Appeal by Punjab National Bank against confirmation of attachment of mortgage property. Court disposed appeal directing bank to seek auction permission from Special Judge under Section 8(7) PMLA, deposit excess proceeds in FDR, and leave disposal to trial finality.
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BEFORE RAJESH MALHOTRA, MEMBER; SINGLE BENCH: APPELLATE TRIBUNAL UNDER SAFEMA; AT NEW DELHI.
FPA-PMLA-1250/LKW/2016 Punjab National Bank … Appellant
Versus
The Joint Director, Directorate of Enforcement, Lucknow … Respondents
Advocates/Authorized Representatives who Agued
For the Appellant : S/Sh. Anil Kumar Singh & Rahul Khanna, Adv. For the Respondent : Ms. Nattasha Garg, & Sh.Akash Mishra, Adv.
FINAL ORDER
19.03.2025
`Present appeal under Section 26 of Prevention of Money Laundering Act, 2002 is filed by the Appellant bank against the Order dated 19.01.2016 passed by the Adjudicating Authority in Original Complaint No. 526/2015 whereby respondent ED vide PAO No.04/LKZO/2015 dated 29.09.2015 attached the properties including the mortgage property with the appellant bank i.e. Duplex Apartment Villa IV, Crossing Republic, Dundahera, Ghaziabad, UP. 2. As per the facts of the case, FIR No. RC1202011A80004 dated 18.08.2011 was registered against Shri Vivek Sudershan and Ors. by CBI, ACB, Ghaziabad, UP for commission of offences under Section 120-B IPC read with 420 IPC and also read with 13(2), 13(1)(d) of Prevention of Corruption Act, 1988 and the scheduled offences thereunder. After conclusion of investigation CBI filed charge sheet against the accused persons on 05.08.2013. As per the said charge sheet accused Shri Vivek Sudarshan, Secretary of M/s Society for Science and Environment Awareness Research Communication and Heritage (SEARCH) was entered in to a criminal conspiracy with the other public servants posted therein during the period from March, 2008 to March, 2011 and thereby dishonestly fraudulently committed the fraud by
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misappropriating the public funds by commission of criminal misconduct and thereby causing wrongful loss to the Government Exchequer to the tune of Rs.6.38 crores (approx.) out of the funds/food grain allocated for the ‘Mid-day-Meal’ and corresponding gain to themselves. Shri Vivek Sudershan was awarded with the work of serving ‘Mid-day-Meal’ in primary and upper primary school of 06 block and city area of Mainpuri District, UP. Shri Vivek Sudershan, Secretary of SEARCH was paid excess conversion cost and food grain to the tune of Rs.6.38 Crore (approx.) and thereby caused the wrongful loss to the Government Exchequer by committing the aforesaid offences.
Previously FIR dated 24.04.2011 was lodged at Police Station Kotwali District Mainpuri vide FIR No.900/2011 by Shri Sanjay Mishra, Supply Inspector, Mainpuri District against Shri Vivek Sudershen, Secretary of NGO named as SEARCH and against four other officials of Basic Shiksha Department, Mainpuri namely Shri KDN Ram, the then Basic Shiksha Adhikari; Raghuvir Singh, Ex Basic Shiksha Adhikari; Shri Vishnu Dayal Rajput; Senior Clerk and Shri Prashant Mishra, the then District Co-ordinator of Midday-Meal Scheme for commission of offences under Section 420 IPC and 120 B IPC and 13 & 7 of PC Act regarding Mid-day-Meal Scheme for the period from March, 2008 to March, 2011. The then District Magistrate of Mainpuri also conducted search in the godown of M/s SEARCH and seized food grains which were meant for Mid-day-Meal Scheme and ordered for recovery of Rs.7,63,48,521/- from M/s SEARCH. Thereafter M/s SEARCH filed writ petition No.25920 of 2011 before Hon’ble High Court of Judicature at Allahabad against the order of recovery passed by the District Authorities. The Hon’ble High Court of Judicature at Allahabad directed CBI to conduct preliminary enquiry into the
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award of contract and utilization of funds and role of MDMA relating to Mid-day-Meal Scam in Mainpuri District, UP and submit report of 02.08.2011, vide its order dated 30.05.2011. CBI registered preliminary enquiry No.1202011A0004 at CBI ACB Ghaziabad and filed preliminary enquiry report on 02.08.2011 before the said Hon’ble High Court. After going through the said report the Hon’ble High Court transferred the investigation to CBI vide order dated 02.08.2011, pertaining to FIR No.900/2011 registered at PS Kotwali Mainpuri. Accordingly, CBI registered the aforesaid regular case and conducted investigation and concluded that M/s SEARCH had been paid excess conversion cost to the tune of Rs.6,37,97,535/-. During the period from March, 2008 to March, 2011.
On the basis of result of above investigation, the Directorate of Enforcement, Lucknow Zonal Office recorded ECIR No.04/PMLA/LKZO/2014 on 28.03.2014 for initiating investigation pertaining to the offence of money laundering under the provisions of PMLA, 2002. During the investigation conducted by ED statement of accused/suspected were recorded and documents were concluded from various sources after being satisfied with the same ED attached the properties vide PAO No. 04/LKZO/2015 dated 29.09.2015. Thereafter, ED filed original complaint before the Adjudicating Authority along with relied documents.
The Adjudicating Authority being satisfied to the allocation mentioned in the Original Complaint along with relied upon documents, issue the Show Cause Notice of the defendants and after receiving the replies and hereunder the rival submissions confirmed the PAO vide order dated 19.01.2016.
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Being aggrieved by the said order appellant bank filed the present appeal.
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the alleged period of offence committed by the main accused Shri Vivek Sudershan the husband of mortgagor Smt. Malvee Sudershan, whereas properties were purchased thereafter on 09.07.2012 hence apparently the said property was purchased by Smt. Malvee Sudershan wife of accused Shri Vivek Sudershan out of the proceeds of crime as stressed by Ld. Counsel for the respondent ED. Therefore, question of releasing the said property at this pre-mature stage does not arise. However, the appellant bank being the secured creditor can move application under Section 8(7) of PMLA, 2002, before Ld. Special Judge, PMLA Court for permission to e-auction the mortgaged property. Ld. Special Judge may allow the said application after inviting the objections of the other creditors/claimants, if any. In case the said mortgaged property is permitted to be auctioned, then the appellant bank shall deposit the excess amount (if any) after discharge of its outstanding loan liabilities, in the form of FDR with ED. The said FDR and other attached properties will be disposed of by Ld. Special Judge, PMLA Court, as per law, when the trial attains finality.
Appeal Disposed of with Direction, Pronounced on this 19th Day of March, 2025.
(Rajesh Malhotra) Member
‘PS’
2 issues framed by the court
Whether a secured creditor bank can auction a mortgaged property attached under PMLA while the trial is pending.
Whether the interest of a secured creditor prevails over unsecured creditors in invocation of proceeds from attached property.
2 provisions across 1 enactments
Punjab National Bank
The Joint Director, Directorate of Enforcement, Lucknow
RAJESH MALHOTRA
As recorded by the court registry
15 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
