TaxTMI 
TaxTMI 
2020 (3) TMI 86
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....he fourth respondent, based on the security of fixed deposit created by him and that the fourth respondent committed default in the repayment of the loan and therefore, they exercised lien over the fixed deposit created by the fourth respondent in their favour towards repayment of the loan. According to them, the third respondent without any notice to the petitioner has passed the impugned order confirming the provisional attachment of fixed deposit created by the fourth respondent in the petitioner's favour under Section 8(1) of the Prevention of Money Laundering Act, 2002. It is the case of the petitioner that the third respondent has not followed the procedure contemplated under proviso to Section 8(1) of the Prevention of Money Laun....
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.... 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any o....
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....t the fixed deposit was created by the fourth respondent only to secure the loan availed by him from the petitioner bank. According to them, under the loan documents executed by the fourth respondent, the petitioner is having a right to exercise lien over the fixed deposit for non-payment of the dues by the fourth respondent. It is their case that the fourth respondent is a defaulter to them and he owes substantial sums of money in respect of the loan availed by him from the petitioner bank. A reply dated 21.03.2012 was also sent by the petitioner to the second respondent on receipt of the provisional order of attachment dated 15.03.2012 wherein they have reiterated that the fixed deposit created by the fourth respondent is only to secure t....
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....id a claim. The relevant paragraphs of the said judgment are extracted hereunder: "29. The Proviso to sub-section (2) of Section 8 enables any person who claims the property to be his own, also to be given an opportunity of being heard to prove that the property is not involved in money laundering. This proviso makes it clear that the leverage given to the Adjudicating Authority to release the property is limited to instances where the property is proved to be not involved in money laundering. This is only a very same leverage given to the Adjudicating Authority. None of the subsections of Section 8 enable the Adjudicating Authority to release a property to a third party even after the property is proved to be involved in money lau....
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.... Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering." 42. Therefore, there is an obligation on the part of the Adjudicating Authority to hear the Bank, when it is pointed out to the Adjudicating Authority that the Bank had already laid a claim and that they also have obtained an interim stay of all further proceedings." 10. In the case on hand also, despite the third respondent having knowledge that the fixed deposit standing in the name of the fourth respondent is lying with the petitioner bank, the third respondent before passing of the impugned ....