Partly allowed

FPA-PMLA-1756/KOL/2017 of Aditya Birla Finance Ltd. v/s The Joint Director Directorate of Enforcement, Kolkata

ATFP27 Jul 2017FPA-PMLA-1756/KOL/2017

Case brief

AI extract

What is this about?

The Tribunal allowed a prayer directing tenants to deposit future rentals directly into the appellant's specific bank account under Rule 8 of the PMLA Rules, pending the resolution of the money laundering attachment. The prayer to operate the accounts was postponed for final hearing.

What did the court decide?

Directing respondents to deposit future rentals for two properties into the appellant's specified DCB Bank accounts; prayer to operate accounts postponed.

FPA-PMLA-1756/KOL/2017 of Aditya Birla Finance Ltd. v/s The Joint… — Money Laundering | ATFP (2017)

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APPELLATE TRIBUNAL, PREVENTION OF MONEY LAUNDERING ACT AT NEW DELHI

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MP-PMLA-3493/KOL/2017 (Misc.) MP-PMLA-3407/KOL/2017 (Misc.)

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FPA-PMLA-1756/KOL/2017

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Aditya Birla Finance Ltd. … Appellant/Applicant Versus The Joint Director Directorate of Enforcement, Kolkata … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	: Shri Rajiv Nayar, Sr. Advocate Shri Jaiveer Shergil, Advocate
For the respondent	: Ms. Shilpi Satyapriya Satyam, Advocate
CORAM
JUSTICE MANMOHAN SINGH	: CHAIRMAN
SHRI G.C. MISHRA	: MEMBER
SHRI B.K. BANSAL	: MEMBER

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ORDER

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27.07.2017

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FPA-PMLA-1756/KOL/2017, MP-PMLA-3493/KOL/2017 (Misc.) & MP-PMLA-3407/KOL/2017 (Misc.)

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The appeal is directed against the impugned order dated 21.03.2017 passed by the Adjudicating Authority in O.C. No. 651/2016 filed on 25.10.2016 confirming the Provisional Attachment Order dated 29.06.2016 passed by Enforcement Directorate, Kolkata in Fine No. ECIR/KLZO/05/2014. Two applications are also filed seeking stay of the impugned order.

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The respondent has attached the following properties (together hereinafter referred to as “attached properties”):

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FPA-PMLA-1756/KOL/2017

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Page 1 of 8

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(a) Unit No. 301, 3^rd floor, Building No. 7, Interface, Link Road, Malad (W), Tal-Borivali, Mumbai-owned by M/s Oak Leasing and Infotech Pvt. Ltd. and mortgaged to the appellant.

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(b) Unit No. 201, 2^nd Floor, Building No. 7, Interface, Link Road, Malad (W), Tal-Borivali, Mumbai-owned by M/s Rosette Leasing and Infotech Pvt. Ltd. and mortgaged to the Appellant.

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(c ) Unit No. 401, 4^th Floor, Building No. 7, Interface, Link Road, Malad (W), Tal-Borivali, Mumbai-owned by M/s Upright Leasing and Infotech Pvt. Ltd. and mortgaged to the Appellant.

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(d) Escrow Accounts, being Accounts No. 200999779905 and 200999779912, Induslnd Bank, Lower Parel Branch, Mumbai out of which rents were being received by the appellant.

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We are concerned at the present at this stage is of serial no. (d) i.e. pertaining Escrow Accounts.

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The appellant herein – Aditya Birla Finance Ltd., is a Non-Banking Finance Company, having its Branch Office at One India Bulls Centre, Tower - 1, 18^th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai-400 013. The appellant herein was named as Defendant No. 14 by the Respondent herein in the Original Complaint (hereinafter “O.C.”) and as such was arraigned as Defendant No. 14 before the Ld. Adjudicating Authority.

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On 28.10.2014, the appellant herein sanctioned and granted three (3) separate term loan facilities to three (3) borrowers who are arraigned as Defendants No. 4, 5 and 6 in the Original Complaint No. 651 of 2016 as also arraigned before the Ld. Adjudicating Authority.

