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TMI Blog2011 (9) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of provisional attachment does not disclose the satisfaction of the Authority that it has reason to believe that the properties were derived from proceeds of crime. This argument deserves to be stated to be rejected. In the earlier part of the judgment, we have already reproduced the provisional attachment order as well as the notice to show cause in its entirety. On conjoint reading thereof, it is amply clear that the Appropriate Authority has recorded satisfaction of having reason to believe that the properties were involved in money laundering and may have to be eventually confiscated, for which, were required to be provisionally attached. Hence, there is no substance even in this submission. - FIRST APPEAL NO.967 OF 2010, FIRST APPEAL NO.968 OF 2010 - - - Dated:- 29-9-2011 - A.M.KHANWILKAR AND R.Y.GANOO, JJ. Mr. A.A. Kumbhakoni with Mr. Ravi Gurnani and Mr. Sudhan Amre for the Appellant Mr. Rajeev Avasthi with Mr. M.S. Bhardwaj Mr. G. Hariharan JUDGMENT (PER A.M. KHANWILKAR, J.) 1. These Appeals under Section 42 of the Prevention of Money- Laundering Act, 2002 (hereinafter referred to as PMLA ) take exception to the common Judgment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nariman Point Fax: 22828930 Mumbai - 400 021 EXHIBIT C No. ECIR/04/MZO/2007 PROVISIONAL ATTACHMENT ORDER NO. I/2008 (Under Section 5 of the Prevention of Money Laundering Act, 2002) ........................................ 1. In exercise of the authorization dated 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, in-charge of Mumbai Zonal Office make the following order: 2. WHREAS 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 Zonal Office of the Narcotics Control Bureau, statement of bank accounts, statements of S/Shri Umesh Bangur, Vinay Kumar Nogaja, Om Prakash Nogaja and various documents gathered during the course of investigation in case no. ECIR/04/MZO/07 dated 24th January, 2007 and on its examination, I have reasons to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisionally attached for a period of 90 (ninety) days and further Order that you shall not remove, part with or otherwise deal with such properties without my prior permission. DETAILS OF PROPERTIES SR. NO. NAME OF THE BANK ACCOUNT NO. Type of Account Amount(Rs.) 1. BANK OF RAJASTHAN 06702411017229 Term Deposit 1,67,48,144 2. BANK OF RAJASTHAN 0670301115094 Current 23,44,051 3. HDFC BANK LTD. 0602320009475 Current 1,22,12,453 4. PUNJAB NATIONAL BANK 3731002104760684 Current 41,11,675 5. 3731002104761850 Current 10,62,893 6. 37310031000081939 F.D. 57,060 7. 373100PR00007724 F.D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plainant Dy. Director, Directorate of Enforcement, Prevention of Money Laundering Act, 2002 Mittal Chambers, 2nd Floor, Nariman Point, Mumbai-400021 Versus M/s. O.P.M. International Pvt. Ltd., . ... Defendant 30-D, 1st floor, 9-B, Wadia Building, Cawasji Patel Street, Mumbai. Above named complainant has filed a complaint under sub-section (5) of section 5 against you. You are called upon to indicate the source of your income, earning or assets out of which or by means of which you have acquired the property provisionally attached under sub-section (1) of Section 5 of the Prevention of Money Laundering Act, the evidence on which you rely and other relevant information and particulars and to show cause why all or any of such property should not be declared to be the properties involved in money-laundering, and confiscated by the Central Government. You are directed to appear before Adjudicating Authority at Jeevan Deep Building, 4th Floor, Room No. 25, Parliament Street, New Delhi in person or through an advocate/authorized representative, duly instructed on the 27th day of August Year 2008 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority then went on to consider the additional argument of the appellants that the appellant company is a separate legal entity. The authority distinguished the reported decisions relied by the appellants by observing that the said decisions were concerning the proceedings under NDPS Act, 1985 wherein the issue under consideration was one of forfeiture of illegally acquired properties. On the other hand, in the present proceedings, the question relates to only provisional attachment under the provisions of PMLA 2002. As per the Scheme of the present enactment, action of forfeiture would be resorted to when the Court of competent jurisdiction finally concludes that the properties involved in the case are proceeds of crime. At this stage, the properties are required to be secured by provisional attachment thereof, so that, the same is not transferred or concealed resulting in frustration of proceedings relating to confiscation of such properties in case the scheduled offence is proved. The Authority further observed that even if the appellant company is a separate legal entity, the fact that it is in possession of proceeds of crime makes the property liable for attachment to avo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appellants, in view of Section 24 of the PMLA. The Tribunal held that the provisional attachment proceedings commenced against the appellants by the Authority under the PMLA were inevitable, considering the fact situation of the case. The Tribunal distinguished the decision of the Apex Court in Aslam Mohammed relied by the appellants on the finding that in the present case, matter related to provisional attachment of properties under the PMLA and not with regard to forfeiture of illegally acquired property under the NDPS Act. The intent of provisional attachment of the disputed properties was to ensure that the same is not concealed, transferred or dealt with in any manner which may result in frustration of any proceedings relating to confiscation thereof under the PMLA. The Tribunal noted that the Scheme of PMLA is that if the person accused for scheduled offence were to be finally acquitted, the attachment of property shall cease to have effect and on the other hand, if the guilt of the accused person is proved and the order of the Trial Court becomes final, the adjudicating authority would proceed to confiscate the