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TMI Blog2024 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ordered to be substituted by bank guarantee of equivalent amount to be furnished by the applicant/petitioner no 1 in favour of the respondent no 3 within 15 days who shall be having lien over said FDR. The bank guarantee shall be kept alive by periodical renewal till conclusion of trial arising out of ECIR bearing no. 03/INSZO/2014. If the respondents succeed in present petition then the respondent no. 2 shall be at liberty to encash the bank guarantee. The applicant/petitioner no 1 is also directed to submit an undertaking by way of affidavit that the applicant/petitioner no 1 shall not create any interest in favour of any other person or entity in respect of said bank guarantee. Application allowed. - HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN For the Petitioners Through: Mr. Vijay Agarwal, Mr. Hardik Sharma, Mr. Pankush Goyal, Mr. Kshitiz Garg, Ms. Barkha, Mr. Nagesh Behl, Advocates For the Respondents Through: Mr. Kirtiman Singh, CGSC with Mr. Waize Ali Noor and Mr. Varun Pratap Singh, Advocates for R-1/UOI. Mr. P. V. Yogeswaram, Advocate for R-3 ORDER CM APPL. 6943/2022 1. The petitioners filed the present writ petition to quash and set aside the Provisional Attachment Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Writ Petition bearing WP(C) No 7026 of 2019. 1.2 The petitioner no 1 was incorporated with the object of establishing an integrated cement plant at Village Saha, Tehsil Raghuraj Nagar, District Satna, MP and was setting up a 3.0 MTPA cement plant with captive thermal power plant of 45MW for addressing its power requirements and said cement plant was a green field mega project. The petitioner no 1 has taken numerous steps for obtaining various permissions and leases from different governmental departments. The petitioner no 1 also took concrete steps to acquire loans, equipment and land. The Ministry of Coal, Government of India vide advertisement dated 06/13.11.2006 invited applications for the allocation of coal blocks including Thesgora-B/Rudrapuri Coal Block in the State of Madhya Pradesh. The 36th Screening Committee concluded its deliberations on 03.07.2008 and recommended allocation of Thesgora-B/Rudrapuri coal block jointly to the petitioner no 1 and M/s Kamal Sponge Steel Power Ltd and thereafter a Joint Venture Agreement dated 03.09.2008 was executed. The Ministry of Coal vide letter dated 21.11.2008 allocated Thesgora-B/Rudrapuri Coal Block in the State of M.P. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he attached immovable property. The applicant/ petitioner no 1 prayed that the attached immovable property i.e. land admeasuring 26.76 hectares situated at Village Saha, Tehsil Raghurajnagar, District Satna (M.P.) having a total value of Rs. 4,68,60,710/- owned by the applicant/petitioner no 1 be released and be substituted with a bank guarantee in the sum of Rs. 4,68,60,710/-. 2. The respondent no 3 filed reply wherein preliminary objection stated that the present application is not maintainable on the ground of forum non convenience as the petitioner no 1, attached property and the respondent no 3 are based in the State of Madhya Pradesh, and referred decision dated 02.03.2022 passed by this court in M/s Faith Cricket Club V Directorate Of Enforcement, W.P.(C) 3603/2022, CM APPL 10600/2022 10601/2022. The provisional attachment order is also passed in Indore. CBI registered a case vide FIR No RC-219/2014/E0014 dated 30.07.2014 for commission of offences under section 120B read with section 420 IPC and section 13 (2) read with section 13 (1) of Prevention of Corruption Act, 1988 against various accused including the petitioner no 1. The charge sheet bearing no 13/2017 dated 10.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2 (1) (u) of the Act. The Original Complaint bearing No. 1208/2019 as per section 5 (5) PMLA was filed on 14.10.2019 before Adjudicating Authority for adjudication. The Adjudicating Authority issued a notice to show cause to the petitioner no 1 and other as per section 8 (1) PMLA. The Adjudicating Authority vide orders dated 02.03.2020 and 23.11.2020 has confirmed the provisional attachment order and attachment of the properties attached under section 5 (1). The properties in question are already under attachment/restrain due to issuance of provisional attachment order issued by the respondent no 3 which has been confirmed by the Adjudicating Authority under PMLA. It was prayed that the application is liable to be dismissed. 3. The petitioners filed the rejoinder. 