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TMI Blog2019 (5) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... e-Sheet dt. 07.03.2016 came to filed by CBI for the offences punishable under section 120 B, 409, 420, 467, 468, 471 of IPC and section 13(2) r/w 13(1) (c) and 13(1) (d) of PC Act against Bharat Bomb, Shankar Khadelwal, Vipul Kaushik, Santosh Kumar Gupta and Usha Gupta. Investigation against Satish Kumar, Sanjiv Kumar, Deshraj Meena, Adarsh Manchanda, Awadesh Tiwari, Piyush Jain and Vineet Jain is shown to be pending. ECIR dt. 11.07.2016 came to be registered by the Enforcement Director as the offences under section 120 B, 420, 467 and 471 of IPC and section 13(2) r/w 13(1) (d) of PC Act are the scheduled offences. The Charge-Sheet reveals that without requisite KYC documentation, over 386 bank accounts were opened by the suspects in the said three branches of Syndicate Bank at (i) Malviya Nagar branch, Jaipur, (ii) M.I. Road branch, Jaipur and (iii) Bapu Nagar Branch, Udaipur by using identification documents of genuine account hodlers in other banks with the nexus of bank officials for diverting the bank funds to the tune of 1055.79 Cr. to various destinations by adopting three different modus operandi i.e. (i) discounting of forged cheques, (ii) withdrawing money through over-dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of companies; Himanshu Verma & his companies; Pavitra Kothari, family member & his companies for investment/loan purpsoe by way of complex maze of financial transactions. Bharat Bomy through the accounts of his associates, and his fictitious firms transferred about Rs. 231.20 Cr. in accounts of Shankar Lal Khandelwal of Guman Group, his family members and his companies out of the Proceeds of Crime generated from Syndicate Bank Fraud and out of the above fund about Rs. 103.07 Cr. has been repaid by Shankar Lal Khandelwal of Guman Group, his family members, his companies and more than Rs. 128,13,64,438/- is still outstanding. Further, Shankar Lal Khandelwal committed fraud aggregating to Rs. 58,22,00,000/- by availing fraudulent housing loans in the name of his associates, employees, family members by showing illicit booking of flats in various projec ts of Guman Group. That in aggregate Shankar Lal Khandelwal of Guman Group, his family members and his companies are beneficiary of more than Rs. 1,86,35,64,438/- which are Proceeds of Crime generated out of Syndicate Bank fraud. Further, Pavitra Kothari, his father Daulat Raj Kothari and his company M/s. G.S. Build Estate Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger, Syndicate Bank (Retired) and his family members (xiii) Movable & Immovable properties registered in the name of Deshraj Meena, Chief Manager (Suspended), Syndicate Bank and his family members (xiv)Immovable properties of Himanshu Verma and his companies (xv) Immovable properties of Pavitra Kothari, Daulatraj Kothari, Priya Kothari (xvi) Vill No. 40, Pafrth City Kalwar Road, Jaipur registered in the name of Mahendra Meghwal and cash of Rs. 66,88,400/- seized by CBI from Mahendra Meghwal (xvii) Plot No. A-5, Airport Enclave (Airport Plaze Extension) Tonk Road, Jaipur admeasuring 7276.40 Sq. Mtrs in the name of M/s. A. Gangwal Real Estate LLP (xviii) Proceeds of Crime available in various bank accounts of different firms/persons whose accounts were used by Bharat Bomb in defrauding Syndicate Bank (xix) Proceeds of Crime available in various bank accounts of different firms/persons controlled by Shankar Lal Khandelwal. f) It is evident that prime facie the Defendants are in possession of the proceeds of crime and/or have committed the offence of money laundering punishable under section 4 of PMLA. g) The Defendants 1 to 127 named in the OC are required to be heard and called u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, basis which the Secured Property has been attached, is that the Accused obtained 43 fraudulent housing loans from Syndicate. Fraudulent housing loan in the name of Sushila Agarwal (who was not even the registered owner of the property) against the Secured Property was disbursed by Syndicate Bank on 01.06.2015 i.e., after the Appellant's mortgage on the same had been created. by Syndicate Bank against the Secured Property Serial No.27 of the table of loans in the Impugned Order 31.12.2016 Amendment made to the Loan Agreement, whereby, the loan amount was reduced to Rs. 49,83,629/-, hence new New Loan Account No.419CSL32972388 allotted 24.08.2017 Proceedings under Section 13 (2) of the SARFAESI Act initiated by the Appellant for recovery of outstanding dues of Rs. 54,56,939/- (including interest) 26.12.2017 Notice taking over possession of the Secured Property, and other properties of the Respondent No.2 and 3, under Section 13 (4) of the SARFAESI Act issued by the Appellant who has filed as Annexure A-9 (Colly.) 16.05.2018 Provisional Attachment Order No.02 of 2018 was passed whereby, inter alia, the Secured Property was attached. The Secured Property is attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, situated at Plot No. GH2, RPA Road, Shastri Nagar, Jaipur - 302 016 ("Secured Property"), which has been mortgaged to the Appellant prior to commission of the Scheduled Offence. The appellant is only concerned with the said property attached. 8. It is argued on behalf of the appellant that the present case is squarely covered by the recent judgment of the Hon'ble Delhi High Court in Directorate of Enforcement v. Axis Bank & Ors.., wherein, it has been observed as under: "163. Having regard to the above scheme of the law in PMLA, it is clear that if a bonafide third party claimant had acquired interest in the property which is being subjected to attachment at a time anterior to the commission of the criminal activity, the product whereof is suspected as proceeds of crime, the acquisition of such interest in such property (otherwise assumably untainted) by such third party cannot conceivably be on account of intent to defeat or frustrate this law. In this view, it can be concluded that the date or period of the commission of criminal activity which is the basis of such action under PMLA can be safely treated as the cut-off. From this, it naturally follows that an interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant disbursed a loan in accordance with law to the Respondents Accused and created a mortgage over the Secured Property prior to the commission of the Scheduled Offence in respect of the Secured Property; and (c) The Appellant commenced the proceedings under SARFAESI Act against the Secured Property prior to its provisional attachment. (d) The said property was not acquired from the proceed of crime. 