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2019 (1) TMI 188
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....filed within the prescribed period of 45 days as provided under the provisions of Section 26(3) of the Act. 4. The appellant, Bharat Co-operative Bank (Mumbai) Ltd. is a multi-state Scheduled Bank under the provisions of the Multistate Co-operative Societies Act, 2002 having 102 Branches and the appellant bank's branch is one of them. 5. The case of the respondent - Deputy Director of Enforcement is that the Zonal Office - Ahmedabad was investigating a case of illegal cricket betting vide ECIR Bi, 03/AMZO/2015 under the supervision of Joint Director of Enforcement with Assistant Director; that one Bimal Ramgopal Agarwal, in connivance with Joint Director collected Rs. 2.75 crores from one Manoj Jain alias Chusu on 28.07.2015 and Rs. 50,00,000/- from one Surinder Kalra alias R.S. Mandi on 25.05.2015 as bribe/illegal gratification for doing favour to the accused in the above said case of cricket betting; that a sum of Rs. 96.75 lakhs out of Rs. 3.25 Crores was deposited in various bank accounts of companies/firms/individuals related to Bimal Agarwal between 28.07.2015 and 22.09.2015; that on the basis of a complaint dated 21.09.2015 of the Director of Enforcement, New Delhi, an....
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.....01.2011 confirming the deposit of title deeds in respect of the said Pent House and continuation of the properties already mortgaged earlier. vi. Memorandum of Entry dated 19.01.2011 by the Branch Manager of Goregaon (E) Branch of the Bank, by paying requisite amount of stamp duty in respect of the said Pent House. vii. Loan Agreement for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. viii. Letter of General Lien and Set Off for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. ix. Demand Promissory Note for Bank Guarantee/ Letter of Credit Limit of Rs. 15 Crores dated 19.01.2011. 8.1. The said Penthouse No. 2001/2101 was again mortgaged by Bimal Ramgopal Agarwal to the Appellant - Bank for the Second time on 04.03.2011 against the enhancement of the Cash Credit Limit from the then existing Rs. 10 Crores to Rs. 15 Crores and reduction of composite Bank Guarantee Limit and Letter of Credit Limit from Rs. 15 Crores to Rs. 10 Crores. The said mortgage is duly supported by the following legal documents created in favour of the Appellant Bank:- i. Sanction Letter No. BCB/GGE/CC-650/4205/2....
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....it of Rs. 10 Crores dated 19.12.2011 ix. Demand Promissory Note for Bank Guarantee/ Letter of Credit Limit of Rs. 10 Crores dated 19.12.2011. 8.3. It was again mortgaged by Bimal Ramgopal Agarwal to the Appellant - Bank for theFourth time on 29.01.2013 against the renewal of the Cash Credit Limit of Rs. 25 Crores and enhancement of composite Bank Guarantee Limit and Letter of Credit Limit from Rs. 10 Crores to Rs. 15 Crores. The said mortgage is duly supported by the following legal documents created in favour of the Appellant Bank:- i. Sanction Letter No. BCB/GGE/CC-650/2717/2011 dated 14.01.2013 issued by the Bank. ii. Loan Agreement for Cash Credit of Rs. 25 Crores dated 29.01.2013. iii. Letter of General Lien and Set Off for Cash Credit of Rs. 25 Crores dated 29.01.2013. iv. Demand Promissory Note for Cash Credit Limit of Rs. 25 Crores dated 29.01.2013. v. Borrowers' Forwarding Letter dated 29.01.2013.confirming the deposit and continuation of title deeds in respect of the said Pent House and other properties. vi. Memorandum of Entry dated 29.01.2013 by the Branch Manager of Goregaon (E) Branch of the Bank, by pa....
