MELIORA ASSET RECONSTRUCTION COMPANY Vs. UNION OF INDIA

JUDGEMENT

(1.) This Writ Petition, is filed by the petitioner-company seeking to issue writ in the nature of Certiorari calling for records relating to the order dtd. 22/4/2021 passed in O.C.No.1367 of 2020 by the respondent No.3 confirming the Provisional Attachment Order No.3 of 2020 dtd. 27/10/2020 in ECIR/HYZO/01/2016 of the respondent No.2 and consequently prayed this Court to set aside the said orders as being contrary to the provisions of Prevention of Money Laundering Act, 2002 (for short "PMLA Act"), arbitrary and unconstitutional.

(2.) It is stated that petitioner is an Asset Reconstruction Company (for short "ARC") and it obtained license under Sec. of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short "SARFAESI Act") from the Reserve Bank of India (RBI) and the RBI also issued Certificate of Registration on 5/12/2014. It is further stated that the said Certificate of Registration was cancelled by the RBI vide order dtd. 30/8/2019 alleging that the petitioner failed to meet the capital requirements as mandated by it. It is the case of the petitioner that under the mechanism evaluated for appointment of ARC, the loan account and securities would be assigned to ARC which in turn, will hold it in a trust to which the ARC and bank would contribute amounts equivalent to their respective shares. Thereafter, the ARC would act as a trustee to take all reasonable measures to ensure that the best possible amounts are recovered depending upon the quality of securities, the outstanding dues, other possible actions against promoters depending on their net worth, their other assets etc. Once the best possible amounts are recovered from the transaction, the net proceeds are divided as per the initial agreed upon percentage, subject to deduction of expenses and other fees that ARC is entitled to. While the matter stood thus, on the basis of material placed before the Complainant i.e, respondent No.2 and with the reasonable belief that the properties listed in the compliant are related or acquired out of the Proceeds of Crime which involved in Money Laundering, and are required to be attached for the purposes of the ongoing investigation and adjudication proceedings under the PMLA Act, 2002, the respondent No.2 issued Provisional Attachment Order No.03/2020 dtd. 27/10/2020 in File No.ECIR/HYZO/01/2016 provisionally attaching the movable and immovable properties of the petitioner-company and filed Original Complaint No.1367 of 2020 on the file of respondent No.3-Adjudicating Authority seeking to take cognizance of the same under Sec. 5(5) of the PMLA Act, 2002. The respondent No.3 after considering the entire material and investigation reports placed on record and after taking into consideration the various objections and contentions raised by the petitioner company, came to conclusion that the properties provisionally attached by PAO No.03/2020 dtd. 27/10/2020 are involved in money laundering and vide order dtd. 22/4/2021 confirmed the Provisional Attachment Order and allowed the complaint. Challenging the same, the present Writ Petition is filed.

(3.) This Court vide order dtd. 12/8/2021 issued notice before admission and granted interim stay of Provisional Attachment Order No.3 of 2020 dtd. 27/10/2020 passed by the respondent No.2 in respect of Schedule 2-A and 2-B properties, on the ground that the appellate authority is not functioning.