9911796707
TMI Blog2010 (8) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the present case we have upheld the decisions of the Authorities below having found that the same were unexceptionable and does not suffer from any infirmity nor are manifestly wrong. Accordingly, all these appeals fail being devoid of merits. Instead, we confirm the provisional attachment orders as passed by the Deputy Director and confirmed by the Adjudicating Authority, which view has been upheld by the Appellate Tribunal. Therefore, we proceed to pass order. - A.M.KHANWILKAR AND A.A.SAYED, JJ For The Appellant : Sushant Murthy and Others For The Respondent : Rajeev Awasthi and Others JUDGMENT : 1. Heard Counsel for the parties at length. By consent, we are finally disposing of the three appeals by this common Judgment and Order as the questions involved therein are overlapping. 2. These appeals are directed against the Judgment and Order passed by the Appellate Tribunal under Prevention of Money Laundering Act, New Delhi dated November 23, 2009 in appeals filed by the Appellants herein to challenge the order of the Adjudicatory Authority at New Delhi on Complaint Nos. 1,2,3 and 4 of 2007 dated 1st June, 2007, which in turn confirms the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of material placed before me such as copy of complaint No.NDPS Spl.Case No.192/2006 dtd.08.12.2006 filed by the Mumbai Zonal Office of the Narcotics Control Bureau, statement of bank accounts, report forwarded by the Narcotics Control Bureau and statements of Shri Radhamohan Lakhotia in case of ECIR/04/MZO/07 dtd. 24.01.07 and on its examination, I have reason to believe- (a) the Shri Umesh Bangur, Bldg. No.11-B, Flat No.501, 502, Kalpak Estate, Antophill, Mumbai -400 037 is in possession of proceeds of crime; that part of the said money has been parked with Shri Radhamohan Lakhotia, that the said Radhamohan Lakhotia had invested the money so received in shares through the Demat Account No.1601480000009377 held with Infrastructure Leasing and Financial Services Ltd., Mumbai which is more particularly detailed below; (b) that the said Shri Umesh Bangur has been charged of having committed the schedule offence under section 23 27 (a) of the NDPS Act, 1985 in Complaint No.NDPS Spl. Case No.192/2006 dtd. 08.12.2006 filed by the Mumbai Zonal Office of the Narcotics Control Bureau; and (c) that the said Shri Umesh Bangur has invested the proceeds of crime through Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. of shares Purchase 1 Peerless Shipping 05.06.06 2000 304660 2 Glenmark Jan-Feb 07 2275 1342250 Total 1646910 Note: The purchase value of ₹ 1646910/- is inclusive of the profit derived out of disposal of shares purchased earlier and disposed. ig IN APPEAL NO.528 OF 2010 PROVISIONAL ATTACHMENT ORDER-2/2007 (under sub-section(1) of Section 5 of the Prevention of Money Laundering Act, 2002) In exercise of authorization dtd.07.02.2007 issued by the Director of Enforcement under sub-section (1) of section 5 of the Prevention of Money Laundering Act, 2002 (15 of 2003) read with Notification No.GSR.441(E) dated 1st July, 2005, I, ATUL VERMA, Deputy Director, incharge of Mumbai Zonal Office make the following order: WHEREAS on the basis of material placed before me such as copy of complaint No.NDPS Spl.Case No.192/2006 dtd.08.12.2006 filed by the Mumbai Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d floor, Mittal Chambers, Nariman Point,Mumbai. Seal To (1) Shri Umesh Bangur, Bldg.No.11-B, Flat No.501,502, Kalpak Estate, Antop Hill, Mumbai - 400 037. (2) Shri Radhamohan J. Lakhotia, A:4/502, Alak CHS Ltd., Sector-19 A, Nerul, Navi Mumbai -400 706. (3) M/s. Infrastructure Leasing Financial(in respect of shares at Services Ltd. (DP:14800) St.No.1-7 of Annexure) IL FS House, Plot No.14, Raheja Vihar, Chandivali, Andheri(East), Mumbai-400 072. (4) Franklyn Templrton Mutual Fund(in respect of 30000 units of 1st floor, Sakhar Bhavan, -Franklyn India Smaller Cos. Fund) 230, Backbay Reclamation, Nariman Point, Mumbai - 400 021. Copy to:- Shri R.M.Sharma, Chairperson, Adjudicating Authority Chairperson, Adjudicating Authority, Room No.408, A-Wing, 4th Floor, Shastri Bhavan, Dr. Rajendra Prasad Road, New Delhi-110001. (2) The Director, Directorate of Enforcement, Head Quarters, NEW Delhi. (3) The Additional Director (PMLA), Directorate of Enforcement, Mumbai. ANNEXURE TO ATTACHMENT ORDER Sr. Name of the Company Date of acquistition No. of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Estate, Antophill, Mumbai -400 037 is in possession of proceeds of crime; That part of the said money has been parked with Shri Radhamohan Lakhotia, That the said Radhamohan Lakhotia had invested Rs,11 Lakhs with M/s. E.V.Homes, 303, Vardhaman Chambers, A-Wing, Sector - 17, Vashi, Navi Mumbai - 400 703 as advance towards purchase of Shop No.17, Millenium Park, No.22 23, Sector 25, Nerul, Navi Mumbai; (b) that the said Shri Umesh Bangur has been charged of having committed the schedule offence under section 23 27 (a) of the NDPS Act, 1985 in Complaint No.NDPS Spl. Case No.192/2006 dtd. 08.12.2006 filed by the Mumbai Zonal Office of the Narcotics Control Bureau; and (c) that the said Shri Umesh