YES BANK LTD Vs. RECOVERY OFFICER-I, DEBTS

JUDGEMENT

(1.) In this petition preferred under Article 226 of the Constitution of India, the petitioner has assailed the validity of the order dated 13.08.2018 passed by the Recovery Officer of the Debts Recovery Tribunal, Bengaluru, by which assets of the petitioner including liquid assets have been attached.

(2.) Facts giving rise to filing of the petition briefly stated are that the petitioner is a depositary participant holding the shares on behalf of United Breweries (Holding) Limited (hereinafter referred to as 'the UBHL' for short). The petitioner received a notice dated 12.09.2016 from the Assistant Director, Directorate of Enforcement , Mumbai stating that a case is being investigated against M/s Kingfisher Airlines Limited, wherein certain movable properties in the form of shares have been attached and a direction was issued to the petitioner not to sell, transfer alienate or create third party interest on the remaining portion of the shares. By an notice dated 11.10.2016, the respondent No.2 informed the petitioner that designated authority identified to adjudicate the matters under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'the Act' for short) had directed the attachment of the movable property of Mr.Vijay Mallya, which included the schedule shares. The respondent No.1 issued a recovery proceeding in furtherance of recovery certificate to a Consortium of Banks. The respondent No.1 by a notice dated 01.08.2018 asked the petitioner as to show cause as to why an order should not be passed against the petitioner for non compliance of the order of respondent No.1 and being the petitioner as defendant in default. Thereupon the authorized representative of the petitioner appeared before respondent No.1 on 10.08.2018 and apprised the Recovery Officer of the facts. Thereafter, the petitioner was served with the impugned order of attachment dated 13.08.2018. In the aforesaid factual background, the petitioner has approached this court.

(3.) Learned counsel for the petitioner submitted that the petitioner is a mere depositary of the shares held by the UBHL and is prepared to hand over the aforesaid shares to the Recovery Officer and the impugned order be set aside as the same is adversely affecting the business of the petitioner. On the other hand, learned counsel for respondent No.3 submitted that the shares of the UBHL are subject matter of the proceedings initiated by the Directorate of Enforcement under Sections 3 and 4 of the Act in which Mr.Vijay Mallya has to be declared to be a proclaimed offender. It is further submitted that if the petitioner is aggrieved by the order dated 10.11.2016 passed under the provisions of the Act, the petitioner has the remedy under Section 84 of the Code of Criminal Procedure, 1973 (herein after referred to as 'the code' for short) and if any order is passed in this proceeding, the same would amount to modifying the order passed by the Authority under the Act. Learned Senior Counsel for the impleading applicants submitted that by an order dated 10.11.2016, the movable properties i.e., the freezed shares and pledged shares described in Chart 1 and 2 of Exhibit-E belonging to the accused Mr.Vijay Mallya has been attached and he has been declared as proclaimed offender. It is further submitted that Consortium of Banks has obtained the recovery certificate and there is no stay with regard to the recovery proceedings. It is also submitted that the UBHL was guarantor to the loan transaction between the Consortium of Banks and Mr.Vijay Mallya and the shares held by the UBHL are not the subject matter under the Act and therefore, the petitioner may be directed to surrender the shares with the Recovery Officer and the outcome of the sale of shares be made subject to the order, which may be passed by the Competent Court including the Designated Authority under the Act.