TaxTMI 
TaxTMI 
2025 (11) TMI 1202
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2019 passed by the Appellate Tribunal, New Delhi, under the PML Act, 2002, in MP-PMLA-4917/MUM/2018(U.A), MP-PMLA-4918/MUM/2018 (Stay) and FPA-PMLA-2532/MUM/2018. 2. The brief facts of the case are that, the CBI - BS & FC has registered the FIR No. RC BSM 2015 E 0006 dated 29.07.2015 against Sri Vijay Mallya, M/s. Kingfisher Airlines Ltd., and unknown officers of IDBI and others for showing undue favour to M/s. Kingfisher Airlines Ltd. (for sake of brevity, "M/s. KAL") in the matter of sanction and disbursement of short-term loans (STL) to the tune of Rs.150 Crores Rs.200 Crores and Rs.750 Crores, respectively, despite weak financials, negative net worth and low credit rating of the borrower Company and despite the fact that the Company, viz., M/s. KAL, being a new client, did not satisfy the norms stipulated in the corporate loan policy of the bank. 3. The officials of the IDBI Bank Ltd., M/s. KAL and its officials conspired among themselves and got sanctioned and disbursed term loans aggregating to Rs.750 Crores to M/s. KAL without conducting due diligence and M/s. KAL had diverted the funds, thereby putting the IDBI Bank to a wrongful loss of Rs.750 Crores. 4. The FIR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lage, Madikeri, Kumboor Village. 28.71 Acres M/s. Endeavour Estates Pvt. Ltd. 05 UB City, Bengaluru (U.B. Towers Commercial) 1^st Floor - car parking IInd Floor - Reception 12^th Floor- UBHL office 14^th Floor- .......do....... 15^th Floor- .......do....... 16^th Floor- .......do....... 35511.64 sq. ft. United Breweries (Holdings) Ltd. 06 UB City, Bengaluru (Canberra Tower) (3^rd Floor to 16^th Floor except 9^th & part of 15^th Floor sold to M/s. USL) 309974 sq. ft. M/s. United Breweries (Holdings) Ltd. 07 UB City, Bengaluru - UB Mall (Canberra & Concorde Retail - commercial area viz., Basement to IInd Floor) 76406 sq. ft. M/s.United Breweries (Holdings) Ltd. 08 Amount lying balance in bank A/c No.0164351000009300 held with Lakshmi Vilas Bank, Bengaluru (presently in Fixed Deposit A/c No. 164.113.8959/1) Rs. 34.21 Crores (approx) P.E. Data Centre Resources Pvt. Ltd. 09 Under construction flats in Kingfisher Tower, Bengaluru to the extent of the remaining POC 78. ......... M/s. United Breweries (Holdings) Ltd. 8. Later, the Adjudicating Authority confirmed the Provisional Attachment Order in O.C.N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 was enacted to prevent money laundering and to attach and confiscate properties derived from such offences, however, the Tribunal without considering these aspects has passed the impugned order mechanically and a mere agreement to purchase property does not confer ownership unless a registered sale deed is executed. Hence, learned counsel contends the finding of the Tribunal is bad in law. 13. Further, Appellate Tribunal has also erred in relying upon the decision in VannarakkalKallalathil Sreedharan v. Chandramaath Balakrishnan and another, reported in (1990) 3 SCC 291, which pertains to the attachment under Civil Procedure Code, 1908 and present attachment is under PMLA, 2002, a special enactment with overriding effect under Section 71, PMLA and pertains to proceeds of crime and not a mere civil attachment. Hence, he prayed to allow the appeal. 14. Thus, the appellant, Directorate of Enforcement has framed the following substantial questions of law on facts, which reads as under: I. Is not the Appellant Tribunal refusing to confirm the Provisional Attachment Order is not against Section 24 of the PMLA, 2002? II. Is not the Appellate Tribunal failing to e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... favour of respondent No. 1 on 21.05.2012, wherein, the UBHL agreed to sell flat No. 7A in favour of respondent No. 1. Therefore, the consideration passed under the Agreement to Sell is not proceeds of crime and value thereof. Thus, respondent No. 1 is a bona fide purchaser and the UBHL is a corporate guarantor. Therefore, the appellant/ED could attach the sale proceeds in the hands of vendor of respondent No. 1 and not the properties standing in the name of genuine/legitimate/bona fide purchaser of the flat, without knowledge. Thus, learned Senior counsel prayed to dismiss the appeal. 16. Sri K. G. Krishnamurthy, learned Senior counsel appearing for impleading applicants/respondent Nos.2 to 12 vehemently contended that, the Bank lends loan to the borrowers and the public money is involved in this case, and the Tribunal has set aside the order of the Adjudicating Authority and thus, the appellant may proceed to attach the properties, which are available for attachment. The Banks advanced various finance facility to M/s. KAL for which, Sri Vijay Mallya was a personal guarantor and the UBHL is a Corporate Guarantor. He contends that once the winding-up proceeding of the company is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s must strictly conform to the statutory checks and balances provided within PMLA. 21. We reiterate that, Section 20(1) of PMLA would necessarily get attracted, at the very first instance, in respect of any action taken for the retention of property or the continuance of freezing of any property. Section 20(1) of PMLA mandates that a separate and independent opinion must be formed by an officer authorised by the Director, who may not necessarily be the same officer as authorised under Section 17(1) of PMLA, stating reasons justifying such retention. After forming an independent reason to believe, which would naturally have to form the basis for the order for retention, the order would be required to be forwarded along with the material in his possession to the Adjudicating Authority, without