Sr. no.,Description of Property,Value ( In Rs. )
1.,"601, Type Sovereign, 6th
Floor, Section-49, Vatika
City, Gurgaon, Sohna
Road, Haryana","80,50,549.80/-
dishonest means of inflating the value of stocks. They had also indulged in removal of hypothecated stocks without banks knowledge,,
through illegal sale of cars. SSPL company account remains irregular since 6/12/2008 as such the said account was classified as NPA on,,
31.03.2009.,,
7. That on 29.03.2007 borrower M/s. Surhit Services Pvt. Ltd. (SSPL) executed agreement to Mortgage the Property in question (being,,
owner of the said property in terms of the,,
“Apartment Buyers Agreement†dated 25.2.2005 executed by M/s Vatika Projects Ltd. â€" (as the Builder was known at the relevant,,
time) in favour of the appellant Syndicate Bank as security to the loan of Rs. 26.50 Crores sanctioned to M/s SSPL by Syndicate Bank. Copy,,
of the Agreement to Mortgage dated 29.03.2007 is filed.,,
8. The Respondent No. 2 Borrower M/s SSPL, the Builder M/s Vatika Land Base Ltd. and the appellant Syndicate Bank entered into a",,
Tripartite Agreement dated 18.07.2007 wherein amongst others it is duly recorded that:,,
a) Syndicate Bank had agreed to grant credit facilities to the extent of Rs. 26.50 Crores to the Borrower M/s SSPL.,,
b) The Builder M/s Vatika Land Base Ltd. has agreed to construct and sell to the Respondent No. 2 M/s SSPL a three bed room plus study,,
room being Flat No. 2/601, Type: Sovereign, Block No. II, 6th Floor, Vatika City, Sohna Road, Gurgaon and the said property will be ready",,
by March, 2008.",,
c) The Respondent no. 2 M/s SSPL has paid to the Builder M/s Vatika Land Base Ltd. a sum of Rs. 44,18,970/- towards the cost of the flat",,
and the balance of Rs. 33,87,640/- shall be paid by the said Respondent No. 2 M/s SSPL as and when demanded by the said Builder.",,
d) The Respondent No. 2 M/s SSPL and the Builder agree that the Appellant Syndicate Bank will have unrestricted right of entry and taking,,
possession of the flat in question.,,
e) The said Respondent No. 2 M/s SSPL agrees that in case of any default in paying the loan amount to Appellant Syndicate Bank by said,,
Respondent No. 2, the Builder will accept the new person brought by the Appellant Syndicate Bank as the purchaser and accordingly",,
execute the documents in their favour.,,
9. The Appellants above were the members of the Consortium of Banks. The Syndicate Bank was the lead Bank of the Consortium. In,,
exercises it power under SARFAESI Act, the Syndicate Bank issued notices to M/s SSPL u/s 13(2) of the SARFAESI on 25.08.2009 and",,
possession of three mortgaged properties mentioned below were taken on 16.02.2010 and on 23.03.2010. The Appellant Syndicate Bank,",,
being the lead bank, sold said three properties of the Respondent No. 2 M/s Surhit Services Pvt. Ltd. (M/s. SSPL) and shared the proceeds",,
with the other Appellant State Bank of India and a sum of Rs. 3.22 Crores being the share of State Bank of India has been credited towards,,
the loan account of SSPL.,,
10. Admittedly the property in question Flat No. 2/601,",,
Type: Sovereign, Block No. II, 6th Floor, Vatika City, Sohna Road, Gurgaon is a secured asset of the Appellant Banks in terms of the",,
Tripartite Agreement dt. 18.07.2007 r/w Agreement to Mortgage dt. 29.03.2007 being part of the security to the amount of Credit Facilities,,
by Appellant Banks granted by Syndicate Bank to the Respondent No. 2 M/s SSPL.,,
11. The loan amounts were released by the Appellant Syndicate Bank in 5 installments, as and when demanded by the Builder M/s Vatika",,
Land Base Ltd. (hereinafter referred to as “the Builderâ€), remitted a sum of Rs. 28,95,698/- between 03.05.2007 to 17.09.2008 towards",,
the property in question. The said amount of Rs. 28,95,698/- was remitted by debiting/liquidating the Fixed Deposit kept by the Respondent",,
No. 2 M/s SSPL much prior to 30.09.2008.,,
12. It is contended by the Appellants that on 25.08.2009 the Appellant Syndicate Bank issued notice under Sec. 13(2) of the Securitization,,
and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 calling upon the Respondent No. 2 M/s SSPL to pay,,
the dues of the appellant Bank failing which the Bank will amongst others sale the four immovable properties being secured assets of the,,
Bank.,,
13. It is contended by the appellant Syndicate Bank that it could not sell the property in question at that time as the same was not ready.,,
14. The Fixed Deposit kept by the Borrower M/s SSPL having been exhausted on 06.09.2011 appellant Syndicate Bank in order to protect,,
its security and perfect the sole right of the lenders to the property in question as their secured asset, the paid the last installment demanded",,
by the Builder amounting to Rs. 7,35,876/- and Rs. 1,08,988/- totaling Rs. 8,44,864/- by debiting the Overdraft Account of the respondent",,
No. 2 M/s SSPL. It is alleged by the appellant that though appellant Syndicate Bank has remitted a sum of Rs. 37,40,562/- to the Builder",,
towards the cost of the property in question only a sum Rs. 8,44,864/- is from the funds of the borrower M/s. SSPL kept in fixed deposit for",,
the purpose much prior to 30.09.2008.,,
It is mentioned that the sum of Rs. 37,40,562/- remitted by the appellant to the Builder towards the cost of the property in question by",,
liquidating the fixed deposits kept for the said purpose by the respondent no. 2 is much prior to 30.09.2008.,,
15. The Appellant Syndicate Bank filed O.A. No. 143/2011 on 26.09.2011 in Debt Recovery Tribunal-I, Delhi for recovery of Rs. 28.27",,
crores from the respondent no. 2 M/s SSPL.,,
16. The property in question was attached by CBI on 29.01.2013 in execution process under Sec. 83 of the Cr. P.C. in pursuance of the,,
order of the Court of the learned Shri V.K. Gupta, Additional District & Sessions Judge, CBI Court, Patiala House Courts, New Delhi.",,
17. The Appellant Syndicate Bank moved application dated 05.02.2013 before the CBI court of praying that the property in question be de-,,
sealed so as enable them to sell the same under Sec. 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of,,
Security Interest Act, 2002",,
(hereinafter referred to “the SARFAESI Act).,,
18. The CBI in its reply filed stated that the appellant Syndicate Bank suffered a loss of Rs. 26.24 crores and State Bank suffered a loss of,,
Rs. 8.96 crores and stated as under:-,,
“Since Syndicate Bank suffered a loss as above therefore, it may be allowed to recover its loss incurred due to the act of M/s Surhit",,
Services Pvt. Ltd. After valuation of the flat/property as on date.â€,,
The CBI Court vide order dated 04.03.2013, on an erroneous appreciation of the facts and circumstances of the case, held that the",,
appellant Syndicate Bank shall be paid only the amount financed by it to purchase the property.,,
19. It is the case of the Syndicate Bank that there being no irregularity or illegality in Syndicate Bank taking the property in question as,,
security and the appellant Syndicate Bank being entitled to sell the same and appropriate the proceeds towards the dues of the Respondent,,
no. 2 M/s SSPL under Sec. 13 (4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,",,
2002 the appellant Syndicate Bank filed Criminal Revision Petition No. 299 of 2013 in May, 2013 before the Hon’ble High Court of",,
Delhi against the order of the CBI court dated 04.03.2013.,,
20. The High Court by order dated 07.11.2014 was pleased to de-seal the property in question in favour of the appellant Syndicate Bank,,