subject properties after giving opportunity of being heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, instead, noted that Smt. Madhubala Maheshwari is eldest sister of Umesh Bangur and is married to Manek Maheshwari, brother of O.P. Nogaja. Smt. Nirmala Biyani is wife of S.P. Biyani. Notably, both these NRI ladies have conceded in their share applications that they are housewives. Manek Maheshwari and S.P. Biyani are Directors of Royal Global Exports Pte. Ltd., Singapore. Manek Maheshwari paid freight charges of the consignment, in which, 200 Kgs. of Cocaine was seized, though the consignor was Megha International Pte. Ltd. The Company failed to produce evidence to prove the legitimate source of funds like source of income of the NRI investors, copies of their balance sheet, profit and loss account, Income Tax return, bank account, etc. The Tribunal also noted that, so far as persons outside India, i.e., Bangkok, Singapore, etc., are concerned, the Letter of Rogatory has been issued, and the investigation is in progress. The Tribunal, therefore, opined that the Appropriate Authority had reasons to believe that the property in question was proceeds of crime, necessitating order of provisional attachment as per the provisions of the PMLA. The Tribunal has also noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant provision of the PMLA, the Court opined that, in a given case, a person can be in possession of proceeds of crime, without his knowledge, that the property held by him is tainted. That person may not face prosecution. However, even in such a case, an order of attachment of the proceeds of crime can be resorted to, which may eventually result in confiscation of the property, depending on the outcome of the criminal action against the person alleged to have committed Scheduled Offence. We see no reason to depart from the said view. Furthermore, in the present case, appellant Om Prakash Nogaja is an accused in the Scheduled Offence, and both the appellants are prosecuted for offence under Section 3 of the PMLA. That trial is still pending. The concerned Court has already taken cognizance of the offence. The order taking cognizance dated 26th March, 2009, read with the prosecution case, as stated in the complaint, in particular, paragraph 51, shows that there is sufficient material to make out a prima facie case that all the accused have received proceeds of crime of value exceeding ₹ 30,00,000/-. There is allegation of commission of offence under Part A of the Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be presumed that the remaining transaction formed part of such interconnected transactions, unless otherwise proved to the satisfaction of the Adjudicating Authority. The appellants have not discharged the said presumption at the stage of provisional attachment order. Thus understood, there is no substance in the argument under consideration. For the same reason, the argument of the appellants that the respondents have not brought on record any past infraction of law on the part of the appellants; and, in particular, the Company or, for that matter, that the respondents have not explained as to how the goods as well as the money can flow in the same direction towards the Company does not take the matter any further for the appellants. 11. According to the appellants, out of the total investment made by Madhubala Maheshwari, a sum of ₹ 1,51,76,876/- came in the hands of the Company before coming into force of the PMLA, i.e., 1st July, 2005. As a result, the Authority could not have proceeded against the said amount. In the first place, on perusal of the judgments under appeal, it is noticed that this factual plea has been taken for the first time in the present appeals. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other funds of the Company, lost its identity of untainted money, more so the appellants having declined to avail of the opportunity offered to them to prove to the contrary. We are in agreement with these submissions of the respondents. Further, the issue already stands answered in the former appeals decided by this Court. The argument of the appellants that the opinion recorded in the earlier decision of this Court in respect of the same transaction is of no avail is devoid of merits. Once it is found that it is a case of inter-connected transaction, the presumption under Section 23 of the PMLA would come into play, and it was for the appellants to prove to the satisfaction of the Adjudicating Authority that the amount received from NRE Account did not form part of the inter-connected transactions. Accordingly, we agree with the finding recorded by the Tribunal that the remittance from NRE Account was modus operandi so as to project the amount as untainted property. 14. The next argument of the appellants is that the provisional attachment could not have been made without giving notice to the two ladies who made investment in the Company towards share capital or that the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the order of the learned Single Judge of this Court dated 10th August, 2000. That, however, does not mean that the Appropriate Authority could not have proceeded in the matter under the PMLA, which is a special enactment. Obtaining of permission of this Court before proceeding to issue order of provisional attachment of the amount governed by the order of this Court can be said to be a matter of propriety and prudence; but not obtaining such permission of the High Court does not result in action of the Appropriate Authority under the PMLA, being without jurisdiction. It was certainly not intended to frustrate the order of the High Court, but to further the purpose and object of the provisions of the PMLA, which, as aforesaid, is a special enactment. The effect of provisional attachment under the PMLA is that the property can be finally confiscated with the Central Government, in the event the accused person is found guilty by the Court of competent jurisdiction trying the Scheduled Offence. Such provisional attachment is imperative, as that would not only facilitate the confiscation of that property, but also secure the availability of that property for confiscation a ..... 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