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TMI Blog2017 (8) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... far as registration of sale deed is concerned, the same has not been registered. We agree with regard to the argument that the FIR in the matter was registered on 31.01.2008 and the schedule offence were added on 01.06.2009, the same have no force as the units in questions were sold only in the year-2011. As regards the other arguments of the appellant, the same have no force as each and every plea raised by the appellant before us has been dealt in the impugned order. There is no infirmity in the impugned order. We find no force in the arguments of the appellants that the impugned order dated 10th July, 2012 is arbitrary, unreasonable, high handed, only without jurisdiction and illegal and void. There is no infirmity in the order, we have passed a detailed order in the connected appeal. - MP-PMLA-2023/AHD/2015 (U/s 35) MP-PMLA-244/AHD/2012 (Stay) & FPA-PMLA-387/AHD/2012 - - - Dated:- 20-6-2017 - Justice Manmohan Singh Chairman, Shri Kaushal Srivastava Member And Shri Anand Kishore Member For the Appellant : Shri Suryakant Singla, Advocate For the Respondent : Shri Rajeev Awasthi, Advocate JUDGMENT FPA-PMLA-387/AHD/2012 1. The appellant has filed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hal House. 2.1 In 1997, Vishal Exports Overseas Ltd. (VEOL) took financial assistance from a consortium of Banks led by State Bank of India. In order to secure the loan, 16 units in Vishal House (out of total 19 units) were mortgaged to SBI and other constituents of the consortium. 2.2 In 1998, Punjab National Bank joined the consortium by sanctioning working capital facilities to VEOL. In 2005-06, Punjab National Bank sanctioned additional funds to VEOL. As VEOL defaulted in payments of its dues, SBI and other consortium banks filed recovery proceedings against VEOL and the guarantors before the Debt Recovery Tribunal, Ahmedabad. 2.3 On 31.01.2008, CBI registered a criminal case under various provisions of IPC and PC Act against the Directors of VEOL, the then manager PNB, then ZONAL Manager and other unknown persons. It was alleged that they had entered into a criminal conspiracy to cheat PNB in the matter of obtaining short-term loan of ₹ 50 crore on the basis of misrepresentation, during the period 2005 to 2006 by abuse of the official position. The respondent however omitted to consider that against the sanctioned sum of ₹ 150 crore, a sum of ₹ 120 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 5 and 6 in respect of 16 units of the appellant and 3 units of others in Vishal House and the same was registered at S.No. 12069/2011 with the Sub- Registrar, Ahmedabad. Possession of all the 19 units was then handed over to respondents 4, 5 and 6 and a letter to this effect was executed and notarized. 2.11 On 10.12.2011, Sale deed was drawn on requisite stamp papers and signed by the appellant, other co owners and respondents 4, 5 and 6. Anand Owners Association also signed the sale deed as confirming party. Then registration charges were deposited and the sale deed was presented to the Sub-Registrar on 12.12.2011 for registration. The instrument so presented was accepted by the Sub Registrar and acknowledgment confirming refused to register the sale deed contending that he had been restrained from registering any sale deed in respect of the stated property by letter dated 21.07.2011 by the office of the Directorate of Enforcement. No other objection was raised by the Sub Registrar except the letter dated 21.07.2011 of the ED. In the letter dated 21.07.2011, the Enforcement Directorate had on the basis a circular of 30.06.2010 of Inspector General of Registration, asked the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 2012 that the present appeal has been filed inter alia mainly with the following grounds: (i). The Adjudicating Authority had committed a patent error by holding that there was a reason to believe on the part of the respondent no. 1 that the Vishal House property were proceeds of crime and by holding that sufficient material existed in the form of the charge sheet and accompanying documents and materials gathered by the Joint Director through his investigation including statements of Directors on the basis of which reason to believe as envisaged under section 5(1) of the Act could be formed and has completely ignored the following which would establish that the respondent no. 1 could not, on the basis of the material available before him, have had any reason to believe that the Vishal House property was purchased from out of proceeds of crime as there was absolutely no evidence or material to show that the Vishal House property was purchased out of proceeds of crime. The charge sheet and documents accompanying it did not allege or even provide a shred of evidence indicating that the Vishal House property was purchased out of proceeds of crime. There is not even a remote li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration towards the Vishal House Property. It is clear that there is no nexus between the loans valid of by the respondent no. 2 from PNB or any other bank and the source of the funds paid by the appellant to SBI towards the sale consideration for the Vishal House property. (vi). The respondent no. 1 has no jurisdiction to attach any property unless the charge sheet specifically alleged commission of a scheduled offence which has resulted in deriving or obtaining that property. The Provisional Attachment Order and the complaint are based on conjectures and surmises with regard to the source of funds from which the respondent no. 1 purchased the subject property and proceed on the assumption that certain funds which could have been utilised by the respondent no. 2 to repay the banks were given to other companies. When there was no nexus whatsoever between funds sanctioned by PNB to the respondent no. 2 and the funds utilised by the appellant for