noting the submission of the Bank “that it is a secured creditor and is entitled to recover its due in terms of Sec. 13 (4) of the,,
Securitization and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002.â€",,
21. The DRT on 23.09.2015 issued Recovery Certificate No. 394 of 2015 in T.A. No. 01/2014 (Originally O.A. No. 143 of 2011) in favour of,,
the appellant and against Respondent no. 2 for recovery of Rs. 28,28,68,238/- (Rupee twenty eight crores twenty eight lakhs sixty eight",,
thousand two hundred thirty eight only) and directed the respondent no. 8 Builder to execute sale deed of the property in question in favour,,
of the appellant. The relevant portion of the DRT’s order dt. 23.09.2015 is reproduced below:-,,
“15. The applicant has stated that the residential property no. 2/601, SOV-II, 3B/RS, 6th Floor, Gurgaon was greed to be sold to DI by",,
D6. The applicant has stated that the entire payments towards the cost of the flat has been remitted by applicant on behalf of D1 to D6. D1,",,
D6 and the applicant has entered into tripartite agreement. D1 by an agreement to mortgage AW-1/19 dt. 29.03.2007 agreed to create,,
mortgage of the property in favour of the applicant bank. The agreement with D6 executed by D1 on 25.02.2005, AW-1/20 was produced",,
before the bank. The original of this document is seized by the CBI and copy is produced before court. Since the entire sale consideration,,
on behalf of D1 is paid by the applicant to D6, the applicant is entitled to execute the sale deed in its favour and D6 is directed to execute",,
the sale deed in favour of the applicant. The applicant shall be entitled to possession of the property and thereafter the sale of the property,,
to recover the debt.â€,,
22. The Recovery Officer, on 27.11.2015 issued Demand Notice under Sec. 25 to Sec. 28 of the Recovery of Debts and Due to Bank and",,
Financial Institutions Act, 1993 and rule 2 of the Second Schedule to the Income Tax Act, 1961 to the Respondent nos. 2, 5 and 6.",,
24. Sri Rajesh Kumar Jain, Deputy Director, Director of Enforcement, New Delhi passed Provisional Attachment Order No. 04/2017 dated",,
31.03.2017 attaching the property in question namely property no. 601, Type Sovereign, 6th Floor, Sector-49, Vatika City, Gurgaon, Sohna",,
Road, Haryana.",,
25. Shri Rajesh Kumar Jain, on 28.04.2017, Deputy Director of Enforcement, New Delhi filed complaint no. OC-763 of 2017 before the",,
Adjudicating Authority under the PMLA.,,
26. It is averred in the appeal that the Appellant is also a victim of fraud played by the above named persons. The Appellant Syndicate Bank,,
had granted credit facilities to the extent of Rs. 26.50 Crores to M/s SSPL. Recovery Certificate for recovery of Rs. 28,27,18,238/- (Rupees",,
twenty eight Crores twenty seven lakhs eighteen thousand two hundred thirty eight only) has been issued by the Debt Recovery Tribunal,,
vide recovery Certificate No. 394/15 dated 23.09.2015 which the Appellant Syndicate Bank is not able to recover so far.,,
27. As per the Provisional Attachment Order No. 04/2017 in ECIR No. ECIR/05/DZ/2013/AD (AKS) dated 31.03.2017, a sum of Rs. 8.96",,
Crores is outstanding against M/s SSPL with State Bank of India against the amount of Loan of Rs. 13 Crore sanctioned to M/s SSPL by the,,
State Bank of India on 30.09.2008. As per Deputy Director Enforcement, Delhi Zone-I, New Delhi, the accused persons named above,",,
“have committed the offence of Money Laundering as defined under Section 3 and punishable under Section 4 of the PMLA, 2002; as",,
the money has been transferred and layered and further invested in the properties procured in the name of entity.†That according to the,,
Deputy Director, the property in question is Flat No. 2/601, Type: Soverign, Block No. II, 6th Floor, Vatika City, Sohna Road, Gurgaon.",,
28. The case of the appellant was that the above said conclusion of the Deputy Director is prima facie erroneous in as much as the Loan of,,
Rs. 13 Crore was sanctioned to M/s SSPL by the State Bank of India only on 30.09.2008 where SSPL paid the consideration of the Property,,
in question in full or otherwise made provision for payment of the balance amount as and when demanded by the builder M/s Vatika Land,,
Base Ltd. by way of fixed deposits with the appellant prior to 30.09.2008. This is evident on the face of the record and therefore the,,
consideration towards the cost of the property in question did not come from proceeds of crime and the Adjudicating Authority could not,,
have in law attached the same. The proceeds of the crime could not have come into existence prior to 30.09.2008.,,
29. However, the Adjudication Authority has confirmed the provisional attachment order by passing the impugned order on 02.08.2017.",,
33. Admittedly, it is not the case of the Deputy Director that the property was purchased by the respondent no. 2 SSPL from the amount",,
financed by the State Bank of India or Syndicate Bank. The case of the Appellant Banks are in much stronger footing than the case cited,,
above.,,
34. Rather the respondent no. 1 Director, Enforcement has conceded that the property in question has not been purchased from the",,
proceeds of the crime. The appellant Syndicate Bank in Para 3 (f) of the reply field by it before the Adjudicating Authority has shown that,,
the property in question has not been purchased from the proceeds of the crime as loan was sanctioned only on 30.09.2008 whereas the,,
cost of the property was paid much before the said date. The respondent no. 1 in his rejoinder has avoided replying to this contention of the,,
appellant.,,
35. There is no material nor any pleading of any party contrary to the fact that no transaction has been shown that any amount of the loan,,
of Rs. 13 Crores sanctioned to the Defendant No. 1 by State Bank of India on 30.09.2008 was used for the purchase of the property in,,
question. A sum of Rs. 5 Crores and Rs. 2.50 Crores is said to have been transferred to the account of the respondent no. 2 with the,,
appellant Syndicate Bank on 12.06.2008 and 27.06.2008 respectively by the respondent no. 7 State Bank of India (SBI). (Para 7.3 at Page,,
6 of the Complaint). But this is prior to sanction of the loan by SBI on 30.09.2008. Therefore the transfer cannot be from the proceeds of,,
the crime.,,
36. The amount of Rs. 5 Crore transferred to the Account of the respondent no. 2 on 12.06.2008 to the appellant Syndicate Bank was to,,
clear another loan account with of the said respondent no. 2 with Syndicate Bank i.e. OSL 01/08. (Please see statement of account of the,,
respondent no. 2 with Syndicate Bank entry for Rs. 4,97,62,012.19 dated 13.06.2008. Similarly, the amount of Rs. 2.5 Crores transferred to",,
the account of the respondent no. 2 with the appellant Syndicate Bank was to reduce the overdrawn limit in the account (Please see,,
statement of account of the respondent no. 1 with Syndicate Bank entry for Rs. 2.5 crores dated 27.06.2008.,,
37. Even borrower the (Respondent no. 2 on 17.06.2008 requested the SBI to transfer a sum of Rs. 25 lakhs to their account with Syndicate,,
Bank (Para 7.6 at Page 7 of the Complaint). But as per appellant Syndicate Bank the said request was not acted upon by SBI (there is no,,
such entry in the account of the Respondent no. 2 with Syndicate Bank (Statement of Account does not show any such entry). In any case,",,
this also prior to 30.09.2008. Therefore, it is apparent on the face of the record that the proceeds of the crime were not used to purchase",,
