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TMI Blog2024 (6) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... DLI/2018 (Exem.) FPA-PMLA-2487/DLI/2018 MP-PMLA-4840/DLI/2018 (Stay) MP-PMLA-4841/DLI/2018 (Exem.) FPA-PMLA-2488/DLI/2018 MP-PMLA-4881/DLI/2018 (Stay) FPA-PMLA-2512/DLI/2018 MP-PMLA-4883/DLI/2018 (Stay) FPA-PMLA-2513/DLI/2018 MP-PMLA-4885/DLI/2018 (Stay) FPA-PMLA-2514/DLI/2018 MP-PMLA-4887/DLI/2018 (Stay) FPA-PMLA-2515/DLI/2018 JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN And SHRI V. ANANDARAJAN : MEMBER For the Appellants : Mr. Mehendra Pratap , Advocate For the Respondent : Mr. Priyank Khattar , Advocate JUDGEMENT This set of 13 appeals arises out of the order of the learned Adjudicating Authority ("AA") under the Prevention of Money Laundering Act, 2002 ("PMLA, 2002") dated 09.07.2018 confirming the Provisional Attachment Order ("PAO") passed by the Directorate of Enforcement, Delhi under section 5(1) of the Act through which various immovable and movable properties of the appellants herein were attached. 2. The relevant facts, as recorded in the impugned order passed by the Ld. AA are that on the basis of a complaint by the Deputy Director, Directorate of Revenue Intelligence (DRI), Lucknow Zonal Office, a case vide FIR No: 76 dated 18.01.2015 was registered at Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th of bogus documents and remitted the same outside India with the connivance of forex dealers/agents such as Duggal Forex, P.R. Forex and M/s Kamakhya Forex Pvt. Ltd., all based in Delhi. For the said purpose, Shri Manish Jain had also set up his own concern, namely, M/s Pacific Technology in Hong Kong in 2004. Foreign exchange remittances were made into the HSBC account of the said entity. The foreign exchange remitted to the said HSBC account was further transferred to firms based in China/ Hong Kong/ USA/ India etc. He also admitted that the remittances were made on account of under-valuation made by Indian importers who imported mainly from Chinese firms and over-invoicing made by Indian exporters whose names and account numbers were provided to him to transfer the specified amount of money in the accounts of Chinese, Indian and other firms. A major portion of foreign exchange remitted to Hong Kong was received in India from importers, namely, M/s Brother Impex and M/s Shri Krishna Overseas of Delhi and others. Funds were also transferred into the accounts of various exporters in India from the accounts of companies in Hong Kong belonging to Shri Manish Jain. 7. Consequent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant in connivance with accused Manish Jain has acquired proceeds of crime in the form of foreign exchange against fake import documents and remitted the same outside India to launder the said money in the garb of remittance against advance import in order to conceal fraudulent exports/imports. It is also contended that the aforementioned proceeds of crime have been used in acquiring properties which fall within the definition of „proceeds of crime‟ and have been attached following due process of law. 13. We have considered the submissions made from both sides and perused the material on record. One of the main contentions raised on behalf of the appellant is that she had her own independent sources of income out of which the properties in question were acquired. Having perused the case records and considered the verbal arguments presented before us, we do not find any evidence to substantiate the claim that the appellant had sufficient income from explained and legitimate sources to acquire the assets in question during the period when the same were acquired. No details as to the nature of business or profession carried on by the appellant have been submitted excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice has validly been served upon a person under section 8(1), it is for that person to indicate the sources of his/her income, earning or assets out of which or by means of which he/she has acquired the property. The presumptions mandated under section 23 and 24 of the Act are also against the appellant. Having given careful consideration to materials on re cord and the arguments presented before us on behalf of the appellant, we do not find that the appellant in the present case had presented any such proof either before the Ld. AA or even during the proceedings before this Appellate Tribunal to establish the legitimate sources of acquisition of the properties attached by the respondents. It is noteworthy that the appellant in this case is none other than the wife of the main accused Shri Manish Jain. The case is one which involves a web of inter- connected transactions between multiple individuals and entities. There is every reason to believe that the proceeds of crime were parked and layered by the main accused in the form of immovable properties in the name of his wife among other persons and entitles of the group. 