Bangur has invested the proceeds of crime through Shri Radhamohan Lakhotia for the purpose of laundering to project the said proceeds as untainted property; That the properties detailed below are likely to be concealed, transferred or dealt with in such a manner that, I have reason to believe that if no Provisional Attachment Order is passed in this case at this crucial stage, it may result in frustrating proceedings relating to confiscation under Chapter III of the Preventio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai Zonal Office of the Narcotics Control Bureau, statement of bank accounts, report forwarded by the Narcotics Control Bureau and statements of Smt. Asha Lakhotia in case of ECIR/04/MZO/07 dtd. 24.01.07 and on its examination, I have reason to believe- (a) the Shri Umesh Bangur, Bldg. No.11-B, Flat No.501, 502, Kalpak Estate, Antophill, Mumbai -400 037 is in possession of proceeds of crime; that part of the said money has been parked with Smt. Asha Lakhotia, that the said Smt. Asha Lakhotia had invested the money so received in shares held by the Demat Account No.1601480000009417 held with Infrastructure Leasing and Financial Services Ltd., Mumbai which is more particularly detailed below; (b) that the said Shri Umesh Bangur has been charged of having committed the schedule offence under section 23 27 (a) of the NDPS Act, 1985 in Complaint No.NDPS Spl. Case No.192/2006 dtd. 08.12.2006 filed by the Mumbai Zonal Office of the Narcotics Control Bureau; and (c) that the said Shri Umesh Bangur has invested the proceeds of crime through Shri Radhamohan Lakhotia for the purpose of laundering to project the said proceeds as untainted property; that the properties deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 931500 Total 1514645 4. As required by section 5(2) of the Act of 2002, the authorised Officer forwarded the copy of the Provisional Attachment orders alongwith the material in his possession to the Adjudicating Authority in the manner provided by the said provision. The Adjudicating Authority on receipt of the provisional attachment orders considered the question as to whether the provisional attachment orders were just and proper in exercise of power conferred under section 8(1) of the Act of 2002. The appellants and others, who were served with provisional attachment order filed their replies. The appellants had raised preliminary objection that the complaints were not maintainable and should be dismissed at the threshold. For, the sine qua non for proceeding against the person involved in money laundering is his connection with the proceeds of crime. If the same is absent as in the present case, the action is without authority of law. According to the appellants, the complaint as filed itself mentions that no proceeds of crime were generated by way of sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al was produced by the Appellants, who were obliged to do so, to persuade the authority to take the view much less prima facie view that money remitted from the account of Shri R.P.Modani was out of his legitimate earnings. On the other hand, the material on record would indicate that the amount in the account of Shri R.P.Modani was not legitimate. On this analysis the adjudicating authority opined that the money in question in the hands of the Appellants was proceeds of crime. It then adverted to three different stages before the provisional attachment property is finally confiscated under section 8(6) of the Act. Firstly, of issuance of provisional attachment by the Director or authorised officer of the Director in that behalf under section 5(1) of the Act. Secondly, confirmation of the provisional attachment by the Adjudicating Authority under section 8(3) of the Act. And lastly, final order of confiscation by the Adjudicating Authority under section 8(6) of the Act. The stage at which the present proceedings came up before the Adjudicating Authority was to confirm the provisional attachment order under Section 8(3) of the Act. It went on to observe that satisfaction of the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Modani. Smt. Madhubala Maheshwari and Smt. Nirmala Biyani @ Neelu (W/o Shri Shambu Prasad Biyani, another director of M/s. Royal Globel Exports Pvt.Ltd.) jointly hold 74% shares of M/s. OPM International Pvt.Ltd. Shri Manek Maheshwari of Royal Global Exports had paid the freight charges of the consignment of timber in which Cocaine was seized, inspite of the fact that the consignor was M/s. Mega International Pvt.Ltd., Shri Rasha Mohan Lakhotia and Smt. Asha Lakhotia w/o Shri Radha Mohan Lakhotia and Sister of Shri R.P.Modani. 