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2018 (11) TMI 1398
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....,00,000/- 2. M/s Bajaj Finance earlier also filed an Appeal against 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 Nar....
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....eds of crime. It is submitted that there is no nexus of the properties in question with the alleged criminal 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 ....
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....t submitted that such agreement should not be considered by this Tribunal. However, the counsel agreed that the appeal be decided on merit and the respondent has no objection if the Bank of Baroda be impleaded 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 th....
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....de the real controversy between both parties as the bank is an interested party who are also secure creditor having equitable mortgager in its favour. 10. The present application has been filed as per order dated 29th August, 2018. Reply to the application has been filed by the respondent 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....
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.... and the bank is enable to recover the amount by dispensing of the said property. The respondent no.1 has failed to comply the provision of section 5 & 8 of the Act. Had the investigation in the matter was property done by the ED, such situation ought not to have arrived. While issuing the notice under section 8(1) to the appellant to the 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 ....
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....985 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 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....
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....perly 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 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 ....
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.... 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." 26. 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),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 Bankrupt....
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....he 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 concur 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 statues 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. 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 ....
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....o its case in the given facts and circumstances of the case. The facts in the referred cases are not similar. 32. It is an admitted fact that the properties herein are mortgaged with therespondent no. 2. It is also a fact that the mortgaged properties are not acquired out of any proceeds of crime. It has come on record that the properties mortgaged were acquired prior to the alleged commission of crime. The relevant sale deed of the mortgaged properties are of 2003 so the date of acquisition 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 ov....