# In the matter of the Deputy Director Directorate of Enforcement Delhi Vs Axis Bank and Ors CRL. A. 143-2018 and Crl M A 2262-2018

> HC judgment dated 2019-04-02. Citation: TCN-2019-HC-00016. These are appeals presented under Section 42 of the Prevention of Money-Laundering Act, 2002…

- **Court:** HC
- **Order date:** 2 Apr 2019
- **Citation:** TCN-2019-HC-00016
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/the-deputy-director-directorate-of-enforcement-delhi-vs-axis-bank-and-ors-crl-a-f33fec53

## Summary

### Background

These are appeals presented under Section 42 of the Prevention of Money-Laundering Act, 2002 (“PMLA”) against orders of the appellate tribunal. The appeals relate to claims of entities other than the persons in whose name the attached properties are held, referred to as “third party” claims. The conflict concerns the authority of the State to take away and confiscate property acquired through criminal activity versus the lawful claim of a third party to recover what is due by attachment and sale of the same property. The issues brought for adjudication are not adversarial in nature, as both sides have been given authority by law to reach out to the properties in question for their respective purposes. The challenge is to prioritize the claims of one over the other. The

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## Facts

Several appeals were filed against orders of the appellate tribunal concerning attachment of properties under the Prevention of Money Laundering Act (PMLA). These properties were subject to claims by banks and other financial institutions, creating a conflict between the enforcement authority's power to confiscate proceeds of crime and the rights of third parties with legitimate interests in the properties. The cases involve various scenarios, including attachment of an Audi car financed by Axis Bank, agricultural lands and built-up properties mortgaged to State Bank of India, mortgaged shops claimed by IDBI bank, and properties mortgaged to Punjab National Bank (PNB) for credit facilities taken by Dynamic Shells (India) Pvt. Ltd. The common thread is the question of

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## Issues and analysis

### Issue 1: Whether the provisions of the Prevention of Money Laundering Act (PMLA) override the rights of …

**Ratio:** The PMLA, RDBA, SARFAESI Act, and Insolvency Code must co-exist, each to be construed and

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**Reasoning:** The court reasons that the objective of the legislation in PMLA is distinct from the

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**Interpretation:** This means that while the PMLA aims to confiscate proceeds of crime, the

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**Application:** The court applies this principle by stating that an order of attachment under

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## Parties

- **Judges:** R.K.G…
- **Appellants:** THE DEPUTY…
- **Respondents:** AXIS BANK…

## Timeline

- **2019-02-25 — Reserved…**: Case reserved f…
- **2019-03-27 — Reserved…**: Case reserved f…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 120 — Standard of conduct](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-120)

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