IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NO.36447 OF 2018 (GM-DRT) BETWEEN:
YES BANK LTD GROUND FLOOR, PRESTIGE OBELISK, MUNICIPAL NO.3, KASTURBA ROAD, BENGALURU, KARNATAKA-560001 RERPESENTED BY ITS AUTHORISED SIGNATORY MR RITESH JAIN WITH ITS REGISTERED OFFICE AT NEHRU CENTRE, 9TH FLOOR, DISCOVERY OF INDIA, DR ANNIE BESANT ROAD, WORLI, MUMBAI 400018 … PETITIONER (By SMT. POORNIMA HATTI AND SMT. VIDYA PRIYADARSHINI, ADVS.) AND:
1. RECOVERY OFFICER-I, DEBTS RECOVERY TRIBUNAL 2, BENGALURU 4, HAYES ROAD, SHANTHALA NAGAR, RICHMOND TOWN, BENGALURU, KARNATAKA-560025 2. ENFORCEMENT DIRECTORATE MUMBAI ZONAL OFFICE KAISER-E-HIND BUILDING, BALLARD ESTATE, FORT, MUMBAI, MAHARASHTRA-400001.
3. STATE BANK OF INDIA HAVING CORPORATE CENTRE AT STATE BANK BHAVAN MADAME CAMA ROAD, NARIMAN POINT MUMBAI-400021 REP. BY THE MANAGING DIRECTOR AND HAVING ITS INDUSTRIAL FINANCE BRANCH AT 61, RESIDENCY PLAZA RESIDENCY ROAD, BENGALURU-580 025.
4. BANK OF BARODA HAVING ITS HEAD OFFICE AT STAR HOUSE C-5, G BLOCK BANDRA KURLA COMPLEX MUMBAI-400051 REP. THROUGH THE M.D.
HAVING ITS LARGE CORPORATE BRANCH AT GROUND FLOOR, ORIENTAL BUILDING 364 D.N. FORT, MUMBAI-400001.
5. CORPORATION BANK HAVING ITS CORPORATE OFFICE AT MAGALADEVI TEMPLE ROAD PANDESHWAR, MANGALORE-575001 REP. BY ITS M.D.
HAVING ITS INDUSTRIAL FINANCE BRANCH AT RALLARAM MEMORIAL BUILDING 1ST FLOOR, CSI COMPOUND MISSION ROAD BENGALURU-27.
6. THE FEDERAL BANK LIMITED HAVING ITS REGISTERED OFFICE AT FEDERAL TOWERS, ALUVA-683101 KERALA REP. BY THE M.D. BRANCH OFFICE AT ST. MARKS ROAD, 9 HALCYON COMPLEX, ST. MARKS ROAD BANGALORE-560001.
7. IDBI BANK LIMITED HEAD OFFICE AT IDBI TOWERS WTC COMPLEX, CUFFE PARADE MUMBAI-400005 REP. BY M.D. BRANCH OFFICE AT CORPORATE BANKING GROUP FAMG 9TH FLOOR, IDBI TOWERS WTC COMPLEX, CUFFE PARADE COLABA, MUMBAI-400005.
8. INDIAN OVERSEAS BANK HAVING ITS CENTRAL OFFICE AT 763 ANNA SALAI, CHENNAI-60002 REP. BY M.D. BRANCH OFFICE HARIKRIPA 26A, SV ROAD SANTACRUZ(W), MUMBAI-400045.
9. JAMMU AND KASHMIR BANK LIMITED HAVING ITS REGD. OFFICE AT CORPORATE HQ MAULANA AZAD ROAD, SRINAGAR KASHMIR-190001 REP. BY MD BRANCH OFFICAT AT SYED HOUSE, 124, SV SAARKAR MARG MAHIM (WEST) MUMBAI-400016.
