TaxTMI 
TaxTMI 
2026 (9) TMI 1229
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....r facts of the case, an immovable property i.e. a flat number B-304, 3rd floor, Blue Berry Apartment, DB City, Village Mehra, Ward number 60, Gwalior admeasuring 1262 sq. ft. that is 117.28 sq meter super built up area was purchased in the name of Shri Surendra Kumar Agrawal S/o Shri Ramesh Chand Agrawal. Consequent upon search action by the Income Tax Department, certain documents containing registry and chain documents of one flat including purchased conversion related documents, receipt of cash payment of Rs. 6,79,320/- issued in the name of Shri Sonu Mangal (alias Shri Sandeep Mangal), agreement for flat, etc. were seized. From the seized documents, it was found that initially the impugned flat i.e B- 304, 3rd floor, Blue Berry Apartment, DB City, Village Mehra, Ward number 60, Gwalior (hereinafter referred as impugned flat) was booked in the name of Shri Sonu Mangal alias Sandeep Mangal and entire negotiations for the purchase of flat was done by Shri Sandeep Mangal. Further it was also found that the receipts of booking the flat were also issued in the name of Shri Sonu Mangal. However, an agreement was found which showed that the impugned flat was purchased in the name of....
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....ior, for Rs. 29,00,000/- by taking a loan of Rs. 22,00,000/- from Canara Bank, Branch-Gwalior and by paying cash of Rs. 7,00,000/-. He stated that he has no idea about how the loan was passed by the Canara Bank, and this loan was sanctioned through the broker Shri Kailash Soni whom he does not know personally. He further stated that he has not kept any security or mortgage for availing the above said loan of Rs. 22 lakhs from Canara Bank. Even there was no explicit intent of purchasing the flat at Gwalior by Shri Surendra Agarwal as he belongs, resides and works at Seoda, Dist.-Datia, MP. Further he stated that he has repaid the total loan amount of Rs. 22,00,000,/- in cash only in installments during the period of 21 months i.e. from Feb, 2015 to Nov, 2016. But it was found that Shri Sandeep Mangal has transferred amounts from his Canara Bank A/c No. 3910261000011 (Prabha Jewellers, Proprietor Shri Sandeep Mangal) to the housing loan A/c no. 3910619000010 of Shri Surendra Kumar Agrawal as under:- Date Amount 16.07.2016 20,000/- 14.12.2016 1,50,000/- 26.12.2016 1,00,000/- 29.12.2016 13,31,361/- Total 16,01,361 A total of Rs. 25,....
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....itical acquaintance with Shri Sandeep Mangal. With reference to the discussion made in the above para 2(b) and in this para, it also proves that the property (Fiat B-304) has been purchased in Benami Name Surendra Agrawal) for the ultimate and future benefit of Shri Sandeep Mangal. f) Further in his statement, Shri Sandeep Mangal stated that he transferred about Rs. 10,00,000/- to the loan account of Shri Surendra Agrawal as loan and on being questioned about the repayment of this loan, he stated that Shri Surendra Agarwal has not repaid this loan of Rs. 10,00,000/- so far. Further Shri Surendra Kumar Agarwal had completely denied in this statement that he has not taken any such loan from any person and except him no one has deposited any amount in his loan account either in cash or cheque or transfer. And he further stated that he has just taken 05-06 lakhs cash from Maa Kaila Devi Developers & Hotels Pvt. Ltd (Director- Shri Sandeep Mangal) only to repay the said Canara Bank Loan. Further Shri Sandeep Mangal in his statement denied that no amount/loan has been given to Shri Surendra Agarwal from Maa Kaila Devi Developers & Hotels Pvt. Ltd. It is also evident from such co....
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....lias Sonu Mangal is the Beneficial Owner. In view of above it is clear that the benamidar Shri Surendra Agrawal do not have capacity to buy the said property (B- 304, 3rd floor, Blue Berry Apartment, DB City, Village Mehra, Ward number 60, Gwalior) as he has meagre income to explain the investment in the above said immovable property purchased/ held in his name. Therefore, it is clear that Shri Surendra Agrawal has entered into transactions where property is transferred in his name for a consideration paid or provided by another person. Therefore, such transactions are covered under the definition of PBPT Act, 1988 prior to amendment. Also, such transactions are covered under the amended definitions 2(9)(A) of the PBPT act. Therefore, the property is a Benami Property and Show Cause Notice u/s. 24(1) of the PBPT Act, 1988 dated 31.01.2018 was sent to the parties. In view of the above it is held that the property (B-304, 3rd floor, Blue Berry Apartment, DB City, Village, Mehra, Ward number 60, Gwalior) under consideration is a Benami property and Shri Surendra Agrawal is benamidar and Shri Sandeep owner of this property and thus, on the same day, a Provisi....
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....e impugned order that in spite of opportunity given on 25.07.2018, 17.09.2018, 16.10.2018, 20.11.2018, 04.01.2019 and 24.01.2019, the appellant Bank/ Defendant no. 3 did not file any reply in response of notice u/s. 26(1). The said observation is wrongly recorded since the appellant Bank never received any notice u/s. 26(1) and therefore, the Bank never had the opportunity to participate in the proceedings before the Ld. Adjudicating Authority to defend its case. He stated that therefore by not issuing a notice to the appellant bank the Learned Adjudicating Authority has violated 26(1)(c) of the Prohibition of Benami Property Transaction Act, 1988, which states inter-alia, as:- "....26 (1). On receipt of a reference under sub-section (5) of section 24, the Adjudicating Authority shall issue notice to furnish such documents, particulars or evidence as is considered necessary on a date to be specified therein, on the following persons, namely:- (a)--- (b) (c) Any interested party, including a banking company. ". (d)--- He argued that since, no notice under section 26 (1)(c) was issued to the appellant bank to furnish any document or ....