making payment to SBI towards purchase consideration for the Vishal House property and the sources of funds utilised for purchased the said property were independent of the loans given by PNB to the respondent no. 2 and there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not charged of having committed any scheduled offence and the fact that, even assuming Section 24 is applicable, the appellant has sufficiently discharged the burden by showing the source of money from which the property was purchased. (xi). The action of issuing the letter dated 21.07.2011 was illegal and no such instructions/directions as were sought to be issued by the said letter could have been issued and hence, in order to get out of this situation and to frustrate the proceedings already pending in the Hon'ble High Court of Gujarat in respect of the said letter dated 21.07.2011, the Provisional Attachment Order was passed as an afterthought and the allegations made in the same and in the complaint are an afterthought and are clearly made in order to create a story to justify the action of passing the Provisional Attachment Order. (xii). The Vishal House property was sold by SBI in a public auction under the Securitisation Act for recovery of the dues of the consortium, the property exhausted itself for this purpose and could not have been attached under the Act and it was only the monies, which were allegedly obtained by commission of a scheduled offence, which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.06.2010 Chief Inspector of Registration, Gujarat State, Gandhinagar issued a Circular conveying that where properties have been attached under section 5(1) of the Prevention of money Laundering Act, 2002, the properties mentioned in the Attachment order should not be registered without prior approval of the concerned Department. 12. 13.12.2010 A Sum of ₹ 6,00,000/- was initially paid to M/s. JMD Media Pvt. Ltd. 13. 08.04.2011 Appellants through their advocates gave a notice in the newspapers as regards any person having objection to the sale of the said property. 14. 21.07.2011 Assistant Director, Enforcement issued a letter to the Joint Sub-Registrar, Ahmedabad, conveying that the authority should not allow transfer/sale of the property to any person/party without prior approval of the Enforcement Directorate and that in case any sale /transfer is allowed it would compel the authority to conclude that by allowing registration of property by way of sale /transfer /al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. 10.01.2012 Sub-Registrar, Ahmedabad-III addressed a letter to Enforcement Directorate seeking clarification. 23. 30.01.2012 As The Sale Deed Was Not Being Registered By The Sub-Registrar, Appelalnts Filed A Writ Petition Bearing SCA No. 1059 Of 2012 In The Hon ble Gujarat High Court praying for various reliefs on which the Hon ble Court was pleased to issue notice. 24. 15.03.2012 Joint Director, Enforcement was pleased to issue provisional attachment order no. 2 of 2012 attaching the property. 25. 11.04.2012 Joint Director, Enforcement filed a complaint bearing Original Complaint No. 133/2012 in provisional attachment order No.02/2012 under section 5(5) of prevention of Money Laundering Act, 2002. 26. 10.07.2012 Adjudicating authority was pleased to pass an order confirming the provisional attachment of property. 27. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of judgment is being given by us in above appeal. 10. Admittedly, 19 units in Vishal House that were purchased by Kantaben, Dipak S Mehta, Subhashchandra, Subhashchandra C Mehta HUF, Pradeep S Metha, Vishal Plastomer Pvt. Ltd., Drishtkumar D Mehta, Jaikumar D Mehta, Vishal kumar P. Mehta in the year 1991 cannot be costrued to be proceeds of crime at the time of purchase. These were purchased by monies raised form legitimate sources. Similarly, these units were not proceeds of crime when these were mortgaged with the Bank to secure the loan taken by VEOL. These units were also not proceeds of crime at the time of taking over by the State Bank of India under Securitisation Act in September, 2008. The units can also not be construed to be proceeds of crime when bids were invited for sale. These units were purchased by the appellant for a consideration of ₹ 1,89,00,000/-. The source of this amount is traceable to loans received from different companies in 6 different trenches whose details are as below:- ₹ 10,00,000/- ₹ 17,00,000/- ₹ 48,00,000/- ₹ 18,10,000/- ₹ 2,15,000/- ₹ 67,80,000/- ₹ 26,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been recorded in the PAO is only the subjective satisfaction. Besides, there is no nexus between the funds sanctioned by PNB to VEOL and the funds utilized by the appellant in making the payment to SBI towards the purchase consideration. Similarly, there was no material before the Adjudicating Authority for formulating the reason and then issuance of the notice. In fact, the attaching authority by itself did not have any material on the basis of which it could formulate the reason to believe and hence no material could have been placed before the Adjudicating Authority. The issuance of notice under Section 8 of the Prevention of Money Laundering Act, by itself was bad in law. 13. It is submitted by the appellant that offences under Sections 120B, 420, 471 and 477A of the Indian Penal Code and Sections 13 (2) of the Prevention of Corruption Act were not scheduled offences on the day they are alleged to have been committed. FIR was lodged 31.01.2008 and the offence if any ought to have been committed prior thereto. In fact, the allegation is that the loans were taken by adopting dubious means in 2005-06. The alleged offences came to be incorporated in the schedule by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue restraint order before passing of the provisional attachment order. It shall not be out of place to state here that the Sub-Registrar not only refused to register the sale deed but illegally retained that instrument it is respectfully submitted that provisional attachment order was passed much thereafter. The direction to the Sub-Registrar was absolutely illegal and void ab initio and could not be acted upon. It is settled law that in order passed by any authority or Court without jurisdiction is coram non-judice. It is non nest-void ab inito. It s invalidity can be set up whenever it is sought to be enforced or acted upon. The defect of jurisdiction sticks at the very authority. 