15. Accordingly, this appeal is dismissed and the attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018. Two amounts, namely, Rs. 1,81,556/- and Rs. 7,60,099/- standing to her credit in the accounts maintained with the South Indian Bank, Rajouri Garden and the ICICI Bank, Patel Nagar respectively, have been attached. 22. It is contended on behalf of the appellant that the amounts attached represent her legitimate income from her profession, income from short-term capital gain and commission income. The bank accounts were duly disclosed in the ITRs. Copies of ITRs for the period 2014-18 have been filed to substantiate the contention. 23. It is further submitted that the complaint is completely silent on the money trail of the alleged proceeds of crime. There is nothing in the entire complaint to show that any proceeds of crime flowed to her. The complaint nowhere shows any link between the bank balances and the alleged proceeds of crime. No enquiries were made by the complainant department with the appellant in respect of the aforesaid bank balance at any stage and arbitrarily, without any lawful cause, the department proceeded to freeze the bank balance without even an intimation to the appellant. There is neither any statement nor any document which speaks against the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources of acquisition of property which has been attached. The onus of proving the legitimacy of the transactions through which the balances in the bank account were acquired and the sources thereof was upon the appellant. However, we find that the submissions made by the appellant are of a broader nature, including existence or otherwise of reason to believe, absence of any allegations or charges personally against the appellant, absence of money trail etc. No specific evidence to substantiate the legitimacy of the sources of the funds in the individual bank accounts of the appellant have been presented before us, nor have the transactions therein been explained. Accordingly, we are of the view that the appellant has failed to discharge the burden of the proof which was cast upon her under the Act to explain the sources out of which the attached properties were acquired. 28. In light of the above discussions, the present appeal is hereby dismissed along with pending applications, if any. FPA-PMLA-2479/DLI/2018 29. Shri Sanjeev Wadhwa, the appellant in this appeal, is the brother of Shri Rajeev Wadhwa, who is one of the accused persons in the supplementary prosecution complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the accounts of Kamakhya Forex on his directions. 33. We have carefully considered the material on record and the arguments presented before us. The appellant Shri Sanjeev Wadhwa had incorporated the company M/s P R Forex Pvt. Ltd. which is one of the concerns through which the illegitimate foreign currency transactions were carried out by the principal accused. Further, as per the statement of Shri Rajeev Wadhwa, brother of the appellant and one of the accused persons in this group of cases, Shri Sanjeev Wadhwa was running the business of M/s Kamakhya Forex Pvt. Ltd. in which his wife Bhawna Wadhwa is a director. The above facts indicate that the appellant was very much a part of the operations carried out by the group. He was the founder of one of the key business entities of the group i.e., P R Forex Pvt. Ltd. and was associated with the business activity of another entity of the group in which his wife was a director namely, Kamakhya Forex Pvt. Ltd. Shri Rakesh Jain, brother of Shri Manish Jain had stated in his statement that among others, his brother received heavy cash from Shri Sanjeev Jain and that most of the firm, heavy cash was delivered by Sanjeev, Rajeev or their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of income by means of which the appellant had acquired the properties attached were duly explained and there is nothing in the complaint to show any nexus between any proceeds of crime and the provisionally attached property. The appellant is not named in the FIR, the ECIR or the prosecution complaint. 38. According to the respondents, the accounts in the name of Gurdeep Kumar Gujral & Sons are likely to have been operated by Shri Gurdeep Kumar Gujral himself, who was one of the accused in the 2nd supplementary prosecution complaint filed on 06.10.2018. 