The PMLA has an overriding effect over the SARFAESI Act, and the rights of a secured creditor under the SARFAESI Act would not prevail over an order of attachment under the PMLA.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION MEERA MAHESH FIRST APPEAL NO. 335 OF 2022 JADHAV WITH Digitally signed by MEERA MAHESH JADHAV INTERIM APPLICATION NO.9864 OF 2022 Date: 2023.01.13 15:39:37 +0530 IN FIRST APPEAL NO.335 OF 2022 Aditya Birla Finance Limited, Through Authorised Representative Mr. Nikhil Rodnigues ...Appellant Versus Directorate Of Enforcement, Government Of India Through The Deputy Director Ms. N. Ananthie ...Respondent WITH FIRST APPEAL NO.338 OF 2022 ----

Mr. Venkatesh Dhond, Senior Advocate a/w Mr. Rohan Kelkar, Mr. Ashutosh Thipsey, Mr. Lalit Katariya, and Mr. Ashish Chindarkar i/b Katariya &

Associates for Appellant in FA/335/2022.

Mr. Cyrus Ardeshir a/w Mr. Ziyad Madan, Mr. Lalit Katariya and Ms Pooja Jhaveri i/b Katariya & Associates for Appellant in FA/338/2022.

Mr. Hiten Venegavkar a/w Mr. Bharat Mirchandani for Respondent No.1.

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CORAM : K.R. SHRIRAM &

RAJESH S. PATIL JJ DATED : 11th JANUARY 2023 P.C. :

1 Appellant, in the first appeal is impugning an order dated 31st December 2020 passed by the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS & PBPT Act, at New Delhi, while considering the appeal that appellant had filed against an order dated 16th January 2019 passed by the Adjudicating Authority confirming provisional attachment order (PAO) No.11 of 2018 dated 31st July 2018. Respondent to the appeal, i.e., Directorate of Enforcement (PMLA) Chennai, have registered a case against various individuals/ firms / company for commission of offence under the provisions of Prevention of Money Laundering Act (PMLA). One of the accused is M/s Nathella Sampath Jewellery Pvt. Ltd., Chennai. Some of the properties, against which the provisional attachment order has been passed are charged to appellant herein. Appellant’s case in the appeal is that the Tribunal erred in not considering favorably that appellant being a secure creditor under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), has right over the properties in priority over respondent under the provisions of PMLA.

2 Substantial questions of law and facts as raised in the appeal are as under:

“(a) Whether the rights of a secured creditor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) would prevail over an order of attachment under the PMLA Act, in the light of the provisions of the SARFAESI Act ?

(b) Whether the security created in favour of a bonafide lender who has exercised due diligence can be adversely impacted by an order of attachment under the PMLA Act ?

(c) Whether proceedings initiated by a secured lender for enforcement of its rights under the SARFAESI Act can be indirectly stayed by subsequent actions under the PMLA Act without following the procedure provided for the same under the SARFAESI Act ?

(d) Whether the respondent could have passed the Provisional Attachment Order without recording in writing that it had reason to believe that the secured assets were the proceeds of crime and that they were likely to be transferred or dealt with in any manner which may frustrate any proceedings relating to confiscation thereof ?

(e) Whether the respondent could have passed the provisional attachment order in the absence of any allegation that the appellant or its officers committed any offence ?

(f)Whether the secured assets are the proceeds of crime ?

(g) Whether the secured assets are likely to be transferred or dealt with in any manner which may frustrate any proceedings relating to confiscation thereof ?

(h) Whether the respondent has adequate reason to believe that the subject properties are the proceeds of crime and that the same are likely to be transferred or dealt with in any manner which may frustrate any proceedings relating to consideration thereof ? “

3 In the mean while, appellant has taken out this Interim Application No.9864 of 2022 for the following