10. PUNJAB AND SIND BANK HAVING ITS HEAD OFFICE AT 21, RAJENDRA PALACE NEW DELHI 110008 REP. BY M.D. AND HAVING AMONGST OTHERS A BRANCH OFFICE AT J K SOMANI BUILDING, BRITISH HOTEL LANE FORE MUMBAI-400023.
11. PUNJAB NATIONAL BANK HAVING ITS HEAD OFFICE 7, BHEKAJ CAMA PALACE NEW DELHI-110607 REP. BY MD ACTING THROUGH ITS CORPORATE BRANCH, AT CENTENARY BUILDING 28, M.G. ROAD, BENGALURU-560001.
12. UCO BANK HAVING HEAD OFFICE AT 10, BTM SARANI KOLKATA 700001, WEST BENGAL REP. BY MD BRANCH OFFICE AT 1ST FLOOR B/22, K.G. ROAD, BENGALURU-560009.
13. UNITED BANK OF INDIA HAVING ITS HEAD OFFICE AT 11, HEMANTA BASU SARANI, KOLKAKTA REP. BY MD BRANCH OFFICE 40, K.G. ROAD BENGALURU-560001.
14. JM FINANCIAL ASSETS RECONSTRUCTION COMPANY PVT LTD REGD. OFFICE AT 7TH FLOOR CNERGY APPASAHEB MARATHE MARG PRABHADEVI, MUMBAI-400025.
CAUSE TITLE AMENDED AS PER ORDER DATED 05-02-2019 (By Mr. KUMAR M.N. ADV., FOR C/R1 Mr. S.S. NAGANAND, SR. COUNSEL FOR … RESPONDENTS M/S. DUO ASSTS. FOR R3 TO R14 FOR IMPLEADING PROPOSED Mr. MADHUKAR DESPANDE, ADV., FOR R2) - - -
THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED 13.8.2018 PASSED ON TRC NO. 255/2017 VIDE ANNEX-A. RESTRAIN THE R1 FROM CONTINUING ANY PROCEEDINGS IN RESPECT OF THE SCHEDULE SHARES & ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Smt.Poornima Hatti and Smt.Vidya Priyadarshini, learned counsel for the petitioner.
Mr.Kumar M.N., learned counsel for caveator/respondent No.1.
Mr.S.S.Naganand Learned Senior Counsel for M/s Duo Assts for impleading proposed respondent Nos.3 to 14.
Mr.Madhukar Despande learned counsel for respondent No.2 2. The writ petition is admitted for hearing.
With consent of the parties, the same is heard finally.
3. In this petition preferred under Article 226 of the Constitution of India, the petitioner has assailed the validity of the order dated 13.08.2018 passed by the Recovery Officer of the Debts Recovery Tribunal, Bengaluru, by which assets of the petitioner including liquid assets have been attached.
4. Facts giving rise to filing of the petition briefly stated are that the petitioner is a depositary participant holding the shares on behalf of United Breweries (Holding) Limited (hereinafter referred to as ‘the UBHL’ for short). The petitioner received a notice dated 12.09.2016 from the Assistant Director, Directorate of Enforcement , Mumbai stating that a case is being investigated against M/s Kingfisher Airlines Limited, wherein certain movable properties in the form of shares have been attached and a direction was issued to the petitioner not to sell, transfer alienate or create third party interest on the remaining portion of the shares. By an notice dated 11.10.2016, the respondent No.2 informed the petitioner that designated authority identified to adjudicate the matters under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as ‘the Act’ for short) had directed the attachment of the movable property of Mr.Vijay Mallya, which included the schedule shares. The respondent No.1 issued a recovery proceeding in furtherance of recovery certificate to a Consortium of Banks. The respondent No.1 by a notice dated 01.08.2018 asked the petitioner as to show cause as to why an order should not be passed against the petitioner for non compliance of the order of respondent No.1 and being the petitioner as defendant in default. Thereupon the authorized representative of the petitioner appeared before respondent No.1 on 10.08.2018 and apprised the Recovery Officer of the facts. Thereafter, the petitioner was served with the impugned order of attachment dated 13.08.2018. In the aforesaid factual background, the petitioner has approached this court.