delay, under Section 20(2) of PMLA. Such an order would draw sustenance from the reason to believe and would necessarily have to form a part of the order, as any order without the appurtenant reasoning would not be an order at all. This is all the more relevant since the said order effectively seeks to prolong the curtailment of the enjoyment of valuable rights of a party, who has suffered a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e reasons recorded along with material in his possession to the adjudicating authority in a sealed envelope. Sub-section (4) provides that the authority seizing or freezing any record or property under sub-section (1) or (1-A) shall within a period of thirty days from such seizure or freezing, as the case may be, file an application before the adjudicating authority requesting for retention of such record or properties seized. 9. For the purpose of clarity, it is emphasised that the freezing of the account will also require the same procedure since a bank account having alleged "proceeds of crime" would fall both under the ambit "property" and "records". In that regard, it would be appropriate to take note of Sections 2(1)(v) and 2(1)(w) of the PMLA which defines "property" and "records". The same read as follows: "2.(1)(v) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located; 2.(1)(w) "records" include the records maintained in the form of books or stored ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to consider the Rules to find out as to what would be a valid presentation of an election petition in Chandra Kishore Jha v. Mahavir Prasad and Others (1999) 8 SCC 266] and in the course of consideration observed as hereunder : (SCC p. 273, para 17). "17.......It is a well-settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner." Therefore, if the salutary principle is kept in perspective, in the instant case, though the Appellate Tribunal is vested with sufficient power; such power is circumscribed by a procedure laid down under the statute. As such, the power is to be exercised in that manner alone, failing which, it would fall foul of the requirements of complying with due process under law. 25. In the instant appeal, two questions are primarily involved for decision namely, (1) Whether the respondent No. 1 could be said to be the owner of Flat No.7A (under construction) in Kingfisher Towers on the basis of unregistered agreement to sell dated 21.05.2012? (2) Whether Flat No.7A could be attached as 'proceeds of crime' under the concept of 'p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.] [Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.]; (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under [sub-section (3)] of section 8, whichever is ea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1. The DRT allowed the OA No.766/2013 vide order dated 19.01.2017 and directed the UBHL, its subsidiaries and sister companies to pay a sum of Rs.6,203 crores along with interest @11.50% p.a. from the date of the application till the date of realisation and OA No. 1220/2015 was allowed vide order dated 30.06.2018 and directed the UBHL and KAL to pay a sum of Rs.644.92 crores along with interest @ 12% p.a. from the date of the application till the date of realisation. 32. The total decretal amount as on 16.05.2024 came to Rs.17,471.46 crores. Out of the said amount, the banks were temporarily holding Rs.10,814.54 crores and the balance sum due was Rs.6,656.92 crores. 33. The consortium of banks also invoked the Corporate Guarantee dated 21.12.2010 executed by the UBHL to secure the obligations of the KAL. The Company Petitions for winding up of the UBHL, the corporate guarantor to the loan advanced to the KAL, was allowed vide order dated 07.02.2017. The said order got confirmed up to the Supreme Court. It appears that the respondent No. 1 entered into an Agreement to Sell for purchase of Flat No.7A (8321 sq.ft) along with a proportionate undivided area jointly developed by M/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n circumventing the pending legal actions by facilitating the transactions with the UBHL, post filing of the winding up petition. 38. Section 54 of the Transfer of Property Act, 1882 (for short 'the TP Act') provides that the contract of sale itself does not create any interest in or charge on the property for which the contract of sale has been entered into. It is mere an agreement for sale of the property which shall take place on the terms settled between the parties. Section 54 of the TP Act reads as under: "54. "Sale" defined.- "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made.- Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that a contract for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property. It is thus clear that an agreement for sale is merely a document creating a right to obtain another document of sale on fulfillment of terms and conditions specified therein. It does not, of itself, create any interest in or charge on such property. On the strength of such an agreement a buyer does not become the owner of the property. The ownership remains with the seller. It will get transferred to the buyer only on execution of the sale deed by the seller. What the buyer gets from an agreement for sale is only a right to obtain a sale deed executed in his favour. If the seller refused to comply, the buyer is entitled to enforce that obligation by filing a suit for specific performance." 42. The Provisional Attachment Order No. 11/2016 and its confirmation by the Adjudicating Authority vide order dated 01.12.2016 in OC No. 612/2016 were based on the evidence that the UBHL, controlled directly or indirectly by Dr. Vijay Mallya, held the properties linked to th....