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TMI Blog2019 (8) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that Y. S. Jagan Mohan Reddy, in a criminal conspiracy with certain public officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. ( BCCL then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions - proceeds of crime. HELD THAT:- It is an admitted position by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer. It is the admitted fact that the investment made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3010/HYD/2016, 3190/HYD/2017 (Stay), 2989/HYD/2015 (Misc.), 2990, 2993, 2995, 2999, 3001, 3003, 3005, 3007, 3009, 3011/HYD/2016 (Misc.), 3095/HYD/2017(Exem), FPA-PMLA-1573-77, 1579, 1582-88/HYD/2016, 1619/ HYD/2017 JUDGEMENT JUSTICE MANMOHAN SINGH: CHAIRMAN FPA-PMLA-1573 - 1577, 1579, 1582 - 1588 & 1619/HYD/2016 1. By this common order, this Tribunal proposes to decide the above-mentioned 14(fourteen) appeals filed against Order dated 23.11.2016 by the Adjudicating Authority made in Original Complaint No. 618 of 2016 confirming the attachments made vide Provisional Attachment Order No. 02/2016 dated 29.06.2016 (PAO) in ECIR/09/HZO/2011. PAO passed corresponding to CC No. 25 of 2013 before The Special Judge for CBI Cases, Hyderabad (CBI Case). Earlier, the appeals were heard by the Chairman and the Hon'ble Member. The appeals were listed for clarification/ re-hearing. In the meanwhile, the Hon'ble Member retired/resigned. The appeals were re-heard and the orders were reserved. 2. The PAO arises out of registered case no. ECIR/09/HZO/2011 dated 30.8.2011 filed by the Respondent, in pursuance of an FIR filed by Central Bureau of Investigation (hereinafter referred to as 'CBI' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attachment Order was confirmed by the impugned order dated 23.11.2016. 5. The following appeals have been filed: Y.S. Jagan Mohan Reddy & Group: 1. Appeal Nos. 1573 of 2016- Mr. Y.S. Jagan Mohan Reddy 2. Appeal Nos. 1575 of 2016 - M/s. Classic Realty Pvt. Ltd. 3. Appeal Nos. 1576 of 2016 - M/s. Sandur Power Company Pvt. Ltd. 4. Appeal Nos. 1577 of 2016 - M/s. Silicon Builders Pvt. Ltd. 5. Appeal Nos. 1582 of 2016 - M/s. Silicon Infrastructure Pvt. Ltd. 6. Appeal Nos. 1583 of 2016 - M/s. Capstone Infrastructure Pvt. Ltd. 7. Appeal Nos. 1584 of 2016 - M/s. Revan Infrastructure Pvt. Ltd. 8. Appeal Nos. 1585 of 2016 - M/s. Bhagavath Sanidhi Estates Pvt. Ltd. 9. Appeal Nos. 1586 of 2016 - M/s. Utopia Infrastructure Pvt. Ltd. 10. Appeal Nos. 1587 of 2016 - M/s. Saraswati Power and Industries Pvt. Ltd. 11. Appeal Nos. 1588 of 2016 - M/s. Harish Infrastructure Pvt. Ltd. 12. Appeal Nos. 1574 of 2016 - filed by Mrs. Y.S. Bharathi Reddy. 13. Appeal Nos. 1579 of 2016 - M/s. Bharathi Cements Corporation Pvt. Ltd. 14. Appeal Nos. 1619 of 2017 - Mr. Jella Jagan Mohan Reddy. 6. With regard to appeal no. 1619/2017, filed by Jella Jagan Mohan Reddy, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through M/s. Carmel Asia Holdings Pvt. Ltd. which are also occasioned by VANPIC favours. Allegations in the CBI charge-sheet 8.1 As far as monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL, the allegations are that ₹ 30 Crs were received as bribe amount by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad in lieu of VANPIC favours and was guised as sale consideration for sale of shares held by Mr. Y.S. Jagan Mohan Reddy in M/s. Sandur Power Company Ltd. (Sandur Power) to Mr. Nimmagadda Prasad. The said ₹ 30 Crs were utilized in purchasing 3,00,00,000 shares of BCCL at ₹ 10 per share. Mr. Y.S. Jagan Mohan Reddy sold 62,00,972 shares held by him in BCCL to PARFICIM SAS, France at ₹ 671.20 per share totaling to ₹ 416.20 Crs on 28.04.2010. The ₹ 416.20 Crs so realized were transferred into various group companies controlled by Mr. Y.S. Jagan Mohan Reddy. The initial investments into BCCL and subsequent investments by companies such as M/s. Dalmia Cements, M/s. India Cements Ltd. and Mr. Nimmagadda Prasad's group of companies at high valuations are nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Realty) has received, in total, an amount of ₹ 193.50 Crores (₹ 126.50 Crs from Mr. Y.S. Jagan Mohan Reddy and ₹ 67 Crs form Sandur Power) as Share Application Money from ₹ 416.20 Crs realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to M/s PARCIFIM SAS, France on 27.04.2010. Thereafter, an amount of ₹ 196.85 Crs was utilized in the following nature: i) ₹ 58 Crs was returned to Mr. Y.S. Jagan Mohan Reddy against earlier received Share Application Money. ii) ₹ 56 Crs returned to BCCL against earlier received Share Application Money. iii) ₹ 57 Crs paid to G2 and Suguni Constructions for acquiring Silicon Builders Shares. iv) ₹ 25.85 Crs invested into 4 companies. It is stated as monies received are not parked with Classic Realty, the ED has sought to attach, on the basis of concept of beneficial ownership, 'Tangible Fixed Assets of M/s Classic Realty Pvt Ltd as detailed in the Audited Balance Sheet for 2013-14 being equivalent to the proceeds of Crime valued at ₹ 49,45,62,869/- (includes company's asset - Building named Commerce @ Mantri, Bannerghatta Road, Bangalore) 8.5 The alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by CBI with the Hon'ble Court that S/Shri Y.S Jagan Mohan Reddy, V. Vijay Sai Reddy, Jella Jagan Mohan Reddy & others committed the offences of criminal conspiracy, cheating and criminal misconduct by abusing official position of Late Dr. Y.S. Rajsekhara Reddy, the then Chief Minister of Andhra Pradesh, punishable under Section 120-B read with Section 420 of the Indian Penal Code, 1860 and Sections 9, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The offences under Section 120-B, Section 420 of IPC, 1860 and Section 13 of PC Act, 1988 are the scheduled offences as per Section 2(1)(y) of PMLA, 2002. The investigation carried out so far under PMLA, 2002, has revealed that, as a result of the above stated scheduled offences, following are the Proceeds of Crime in this case. i) Shri Y.S. Jagan Mohan Reddy built a Cement Factory with the quid pro quo investments received by him from the companies of S/Shri Nimmagadda Prasad, N. Srinivasn and Puneet Dalmia for the benefits/favours extended t them in the form of various approvals/concessions by the then Government of Andhra Pradesh by influencing his father Late Shri Y.S. Raja Sekhar Reddy. Shri Y.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Shri Nimmagadda Prasad, Shri Y.S. Jagan Mohan Reddy, out of the bribe amounts received by him through his group companies from Shri Nimmagadda Prasad, transferred an amount of ₹ 15 Crore to M/s. Silicon Builders Private Limited for which he received 1.5 Crore shares of ₹ 10/- each of M/s. Bharathi Cement Corporation Private Limited. M/s. Silicon Builders Private Limited continues to hold these shares till date which are the direct Proceeds of Crime. v) Shri Y.S. Jagan Mohan Reddy, purchased 3,00,00,000 Shares of ₹ 10/- each in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by him from Shri Nimmagadda Prasad. Out of these 3,00,00,000 shares, Shri Y.S. Jagan Mohan Reddy, in April 2010, sold 62,00,972 shares to M/s. Parficim, France at a rate of ₹ 671.20 per shares and benefitted by an amount of ₹ 416,20,92,406/- and the same was deposited in his bank account maintained at Oriental Bank of Commerce, Jubilee Hills Branch, Hyderabad (A/c No. 09242011001503). Shri Y.S. Jagan Mohan Reddy is till continues to hold 2,38,06,435 shares of ₹ 10/- each in M/s. Bharathi Cement Corporation Private Limited which were ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuniary gain derived by M/s. Bharathi Cement Corporation Private Limited on account of excavation of Lime stone from the Mining License granted illegally amounts to ₹ 152,84,61,315/- which is proceeds of crime in terms of Section 2(1)(u) of PMLA, 2002. 12. The total alleged proceeds of crime as per respondents as per Provisional Attachment Order dated 29.06.2016 and O.C. No. 618 of 2016 are as follows: 416.20 Crs Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of 62,00,972 shares to M/s. PARFICIM SAS at ₹ 671.20 per share. 23.80 Crs Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad) 15.00 Crs Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad) 81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL 51.20 Crs Dividend received by Silicon Builders on 1,50,00,000 Shares of BCCL 152.84 Crs Value of limestone extracted by BCCL. 19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy 7.18 Crs Salaries of Mr. Jella Jagan Mohan Reddy ---------------- 766.97 Crs Total quantification of PoC Total value of properties atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Power is a successful running company established in 1999 and taken over by Mr. Y.S. Jagan Mohan Reddy in the year 2001. Sandur Power acquired Classic Realty, an industrial park in Bangalore from internal revenue generated by sale of power generated and sold to State Electricity Board of Karnataka (MESCOM) and by availing a bank loan of ₹ 117 Crs doubling the profitability of Sandur Power. The hydro plant owned by Sandur Power continues to have one of the best PLF in all of Karnataka. f) Apart from the above, the net worth of Sandur Power at the time of the above transaction was over ₹ 250 Crs and therefore the purchase of Sandur Power shares by Mr. Nimmagadda Prasad was a genuine transaction with commercial interest. ii) Purchase of 3,00,00,000 shares of BCCL for ₹ 30 Crs and monies realized from sale of BCCL to PARFICIM SAS, France: a) Mr. Y.S. Jagan Mohan Reddy had utilized the ₹ 30 Crs amount to purchase shares in BCCL for ₹ 10 per share and had acquired a total of 3,00,00,000 Shares in BCCL. b) Mr. Y.S. Jagan Mohan Reddy had sold 62,00,972 shares held by him in BCCL to PARFICIM SAS, France at ₹ 671.20 per share totaling to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Dalmia Cement, India Cement and Mr. Nimmagadda Prasad's group with the Government of A.P. is entirely incorrect and Mr. Y.S. Jagan Mohan Reddy has no connection whatsoever with such distinct and independent transactions which the said entities may have had with the Government of A.P. 13.2 Relating to M/s. Sandur Power Company Pvt. Ltd. (Appeal No. 1576 of 2016): a) The transactions between Mrs. Y.S. Jagan Mohan Reddy and Sandur Power are genuine business transaction. Only on the premise of beneficial ownership, the said attachments at the hands of Sandur Power has been done as value equivalent to proceeds of crime. The proceeds of crime if any have already been attached at the end of Mr. Y.S Jagan Mohan Reddy. b) No allegations that amount paid for acquisition of shares by Mr. Y.S. Jagan Mohan Reddy are over-valued or excessive. The shares have been purchased by Sandur Power from the internal accruals of the company on the following dates: 1. 