Punjab National Bank Vs Deputy Director (Appellate Tribunal Under SAFEMA Delhi)
PMLA Attachment Upheld on Hypothecated Car; Bank’s Charge Protected Only to Loan Extent, Remedy Lies u/s 8(8)
The Appellate Tribunal under SAFEMA at New Delhi disposed of the appeal filed by Punjab National Bank against confirmation of provisional attachment of a Maruti Brezza car under PMLA, holding that mere existence of hypothecation in favour of a secured creditor does not invalidate attachment where the asset is partly tainted. The Tribunal noted that the vehicle, valued at ₹10.69 lakh, was funded partly by PNB loan of ₹6.50 lakh & partly by ₹4.19 lakh paid from the borrower’s bank account, the source of which remained unexplained & linked to cash deposits. Given the borrower’s criminal antecedents, multiple FIRs, inadequate income disclosures & belated filing of ITRs, the Tribunal held that the margin money portion carried taint of proceeds of crime. Relying on the Delhi High Court judgment in Axis Bank, the Tribunal reiterated that PMLA has overriding effect, though statutes like SARFAESI & RDDB must co-exist harmoniously, & that attachment is valid subject to protection of bona fide secured creditors. Since the attachment was not illegal per se & the bank’s claim was already noted as protected under section 8(8) of PMLA, the appeal was disposed of with liberty to PNB to approach the Special Court, PMLA, for appropriate relief to safeguard its secured interest.
PMLA Attachment vs Bank’s Hypothecation — SAFEMA Tribunal Holds Brezza Car Tainted to Extent of Unexplained Funds; Bank’s Remedy Lies u/s 8(8)
The Appellate Tribunal under SAFEMA, New Delhi, disposed of the appeal filed by Punjab National Bank (PNB) challenging confirmation of provisional attachment of a Maruti Brezza car under the Prevention of Money Laundering Act, 2002, holding that the attachment was valid notwithstanding the Bank’s hypothecation, though the Bank’s claim as a secured creditor remains protected u/s 8(8) of PMLA.
The car, purchased for ₹10.69 lakh by the borrower Shri Dhanik Lal Mandal, was partly funded through a car loan of ₹6.50 lakh from PNB and partly through ₹4.19 lakh paid from his savings account. The Tribunal noted that the borrower faced multiple serious criminal cases and had failed to explain the source of substantial cash deposits in his bank account used for the margin money. Filing of ITRs for only two years, just prior to the transaction, was held insufficient to establish a clean source of funds.
Relying on the Delhi High Court ruling in ED vs Axis Bank, the Tribunal reiterated that PMLA has overriding effect u/s 71, yet must operate harmoniously with SARFAESI and RDDB Acts. A secured creditor’s charge does not invalidate PMLA attachment, nor does attachment automatically extinguish the creditor’s rights. Since the margin contribution of ₹4.19 lakh remained unexplained, the vehicle was held tainted to that extent, though the Bank’s loan exposure was recognised as protectable.
Accordingly, the appeal was disposed of with liberty to PNB to approach the Special Court under Section 8(8) of PMLA for appropriate relief, reaffirming that banks must demonstrate due diligence and bona fides to safeguard their secured interests in PMLA proceedings
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