the property in question.â€,,
4. The aforesaid appeals vide order dated 15.03.2018 were allowed relying on the judgment passed by this Tribunal in State Bank of India Versus,,
Enforcement Directorate in FPA-PMLA-1026/KOL/2015 and 11 others dated 14.07.2017 and in FPA-PMLA-1368/GOA/2016 HDFC Versus Joint,,
Director, Directorate of Enforcement, Goa dated 28.08.2017.",,
5. This Tribunal also decided the batch of matters which were challenged before Honâ€ble High Court of Delhi at New Delhi in CRL.A. 143/2018 &,,
Crl.M.A. 2262/2018 and four others relying on the FPA-PMLA-1026/KOL/2015 and FPA-PMLA-1368/GOA/2016 on the basis of views taken,,
therein. Being aggrieved with the orders passed in FPA-PMLA-1848/DLI/2017 filed by Axis Bank, FPA-PMLA-729/DLI/2014 and FPA-PMLA-",,
1411/DLI/2014 filed by State Bank of India & Ors., FPA-PMLA-2147/DLI/2018 filed by IDBI Bank Ltd., FPA-PMLA-1958/DLI/2017 filed by",,
Punjab National Bank, FPA-PMLA-1616/DLI/2017 filed by Punjab National Bank and FPA-PMLA-1618/DLI/2017 filed by DBS Bank Ltd., the",,
Enforcement Directorate filed the CRL.A.143/2018 & Crl.M.A.2262/2018; CRL.A.210/2018 & Crl.M.A.3233/2018; CRL.A.623/2018 &,,
Crl.M.A.10886-87/2018, 48245/2018; CRL.A.764/2018 & Crl.M.A.28500/2018, 199/2019, 202/2019 and CRL.A1076/2018 & Crl.M.A.34565/2018,",,
34567/2018 respectively.,,
6. The Honâ€ble High Court, while deciding the aforesaid batch of matters in CRL.A. 143/2018 & Crl.M.A. 2262/2018 and others, have made the",,
following observations and summarized the conclusions which are reproduced below;,,
“163. Having regard to the above scheme of the law in PMLA, it is clear that if a bonafide third party claimant had acquired interest in",,
the property which is being subjected to attachment at a time anterior to the commission of the criminal activity, the product whereof is",,
suspected as proceeds of crime, the acquisition of such interest in such property (otherwise assumably untainted) by such third party cannot",,
conceivably be on account of intent to defeat or frustrate this law. In this view, it can be concluded that the date or period of the",,
commission of criminal activity which is the basis of such action under PMLA can be safely treated as the cut-off. From this, it naturally",,
follows that an interest in the property of an accused, vesting in a third party acting bona fide, for lawful and adequate consideration,",,
acquired prior to the commission of the proscribed offence evincing illicit pecuniary benefit to the former, cannot be defeated or frustrated",,
by attachment of such property to such extent by the enforcement authority in exercise of its power under Section 8 PMLA.,,
164. Though the sequitur to the above conclusion is that the bonafide third party claimant has a legitimate right to proceed ahead with,,
enforcement of its claim in accordance with law, notwithstanding the order of attachment under PMLA, the latter action is not rendered",,
irrelevant or unenforceable. To put it clearly, in such situations as above (third party interest being prior to criminal activity) the order of",,
attachment under PMLA would remain valid and operative, even though the charge or encumbrance of such third party subsists but the",,
State action would be restricted to such part of the value of the property as exceeds the claim of the third party.,,
165. Situation may also arise, as seems to be the factual matrix of some of the cases at hand, wherein a secured creditor, it being a bonafide",,
third party claimant vis-a-vis the alternative attachable property (or deemed tainted property) has initiated action in accordance with law,,
for enforcement of such interest prior to the order of attachment under PMLA, the initiation of the latter action unwittingly having the effect",,
of frustrating the former. Since both actions are in accord with law, in order to co-exist and be in harmony with each other, following the",,
preceding prescription, it would be appropriate that the PMLA attachment, though remaining valid and operative, takes a back-seat",,
allowing the secured creditor bonafide third party claimant to enforce its claim by disposal of the subject property, the remainder of its",,
value, if any, thereafter to be made available for purposes of PMLA.",,
166. As already noted, the newly inserted provision contained in Sections 26-B to 26-E falling in Chapter (no. IV-A) on “registration by",,
secured creditors and other creditors†of SARFEAESI Act are yet to be notified and brought into force. In the event of said statutory,,
clauses coming into force, a creditor will not be entitled to exercise the right of enforcement, inter alia, of security interest over the property",,
of borrower unless such “security interest†has been duly registered under the said law. Upon such amended law being enforced, a",,
bona fide third party claimant seeking relief against an order of attachment under PMLA will also be obliged to show due compliance with,,
such statutory requirements.,,
167. As has been highlighted earlier, the provisional order of attachment is subject to confirmation by the adjudicating authority. The order",,
of the adjudicating authority, in turn, is amenable to appeal to the appellate tribunal. The said forum (i.e. the appellate tribunal) may pass",,
such orders as it thinks fit “confirming, modifying or setting aside the order appealed against†[Section 26(4)]. Undoubtedly, an",,
aggrieved party is entitled in law to invoke the said jurisdiction of the appellate tribunal to bring a challenge to the orders of attachment (as,,
confirmed) but, the law in PMLA, at the same time, also confers jurisdiction on the special court to entertain such claim for purposes of",,
restoration of the property during the trial of the case [Section 8]. The jurisdiction to entertain objections to attachment conferred on the,,
appellate tribunal on one hand and, on the special court, on the other, thus, may be co-ordinate, to an extent.",,
168. An argument, however, was raised, by the appellants that the respondents herein should have approached the special court, instead of",,
the appellate tribunal, for consideration of their respective claims.",,
169. In view of above-noted legislative scheme, it must be clarified that if the order confirming the attachment has attained finality, or if the",,
order of confiscation has been passed or, further if the trial of a case for the offence under Section 4 PMLA has commenced, the claim of a",,
party asserting to have acted bonafide or having legitimate interest will have to be inquired into and adjudicated upon only by the special,,
court.,,
170. But, the above exception cannot be applied to all cases of bona fide third party claimants so as to confer a general right to seek",,
release of such property as last mentioned above from attachment even in cases where the encumbrance is created or interest acquired at a,,
time around or after the date or period of criminal activity. In this category of cases, the third party will have the additional burden to prove",,
that it had exercised due diligence having ""taken all reasonable precautions"" at the time of acquisition of such interest or creation of such",,
charge, the jurisdiction to entertain and inquire into such claim and grant relief of release after order of attachment has attainted finality,",,
or of restoration after order of confiscation, vesting only in the special court under Section 8(7) & (8) PMLA. The due diligence is to be",,
