State Bank Of India vs Joint Director Directorate Of Enforcement, Lucknow

MP-PMLA-4484/LKW/2018 (Misc.) &MP-PMLA-3624/LKW/2017 (Misc.)

By this common order, I propose to decide the two applications filed by the State Bank of India. The details are mentioned below:

a. Application U/S 35 of the Prevention of Money Laundering Act for review of order dated 14.11.2014 passed by this Tribunal in terms of the order dated 29.05.2017 of the Adjudicating Authority in M.A. No. 29/2016 in OC No. 76/2010.

b. Application on behalf of State Bank of India for condonation of delay in filing the application for review of order dated 14.11.2014 passed by this Tribunal in terms of order dated 29.05.2017 of the Adjudicating Authority in M.A. No. 29/2016 in OC No. 76/2010.

The Applicant/State Bank of India is a body Corporate, constituted under the State Bank of India Act, 1955, having its Central Office at Madam Cama Road, Nariman Point, Mumbai- 400 021.

In the year 2009, the Respondent/Borrower Company to meet the cost of modernization approached the Applicant Bank and Punjab National Bank

(PNB) for Term Loan.

It is stated by the appellant that after considering the loan proposal, the applicant Bank sanctioned to the Borrower Company, a term loan of Rs.14.0 crores and PNB sanctioned a term loan of Rs.9.50 crores on consortium lending basis, with applicant Bank as the leader of the consortium and to enable the Borrower Company to procure the raw materials, to meet the other expenditure for manufacturing the final product, the applicant Bank sanctioned a Cash Credit (stocks) limit of Rs.14.50 crores, Letter of Credit/Bank Guarantee of Rs.5.50 crores and PNB sanctioned another limit of Cash Credit (stocks) Rs.5.50 crores within the consortium, with the applicant Bank as the leader of the Consortium.

The Deputy Director, Directorate of Enforcement, Lucknow Zone, vide its Attachment Order No. 4/2010 in ESIR/02/PAT/2009 under sub-section 1 of section 5 of the Prevention of Money Laundering Act 2002 passed the provisional attachment order against the properties of the Borrower Company and others as mentioned in the list of properties to be attached in the Annexure-A of the said POA.

The adjudicating authority without serving any Notice to the Bank and even without impleading the applicant Bank as a party, passed the Order dated 06.04.2011 modifying the provisional attachment order. The adjudicating authority passed the order holding that the quantum of proceeds of crime is Rs.43.84 crores, the fixed assets of the Company as on 31.03.2010 were worth of Rs.94.84 crores and ordered the Deputy Director, ED to modify the attachment order.

In the operative para of the order, it was stated that the attachment of the fixed assets of the Companies (M/s. IAG Co. Ltd and M/s. Bharat Glass Tube Ltd.) is partly confirmed. It is alleged by the applicant that without specifying the properties which has been acquired with the proceeds of the crime, the impugned order could not have been passed.

The appellant Bankon coming to know about the said Order filed the appeal before this Tribunal against the Order dated 06.04.2011 passed by the adjudicating authority.

It was stated that the Order dated 06.04.2011 was passed by the adjudicating authority without summoning, without hearing, the applicant Bank to whom the properties attached are transferred by way of mortgage and the assets are charged by way of hypothecation to secure the due repayment of all the amounts which are due and outstanding in various Loans/Credit facilities against the Borrower Company.

It was also alleged specifically that the Directorate of Enforcement wasfully aware about the financing of the project by the applicant Bank and still has not issued any notice to the applicant Bank. The appeal of the applicant Bank was registered as No. FPA/PMLA/76/LKW/2011.

While the proceedings in this appeal were being conducted, in the similar matter of Central Bank of India, this Tribunal passed the Order dated 05.09.2014 where it was held that the appeal before the Appellate Tribunal is not maintainable in the cases where the appellant was not the party before the adjudicating authority and had the grievance that the appellant is not being heard by the adjudicating authority. It was further observed that such appellant/party can approach the adjudicating authority u/s 8(2) of the Act even after the disposal of the complaint.

The said appeal of the applicant Bank was disposed of by this Appellate Tribunal vide its Order dated 14.11.2014, on the basis of the Central Bank’s Order on the similar ground that the appeal was not maintainable and in case the petitioner was aggrieved with the Order of the adjudicating authority, the petitioner should approach the adjudicating authority to seek the relief claimed. The Appellate Tribunal was also of the view that the Order dated 06.04.2011 was passed by the adjudicating authority without serving any notice on the applicant Bank and without hearing the applicant Bank and under these circumstances, it is for the adjudicating authority to first hear the matter.

