TaxTMI 
TaxTMI 
2019 (1) TMI 329
X X X X Extracts X X X X
X X X X Extracts X X X X
.... alia, evidencing the creation of first charge by way of equitable mortgage and Hypothecation qua the property in issue. 5. By provisional attachment order No.3/2018 dated 28.03.2018 passed by Respondent no.1 in ECIR/RPSZO/01/2015, inter alia, the following Moveable/Immoveable asset which has been hypothecated/Equitably Mortgaged to the Appellant was attached. The details of the same is described herein below:- S.N. Description of the Property Value (In Rs.) 1. Plant and Machinery of M/s Vandana Vidhyut Ltd. Valued at Rs. 1711,13,74,636/- situated at Katghora, District-Korba, Chattisgarh to the extent of Rs. 335,46,23,910/- Rs. 335,46,23,910/- 2. Factory Building of M/s Vandana Vidhyut Ltd, Valued at Rs. 266,59,72,781/- situated at Katghora, District- Korba, Chattisgarh Rs. 266,59,72,781/- 3. Land Valued at Rs. 1,13,79,809/- of M/s Vandana Vidhyut situated at Katghira, District- Korba, Chhatisgarh. Rs. 1,13,79,809/- TOTAL Rs. 603,19,76,500/- 6. The Respondent no.1 lodged original complaint no.952/2018 before the Adjudicating Authority (PMLA). The appellant was arrayed as defendant no.3 in the original complaint no.952/2018. 7. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led 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. 16. The amended provisions of Section 26E of the SAR-FAESI 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 StateGovernment or local authority." 17. The amended provisions of Section31B of the Recovery of Debts due to Banks and Financial' Institutions Act, 1993 as amended by the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 which reads as under:- "31B. - Priority to secured creditors. Notwithstanding anything contained in any other law for the time being in force, the rights of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....obstante clause in the later enactment will prevail over the non-obstante clause in the earlier enactment. 23. The following is the relevant portion of the decision of the Special Court, as appearing at Para 10 of the said Supreme Court Judgment:- "Where there are two special statues which contain non-obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier Legislation and its non-obstante clause. If the legislature. still confers the later enactment with a nonobstante clause, it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail, then it could and would provide inthe later enactment that the provisions of the earlier enactment continue to apply." 24. The afore-stated principle laid down by the Hon'ble Supreme Court has been followed by the Full Bench of the Hon'ble Madras High Court in a recent decision dated 10.11.2016 in W.P. Nos. 2675 (authored by Hon'ble Mr. Justice S.K. Koul, who is now the Hon'ble Judge of Supreme Court). The Assistant Commissioner (Commercial Taxes) Vs. Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt :- "103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid thereof the adjudicating authority must carefully consider the material and evidence on record (including the Reply furnished by a noticee in response to a notice issue under Section 8(1) and the material or evidence furnished along therewith to establish his earnings, assests or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property, relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment. 29. The Adjudicating Authority 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o lien over the said properties as the appellant banks are now the legal transferees of the said properties. 65. From the entire gamut of the matter, we are of the view that there is no nexus whatsoever between the alleged crime and the two banks who are mortgagees of all the properties which were purchased before sanctioning the loan. Thus no case of moneylaundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority as secured creditors to recover the loanamount/debts by sale of assets over which security interest is created, which remains unpaid." This Tribunal in the above Judgment dated 14.07.2017 has also relied upon its own earlier Judgment 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 Adju....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 37. In the present case, it is admitted by the respondent no. 1 that the Adjudicating Authority by themselves and have not disputed the fact that the Consortium Finance sanctioned by the Appellant herein is untainted and pure money and in an utter disregard to the settled position of law went ahead with the confirmation of the PAO bearing no 03/2018 vide impugned order dated 17.09.2018. However, both the Adjudicating Authority and respondent failed to appreciate that the it is an admitted position of the Respondent No.1 that the credit facility granted by the appellant was untainted and legal money, therefore, the same could not have been attached by the Respondent No.1 vide PAO bearing no 03/2018 dated 28.03.2018. 