88,103 shares of Classic Realty on Sept 2006 2. 2,58,181 shares of Silicon Builders in March 2006(10,000shares), January 2008 (1,50,000) and January 2009 (98,181 shares) 3. 1,85,000 shares of BCCL in October 2006 c) Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (1) of the PMLA. Let me now deal with the case of appeal filed by Bharati Cement Corporation Pvt. Ltd. being appeal no. 1579/2016. The result of this appeal would have impact of other appeals also. 16. As already mentioned that the main allegation in the PAO is that the mining lease was illegally allotted in favour of the Appellant company upon an alleged wrongful cancellation of the prospecting license of M/s Gujarat Ambuja Cement Limited(hereinafter referred to as 'Gujarat Ambuja'). It is alleged that the said alleged illegality was perpetrated by the actions of Mr Y.S. Jagan Mohan Reddy (who is the son of the then Chief Minister of Andhra Pradesh, Mr. Y.S. Reddy), in conspiracy with others, and by influencing public servants and without due procedures being followed under the extant mining laws and rules made thereunder. 17. Accordingly, the impugned PAO was passed, the amount of INR 152,84,61,315 allegedly represented 'proceeds of crime' to the extent of the purported pecuniary gain allegedly derived by the Appellant company from the extraction of 1,74,93,605 MT of limestone from the areas under the mining lease granted in its favour during the period from 2009-10 to 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant period of time, then the attachment of the said FDs has to continue. 20. It is submitted on behalf of the appellant in appeal no. 1579/2016 that the Respondent has misinterpreted the statutory provisions as contained in the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as 'MMDR Act') and the rules made thereunder. The Respondent has wrongly come to the conclusion while ignoring relevant material in arriving at the finding of unlawful allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant as mentioned above. 21. As per pleadings, the admitted following facts are:- (a) Gujarat Ambuja was granted a Prospecting License for a period of 2 (two) years, i.e., from September 13, 2000 until September 12, 2002 vide a license deed. (b) After Gujarat Ambuja was unable to complete the prospecting work, it applied for a renewal of the Prospecting License for a further period of 2 (two) years, i.e., from September 13, 2002 until September 12, 2004. (c) As no reply was received from the State authorities, there was deemed renewal of the Prospecting License for a further period of 2 (two) years, i.e., until September 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted on behalf of appellants that the the Adjudicating Authority did not appreciate that in absence of any right existing in favour of Gujarat Ambuja, as contained in the MMDR Act itself. The very genesis of the alleged conspiracy of grant of Mining Lease to the Appellant by surpassing Gujarat Ambuja, fails at the very threshold. Even the Revision Application filed by Gujarat Ambuja challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide a detailed final order dated September 8, 2006. 24. Admittedly, Gujarat Ambuja has not filed any other complaint, whether civil or criminal, in this regard. The said fact was admitted on behalf of respondent by the counsel as well as IO present. Under no circumstances, irrespective of any allegations against the appellants, one thing is very clear that Gujarat Ambuja as per the mandatory provision of the Act, was not entitled for renewal of prospective mining lease after the expiry of five years. 25. Once the preferential right in favour of Gujarat Ambuja was ended, the Government (State) is not precluded to invite the filing of an application for grant of Mining Lease as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant to Gujarat Ambuja was in the nature of a prospecting licence, the notification stated so. (c) Rule 59(1)(ii) of the Mineral Concession Rules, 1960 does not distinguish between a notification for grant of a prospecting license and a notification for grant of mining lease. In fact, the provision merely requires that the area for re-grant be notified. (d) The attempt in the PAO to restrict one of the notified areas as that for "mining lease" and the other for "prospecting licence" is contrary to the language of the notification itself. (e) In fact, nothing precluded Gujarat Ambuja from applying for a Mining Lease pursuant to the said notification, but it has chosen not to apply. (f) In view of the above, the allegations in the PAO that first, the Notification dated November 21, 2005 was not issued for a mining lease, and second, the Appellant's application for mining lease pursuant to the same is evidence of