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TMI Blog2015 (6) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... gment was reserved. 2. Brief facts to comprehend the dispute is - 2.1 That on the basis of complaint lodged by Shri Tushar Madhukar Kakde, Member Administrative Board, Pen Co-op Urban Bank Ltd, an FIR No. 34 of 2013, dated 22-3-2011, was registered by Pen Police Station, Dist-Raigad. In the complaint it was alleged that, cheating and fraud was committed on Pen Co-op Urban Bank Ltd. (hereinafter referred to as "Pen Bank") at its Pen (H.O), Pen, Wadkhal, Khopoli, Karjat, Uran, Matheran, Mohpada, Neral, Vaveshi, Pali, Roha, Kolad, Karjat, Shilphata, Ramwadi, Girgaum, Dadar, Vileparle during the period 2008 till 24-9-2010. The Pen Police Station, District-Raigad, Maharashtra investigated the matter and Charge sheet bearing No. 41/2011, was filed on 23-6-2011 in the Case No. 1/2011 before the Court of the Additional Sessions Judge, District & Sessions Court at Alibaug, under Sections 409, 418, 420, 465, 467, 468, 471, 477, 163 and 34 of IPC, 1860 for offence of fraud and cheating. Subsequently, Pen Police have also filed supplementary charge sheets in the said case, which are as under :- (i) Supplementary Charge sheet no. 78/2011, dated 30-11-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trict Central Co-op Bank Ltd., both Apex Co-op Banks. The Reserve Bank of India imposed penalty of Rs. 18.18 crores on Pen Bank for making false representation to RBI. 2.3 That the appellant, Shri Purshottam V. Joshi, CEO of Pen Bank, allegedly diverted the legitimate funds of investors of Pen Bank into the bogus loan account of one, Shri Toona Satishchandra Sharma, and later withdrew the said amounts by issuing DD's/pay orders and utilized the proceeds for their own benefits during the period 2008-09 and 2009-10. Later on Rs. 16 crores were further siphoned off from the benami loan accounts and diverted by Hawala to Kolkata, Delhi and other places and RTGS/cheques were credited to account of Shri Prem Kumar Sharma and bogus bills were generated for showing that the funds received in his account were by trading on Commodity Exchange/shares etc. 2.4 That Shri Shishir Dharker, Chairman of Pen Bank and Shri Prem Kumar Sharma, Expert Director of Pen Bank entered and hatched a criminal conspiracy to divert the funds held in Pen Bank into bogus cash credit (loan) accounts in Pen Bank. As part of said conspiracy they were aided and abetted by Pen bank officials namely, Shri Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have account with RBI; that as a CEO, he was handling day to day business of the bank and was answerable to the Board of Directors. 2.7 The appellant stated that in the month of March 2011 an FIR was lodged at Pen Police Station on the basis of complaint filed by Shri Tushar Kakde, Administrator of Pen Co-op Urban Bank Ltd. in connection with fraud in Pen Co-op Urban Bank Ltd.; that he was arrested by Pen Police on 1st April, 2011 and subsequently he was released on bail on 8th November, 2011; that the entire of Board of Pen Co-op Urban Bank Ltd. including Chairman, Shri Shishir Dharker were also arrested. The criminal case No. 1/2011 is going on at the Alibaug Sessions Court; that Shri Shishir Dharker was Chairman of Pen Co-op Urban Bank Ltd. and as such his instructions even if oral were required to be followed by the executives. However, he did not interfere with day to day working of the bank; that office of Shishir Dharker was situated at Janki Centre, Andheri. He visited Pen H.O. only at time of meetings; that Shri Prem Kumar Sharma was Expert Director of Pen Co-op Urban Bank Ltd. and close confidant of Shri Shishir Dharker therefore, most of times he received instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dist-Raigad; that, Shri Mohan Shetty was an estate agent who identified the agricultural land at Panvel taluka only; that another estate agent, Shri Ganesh Kanade identified agricultural land for purchase in Pali Suddhagad taluka and Roha taluka; that Shri Ganesh Kanade was introduced by Girish Gupte to him at Pali, Dist-Raigad; that Ganesh Kanade's contact address is village Karsundhe, Tal-Pali Suddhagad, Dist-Raigad; that the deeds of land purchased by Pen Urban Co-op Bank Ltd. were in his possession till they were given as collateral to MSTC and partly to RDCC Bank; that the agricultural lands purchased at village Nere, Vichumbe and Akurli at Panvel taluka were brokered through Shri Mohan Shetty and the registration was carried out at Panvel Registrar office. The agricultural lands purchased at village Koshombe, Taluka-Pali Suddhagad were brokered by Shri Ganesh Kanade and the registration was done at Pali Registrar office. The agricultural lands purchased at village Vave, Tarfe, Asre, Siddheshwar and Gherasuddhagad Taluka-Roha were brokered through Shri Ganesh Kanade and the registration was done at Roha Registrar office; that he did not recollect how much amount