He said collateral was the only security a bank accepted. There was no process by which banks could determine at the time of accepting the collateral whether it can be attached in the future as proceeds of a crime.
Explaining the case, Bhargava said these properties were mortgaged to the consortium, which also includes Punjab National Bank, Canara Bank, Oriental Bank of Commerce and Axis Bank, between 1989 and 2009.
Thereafter, under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002, notice was issued that year and possession of the charged assets was taken under the Act. DRT, Ahmedabad allowed the consortium to get recoveries from these properties.
Later, the Mumbai ED attached some of these properties on the plea that these have been acquired from the proceeds from money laundering.
Against this, Standard Chartered Bank
went to the appellate tribunal, saying the mortgaged properties are not derived or obtained, directly or indirectly from the criminal activity or the proceeds of crime.
It was also contended that amendments to the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 prima facie gives the secured creditor a priority over the rights of central or state government.
The tribunal said Mehta had fled the country and owed Rs 48 billion.