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..... 21 Crores and reduction of Composite Bank Guarantee Limit and Letter of Credit Limit from Rs. 10 Crores to Rs. 8 Crores. The said mortgage is duly supported by the following legal documents created in favour of the Appellant Bank:- i. Sanction Letter No. BCB/GGE/LOANS/4111/2017 dated 31.03.2017 issued by the Bank. ii. Loan Agreement for Cash Credit of Rs. 21 Crores dated 31.03.2017. iii. Letter of General Lien and Set Off for Cash Credit of Rs. 21 Crores dated 31.03.2017. iv. Demand Promissory Note for Cash Credit Limit of Rs. 21 Crores dated 31.03.2017. v. Borrowers' Forwarding Letter dated 31.03.2017 confirming the deposit and continuation of title deeds in respect of the said Pent House and other properties. vi. Memorandum of Entry dated 31.03.2017 by the Branch Manager of Goregaon (E) Branch of the Bank, by paying requisite amount of stamp duty in respect of the said Pent House. 8.6. Bimal Ramgopal Agarwal had created legally sustainable Equitable Mortgage by deposit of Title Deeds in respect of the above Penthouse No. 2001/2101 in favour of this Appellant - Bank on (i) 19.01.2011, (ii) 04.03.2011, (iii) 19.12.2011, (iv....
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....Agarwal was in possession of the value of the proceeds of crime. The Appellant case is having created a legally valid mortgage in its favour by the Predicate Offender in 2011, i.e. even before the commission of the alleged scheduled crime in 2015, the property in question is a secured asset in the hands of the Appellant, as has been held by this Tribunal in a number of cases. Both the Respondent and the Adjudicating Authority did not appreciate that it is not even the value of the proceeds of crime. The said Bimal RamgopalAgarwal through Advocate has raised no objection if the prayer made in the appeal is allowed. 11. It is truethat the Respondent - Deputy Director is empowered to pass Provisional Attachment Order under Section 5(1) of PMLA only if the conditions mentioned therein are satisfied. Sub-Section (1) of Section 5 of PMLA reads as under :- "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 the Director 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 pos....
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....eded to issue the Provisional Attachment Order. 14. The Respondent-Deputy Director is relying upon the non-obstante clause in Section 71 of PMLA to claim priority over their debts due to the Appellant Bank. Section 71 of PMLA reads as under:- "The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force." 15. There is no denial on behalf of respondent that appellant is a Secured Creditor and is entitled to priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or Local Authority. In this connection, the Appellant - Bank relies upon the amended provisions of Section 26E of the SARFAESI Act, 2002 as amended by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 which reads as under:- "26E. Priority to secured creditors. - Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts....
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.... Adjudication Order was bad and against the law,therefore, the said Impugned Order is liable to be set aside by lifting the attachment and for handing over the possession to the Appellant. 17. It is matter of record that Shri Bimal Ramgopal Agarwal and his wife by executing legal mortgage of the attached property in favour of the Appellant - Bank by way of deposit of Title Deeds thereof, secured and availed of the benefit of financial assistance from the Appellant - Bank.The Appellant Bank had already given its own money to the said Bimal Ramgopal Agarwal by way of loan. The Appellant - Bank, therefore, had become secured creditor as far as the property attached under the Impugned Order is concerned. In the face of the rulings laid down by this Tribunal in number of cases referred to in Paragraphs 31 to 34 of the instant Memo of Appeal, which rulings have been handed down by this Tribunal after duly considering the law as laid down by the Hon'ble Supreme Court, followed by the full Bench of the Madras High Court,Andhra Pradesh High Court as stated in Paragraphs 25 to 29 of the Memo of Appeal, this case is quite a fit and proper case deserving it to be allowed by setting asid....
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....s brought to our notice of this Tribunal that the above mentioned provisions had come into force w.e.f. 16.08.2016, empowering this Appellant Bank to have priority over the mortgaged property. 22. The Hon'ble Supreme Court, wherein it has been categorically held that if non-obstante clause is contained in two enactments, the non-obstante clause in the later enactment shall prevail over the non-obstante clause in the earlier enactment.In the case of Solidaire India Ltd. vs. Fairgrowth Financial Services Ltd. (2001) 3 SCC 71, the Supreme Court was considering the effect of the nonobstante clause contained in Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 and Section 13 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. The Hon'ble Supreme Court has categorically held that the non-obstante clause in the later Act must prevail over the non-obstante clause in the earlier Act. The following is the relevant portion of the decision of the Hon'ble Supreme Court :- "9. It is clear that both these Acts are special Acts. This Court has laid down in no uncertain terms that in such an event it is....