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Vide Show Cause Notice dated 28.10.2016, the appellant was called upon in the matter of the Provisional Attachment Order (hereinafter “PAO”) dated 24.09.2016 regarding the following immovable properties

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FPA-PMLA-1756/KOL/2017

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Page 2 of 8

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which were owned by Defendants No. 4, 5 and 6 were mortgaged by the

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said Defendants to the appellant as per details mentioned herein:

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S.No.	Borrower	Property Mortga	ged	Loan Advanced byAppellant
1	M/s Oak Leasing and Infotech Pvt. Ltd. (Defendant No. 4)	Unit No. 301, Floor, Building 7, Interface Road, Malad Tal-Borivali, Mumbai	3^rd No. Link (W),	Rs. 15 Crores
2.	M/s Rosette Leasing and Infotech Pvt. Ltd. (Defendant No. 5)	Unit No. 201, Floor, Building 7, Interface, Road, Malad Tal-Borivali, Mumbai	2^nd No. Link (W),	Rs. 15 Crores
3.	M/s Upright Leasing and Infotech Pvt. Ltd. (Defendant No. 6)	Unit No.-401, Floor, Building 7, Interface, Road, Malad Tal Bori Mumbai	4^th No. Link (W), vali,	Rs. 16 Crores

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The impugned order has been challenged by the appellant.

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As mentioned earlier, the appellant has filed two applications i.e.

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MP-PMLA-3407/KOL/2017 and MP-PMLA-3493/KOL/2017. The prayer is opposed by the learned counsel for the respondent. As far as the merit of the appeal filed by the appellant is concerned, the same will be considered on merit on the next date. It is contended by the learned counsel for the respondent that Sony Pictures Pvt. Ltd. who are tenant of the movable properties under the present for consideration of payment of rent after deducting maintenance of the other charges, therefore the amount sought by the appellant may not be released to the appellant. It is stated by the learned counsel for the respondent that the rental are to be received by the E.D rather it should be deposited in the Escrow Account of the appellant as prayed in applications.

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FPA-PMLA-1756/KOL/2017

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Page 3 of 8

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It is admitted position that the earlier Escrow account was maintained by the Indusind Bank however the appellant has got the no objection from the said bank if the future rental are deposited with the bank. The appellant bank who also gives an undertakings that if ultimately the monies accruing in the Escrow Accounts are found to be involved in „proceeds of crime‟ in any manner by the designated Special court then the appellant shall pay back/restitute all such amounts to the respondent or any other concerned authority. The following prayer was made in the application:

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(a) M/s Multi Screen Media Pvt. Ltd. to deposit the rent for the two immovable properties in question to the account of the appellant, which till now is being deposited in Escrow Accounts, being Accounts No. 200999779905 and 200999779912, Indusind Bank, Lower Parel Branch, Mumbai.

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(b) The appellant be permitted to operate the Escrow Accounts, being Accounts No. 200999779905 and 200999779912, Indusind Bank, Lower Parel Branch, Mumbai and withdraw the amounts lying in such Escrow Accounts, which companies only of the installments that were legitimately owed to the appellant by the borrowers for the loans advanced to them.

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All the three immovable properties under attachment are leased by the Borrowers, i.e. Oak Leasing and Finance Pvt. Ltd. and upfront Leasing and Finance Pvt. Ltd. [hereinafter referred to as the “three Borrowers”] to M/s Multi Screen Media Pvt. Ltd. [a subsidiary of M/s Sony Entertainment] vide 3 separate Lease Deeds dated 19.1.2.2014.

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In this regard, 3 separate tripartite Escrow Agreements dated 31.10.2014 were earlier executed between the Appellant herein Indusind

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FPA-PMLA-1756/KOL/2017

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Page 4 of 8

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Bank Ltd. and the three borrowers. As per these agreements, all the three borrowers had agreed to deposit the receivables, i.e. the rentals to be received from M/s Multi Screen Media Pvt. Ltd. directly in the three designated Escrow Accounts, which were to be opened by Indusind Bank specifically for this purpose.

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It was agreed under the aforesaid Escrow agreements that the entire rent receivables deposited in the three Escrow Accounts shall be appropriated by the appellant herein towards the repayment of the loan advanced by the appellant to the three borrowers. In view of the impugned order, the appellant is not able to receive the said amount.