5. Learned counsel for the petitioner submitted that the petitioner is a mere depositary of the shares held by the UBHL and is prepared to hand over the aforesaid shares to the Recovery Officer and the impugned order be set aside as the same is adversely affecting the business of the petitioner. On the other hand, learned counsel for respondent No.3 submitted that the shares of the UBHL are subject matter of the proceedings initiated by the Directorate of Enforcement under Sections 3 & 4 of the Act in which Mr.Vijay Mallya has to be declared to be a proclaimed offender. It is further submitted that if the petitioner is aggrieved by the order dated 10.11.2016 passed under the provisions of the Act, the petitioner has the remedy under Section 84 of the Code of Criminal Procedure, 1973 (herein after referred to as ‘the code’ for short) and if any order is passed in this proceeding, the same would amount to modifying the order passed by the Authority under the Act. Learned Senior Counsel for the impleading applicants submitted that by an order dated 10.11.2016, the movable properties i.e., the freezed shares and pledged shares described in Chart 1 and 2 of Exhibit-E belonging to the accused Mr.Vijay Mallya has been attached and he has been declared as proclaimed offender. It is further submitted that Consortium of Banks has obtained the recovery certificate and there is no stay with regard to the recovery proceedings. It is also submitted that the UBHL was guarantor to the loan transaction between the Consortium of Banks and Mr.Vijay Mallya and the shares held by the UBHL are not the subject matter under the Act and therefore, the petitioner may be directed to surrender the shares with the Recovery Officer and the outcome of the sale of shares be made subject to the order, which may be passed by the Competent Court including the Designated Authority under the Act.
6. I have considered the submissions made on both the sides and have perused the record. At the outset, it is pertinent to note that the order passed by the Special Judge dated 10.11.2016 under the Act is not subject matter of challenge in this petition. The relevant extract of the aforesaid order reads as under:
“It is contended by the applicant that the Directorate of Enforcement, Department of Revenue, Ministry of finance, Government of India is the Statutory Investigating Agency established by the Government of India and is entrusted with the task and authority to implement and enforce the provisions of the Prevention of Money Laundering Act, 2002. It is the only Competent Agency of the Government of India empowered to investigate suspected offences of money laundering as defined under Section 3 punishable under Section 4 of Prevention of Money Laundering Act, 2002”.
7. Chart 1 and 2 of Exhibit-E undoubtedly mentions the name of the UBHL. However, it is pertinent to mention that the Special Court under the Act has passed an order directing attachment of the movable properties i.e., the freezed and pledged shares described in Chart 1 and 2 of Exhibit-E belonging to accused-Mr.Vijay Mallya. Admittedly, Mr.Vijay Mallya is no way concerned with the UBHL. Thus, it is evident that the subject matter of the proceeding under the Act as well as the proceeding before the Recovery Officer is different.
8. Thus, the submission of respondent No.3 that subject matter of proceeding before the Recovery Officer and the Special Court under the Act is the same cannot be accepted. Similarly, the contention made on behalf of respondent No.3 that in case, any order is passed in this writ petition, the same would amount to modifying the order passed under the provisions of the Act is also misconceived as subject matter of both the proceedings are different. In the fact situation of the case, it is not necessary for this Court to relegate the petitioner to the remedy under Section 84 of the Code.
9. The petitioner has expressed its
directed that in case petitioner surrenders the share of the UBHL in favour of the Recovery Officer within a period of three weeks from the date of receipt of certified copy of the order passed today, the impugned order dated 13.08.2018 shall stand quashed. Needless to state that the attachment and the sale, if any, of the shares in question shall be subject to decision by the Competent Court including the order passed by the Special Court under the Provisions of the Act.
Accordingly, the petition is disposed of.
Sd/-
JUDGE SS