tested amongst others, on the touchstone of questions as to whether the party had indulged in transaction after due inquiry about untainted",,
status of the asset or legitimacy of its acquisition.,,
SUMMARISING THE CONCLUSIONS,,
171. It will be advantageous to summarise the conclusions reached by the above discussion, as under :-",,
(i). The process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs,,
parallel to investigation and criminal action vis-a-vis the offence of money-laundering.,,
(ii). The empowered enforcement officer is expected to assess, even if tentatively, the value of proceeds of crime so as to ensure such",,
proceeds or other assets of equivalent value of the offender of money-laundering are subjected to attachment, the evaluation being open to",,
modification in light of evidence gathered during investigation.,,
(iii). The empowered enforcement officer has the authority of law in PMLA to attach not only a ""tainted property"" - that is to say a property",,
acquired or obtained, directly or indirectly, from proceeds of criminal activity constituting a scheduled offence - but also any other asset or",,
property of equivalent value of the offender of money laundering, the latter not bearing any taint but being alternative attachable property",,
(or deemed tainted property) on account of its link or nexus with the offence (or offender) of money-laundering.,,
(iv). If the ""tainted property"" respecting which there is evidence available to show the same to have been derived or obtained as a result of",,
criminal activity relating to a scheduled offence is not traceable, or the same for some reason cannot be reached, or to the extent found is",,
deficient, the empowered enforcement officer may attach any other asset (""the alternative attachable property"" or ""deemed tainted",,
property"") of the person accused of (or charged with) offence of money-laundering provided it is near or equivalent in value to the former,",,
the order of confiscation being restricted to take over by the government of illicit gains of crime.,,
(v). If the person accused of (or charged with) the offence of money-laundering objects to the attachment, his claim being that the property",,
attached was not acquired or obtained (directly or indirectly) from criminal activity, the burden of proving facts in support of such claim is",,
to be discharged by him.,,
(vi). The objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and Insolvency Code, the latter three legislations do",,
not prevail over the former.,,
(vii). The PMLA, by virtue of section 71, has the overriding effect over other existing laws in the matter of dealing with ""money-laundering""",,
and ""proceeds of crime"" relating thereto.",,
(viii). The PMLA, RDBA, SARFAESI Act and Insolvency Code (or such other laws) must co-exist, each to be construed and enforced in",,
harmony, without one being in derogation of the other with regard to the assets respecting which there is material available to show the",,
same to have been ""derived or obtained"" as a result of ""criminal activity relating to a scheduled offence"" and consequently being",,
proceeds of crime"", within the mischief of PMLA.",,
(ix). If the property of a person other than the one accused of (or charged with) the offence of money-laundering, i.e. a third party, is",,
sought to be attached and there is evidence available to show that such property before its acquisition was held by the person accused of,,
money-laundering (or his abettor), or it was involved in a transaction which had interconnection with transactions concerning money-",,
laundering, the burden of proving facts to the contrary so as to seek release of such property from attachment is on the person who so",,
contends.,,
(x). The charge or encumbrance of a third party in a property attached under PMLA cannot be treated or declared as ""void"" unless",,
material is available to show that it was created ""to defeat"" the said law, such declaration rendering such property available for attachment",,
and confiscation under PMLA, free from such encumbrance.",,
(xi). 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 complicit in, the offence of money-laundering, and that it has made all compliances with",,
the existing law including, if so required, by having said security interest registered.",,
(xii). An order of attachment under PMLA is not illegal only because a secured creditor has a prior secured interest (charge) in the,,
property, within the meaning of the expressions used in RDBA and SARFAESI Act. Similarly, mere issuance of an order of attachment under",,
PMLA does not ipso facto render illegal a prior charge or encumbrance of a secured creditor, the claim of the latter for release (or",,
restoration) from PMLA attachment being dependent on its bonafides.,,
(xiii). If it is shown by 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 around or after the commission of the proscribed",,
criminal activity, in order to establish a legitimate claim for its release from attachment it must additionally prove that it had taken “due",,
diligence"" (e.g. taking reasonable precautions and after due inquiry) to ensure that it was not a tainted asset and the transactions indulged",,
in were legitimate at the time of acquisition of such interest.,,
(xiv). If it is shown by 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 the proscribed criminal,,
activity, the property to the extent of such interest of the 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 is in excess of the claim of the said third party.,,
Sr. No.,Date,List of Events
1.,25.02.2005,"M/s.    Surhit    Services   Â
Pvt.    Ltd.    (SSPL) (Respondent  Â
no.2)   entered   into   Apartment BuyersÂ
Agreement with the Builder M/s. Vatika
Land Base Ltd. (VLBL)
2.,29.03.2007,"Execution of agreement to mortgage the property inÂ
question by M/s. SSPL with appellant as
security to the amount of Rs.26.50 Crores.
3.,18.07.2007,"Tripartite agreement entered into by the M/s.
SSPL, the appellant and M/s. VLBL.
4.,18.07.2007,"a) Tripartite agreement shows that M/s. SSPL
has paid Rs.44,18,970/- to M/s. VLBL being
the  part  consideration  of  the Â
property  in question  prior  to  the Â
date  of  tripartite agreement.
b) The  balance  consideration  amount Â
of  the property in question of Rs.33,87,640/-Â
shall be paid by the Respondent no.2 M/s. SSPL as and when
demanded by M/s. VLBL.
c) M/s. SSPL agrees to create mortgage ofÂ
the flat in question as soon as the saleÂ
deed is executed.
d) M/s. SSPL and M/s. VLBL agree thatÂ
the appellant will have unrestricted right of entry and taking
possession of the flat in question.
e)Â M/s. SSPL agrees that in case of any default inÂ
payment of loan amount to appellant, the M/s.
VLBL will accept the new person brought by the appellant as
the purchaser and execute the document in their favour
accordingly.
f)Â Â The property in question is a secured asset of the
appellant being security to the amount of Credit FacilitiesÂ
granted by the appellant to M/s. SSPL. The said
property is also security to Rs. 13 Crores sanctionedÂ
by SBI to the
Respondent no.2 M/s.SSPL.
5.,17.09.2008,"The appellant in 5 installments remitted a sum of
Rs.28,95,698/- between 03.05.2007 to
17.09.2008Â toward the property in question.
6.,30.09.2008,"The loan of Rs.13 Crores was sanctioned to
M/s. SSPL by State Bank of India.
7.,25.08.2009,"The appellant issued notice under Section 13(2)Â
of SARFAESI Act, 2002 to Respondent no.2 M/s.
SSPL to pay the dues of the Bank.
