Bar & Bench (www.barandbench.com) APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS & PBPT ACT AT NEW DELHI Date of Decision:- 10.10.2018 MP-PMLA-4930/MUM/2018(COD) MP-PMLA-4931/MUM/2018 (EXEM.) MP-PMLA-4932/MUM/2018 (STAY) FPA-PMLA-2538/MUM/2018 (1) State Bank of India … Appellant no. 1 (2) Bank of Baroda … Appellant no. 2 (3) Corporation Bank … Appellant no. 3 (4) The Federal Bank Ltd. … Appellant no. 4 (5) IDBI Bank Ltd. … Appellant no. 5 (6) Indian Overseas Bank … Appellant no. 6 (7) Jammu & Kashmir Bank Ltd. … Appellant no. 7 (8) Punjab & Sind Bank … Appellant no. 8 (9) Punjab National Bank … Appellant no. 9 (10) UCO Bank … Appellant no. 10 (11) United Bank of India … Appellant no. 11 (12) JM Financial Asset Reconstruction Co. Pvt. Ltd. … Appellant no. 12 Versus (1) The Deputy Director Directorate of Enforcement … Respondent no. 1 Mumbai (2) M/s Kingfisher Airlines Ltd. … Respondent no. 2 FPA-PMLA-2538/MUM/2014 Page 1 of 17 Bar & Bench (www.barandbench.com) (3) Shri Vijay Mallya … Respondent no. 3 (4) M/s United Breweries (Holding) Ltd. … Respondent no. 4 (5) Kingfisher Finvest India Ltd. … Respondent no. 5 (6) The Chief Manager Standard Chartered Bank … Respondent no. 6 (7) M/s Pharma Trading … Respondent no. 7 (8) Devi Investment Pvt. Ltd. … Respondent no. 8 (9) Kamsco Industries … Respondent no. 9 (10) Gem Investment and Trading … Respondent no. 10 (11) Mallya Pvt. Ltd. … Respondent no. 11 (12) Chief Manager, HDFC Ltd. … Respondent no. 12 (13) Chief Manager Yes Bank Ltd. … Respondent no. 13 (14) Chief Manager ECL Finance Ltd. Respondent no. 14 (15) Vittal Investment Pvt. Ltd. … Respondent no. 15 (16) DIAGEO Holding Netherlands B.V. Respondent no. 16 Advocates/Authorized Representatives who appeared For the appellant : Mr. Rana Mukherjee, Sr. Advocate with Mr. Chitranshul Sinha, Advocate Ms. Daisy Hannah, Advocate For the respondent : Mr. Rajeev Awasthi, Advocate CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN JUDGEMENT MP-PMLA-4930/MUM/2018(COD) FPA-PMLA-2538/MUM/2014 Page 2 of 17 Bar & Bench (www.barandbench.com) 1. The State Bank of India and 11 others bank have filed the present appeal against the order dated 22.02.2017 passed in O.C. No. 639/2016 by the Adjudicating Authority, New Delhi (under the Prevention of Money Laundering Act, 2002) inter alia confirming the Provisional Attachment Order bearing PAO No. 16/2016 dated 03.09.2016 passed by the Respondent No. 1 on the basis of case registered bearing ECIR No. ECIR/07/MBZO/2016 attaching various movable and immovable properties of the Respondent Nos. 2 to 5. 2. The State Bank of India and other banks have also filed the appeal under Section 26 of the PMLA against the order dated 1.12.2016 passed in O.C. No. 612/2016 issued by the Adjudicating Authority, New Delhi (under the Prevention of Money Laundering Act, 2002) inter alia confirming the Provisional Attachment Order bearing PAO No.11/2016 dated 11.06.2016 passed by the Respondent No.1 in the criminal case bearing ECIR No. ECIR/03/MBZO/2016 inter alia attaching immovable properties of the Respondent No. 4. 3. Along with the appeal, the appellants have also filed three applications for condonation of delay, seeking exemption from filing certified copy of the impugned order dated 1.12.2016 passed in O.C. No. 612/2016 and stay of the impugned order dated 1.12.2016 passed in O.C.NO. 612/2016 bearing no. MP-PMLA-4933/MUM/2018, MP-PMLA- 4934/MUM/2018 and MP-PMLA-4935/MUM/2018. By this Order, common order is being passed as facts and legal points are almost same. In the present Order, the facts are taken from appeal no.2538/2018. 4. The case of the appellants is that the appellants herein have prior right over the movable and immovable properties of the Respondent Nos. 3, 4 & 5 pursuant to a Personal Guarantee Agreement dated 21.12.2010, FPA-PMLA-2538/MUM/2014 Page 3 of 17 Bar & Bench (www.barandbench.com) Corporate Guarantee Agreement dated 21.12.2010 and the final order dated 19.01.2017 (“Final Order”) passed by the Debt Recovery Tribunal, Bengaluru (hereinafter “DRT”) in O.A. No. 766 of 2013 (“O.A. NO. 766/2013”) inter alia holding that Respondent Nos. 2 to 5 are jointly and severally liable to pay a sum of Rs. 6203,35,03,879.42 (Rupees Six Thousand Two Hundred and Three Crores Thirty Five Lakhs Three Thousand Eight Hundred and Seventy Nine and Paise Forty Two Only) to the Appellants together with interest @ 11.50% p.a. from the date of the Original Application till the date of recovery (“OA Amount”). Pursuant to the above Final Order, the DRT also has issued an Amended Recovery Certificate dated 10.04.2017 (“Recovery Certificate”) in favour of the Appellants. 