Disposed

FPA-PMLA-2126/NGP/2017 of Bank of Baroda v. The Deputy Director Directorate of Enforcement, Nagpur

ATFP13 May 2025FPA-PMLA-2126/NGP/2017

Case brief

AI extract

What is this about?

On an appeal against the confirmation of provisional attachment of properties mortgaged to the appellant bank, the Tribunal disposed of the matter allowing the bank to stake its claim before the Special Judge PMLA regarding its rights as a secured creditor without affecting the criminal trial.

What did the court decide?

No immediate relief granted; liberty given to stake claim before Special Judge PMLA.

FPA-PMLA-2126/NGP/2017 of Bank of Baroda Versus The Deputy Director Directorate of Enforcement, Nagpur — ATFP (2025) — LawSathi Research

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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FPA-PMLA-2126/NGP/2017

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Bank of Baroda … Appellant Versus The Deputy Director Directorate of Enforcement, Nagpur … Respondent

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Advocates/Authorized Representatives who Argued

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For the Appellant : Mr. Pankaj Vivek & Mr. Suryansh Jamwal, Advocates For the Respondent : Mr. N K Matta & Aditya Raj Sharma, Advocates

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CORAM

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SHRI G. C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER 13.05.2025

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Dictated By : Rajesh Malhotra

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Present appeal u/s 26 of Prevention of Money Laundering Act, 2002 (PMLA) is filed by the Appellant Bank against the impugned order dated 13.09.2017 passed by the Adjudicating Authority in Original Complaint No. 761/2017, whereby the properties attached by ED vide Provisional Attachment Order No.04/2017 (PAO) dated 31.03.2017 were confirmed, including the following immovable properties mortgaged with the appellant bank Mortgaged by Shri Ramchandra M. Katkamwar & Shri Praful S. Vaidya:

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Sr. No.	Details of the immovable property attached	Value of the property
1.	Ground Floor Hall No. G-1, admeasuring area of 100.76 sq.mtrs. at Laxmi Height Building Plot No. 85, Ward No. 21, Corporation House No. 1295/85, Kaharasa No. 23, 46/1, 47, 61, 64, 67, Old Pardi Naka, Bandara Road Nagpur. In the possession of Shri RamchandraM.Katkamwar	Rs. 17,12,920/- (as on year 2007 as per valuation report.
2.	Entire land of M/s Shridhar Castings Pvt. Ltd. Situated at Survey No. 247, P.H. No. 32 Mauza Takli (Bhansali), Tehsil-Saoner, Dist-Nagpur. In the possession of Shri Praful Vaidya.	Rs. 40,22,500/- as on year 2007 as per valuation report & Rs. 13,91,000/- (value as per Sale Deed)
3.	Khasra No. 94/2, Mauza Suraburdi, PH No. 5-A, Grampanchayat-Suraburdi, Tah-Nagpur (gramin), Dist.-Nagpur admeasuring 0.56 Hr. In the possession of Shri Praful Vaidya.	Rs. 19,04,000/- (value as on year 2007 as per valuation report)

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FPA-PMLA-2126/NGP/2017 Bank of Baroda v. ED, Nagpur

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As per the facts of the case, the FIR was registered against the accused persons of the Samta Sahakari Bank Ltd., dated 15.11.2007 for commission of offence u/s 120-B of IPC r.w.s. 406, 408, 409, 467, 468, 471, 420, 201 of IPC also r.w.s. 65 of Information & Technology Act, 2005 and substantive offences there under. Thereafter, case was transferred to State Crime Investigation Department, Nagpur. After investigation CID Nagpur filed four final reports in the said case on 25.03.2008, 22.08.2008, 15.10.2008 & 30.06.2010 for the commission of aforesaid offences.

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As per the allegations the accused persons in conspiracy with the Chairman and Directors of the Samta Sahakari Bank Ltd., obtained various loan facilities against the mortgage of the properties by over valuing the same; prepared bogus documents & wrongful information about their self & their business and the occupation of the Guarantors etc.; blank loan application forms were submitted by only putting the loanee’s signature on them; the signature of Guarantor were not obtained; the amounts were illegally adjusted from one loan account to other loanee’s account.

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On the basis of above information, ED also recorded ECIR No. Dated 20.11.2009 for initiating investigation for the offence of money laundering under PMLA.

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During investigation ED recorded the statements of the suspected and others and also collected the documents from the investigation agencies and other departments. Being satisfied that the material on record, ED passed the PAO order No. 04/2017 dated 31.03.2017. Thereafter, ED filed Original Complaint No. 761/2017 before the Adjudicating Authority for the confirmation of the PAO.