a purported criminal conspiracy, are far-fetched, unfounded and without any basis in law. 29. It is submitted on behalf of appellants that the purported statement by Mr Jella Jagan Mohan Reddy, the director of the Appellant company, that a copy of the Mining Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the PAO due to the pendency of the revision petition at the time of grant of Mining Lease in favour of the Appellant. It is submitted on behalf of appellant that the Adjudicating Authority has failed to take cognizance of the following relevant facts: (a) The G.O. Ms. No. 95 dated March 27, 2006 granting the Mining Lease for Limestone over an extent of 2037.52 acres in Sy. Nos. 215 to 231 etc. in villages in Yerraguntla and Kamalapuram Mandals in Kadapa District in favour of the Appellant was by no means an unconditional grant, as has been sought to be incorrectly portrayed in the impugned PAO. (b) On the contrary, the GO clearly provides that the grant orders are subject to the outcome of the decision of the Government of India in the Revision Application filed by Gujarat Ambuja. (c) In case Gujarat Ambuja's Revision Application had succeeded, the G.O. Ms 95 or Mining Lease granted in favour of the Appellant would not come in the way. (d) In addition to the same being subject to the outcome of the Revision Application, the Appellant was, inter alia, required to obtain environmental clearances within 6 (six) months and set up a cement unit within a period of 3 (thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il the time such aggrieved party challenges the same in revision. (j) It was alleged that it is not within the contemplation of the mining rules that the competent authority is statutorily mandated to remain idle and not take decisions for grant of mining lease in respect of the same area until the period of limitation under Rule 54 expires, which interpretation will create a situation of absurdity and the same could not have been the intent of the framers. 34. It is a matter of fact that the First Revision Application filed by Gujarat Ambuja, challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide final order dated September 8, 2006. It cannot be denied that despite the Gazette Notification being in the public domain and known to Gujarat Ambuja, it chose to apply for a stay under Rule 55(5) of the Mineral Concession Rules, 1960 only on February 21, 2006, almost 4 (four) months after rejection of its renewal application and 3 (three) months after the Gazette Notification was published. 35. It is also factual position that Gujarat Ambuja had also filed a second revision petition challenging the grant of Mining Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exploration report of M/s Gujarat Ambuja Cement Ltd., the total estimated reserves are to the tune of 144.06 million tonnes considering an average workable thickness of 18 mts and 50% of the area for practical working leaving sufficient area for safety zone for blasting, green belt development and statutory limits from roads, lease periphery etc. " 39. It is submitted that as long as the existence of mineral content has been established (which was a clear finding of the GoAP), the grant of a mining lease (even without a prior prospecting license) cannot be questioned. In fact, by the allegations of the PAO itself, wherein it is detailing out the extent of lime stone extracted by the Appellant, it is evident that the said area indeed and indisputably contained sufficient reserves of minerals. 40. The PAO itself reveals that (a) the GoAP had recorded and accepted that the existence of mineral contents therein has been established; and (b) the post facto occurrences, i.e., the lime stone extracted by the Appellant from the area, evidence the correctness of the said recordal. 41. Under the provisions of Section 5(2) of the MMDR Act, a mining lease can be granted to a party wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 records the process to be followed in the event that information submitted by a person undertaking prospecting activities is to be treated as confidential. 45. The allegation was that both the Appellant and M/s Saraswati Power and Industries Private Limited had failed to submit prospecting reports from the Geological Survey of India or from any other private consulting agency, and had instead used the prospecting report of Gujarat Ambuja, or that the same wass unlawful. 46. It is submitted on behalf of appellants that no such process for treating the information submitted by Gujarat Ambuja as confidential, had been requested or followed and as such, the Appellants were free to use all such information within the framework of the MMDR Act, and the Mineral Concession Rules, 1960.It is submitted that there is not even a single averment in either the charge sheet, the PAO or the impugned order that Gujarat Ambuja had marked their reports and information as confidential and as such, in terms of the said rule, the said reports and information could be used by any person, including the appellant herein. 