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....tered. In the present case the security interest is registered, as per law. Therefore, a security interest stands created in favour of the appellant bank, protects its right. The Provisional Attachment Order and the subsequent confirmation is liable to be set aside, since it disregards and completely ignores the legislative mandate under section 26 E of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002. The said amendment of section 26 E has been bought into effect in 2016 and the said section 26 E has a non- obstante clause, which means, the said new amended law has an overriding effect over any other law for the time being in force including the provision of the Prohibition of Benami Property Transactions Act, 1988. Hence, the Provisional Attachment Order is in direct conflict with the provisions of section 26 E of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, and therefore the said Provisional Attachment Order is liable to be set aside. He stated that in the case of State Bank of India Vs. Joint Director, Directorate of Enforcement, MP-PMLA-2020.KOL/2015 (U.A....
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....d Prevention of Smuggling Activities Act has defined the illegally acquired properties and held that such properties are earned and acquired in ways illegal and corrupt, at the cost of the people and the state, hence these properties must justly go back where they belong, the state. In the present case as the money belongs to the Appellant bank it is public money. The appellant bank has the right to property under the Constitution of India. The property of the appellant bank cannot be attached or confiscated if there is no illegality in the title of the appellant and there is no charge of money laundering against the appellant. The mortgage of property is the transfer under the transfer of property act. 55. The ED has also filed the copies of the sale deeds/title deeds of the properties which shows the date of acquisition of all the properties. The original title deeds of all the properties are lying with the Appellant Bank. The Appellant Banks are having the mortgage charge over the properties. 56. That the definition of "proceeds of crime" as per Section 2(u) of the PML Act comprises of the property which is derived or obtained as a result of criminal activity. ....
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.... 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 Ld. Adjudicating Authority has not appreciated the facts and law involved in these matters and the primary objective of section 8 of 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 the circumstances available in the present case, the allegation of money laundering prima facie found to be unsustainable for the purpose of attachment under the PMLA, 2002. 66. In view of aforesaid facts and circumstances in the present case and for reasons referred above, we set aside the Impugned Order dated and 02.0....
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....aken the Symbolic Possession of the said Property on 02.03.2019 the Bank in compliance of the SARFAESI Act has made Paper Publication about the Symbolic Possession on 07.03.2019. That a copy of the loan arrangement letter evidencing the factum of loan which was advanced by the appellant bank is enclosed as ANNEXURE - G. Copy of document showing the registration of the mortgage is enclosed as ANNEXURE - H. Prayer is accordingly made to allow the present appeal and set aside the impugned adjudication order passed by the Adjudicating Authority (AA), qua the interest of the present appellant bank. 4. The Ld. Counsel for the respondent countered all the arguments of the appellant and the same will be analysed and reflected in our discussions and findings in paras below. 5. After hearing both the sides, the following issues emerge for analysis: i) Whether notice was not duly served on the appellant bank and thereby the impugned order was passed without hearing the appellant bank? ii) Whether the alleged benami property mortgaged with the bank as collateral security needs to be released? 6. Coming to issue no. i), the appellant has claimed that the AA has not....
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....rtant to note that the provisional attachment under the Benami Act is subject to confirmation by the adjudicating authority. Mere order of provisional attachment does not prevent a person "entitled to claim" any interest in the property ("person interested") or to enjoyment of an immovable property (for example a lessee) from such enjoyment, the possibility of taking over the possession of such property or for it to be treated as "Frozen being Benami" arising only upon confirmation by the adjudicating authority under section 27 (1) of the Benami Act. In terms of such scheme, the attachment is an interim measure, eventual intendment being that in the event of it being "found" that the property is benami, the same shall be ordered to be "confiscated to the Central Government" [Section 27(3)]." Thus, no prejudice has been caused to the appellant bank as the bank was having sufficient time to explain its stand before the Adjudicating Authority by way of submitting its objection/application/ response which the bank has not availed and it would be unjust to say that the bank has not been given opportunity before the Adjudicating Authority. Moreover, the respondent stated that the n....
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....erty. The expression "benami transaction" is defined by Section 2(9) to connote a transaction or an arrangement where the property is transferred to or held by one person while the consideration for the same is provided or paid by another, it being held for the "immediate or future benefit" of the latter, this being subject to some exceptions with which one is not immediately concerned here. In the context of attachment and confiscation, the disputes might also involve a transferee, for consideration, of property suspected to be held benami in the name of transferor. Such transferee is given the right to object to confiscation, it being incumbent on him to prove that the property had been held or acquired by him from the transferor (benamidar) "without his having knowledge of the benami transaction". The test, thus, is of the transaction being bonafide and for "adequate consideration". The taint of benami in such disputes would precede the acquisition by the bonafide holder. If the proposition of the SBI is accepted then the very purpose/intent as well as the object of the Benami Act would be defeated as unscrupulous person after acquiring a Benami Property and on detection of t....