38. The Adjudicating Authority did not appreciate that the provisions of The Prevention of Money-Laundering Act, 2002 do not constitute any overriding statutory charge so as to defeat and make sub servient the rights of the bank as a secured creditor. It is no longer res integra that crown debts have no priority over the claim of a secured creditor under a contract of loan. 39. The Prevention of Money-Laundering Act, 2002 does not override the provisions of The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as received by the Respondent No.2 Company as equity shares and premium amount by issuance of fresh shares after the allocation of the "Fatehpur East Coal Block‖ during FY 2007-08 to 2013-14 is considered to have been derived out of criminal activity relating to schedule offences and thus the same constitute as Proceeds of Crime, and that the Respondent No.2 Company had used the said POC amount towards the purchase of land, construction of Factory Building, plant and machinery and commissioning of the proposed power plant. The counsel for the appellant in the present appeal is merely pressing the relief against the respondent no. 1. 43. The Adjudicating Authority did not appreciate that a bare perusal of the afore mentioned section 2(1)(u) of PMLA very clearly stipulates that the property can be attached under the provisions only when, such property has either been derived or obtained, directly or indirectly as a result of a criminal activity relating to a scheduled offence. However, the complainant has failed to prove/establish that the moveable/immoveable property that has been lawfully hypothecated/Equitably Mortgaged with the Appellant Bank has either been derived or o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the terms and conditions of the various loaning and security documents, therefore, the same is not at all concerned with the proceeds of crime or the alleged offences in any manner. Further the moveable/immoveable asset which has been provisionally attached are not proceeds of crime as defined in section 2(1)(u) of The Prevention of Money Laundering Act, 2002. 47. Counsel for the respondent no. 1 has admitted during hearing that mortgaged property have not been acquired out of the proceeds of the crime. There is no evidence and material to establish that the hypothecated/Equitably mortgaged moveable/immoveable property have been acquired by the Respondent No.2 company by proceeds of crime at all. It is further submitted that the same was acquired by obtaining Consortium Finance facilities from the Appellant i.e. PNB ( being a Public sector Bank and the Lead Bank in the consortium of Banks). He also admits that the banks are victim parties who are entitled to recover the money from the borrowers. However, they are entitled only when the trial against the borrowers is over before the Special Court. The same would take number of years. The second submission of the counsel for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould not have been passed more particularly in view of the fact that the complainant was aware of the fact that there is an exclusive and paramount claim of the Appellant Bank, therefore, The Adjudicating Authority had no justification/jurisdiction for attachment of the aforesaid hypothecated/Equitably Mortgaged Moveable and immovable properties. 53. The Adjudicating Authority has failed to understand that the NCLT Mumbai vide order dated 26.02.2018 has declared moratorium under Section 14 of the IBC, 2016, inter alia, the said section 14 of the IBC, 2016 prohibits the continuation pending suits or proceedings against the corporate debtor (i.e. Respondent No.2 herein), therefore, the Adjudicating Authority could not have confirmed the PAO bearing No. 03/2018 dated 28.03.2018 passed by the Respondent No.1. 54. By virtue of Section 4A of the RDB Act, 1993, the property of the Borrowers/mortgagors/guarantors becomes the custodial egis on the institution of the OA for recovery of dues under the Act. It is admitted fact in the present case that the OA bearing No. 410/2017 has been filed by the Appellant Bank before the DRT, Jabalpur and the Ld DRT has been pleased to issue notice ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reads as under:- "In view of the legal provisions above referred and the object sought to be achieved by the PMLA, I humbly and with great respect cannot concur with the view expressed by the Appellate Tribunal, PMLA in the judgments of the Appellate Tribunal cited by D-3. In view of the findings hereinabove, the Provisional Attachment Order issued is rightly issued and deserves acceptance and confirmation. The Provisional Attachment Order is therefore, hereby confirmed." 63. The Adjudicating Authority is bound by the law laid down by the higher courts. No authority has any justification to ignore the law laid down by the Supreme Court and various High Courts and this Tribunal, who on the basis of decisions of Hon'ble Supreme Court and various High Courts, has delivered orders. Unless each and every judgment is distinguished or are on different facts, the different conclusion cannot be arrived. The facts and legal issues are almost same and the Adjudicating Authority has incorrectly passed the impugned order by saying that it cannot "Concur‖ with the law laid down by this Tribunal. The appellant is a Public Sector Bank. The money must come to the public f....