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2019 (2) TMI 961
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....f liquidation under the IBC, 2016 to declare the right of the lenders/creditors on the attached properties of the corporate debtor to recover their dues prevails over the right of the respondent to attach the properties under the PMLA, and pass order to extend immunity to buyer of the property from any adverse action with respect to the said properties of the corporate debtor under the PMLA proceedings, after sale of the properties by the liquidator to such buyer under the IBC, 2016. 2. The facts in brief that require for the disposal of this application are as follows : (i) The Bank of Baroda initiated the corporate insolvency resolution process (CIRP) against Rotomac Global P. Ltd./corporate debtor in C. P. No. (IB)70/ALD/2017. The said application was admitted by this authority on September 20, 2017. (ii) This Authority alter the conclusion of CIRP of 180 days basing on the resolution of the committee of creditors (CoC) and the application moved by the resolution professional (RP) ordered for liquidation of the corporate debtor and appointed RP Mr. Anil Goel as the liquidator. 3. In contra it is stated by the respondent that the Directorate of Enforcement....
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....that were attached fall within the definition of "proceeds of crime" in terms of section 2(1)(u) of the PMLA and the same were provisionally attached vide P. A. O. No. 8 of 2018 dated May 28, 2018. It is further stated that the property provisionally attached constitutes the value of such proceeds of crime. 7. The respondent relied upon the decision of the hon'ble Appellate Tribunal, New Delhi, under the Prevention of Money-laundering Act in the case of Chief Manager, Syndicate Bank v. Deputy Director, PMLA held as under : "It has also been held by the Supreme Court in a number of judgments that the conflict of non-obstante clause arising in respect of two enactments has to be resolved on consideration of policy under lying the enactments and the language used in them (Sawvan Singh v. Kasturi Lal, AIR 1977 SC 265 and Kumaon Motor Owners' Union Ltd. v. State of Uttar Pradesh, AIR 1966 SC 785). The Prevention of Money-laundering Act has been enacted to provide for forfeiture of proceeds of crime involved in money laundering which was considered necessary to deprive persons engaged in serious illegal activities and have thereby been increasing their resources for o....
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....ts of the secured creditors or other creditors is affected. 11. It is also stated that in view of section 8(8) of the PMLA, special court may, if it thinks fit, consider the claim of the claimant for the purpose of restoration of such property during the trial of the case in such manner as may be prescribed. 12. It is contended that the moratorium order passed by the Adjudicating Authority under the provision of the I and B Code is not applicable to the criminal proceedings, if any, initiated under the provisions of the Prevention of Money-laundering Act, 2002 and the proceedings before the Enforcement Directorate and to the criminal cases initiated by the Central Bureau of Investigation. On this aspect the respondent relied upon the decision of the National Company Law Tribunal, Ahmedabad Bench in the matter of PNB v. Sidhi Vinayak in C. P. (IB) No. 89/7/NCLT/AHM/2017, dated September 12, 2017. 13. It is also contended that section 71 of the PMLA, 2002 gives overriding effect to the provisions of the Act notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 14. On the other hand, it is contended by learned counsel for t....
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....e properties of the financial establishment though such financial establishment are already wound up under the provisions of the Companies Act, 1956 or that the official liquidator cannot seek any direction in respect of the properties attached by the competent authority as prayed in the report filed by the official liquidator. In my view since there is no conflict between the Companies Act. 1956 and the MPID Act and both operates in different field, the judgment of Supreme Court in case of Central Bank of India v. State of Kerala [2009] 4 SCC 94 ; [2010] 153 Comp Cas 497 (SC) relied upon by the learned AGP would not assist his case . . . In my view for the purpose of considering the claims of the secured and unsecured creditors, the preferential creditors and also the claims of the investors/depositors, etc., the properties which are admittedly standing in the name of the companies in liquidation attached by the competent authority under the provisions of the MPID Act are required to be handed over to the official liquidator for the purpose of sale and physical control thereof. The competent authority is thus required to be issued an order and direction to handov....
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....t the Appellate Tribunal of PMLA has also recognized the right of secured creditors in the matter of FPA-PMLA-1026/KOL/2015 and another 10 appeals titled State Bank of India v. Joint Director, Directorate of Enforcement, Kolkata. The operative part of the judgment is as under : "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 bank who are mortgagee of all the properties which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against banks who have sanctioned the amount which is untainted and pure money. They have priority to the secured creditors to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The learned Adjudicating Authority has not appreciated the facts and law involved in these matters and the primary objective of section 8 of the PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. All the contentions raised by Mr. Matta has no substance. The provisional attachment in the present matter is bad and against the law. In t....
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....g all reasonable precautions and is not involved in the offence of money laundering. 25. It is contended by learned counsel appearing for the liquidator that the liquidator acted in good faith and the lenders also acted in good faith and therefore the properties mortgaged to the lenders wherein security interest is created, has to be de-attached from the order of attachment. 26. It is contended that the proceedings under the Prevention of Money laundering Act may not get frustrated even if this Authority de-attached the properties provisionally attached by the Enforcement Directorate. It is said that if the properties of the corporate debtor are not de-attached and hand over to the liquidator, the rights of the creditors would be deprived. 27. It is contended that in section 6(15) of the PMLA, it is stated that the procedure laid down by the CPC is not applicable and therefore it can be said that the proceedings under the PMLA are civil in nature but not criminal. It is argued that if the proceedings are criminal in nature, it would have been mentioned in section 6(15) that the Authority under the PMLA is not bound by the procedure laid down by the Cr.P.C. 28. This Auth....
