Allowed

FPA-PMLA-2360/DLI/2018 of Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

ATFP22 Apr 2025FPA-PMLA-2360/DLI/2018

Case brief

AI extract

What is this about?

The Tribunal permitted a mortgagee bank to apply for auctioning mortgaged property attached under PMLA, directing that excess proceeds after discharging bank dues be deposited with the Enforcement Directorate pending trial.

What did the court decide?

Appellant permitted to move application under Section 8(7) PMLA for auction; directed to deposit excess proceeds to ED as FDR after discharging bank dues.

FPA-PMLA-2360/DLI/2018 of Hongkong Shanghai Banking Corp… — Banking and Recovery | ATFP (2025)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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FPA-PMLA-2360/DLI/2018 Hongkong & Shanghai Banking Corporation Limited, India

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Appellant

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Versus

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The Deputy Director Directorate of Enforcement, Delhi

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… Respondent

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Advocates/Authorized Representatives who argued

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For the Appellant : Ms. Vasundhra, Advocate For the Respondent : Mr. N.K. Matta, Advocate

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CORAM

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

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FINAL ORDER 22.04.2025

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Dictated by: Rajesh Malhotra

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Present appeal under Section 26 of Prevention of Money Laundering Act, 2002 (PMLA) is filed by the appellant bank against the order dated 23.04.2018 passed by the Adjudicating Authority, whereby properties attached by ED vide Provisional Attachment Order No. 13/2017 (PAO) dated 14.11.2017 were confirmed. Out of the said properties, the property

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mortgaged with the present appellant bank is as under:-

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S. No.	Owner	PropertyDetails	Value Rs.
1.	Sh. Ashwani Verma &	D-14, Ground Floor, Chander Nagar,	75,00,000/-
	Smt. Jyoti Verma	Ghaziabad,Uttar Pradesh –201011.

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As per the facts of the case, CBI registered FIR No. RC/BD1/2009/E/ 0004 dated 06.02.2009 on the basis of written complaint filed by Chief Manager, PNB, South Extension Branch, New Delhi, whereby it is alleged that the accused persons in conspiracy with unknown officers of PNB committed the fraud to the tune of Rs. 784.54 Lakhs and thereby committed the offence punishable u/s 120-B IPC r.w.s. 420, 467, 468, 471 IPC & Section 13(2) r.w. 13(1)(d) on Prevention of Corruption Act, 1988 and substantive offences thereunder.

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FPA-PMLA-2360/DLI/2018 Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

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After completion of investigation, CBI, BSFC, New Delhi filed chargesheet on 20.05.2010 in the court of Hon’ble Special Judge, Patiala House Court, New Delhi.

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On the basis of the FIR and the investigation conducted by CBI, the Directorate of Enforcement recorded ECIR No. 284/D/2009 on 11.12.2009 against the suspects/accused persons in initiating investigation for commission of offence of money laundering punishable u/s 4 r.w.s. 3 of PMLA, 2002.

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During investigation, ED recorded statement of the accused/suspects and others and also collected the documents from various persons including the investigation agency, banks etc. Being satisfied with the material collected during investigation, ED passed the Provisional Attachment Order No. 13/2017 (PAO) dated 14.11.2017 and thereafter filed Original Complaint No.857/2017 dated 11.12.2017 before the Adjudicating Authority for confirmation of the PAO.

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Ld. Adjudicating Authority being satisfied with the allegations made in the OC coupled with the relied upon documents and statements, issued the Show Cause Notice to the defendants. After receiving the respective replies and hearing the rival submissions, the Adjudicating Authority confirmed the PAO vide its order dated 23.04.2018. Aggrieved by the said order, appellant bank filed the present appeal being the mortgagee of the property mentioned in para no. 1 above.

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During the arguments, Ld. Counsel for the appellant bank pointed out that the aforesaid property was mortgaged with the appellant bank on 20.12.2004 for sum of Rs.49,02,400/- and second loan granted on 11.06.2005 for sum of Rs.20,60,084/-. He pointed out that mortgagers Shri Ashwani Verma and Smt. Jyoti Verma also executed the loan documents in

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FPA-PMLA-2360/DLI/2018 Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

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favour of the appellant bank. He pointed out that this property mortgaged with the appellant bank was purchased by the mortgagers vide sale deed dated 18.11.2002. He pointed out that as per the allegations in the FIR and the CBI investigation, the mortgagers along with bank officials committed the fraud with PNB for availing the loan facilities on 26.09.2005 and thereafter mis-utilized the said amount. He argued that the attached mortgaged property being purchased much prior to the coming into force of the PML Act and the commission of scheduled offence, the present appellant bank HSBC being the mortgagee/secured creditor is entitled to take possession of the said mortgaged property and to auction the same to realise its dues. He further submitted that appellant bank undertakes to deposit the excess amount, if any, after discharge of outstanding liabilities of the mortgagors, to the Respondent ED by way of FDR. Prayer is accordingly made to allow the present appeal.

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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 and submitted that irrespective of the fact whether the property was mortgaged prior to the commission of offence or later-on, ED is entitled to attach the same. He further stressed that Ld. Special Judge, PMLA Court can dispose of the mortgaged property 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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After hearing the rival submission, we have given our thoughtful consideration to the same. The mortgage of property (as mentioned in para no. 1 above) with appellant bank HSBC has nothing to do with the commission of offence committed by the mortgagor with PNB on 26.09.2005. Therefore, the property attached by ED is in fact the residual value of the property after deduction of the mortgaged liabilities, if any, and hence, only excess amount after the auction sale needs to be kept with the ED by way of

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FPA-PMLA-2360/DLI/2018 Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

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FDR, till the conclusion of the trial. The said FDR amount will be disposed of by Ld. Special Judge, PMLA Court after the conclusion of the trial as per law.

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In sequel to our discussion in the preceding para, the present appellant bank is permitted to move an application u/s 8(7) of PMLA, 2002 before the Ld. Special Judge, PMLA Court for permission to auction the said property with direction to deposit the excess amount to the ED by way of FDR, if any, after the discharge of the liabilities towards it. Appellant is directed to hereby give an undertaking before the Ld. Special Judge in this regard, while moving the application. It is made clear that nothing expressed herein will affect the right of either party in the criminal trials.

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Appeals Disposed of with direction.

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Pronounced on this 22^nd Day of April, 2025.

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(Rajesh Malhotra) Member

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(G.C. Mishra) Member

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‘AB’

FPA-PMLA-2360/DLI/2018 of Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

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FPA-PMLA-2360/DLI/2018 of Hongkong Shanghai Banking Corp. Ltd., India v. E.D., Delhi

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