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TMI Blog2024 (10) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... he criminal activity relating to the alleged scheduled offence. HELD THAT:- It is an admitted fact that the land has been transferred to the Appellant Trust by the Government of Odisha under a lease deed with certain rights and liabilities but the title of the land has not been passed over to the Appellant Trust. The lease is for 99 years with effect from 11-1-2007 for a premium of Rs. 20 Lakhs at the rate of Rs. 1 lakh per acre with yearly rent of Rs. 20 thousand and cess of Rs. 15 thousand at the rate of 75 percent of the annual rent or as admissible from time to time besides the cost of trees standing on the demised land. The Appellant Trust has taken a plea that the Government of Odisha was neither made a party to the proceedings initiated before the Ld. Adjudicating Authority nor a show cause notice was served upon it by the Ld. Adjudicating Authority u/s 8(1) of the PMLA, 2002. There is no necessity of making Government of Odisha as a party by the Respondent ED as the title of the government land cannot be transferred in favor of the Central Government as absolute owner in the event of confiscation of the land, if the Respondent ED succeeds in the criminal trial of prosecutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first time the limitation of 90 days was inserted in the PMLA, 2002 on dated 19-4-2018 and subsequently 90 days was substituted by 365 days on dated 20-3-2019. In other words, when the prosecution complaint was filed on 31-3-2016 there was no such limitation. The aforesaid provision of law does not speak about continuation of any investigation or criminal proceedings in any court of law against any person, but it states about the property. The Trust is neither named in the FIR nor in the ECIR and not an accused in the scheduled offence or in the prosecution complaint - HELD THAT:- The proceeding before this tribunal is with regards to attachment of the tainted property derived/obtained directly or indirectly by any person as a result of criminal activity. In the present case, it is Shri Prashant Kumar Dash who is allegedly indulged in criminal activity and generated proceeds of crime and thereafter the said proceeds of crime was utilized for the development of the building of the Appellant Trust, payment of salary to the staff etc. while he was the Managing Trustee of Appellant Trust. In the aforesaid fact and circumstances, we do not find any merit in the contention of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as granted to both the sides to file additional submissions/documents, if any, within two weeks. Ld. Counsel for the Appellant Trust filed additional written submissions on 13-12-2023 and in addition Respondent has filed the copy of prosecution complaint dated 31-3-2016 and copy of cognizance order dated 16-11-2016 on 18-12-2023 along with judgments in support of their submissions. The same are taken on record. The appeal was heard on 8-4-2024. 2. The present appeal has been preferred by the Appellant against the order dated 1-6-2015 passed by Ld. Adjudicating Authority under Prevention of Money Laundering Act, 2002 (PMLA- 2002) in Original Complaint (OC) No. 411/2015 seeking following reliefs:- (i) The impugned order of the Adjudicating Authority passed against the Appellant on 1-6-2015 in Original Complaint No. 411/2015 in ECIR No. 02/BSZO/2014 dated 09/01/2015 confirming the said PAO, be quashed and set aside as not maintainable on the facts and circumstances of the case, and (ii) The immovable property of the Appellant as detailed Khata No. 68, Plot No. 4, Tahasil: Jatni, Village: Harapur, District - Khurda, Area: 20 Acres, Odisha be released from the provisional attachment. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.5,05,77,261/-) or from FroBITs until the end of financial year 2008-2009 and represent proceeds of crime and that a charge was created in favor of the Bank on the land of 20 Acres as well as building to be constructed thereon and that the Appellant Trust started generating revenues for the first time in the financial year 2009-2010. 6. It is also pleaded by the Appellant Trust that one Shri Prasant Kumar Dash (Shri Dash) was inducted as a trustee in the Appellant Trust on 11-11-2009 by way of a nomination by the Founder Member and Chairman Ravi N. Mahapatra unaware of the fact that Shri Dash could be engaged in a criminal activity and that the trustees of the Appellant Trust became aware about the allegations of financial irregularities committed by Shri Dash in the month of July, 2012 when the matter was reported in the Media and then the trustees convened an emergency telephonic meeting on 20-7-2012 and passed resolutions to remove Shri Prashant Kumar Dash from the position as a trustee in the Appellant Trust. 7. The Appellant Trust, in its pleading has admitted that between the period 2009-2012 Shri Prasant Kumar Dash had, in a phased manner contributed a sum totaling Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 9-1-2015 before the Adjudicating Authority for confirmation. 