4. Section 5 PMLA deals with attachment of property involved in money laundering. Section 5 (1) provides that where the Director or any other officer not below the rank of Deputy Director authorized by the Director has reason to believe to be recorded in writing on the basis of material in his possession that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring RC No. 219 2014 (E) 0014 dated 30.07.2014 under sections 120-B read with section 13 (2) read with 13 (1) (d) of the Prevention of Corruption Act, 1988 was registered against various accused including the petitioner no 1. The respondent no 2/ED on 30.12.2014 also registered ECIR No. 03/INSZO/2014 under Section 3/4 of PMLA under Sections 420/120-B IPC and the Charge Sheet was filed on 10.08.2017 against 6 accused persons including the petitioner no1 under sections 420 120B IPC and section 13 (2) read with section 13 (1) (d) of the Prevention of Corruption Act, 1988. The investigation was conducted as per PMLA and total proceeds of crime worth Rs. 49.2 crores was quantified during the investigation. The properties worth of Rs. 49.2 crores were attached vide two provisional attachment orders. The Provisional Attachment Order No. 01/2019 dated 28.3.2019 attached land admeasuring 339.94 acres situated at District Satna having registered sale value of Rs. 13,34,58,985/- and construction work thereon worth Rs. 15,61,99,810/- which were stated to be directly linked with the proceeds of crime under section 5 PMLA. Thereafter Original Complaint bearing No. 1132/2019 as per section 5 (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts group companies. This share capital was accrued as a result of allocation of the coal block only and therefore it is nothing but proceeds of crime generated directly out of the criminal activity related to the schedule offence. The said proceeds of crime, as defined under section 2 (1) (u) of PMLA, 2002 was placed, layered and finally integrated into purchase of immovable properties in the form of land parcels admeasuring 339.94 acres, construction work over the said land, invested as share capital in company M/s Thesgora Coal Private Limited and in Capital-Work-In-Progress, which are being projected as untainted. Accordingly, balance to the extent of Rs. 19,52,845/- in the bank account No.058111023776 of M/s TCPL with Dena Bank which is directly linked with the proceeds of crime, land admeasuring 26.76 hectares situated at Village Saha, Tehsil Raghurajnagar, Dist.Sntna which was acquired at Rs. 4,68,60,710/- out of proceeds of crime and personal properties of Mr.Umesh Shahra, Director beneficial owner of M/s RCPL, to the extent of Rs. 15,34,44,950/- are considered for attachment as value of any such property, as provided under Section 2 (1) (u) of the Act. 6. Sh. Vijay Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the respondent no 2/ED has wide powers not only to attach direct proceeds of crime but also to attach properties at equivalent value of proceeds of crime. Accordingly attached property can be substituted with a property of an equivalent value and by this no prejudice shall be caused to the respondent no 2/ED. It is argued that the application be allowed. 7. Sh. P.V. Yogesewaran, the Counsel for Directorate Of Enforcement/the respondent no 2 advanced arguments on behalf of the respondents and argued that the proceeds of crime as defined under Section 2 (1) (u) PMLA is not a mere a property. The applicant/petitioner no 1 placed reliance on Rule 5 (5) of The Prevention Of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed By The Adjudicating Authority) Rules, 2013 to contend that the proceeds of crime can be substituted with fixed deposits but said provision is applicable to the properties which is under joint ownership . The counsel for the respondent no 2/ED further argued that attachment proceedings are part of confiscation proceedings and the object of attaching proceeds of crime which is involved in the process of money laundering is to preserve the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership. There is no legal force in argument advanced by the counsel of the applicant/petitioner no 1 regarding applicability of Rule 5 (5). 10. Sh. P. V. Yogeshwaran, the counsel for the respondent no 2/ED argued that the High Courts under Article 226/227 of the Constitution can interfere with the order passed by the statutory authorities/tribunals only when it is against principles of justice, equity and good conscience but none of these parameters are met in the instant case. He further argued that any order passed under PMLA can be tested under the provisions of PMLA and High Court while exercising power under Articles 226 and 227 may not downplay the statutory enactment. Sh. Vijay Aggarwal, the counsel for the applicant/petitioners argued that the High Courts can judicially review an administrative order in terms of the Wednesbury Principles and cited Prince Pal Singh V State of Haryana and another, 2018 SCC OnLine P H wherein it was held that an administrative decision is subject to judicial review in exercise of supervisory writ jurisdiction of High Court under Article 226 of the Constitution of India although High Court cannot act as an Appellate Court but the administrative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th