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In this regard, it is relevant to refer to Rule 8 of The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013. The said provision is being reproduced hereunder:-

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“8. Confirmed attached property hypothecated or mortgaged or pledged to bank, financial institution etc. – where the confirmed attached property is hypothecated or mortgaged or pledged to any bank, financial institution etc., the authorized officer shall direct such bank financial institution, etc. that such property and any interest or dividend payable thereon shall be retained subject to further orders of the authorized officer.”

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In view of the said provision, which was enacted solely with the view to protect the interest of a bona fide mortgagee Bank/Financial Institution, it can be clearly seen that his Hon‟ble Tribunal has the power to direct that the appellant [i.e. the Mortgagee Financial Institution] be allowed to access and retain the funds till the final determination in this regard by the Special Court. Counsel for the appellant submits that the appellant has a strong case of merit and the impugned order is likely to set-aside pertaining to the appellant. Counsel has referred the decisions passed by this tribunal on 14^th July, 2017 in the similar facts of the case.

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FPA-PMLA-1756/KOL/2017

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Page 5 of 8

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On the last date of hearing, i.e. 12.05.2017, the Counsel for the respondent stated to this Hon‟ble Court that she seeks time to take the instructions from the respondent in the matter. This Hon‟ble Tribunal has also allowed the appellant to move an appropriate application in terms of Rule 8 as mentioned hereinabove seeking retention of funds in the Escrow Accounts.

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It is informed to us by the learned counsel for the appellant that on 17.05.2017, the appellant was completely shocked to receive a Notice dated 05.05.2017 from the respondent to Indusind Bank. Copy of the notice dated 05.05.2017 by the respondent to Indusind Bank is annexed herewith and marked as Annexure-A.

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As far as the facts of the case are concerned, there is no denial on behalf of the respondent that the properties are mortgaged with the appellant who has received the rental charges from the tenants. As far as the Escrow account maintained by the Indusind Bank who has no objection if the said account to be transferred to the banks who mentioned in the application has issued a letter dated 13^th July, 2017 which read as under:-

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“Ref. No: CBG/ABFL/2017-18/25 July 13, 2017

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Aditya Birla Finance Ltd. One India Bulls Centre, Tower-1, 18^th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai-400 013

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Sub: Letter of No-Objection

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Please refer, to the tripartite Escrow Agreements dated 31.10.2014 executed between Aditya Birla Finance Ltd. (ABFL) , Indusind Bank Ltd. and the Borrowers. Under the said Agreements we hav opened two Escrow accounts 200999779905 and 200999779912 in the name of Oak Leasing & Infotech Pvt. – Escrow A/c ABFL and Rossette Leasing & Infotech Pvt. Ltd.-Escrow A/c ABFL respectively.

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Indusind Bank Ltd. , as Escrow Account Bank have no objection if the future rentals are routed through a separate account of ABFL. We are the Account Bank for benefit of Lender i.e. Aditya Birla Finance Ltd. as per the said Escrow Agreements.

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FPA-PMLA-1756/KOL/2017

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Page 6 of 8

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Yours Sincerely,

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For Indusind Bank Ltd.

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(Authorised Signatory)”

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Under these circumstances at present the following prayer is granted:

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(a) M/s Multi Screen Media Pvt. Ltd. to deposit the rent for the two immovable properties in question to the below mentioned accounts account of the appellant, which till now is being deposited in Escrow Accounts being accounts No. 200999779905 and 200999779912, Indusind Bank, Lower Parel Branch, Mumbai:

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Rentals from Oak leasing and Infotech Pvt Ltd. presently deposited in Escrow A/c. No. 200999779905 with Indusind bank can in future be deposited with Account No. 0232130000 with DCB ,bank limited Nariman Point branch Mumbai.

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Rentals from Rosette leasing and infotech Pvt. Ltd. in Escrow A/c No. 200999779912 with Indusind Bank can be in future be deposited with A/c No. O2321300001236 DCB Bank Ltd. Nariman Point branch Mumbai.

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With regard to the other prayer for operating the accounts since we have already put the matter for final arguments it would be appropriate that till the next date of hearing the said prayer is post-poned. The said prayer would be considered at the time of passing the final order.

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FPA-PMLA-1756/KOL/2017

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Page 7 of 8

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Reply to the appeal be filed within six weeks with an advance copy to the counsel for the appellant who may file the rejoinder within two weeks thereafter.

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