER 28.09.2018 1. "In view of the order dated 29.08.2018, the followings properties were attached by the provisional attachment order dated 26. 04.2017. The said order was confirmed by the impugned order dated 13.09.2017 the details of the properties are mentioned below. 2. As per material placed on record the above mentioned properties were purchased in 2001 & 2002. The above mentioned property at sr. no. 2 the payment were made by way of demand drafts. The details of the same were available before page no. 226 of the paper book. Sr. No. Details of Property Value (INR) 1. B-42, Ashok Vihar, Phase-I, New Delhi 17,11.42,000/- 2. Factory of M/s SurgicoinMedequip Pvt. Ltd. 1703-04, HSIDC, Rai, Sonepat, Harnaya. 5,50,00,000/- 3. It has come on record that in the impugned order at page no. 74 where the statement of Ms. Pankaj Grover was recorded u/s 50 it is observed in the impugned order that the loan of Rs. 7 crores has been taken from the Bank of Baroda for the property at serial no. 2 and s....
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....dent no. 1. 11. Mr. Shvet. Gupta, Senior Manage, Bank of Baroda, Kundli Brach Haranya, is present in person before this Tribunal and submits that no notice u/s 8(1) of PMLA has been received by the Bank. He further submits that the main intention of the bank is to recover the loan amount from the borrower i.e. appellant. 12. All the contentions of the respondent with regard to merits will be considered at the time of hearing.. As the prayer made in the application is concerned, the same is allowed. Bank of Baroda is allowed to impleaded as respondent no. 6. 13. Let the response to the appeal as well as reply filed by the respondent no. 1 be filed by Bank of Baroda by 7th October, 2018 with an advance copy to the counsel for the appellant as well as respondent no. 1. Reply if any be filed by 10th October, 2018. 14. List for remaining arguments on 10th October, 2018 before me. Order be given dasti to the parties." 17. The learned counsel for the respondent no.1 does not dispute that the property in question was purchased in 2001/2002 which was not from the proceeds of crime. However, it is argued by him that the same can be attached in lieu of value thereof as there are se....
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....other parties, no notice was given to the Bank of Baroda who is the interesting party/owner of the property as the borrowers were in violation to pay the debt of the bank. The law in tis regard is quite settled. 22. The proceeds of crime are defined in Section 2(1) (u) of the Prevention of Money Laundering Act, 2002 which reads as under:- "Proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property." 23. The scope of the Act and the provisions of PML Act, 2002 is to punish the accused person involved in money laundering, but not to punish an innocent person, who is not involved in the crime within the meaning of Section 2(u) of the Act. 24. In the present case, the SARFAESI Act, 2002, RDDB Actand 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 ....
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....n 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 the said Act will have effect notwithstanding anything inconsistent therewith contained in any other law except to the provisions of the Foreign ExchangeRegulation Act, 1973 and the Urban Land (Ceiling and Regulation) Act, 1976. A similar non obstante provision is contained in Section 13 of the Special Court Act which reads as follows: "13. Act to have overriding effect.-The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or order of any Court, tribunal or other authority." 9. It is clear that both these Acts are special Acts. This Court has laid down in nouncertain 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.....
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....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 purposes of distribution under Section 11(2). The distribution can only take place provided the assets are first collected. The whole aim of these provisions is to ensure that monies which are siphoned off from hanks and financial institutions into private pockets are returned to the banks and financial institutions. The time and manner of distribution is to be decided by the Special Court only. Under Section 22 of the 1985 Act, recovery proceedings can only be with the consent of the Board for Industrial and Financial Reconstruction or the appellate authority under that Act. The Legislature being aware of the provisions of Section 22 under the 1985 Act still empowered only the Special Court under the 1992 Act of the 1992 Act to give directions to recover and 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 i....
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.... Court in the matter of KSL & Industries ltd. (supra),I 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 time the aim and object of both the special Acts are to be looked into to decide such issue in the manner and harmoniousconstruction has to be arrived. 27. 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....
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....t 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. Even when the properties were mortgaged with the respondent no. 2 the same were not tainted. The allegation of commission money laundering is after the mortgage of the said properties with therespondent no. 2. After the mortgage of the aforesaid properties a legal right has been accrued in favour of the respondent no. 2 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 filedagainst them. 30. 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. I 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 acquired properties and those acquired properties were ....
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....ion is much prior to the date of alleged commission of crime in the present case. 33. Being a victim party u/s 8(8) of the Act, second proviso which is incorporated very recently in April, 2018, the bank is entitled to dispose of the properties if the bank is victim and sufferer due to non-return of loan amount by the borrower. 34. There is no nexus whatsoever between the alleged crime and the bank is merely the secured creditor and was not aware that the borrower would avoid returning the loan-amount. Prima facie, no case of moneylaundering is made out against bank. The bank has the priority rights on assets of the secured creditors to recover the loan amount/debts by sale of assets over which security interest is created. 35. This Tribunal has gone through the written submissions as well as reply filed by the respondent. The respondent no. 1 has merely brought the allegations made against the appellant which are to be decided by the Special Court. As far as issue of mortgage of property is concerned, the same has not been dealt by the respondent in accordance with the law. Therefore, I reject all the arguments alleged by the respondent no. 1 or its counsel. The property even ....