It is stated by the appellant that in the matter of Central Bank of India and approached the Adjudicating Authority with the application u/s 8(2) of the Act and met the Registrar Shri Hargopal Goyal, who did not give any receipt, but kept the Paper Book with him for consultation with the President of Adjudicating Authority and Members. On 03.12.2014, the Registry of the Adjudicating Authority returned the said papers claiming that the Adjudicating Authority has no such provisions for entertaining these types of Applications.

It is alleged that on 25.02.2015, the Counsel for the Applicant Bank had another matter before this Tribunal and during the hearing, the matter of the Adjudicating Authority for not accepting the Applications also came up before the Bench for discussion. Though not recorded, but from the verbal observations of the Bench, it was implied that if the Applications, in regard to the Adjudicating Authority not accepting the Applications u/s 8(2), were filed before this Appellate Tribunal in the already disposed of Appeal, Appellate Tribunal may pass the directions to the Adjudicating Authority to hear the matter.

On 29.10.2015, before the Tribunal Counsel of ED stated that initially the Adjudicating Authority refused the Applications u/s 8(2) of the Act but later on the Ld. Authority started accepting such Applications and therefore, Application u/s 8(2) was filed in the matter of State Bank of India. As per the Order dated 14.11.2014 passed by the Appellate Tribunal the Applicant Bank filed an Application u/s 8(2) of the Act before the Ld.

Adjudicating Authority for recalling the Order dated 06.04.2011 passed by the Ld. Adjudicating Authority of accepting the compliant and attaching the assets of M/s IAG company Ltd., which are already transferred by way of mortgage and assets are hypothecated in favour of the Applicant Bank to secure the due payment of all the accounts which may become due and payable in various loans and credit facilities.

Notice in the Application was issued on 10.08.2016 to the Respondent ED. While the arguments were being heard by the Adjudicating Authority on the maintainability of the Application u/s 8(2) of the Act, the Ld. Counsel for ED stated that this Tribunal has reserved the Order in the similar matter of Amanpreet Singh Gandhi @ Jaggu vs Deputy Director in FPA/PMLA/582/JL/2014 wherein the issue of maintainability of the Appeal and the right of the aggrieved person to approach the Ld. Adjudicating Authority was to be relooked/decided and further requested to wait for the said decision.

The Appellate Tribunal vide its Order dated13.01.2017 in Amanpreet Singh Gandhi’s case reverse/reviewed its decision 05.09.2014 in the matter of Central Bank of India and held that the Ld. Adjudicating Authority has no power of reviewing its own Order. It is further held that once the Adjudicating Authority passes the Order of confirmation of the Provisional Attachment Order, it becomes functus officio and cannot review its own decision/Order unless the matter is remanded back by the Appellate Tribunal by setting aside the impugned order.

On the basis of the abovementioned Amanpreet Singh Gandhi’s case, the Ld. Adjudicating Authority decided/dismissed the Application of the Applicant Bank by passing the Impugned Order dated 29.05.2017. However, the Ld. Adjudicating Authority granted the liberty to the Applicant Bank to approach the Appellate Tribunal u/s 35 of the Act for the review of the Order dated 14.11.2014.

Now the Applicant Bank is filing the present Review Application for the review of the Order dated 14.11.2014 passed by this Tribunal after the passing of the Order dated 29.05.2017 as the facts and circumstances remain the similar, the only remedy available with the applicant is to seek the review of the Order dated 14.11.2014 and to get the appeal restored to its original number and position.

It is prayer in the application that in the light of the decision dated 13.01.2017 passed by this Tribunal in the case of Amanpreet Singh Gandhi, the adjudicating authority has no powers to hear the applicant/appellant.

Along with the first application where the prayer is made for review of order dated 14.11.2014, the appellant has also filed the formal application for condonation of delay.

It is alleged that the delay in filing the said review application is under the genuine circumstances and not because of any willful default. The delay in filing the application was due to circumstances beyond the control of the applicant Bank. It is in the interest of justice, equity and fair play that the delay in filing the application may be condoned. The applicant has been rigorously following up with the matter since inception and no negligence can be accorded on the part of the applicant Bank.

No replies to these two applications have been filed. There can not demand that this Tribunal has passed the decision dated 13.01.2017 having the similar facts. Even at the time of hearing, there was no representation on behalf of respondent, however, learned counsel for the respondent later on mentioned the matter and he apprised that the order has already been reserved. He was asked to file the written submission but those are also not filed.

In the light of the above mentioned facts and circumstances, the delay in application is condoned and this Tribunal to also review its Order dated 14.11.2014 on the basis of order dated 13.1.2017 which is binding in nature and to restore the appeal to its original number and position.

Both applications are disposed of.

List this appeal for further direction on 9.7.2018.