39. We have considered the contentions from both sides and perused the material on record. At the outset, we note that the appellant is an HUF of which the Karta is Shri Gurdeep Kumar Gujral, one of the accused in the case. The main accused, Shri Manish Kumar Jain had stated in his statement under Section 50 of the PMLA, 2002 that Shri Gurdeep Gujral, among others, worked with him during 2006-2010 and 2012-2014. The properties attached are balances available in banks. It was incumbent upon the appellant to present specific evidence to establish the legitimacy of the sources of the balances in the said accounts. However, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said FDRs. There is not even a whisper in the complaint about the explanations offered in respect of the seized FDRs. There is no justification to retain the seized FDRs beyond 180 days. There are no allegations against the appellant in the original complaint or the FIR or ECIR or the complaint filed under PMLA, 2002. It is further contended the appellant had made the above submissions before the Ld. AA vide her reply dated 04.04.2018. The order has been passed mechanically, without any application of mind and the submissions made by the appellant have been ignored by the Ld. AA which has not given any findings on the same. There is absolutely no basis or material to even remotely infer that the appellant has derived any property as a result of any criminal activity relating to a scheduled offence. 43. The respondents have pointed out that the appellant had no separate/personal source of income. Her likely source of income would be from the earnings of her sons, namely, Gurdeep Kumar Gujral and Parvesh Kumar Gujral, who were directors in P R Forex Ltd. The appellant had depended on her sons for her day-to-day expenses and properties purchased/invested in her name were actually pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in lawful business and is an income-tax assessee. The sources of the bank balance were legitimate income of the appellant which was duly reflected in the ITRs. Copies of ITRs for the period 2014-2018 have been filed by the appellant to substantiate the claim. It is contended that the complaint is totally silent on the money trail of the alleged proceeds of crime. The complaint nowhere shows any link of the subject bank balances and the alleged proceeds of crime. No enquiries were made by the complainant department with the defendant at any stage, and arbitrarily, and without any lawful cause, the respondent proceeded to freeze the aforesaid bank balances without any intimation to the appellant. There is neither any statement nor any document which speaks against the appellant and the appellant has been unnecessarily dragged into the matter. The appellant had made these submissions before the AA vide reply dated 04.04.2018. Nevertheless, the AA proceeded to confirm the PAO. The appellant is not named in the FIR, the ECIR, or the prosecution complaint. 49. The respondents, on the other hand, have pointed out that her likely source of income would be from the earnings of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounts maintained with the South Indian Bank, Rajouri Garden have been attached. 52. It is contended on behalf of the appellant that the appellant was not implicated in the statements of the main accused Shri Manish Jain recorded on 17.04.2014, 07.08.2014, 13.10.2014 & 15.10.2014. Similarly, statements of a large number of witnesses, including the employees of Shri Manish Jain, bank employees and others, were recorded and none of them made any allegation against the appellant. It is also contended that no investigation was made against Shri Ravinder Jolly and his 25 associates whose names and contact numbers were mentioned by Shri Manish Jain who stated that he had carried out transactions under the directions of these persons. The appellant is not a noticee in the Show Cause Notice issued by the DRI for violation of the provisions of the Customs Act. The appellant is not named in the FIR, the ECIR or in the prosecution complaint. 53. As regards source of the amounts attached, it is stated that the same were the sale consideration of Rs. 1,10,00,000/- of her property at the first floor, A-132, Lok Vihar, Pitampura, New Delhi Received from Shri Amit Kumar and Shri Mohit Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he source of the bank balances provisionally attached either through any written communication or when they attended the office of the complainant department. The Chartered Accountant of the appellant was called a number of times by the complainant department and he fully cooperated and furnished voluminous documents called by the department. The balance of Rs. 5,14,048/- available in the bank account of the company maintained with the South Indian Bank, New Delhi and FD of Rs. 7,84,337 /- with the same bank have been attached by the complainant department. There is nothing in the complaint to show as to how the complainant has come to the conclusion that the amounts represent proceeds of crime. There are no allegations regarding the defendant having obtained or received any proceeds of crime. There is nothing in the complaint to show as to which particular proceeds of crime are generated from which scheduled offence and the manner of acquisition and projection of the alleged proceeds of crime. The complaint is totally silent to link the aforesaid balances with any proceeds of crime. The bank balances attached are the legitimate income of the defendant which was duly recorded in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attached. The respondents have pointed out that Shri Rakesh Jain, the appellant's father and Shri Manish Jain, the main accused in these cases, purchased some properties (both movable and immovable) in their own names as well in the names of their family members. 