14. R.P.Modani is residing at Bangkok and there is no proof that he has any business either at Singapore or in India. It is surprising that he has accounts NRE NRO with Baharat Overseas Bank, Fort, Mumbai. His status as certified by the Embassy of India Bangkok vide certificate No.67/2006 dated 29.6.06 is that of an employee of M/s. Trupti International as is available from record Annexure-5. There are huge remittances of US$ 1106235 and Euro 514791 were effected from Singapore into the NRE account of R.P.Modani. Out of said amount US$ 634140 was remitted by M/s. Royal Globel Exports Pvt.Ltd., Singapore and the remaining on the self basis. It is surprisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred in the guise of gifts etc. As an upshot of the above discussion and findings it is held that the properties, detailed in the respective provisional attachment orders, which are the subject matter of the above detailed respective complaints, are involved in money laundering, consequently this Authority hereby confirms the attachment of the properties detailed in the respective provisional attachment orders. Order that the attachment shall (a) continue during the pendency of the proceedings relating to scheduled offence before a Court; and (b) become final after the guilt of the person is proved in the trial Court and order of such trial Court becomes final. 5. Against this decision, the Appellants carried the matter in appeal before the Appellate Tribunal under Prevention of Money Laundering Act, New Delhi. The Appellate Authority upon considering the material on record and the relevant provisions answered the grounds of challenge against the Appellants. Before the Appellate Authority essentially two grounds were urged. First ground was that the order of provisional attachment and its confirmation by the Adjudicating Authority was on the basis of assumption an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the scheme of enactment since the appellants have exhausted one statutory remedy of appeal before the Appellate Tribunal against the order passed by the Adjudicating Authority, the remedy of appeal under section 42 of the Act of 2002 is in the nature of Second Appeal. However, we would not express any final opinion on this plea pressed by the Respondents. At the same time, we are in agreement with the argument of the Respondent that the findings on facts recorded by the Deputy Director, which has been confirmed by the Adjudicating Authority and in the appeal before the Appellate Tribunal being concurrent findings on the point in issue, the same cannot be lightly brushed aside by this Court unless it is shown that the same are manifestly wrong or perverse. 8. Be that as it may, the second plea taken before the Appellate Tribunal by the Appellants is a pure question of law. In that, whether action under Section 5 of the Act of 2002 can be proceeded only against a person charged of having committed a Scheduled Offence. We shall straightaway address this question. In doing so, we may have to keep in mind some of the provisions of the enactment such as section 2(p), which d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding ninety days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule: Provided that no such order of attachment shall be made unless, in relation to an offence under: (i) Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or (ii) Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985). (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants. 11. The question is whether section 5 can be invoked against a person who is not named as an accused in the commission of a scheduled offence? Sub-section (1) of Section 5 will have to be read as a whole conjointly with the other provisions of the Act already referred to hitherto, including section 8 thereof. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the purposes of the said section to resort to action of attachment of property if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such property until the criminal action for the scheduled offence is taken to its logical end against the accused named therein. The proceeds of crime means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Action, as annexed to the resolution S-17/2 adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990. It has come into being also on account of the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 which called upon the Members States to adopt national money-laundering legislation and programme. The term money-laundering has the same meaning assigned to it in Section 3 of the Act of 2002. It essentially refers to the tainted property which is derived from criminal activity relating to a scheduled offence. Such tainted property may travel at different levels or by way of circular transactions for being eventually projected as untainted property in the hands of or possession of person other than the person charged of having committed a scheduled offence. That involves direct or indirect involvement of person or persons other than the person(s) accused of having committed a scheduled offence. Such other person(s) may directly or indirectly attempt to indulge or knowingly assist or knowingly is a party or is actually involved in any proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew may defeat the legislative intent. In as much as, a person who has been charged of having committed a scheduled offence can successfully defeat the object of the enactment of attachment and confiscation of the proceeds of crime by transferring it to some other person who is not so involved with him in commission of stated scheduled offence. In our opinion, on fair reading of section 5 (1) read with section 8 of the Act, it postulates two