The rights of secured creditors under the Prevention of Money Laundering Act are upheld, prioritizing their claim over attached properties not proven as proceeds of crime.

JUDGEMENT

FPA-PMLA-2534/CHN/2018, FPA-PMLA-2533/CHN/2018 &FPA-PMLA- 2498/CHN/2018

1. By this order, we propose to decide the above-mentioned three appeals filed by the appellants under Section 26 of the Prevention of Money Laundering Act, 2002 against common Order dated 27.07.2018 passed by the Adjudicating Authority confirming the provisional attachment order no. 02/2018 dated 13.02.2018 passed in O.C. No. 897/2018 dated 6.3.2018 in ECIR/CEZO/01/2017 dated 06.01.2017.

2. All the appellants have separately argued theirrespective appeals. The facts are common so as the legal issues, thus, by single order these are being decided.

3. The main allegations of the ED in the present case is that wrongful gain to the Appellant M/s. VGN Proprty Developers Pvt. Ltd. and wrongful loss to the Government of India of Rs. 115 Crores has been caused by sale of the property admeasuring about 10.46 Acres in Guindy Village, Chennai (hereinafter referred to as the “said property”) at a sale price of Rs 272 Crores whereas the guidelines value for the same was Rs. 387 Crores (and hence the loss).

4. The brief facts are that on 28.12.2016, the Central Bureau of Investigation, Anti-Corruption Branch, Chennai registered FIR RC MAI 2016 A0050 under Sec.120-B, 420 IPC and Sec.13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 against Mr. Leon Terattil, then DGM and Mr. Ramadoss, then Chief Manager of State Bank of India and Mr. D.P Gupta , C.O.O of M/s HTL Ltd, Mr. D. Pratish, Managing Director of M/s VGN Developers P Ltd and M/s VGN Developers Ltd. The allegation in the FIR is that M/s HTL, thiru-Vi-Ka-Industrial Estate, Guindy, Chennai, a public Sector enterprises of Government of India was financed by consortium of banks consisting of State Bank of India, Indus Bank, Axis Bank and South India Bank Ltd; in order to repay the debts and outstanding loans, M/s HTL Ltd proposed to sell 11.021 acres of land in Thiru-Va-Ka-Industrial Estate; after approval from the concerned department, HTL conducted online auction on 07.03.2007 and M/s RMZ Properties P. Ltd, Bangalore emerged as successful bidder by quoting Rs.27.10 crores per acre aggregating to total of Rs.298 crore; the Government of Tamil Nadu (SIDCO) raised objection to the sale of land and the matter was taken up before the High Court of Madras and the Hon‟ble Supreme Court finally ordered in favor of M/s HTL Ltd in 2009; in 2009, SBI leader of Consortium of banks took possession of the land and initiated proceedings under SARFAESI Act to recover the dues of the Consortium banks. It was further alleged that the SBI sold the land measuring 10.46 acres of HTL Ltd on 15.03.2013 by way of private treaty to M/s VGN Developers P Ltd for an amount of Rs.272 crores. Shri. Leon Terattil, then DGM and Shri Ramadoss, then Chief Manager of SBI and Shri. D.P Gupta CEO of M/s HTL Ltd who represented SBI working capital consortium meeting, in order to favor M/s VGN Developers P Ltd and its Managing Director had deliberately resorted to the method of private Treaty instead of public auction for disposal of the said property. It is further alleged that as per the State Revenue Records the guideline value of the property during 2013 was Rs.387 crores and the property was bidded for Rs.298 crores in the online auction held in 2007. The allegation is that the above-mentioned persons conspired among themselves and sold the land for a lesser value and thereby caused wrongful loss to Government of India.

5. On 06.01.2017, Directorate of Enforcement registered ECIR/CEZO/01/2017 against the persons mentioned in the preceding paragraph on the basis of FIR R