10. The Appellant Trust after receiving of Show Cause Notice appeared before the Adjudicating Authority and contested the same by filing reply along with Annexures. Being not satisfied with the same, on 1-6-2015 the Ld. Adjudicating Authority confirmed the PAO, against which the present appeal has been filed. 11. Grounds of Appeal in brief. The Appellant Trust has, inter alia, taken the following grounds: A. The Adjudicating Authority acted contrary to and in excess of its power and jurisdiction and its order is also contrary to law; B. Principle of natural justice has not been followed by the Adjudicating Authority, wrongfully rejected the evidence submitted by the Appellant by drawing inferences contrary to the real facts; C. Shri Dash has made the offence and without the knowledge of the Appellant induced the proceeds of crime in the Appellant Trust; D. There was no allegation that any of the funds of the Appellant Trust until the end of the financial year 2008-09 represents proceeds of crime; E. The first charge of the college building vests with Syndicate Bank; F. The trustees were not aware of involvement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which they incurred for the trust activity or for the initiation or operation of the project including their interest, not later than fifteen days after initiation of the process of their departure and that the Managing Trustee understands such liabilities and, accordingly, he is willing to arrange these funds on priority basis. (ii) That further, both MT and Chairman will make sure that the departing trustees also get the bank clearance that they gave in the form of guarantee to secure the term loan for the trust to initiate the BIT Engineering College project. It is understood by the Chairman and the MT that the obligations of the trust towards the departing trustees are not completely over, until both the funds and the bank clearances are made available to them. (iii) That the MT will ensure sufficient funds are made available for BIT in the short term, defined as the term from now until September, 2010 and in the near term defined as the term from investments. He will support the academic growth plans as per the vision of BIT to become the best technical institute in the state in the next 5-6 years. (iv) That the MT will possess the power for the entire financial control of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds stated in the reply to reject the said Application being devoid of merit. Subsequently, the Appellant did not want to proceed with the said Application and argued on the appeal. So, the said Application for substitution of the property with payment of Rs. 9,01,66,000/- quantified as proceeds of crime is no more pressed and, accordingly, treated as disposed of. 15. The Appellant has filed written submissions along with Annexures, on three occasions i.e. 16-1-2019, 24-7-2019 19-9-2023 and Additional Written Submissions dated 12.12 2023 in addition and relying on the grounds of appeal and Rejoinder. The averments of the Appellant made in the written submissions, in brief, are as below: A. There is no link or nexus between the attached property and the proceeds of crime. B. Increase in the total strength of the students. C. Recognition of OMET as a Charitable Institution by the Income-tax Department. D. Loan of Rs. 6.80 Crores from Syndicate Bank by the Appellant on 9-6-2008 for the purpose of establishment of BIT and constructions of buildings etc. E. Donation received from Shri P.K. Dash during the period 2009 to 2012. F. There is no allegation against Shri P.K. Dash at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganesan v. Joint Director, Directorate of Enforcement 2014 SCC OnLine Mad 10702, Paras 45 46; and (v) Joti Parshad v. State of Haryana 1993 Supp (2) SCC 497, Para 5. M. In addition to above it is also pleaded the Impugned Order is null void being flagrant violation of statutory provisions of PMLA as the Adjudicating Authority has not followed the prescribed procedure to be followed in a particular manner. In this regard he has relied on the following judgments: (i) OPTO Circuit India Ltd. v. Axis Bank [2021] 127 taxmann.com 290/165 SCL 703 (SC)/(2021) 6 SCC 707, Para 14 (decided by the Constitution Bench); (ii) State of Rajasthan v. Mohinuddin Jamal Alvi [2016] 12 SCC 608, Para 61; and (iii) Dipak Babaria v. State of Gujarat [2014] 3 SCC 502, Para 61; and (iv) Seema Garg (supra) Para 45. Besides above, the Ld. Counsel for the Appellant also argued the appeal orally reiterating that are stated in the Memo of Appeal, Rejoinder and Written Submission. On the basis of above, the Ld. Counsel for the Appellant prayed for quashing and setting aside of the Impugned Order and release/return of the attached properties to the Appellant forthwith. 16. The written submission filed on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Enforcement [2020] 113 taxmann.com 114 (Delhi)/Crl.Rev.P 1033/2019; ii. Fairdeal Supplies Ltd. v. Union of India [2021] 127 taxmann.com 73 (Cal.)