Left Menu
Development News Edition

Tribunal quashes order to attach firm properties mortgaged with PNB

Tribunal quashes order to attach firm properties mortgaged with PNB
The PNB had approached the tribunal challenging the adjudicating authority's order allowing the ED to attach the company's properties mortgaged with the bank. (Image Credit: Twitter)

The Appellate Tribunal of the Prevention of Money Laundering Act (PMLA) has set aside an order of the adjudicating authority allowing the Enforcement Directorate (ED) to attach a company's properties mortgaged with the Punjab National Bank.

The tribunal's chairman, Justice Manmohan Singh, said that the PNB is a public sector bank and the banks are in crisis and no attempt should be made to block loan amount so as to avoid worsening of positions in the commercial market.

The PNB had approached the tribunal challenging the adjudicating authority's order allowing the ED to attach the company's properties mortgaged with the bank. The company, Vandana Vidhyut Limited, had approached a consortium of banks for availing of a loan and Rs 546.77 crore was taken from the PNB, one of the banks of the consortium. The ED had passed a provisional attachment order in March 2018, attaching movable and immovable property of the company which were hypothecated/equitably mortgaged to the bank.

In April, 2018, the Mumbai Bench of the National Company Law Tribunal (NCLT) had declared a moratorium against the company under Section 14 of the Insolvency and Bankruptcy Code, 2016, on an application made by State Bank of India (being a financial creditor as well as a member of the consortium of banks).

Even then, the Adjudicating Authority confirmed the attachment of the properties by passing an order on September 17, 2018, which was challenged by the PNB before the PMLA appellate tribunal. The tribunal, in its order, said that PNB is a public sector bank and the money must come to the public forthwith and not after the trial of the criminal case against the borrowers which may take many years.

"The banks are in crisis, no attempt should be made to block the loan amount in order to avoid worsening positions in the commercial market. The trial may continue against the borrowers. One fails to understand why the bank loan amount be blocked in view of settled law," it said.

The tribunal said the ED has registered the case and passed the provisional attachment order after the moratorium order was passed by the NCLT. "Thus, on the face of the record, it is evident that the ED and the adjudicating authority have not understood the legal issues involved rather they have ignored the settled law and passed the impugned order.

"The serious situation is that ED has registered ECIR on the basis of FIR which was registered at the request of banks' complaint as borrowers had failed to pay the loan amount. The banks have now become a victim. Therefore, both the impugned order and provision attachment order are set aside qua the appellant bank," the tribunal said.

It said the adjudicating authority should have stayed the proceedings on the passing of the moratorium order by the NCLT and the continuation of the proceedings from the date of commencement of the moratorium order is contrary to the intention of the legislature.

"In the facts of the present case, it appears that hurdle has been created in the process after passing the order of NCLT which ought not to have been done. The question of registering ECIR does not arise. The passing of provisional attachment order was not the application of mind and without consulting the facts and law," it said.

The tribunal held that there was no evidence to suggest that the property attached by the ED was acquired out of "proceeds of crime" as defined in Section 2(1)(u) of the PMLA, and therefore, the same cannot be attached under Section 5 of the PMLA by the ED.

It also observed that the tribunal has time and again held that the secured asset of a bank cannot be attached or confiscated when there is no illegality or unlawfulness in the title of the bank and that there is no charge of money laundering against the bank.

(With inputs from agencies.)

Download The Devdiscourse News App for Latest News.



Top 10 Fake News, Myths and Realities on 2019 Novel Coronavirus COVID 19

With nearly 1500 deaths by January 14 and around 65,000 infections in China, the Novel Coronavirus 2019 has become one of the worst health epidemics of the 21st Century. However, 8,573 people have been cured but the rumor mongers are a...

Handling fake news Infodemic in time of Coronavirus epidemic

Social media has provided a platform where everybody can disseminate his her views without any supervision. Its excellent if the message is genuine but misinformation is equally disastrous. Health is such a topic where every Tom and Harry c...

Sentiment Analysis on Budget 2020: Long shot for solution to economic worries?

Industries and individuals alike had high expectations from the government to take tangible steps but the budget 2020 seems to have failed expectations....

How can technology help the future of mobility?

More than a billion people or one-third of the global rural population lacked access to all-season roads and transport services in 2016, subsequently hindering the socio-economic development....


Latest News

'Tiger widows' shunned as bad luck in rural Bangladesh

Abandoned by her sons, shunned by her neighbors and branded a witch. Mosammat Rashidas crime Her husband was killed by a Bengal tiger.Women like her are ostracised in many rural villages in Bangladesh, where they are viewed as the cause of ...

Section 144 withdrawn in Goa

Ahead of the carnival festivities, the North Goa district administration has withdrawn Section 144 of the Criminal Procedure Code CrPC which was imposed last week after intelligence inputs about possible terror threat along the western coas...

UK working to organize flight for British nationals on cruise ship with coronavirus

Britains Foreign Office said on Wednesday it is working to organize a flight to Japan to evacuate its nationals from a cruise ship hit by the coronavirus. Our staff are contacting British nationals on board to make the necessary arrangement...

UPDATE 1-Japan plans HIV drug trials for coronavirus, cruise ship evacuations continue

Japan plans to trial HIV medications to treat patients infected with coronavirus as the growing number of cases poses an increasing threat to the countrys economy as well as public health. Yoshihide Suga, the governments top spokesman, said...

Give Feedback