Partly allowed

FPA-PMLA-2094/CHD/2017 of Surinder Kumar Palta v. The Deputy Director, Directorate of Enforcement, Chandigarh

ATFP12 Sept 2024FPA-PMLA-2094/CHD/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal entertained appeals against the freezing of bank accounts seized during a PMLA investigation. While the Respondent ED argued the freeze was necessary to prevent further fraud involving a huge bank liability, the Tribunal directed the defreezing to allow the appellants to clear outstanding loan liabilities, subject to a stay on credit release by the bank. The appeals were dis

What did the court decide?

Direction to defreeze bank accounts for clearing loan liability; Restriction on bank from releasing fresh credit into CC account.

FPA-PMLA-2094/CHD/2017 of Surinder Kumar Palta Vs. The Deputy… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. FPA-PMLA-2091/CHD/2017
Anish Palta	…	Appellant
2. FPA-PMLA-2094/CHD/2017
Surinder Kumar Palta	…	Appellant
3. FPA-PMLA-2097/CHD/2017
M/s Pioneer Knitting	…	Appellant
4. FPA-PMLA-2099/CHD/2017
Sanyokta Palta	…	Appellant
Versus
The Deputy Director, Directorate of Enforcement, Chandigarh	…	Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant :	Mr. Saurabh Kapoor, Adv. Mr. Rishabh Kapoor, Adv. Ms. Madhvi Khandelwal, Adv.
For the Respondent :	Mr. Arjun Sawhney, Adv. Mr. Rohan Bhambri, Adv.
CORAM
SHRI G.C. MISHRA	: MEMBER
SHRI RAJESH MALHOTRA	: MEMBER

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FINAL ORDER 12.09.2024

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Dictated by: Rajesh Malhotra

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Present appeals u/s 26 of the Prevention of Money Laundering Act, 2002, is filed by the appellants against the impugned order dated 12.09.2017 passed by the Adjudicating Authority in Original Application No. 93/2017, whereby it allowed the respondent ED to retain/seize/freeze the documents, digital records, bank accounts etc., seized from the premises of various persons including the present appellants, during the search conducted on 07.04.2017.

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FPA-PMLA-2091, 2094, 2097 & 2099/CHD/2017 Anish Palta, Surinder Kumar Palta, M/s Pioneer Knitting &Sanyokta Palta v. E.D., Chandigarh

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In the present appeals, Ld. Counsel for appellants submitted that Sh. Surinder Kumar Palta is the proprietor of M/s Pioneer Knitting, Anish Palta (son), Mrs. Sanyokta Palta (Wife). Search and seizure were conducted on the premises of the appellantsand various other persons on the basis of the FIR No. RCBD No. 1/2016 filed by CBI which are as under:

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S. No.	Bank Name	Appellant	A/c No.	Amount
1.	Indian Overseas Bank	M/s Pioneer Knitting	28402000012968	2,95,25,228.48 (Debit)
2.	Punjab National Bank	Surinder Kumar Palta	3248000100221630	280.32
3.	Punjab National Bank	Surinder Kumar Palta	3248009300005356	0.00
4.	Induslnd Bank	Surinder Kumar Palta / M/s Pioneer Knitting	200999917208	33976.74
5.	UCOBank	Surinder Kumar Palta	01340210000960
6.	Central Bank of India	Surinder Kumar Palta& Mrs. Sanyokta Palta	3010898668	433.78
7.	ICICI Bank	Anish Palta	036201500585	Dormant Account
8.	HDFC Bank	Anish Palta	01081930008427	0.00

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The appellants have been maintaining their accounts with Indian Overseas Bank, Sector-7, Chandigarh since 2011. The appellants have been availing following credit facilities from Indian Overseas Bank:

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Term Loan 25.00 lac Cash Credit 350.00 lacs

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The same has been obtained by the appellants on various terms and conditions including collateral security by mortgaging the properties as under:

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Sl. Nature of Security No.

