Enforcement Directorate Current Affairs - 2019

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PMLA prevails over Bankruptcy Act and Insolvency Code: Delhi HC

The Delhi High Court has ruled that Prevention of Money Laundering Act (PMLA) prevails over the Bankruptcy Act and insolvency code when it comes to attachment of properties obtained as ‘proceeds of crime’.

The Enforcement Directorate (ED) had challenged the orders of PMLA appellate tribunal on the pleas of various banks. PMLA Tribunal had held that third parties, banks in this case, which have legitimately created rights such as a charge, lien or other encumbrances, have a superior claim over such properties.

Observations made by Delhi High Court

  • PMLA, Recovery of Debt and Bankruptcy Act (RDBA), Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act and Insolvency and Bankruptcy Code (IBC) must co-exist and be enforced in harmony.
  • The Delhi High Court has set aside the verdict of the PMLA tribunal and held that the objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and IBC.
  • RDBA, SARFAESI Act and IBC doesn’t not prevail over PMLA
  • The attachment order under the PMLA will not be illegal only because a secured creditor has a prior secured interest [charge] in the property, within the meaning of the expressions used in RDBA and SARFAESI Act.
  • Also mere issuance of an order of attachment under the PMLA does not ipso facto render illegal a prior charge or encumbrance of a secured creditor, the claim of the latter for release [or restoration] from PMLA attachment being dependent on its bonafides.

Delhi High Court has stated that by the virtue of Section 71, PMLA has the overriding effect over other existing laws in the matter of dealing with “money-laundering” and “proceeds of crime”.

Terror Monitoring Group for Jammu and Kashmir

The Union Home Ministry has announced setting up of a Terror Monitoring Group (TMG) to ensure synergised and concerted action against terror financing and terror-related activities in Jammu and Kashmir.

Mandate of the Terror Monitoring Group

  • Taking action against hardcore sympathisers among government employees including teacher’s etc providing overt or covert support to such activities.
  • TMG will act against all registered cases related to terror, terror financing and terror-related activities and bring them to a logical conclusion.
  • TMG shall identify all key persons including leaders of the organisations who are involved in supporting terrorism in any form and take concerted action against them. Investigate the networks of various channels being used to fund terror and terror-related activities and take action to stop the flow of such funds.
  • TMG will also investigate the network of various channels being used to fund terror and terror-related activities and take coordinated action to stop the flow of such funds.

The seven-member TMG shall be headed by the Jammu and Kashmir additional director general of police (ADGP) and have representatives from the Intelligence Bureau (IB), CBI, NIA, Central Board of Direct Taxes (CBDT), and Central Board of Indirect Taxes and Customs (CBIC). The Jammu and Kashmir police inspector-general shall be the seventh member of the TMG. Strangely the Enforcement Directorate (ED), which has attached several properties in terror funding cases, did not find mention in the order.