was paid throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which did not have any account with Pen Bank, that against the said transaction, bank used to get credit in the form of either demand draft or RTGS in some other loan (current/cash credit) account opened in Pen Bank after deduction of commission charges on account of the discounting of cheques/DDs; that the said practice /modus operandi was being carried out within knowledge of Chairman, Shri Shishir Dharker, and Expert Director, Shri Prem Kumar Sharma; that the DD's issued from the loan account of Pen Bank were handed over to a person of Shri Sunil Dutt Sharma, chartered accountant introduced by Shri Prem Kumar Sharma; that the bank transaction statement in respect of aforesaid accounts opened during the period 2004 to 2008 when he was CEO of Pen Bank with effect from 27-3-2004; that the accounts were opened for routing the funds of Pen Bank for its day to day operations as during this period Pen Bank was ever greening of the books of account in case of existing NPA loan accounts of the bank; that have seen the bank transaction statement in respect of aforesaid accounts opened during the period 2004 to 2008. He stated that he confirms that he was CEO of Pen Bank with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct-Raigad; that he was not aware of particulars of land properties, Area, mode of payments etc. that there were several other properties purchased in his name, as well as in name of his wife which were not mentioned in the details shown and confirmed by him and payment for purchase of said properties was also made by Pen Urban Coop Bank; that, he was told by Shri Purshottam Joshi, CEO, Pen Co-op Urban Bank Ltd. that the land was to be shown as purchased out of loan given to him from the bank; that accordingly Shri Purshottam Joshi made him sign some loan application; that he do not know how much loan was credited to said loan account and what was the payment given from the account to the sellers of said agricultural lands; that the land was identified by Shri Mohan Shetty and Shri Ganesh Kanade at the behest of Shri Purshottam Joshi, CEO of Pen Urban Co-op Bank Ltd.; that he was never informed details thereof like the total area of land nor its purchase cost; that he was not aware of the mode of payment made towards the purchase of the said agricultural land; that the purchase deeds were registered and collected and handed over to Shri Purshottam Joshi by Shri Mohan Shetty and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eshpande. The Pen Bank's letter further clarified that the account opening forms and other KYC documents were not available with Pen Bank. The scrutiny of bank transaction accounts indicated that the said cash credit/loan accounts were opened and Pen bank's funds were sourced into it and some of these funds were then routed for day to day operations and also ever greening the books of account of Pen Bank's existing NPA accounts and part of said funds were utilized for making payments towards purchase of agricultural land at Panvel Taluka, Dist-Raigad. In some cases even the bogus cash credit/loan accounts were squared off by transferring deposits from other bogus cash credit/loan accounts opened in Pen Bank and thereafter the said accounts were closed. The details of the bogus cash credit/loan accounts are detailed in table below :- Name of the account Holder Particulars of account Branch Vishaka Traders CC No. 591 Dadar Pandit Traders CC No. 352 Vile Parle Vishaka Traders CC No. 591 Dadar Supriya Enterprises CC No. 308 Vileparle Suraj Traders CC No. 625 Dadar Makrand Enterprises & CC No. 626 Dadar Sanjivani Associates CC No. 627 Dadar Space Mercantile Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , from the customers of Pen Bank in good faith and thereafter the said bogus cash credit (loan) accounts were opened without their knowledge for routing the Pen Bank funds, including closing of existing NPA accounts and utilizing the part of Pen Bank funds for purchase of land in various places in Raigad District. Investigation revealed that the officials of Pen Bank have misused the KYC documents obtained in good faith from Pen Bank's customers and opened accounts in name of the bank customers using the KYC documents. Demand drafts were issued from said bogus cash credit/loan accounts and were utilized for purchase of immovable properties i.e. land at villages Nere, Akurli and Vichumbe at Panvel in name of Shri Shailesh Deshpande, a confidant/acquaintance of Shri Shishir Dharker, Shri Prem Kumar Sharma and Shri Purshottam Joshi, appellant. In their statements recorded under Section 50 of the PMLA, 2002, Shri Purshottam Joshi, Girish Gupte, Shri Shailesh Deshpande, have admitted that the land in name of Shailesh Deshpande have been purchased out of funds of Pen Bank and that the said properties are properties of Pen Bank. Shri Shishir Dharker and Shri Prem Kumar Sharma in their sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of