TaxTMI 
TaxTMI 
2019 (9) TMI 933
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.... members of Punjab National Bank Consortium comprises with Punjab National Bank, Bank of India (now assigned debts to Phoenix ARC Private Limited), Andhra bank (now assigned debts to M/s. Pridhvi Asset Reconstruction and Securitization Company Ltd), Union Bank of India, Bank of Baroda, UCO Bank (now assigned debts to Phoenix ARC Private Limited) and Punjab & Sind Bank lastly enhanced on 15.12.2011 vide PNB Consortium. Therefore the Appellate Punjab Nation Bank being the Lead Bank of PNB Consortium is competent to file the present appeal also on behalf of the other member Bank of PNB Consortium by virtue of interse agreement dated 15.12.2011 executed between the member banks of the PNB Consortium whereby appellant was appointed as the Lead of the PNB Consortium and further vide Joint lenders, meeting dated 16.06.2017 authorised to file the present appeal on or behalf of other member banks of PNB Consortium. 3. The appellant Bank being the Lead Bank of PNB Consortium called a JLM Meeting on 06.06.2017 at Circle office PNB, whereby in JLM of the PNB Consortium members it was bring into the knowledge of the PNB Consortium members by the borrowers i.e. M/s. Divine Infracon Pvt. Ltd t....
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....said POA property at Plot No. 4, Sector-13, Dwarka, New Delhi known as "Hotel Raddisson Blu" was attached in exercise of the powers conferred under Section 5(1) of PMLA, 2002 to the extent of Rs. 64.70 Crores. c) Upon the receipt of the show cause notice, the appellant Bank duly entered the appearance on behalf of Defendant no. 6 and filed a detailed reply to the OC no. 713/2017 on 14.06.2017 inter-alia challenging the POA no. 05/2017 and Original Complaint filed by the Deputy Director, Directorate of Enforcement under sub-section (5) of section 5 of the PMLA, 2002 as the same is not maintainable and liable to be dismissed in the eye of law. d) It is the admitted case of respondent that the appellant is the mortgagee bank in respect of property bearing plot no. 4, Sector-13, Dwarka, New Delhi, Hotel managed by Raddison Blue ( hereinafter referred as "Attached Hotel"), which was attached by the respondent in exercise of the powers conferred under Section 591) of PMLA, 2002 vide Provisional Attachment Order no. 05/2017 dated 14.03.2017 read with corrigendum dated 5.4.2017 to the extent of Rs. 64.70 Crores. e) The Provisional Attachment Order no. 05/2017 dat....
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....tgage of immovable property admeasuring 3.85 acres situated at Plot No.4, Dwarka City Centre Sec 13, Dwarka with all superstructures thereon. 14.12.2011/ 15.12.2011 M/s Divine Infracon Pvt. Ltd. extended the Equitable Mortgage of property bearing Plot No.4, Dwarka City Centre along with structure thereon. 30.09.2013 21-02-2015 Account of the M/s Divine Infracon Pvt. Ltd. was declared NPA as per RBI guidelines by all the Consortium Member Banks. 02.03.2015 Petitioner Bank on behalf of other Consortium member Banks issued a Notice u/s 13(2) SARFASEI Act,2002, dated 02-03-2015, calling upon M/s Divine Infracon Pvt. Ltd. to discharge in full its liabilities of a sum of Rs. 336, 46,02,792.48/- Crores as due & recoverable as on 28.02.2015, within a period of 60 days. 30.04.2015 The M/s Divine Infracon Pvt. Ltd. herein have raised their objections U/s 13(3)(a) of the SARFAESI ACT 2002. 13.05.2015 Petitioner Bank being the lead bank of the PNB Consortium has dealt with the objections of the M/s Divine Infracon Pvt. Ltd. 06.06.2015 A Joint Lenders Meeting was constituted on the request of the M/s Divine Infracon Pvt. Ltd. for examining the proposal of ....
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....ted to defeat the PMLA, such declaration rendering such properties available for attachment and confiscation under PMLA, free from encumbrance." The Hon‟ble High Court further held that "a party in order to be considered as a bonafide third party claimant for its claim in a property being subjected to attachment under PMLA to be entertained must show, by cogent evidence, that it had acquired interest in such property lawfully and for adequate consideration, the party itself not being privy to, or complacent in, the offence of money laundering, and that it had made all compliances with the existing law including, if so required, by having said security interest registered" 10. In view of the fact that the appellant being the secured creditor has initiated proceedings/ taken actions against DPIL in accordance with the law much before the initiation of proceeding under the PMLA Act, it is submitted that the attachment in respect of the aforementioned property is to be quashed. 11. Since the action taken by the Punjab National Bank of India was in accordance with law and was prior to the proceedings initiated under PMLA Act, the proceedings initiated by the Bank of India un....