47. It is matter of fact that Gujarat Ambuja had the opportunity to submit its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the deficiencies in the Mining Plan, if any, had been rectified fully by the Appellant, which was subsequently also confirmed by the Dealing Assistant before being approved by the competent authority. 50. The entire process for approval of the Mining Plan took more than a month i.e. from February 21, 2006 (when the mining plan was submitted) to March 23, 2006/ March 24, 2006 (when approval was granted), and therefore the allegation that the approvals were done in less than a day was not correct. 51. The Appellant has relied upon the following judgement in this regard: (a) Chairman & MD, BPL Ltd. v. S.P. Gururaja and Others, (2003) 8 SCC 567 [paragraphs 34 and 35] "34. Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be malafide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the Impugned allotment of land could not have been interfered with. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissions of Inquiry Act, 1952, rather it has given finding contrary to the report by coming to the conclusions that the allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant was unsupported by any cogent and reliable material on record. 54. The Respondent's stand is that the Hon'ble Commission only enquired into the legality of the grant of Mining Lease by the Government, however, the grant of Mining License to Appellant was illegal and despite of Hon'ble Commission had categorically noted in paragraph 8.9.3 that there had been no infraction in following the established norms, procedure or the provisions of law in granting the Mining Lease to the Appellant. 55. It is admitted by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05,799. 56. It is argued on behalf of the appellants that as a matter of fact the benefit has accrued to the Government on account of the mining activities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 15.06.2009. It is submitted on behalf of appellants that the provisions of law cannot be retrospectively applied, as Article 20(1) of the Constitution bars ex-post facto penal laws and no person can be prosecuted under Sections 3 and 4 of the Act. on the allegations which occur earlier by applying the provisions of law, which have come into force after the alleged incident. 61. In the impugned order dated November 23, 2016, it is held that proceeds on the basis that the offence of money laundering under Section 3 of PMLA is a continuing one, despite the allegations of commission of the offences and acquisition of proceeds there from having occurred prior to the offences being notified in the Schedule of PMLA. The impugned order has referred the following decision- B. Rama Raju v. Union of India - Hon'ble Andhra Pradesh High Court in Writ Petition No. 10765, 10769 & 23166 of 2010 decided on March 4, 2011 (para 50 and 51) "50. On analysis of the provisions of Section 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is merely obiter and is not an authority for Article 20 of the Constitution. In this regard, the Appellant's seek to rely upon the following judgment: Bhavnagar University v. Palitana Sugar Mill Pvt. Ltd. and Ors., (2003) 2 SCC 111 - "59. A decision, as is well-known, is an authority for which it is decided and not what can logically by deduced therefrom. It is also well-settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision…"; and (2) Bharat Petroleum Corporation Ltd. and Anr.v. N.R. Vairamani and Anr., (2004) 8 SCC 579. "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to another construction. It is also stated that if a statute be ambiguous, the Court should lean to the interpretation which would support existing rights. 64. In the Queen v. The Inhabitants of St. Mary, Whitechapel (1848) 12 QB 120, the Court pointed out that "The Statue which in its direct operation of prospective cannot be properly called a retrospective statute because a part of the requisites for that action is drawn from the time antecedent to its passing". 65. The fundamental rule of interpretation of statutes. Following case laws are cited:- a) Monnet Ispat and Energy Limited Versus Union of India and Others (2012) 11 SCC at page 90 paras 153 & 154 held that: "153. Having carefully considered Section 17-A, I have no hesitation in holding that the said provision is prospective. There is no indication in Section 17-A or in terms of the amending Act that by insertion of Section 17-A Parliament intended to alter the pre-existing state of affairs. Parliament does not seem to have intended by bringing in Section 17-A to undo the reservation of any mining area made by the State Government earlier thereto for exploitation in public sector. Parliament has no doubt plena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made to have retrospective operation. …………… …………………………………………………………………………………… …………………………………….." c) Mahadeolal Kanodia Versus Administrator, General of West Bengal, AIR 1960 SC 936 - para 8 [3 Judge Bench of Hon'ble Supreme Court], held that: "8. The principles that have to be applied for interpretation of statutory provisions of this nature are well-established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the legislature has made them retrospective; and the retrospective operation will be limited only to the extent