11. The Appellant has already initiated recovery proceedings under the SARFAESI and RDDBFI Act and insolvency proceedings under the I&B Code for enforcement of its interest. S. 13 SARFAESI allows secured creditors to enforce security. 12. In terms with the statutory safeguards incorporated in the Act, any party aggrieved by the confirmation of the Provisional Attachment Order by the Adjudicating Authority may challenge such confirmation in an appeal to this Tribunal U/s 26 of the Act and then before the Hon'ble High Court U/s 42 of the Act against the order of this Tribunal. Accordingly, under the legislative and statutory scheme of the Act, unless a party has exhausted its remedies in appeal right up to the Hon'ble High Court, an order confirming the attachment cannot be said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponsible approach or connivance of the bank management....The pleas of the mortgagees, therefore cannot be granted at this stage of confirmation of the provisional attachment order, as such grant of the relief would interject with the scheme of the Act, deliberately provided. As aforesaid section 8(8) of the PMLA provides for rights of claimant with a legitimate interest with the property provisionally attached/confiscated, who may have suffered a quantifiable loss as a result of the offence of money laundering....In view of the legal provisions above referred and the object sought to be achieved by the PMLA, I humbly and with great respect cannot concur with the view expressed by the Appellate Tribunal, PMLA in the Judgments of the Appellate Tribunal cited by D-21 and D-22." It is matter of fact and as per material available on record that the mortgaged property was not acquired from the proceed of crime. 15. This tribunal does not agrees with the argument of the respondent on this issue as the bank and financial institution cannot be asked to be a mute spectator to the confirmation of attachment of mortgaged properties at this stage without availing statutory remedy under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 56. Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy." 19. B. RAMA RAJU V. UOI AND ORS. Reported in (2011) 164 company case 149(AP)(DB) who has dealt with the aspect of bonafide acquisition of property in para 103. The same read as under:- "103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the adjudicating authority must carefully consider the material and evidence on record (including the Reply furnished by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached U/s 5(1) of the Act. Reasons to believe pertaining to the appellant 23. Counsel appearing on behalf of ED submits that it is not necessary to record the reasons to believe prior to passing the provisional attachment order and it could only be recorded in order of provisional attachment order itself. 24. Copy of the same is not be served to aggrieved party even at the stage of arguments in the main appeal or any subsequent proceedings. These cannot be shown to the appellant. 25. The guidelines of recording the reason to believe have been laid down in various judgements of Apex Court and High Courts. It is held time and again by the said Hon'ble Courts directing that the approach should be not the subjective satisfaction of the officer concerned. Such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law. The belief must be that of an honest and reasonable person based upon reasonable ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. Reasons for the order must be communicated to the affected party."[ The above referred to decision has been followed in various judgments by many High Courts, as well the Hon'ble Supreme Court of India in subsequent decisions. 28. a)In Kranti Associates v. Masood Ahmed Khan (2010) 9 SCC 496, the legal position was summarized as under:- a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". b) In Income Tax Officer v. LakhmaniMewaldas 1976 (3) SCR 956, the Supreme Court held that there should be a live link or close nexus‖ between the material before the ITO and the formation of his belief that income had escaped assessment. More recently, in Aslam Mohd Merchant v. Competent Authority (2008) 14 SCC 186, the entire legal position has been explained elaborately by the Supreme Court as under: 28. It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperative before a show cause notice is issued. Section 68- H of the Act provides for two statutory requirements on the part of the authority viz: (i) he has to form an opinion in regard to his `reason to believe'; and (ii) he must record reasons therefor. Both the statutory elements, namely, `reason to believe' and `recording of reasons' must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Recording of reason to believe under the said provision is not a formality rather it is the duty of the authorized officer to record the valid reason to believe. As far as reason of believe within the meaning of Section 8(1) is concerned, if the Adjudicating Authority chooses to record the same, it must be recorded after having gone through the entire material and copy of complaint and provisional attachment order, the same shall have to be satisfied fully with the mandatory condition as to whether the person-concerned has committed the offence within the meaning of Section 3 of the Act or not or is in possession of proceed of crime. Only than, the notice under section 8(1) is to be issued, otherwise notice is to be declared as invalid. 30. In the present case, copy of reason to believe has not been filed. Counsel for the respondent submits that reason to believe is not required prior to the order of passing the provisional attachment order. The attachment order shows that after recording the facts, the IO has just used the expression by repetition of language of section 5(1) in the provisional attachment order. The Authorised Officer must be aware that due to fixed peri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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