The Appellant sold three of the said four
immovable  properties  of  Respondent  no.2
M/s. SSPL and adjusted the said amounts so
realized towards the dues of M/s. SSPL.
8.,2010,"The appellant and SBI lodge complaint of
cheating with CBI against M/s. SSPL.
9.,06.09.2011,"The  FD  kept  by  M/s.  SSPL Â
having  been exhausted,   the   appellant  Â
paid   the   last installment   Â
demanded    by    the    builder
amounting   to   Rs.8,44,864/-   by  Â
debiting
Overdraft Account of M/s. SSPL.
10.,26.09.2011,"The appellant filed O.A. No. 143/2011 before
DRT, Delhi.
11.,29.01.2013,The property in question attached by CBI.
12.,07.11.2014,"The Hon‟ble High Court Delhi ordered to de-
seal the property in question in favour of the appellant  Â
noting   the   submission   of   the
appellant that it is a secured creditor and is
entitled to recover its due in terms of Section
13(4) of SARFAESI Act, 2002.
d) The subject property is not an alternate attachable property and not even claimed as such.,,
e) The property in question was acquired much before the alleged criminal activity and is not involved in a transaction which had interconnection with,,
transactions concerning money-laundering.,,
f) That even otherwise, due diligence was exercised by the Bank in taking the property in question as security.",,
g) The subject property is not tainted property. Property valued at Rs.80.50 Lakh;,,
DRT issued Recovery certificate for Rs.28.27 crores much more than value of property.,,
h) The property in question is not attached as an alternate property.,,
9. It is contended by the Appellant Bank that CBI has fully investigated the matter and the transactions involved in the case and filed charge sheet in,,
the CBI Court. If it had found t hat there was any offence involved in the matter of purchase of the property in question or creation of security,,
interest in favour of the Bank including money laundering even remotely, it would not have consented that the property in question confiscated by the",,
CBI to be released to the Appellant Bank for being sold to recover its dues before the Honâ€ble High Court and Honâ€ble High Court on merits,,
would not have released the property in favour of the Bank.,,
10. On the other hand the respondent has inter-alia submitted the following:,,
a. That, Enforcement Directorate issued Provisional Attachment Order no. 04/2017 dated 31.03.2017 for property situated at address “601, type",,
Sovereign, 6th Floor, Sector-49, Vatika City, Gurgaon, Sohna Road, Haryanaâ€.",,
b. That, consequent to issuing of the Provisional Attachment Order, the Original Complainant vide no. 763/2017 was filed before the Honâ€ble",,
Adjudicating Authority for adjudication. After hearing both the parties, the Ld. Adjudicating Authority has also confirmed the Provisional Attachment",,
Order and allowed the Original Complaint filed by Enforcement Directorate vide its order dated 02.08.2017, confirming the provisional attachment of",,
assets worth Rs. 80,50,549.80/-.",,
c. That, the respondent Syndicate Bank preferred an appeal against the order dated 02.08.2017. The Honâ€ble Appellate Authority, Prevention of",,
Money Laundering Act at New Delhi vide its Orders dated 15.03.2018 allowed the appeal of the respondent bank and set aside the confirmation of,,
Provisional Attachment Order dated 02.08.2017.,,
d. That, a prosecution complaint has also been filed in Honâ€ble Trial Court under PMLA, 2002 against M/s Surhit Service Pvt. Ltd. and its Directors",,
for prosecution and confiscation of the attached property.  Honâ€ble Trial Court has taken cognizance of the same and the case is pending for trial.,,
e. That, Enforcement Directorate filed an appeal no. Crl. A. 603/2018 in Honâ€ble Delhi High Court u/s 42 of the PMLA, 2002 against the Order",,
dated 15.0.3.2018 passed by Honâ€ble Appellate Tribunal(PMLA) in FPA-PMLA-1935/DLI/2017 in which Honâ€ble High Court vide order dated,,
01.11.2019 disposed the appeal filed by Enforcement Directorate and ordered that:,,
“It is agreed between the parties that in view of the judgment passed by a coordinate bench of this court in the case bearing Crl. A.,,
143/2018 in Deputy Director Directorate of Enforcement Delhi vs. Axis Bank and Ors. and other batch matters, the present case be",,
remanded to Appellate Tribunal for PMLA and the tribunal shall restore the appeal and after hearing both the parties, decide the same",,
within six weeks from the receipt of this order. This appeal is disposed of, accordingly.â€",,
f. The respondent has drawn the attention of this Tribunal to the judgment passed in CRL. A. no. 143/2018 in matter of Deputy Director Directorate,,
of Enforcement Delhi Vs. Axis Bank and other and other batch matters and has also drawn attention to para 163 to 167 and para 171 of the aforesaid,,
judgment of Honâ€ble High Court of Delhi which has already been re-produced in earlier paragraph.,,
g. From the above it emerges that Honâ€ble High Court of Delhi has held as under:-,,
• The charge or encumbrance of a third party in a property cannot make attachment under PMLA void or not tenable.,,
• An order of attachment under PMLA is not illegal only because a secured creditor has a prior secured interest/charge in the property.,,
• SARFAESI Act and Insolvency Code do not prevail over PMLA for the reason that the objective of PMLA is distinct from these legislators. By,,
virtue of Section 71, PMLA has overriding effect over other existing law in the matter dealing with money laundering.",,
• Bonafide third party has to prove its claim and in case bonafide third party proves its claim even then the attachment under PMLA would not be,,
invalid.,,
• If order confirming the attachment has attained the finality or if the order of confiscation has been passed or if trial of a case under Section 4 of,,
PMLA has commenced the claim of a party with regard to legitimate interest in the property will be inquired into and adjudicated upon only by the,,
Special Court.,,
h. In the instant case, as per Agreement to Mortgage dated 29.03.2007 between appellant bank and M/s. Surhit Services Pvt. Ltd., the property in",,
dispute was actually never mortgaged to the appellant bank. The extract of the agreement in this regard is as below:,,
“The First party shall mortgage the said property in favour of the Bank immediately after the execution of the sale deed in their favour,,
by M/s Vatika Greenfields Projects Pvt. Ltd.â€,,
Further, from Tripartite Agreement which was signed between Appellant Bank, Builder and M/s. Surhit Services Pvt. Ltd. Dated 18.07.2007 the",,
aforesaid fact is again clear that the property in dispute was never mortgaged to the appellant Bank and the extract of the agreement in this regard is,,
as below:,,
“One of the terms and conditions of the said sanction of credit facilities that amongst others the borrower shall create the mortgage of,,
the scheduled property on completion of construction and other formalities of transfer by the builder in favour of the Borrower and,,
meanwhile to project the interest of the Bank an agreement shall be entered into by the builder with the borrower in favour of the bank,,
agreeing for certain terms and conditions.â€,,
Thus, from the aforesaid facts, it is clear that the claim of the appellant bank that it was a mortgagee is not tenable as the property in question was",,
never mortgaged to the appellant Bank.,,
i. Further, it is submitted that the attached property is a proceeds of crime. It is also relevant to mention herein that in the present case Prosecution",,
complaint has already been filed and Special Court has taken cognizance therefore the attached property has also become the case property.,,
j. It is also submitted that the prosecution complaint has been filed after the pronouncement of this Appellate Tribunal judgment dated 15.03.2018.,,