5. Along with appeals, an application for condonation of delay of 562 days has been filed in both appeals. On the last date, time was granted to file reply, however, no reply is filed. 6. The grounds for condonation of delay are mentioned in paras 4 to 6 of application. The same are reproduced hereunder:- “4. It is further submitted the Impugned Order was passed by the Adjudicating Authority inter alia confirming the Provisional Attachment Order dated 03.09.2016 passed by the Respondent No.1 in the criminal case bearing ECIR No. ECIR/07/MBZO/2016 inter alia attaching movable and immovable properties of the Respondent Nos. 2 to 5 are bad in law as the Appellants have prior right over the movable and immovable properties of the Respondent Nos. 2 to 5 pursuant to the Personal Guarantee dated 21.12.2010, the Corporate Guarantee dated 21.12.2010 and the Final Order passed by the DRT on 19.01.2017 in O.A. No.766/2013 inter alia holding that Respondent Nos. 2 to 5 are jointly and severally liable to pay the OA amount and consequently by the Recovery Certificate in favour of Appellants.” “5. It is submitted that the Appellants received a copy of the Impugned Order only on June 22, 2018 when the Respondent No. 4 filed it before the Hon’ble High Court of Karnataka in O.S.A. No.5/2017. It is further submitted that on June 29,2- FPA-PMLA-2538/MUM/2014 Page 4 of 17 Bar & Bench (www.barandbench.com) 18 the Appellants have filed an intervention application bearing no. MP-PMLA-4307/MUM/2018 in FPA-PMLA- 1767/MUM/2017 (an appeal filed by Respondent No. 4) wherein the Appellants have sought to intervene in the said appeal and for release of the movable and immovable properties of Respondent Nos. 2 to 5 attached by the Respondent No. 1 in favour of the Appellants for recovery of the outstanding dues pursuant to the Final Order passed by the DRT in O.A. No. 766/2013.” “6. The Appellants have immediately thereafter taken steps to file the instant appeal.” 7. Admittedly, no notice under section 8(1) was issued to the appellant, nor any opportunity was granted to the banks before passing the impugned order. 8. This Tribunal in „Amanpreet Singh Gandhi vs. Deputy Director, Enforcement Directorate,FPA-PMLA-582/JL/2014 has held as follows: “The second proviso to section 8(1) requires that in case the property is held by more than one person, the show-cause notice shall be served to all persons holding such property Section 8(2) empowers the Adjudicating Authority to record a finding by an order whether all or any of the properties referred to in the show-cause notice are involved in money-laundering and the proviso to sub-section (2) of section 8 lays down if the property is claimed by a person, other than the person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money laundering. It is this proviso which casts a responsibility on the Adjudicating Authority to afford an opportunity of hearing to any person who has not issued a notice under section 8(1) but claims a right in the property in question.” 9. In Amanpreet Singh Gandhi (supra), this Tribunal also ruled on whether the obligation cast by the Proviso to Section 8(2) has to be discharged before the confirmation order under Section 8(3) is passed or a post-decisional hearing would suffice to meet the requirement of law. This Tribunal as follows: FPA-PMLA-2538/MUM/2014 Page 5 of 17 Bar & Bench (www.barandbench.com) “…..The provisions of Section 8 (1), (2) & 3 have to be read harmoniously and a holistic view has to be taken to interpret these provisions correctly. While Section 8 (1) speaks of issue of show cause notice to the persons alleged to have committed an offence under Section (3) and to joint holders of the property and on whose behalf the property is held by some other person, Section 8(2) read with its proviso speaks of Principles of Natural Justice to be followed in the form of considering the reply to the show cause notice, hearing the aggrieved persons and the complainant and also hearing any person other than a person to whom the notice has been issued, who claims a right in the property and Section 3 provides for passing an order in writing regarding confirmation of attachment. This scheme of law has no scope for segregating the proviso to Section 8 (2) from Section 8(2) as well as the Section 8(3) because a hearing after the passing of the order under Section 8(3) has no meaning.