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....a Panki, Site No. 3, Kanpur Nagar Working Capital Consortium of 7 Banks date 6-10-2015 Relinquished 14. Premises No. D-4 & D-5, Industrial area Panki, Site No. 3, Kanpur Nagar Working Capital Consortium of 7 Banks date 6-10-2015 Relinquished 15. Premises No. D-6, Industrial Area Panki, Site No. 3, Kanpur Nagar Working Capital Consortium of 7 Banks date 6-10-2015 Relinquished 16. Premises on Plot No. 788/P, Paiki National Highway No. 81, Gram-Moje Rojoda Bavla, Ahmedabad Working Capital Consortium of 7 Banks Relinquished 17. Premises on Plot No. 415, Paiki Village-Moraiya, Taluka-Sanand, Ahmedabad Working Capital Consortium of 7 Banks Relinquished 18. Plant and machinery including mould electricals at Ahmedabad Bank of India 6-9-2007) Relinquished 19. Plant and machinery including mould electricals at Kanpur Bank of India (6-9-2007) Relinquished 20. Other fixed assets such as office equipments, furniture and fixture, A.C., Vehicles (except Landrover), etc. Working Capital Consortium of 7 Banks Relinquished 21. Landrover bearing Registration No. JH-05-AY-0777 Punjab National Bank (E....
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.... counsel appearing for the liquidator relying upon the judgment of the hon'ble Supreme Court in Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. [2001] 104 Comp Cas 569 (SC) ; [2001] 3 SCC 71, in that decision it is held that where two statutes contain nonobstante clause, later statute would prevail. No doubt, I and B Code is later in point of time. 36. Section 238 of the I and B Code contain non-obstante clause giving overriding effect over other laws in existence if there is a conflict between the provisions of the I and B Code and the other laws. 37. It is contended by learned counsel for the Enforcement Directorate relying upon the judgment of the hon'ble Appellate Tribunal, New Delhi under Prevention of Money-laundering Act in the case of Chief Manager, Syndicate Bank v. Deputy Director, PMLA referring the judgment of the hon'ble Supreme Court of India in the matter of (Sarwan Singh v. Kasturi Lal, AIR 1977 SC 265 and Kumaon Motor Owners' Union Ltd. v. State of Uttar Pradesh, AIR 1966 SC 785), that the question of prevalence of a subsequent legislation will only come into picture when there is a conflict between the two statutes. 38. In that ....
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....Act, 1992. In that case Securitisation Act is of the year 1995, whereas the Special Court (Trial of Offences Relating of Transactions and Securities) Act is of the year 1992. The hon'ble Supreme Court held that there is a conflict between the provisions of these two Acts and therefore held that the provisions of the Special Court (Trial of Offences Relating of Transactions and Securities) Act, 1992 would prevail over the other Act being a later enactment on the ground that the Legislature knowingly included non-obstante clause in the Special Court (Trial of Offences Relating of Transactions and Securities) Act, 1992 about the existence of section 31 of the SIC Companies Act. The hon'ble Kolkata Bench in C. A. (IB) No. 453/KB/2018 in C. P. (IB) No. 73/KB/2017 has not considered whether there is any inconsistency between the provisions of the PMLA and provisions of the I and B Code. Moreover, the decision of learned single Member is only having persuasive value but not binding precedent. 42. Therefore, it is settled position of law that where two statutes contain non obstante clause, the later statute must prevail, provided if there is inconsistency between the two enactme....
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....of confiscation is passed, the property vest in Central Government. (iii) Proviso to section 9 gives power to the Special Court to declare that the particular encumbrance has been created with a view to defeat the provisions of the PMLA. It may declare such encumbrances, after giving opportunity of hearing to the persons interested in the property. It creates an opportunity for the secured creditors through liquidator to represent that the encumbrance has not been created with a view to defeat the pro visions of the PMLA. (iv) Section 8 of the PMLA deals with adjudication, section 8(8) comes into picture after the property stands confiscated to the State under sub-section (5) of section 8. Even after the properties confiscated to the Central Government, the Special Court may direct the Central Government to restore the confiscated property or part thereof to a claimant with a legitimate interest in the property, who had suffered a quantifiable loss as a result of the offence of money laundering. However, the claimant has to establish that he has acted in good faith and has suffered loss despite having taken all reasonable precautions. In view of the amendment to s....
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....A and the punishment provided for the offences go to show that the proceedings are criminal in nature but not civil in nature. 48. The argument that moratorium comes into operation even in respect of the proceedings filed or pending before the Authorities under the PMLA can be raised before the Authority under the PMLA Act. 49. From the above discussion the conclusion is, that the properties attached in this case under the provisions of the PMLA, no doubt form part of the liquidation estate, irrespective of the fact, whether the secured creditor relinquished their security interest or not. Procedure is provided for distribution of the liquidation assets in the I and B Code. The manner in which the proceeds of crime has to be dealt with is provided in the provision of the PMLA. In other words, the procedure laid down under the PMLA deals with proceeds of crime in case of money laundering, whereas the procedure laid down under the I and B Code deals with distribution of liquidation assets. It is for the Authorities under the PMLA to finally decide that the money laundering has been committed or not and whether the property is acquired by way of proceeds of crime or not. The sai....