k. Attachment is still continuing. It was not a housing loan but a loan against credit facility.,,
11. Heard both sides. Perused the materials available on record and gone through the order of Honâ€ble High Court of Delhi passed in Crl.A.,,
No.143/2018 and other batch matters. It is revealed from the record that the following are the undisputed facts of the appeals:,,
i. On 25.02.2005, M/s. Surhit Services Pvt. Ltd. (SSPL) (Respondent no.2) entered into Apartment Buyers Agreement with the Builder M/s. Vatika",,
Greenfields Project Pvt. Ltd. (Annexure A-1),,
ii. On 29.03.2007, Execution of agreement to mortgage the property in question by M/s. SSPL with appellant as security to the amount of Rs.26.50",,
Crores. (Annexure A-1 Agreement to Mortgage),,
iii. On 18.07.2007, Tripartite Agreement entered into by the M/s. SSPL, the appellant and M/s. Vatika Land Base Ltd. (VLBL) (Builder). (Annnexure",,
A-2),,
iv. The said Tripartite Agreement shows that M/s. SSPL has paid Rs.44,18,970/- to M/s. VLBL being the part consideration of the property in",,
question prior to the date of tripartite agreement. (Annnexure A-2),,
v. The balance consideration amount of the property in question of Rs.33,87,640/- was to be paid by the Respondent no.2 M/s. SSPL as and when",,
demanded by M/s. VLBL. (Annnexure A-2),,
vi. M/s. SSPL agrees to create mortgage of the flat in question as soon as the sale deed is executed. (Annnexure A-2),,
vii. M/s. SSPL and M/s. VLBL agreed that the appellant bank will have unrestricted right of entry and taking possession of the flat in question.,,
(Annnexure A-2),,
viii. M/s. SSPL agreed that in case of any default in payment of loan amount to appellant, the M/s. VLBL will accept the new person brought by the",,
appellant as the purchaser and execute the document in their favour accordingly. (Annnexure A-2),,
ix. The said property is also security to Rs. 13 Crores sanctioned by SBI to the Respondent no.2 M/s.SSPL.,,
x. On 17.09.2008, the appellant bank in 5 installments remitted a sum of Rs.28,95,698/- between 03.05.2007 to 17.09.2008 toward the property in",,
question.,,
xi. On 30.09.2008, the loan of Rs.13 Crores was sanctioned to M/s. SSPL by State Bank of India.",,
xii. On 25.08.2009, the appellant issued notice under Section 13(2) of SARFAESI Act, 2002 to Respondent no.2 M/s. SSPL to pay the dues of the",,
Bank.,,
xiii. In 2010, the appellant bank and SBI lodge complaints of cheating with CBI against M/s. SSPL.",,
xiv. On 06.09.2011, the FD kept by M/s. SSPL having been exhausted, the appellant paid the last installment demanded by the builder amounting to",,
Rs.8,44,864/- by debiting Overdraft Account of M/s. SSPL.",,
xv. On 26.09.2011, the appellant filed O.A. No. 143/2011 before DRT, Delhi.",,
xvi. On 29.01.2013, the property in question attached by CBI.",,
xvii. On 07.11.2014, the Honâ€ble High Court of Delhi ordered to de-seal the property in question in favour of the appellant noting the submission of",,
the appellant that it is a secured creditor and is entitled to recover its due in terms of Section 13(4) of SARFAESI Act, 2002.",,
12. The bonafide as well as due diligence in sanctioning the loan by the appellant to M/s. SSPL has not been doubted by the respondent at any point of,,
time. It is also not clarified by the respondent how the property in question is acquired out of proceeds of crime. On perusal of the conclusive para i.e.,,
Para No. 12, the ld. Adjudicating Authority is not sure whether the property attached in proceedings are proceeds of crime or value thereof and how",,
the appellants are involved in the money laundering.,,
13. One of the main contentions of the respondent that the property was not mortgaged rather there is an agreement to mortgage the same. On the,,
other hand, it is the contention of the appellant bank that security interest has already been created on 29.03.2007 on Execution of Agreement to",,
mortgage the property in question by M/s. SSPL with the appellant and followed by Tripartite Agreement entered into by M/s. SSPL, the appellant",,
and M/s. VLBL on 18.07.2007. It is also contended by the learned counsel for the appellant that the CBI in the proceedings relating to the predicate,,
offence pending before the Ld. Special Judge, CBI submitted that “an amount of Rs.33,77,816/- paid by the Bank to M/s. Vatika. In this case, SBI",,
suffered a loss of Rs.8.96 crore out of Rs.13 crore and also Syndicate lead Bank also suffered a loss of Rs. 26.24 crore. CBI has filed a charge-sheet,,
in the Hon’ble Court in RC.BDI/2010/E/0005/CBI/BS&FC/New Delhi related to loss of Syndicate Bank. Since Syndicate Bank suffered a loss as,,
above therefore, it may be allowed to recover its loss incurred due to act of M/s. Surhit Services Pvt. Ltd. after proper valuation of the flat/property as",,
on date.†(Annexure A-3),,
14. Annexure A-6 is the copy of the order passed by the Honâ€ble High Court of Delhi in CRL. REV.P. 299/2013 & Crl. M.A. 8119/2013 filed by,,
the Appellant against the order dated 04.03.2013 passed by the Ld. Special Judge, in complaint case no. 10/2011 filed by CBI. On the said Criminal",,
Revision Petition the Honâ€ble High Court of Delhi has passed the following order:,,
“Counsel for the petitioner has put in appearance.,,
Parties have addressed arguments.,,
Submission of the learned counsel for the petitioner is that the order dated 04.3.2013 passed in Complaint Case No.10 of 2011 is patently,,
illegal and in gross violation of Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security,,
Interest Act, 2002.",,
Record shows that M/s Surhit Services Pvt. Ltd. had mortgaged its property i.e. Flat No.2/601, Type: Sovereign Block No.II, 6th Floor,",,
Vatika City, Sohna Road, Gurgaon on 29.3.2007 with the petitioner bank i.e. Syndicate Bank. An agreement of mortgage to the said effect",,
had been executed. This property had been mortgaged as a security for the loan amount of Rs.26.50 crores which had been sanctioned by,,
the bank to the borrower (M/s Surhit Services Pvt. Ltd.). On 18.7.2007 the borrower, builder (M/s Vatika Land Base Ltd.) and the petitioner",,
bank entered into a tripartite agreement. The contention of the petitioner bank is that the bank is a secured creditor and the property had,,
been mortgaged with the bank; the impugned order dismissing the application of the bank and not allowing the de-sealing of the property,,
had committed a folly.,,
The reply filed by the CBI has been perused. It is not in dispute that the present property stood as a security with the petitioner bank,,
pursuant to which a loan had been granted to M/s Surhit Services Pvt. Ltd. There is also no dispute to the factum of the tripartite agreement,,
entered into between the bank (petitioner), builder and the borrower.",,
The CBI has reiterated that the afore noted flat is a secured asset of the Syndicate Bank. It has supported the stand of the petitioner bank,,
and has stated that since the bank had suffered a loss it may be permitted to sell the aforenoted property.,,
Record shows that this property had been attached by the Special Judge in the proceedings under Section 82 and 83 Cr.P.C. as the,,
borrower had not been appearing and that Court had been informed that as on date he is a proclaimed offender.,,
Noting the submissions of the petitioner bank that it is a secured creditor and is entitled to recover its due in terms of Section 13(4) of the,,
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the present prayer made in the",,
present application is granted and the property Flat No.2/601, Type: Sovereign Block No.II, 6th Floor, Vatika City, Sohna Road, Gurgaon",,
be de-sealed in favour of the petitioner bank.,,
With these directions this petition is disposed of.â€,,
15. Annexure A-11 to Annexure A-14 are the copy of the documents showing that the appellant had filed recovery proceedings before the DRT-II,",,