to which it has been so made by express words, or necessary implication. The second rule is that the intention of the legislature has always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Air 1948) "All laws which affect substantive rights general operate prospectively and there is a presumption against their retrospectivity if they affect vested rights and obligations unless the legislative intent is clear and compulsive. Such retrospective effect may be given where there are express words giving retrospective effect or where the language used necessarily implies that such retrospective operation is intended. Hence, the question whether a statutory provision has retrospective effect or not depends primarily on the language in which it is couched. If the language is clear and unambiguous effect will have to be given to the provision in question in accordance with its. (32) It would appear from the case law considered above that the rule of construction or interpretation is very well settled and well established that laws generally are prospective in character more particularly, law affecting vested or substantive rights or laws creating new liabilities or imposing new disabilities, unless there are express words in the statute affecting the existing rights of unless there is clear manifestation of the intention of the Legislative on the basis of which it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll cease to have effect, the moment the persons concerned are acquitted on conclusion of trial for any scheduled offence. But after the amendment, the conviction of a person for a scheduled offence has no nexus to the confiscation of the property. What is now important is to see whether the Special Court finds the commission of an offence of money laundering or not. 70. The contention of Mr. S. Ravi, learned senior counsel for the petitioner is that the petitioner company was not even implicated as an accused in the criminal case. All the accused, who were individuals and who were at the helm of affairs of the petitioner company, were prosecuted and they were convicted by the Special Court by a judgement dated 09-04-2015. Since the charge sheets filed prior to the amendment and since the petitioner was not one of the accused, the amendment to Section 8(5) will not apply to the case of the petitioner. That vested rights cannot be taken away by retrospective application of the law (especially quasi criminal) is too well settled. A useful reference may be made in this regard to the judgements of the Supreme Court in STO v. Oriental Coal Corporation MANU/SC/0427/1988 : 1988 (Suppl) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 29.06.2016 and O.C. No.618 of 2016 are as follows: 416.20 Crs Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of shares to M/s. PARFICIM SAS at ₹ 671.20 per share. 23.80 Crs Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad) 15.00 Crs Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad) 81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL 51.20 Crs Dividend received by Silicon Builderson 1,50,00,000shares of BCCL 152.84 Crs Value of limestone extracted by BCCL 19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy 7.18 Crs Salaries of Mr. JellaJagan Mohan Reddy ------------- 766.97 Crs Total quantification of PoC Total value of properties attached as 'Proceeds of Crime' @ Pg. 52 of PA Order dated 29.06.2016 is ₹ 748.95 Crs. 71. Relating to Mrs. Y.S. Bharati Reddy (Appeal No. 1574 of 2016): Salaries received by Mrs. Y.S. Bharathi Reddy Mrs. Y.S. Bharathi Reddy was appointed Director of BCCL, which is a company incorporated and is subject to regulations framed under the Companies Act, 1956. The alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave a majority stake, the insinuation that the salary amounts are dictated by collateral considerations would be impermissible. a) The flow of investments from Silicon Builders into BCCL is in regular course of business and the transaction in itself is completely legal and stands test to standards of the Companies Act. Therefore, Mrs. Y.S. Bharathi Reddy, only by being in virtue of the director of Silicon Builders at the time of such investment, cannot be faulted with. ₹ 15.5 Crs. received from Y.S. Jagan Mohan Reddy is accrued from genuine business transaction. a) Mrs. Y.S. Bharathi Reddy received ₹ 1.5 Crs and ₹ 14 Crs from her husband, Mr. Y.S. Jagan Mohan Reddy on 14.06.2010 and 01.10.2010 respectively from the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares of BCCL to PARFICIM SAS, France. It is submitted that the sale of 62,00,972 shares to PARFICIM SAS, France by Mr. Y.S. Jagan Mohan Reddy for ₹ 416.20 Crs is a genuine business transaction. b) As the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy is attached (in form of shares), the money in the hands of Sandur Power cannot be called as proceeds of crime as it would amount to execution of double attachment and for twice the value which is contrary to the scheme of PML Act. 83. Therefore, as the monies received by Sandur Power (which have been separately attached at the hands of Sadur Power) which have further been paid to Classic Realty as share application money cannot be attached as the same would amount to triple attachment of property. The said practise cannot be allowed. The proceed of crime amount has to be finally identified, otherwise, there would be no end. 84. Relating to amalgamated entities viz, M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Infrastructure Pvt. Ltd (Defendant No. 