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2019 (6) TMI 1228 - AT - Money LaunderingAttachment of property under PMLA - scheduled offences - main allegation against the appellant is that alienation of the land to the extent of 231.09 acres was done in favour of the appellant and the M/s Pioneer Infrastructure Holding Ltd in lieu of the aforesaid alienation made quid pro quo investment 53, 00, 00, 000/- in M/s Caramel Asia Holding Pvt. Ltd. and M/s Jagati Publication Pvt. Ltd. which are the companies of Sh. Y.S. Jagan Mohan Reddy - HELD THAT - In view of the amendment inserted by Act of 13/2018 which is applicable w.e.f. 19.4.2018 where in the 2nd proviso it is allowed to party to claim the restoration of the said property during the trial by moving the said application if so required if the appellant has acted in good faith would be able to satisfy the Special Court that the appellant is suffering irreparable loss if the claim of the appellant is not allowed. Being an independent Statute as claim by the respondent an independent and impartial evidence is to be traced against the person concerned who is stated to be involved in money laundering. Merely on the basis of allegations the respondent with evidence can not attach any property by passing provisional attachment order unless there are reason to believe that the impugned property is definitely involved in money laundering within the meaning of Section 2(1)(u) read with Section 3 of the Act - Reason to believe is not a formality but it should akin to prima facie findings that the person concerned is positively involved in money laundering. The provisional attachment order can only be passed if such exercise is done within the four corners of settled law. The meaning of proceeds of crime is any property derived or obtained directly or indirectly as a result of criminal activities relating to a schedule offense. The provisions of Section 5 and 8 of PMLA are not exactly similar but principles and intend to incorporate the said provision to some are the guiding factors. The manner in which the provisional attachment order was passed and confirmation thereof in the impugned order the same cannot continue by attaching commercial properties where the future and career of hundred of employees are involved with regard to commercial properties the value of the property can be secured by depositing the same with the respondent till the final order is passed by the Special Court. Appeal allowed in part.
Issues Involved:
1. Legality of the Provisional Attachment Order under the Prevention of Money Laundering Act (PMLA). 2. Allegations of quid pro quo investments and their legitimacy. 3. Compliance with due process in the alienation of land. 4. Validity of the investigation under PMLA. 5. Evaluation of the alleged proceeds of crime. 6. Consideration of the Adjudicating Authority's order and its adherence to legal standards. Issue-wise Detailed Analysis: 1. Legality of the Provisional Attachment Order under PMLA: The Tribunal addressed appeals against the orders confirming the Provisional Attachment Order (PAO) under Section 26 of the PMLA. The PAO was issued based on allegations of quid pro quo investments linked to the alienation of 231.09 acres of land. The Enforcement Directorate (ED) attached the land valued at ?1,15,54,500/-. The Tribunal noted that the PAO was based on allegations from a CBI charge sheet and emphasized that the ED must have "reason to believe" that the proceeds of crime are likely to be transferred or concealed, which was not sufficiently demonstrated in the PAO. 2. Allegations of Quid Pro Quo Investments and Their Legitimacy: The main allegation was that the appellant received land in exchange for investments in companies linked to Y.S. Jagan Mohan Reddy. The investments were detailed in the charge sheet, showing dates and amounts invested in M/s Caramel Asia Holdings Pvt. Ltd. and M/s Jagati Publications Pvt. Ltd. The appellants argued that the investments were legitimate business transactions, supported by documents showing due process in the alienation of land and subsequent investments. The Tribunal found that the investments were genuine business transactions, noting that the newspaper Sakshi, published by M/s Jagati Publications, became the second-largest Telugu daily. 3. Compliance with Due Process in the Alienation of Land: The appellants provided a detailed timeline and documentation showing that the land alienation process followed due process, including issuance of notices, valuation, survey, and inspection by various revenue authorities. The Tribunal observed that the Empowered Committee and Council of Ministers recommended the valuation at ?50,000 per acre, and the Advocate General opined that there was no bar in alienating the land. The Tribunal concluded that due process was followed, contrary to the respondent's argument that it was ignored. 4. Validity of the Investigation under PMLA: The Tribunal examined the investigation carried out under PMLA, noting that the scheduled offenses alleged were under Section 420 read with 120B IPC and Section 13 of the Prevention of Corruption Act. The Tribunal emphasized that the ED must conduct an independent investigation rather than rely solely on allegations from the CBI charge sheet. The Tribunal found that the ED's investigation lacked independent evidence to substantiate the allegations of money laundering. 5. Evaluation of the Alleged Proceeds of Crime: The Tribunal scrutinized the allegations that the investments were proceeds of crime. The appellants argued that the investments were made following legal procedures and were not bribes. The Tribunal noted that the alleged benefits were granted with the approval of the Council of Ministers and that the decision was never challenged. The Tribunal found no direct evidence linking the investments to proceeds of crime, highlighting that the market value of the shares increased, indicating legitimate business transactions. 6. Consideration of the Adjudicating Authority's Order and Its Adherence to Legal Standards: The Tribunal criticized the Adjudicating Authority for not legally considering the reply and material placed on record by the appellants. The Tribunal observed that the Adjudicating Authority's findings were based on assumptions and lacked due application of mind. The Tribunal noted that the Authority's order did not adhere to the mandate of Section 8(2) of the PMLA, which requires a thorough examination of the evidence before confirming a PAO. Conclusion: The Tribunal partially allowed the appeals, modifying the impugned order. The attachment of the land (231.09 acres) was to continue, but possession was not to be taken by the respondent. For the hotel building, the Tribunal allowed the appellant to furnish a Fixed Deposit Receipt of ?6,69,37,415/- in favor of the respondent, subject to which the attachment of certain floors of the hotel building would be released. The Tribunal emphasized that the allegations of quid pro quo investments were not substantiated by independent evidence and that due process was followed in the alienation of land. The Tribunal disposed of the appeals by modifying the impugned order and highlighted the need for the ED to conduct an independent investigation rather than rely solely on allegations from the CBI charge sheet.
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