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1 Equitable mortgage of residential house situated at no. 10, Basant Vihar, Phase-1, Himmatgarh, Zirakpur in the name of Smt. Harjit Kaur (worth Rs. 110.00 lacs) valued at FMV-Rs. 110.00 lacs, FSV- Rs. 99.00 lacs, as per valuation reports dated 01.04.2013 of Satish Chander Chawla obtained by the respondent bank.

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2 Fixed Deposit of Rs. 52.00 lacs.

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FPA-PMLA-2091, 2094, 2097 & 2099/CHD/2017 Anish Palta, Surinder Kumar Palta, M/s Pioneer Knitting &Sanyokta Palta v. E.D., Chandigarh

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Ld. Counsel for the appellants pointed out that Cash Credit Account of theappellants is frozen by respondent ED and hence, the said account could not be operated. He further submitted that there is negative balance in the Cash Credit account and thus, question of freezing these accounts does not arise.

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Prayer is accordingly made to allow the present appeals and thereby direct the respondent ED to release the above bank accounts.

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On the other hand, Ld. Counsel for respondent ED submitted that during the course of investigation, certain bank accounts were identified belonging to the accused and their associate companies as a result of information and also as a result of searches conducted by the respondent ED. The bank officials of Indian Overseas Bank main branch Chandigarh fraudulently intercepted messages and issued letter of conformity/letter of undertaking to the foreign banks for the Buyers Credit (BC) extended by them.

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The proprietor of the company along with others issued 24 Line of Credit (LOC) fraudulently through SWIFT messages to provide buyers credit facility which was to supposed to export goods but the same was granted to the aforesaid company through fraud. But as per the bank, there was no movement of goods & services or underlying commercial transaction between these fund transfers. The amount due on account of Buyers Credit was not paid to the bank before the due date resulting in liability of 321 crores. This was done in collusion with the accused companies and their

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FPA-PMLA-2091, 2094, 2097 & 2099/CHD/2017 Anish Palta, Surinder Kumar Palta, M/s Pioneer Knitting &Sanyokta Palta v. E.D., Chandigarh

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directors/proprietors and have caused loss to the bank to the tune of USD 47.86 million equivalent to approximately Indian Rs. 321 crores. In view of the above, various documents, properties, bank account, cash and lockers including foreign currency etc. of various persons were seized.

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Ld. Counsel for the respondent also stated that the appellants committed the fraud along with their other associates and purchased many properties out of the proceeds of crime and the bank accounts of the appellants might have been used for money laundering. Prayer is accordingly made to dismiss the present appeals being devoid of any merits.

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After hearing the rival submissions, we have given our thoughtful consideration to the same. In view of the above, the respondent ED is hereby directed to defreeze these accounts and appellants are at liberty to clear its outstanding loan liability, if any, with direction to not dispose of the properties on whose collateral the CC Accounts have been secured. Indian Overseas Bank is hereby restrained from releasing more credit into the said CC Account.

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However, seeing the fact that prosecution complaint is already filed, the present appellantsare entitled to the copies of all relied upon documents/seized material and have right to apply for release of all un-relied documents (if any), if the same are not required for any further investigation.

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FPA-PMLA-2091, 2094, 2097 & 2099/CHD/2017 Anish Palta, Surinder Kumar Palta, M/s Pioneer Knitting &Sanyokta Palta v. E.D., Chandigarh

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In sequel to our observation in the preceding para, the present appealsare hereby dismissed. Pending applications, if any, stands disposed of accordingly. It is made clear that nothing expressed herein will affect the merits of prosecution case under Prevention of Money Laundering Act, 2002.

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AppealsDismissed.

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Pronounced on this 12^th Day of September, 2024.

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(Rajesh Malhotra) (G.C. Mishra) Member Member

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‘AB’

FPA-PMLA-2094/CHD/2017 of Surinder Kumar Palta v. The Deputy Director, Directorate of Enforcement, Chandigarh

Case brief

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FPA-PMLA-2094/CHD/2017 of Surinder Kumar Palta v. The Deputy Director, Directorate of Enforcement, Chandigarh

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