MSTC, a Public Sector Enterprise of Govt. of India. Further MSTC was to release advance payment to the associate exporter up to 80 % of invoice value on confirmation of receipt of goods by overseas buyers and release remaining 20% (net of MSTC's entitlement and expenses) after realization of export proceeds. Accordingly, gold jewellery was exported on behalf of MSTC by M/s. Ushma Jewellery & Export Packaging Pvt. Ltd. in 2007-08 and 2008-09. The export proceeds for 2007-08 was realized by MSTC. But exports proceeds valued at Rs. 132 crores for 2008-09 were not realized. Therefore, MSTC called on Shri Vivek Vaidya and asked him to help them in realizing the export proceeds. Thereafter, he put pressure on Shri Prem Kumar Sharma, Ex-Expert Director of Pen Urban Co-op Bank Ltd., that MSTC was pressuring him to give security against non-realization of export and accordingly Shri Prem Kumar Sharma agreed to offer FDR of Rs. 52 crores issued from Pen Bank as security to MSTC on behalf of M/s. Ushma Jewellery & Exports Packaging Pvt. Ltd. Since export proceeds not realized thereafter also, MSTC entered into another Memorandum of Agreement dated 4th March, 2010 with M/s. Ushma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2002 (2 of 2013). Further the proceeds of crime generated out of the said scheduled offences of cheating were layered and integrated by way of purchase of land in name of Shri Shailesh Deshpande and as per directions/instructions from Shri Shishir Dharker, Shri Prem Kumar Sharma and Shri Purshottam Joshi, appellant, Shri Shailesh Deshpande gave his No Objection Certificate in respect of the immovable properties mentioned in the schedule above and placed it as collateral security with MSTC on behalf of M/s. Ushma Jewellery & Packaging Exports Pvt. Ltd. of Shri Vivek C. Vaidya, with sole intention to conceal its tainted origin and projecting as untainted property. 3. In these facts and circumstances it was reasonably believed that the depositor's funds held with Pen Bank was systematically diverted/transferred into fake loan accounts held in Vileparle and Dadar branches of Pen Bank. The said fake accounts were opened in Vile parle and Dadar branches of Pen Bank on basis of forged/fabricated documents and without following KYC norms mandated by RBI. These facts have been confirmed by Pen Bank officials namely, CEO, Purshottam Joshi, appellant and DGM, Shri Girish Gupte. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of the complaint and other relevant documents were supplied to him. The plea of the applicant before the Adjudicating Authority was that he joined the bank in 1987 and was elevated to the post of CEO from 26-3-2004; he always worked at pen Bank Head office; as a CEO, he was handling day to day business of the bank and was answerable to the Board of Directors; it was his duty to administer, supervise and control all the branch operations of the bank and implement the decisions taken by the Board and Committee; Shishir Dharker did not interfere with day to day working of the bank; he knew Shri Shailesh Deshpande, an account holder (client) of Pen Bank; bank had given loans and advances to Shailesh C. Deshpande; he was aware that land was purchased in the name of Shailesh C. Deshpande and two other persons; the payment for purchase of land were made by issuing demand drafts from various fake loan accounts opened in the Pen Bank; original land agreements were in possession of Pen Bank; appellant had introduced him to the brokers of agricultural land for its purchase; original land documents were handed over to appellant and were in possession of the bank; appellant had asked Shailes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had tendered his resignation on 1-9-2008. The appellant was the Head of the Bank for day to day operations and is responsible person and he was expected to act rationally and in accordance with law and not as per any wrong advice tendered by any other person. Serious discrepancies were found in the statement of the CEO before the officers of PMLA and statement tendered by him (the CEO) before Police Authorities or evidence, including evidence in the form of Affidavits. Charge Sheet has been filed by the Pen Police before the Court and unjust and untruthful statement of the CEO after considerable lapse of time, as the same CEO did not allege anything of similar nature before the Police authorities in the earlier proceedings in the investigation conducted by Pen Police, will not make the others liable. 8. The Adjudicating Authority also noticed that in the complaint 26 properties had been provisionally attached whose value has been arrived at on the basis of an authenticated money trail provided by the bank and on that basis the value is Rs. 21,16,00,171/-and not Rs. 24,44,77,711/- which value is based on calculation mistake. The Adjudicating Authority also noticed a few more c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the appellant and the stand taken before the Adjudicating Authority, it appears that the appellant is not claiming any right in the properties which have been attached. 