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.... it had taken "due diligence" (eg taking reasonable precautions and after due enquiry) to ensure that it was not a tainted asset and the transactions indulged in where legitimate at the time of acquisitions of such interest" 13. The Hon‟ble High Court further held that "if it is shown by the cogent evidence by the bonafide third party claimant (as aforesaid), staking interest in an alternative attachable property ( or deemed tainted property) claiming that it had acquired the same at a time anterior to the commission of proscribed criminal activity, the property to the extent of such interest of third party will not be subjected to confiscation so long as the charge or encumbrance of such third party subsists, the attachment under PMLA being valid or operative subject to satisfaction of the charge or encumbrance of such third party and restricted to such part of the value of the property as in is excess of the claim of the said third party. 14. The acquisition of such interest cannot be presumed to have been created with mala fide intent to defeat and/ or frustrate the proceeding under the PML Act and hence the said properties can be held to be "tainted property". Since....
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....ed from the alleged proceeds of crime. As per the provisions of Section 5(1) (c) the primary requirement for the attachment is that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner. The said Property are already in the possession. 20. The Security interest upon the attached property was created under SARFAESI Act, 2002 and mortgagee bank is the secured creditor in terms of SARFAESI Act, 2002. SARFAESI proceedings initiated in the year 2015 two years prior from the PAO. Attached property is under the possession of mortgagee bank since 07-07-2015, hence, it is argued that no question of concealment, transfer, and dealing by the borrowers arise. 21. OA for the recovery of a sum of Rs. 262,57,87,628.28/- was filed before DRT under RDDBFI Act. Reply of the appeal filed by Shri B.K. Singh, Assistant Director, Enforcement Directorate, New Delhi without any authority. Neither, he is deputy director, nor any authorization letter was filed along with reply. 22. It is submitted on behalf of the appellant that the provisions of PML Act, 2002 does not apply to the Transactions where the rights of the secured Creditor were created in acc....
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....erty Act as there is no dispute as regards the origin of funds or the title of the Property. 27. The Respondent does not have any lien over the said Property as the Appellant bank is now the Legal transferee of said Property. The Respondent cannot retain the property over which they have no legal title and the property is to returned to the persons lawfully entitled as the bank is the victim and even after trial. 28. It has come on record that by the second Amended & Restated Common Agreement dated 15-12-2011, borrowers have been permitted in all terms Loan Facility of Rs. 373.00 CR and Bank Guarantees of Rs. 28.84 Crores, which includes the Additional Term Loan of Rs. 25 Crores sanctioned by the Lead Bank and the restructuring of the Repayment schedule of Original Term Loan of Rs. 275.00 Crores has also been permitted to the Borrower. The said relevant facts have not been denied on behalf of respondent. 29. As such the properties/ assets acquired by appellant before the initiation of the proceeding under PML Act and properties/ asset in respect of which security interest has been created in favour of the bona fide secured creditor ought not be subjected to attachment in v....
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....th the respondent no. 1. Therefore, it is not possible to hold that the mortgaged properties claimed by the Appellant in no way can be considered to be "Proceed of Crime" under Section 2(u) of PMLA. The impugned order does not disclose any reasoning. There is no application of mind whatsoever and it is assumed that the properties in question are the proceeds of the crime. There is no reasoning to show as to how the attached properties mortgaged prior to the date of alleged offence are the subject matter of proceeds of crime. The Adjudicating Authority has not analysed the facts at all. The order suffers from a fundamental error. There is no understanding by the Adjudicating Authority of the contents of the statute, much less its application to the facts of the case. 33. Section-3 of the Act provides that only a person who is knowingly a party to any activity or is involved in such activity connected with proceeds of crime and projects or claims it as untainted property can be guilty of the offence. S.5(1) shows that before any property can be provisionally attached there must be material prima facie to show any person is in possession of any proceeds of crime which a....
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.... 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, assets 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; either in respect of the whole or such part of the property provisionally attached in respect whereof bona fide acquisition by a person is established, at the stage of the section 8(2) process..." 36. The Appellant undertakes to deposit any amount realized, which is in excess of its outstanding dues, with the ED if such situation would arise. 37. The Adjudicating Authority failed to apply its mind at the time of issuance of the Show Cause Notice ("SCN"). No reason to believe can be discerned from the SCN, or the provisional attachment order accompanying the SCN under Section 8 of the PMLA, as to how there was reason to believe that the Appellant was in possession of "proceeds of crime‟. Adjudicating Authority, in its dis....