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The Adjudicating Authority being satisfied with the allegations made in the OC coupled with the documents and the statements recorded under Section 50 of PMLA, confirmed the PAO vide its order dated 13.09.2017.

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FPA-PMLA-2126/NGP/2017 Bank of Baroda v. ED, Nagpur

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Aggrieved by the said order, appellant filed the present appeal.

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During the arguments Ld. Counsel for the appellant pointed out that the abovementioned properties were mortgaged with the Appellant bank at the time of grant of various kinds of credit facilities. There is no allegation as such was attributed against the appellant bank. The properties purchased by mortgagors even prior to the period of commission of the schedule offence are attached.

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Ld. Counsel for the appellant bank submitted that the mortgaged properties with the appellant bank are not created by siphoning off of the bank’s fund (being purchased much prior to the period of commission of offence) and the same needs to be appropriated towards the outstanding dues of the appellant bank. Ld. Counsel submitted that the appellant bank is the victim on account of non-clearance of outstanding dues, and now, being made to lose its valuable security on account of attachment. Ld. Counsel submitted that the appellant bank is not holding the property on behalf of the accused persons, as the right of the bank are independent rights secured by mortgage only on the basis of advancing of legitimate funds by the bank, without being involved in any manner in commission of alleged offences. He pointed out that the recovery certificates are already issued in favour of the appellant bank by DRT Nagpur.

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Ld. Counsel for the appellant bank submitted that the subject properties, having been mortgaged with the appellant bank are covered u/s 26E of the SARFAESI Act, 2002, introduced by an amendment in 2016 which gives the secured creditor, an overriding right over the same notwithstanding any other law. He stated that Section 71 of PMLA is of no avail, since the said provision even though it came into effect subsequent to the enactment of the SARFAESI Act, 2002, the provision of Section 26E of

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FPA-PMLA-2126/NGP/2017 Bank of Baroda v. ED, Nagpur

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the SARFAESI Act, 2002, which are attracted to the subject properties was introduced by way of an amendment on 01.09.2016, and therefore, will prevail over the PMLA, 2002.

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Prayer is accordingly made to allow the present appeal and release the aforementioned properties mortgaged with the appellant bank mentioned at para no. 1 above.

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On the other hand, Ld. Counsel for the Respondent ED strongly opposed the contention of the Ld. Counsel for the appellant bank on the ground that the issue regarding right of all the claimants, including the present appellant bank will be decided by Ld. Special Judge, PMLA court, at the stage of conclusion of trial in prosecution complaint case. The properties acquired even prior to the period of schedule offence can be attached. He stressed that if the appellant bank is found negligent in any manner, it may suffer loss. Ld. Counsel for the respondent contended that the plea of the appellant bank that SARFAESI provisions get precedence over provisions of PMLA is not correct, as PMLA is a Special Act and proceedings under PMLA get precedence over other Acts in terms of Section 71 of the Act. He further stressed that Ld. Special Judge, PMLA Court can dispose of the mortgaged properties after the conclusion of the trial, as per law. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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We have considered the rival submissions and we have given our thoughtful consideration to the same. We agree with the contention of learned counsel for Respondent ED that the properties even acquired prior to the period of schedule offence can be attached as value thereof. However, being a secured creditor of the aforementioned immovable

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FPA-PMLA-2126/NGP/2017 Bank of Baroda v. ED, Nagpur

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properties, the appellant bank is at liberty to stake its claim before learned Special Judge, PMLA Court, u/s 8(5) to section 8(8) of the PMLA, 2002. It is pertinent to mention here that if there is no dispute qua the title of the mortgaged properties, then the appellant bank can also move application even before the conclusion of trial under section 8 (7) of PMLA, 2002, for auction sale of the mortgaged immovable properties, being a secured creditor, alongwith an affidavit/undertaking that in case of excess amount realised during auction sale, the same will be deposited with ED by way of FDRs. Before permitting auction sale Ld. Special Judge, PMLA Court, may invite the objection of the other interested parties, if so required. The said FDRs (if any) be disposed of as per law amongst the other claimants as per law, after conclusion of trial.

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In sequel to our discussion in the preceding para, the present appeal is hereby disposed of, with liberty as aforesaid. It is made clear that nothing expressed herein will affect the right of either party in the criminal trials.

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Appeal Disposed of with liberty.

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Pronounced on this 13^th Day of May, 2025.

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(Rajesh Malhotra) Member

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(G. C. Mishra) Member

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‘AK’

FPA-PMLA-2126/NGP/2017 of Bank of Baroda v. The Deputy Director Directorate of Enforcement, Nagpur

Case brief

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FPA-PMLA-2126/NGP/2017 of Bank of Baroda v. The Deputy Director Directorate of Enforcement, Nagpur

Case brief

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