62. It is contended on behalf of the appellant that the FDR of Rs. 34,823/- was in no way connected with the alleged proceeds of crime which are to the tune of Rs. 600 crores. It is contended that the appellant's mother, Mrs. Vinita Jain deposited a sum of Rs. 30,000/- in her name which was out of small savings, cash gifts on the occasion of festivals etc. There is no nexus between the amount and the alleged proceeds of crime. The respondent Directorate has also not disputed the source of the money. Furthermore, she was a minor, aged about 13 years at the relevant time. She is not named in the FIR or the ECIR, and no prosecution complaint has been filed against her. 63. Having considered the rival contentions and perused the impugned order, we find that no proper justification has been provided by the respondents for the attachment of the small amount of money in the account of the appellant. Moreover, the explanation pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rakesh Jain whereas the said FDRs were in fact the property of the appellant and not her son, Shri Rakesh Jain. The appellant has nothing to do with the alleged crime and has been unnecessarily dragged into the matter because of complete non application of mind on the part of the respondent directorate as well as the Ld. AA. It is pointed out that the respondent filed a combined rejoinder to the replies filed by Defendants No. 3, 4, 5, 7 and 8 in the complaint. In the said rejoinder, the respondent has not disputed the contentions raised by the appellant and has merely reiterated the facts of the complaint with which the present appellant is in no way associated. Even so, the learned AA has confirmed the order. The said order of the Ld. AA is perverse in nature and has been passed in a stereotyped manner without application of mind. The authority has not appreciated that there is no nexus between the properties of the appellant, i.e., the FDRs and balances in the savings bank, and the alleged crime. The subject properties of the appellant are in no manner connected with either the predicate offence or the alleged proceeds of crime. The AA failed to appreciate that the directorate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a current account with the said bank. For the purpose of issue of travelling cards, the bank kept FDR with it from the appellant as a pledge/security. The said account was opened was 25.06.2013 and since the beginning, such FDR was kept with the bank as security and was renewed from time to time. The attached FDR of Rs. 6,00,000/- is nothing but the FDR kept with the bank as security in the normal course of business. The appellant has been filing its ITRs since the start of operation and has been assessed to tax. There is no nexus between the alleged offence and the property of the appellant provisionally attached and it is nowhere mentioned in the complaint or even the Show Cause Notice dated 21.02.2018 that the properties of the appellant provisionally attached are related to the alleged offence or proceeds of crime. Even the respondent Directorate has not disputed the source of income stated by the appellant in its reply. The appellant is not named in the FIR or the ECIR or the prosecution complaint. 71. The respondents have contended that the said company was run by Manish Jain, Rakesh Jain and their brother Neeraj Jain. It is further contended that Manish, Rakesh and Neeraj J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter. It is also pointed out that the directorate had filed a common rejoinder before the Ld. AA to the replies file by Defendants No. 3, 4, 5, 7 & 8. In the said rejoinder the respondent did not dispute the contentions raised by the appellant except repeating the facts of the complaint to which the appellant is in no way associated. Neither in the PAO nor in the complaint or the said rejoinder is it mentioned anywhere how the amount of the appellant sought to be attached is related to or has any nexus with the alleged proceeds of crime. However, the Ld. AA confirmed the PAO without considering the submissions made by the appellant. It is contended that the impugned order is perverse in nature and has been passed in stereotyped manner without application of mind. The source of income explained by the appellant in her reply affidavit before the Ld. AA has not been disputed by the respondent directorate. 75. The respondents, on the other hand, have pointed out that the appellant has no personal source of income of her own and the amount attached in the various accounts maintained in the name of Vinita Jain are nothing but the earnings of her husband, Rakesh Jain from his businesses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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