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Judgment
Sr. no.,Description of Property,Value ( In Rs. )
1.,"601, Type Sovereign, 6th Floor, Section49, Vatika City,
Gurgaon, Sohna Road, Haryana","80,50,549.80/-
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.,,
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.,,
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.,,
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.,,
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.,,
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.,,
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.,,
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.",,
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).",,
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.,,
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 Honâ€ble High Court of Delhi against the order of the CBI court dated",,
04.03.2013.,,
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€",,
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 DRTâ€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€,,
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.",,
On September, 2016, Sec. 31-B of the Recovery of Debts and Bankruptcy Act, 1993 was brought into force with effect from 01.09.2016.",,
Therefore the said Act will have an overriding effect over the PMLA.,,
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.,,
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.,,
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.,,
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",,
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.,,
However, the Adjudication Authority has confirmed the provisional attachment order by passing the impugned order on 02.08.2017.",,
Admittedly prior to passing of impugned order, this Appellate Tribunal in State Bank of India Vs. Enforcement Directorate FPA-PMLA-",,
1026/KOL/2015 in 11 others by order dated 14.07.2017 has held as under:,,
From the entire gamut of the mater 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.,,
However, ignoring the order of this Tribunal, the Adjudicating Authority confirmed the Provisional Attachment of the property in question",,
provisionally attached by Deputy Director, Director of Enforcement, New Delhi by order No. 04/2017 dated 31.03.2017.",,
The Appellate Tribunal on 28.08.2017 has also in HDFC Vs. The Joint Director, Directorate of Enforcement, Goa FPA-PMLA-1368/GOA/2016",,
by order dated 28.08.2017 has filed as under:-,,
“15. The Parliament has amended the SARFAESI Act, 2002 by inserting the Section 31B in the said Act w.e.f. 01.09.2016. The effect of",,
the said FA-PMLA-1429/KOL/2016 page 30 of 31 amendment has already been discussed in our judgment dated 14th July, 2017, State",,
Bank of India (Supra).,,
The facts and the legal issues involve in the present appeals are identical to the facts and the legal issues involved in the groups of,,
matter which has been decided by this tribunal on 14.07.2017 (Supra).,,
Keeping in view, the facts and circumstances of the present appeals and the judgments cited herein above in the group of matters of",,
State Bank of India and 11 others Banks (Supra), we are of the considered view that the Impugned Order dated 16.06.2016 and the",,
Provisional Attachment Order dated 17.12.2015 are not legally correct and liable to be set aside.,,
Since we have decided the legal issue of overriding effect of SARFAESI Act over PML Act, 2002, in favour of the appellant, there is no",,
necessity to examine other issues raised by the appellant in the appeal.,,
Accordingly the appeal is allowed.â€,,
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,,
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.,,
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.,,
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.,,
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.",,
It is pertinent to mention here that we are not concerned here as to what extent, the appellant would be entitled to record the loan due and we are",,
not rendering finding in this regard. The said amount would be crystalilzed before the appropriate authority. We are merely concerned in these matters,,
is as to whether impugned/attachment orders could be have been passed in the facts of the present case and law settled on the issues involved.,,
We are also made it clear that the complaints filed against the borrowers under the schedule offences and under PML Act would continue and the,,
same are to be determined as per their merit and without any influence of our finding and Judgment. As far as the appellants in the above appeals are,,
concerned, no complaint is pending. It is not argued on behalf of the respondent no. 1 that the appellants are not victim and innocent parties, rather it",,
was argued that after conclusion of trial under the PML Act, they are entitled to recover the properties. The said arguments unacceptable in view of",,
amendment carried out.,,
Under the facts and circumstances of the case and in view of the Judgment of this Tribunal in State Bank India Vs. Enforcement Directorate FPA-,,
PMLA-1026/KOL/2015 and 11 others dated 14.07.2017 and HDFC Vs. The Joint Director, Directorate of Enforcement, Goa dated 28.08.2017 the",,
above mentioned appeals are allowed. The impugned order is set-aside qua the appellant banks.,,