The court upheld the validity of the provisional attachment order under Section 5 (1) of the Prevention of Money Laundering Act, 2002.

The petitioner bank has filed this writ petition challenging the provisional attachment order dated 07.12.2015 issued by the first respondent by which the first respondent provisionally attached the sum of Rs.1.71 crore which is available with the petitioner bank for a period of 180 days in terms of Section 5 (1) of The Prevention of Money Laundering Act, 2002 (hereinafter referred to as The Act).

2. For disposal of this writ petition, certain facts which are necessary and germane are stated hereunder:-

(i) The petitioner bank -Indian Overseas Bank is a body corporate incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and it is transacting in banking business through its various branches spread across the country and also abroad. During the course of its business, one M/s. Dinakar Trading Company has availed certain credit limits from the Broadway Branch of the petitioner bank by creating equitable mortgage in respect of the property situated at No.53, First Floor, Ganesh Bhavan, Greenways Road, Perumalpuram, Chennai -600 028. As the said M/s.Dinakar Trading company has committed default in payment of the loan amount, the petitioner bank initiated proceedings under the provisions of Securitisation and Enforcement of Security Interest Act, 2002, (in short SARFAESI Act). After such proceedings have been initiated, the third respondent herein has purchased the property from the original borrower/mortgagor. On such purchase, the third respondent, claiming ownership over the mortgaged property, has filed S.A. No. 97 of 2007 before the Debts Recovery Tribunal-II at Chennai under Section 17 of the SARFAESI Act challenging the sale notice issued by the petitioner bank. On receipt of notice in S.A. No. 97 of 2007, the petitioner bank has filed C.R.P. No. 839 of 2007 before this Court contending that S.A. No. 97 of 2007 filed by the third respondent is not maintainable. The Civil Revision Petition No. 839 of 2007 was allowed by this Court on 21.07.2007. As against the same, the third respondent preferred Special Leave to Appeal No. 12617 of 2007 before the Honourable Supreme Court and it was dismissed on 07.12.2007 upholding the action initiated by the petitioner bank. While dismissing the Special Leave Petition, the Supreme Court directed the petitioner bank to refund the amount deposited by the third respondent. Accordingly, the sum of Rs.1,71,00,000/- deposited by the third respondent was refunded by the petitioner bank by means of a demand draft dated 31.01.2008. However, the third respondent did not receive the amount and returned the demand draft dated 31.01.2008. In the meantime, in the auction sale conducted by the bank, the mortgaged property was sold in favour of one Mr. Sekar.

(ii) According to the petitioner, similarly, the fourth respondent availed certain credit facilities from the petitioner's Hong Kong Branch for which the respondents 2, 3 and 5 stood as guarantors. The fourth respondent had committed default in payment. Therefore, the petitioner bank initiated recovery proceedings and obtained a Judgment and Decree in HCA No. 189/2/08 from the High Court of Hong Kong on 29.10.2008 for a sum of US $ 937908.02 which is equivalent to Rs.4.75 crores.

(iii) According to the petitioner, during the course of enquiry, they came to know that the sum of Rs.1,71,00,000/- deposited by the third respondent with the petitioner bank is from and out of the loan availed by the fourth respondent from their Hong Kong Branch and it was routed through State Bank of Hyderabad and UCO Bank. Thereafter, to enforce the decree and judgment of the High Court of Hong Kong, the petitioner bank has filed O.A. No. 95 of 2010 on the file of Debt Recover Tribunal-I, Chennai and obtained a final order on 31.07.2014. During the pendency of execution proceedings, the petitioner bank exercised it's general lien over the sum of Rs.1,71,00,000/- and obtained an order from the Tribunal in IA SR No. 4493 of 2005 on