12. The appellant, though not claiming any rights in the properties which have been attached, has filed the above noted appeal contending inter alia that all the acts done by him were in discharge of his official duties and responsibilities as Chief Executive Officer of the bank and opening and closing of accounts for purchase of properties cannot be termed mala fide. He stated that the truth has not been concealed by him and he has conveyed the entire truth in the affidavits and other documents filed by him before various authorities. He has alleged that the accounts were not open to siphon off the money of the bank but to purchase the properties and as the properties could not be purchased in the name of the bank, therefore, the properties were purchased in the name of one of the customers and deeds of properties were in the bank. According to the appellant the properties were mortgaged to RDCC Bank Ltd. to secure inter Bank mortgage. 13. The appellant has alleged that he has submitted an affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill have to come to an independent finding on the basis of documents and evidence produced before them, whether the offences alleged against the appellant have been made out or not. On the basis of the observation made in the impugned order passed under Section 8(3) of PMLA, the appellant cannot be convicted and sentenced in the criminal cases. The apprehension of the learned counsel is, therefore, without any legal basis in the facts and circumstances. In the circumstances, even prima facie no inference can be drawn in favour of the appellant on the allegations made by him. In any case in the present proceedings, this Tribunal is concerned with whether the attachment of the properties confirmed by the Adjudicating Authority is entitled to be sustained or not. Merely on the allegations of the appellant that he cannot be held liable for the illegalities committed, the properties which are the proceeds of crime cannot be released from attachment on this ground raised by the appellant. 16. The legislation has predicated two parallel proceedings. One, with regard to the attachment of the properties derived and obtained from the proceeds of crime pending investigation and its conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the crime. The fact that the respondents could have acted only if there was reason to believe that a person is in possession of proceeds of crime does not mean that the authorities at this stage are obliged to prove the fact beyond reasonable doubt that the property in possession in fact was proceeds of crime. All that the authority is required to show is that there was "substantially probable cause" to form an opinion that the property under attachment is proceeds of crime. In the present appeal there is not even an attempt by the appellant to show that the lands which were purchased from the money of the bank which were drawn from the bogus accounts and the lands have been purchased in the name of the customer, are not the proceeds of crime. The pleas and the grounds will not entail quashing of the order of confirmation passed by Adjudicating Authority of the properties which are apparently proceeds of crime. 19. Perusal of Chapter III of PMLA also reveals that the orders passed under it are interlocutory in nature and such order do not decide finally whether an offence has been committed by an accused under Section 3 of the Act for money laundering nor such orders passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged against him or not' and 'whether he opened the bogus accounts and due money from them to purchase the land in the interest of the business of the bank'. 21. This is also apparent that the properties which have been attached are not in the name of the appellant. The appellant himself has claimed that the properties attached are the properties of the bank though in the name of other persons and those persons are ready to transfer those properties in the name of the bank. Whether this will absolve the appellant of his acts or not is not to be decided by this Tribunal while considering whether the confirmation order of the properties is sustainable in the facts and circumstances and in law. 22. No other plea or proposition has been raised or canvassed by the counsel for the appellant in the appeal except those which have been considered and dealt with in the appeal. 23. The Appellant in the facts and circumstances is not entitled to seek quashing of order of confirmation, impugned by the appellant before this Tribunal on any of the grounds as raised by him. No illegality or infirmity in the order challenged before us has been pointed out or canvassed successful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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