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17) a) The Hon'ble High Court of Karnataka, vide Orders dated 11.03.2016 in C.A. 346 of 2015 ordered amalgamation of: 1. Nivish Infrastructure Pvt. Ltd. 2. Shalom Infrastructure Pvt. Ltd. 3. Marvel Infrastructure Pvt. Ltd. 4. Inspire Hotels Pvt. Ltd. b) Nivish Infrastructure: Classic Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: Amount Cheque No. Remarks ₹ 3,00,00,000/- 120848 Investment from M/s Sandur Power ₹ 2,50,00,000/- 761124 Investment from M/s Sandur Power ₹ 1,10,00,000/- 761133 Investment from M/s Sandur Power ₹ 5,00,00,000/- 120856 Investment from M/s Sandur Power ₹ 5,00,00,000/- 130812 Investment from Carmel Asia Holdings Pvt. Ltd. Subsequently requested to be treated as investment by Investment from M/s Sandur Power leading to refund of said advance back to Carmel Asia HoldingsPvt. Ltd. (₹ 1,60,00,000/-) 108366 Returned back to M/s Sandur Power ₹ 5,00,00,000/- 120866 Investment from M/s Sandur Power (₹ 5,00,00,000/-) 224277 Returned back to Carmel Asia Pvt. Holdings as per request jointly made by Carmel Asia Holdings Pvt. Ltd. and Sandur Power ₹ 15,00,00,000/- Total Received by Silicon Builders It is alleged that the above amounts were initially invested into the Silicon Builders as Share Application Money by Sandur Power. However, on account of internal understanding and adjustments between Sandur Power and Classic Realty, Silicon Builders was requested to issue the shares favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Carmel Asia and had used the same amounts to purchase BCCL shares. Therefore, the attachment of 1,50,00,000 shares held by Silicon Builders in BCCL and the ₹ 51.20 Crs of dividend received by Silicon Builders ought to be released from any attachment. 89. Relating to M/s. Capstone Infrastructure Pvt. Ltd. (Appeal No. 1583 of 2016): It is the case of appellants that the investments received by Capstone Infrastructure from Classic Realty are share subscription amounts in lieu of allotment of 1,53,00,000 shares of Capstone Infrastructure to Classic Realty. The said transaction is a genuine business transaction and therefore, investment of monies into Capstone Infrastructure cannot be faulted with and be termed as 'proceeds of crime'. Investments received by Capstone Infrastructure from Classic Realty are monies which were in turn invested into Classic Realty by Mr. Y.S. Jagan Mohan Reddy from the monies accrued after sale of his shares in BCCL to PARFICIM SAS, France. As the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares in BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of shares of various companies held by it. Mr. Y.S Jagan Mohan Reddy had accrued such monies from the sale of his shares in BCCL to PARFICIM SAS, France, which is a genuine business transaction. Against him, no action is pending. Counsel for the respondent has admitted that amount paid by French Company against the shares is the clean money. The profit earned by the group companies cannot be treated as proceed of crime once the original purchase of shares are done under business transaction. It is therefore submitted that as the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions, the ₹ 15 Crs received by Saraswati Power through Sandur Power cannot be termed, much less be attached as proceeds of crime. 93. It is alleged by the respondent that the share subscription monies received by Saraswati Power from Sandur Power be treated as proceeds of crime is on a corresponding allegation made that Mr. Y.S. Jagan Mohan Reddy had acquired various shares from Sandur Power for a value of ₹ 80.27 Crs. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. Under the PMLA inter alia it is a mandatory prerequisite that a person/entity is in possession of proceeds of crime for issuance of an attachment order. Such powers cannot be extended beyond the scope of PML Act by adding the new concepts which is alien to the provisions of the PML Act. 95. The concept of beneficial ownership cannot be attributable under Sec. 2(fa) of the PML Act is not attracted in the facts of the case. Mr. Y.S. Jagan Mohan Reddy has no equity in most of the companies directly and does not control the said juridical entity and in the absence of such finding. The appeals are accordingly allowed by set-aside the impugned order. 