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TMI Blog2019 (8) TMI 1911X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant was a 'Claimant' to the said Property in terms of proviso to Section 8(2), PMLA, in view of material available on record. Despite the above, Respondent and the Adjudicating Authority did not issue notice to the Appellant or to afford a hearing to him, during the adjudication proceedings. Thus, the mandatory statutory requirement of the Proviso to Section 8(2), PMLA, the Respondent was cognizant of the details regarding the purchase of the said property and was in possession of the relevant documents. A bare perusal of the same shows that the said Property could not have been attached as proceeds of crime , even if one were to invoke the concept of equivalent value . Locus standi - HELD THAT:- It is settled law that the rights in any asset of a company acquired by any person prior to initiation of the winding-up proceedings against the said company are absolute and cannot be defeated by the winding-up proceedings, subject to the transaction being an arms-length transaction - In the present case, the Agreement to Sell entered into by the Appellant with M/s UBHL is dated 21.05.2012 and the entire purchase consideration was duly paid in advance by 22.09.2012 i.e. prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 612/2016 was filed against Shri Vijay Mallya, M/s Kingfisher Airlines Ltd. Ors., under Section 5(5) of the PMLA, 2002, wherein certain properties (movable immovable properties) have been attached provisionally under Provisional Attachment Order No. 11/2016 dated 11.06.2016, under Section 8(3) of the PMLA, 2002. 6. The Enforcement Directorate, Mumbai has registered a case against Shri Vijay Mallya, M/s Kingfisher Airlines Ltd. (KAL) and others under Prevention of Money Laundering Act (PMLA), 2002, in the matter of IDBI Loan of Rs. 900 Crores. 7. The properties mentioned in the aforesaid Provisional Attachment Order have been provisionally attached under Section 5(5) of PMLA, and the same has been duly confirmed by the Adjudicating Authority in its order in Original Complaint No. 612/2016 dated 01/12/2016, which also includes the property as mentioned by the Appellant. 8. It is submitted on behalf of respondent that the impugned provisional attachment has been made by invoking provision of Section 2(1)(u) of PMLA, 2002, which empowers the Complainant (an authority under PMLA) to attach properties of equivalent value of Proceeds of crime to the offender. Hence, during the course of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 12.4.2011 executed by the Appellant and Respondent No. 5 and 8 herein confirming the receipt of Rs. 1,00,00,000/-. Entire sale consideration remitted by the Appellant to UBHL (Bank Account Statement. 12.5 1st Consideration: Rs. 1,00,00,000/-(Cheque No. 021540) on dated 5.1.2011. 2nd Consideration: Rs. 17,38,79,000/-(Banker Cheque No./D.D. No. 793499) on dated 22.9.2011. 3rd Consideration: Rs. 1,00,00,000/-(Banker Cheque No./D.D. No. 793500) on 22.9.2011. Receipt issued by UBHL to Deccan Mining Syndicate Pvt. Ltd. Acknowledging receiving of Rs. 18,38,79,000/- on dated 30.09.2011. 12.6 Agreements executed on 21.05.2012 among the Appellant, Respondent no. 5 and Respondent No. 8 for sale of Flat No. 7A and proportionate undivided area in the underlying land: Agreement to sell Construction Agreement 12.7 The FIR was registered for predicate offence on 29.07.2015.No allegation against the Appellant, to the best of Appellant's knowledge. 12.8 ECIR No. ECIR/03/MBZO/2016 was registered on 29.01.2016. No allegation against the Appellant, to the best of Appellant's knowledge. 12.9 The Provisional Attachment Order No. 11/2016 passed on 11.06.2016. There is no role attributed to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-ED is a party and as such also, the said proceedings can never have any bearing on the adjudication of the instant Appeal. However, it is clarified that the Appellant has filed the two applications before the Hon'ble Karnataka High Court being Interlocutory Application No. 7 and 8 of 2018 seeking impleadment and directions, which are still pending. The same have no bearing on these proceedings. (d) It is submitted that there is no overlap in the jurisdiction of the Hon'ble High Court or this Tribunal in deciding the respective proceedings pending before them. In the event there was any overlap, the Hon'ble High Court, which is cognizant of pendency of these proceedings, would have directed that these proceedings should not continue till disposal of the proceedings before the Hon'ble High Court, which is not the case herein. (e) It is further submitted that the proceedings before the Debt Recovery Tribunal were inter alia between the secured creditor banks and M/s United Breweries [Holdings] Ltd., under a special enactment for recovery of dues. (f) The present Appeal is a statutory appeal under Section 26 of the PMLA. It is reiterated that the Appellant is not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the purchase of the said Property by the Appellant; however, the ED, either consciously did not investigate the same or if it did investigate it, then the same did not result in any inculpatory findings. 18. There is no material on record to show that the Appellant has any link, association or relation with any of the Defendants in the captioned Original Complaint. 19. The entire purchase consideration was funded from the Appellant's own income/personal funds obtained from legitimate and fully documented sources, as supported by the Appellant's Bank Statement. Therefore, it cannot be said that the Appellant and the Respondents 5 and 8 acted in concert or that the purchase of the said Property, was part of any conspiracy related to the predicate offence or the alleged offence under the PMLA. 20. It appears from the Impugned Confirmation Order that the Enforcement Directorate/Respondent and the Adjudicating Authority were aware that the Appellant was a 'Claimant' to the said Property in terms of proviso to Section 8(2), PMLA, in view of material available on record. Despite the above, Respondent and the Adjudicating Authority did not issue notice to the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant and defeat the valuable property rights of the Appellant herein. 24. The Respondent ED's submission that if the present Appeal is entertained by this Tribunal, it would result in according priority to the Appellant's claims over the claims of other secured creditors is wholly misconceived. It is reiterated by the Appellant that he is neither seeking any direction from this Tribunal that the Appellant be handed over the possession of the subject Property nor that the sale deed(s) in respect of the subject Property be executed by M/s UBHL in favour of the Appellant. The scope of the present Appeal is limited to the determination as to whether the subject Property is involved in money-laundering or not. In respect of other reliefs which are beyond the scope of PMLA, the Appellant has filed relevant applications before the Hon'ble Karnataka High Court seeking impleadment and directions. 25. It is settled law that the rights in any asset of a company acquired by any person prior to initiation of the winding-up proceedings against the said company are absolute and cannot be defeated by the winding-up proceedings, subject to the transaction being an arms-length tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has executed Agreement to Sell, Construction Agreement and has also paid the full purchase consideration. Furthermore, all these documents were executed much prior to the registration of ECIR and FIR in the captioned Original Complaint. Additionally, it is submitted that the Appellant has paid sufficient Stamp Duty on the Agreement to Sell and the Construction Agreement. This too, shows that the subject-property is not involved in money-laundering. 30. It is further submitted that even at the stage of Section 8(8), PMLA, that is, confiscation, the only requirement upon a claimant to seek restoration of the subject-property is only to show that he has a legitimate interest in the subject-property. In other words, the test of title/ownership, which the Respondent is seeking to now invoke in the captioned appeal, is not relevant even at the stage of confiscation under Section 8(8), PMLA, which is a stage much advanced to the stage at which the instant proceedings are pending. 31. The proceedings relied upon by the ED in its Reply are the following: a. O.A. No. 766/2013 before the Debts Recovery Tribunal; b. Writ Petition No. 38870/2013, 39048-39052/2017 and 39053/2017; c. COP No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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