categories of persons against whom action of attachment of property can be proceeded with. The first category is any person who is in possession of any proceeds of crime. A person falling in this category need not be a person, charged of having committed a scheduled offence. The second category is of a person who has been charged of having committed a scheduled offence. Besides, being charged of having committed a scheduled offence, that person is found to be in possession of any proceeds of crime. In either case, it is open to take recourse to section 5 of the Act if the specified Authority has reason to believe and reason for such belief is recorded in writing that the proceeds of crime are likely to be concealed, transferred or dealt with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeds of crime, no action of attachment and confiscation of the proceeds of crime can be resorted to qua him- albeit the proceeds of crime are in his possession. If the argument of the appellants were to be accepted, even the expression whosoever appearing in section 3 and 4 of the Act will have to be limited to person who has been charged of having committed a scheduled offence. The object of the enactment of 2002 would be completely defeated by such approach. Besides, the view that we propose to take is reinforced also from the purport of section 8 of the Act of 2002. It provides that the Adjudicating Authority if has reason to believe that any person has committed an offence under section 3, may serve notice upon such person calling upon him to indicate his source of his income, earning or assets, out of which or by means of which he has acquired the property attached under section 5(1) of the Act. Once again, the legislature has unambiguously used the term any person and not person charged of having committed a scheduled offence. Indeed, any person referred to in this provision is a person who has committed an offence under section 3 of the Act of 2002. He m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, tangible or intangible- and attempts have been made to show that the property is untainted. 16. We find force in the argument of the respondents that the legislation has predicated two parallel proceedings. One, with regard to the attachment of the properties derived and obtained from the proceeds of crime and its confiscation after the guilt of the person in schedule offence is established before the concerned Court. The second action contemplated by the Act is, prosecution and punishment for commission of offence covered by section 3 of the Act and upon being found guilty, impose punishment under section 4 of the Act. From the scheme of the provisions of the enactment under consideration, no property can be confiscated unless it is attached in the first instance. The provisional attachment is an emergent measure to be taken by the Authorised Officer upon being satisfied and having reason to believe that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. On the basis of material in his possession, the Authorised Officer upon identifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Royal Global Exports Pvt. Ltd., Singapore and (iv) M/s. S.S.M.S.Exports, Ecuador, S.A. It was revealed that all the three foreign based companies at Sr.Nos. (ii) to (iv) above were held by another holding company based in Singapore. It was further revealed that persons behind the said firms were not only common, but close relatives having interests in each others business. Inter-relation and nexus between them has been stated by the department as under : (a) The Managing Director of M/s. OPM International Pvt.Ltd., Shri Om Prakash Nogaja(accused No.1 in NDPS case) is a real brother of one of the Directors of M/s. Royal Global Exports Pte.Ltd. Shri Manek Maheshwari. (b) The other director of M/s. OPM International Pvt. Ltd., Shri Umesh Bangur (accused No.2 in NDPS case) is real brother of wife of Shri Manek Maheshwari i.e. Smt. Madhubala Maheshwari. (c) Shri Umesh Bangur is real brother of Smt. Trupti Modani wife of Shri R.P.Modani, who had remitted the proceeds of crime into his NRE Account and placed the same under the control of Shri Umesh Bangur by providing signed cheque leaves. (d) Smt. Madhubala Maheshwari and Smt. Nirmala Biyani (wife of Shri Shambhu Prasad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering of money. 18. We have already adverted to the order of provisional attachment and the same has been reproduced as a whole pertaining to the respective appellants. We have also reproduced the relevant part of opinion recorded by the Adjudicating Authority while confirming the order of provisional attachment. The Appellate Tribunal has upheld the opinion so recorded by the Authorised Officer as well as the Adjudicating Authority. That being concurrent finding of fact, needs no interference in the present appeals. We shall presently briefly indicate our reasons to sustain those decisions. The Appellate Tribunal has found that various parties i.e. companies, their directors and shareholders and other individuals involved in illegal import of 200 kgs. Cocaine are closely related and their activities are spread across international borders