fixed deposit and observed that the Appellate Tribunal may be right in saying that there is no provision under PMLA and the Rules made thereunder for replacement of attached immovable property for some other property. The Telangana High Court also referred VGN Property Developers Private Limited V Deputy Director, Directorate of Enforcement, 2018 SCC OnLine ATPMLA 23 wherein it was observed that there is no specific provision under PMLA for substitution of property provisionally attached by the Enforcement Directorate and thereafter confirmed by the adjudicating authority, there is also no provision that the said power cannot be exercised by the Appellate Tribunal under Section 35 (1) of PMLA. Accordingly in absence of any specific power vested either with Adjudicating Authority or Appellate Tribunal under PMLA, writ petition under Article 226/227 of the Constitution is maintainable. There is no force in argument advanced by the counsel for the respondent no 2/ED that present writ petition is not maintainable. 11. Sh. Vijay Aggarwal, the counsel for the applicant/petitioner no 1 argued for substitution of attached property i.e. land admeasuring 26.76 hectares situated at Village ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Enforcement another, W.P.(C) 11264/2021 also expressed agreement with proposition of law as observed in Joint Director, Directorate of Enforcement V A. Raja others. 11.2 The Supreme Court in various cases has ordered for substitution of attached property. The Supreme Court in Order dated 16.09.2022 passed in SLP (C) no 9335/2022 titled as Esskay Properties and Investment Private Limited another V Union of India others lifted the attachment order on producing the fixed deposit of Rs. 3,00,00,000/- in lieu of part of the attached property with no lien of any other party except the Enforcement Directorate and order of attachment was allowed to be substituted by fixed deposit although without prejudice to the rights and contentions of the parties in the proceedings to be instituted before the Appellate Authority. It was observed as under:- Shri S.V. Raju, learned ASG is not in a position to satisfy the Court why two properties are put to attachment when, at the most, one property was sufficient for the amount involved, i.e., Rs. 3,00,00,000/- (Rupees Three Crores). Be that as it may, as the petitioner is ready and willing to deposit Rs. 3,00,00,000/- (Rupees Three Crores) in fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is also no provision that the said power cannot be exercised by the Appellate Tribunal under Section 35 (1) of PMLA. In the facts of that case, prayer of the appellant for releasing the attached property was allowed by accepting the alternative property offered by the appellant. However, we may point out that even this decision was rendered by the Appellate Tribunal when appellate proceedings were pending before the Appellate Tribunal with the provisional attachment order and confirmation order still holding the field. 23. Before we advert to the order of the Appellate Tribunal insofar the related appeal is concerned, we may mention about Rule 5 (5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 which says that where the attached immovable property as confirmed by the adjudicating authority is in the form of land, building, house, flat etc. and is under joint ownership, the authorised officer may accept the equivalent value of fixed deposit to the extent of the value of the share of the concerned person in the property estimated by the authorised officer to be involved in money laun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide impugned Provisional Attachment Order also provisionally attached immovable property admeasuring 18.928 hectares situated at Village Sejwaya, Tehsil District Dhar (M.P.) having a total value of Rs. 20,96,00,000/- to the extent of Rs. 15,34,44,950/- while land admeasuring 26.76 hectares situated at Village Saha, Tehsil Raghurajnagar, District Satna (M.P.) which is sought to be having a total value of Rs. 4,68,60,710/-. Accordingly as an alternative arrangement/substitution, entire immoveable property admeasuring 18.928 hectares can be ordered to be attached which will also include value of 26.76 hectares amounting to Rs. 4.68,60,710/-. 13. In view of above discussion the land admeasuring 26.76 hectares situated at Village Saha, Tehsil Raghurajnagar, District Satna (M.P.) having a total value of Rs. 4,68,60,710/- and attached vide impugned Provisional Attachment Order No 2/2019 dated 23.09.2019 is ordered to be substituted by bank guarantee of equivalent amount to be furnished by the applicant/petitioner no 1 in favour of the respondent no 3 within 15 days who shall be having lien over said FDR. The bank guarantee shall be kept alive by periodical renewal till conclusion of tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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