2019 (8) TMI 130 - AT - Money Laundering

Money Laundering - financial misdeeds involving huge magnitude of government largesse, corporate dealings including huge investments as part of Quid Pro Quo arrangements for the largesse - maintenance of buffer zone - proceeds of crime - offences under Section 120-B and 420 of IPC - main issues raised by the appellants have not been dealt by the respondent, and CBI in its charge-sheet has ignored the vital facts of the case - HELD THAT - As per the Concession Agreement, the Appellant was not required to maintain any buffer zone around the Pharma City. The appellant was only required to maintain green belt in accordance with the Guidelines for Development of Greenbelts published by CPCB in March 2000 (Please refer Clause H8 of Schedule H of the Concession Agreement), which did not prescribe maintenance of any buffer zone around the Pharma City - It is stated that since there was a possibility of residential areas coming up along the boundary of the Pharma City, the APPCB suggested that a control area be provided outside the Pharma City prohibiting residential areas and polluting industries upto a distance of 1kilometre. The same is evidenced by the letter dated 12.02.2004 written by APIIC to the Vice Chairman VUDA requesting him not to give permissions for any residential layouts around the pharma City. Ramky shall maintain 50 mts. inward as buffer zone inside the pharma till the disputes is finally decided by the Special Court. The attachment in this regard shall continue unless it is vacated by the Special Court. The remaining all attached properties are released forthwith. Burden of proof - HELD THAT - Unless the charges are framed with the offence of money laundering under Section-3 of the Act, the burden of proof shall remain lies with the respondent to prove that the concerned parties are involved with the offence of money laundering in order to invoke Section-3 of the Act if the properties were acquired from the proceed of crime. This Tribunal is of the opinion that there are many issues raised by the appellants either to have been ignored or not decided as per law. Thus, appeals are partly allowed by modifying both impugned orders until the final decision is given by the Special Court on merit or the charge-sheet is quashed by the court prior to start of trial or otherwise - appeal allowed in part.

Summary

Issues Involved:
1. Confirmation of Provisional Attachment Orders (PAO).
2. Alleged wrongful gain by Ramky Pharma City India Ltd. (RPCIL).
3. Alleged bribe of ?10 crores to Jagati Publications Ltd.
4. Retrospective application of PMLA amendments.
5. Validity of the Provisional Attachment Orders.
6. Burden of Proof under PMLA.
7. Alleged involvement in criminal activities.

Detailed Analysis:

1. Confirmation of Provisional Attachment Orders (PAO):
The Tribunal reviewed four appeals against the orders confirming the attachments made by PAOs. The first three appeals challenged the order by the Adjudicating Authority dated 06.06.2013, confirming attachments made on 07.01.2013. The fourth appeal challenged the second attachment order dated 04.08.2015, confirmed on the same date.

2. Alleged wrongful gain by Ramky Pharma City India Ltd. (RPCIL):
The CBI alleged that RPCIL gained an undue benefit by reducing the green belt area inside the Pharma City from 250 meters to 50 meters, resulting in a wrongful gain of 914 acres. Out of this, 627 acres were converted into industrial plots, generating ?133.74 crores from sales. The Tribunal noted that the original master plan required a green belt of 250 meters inside and outside the Pharma City. The Tribunal found that the reduction in the green belt area was contrary to the original master plan and caused wrongful gain to RPCIL.

3. Alleged bribe of ?10 crores to Jagati Publications Ltd.:
The CBI alleged that Ramky Group invested ?10 crores in Jagati Publications Ltd. as a quid pro quo for the reduction in the green belt area. The Tribunal noted that the investment was made through group companies and was claimed to be a genuine business transaction. The Tribunal found no prima facie evidence that the ?10 crores were a bribe.

4. Retrospective application of PMLA amendments:
The Tribunal considered whether the amendments to PMLA could be applied retrospectively. It referred to the case of Satyam Computer Services Ltd. vs. Directorate of Enforcement, where it was held that PMLA provisions affecting substantive rights could not have retrospective effect. The Tribunal agreed that the amendments could not be applied retrospectively to the appellants' case.

5. Validity of the Provisional Attachment Orders:
The Tribunal found that the PAOs were issued without valid reasons to believe that the properties were proceeds of crime. The Tribunal noted that the attachments were based on CBI's allegations without independent investigation under PMLA. The Tribunal found that the attachments were not sustainable.

6. Burden of Proof under PMLA:
The Tribunal discussed the burden of proof under Section 24 of PMLA. It noted that the burden of proof shifts to the accused only after charges are framed. Since no charges were framed against the appellants, the burden remained with the respondent to prove involvement in money laundering.

7. Alleged involvement in criminal activities:
The Tribunal found that the allegations of criminal activities were yet to be tested by law. It noted that the Pharma City project was conceived and grounded before the tenure of the alleged conspirators. The Tribunal found no evidence that the impugned properties were acquired from tainted money.

Conclusion:
The Tribunal allowed the appeals in part, modifying the impugned orders. It directed that Ramky maintain a 50-meter buffer zone inside the Pharma City until the Special Court's final decision. The attachment of other properties was released, and Ramky was directed not to dispose of or construct on the buffer zone. The Tribunal also released the ?10 crores FDR of Jagati Publications Ltd., subject to an indemnity bond. The Tribunal emphasized that the order was without prejudice to the ongoing criminal proceedings.