i.e. India, Singapore, Thailand, South America etc. Further, the funds remitted into the NRE account of R.P.Modani by M/s. Royal Global Exports Pvt. Ltd. and on self basis from Singapore and further transfer of these funds by way of gifts/share application money etc. are for no commercial/business/economic reasons. The bank's pay in slip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow revert back to the argument that the provisional attachment of properties is sans any material to show that the said properties are derived from the transaction of import of 200 kgs. of cocaine. Counsel for the Appellants vehemently argued that the Respondents have not been able to even remotely show that the properties under provisional attachment were acquired out of the sale proceeds of cocaine transaction in question, which in fact happened in June, 2006. Whereas the properties provisionally attached were already acquired by the respective appellants between November, 2005 to May, 2006. The argument though attractive has been rightly repelled by the Authorities below on the finding that the transaction resulting in scheduled offence may not be the first of its kind and there is reason to believe that similar transactions must have taken place in the past, which have gone unnoticed. The Authorities have adverted to the purport of Section 23 of the Act to buttress this opinion. Besides, it is held that the Appellants were not in a position to rebut the presumption about the interconnected transactions. Moreso, of the fact that the appellants were involved in projecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RE account of Shri R.P.Modani. That is not enough. It was necessary for the appellants to further establish that the amount so disbursed from the account of R.P.Modani was equally untainted amount. 20. Suffice it to observe that there was enough material before the Authority as also the Adjudicating Authority to initiate action under section 5 of the Act of 2002 of provisional attachment of the proceeds of crime. The Apex Court in the case of Aslam Mohd.Merchant v/s. Competent Authority ors. reported in JT in 2008(7) SC 446: 2008(14) SCC 186, in paragraph-29 has expounded that whenever a statute provides for reason to believe, either the reasons should appear on the face of the notice or they must be available on the material, which was placed before him. It is also open to the Authority to disclose the reason when called upon to do so. The question is whether the reasons recorded by the Authority in the provisional attachment order were sufficient to initiate action under section 5 of the Act. The provisional attachment order not only records satisfaction about the reasons to believe that the property in question in possession of the appellants was outcome of the proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was impugned before the Apex Court by way of appeal under Section 19 of the TADA Act was an order of provisional attachment during the pendency of the trial in relation to the TADA offence. The Apex Court opined that at this stage, it will not be appropriate to interfere with the conclusion reached by the designated court. Following the same principle, we have no hesitation in rejecting the challenge of the appellants. Significantly, complaint has been filed under section 3 of the Act of 2002 against the appellants, being Case No.1 of 2008, before the Designated Judge under the Prevention of Money Laundering Act, 2002, Sessions Court, Mumbai, dated 25/8/2008. It gives graphic description of the circular transactions resorted to project that the money transferred from the account of R.P. Modani disbursed to the appellants, was untainted property in possession of the appellants. On reading the said complaint as a whole, prima facie, there is enough material to indicate that the property attached in terms of provisional attachment order under section 5(1) of the Act possessed by the appellants herein was proceeds of crime. It is noticed that Umesh Bangur Accused No.3 has stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said opinion. As a result, no interference is warranted with the concurrent view taken by the three Authorities below on the factum of satisfaction and recording of reasons to believe that the properties placed under provisional attachment were proceeds of crime and that the same were likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. 21. The Appellate Tribunal has also noticed that there exists many enactments like The Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act, 1976(SAFEMA), Terrorist and Disruptive Activities (Prevention) Act, 1987, the Prevention of Terrorism Act, 2002, Narcotic Drugs and Psychotrophic Substances(Amendment) Act, 1988(NDPS)(Chapter VA), Code of Criminal Procedure(Amendment) Act, 1993(Chapter VIII A), which dealt with illegal acquired properties from specified criminal activities by providing for forfeiture/confiscation of illegally acquired properties. Even Counsel appearing for the parties have placed before us decisions under the respective enactments, which dealt with the purport of provisions regarding forfeitu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