96. Errors in computation of 'Proceeds of Crime' and attachment of the same: (i) Non-computation of Taxes paid: a) Capital Tax paid by Mr. Y.S. Jagan Mohan Reddy: The respondents allege that ₹ 416.20 Crs was realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to PARFICIM SAS, France and the same is proceeds of crime. The respondents also record the factum that of the ₹ 416.20 Crs, an amount of ₹ 84 Crs paid as Capital Gains Tax to the IT Department. Thus, the proceeds of crime available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sandur Power, Classic Realty and Saraswati Power: As detailed above, the attachments at the hands of Sandur Power for sale of shares owned by it in various companies to Mr. Y.S. Jagan Mohan Reddy would constitute double attachment. Further attachments at the hands of Classic Realty and Saraswati Power on the pretext of receiving monies from Sandur Power constitutes triple attachment at the hands of Classic Realty and Saraswati Power respectively. b) Equivalent value of ₹ 30 Crs already attached in VANPIC Attachment: Further, an amount of ₹ 30 Crs was received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and group, which has already been attached in O.C 276 of 2014. Again, the attachments in the present proceedings to the tune of ₹ 416.20 Crs arise from sale of shares worth ₹ 6.2 Crs out of the same ₹ 30 Crs. Therefore, as ₹ 30 Crs of equivalent value is already attached as being investments from Mr. Nimmagadda Prasad and group companies, ₹ 30 Crs ought to be deducted here. c) ₹ 15 Crs received by Carmel Asia from Beta Avenues already attached: Carmel Asia had received ₹ 20 Crs in total from Beta Avenues. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company's asset at Plot No.7,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet) Golconda Mandal, Hyderabad Equivalent to Proceeds of Crime 58.40 64.30 M/s Marvel Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14 M/s Capstone Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company's asset at Plot No.3,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet) Golconda Mandal, Hyderabad. M/s Harish Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Standalone Financial Statement 1 for 2014-15 (includes Company's asset at Plot No.8, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet) Golconda Mandal, Hyderabad. 2. M/s Revan Infra Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company's asset 9 acres of land situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y.S. Jagan Mohan Reddy was utilized for various purposes including purchasing of shares of other companies, investment in form of Share Application Money, clearing of bank loans, donation and payment of taxes. As far as above-mentioned amount received by him by selling of shares to M/s. Parficim SAS, France at the rate of ₹ 671.20 is concerned, it is admitted by the respondent that the said money paid by French Company is not the tainted amount. The said company is not charge-sheeted in any case being innocent party as admitted in the impugned order. 101. Errors in computing "Proceeds of Crime" which ought to be excluded 84.00 Crs Monies paid by Mr. Y.S. Jagan Mohan Reddy as Capital Gains Tax from the ₹ 416.20 Crs. received from sale of BCCL shares to PARFICIM SAS, France. 6.37 Crs Income Tax paid by Mrs. Y.S. Bharathi Reddy from ₹ 19.50 Crs. received as remuneration. 12.22 Crs Deliberate undervaluation of BCCL Shares purchased by Mr. Y.S. Jagan Mohan Reddy from Sandur Power Company Pvt. Ltd. at ₹ 671 per share amounting to ₹ 12.41 Crs; but attaching the same at ₹ 10 per share amounting to ₹ 18,50,000/-. -------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer. 105. The Respondent has, in passing, raised certain allegations as regards the valuation of the shares of the Appellant, which issue is already the subject matter in a separate OC No. 424 of 2015 out of which an appeal FPA-PMLA- 1035/HYD/2015 titled M/s Bharathi Cement Corporation Private Limited Vs. Joint Director, Directorate of Enforcement has also been filed. It is the admitted fact that the investment made by the various entities/ companies was a bona fide investment in the Appellant Company. Upon transfer of the shares of the various companies/ entities to PARFICIM, France, they made a substantial gain on investment by way of a bona fide, unchallenged and arm's length sale of shares to a third party, viz., PARFICIM, France, agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately or the act of appellants was bonafide or these are technical discrepancies. These aspects have to be considered by the Special Act on the basis of evidence. However, at present, it is difficult to conclude that due process has not been followed at all. These issues are either decided in quashing proceedings if initiated or after trial by the Special Court. 109. The Supreme Court held that the question of any undue haste in taking an administrative decision is a question of fact. It is held by the Supreme Court that the States had devolved a policy of single window system with a view to get rid of red tapism generally prevailing in the bureaucracy. In the present case, it also appears there are elements which would show the decision is taken after deliberations and upon due application of mind cannot be held to be suffering from malice. Charges are yet to be framed in the matter. 110. It is also a matter of fact that despite of change of various Governments in the State by rival political parties, the lease has not been cancelled, rather licensing fee has been accepted without any protest. There are also no allegations that some advantage is taken by BCCL by which the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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