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2019 (1) TMI 1312 - AT - Money LaunderingOffence under PMLA - Prevention of corruption - Proceedings adopted by the Anti Corruption Bureau under Section 13(1)( e) of the Prevention of Corruption Act, 1988 - attachment of properties - Held that - The Appellant / SPCL had advanced to the Nilesh Thakur Group a total sum of ₹ 141.50 Crores from September 2007 to August 2009. A sum of ₹ 111.50 crores was advance between the period 26.9.2007 to 1.6.2009 while the remaining ₹ 30 Crores was advance after 1.6.2009. It is the case and contention of the ACB that the advances / payment by SPCL of the said amount of ₹ 141.50 Crores to the Nilesh Thakur Group, constitutes an offence committed by Nilesh Thakur and Ors. under the provisions of Section 13 of the POC Act. Pertinently, the said offence under the POC Act came to be notified as a scheduled offence under paragraph 5 of Part A of the Schedule of the PMLA only by way of the PMLA Amendment Act of 2009 which was brought into force only on 1.6.2009. The legal position is that the purported offence under Section 13 of the POC Act was not a predicate / scheduled offence under the PMLA prior to 1.6.2009 and since the Appellant / SPCL had advanced monies to Nilesh Thakur Group to the tune of ₹ 111.50 Crores prior to 1.6.2009, the provisions of PMLA could not have been applied to the said monies or the properties acquired out of the same and the said monies / properties cannot be treated as proceeds of crime for the purposes of the PMLA. Thus, it was beyond the jurisdiction of the authorities under the PMLA to issue PAO‟s or file Original Complaints in respect of the said monies of ₹ 111.50 Crores or the properties acquired out of the same. It is evident that the action of the Directorate of Enforcement is in violation of Article 20(1) of the Constitution of India which protects a citizen from being subjected to any penalty greater that what might have been inflicted under the law in force at the time of the commission of offence. Thus, issuance of PAO‟s or attachment in respect of the said monies of ₹ 111.50 Crores or properties acquired out of the same was clearly beyond the power of authority and the Directorate of Enforcement and the said PAO‟s and the Original Complaints in connection therewith are null and void, a nullity and of no legal effect whatsoever. There is absolutely no connection between the monies paid by the Appellant to Nilesh Thakur and the discharge of public duties by the brother of Nilesh Thakur Nitish Thakur . Nitesh Thakur had effectively not discharged any public duties since 2002. The Enforcement Directorate has incorrectly attached the properties standing in the name of Ni lesh Thakur Group only by making a bald statement that they are disproportionate assets of Nitesh Thakur. The said properties are of beneficial ownership of the Appellant. The Appellant is entitled to the said properties to ensure that the said properties come back to the Appellant and has f i led Execution Application for enforcement of the Consent Decree. However, the attachment made by the Enforcement Directorate is coming in the way of the Appellant enforcing the said Decree against Nilesh Thakur. Therefore, all appeals f i led by the appellants are allowed, all orders under appeal are set -aside. The provisional attachment orders are also quashed. Al l the attached properties, movable and immovable properties, are released forthwith.The entire amount detained by ED shal l be refunded to the appellant with interest already accrued forthwith.
Issues Involved:
1. Legitimacy of funds transferred by SPCL to Nilesh Thakur. 2. Whether the properties acquired by Nilesh Thakur using SPCL funds are "proceeds of crime." 3. Validity of the Consent Decree passed by the Bombay High Court. 4. Applicability of the Prevention of Money Laundering Act (PMLA) to the transactions. 5. Impact of Income Tax Tribunal (ITAT) orders on the PMLA proceedings. 6. Validity of Provisional Attachment Orders (PAOs) issued by the Directorate of Enforcement (ED). Detailed Analysis: 1. Legitimacy of Funds Transferred by SPCL to Nilesh Thakur: The Appellant Company (SPCL) transferred ?141.50 crores to Nilesh Thakur Group between 2007-2009 under a legitimate land aggregation agreement. The funds were from SPCL's legitimate business activities and not proceeds of crime. This fact is uncontested by the respondents, including the Directorate of Enforcement (ED). 2. Whether the Properties Acquired by Nilesh Thakur Using SPCL Funds are "Proceeds of Crime": The properties acquired by Nilesh Thakur using SPCL's funds were for lawful purposes under the agreement. The funds used were not proceeds of crime, as admitted by the ED. The properties, vehicles, and fixed deposits acquired from these funds cannot be termed as money laundering under the Prevention of Money Laundering Act, 2002. 3. Validity of the Consent Decree Passed by the Bombay High Court: The Bombay High Court passed a Consent Decree on 19.10.2011, confirming that the properties and funds in question belonged to SPCL. The Consent Decree is legally binding and has the same effect as a decree passed in invitum. The ED's contention that the Consent Decree should not be considered was rejected. 4. Applicability of the Prevention of Money Laundering Act (PMLA) to the Transactions: The PMLA was amended to include offenses under Section 13 of the Prevention of Corruption Act as scheduled offenses only from 1.6.2009. Therefore, the funds advanced by SPCL to Nilesh Thakur Group before this date (?111.50 crores) cannot be treated as proceeds of crime under the PMLA. The attachment of properties acquired before this date was beyond the jurisdiction of the authorities under the PMLA. 5. Impact of Income Tax Tribunal (ITAT) Orders on the PMLA Proceedings: The ITAT, by its order dated 10.4.2015, confirmed that the funds advanced by SPCL to Nilesh Thakur were for business purposes. This order set aside the adverse observations of the Income Tax Officer, which were the basis for the ACB's charge sheet and the ED's reasonable belief for issuing Provisional Attachment Orders. The foundation of the ED's actions ceased to exist with the ITAT's order. 6. Validity of Provisional Attachment Orders (PAOs) Issued by the Directorate of Enforcement (ED): The PAOs issued by the ED were based on the assumption that the properties were proceeds of crime. However, the funds provided by SPCL were legitimate, and the properties acquired were not proceeds of crime. The Adjudicating Authority's confirmation of the PAOs was incorrect and based on a flawed understanding of the facts and law. The Tribunal set aside the PAOs and ordered the release of the attached properties and funds. Conclusion: All appeals filed by SPCL are allowed, and the orders under appeal are set aside. The provisional attachment orders are quashed, and all attached properties, movable and immovable, are released forthwith. The ED is directed to refund the detained amount with accrued interest to SPCL. Appeals filed by SRB Developers and Kalyani Groups are also allowed, and the amounts deposited by them are to be refunded by the ED with accrued interest. All miscellaneous applications are disposed of, and no costs are awarded.
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