Delhi for recovery of the loan amount which was concluded vide order dated 23.09.2015 and issue of recovery certificate dated 27.11.2015. It is,,
contended by the Appellant Bank that the recovery of the outstanding loan could not be made due to the present attachment proceedings. It is,,
contended by the learned counsel for the appellant bank that the total outstanding amount is Rs.28.27 Crores and there will be deficiency even after,,
disposal of the property in question. The learned counsel for the appellant submits that the appellant bank is a victim and not an offender, the public",,
money is stuck due to the proceedings under PMLA.,,
16. The appellant is a third party bonafide claimant of the property. The security interest has been created on the property in question and there are,,
legitimate banking transactions. There is no allegation on the part of Enforcement Directorate that the appellant has not exercised due diligence in,,
sanctioning loan. Such facilities were extended after conducting due diligence and the necessary checks and balances.,,
17. The security interest has been created in the year on 29.03.2007, whereas the ECIR has been registered much later and the Provisional",,
Attachment Order has been passed on 24.03.2017. Much prior to the year 2017, Section 13(2) notice under SARFAESI Act, 2002 was issued on",,
25.08.2009 and the DRT proceedings have been finally concluded in the year 2015.,,
18. The Honâ€ble High Court of Delhi in the recent decision ofâ €œThe Deputy Director, Directorate of Enforcement, Delhi Vs. Axis Bank &",,
Ors.,†reported in 2019 SCC Online Del 7854 (hereinafter referred to as the “Axis Bank Decisionâ€) has rightly held that the interest of a third",,
party in the property of an accused, acquired prior to the commission of the proscribed offence cannot be defeated or frustrated by attachment of",,
such property under Section 8 of the Act.,,
19. The Honâ€ble High Court further recognized the right of such third party to proceed with enforcement of its interest in accordance with law such,,
that while the order of attachment under the Act would not be rendered irrelevant, yet it would take a backseat such that the State action would be",,
restricted to such part of the value of the property as exceeds the claim of the third party, if any. (Reference Paragraph No. 162-164 of the Axis",,
Bank Decision) speak for itself.,,
In terms with the Axis Bank Decision, the claim of the Respondent to the property would be restricted to such part of the aggregate value of the",,
property attached as exceeds the claim of the Appellant.,,
Claim of the Bonafide Third Party Claimant to be determined by the Appellate Tribunal.,,
20. In terms with the statutory safeguards incorporated in the Act, any party aggrieved by the confirmation of the Provisional Attachment Order by",,
the Adjudicating Authority may challenge such confirmation in an appeal to this Tribunal U/s 26 of the Act and then before the Honâ€ble High Court,,
U/s 42 of the Act against the order of this Tribunal. Accordingly, under the legislative and statutory scheme of the Act, unless a party has exhausted",,
its remedies in appeal right up to the Honâ€ble High Court, an order confirming the attachment cannot be said to have attained finality.",,
Therefore, this Tribunal is fully equipped and possesses the requisite jurisdiction in terms with the Act as the court of first appeal, to adjudicate upon",,
the pleas of the Appellant and determine the bonafides and legitimacy of its claims as well as the legality of the Provisional Attachment Order.,,
21. There is no force in the argument of learned counsel appearing on behalf of Enforcement Directorate that claims of third parties are to be solely,,
adjudicated by the Special Court before whom trial is pending. The Honâ€ble High Court of Delhi in the Axis Bank Decision has held that the claim of,,
a party asserting a bonafide and legitimate claim would be inquired into by the Special Court only if the order confirming the attachment “has,,
attained finalityâ€. An order cannot be said to have attained finality until and unless all the remedies under the Act have been exhausted. The Tribunal,,
has only to examine the impugned order and is empowered under Section 26 of the Act as to whether the attachment order has been passed as per,,
law or not. This Tribunal has the exclusive jurisdiction on this issue. The Appellant Bank is otherwise if so may approach the Special Court for release,,
of property even during the pendency of appeal or after allowing the appeal. The validity of the confirmation of attachment order is only to be,,
considered by this Tribunal.,,
22. The plea of the Respondent that the submission of the Appellant of possessing a legitimate and bonafide claim as a third party to the property,,
cannot be tackled at the stage of confirmation of the PAO and that the rights of the Appellate will be dealt with by the Special Court at the stage of,,
Section 8(8) of the Act in incorrect. The said argument of the respondent is contrary to the statutory and legislative scheme of the Act. It would,,
amount to an exercise in futility and wasteful litigation if the Appellant were required to be a mute spectator to the confirmation of attachment of,,
mortgaged property at this stage and await the conclusion of criminal trial under the PMLA, 2002 to agitate and pursue its rightful legal claim over",,
such property on which security interest has been created.,,
23. Therefore, the Adjudicating Authority by the Impugned Judgment has erred in failing to recognise the legitimate claim of the Appellant at the stage",,
of confirmation of the PAO itself as the Appellant Bank is a victim of the fraud by M/s. SSPL the effect of the Impugned Judgment, depriving it of",,
pursuing its legal claims against property mortgaged to it. The value of the property on account of the present case as well as the FIR has depreciated,,
significantly and is deteriorating on a daily basis, such that any delay in enforcement of recovery by the Appellant would be rendered meaningless. In",,
the present case, the Appellant is the victim of the fraud played upon it by M/s. SSPL.",,
24. The authorised officer has failed to trace out the other property which is involved in the money laundering. Without any proper investigation in this,,
regard, the officer concerned straightaway target the secured property which are not acquired from the proceeds of crime and the same were",,
secured prior to the date of offence committed.,,
25. The impugned order confirming the provisional attachment order is passed without application of mind and without understanding the law, it is",,
liable to be quashed with regards to secured property.,,
26. It is not agreed with the submission of counsel appearing on behalf of ED that the banks may not be allowed to dispose of the secured property,,
and should wait for trial to be faced by these offenders and it would. The main reasons for disagreeing his arguments are that the secured property is,,
secured much prior period from the date of offense. The banks are innocent and victims. The banks are not charge-sheeted. They are the secured,,
creditors. Public Sectors Banks†money is the public money.,,
27. No doubt, this tribunal is clear in its mind that if the property was acquired from proceeds of crime and at the time of creating security, the bank is",,
aware and still the loan is sanctioned, then said property can be attached even in lieu of value thereof if the borrowers has concealed or is concealing",,
the proceeds of crime, but under those circumstances, there must be material or prima facie evidence on record before passing the provisional",,
attachment orders.,,
28. This order is being passed in relation to secured property in favour of bank which is not purchased from proceeds of crime. The same was,,
purchased and secured with the bank prior to the of crime period.,,
