TaxTMI 
TaxTMI 
2019 (1) TMI 328
X X X X Extracts X X X X
X X X X Extracts X X X X
....r. 4. The delay of 17 days caused not at all deliberate and intentional and it is for bona fide reasons and the sufficient cause was shown that it is condoned. 5. The Bharat Co-operative Bank (Mumbai) Ltd. ("the said Bank‖, for short) is a Multi-State Scheduled Bank having 102 Branches and the Appellant Branch is one of them. The said Bank is engaged in carrying out its functions as a Banker under the permission and license granted by the Reserve Bank of India in terms of the relevant statute. The said Bank is having its Central Office at Marutagiri, Plot No. 13-9A, Sonawala Road, Goregaon (East), Mumbai - 400 063 and registered Office at Mohan Terrace, First Floor, 64/72, Modi Street, Fort, Mumbai - 400 001. The said Bank is a Multistate Co-operative Bank registered under the provisions of the Multistate Co-operative Societies Act, 2002. 6. One of the activities/functions which it carries is of lending monies to its Customers against various kinds of Securities such as pledging and mortgaging the properties and creating lien of the Bank on such properties of the Customers where against the loan is advanced by the Bank. 7. The Appellant had extended two separate loans of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....20 of the said order that the attached property described in Table II Page No. 56 of the Provisional Attachment Order in the name of Defendant No. 3 - Company lying deposited with the Appellant Bank is involved in Money Laundering and therefore, Ordered that the said Provisional Attachment shall continue during the pendency of the proceedings relating to the Offence under the said Act before a Court and will become final after an Order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 of the said Act. 13. 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 and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority." 14. The amended provisions of Section 31B of the Recovery of Debts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt, has categorically held that if nonobstante 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 non-obstante 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 nonFPA- 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 the later Act which must prevail" 18. The Hon'ble Supreme Court, while deciding this issue unequivocally, has held that its own catena of decisions echoed earlier, which are reported in- (i) AIR 1956 SC 614 - Ramnarayan vs. Simla Banking and In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as 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 of Section 26E." 21. Thus, it clear that the Appellant-Bank being a Secured being a Secured Creditor, is entitled to priority over all other debts and government dues, including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. 22. Even Hon'ble Andhra Pradesh High Court in the case of B. Rama Raju Vs. Union of India & Ors. reported in (2011) 164 Comp Cases 149 in which the Hon'ble High Court has held that if the Adjudicating Authority is satisfied a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Bank while rendering the facilities were bona fide parties. It is not the case of the respondent that the attached properties were purchased after the loan was obtained. The mortgage of the properties were done as bona fide purposes. None of the bank is involved in the scheduled offence. 47. In view of the entire gamut of the dispute, we are of the considered opinion that the conduct of the banks are always bona fide. Both banks are innocent parties. 58. Thus in the present case even though the Ld. Adjudicating Authority had all the reasons to believe that the above mentioned were mortgaged to the Appellant Bank and that the Appellant/SBI had prior charge over the subject matter - 5 properties ;still the Ld. Adjudicating Authority confirmed the provisional attachment order of the respondent no. 1 and thus causing huge loss to the appellant SBI. 60. We also find that the Adjudicating Authority has not examined the law on mortgages and securities. 63. The property of the Appellant bank cannot be attached and confiscated when there is no illegality or unlawfulness in the title of the appellant. 64. The respondent has no lien over the said properties as the appellant banks....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tional security'. 27. This Appellate Tribunal, PMLA in the Admission Order dated 20.11.2017 in the case of Bajaj Finance Ltd. vs. The Joint Director, Directorate of Enforcement, Lucknow in Appeal No. MP-PMLA- 3975/LKW/2017 (Stay) FPAPMLA-2058/LKW/2017, while staying the operation of the Impugned Order passed by the Adjudicating Authority has observed as follows :- "2. The case of the Appellant is closely similar to the case decided by this Tribunal on dated 14.07.2017 in State Bank of India and Ors. Vs. The Joint Director, Directorate of Enforcement, Kolkata. In Paragraphs 46 and 47 of the Judgment, this Tribunal found that the attached property was purchased much prior to the period when the facility of offending loans were sanctioned to the borrowers. Further, the Bank was not involved in the schedule offence. It was further observed that the mortgaged properties are security to the loans and cannot be subject matter of attachment particularly when the same were purchased and mortgaged prior to the events of funds diversion and frauds committed by the borrowers. A completely same scenario exists in the present case also where the Appellant is a bona fide lender and the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....counsel or the appellant. 6. List this appeal for final disposal on 15th January, 2018. 7. In the meanwhile, operation of impugned order shall remain stayed as far as the case of the appellant is concerned. 8. Copy of the order be sent to the Ministry. 9. Order be given "Dasti" to both the parties. 28. The aforesaid interim order dated 20.11.2017 passed by this Tribunal in Bajaj Finance case was finally confirmed by it in the Final Order/Judgment dated 28.06.2018, by allowing the Appeal and setting aside the Impugned Orders of the Provisional Attachment and the Adjudication Order passed therein. It is worthwhile to reproduce here below the 3 concluding Paragraphs of the said Judgment dated 28.06.2018, which are in the following terms: - "53. I am also of the view that once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged properly is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said propert....
X X X X Extracts X X X X
X X X X Extracts X X X X
....io decided by this Tribunal in its very recent Judgment dated 02.08.2018, in the case of Standard Chartered Bank & Ors. vs. The Deputy Director of Enforcement, Mumbai, allowing the Appeal and setting aside the Orders of Provisional Attachment and Adjudication. The facts in the present case are almost same 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. 32. The Respondents did not deny about the issuance of Loan of Rs. 45,55,000/- extended by the Appellant - Bank to its Customer - Predicate Offender. Nowhere in their Counter the Respondents dealt with the subject matter of the said loan given by the Bank to its Customer on 05.03.2015 and 19.08.2015. It is not the case of the Respondents that in this entire transaction, no loan whatsoever, was given by the Bank. But it is other way round. The Bank had, while creating the said lien over. the said Fixed Deposit of Rs. 50,00,000/-, had already parted with its own money amounting to Rs. 45,55,000/-, as loan to its Customer. The Respondent - Department despite knowin....