In a major relief to the HDFC Bank, the Patna High Court quashed Provisional Attachment as no direct nexus established between property forfeited with income.
The respondent, Rajesh Kumar Agrawal, Proprietor of M/S. Maa Tara Agency had put in, three immovable properties purchased through registered sale deeds and two registered sale deeds as mortgage for securing the overdraft loan facility from the petitioner HDFC Bank Limited.
Thereafter two FIRs were lodged. The informant Shashi Kumar, the Proprietor of Firm Shiva Agro Industries alleged that he had a bank account, in the Bank of India. Younger brothers of the informant, namely, Shailesh Kumar and Rajnish Kumar, had also separate bank accounts opened in the same branch. The informant inquired from the bank about debit and credit status in the said accounts and it was noticed that huge cash were deposited in the said accounts by some fake persons and money was transferred to some other accounts.
It is worth mentioning that demonetization was enforced. The statement of the bank account enclosed with the FIR would reveal that from 12th of October, 2016 to 18th November, 2016 huge transactions of credit and debit were there.
The Deputy Director of Enforcement by the impugned order provisionally attached the above referred three mortgaged properties besides bank accounts etc of respondent in exercise of power under Section 5 of the Prevention of Money Laundering Act, 2002.
Mr.Sandeep Kumar, the counsel for the Petitioner contended that before filing of this criminal writ application, filed a written objection before the Deputy Director, Directorate of Enforcement, against the order of provisional attachment ventilating his grievance on the ground that the petitioner has preferential claim over the mortgaged property under Section 31B of Recovery of Debts and Bankruptcy Act,1993.
The petitioner has further sought for issuance of certiorari to quash the show-cause notice contained whereby the petitioner was asked by the Deputy Director, Directorate of Enforcement, to appear before the Adjudicating Authority under PMLA of 2002.
Mr. Sandeep Kumar, counsel for the petitioner, submits that under Section 5 of the PMLA, 2002 only “proceeds of crime” can be provisionally attached if the authority has reason to believe that the property is “proceeds of the crime”. Such “reason to believe” presupposes material in the possession of the authority concerned for such belief and the reason is to be recorded in writing. According to learned counsel the property-in-question was acquired much prior to the alleged act of scheduled offences under PMLA.
The Single Judge Bench of Justice Birendra Kumar held that the property in question was not proceeds of crime as defined under the Prevention of Money-Laundering Act nor the impugned order reveals that there was a direct nexus between the property in question and the proceeds of crime. Therefore, evidently, there was no material before the authority concerned to have “reason to believe” that the property in question was proceeds of crime.
“Only perfunctory recording of the fact that the authority has “reason to believe” and has material before him for such belief would not suffice unless there is evident material for such belief. Therefore, this is a case wherein the statutory authority has not acted in accordance with the provisions of the enactment. The authority has passed the impugned order in flagrant violation of the principles of natural justice. In the circumstance, asking the petitioner to go before the statutory forum would amount to sending the petitioner from “Caesar to Caesar’s wife”,” the Court said.
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