29. SARFAESI Act, 2002 measure under Section 13(2) was initiated in the year 2009 and Bankâ€s OA for recovery of dues under RDB, Act was",,
filed in the year 2014 and DRT order dated 15.10.2015 restraining the Borrowers and Guarantors to deal with the secured property is much prior to,,
the passing of the PAO order 24.03.2017 by the ED.,,
30. The appellant is always at liberty to approach the Special Court to initiate the proceeding for disposal of secured property, if so desired, who is",,
agreeable to deposit the excess amount if such situation will arise. Counsel for appellants after taking the instructions from his clients stated that his,,
clients are duty bound to deposit the excess amount with the respondent.,,
31. The Appellant has nothing to do and has no connection with the allegation of crime committed by the borrower. They are not involved for the,,
offences of money-laundering. The secured property is admittedly not derived from criminal activities or proceeds of crime. The scope of the PMLA,,
is to punish the accused person and not to punish the innocent person who is not involved in the crime within the meaning of Section 2 (v) read with,,
Section 3 of the Act. The appellant is not charge sheeted nor any prosecution complaint has been filed against the appellant.,,
32. There is no nexus whatsoever, between the alleged crime and the appellant who has secured property and is a victim of the fraud and is innocent",,
party. The definition of proceeds of crime as per Section 2 (u) of the Act comprises of the property which is derived or obtained as a result of criminal,,
activities. The secured property is not acquired from proceeds of crime.,,
33. The scheme of the Act is such that is cannot apply to a transaction of the nature as in the present case against the appellant. Money of appellant is,,
public money and its right under SARFAESI cannot be taken away by the attachment order, in case the attachment continues against the mortgage",,
property, in all matters the economy of the country would suffer.",,
34. If paras 167 to 169 are read co-jointly with para-163 and 165, it is clear from the same that if the attachment has attained finality or if order of",,
confiscation has been passed, the claim and legitimate interest will have to be inquired by the Special Court. The said findings are correct if the",,
situation in the present appears are the same. In the present case, attachment has not attained finality or any confiscation has been passed or any trial",,
has commenced under the Section-4 of PMLA against the appellant. In fact, appellant is an innocent party and a victim also. The trial against accused",,
parties may take number of years. Appellantâ€s case is squarely covered under para-163 and 165 of the judgment.,,
35. In terms with the statutory safeguards incorporated in the Act, any party aggrieved by the confirmation of the Provisional Attachment Order by",,
the Adjudicating Authority may challenge such confirmation in an appeal to this Tribunal under Section 26 of the Act and then before the Honâ€ble,,
High Court under Section 42 of the Act against the order of this Tribunal. Accordingly, under the legislative and statutory scheme of the Act, unless a",,
party has exhausted its remedies in appeal right up to the Honâ€ble High Court, an order confirming the attachment cannot be said to have attained",,
finality. This tribunal is only concerned with the validity of the impugned order and provisional attachment order which has been confirmed.,,
36. Therefore, this Tribunal possesses the requisite jurisdiction in terms with the Act as the court of first appeal, to adjudicate upon the pleas of the",,
Appellant and determine the bonafide and legitimacy of its claims as well as the legality of the Provisional Attachment Order. Upon an argument being,,
raised by the Enforcement Directorate that claims of third parties are to be solely adjudicated by the Special Court before whom trial is pending, the",,
Honâ€ble High Court of Delhi in the Axis Bank Decision has held that the claim of a party asserting a bonafide and legitimate claim would be inquired,,
into by the Special Court only if the order confirming the attachment “has attained finalityâ€. An order cannot be said to have attained finality until,,
and unless all the remedies under the Act have been exhausted. No doubt the bank and financial institutions are always at liberty to approach the,,
Special Court (if so desired) in order to invoke the amended provision of sub-section 8 of Section 8, however, it is wrong to suggest that the bank and",,
financial institutions are not entitled to challenged the order of attachment because this tribunal is only exclusively having jurisdiction to examine the,,
validity of attachment and to decide the same under section 26 of the Act as to whether attachment was valid or not. The bank and financial,,
institutions are entitled to take the remedy before the Special Court after the decision of appeal or during the pendency of appeals.,,
37. In view of judgment passed by the High Court also, I am of the view that the Provisional Attachment Order dated 24.03.2017 passed by ED and",,
impugned order dt. 02.08.2017 passed by the Adjudicating Authority, PMLA, confirming the Provisional Attachment Order is to be quashed and set",,
aside.,,
38. The Honâ€ble High Court of Delhi, vide order dated 06.12.2019 passed in Crl.A.1090/2018 in the matter of Directorate of Enforcement Versus",,
Indian Overseas Bank & Ors. have clarified the “status quo†order of Honâ€ble Supreme Court passed in the appeal against the order dated,,
02.04.2019 passed in the matter of Deputy Director, Directorate of Enforcement Versus Axis Bank & batch matters in CRL.A. No.143/2018.",,
The order dated 06.12.2019 of Honâ€ble High Court of Delhi is reproduced below:,,
“ ORDER,,
 06.12.2019,,
Crl.M.A.42109/2019 (Exemption),,
Allowed, subject to all just exceptions.",,
This application is, accordingly, disposed of.",,
Crl.M.A. 42108/2019,,
Vide the present application, the applicant/respondents seek clarification of the order dated 01.11.2019 as to whether the Tribunal shall",,
proceed with the present matter.,,
Vide order dated 01.11.2019, this court remanded the matter to the Appellate Tribunal for PMLA and directed the said Tribunal to restore",,
the appeal and after hearing both the parties decide the same within six weeks from the receipt of this order.,,
The said order was passed on the consent made by the parties and in view of the order passed by this court in Crl.A. 143/2018 in Deputy,,
Director, Directorate of Enforcement, Delhi vs. Axix Bank & Ors. and other batch matters.",,
Learned counsel appearing on behalf of the non-applicants/petitioner submits that the Hon’ble Supreme Court has granted status quo,,
qua the property in question, however, there is no status quo to proceed with the matter by any court including the Appellate Tribunal of",,
PMLA. This fact has not been disputed by counsel for the respondent.,,
Thus, it is clarified that the order of the status quo of the Supreme Court is regarding the disposal of the property, therefore, Appellate",,
Tribunal of PMLA is directed to comply with the order dated 01.11.2019 passed by this court within six weeks from today.,,
In view of above directions, the application is disposed of.",,
Copy of the order be given dasti under the signatures of Court Master.â€,,
In view of the said clarificatory order no order in respect of disposal of the property can be passed by this Appellate Tribunal.,,
39. In the light of above, the present appeal is allowed in terms of the Judgment dated 02.04.2019 passed by the Honâ€ble High Court of Delhi in Crl.",,
A. No. 1076/2018.,,
40. The impugned order dated 02.08.2017 is set-aside. Consequently, Provisional Attachment Order is also quashed in respect of questioned property",,
secured with the appellant.,,
No costs.,,
