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TMI Blog2023 (12) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... in possession of the proceeds. The Competent Authority passed the order of attachment was not having information that an Official Liquidator has been appointed. The information was given only to the Adjudicating Authority - the argument in reference to section 5(1) of the Act of 2002 alleging mis-joinder of parties is not made out. The facts available on records shows a serious allegation against the accused for inviting investments on higher rate of interest and then investors were denied interest and refund of amount. Thus, the accused had cheated the investors. The apprehensions of the respondent was that proceeds of crime or the property of equivalent value of the proceeds of crime may be transferred or alienated, thus the attachment of the property was made. In view of the aforesaid, ground of misjoinder in reference of section 5(1) is not made out. Non compliance of section 8(1) of the Act of 2002 - HELD THAT:- As per section 8(1), the Adjudicating Authority remain under obligation to have reasons to believe that any person has committed an offence under section 3 of the Act of 2002 or is in possession of proceeds of crime then to serve a notice of not less than thirty days c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch may generate the proceeds of crime and if laundered, then an offence under section 3 of the Act of 2002. It is however made clear that the prima facie opinion of Adjudicating Authority is not conclusive, rather it would be recorded by the Special Court in criminal case and accordingly the issue is clarified to the extent - there are no reasons to cause interference in the impugned order. The appeals are disposed of. - JUSTICE MUNISHWAR NATH BHANDARI, CHAIRMAN AND RAJESH MALHOTRA, MEMBER For the Appellant : Hardik Sharma, Rachit Bansal and Ms. Muskan Aggarwal, Advs. For the Respondent : N.K. Matta, SPP and Aaditya Raj Sharma, Adv. ORDER FPA-PMLA-2925 to 2940/MUM/2019 1. The batch of appeals have been filed under section 26 of the Prevention of Money Laundering Act, 2002 (in short the Act of 2002) to challenge the order dated 27/12/2014 passed by the Adjudicating Authority confirming the provisional attachment order. 2. Brief facts of the case:- It is a case where a complaint was registered on 30-12-2013 against M/s Birla Power Solution Limited and its Directors namely:- Sl. No. Name Designation 1 Sh. Yashovardhan Birla - Chairman/Director 2 Sh. P.V.R. Murthy - Managing Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 investors filed the complaint against Birla Power Solution Limited and its Director. In the investigation, it was found that the money collected from the investors was siphoned off and laundered by transfer to other companies and mainly the entities of Birla Power Solution Limited. 7. The statement of the accused were also recorded who submitted that the investment were invited to expand the business and to cover the shortage of capital. The deposits so received from the investors was transferred to the group of companies which includes M/s Birla Surya Limited which alleged to have siphoned of the money thus, an offence of money laundering was found. 8. The respondent finding a case of money laundering sought to attach the properties to safeguard the interest of the investors during the pendency of the criminal case. They accordingly attached several properties of M/s Birla Surya Private Limited to whom the money was transferred by Birla Power Solution Ltd and its Directors. It was to secure the proceeds of crime so transferred to M/s Birla Surya Ltd. The appellant had transferred money to different group of companies. It was even on short term basis. The transactions were noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. It is stated that the properties attached are under the control of Official Liquidator. The Adjudicating Authority passed the impugned order without an opportunity of hearing, to the Official Liquidator. Thus, also, the impugned order deserves to be set aside . 12. It is also submitted that section 8(2) and (3) of Act of 2002 have not been complied rather Adjudicating Authority recorded finding going beyond its power under those provisions. The Adjudicating Authority has no power to hold that a predicate offence has been committed by the defendants. In fact, the jurisdiction for it lies with the Special Court, yet a finding for commission of offence has been recorded. Thus, for the aforesaid reasons also, the order deserves to be set aside. 13. The arguments raised by the appellant and even submitted written arguments for it have been contested by the counsel for the respondent. Their arguments would be discussed while drawing the conclusions on each issue. 14. The appellant have submitted that there was a mis-joinder of parties. The proceedings were taken by the Adjudicating Authority against appellant despite not in possession of proceeds of crime. 15. A reference of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t apart from M/s Birla Power Solution Limited, M/s Birla Surya Limited was also party before the Adjudicating Authority but remain unrepresented in spite of the notice. Who appeared before the Adjudicating Authority out of the defendants are :- (1) Sh. Yashwardhan Birla. (2) Sh. P.V.R. Murthy (3) M/s Shearson Investment Private Limited (4) M/s Godavari Corporation Pvt. Ltd. and lastly (5) M/s Nirved Trades Ltd. 17. All other defendants before the Adjudicating Authority remain unrepresented. It is submitted that the proceeds of crime was in the hands of M/s Birla Surya Ltd. but an Official Liquidator was appointed. Thus, the proceeds of crime was under the possession and control of the Official Liquidator, but he was not given an opportunity of hearing despite the mandate under section 5(1) of the Act. We do not find any mandate under section 5(1) that before attachment of the property, the Official Liquidator was required to be heard by the Adjudicating Authority. The provision for hearing is given under section 8(1) of the Act. Section 5(1) provides for attachment against any person in possession of proceeds. At the relevant time defendant was in possession of the proceeds. The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. 20. It is alleged that the properties attached are under the control of Official Liquidator and prayer was specifically made to issue notice to the Liquidator in compliance of section 8(1) of the Act of 2002. Despite a request, notice was not issued to the Official Liquidator having control and possession of the property and thereby section 8(1) was not complied. 21. We have considered the submission and find that as per section 8(1), the Adjudicating Authority remain under obligation to have reasons to believe that any person has committed an offence under section 3 of the Act of 2002 or is in possession of proceeds of crime then to serve a notice of not less than thirty days calling up the person to indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall (a) continue during the pendency of the proceedings relating to any scheduled offence before a court; and (b) become final after the guilt of the person is proved in the trial court and order of such trial court becomes final. 25. It is submitted that Adjudicating Authority has recorded finding that defendants before it have committed the scheduled offence, generated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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