15. The submission of the appellant is that whatever was necessary for execution of the sale deed had already been done by it and nothing further remained to be done by the appellant. Only a ministerial work had to be carried out by the Sub-Registrar for registering the property. In addition to what has been submitted, the appellant also adopts the submissions made on behalf of the purchasers Respondents 4, 5 and 6. 16. During the course of hearing, the appellant placing reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day activities of the company and that all such things are handled by the said Shri Pradeep Mehta and Shri Deepak Mehta. The said M/s. JMD Media never carried out any objects for which it was set up as per Memorandum and Articles of Association. POCs were diverted and rotated among a number of group firms floated in this manner by Shri Deepak Mehta and Shri Pradeep Mehta. Shri PravinHalwadiya was also director of various other group companies of Vishal Exports, i.e. Navkar Green Power, Alive Hospitalities, FFR Software, etc. Smt. Falguni Bhatt was also director of other Vishal Group firms, i.e. Alive Hospitalities, VikalpRasayan, Mandakini Hydro Power, DF Hydro Power, etc. Her husband Rakesh Bhatt was also director of M/s. FFR Software, etc. along with Shri PravinHalwadiya. It revealed that the property i.e. Vishal House, Ahmedabad was owned by M/s VEOL its Directors and relatives thereof. The subject property was auctioned by the State Bank of India and the same was purchased by M/s JMD Media Private Limited whose one of the director was Shri Pravin T. Halvadiya (childhood friend of Shri PradeepS.Mehta). During investigation it revealed that JMD Media Private Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans taken by the said company from different sources, and that Shri Deepak Mehta and Shri Pradeep Mehta could only answer the same. In his statement dated 27.12.2011, Shri Pradeep Mehta admitted to have provided funds to M/s. JMD Media and other group firms for purchase of subject properties. In view of the above, it was contended that the nexus between the appellants and VEOL is proved beyond reasonable doubt and therefore, the present appeal should be dismissed. 19. We have considered the written submissions and the oral arguments made by the appellant as well as the respondent. As regards the appellant s contentions that reasons to believe were absent in the instant case, a perusal of the show cause notice confirmed the arguments of the respondent that the reasons to forming to such believe was on the basis of sufficient material existing in the form of CBI Chargsheet alongwith accompanying documents as well as material gathered by the Joint Director through his own information including the statement of Directors of various companies do find place in the said showcause notice. The other contention of the respondent that the fact that the designated court had taken co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the registration of sale deed need not be allowed as the property in question had been attached u/s 5(1) of the Prevention of Money Laundering Act, 2002. 23. As regards the appellant s other contention that the execution of the sale deed dated 24.10.2011 had resulted in the sale/transfer of the said property, it was argued by the respondent that the said agreement dated 24.10.2011 was a sham document prepared subsequent to a letter dated 21.07.2011 of the Enforcement Directorate issued to the Joint Sub-Registrar not to allow transfer/sale of any property to any person/party without prior approval of the Enforcement Directorate. In support of his contention that the said agreement dated 24.10.2011 was a sham document, the learned counsel for the respondent place reliance on the following facts:- (1) After having paid a sum of ₹ 6 lakhs to M/s JMD Media Pvt. Ltd. on 13.12.2010, it was only in April, 2011 that the Respondent 4,5 6 through their Advocates had given a notice in the newspaper as regards any person having objection to the sale of the said property and implying hereby that the fact that there was some issue relating to the property in question was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was registered on 31.01.2008 and the schedule offence were added on 01.06.2009, the same have no force as the units in questions were sold only in the year-2011. As regards the other arguments of the appellant, the same have no force as each and every plea raised by the appellant before us has been dealt in the impugned order. There is no infirmity in the impugned order. 26. In view of the facts and circumstance of the case, we find no force in the arguments of the appellants that the impugned order dated 10th July, 2012 is arbitrary, unreasonable, high handed, only without jurisdiction and illegal and void. There is no infirmity in the order, we have passed a detailed order in the connected appeal. The operative part of order pertaining to the same property Vishal House is read as under; 43. In view of the facts and circumstance of the case and the discussion hereinabove, we find no force in the arguments of the appellants that the impugned order dated 10th July, 2012 is arbitrary, unreasonable, high handed without jurisdiction and illegal and void. We therefore uphold the impugned order. 43.1 At the same time, it is observed that the appellants have already pai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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