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.... and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or LocalAuthority." 25. The said principle laid down by the Hon'ble Supreme Court has also been followed by the Hon'ble Madras High Court in another decision dated 22.12.2016 in W.P. No.27504 of 2015 and has upheld the provisions of the amended Section 26E of SARFAESI Act. The following is the extract of the relevant portion of the said decision of the Madras High Court:- "8. Concededly, the mortgage in favour of the petitioner Bank was created on 26.05.2005, which was prior to the date of attachment. The date of attachment, as indicated above, was 19.01.2015. To be noted, attachment entry was made by respondent No. 3, on 13.08.2015. This apart, the matter is now put beyond the pale of doubt, as during the pendency of the writ petition, an amendment has been made to the 2002 Act with the insertion ofSection 26E. " 26. It is clear from the material placed on record that the Appellant - Bank being a Secured Creditor, since it had lent its own money to the Predicate Offender earlier, is entitled to priority over all other debts and government dues, in....
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....ty cannot be considered to have been purchased with any proceeds of crime and the Respondent - Deputy Director has no power to attach the said property under Section 5(1) of PMLA. 30. The AdjudicatingAuthority also has no power to confirm the Attachment under Section8(2) of PMLA. Similarly, it is a simple case of recovery by the Appellant-Bank from its Borrower its own stressed Asset, since the Bank had already lent the money owned by it, which the Bank earned in licit means and during the normal Banking Business Transaction it had made available to its Customer such a huge amount while creating the mortgage in Bank's favour by Bimal Ramgopal Agarwal as collateral security. 31. The principle laid down in the above decisions of the Hon'ble Supreme Court and the Hon'ble Madras High Court has been followed by this Appellate Tribunal, Prevention of Money Laundering Act, New Delhi, in its catena of decisions, including the decision dated 14.07.2017 in a batch of Appeals filed by various Banks, namely, the State Bank of India vs. The Joint Director Directorate of Enforcement (and connected Appeals) against the Provisional Attachment Order. The Tribunal was pleased to ho....
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....y sale of assets over which security interest is created, which remains unpaid." 33. This Tribunal in the above Judgment dated 14.07.2017 has also relied upon its own earlierJudgment dated 22.06.2017 in the case Indian Performing Right Society Ltd. vs. The Deputy Director, Directorate of Enforcement,Mumbai, wherein the Tribunal held as follows :- "55. Whether innocent party whose properties i.e.movable or immovable are attached can approach the Adjudicating 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 purpose of release of properties which have been attached in terms ofthe provisions ofSection 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. 34. In the present case, this Appellant - Bank is an innocent party since it had already lent its own money to the Predicate Offender and the property in question being mort....
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....s were purchased after the loan was obtained. The mortgages of the properties were done as bonafide purposes. None of the bank is involved in the schedule offence. No PMLA proceedings are pending except the complainant bank was arrayed as Column;-ll at the time of framing charges. Union Bank of India has not granted sanction against its employee to proceed against him in criminal complaint. There is no criminal complaint under the schedule offence and PML4 is pending against the two banks. In case of failure on the part of borrowers to comply with the terms of settlement, the contempt proceedings are maintainable in the Court where the settlement was recorded. 47. In view of the entire gamut of the dispute, we are of the considered opinion that the conduct of the banks are always bonafide. Both banks are innocent parties. They were legally entitled to inform the Adjudicating Authority about their innocence and they rightly did so but their contention was rejected as appearedfrom the impugned order." 37. The said Judgment passed by us has not been considered and followed by the Adjudicating Authority. It is a very serious matter. The Authority is supposed to give due res....
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....perty." 41. This Tribunal in recent judgment dated 02.08.2018, in the case of Standard CharteredBank &Ors. vs. The Deputy Director of Enforcement, Mumbai (Mehul Choksi's case), allowing the Appeal and setting aside the Orders of Provisional Attachment and Adjudication. The facts of the case herein is exactly identical to the said case decided by the Tribunal, since no allegation of any nexus or link directly or indirectly has been established by the Department in respect of the Secured Assets as being involved in the proceeds of crime. 42. The Appellant - Bank is an innocent party which is not involved in the money laundering directly or indirectly or assisted in any manner, any party or the said Predicate Offender - Bimal Ramgopal Agarwal and others; that the mortgaged property was also not purchased from the proceeds of crime; that the said property not being owned by Bimal Agarwal, cannot form the value of proceeds of crime. Thus, the question of provisional attachment order and confirmation thereof, does not arise and the Bank being the legal owner. Thus, the appellant is entitled to recover the amount if not paid, the same can be recovered from mortgaged of the said ....