/(23-4-2021 - CALHC): MANU/WB/0326/2021; and iii. P. Chidambaram v. Directorate of Enforcement [2019] 109 taxmann.com 57/156 SCL 104 (SC)/(CRL APPEAL No. 1340/2019) Respondent ED has referred relied on to relevant paras of following judgments: a. Vijay Madanlal Choudhary (supra) Paras 250, 252, 269, 270, 280, 295, 301, 303, 313 314. b. P. Rajendran v. Asstt. Director, Directorate of Enforcement [Criminal Original Petition No. 19880 of 2022, dated 14-9-2022] Para 9 10 c. Radha Mohan Lakhotia (supra), 2010 Para 13 19 d. J. Sekar v. Union of India [2018] 89 taxmann.com 159/145 SCL 637 (Delhi)/2018 SCC OnLine Del 6523 Para 50 e. Shiv Shakti Coop. Housing Society v. Swaraj Developers [2003] 6 SCC 659; Para 19 f. Nav Nirman Builders Developers (P.) Ltd. v. Union of India [Cr. M.P. No. 3608 of 2022, dated 27-2-2023] Para 32 33 g. Yogender Chandolia v. Vishesh Ravi [EL. PET 10/2020, dated 24-12-2021] Para 43 h. Biswanath Bhattacharya v. Union of India [2014] 41 taxmann.com 420/124 SCL 256 (SC) Civil Appeal No. 772-73 of 2014 Para 39, 40, 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the construction of computer center cum hostel for SC/ST Student, paying salary to the staff providing free food to the students, purchasing bus, buying furniture and various other things as detailed in Annexure-2. It is further admitted by the Appellant Trust in the said written submission that during the year 2011-2012 a sum of Rs. 3.55 Crores was received as donation from Shri Dash and was utilized by the Appellant Trust for running Bhubaneshwar Institute of Technology and for its day-to-day expenses as well as for completing the remaining construction of Dr. B. R. Ambedkar Study Center from hostel for SC/ST students. The Appellant Trust has cited the audited receipts and payments account for the year ending 31st March, 2012 which is annexed as A-6. It is also an admitted fact that there is no donation during the financial year 2012-2013 made by Shri Dash it is also come to light that the trust came to know about the criminal activity of Shri Dash from media and that a resolution was adopted by the trustees to ask Shri Dash to vacate the institute from the post of trustee on 20-7-2012. The Appellant Trust has raised the following issues in their pleadings through appeal and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Trust has no merit and as such liable to be rejected. It is necessary to consider the definition of the word 'property' as defined u/s 2(1)(v) of the PMLA, 2002. The provision is reproduced below: Property means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to or interest in, such property or assets, wherever located; [Explanation :- for the removal of doubts, it is hereby clarified that the term property includes property of any kind used in the commission of an offence under this Act or any of the Scheduled offences;] On perusal of the aforesaid provision, it appears that it is an inclusive definition. It includes any property or assets of every description i.e. corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to or interest in, such property or assets. It means and includes the leased property also. Now, whether the attachment of the land is bad for non-joinder of Government of Odisha as a party. It is an admitted fact that the land has been transferred to the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been satisfied. On perusal of records, it is revealed that Shri Dash had infused Rs. 9,01, 66,000/- with the Appellant Trust during the period 2009-2012 which was allegedly generated out of criminal activities by Shri Dash and that this amount was utilized for the purpose of construction of buildings, payment of salary of staffs of the Appellant Trust etc. It is also revealed from the record that some of the amount has also been utilized for the return of money to then existing trustees as per Letter of Intent. The trustees came to know about the alleged criminal activities of Shri Dash and donation of the aforesaid amount allegedly generated through criminal activities, through media in the year 2012 and that Shri Dash was asked to vacate the trusteeship from the Appellant Trust. But the trust did not return the money to Shri Dash. In other words, when the Provisional Attachment Order (PAO) was passed, the alleged proceeds of crime were still with the Appellant Trust and at that point of time there appears to have no intention on the part of the Appellant Trust to return the donation. It is also seen from the record that the Appellant Trust had mortgaged this land and buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trustee of the Appellant Trust when he was in control of that Appellant Trust. In view of the above the claim of the Appellant Trust that it is a bona fide receiver has no legs to stand. 22. The Appellant Trust has raised the issue that the attachment is liable to be set aside as no prosecution complaint has been filed against the Appellant Trust within 365 days as stipulated u/s 8(3)(a) of PMLA, 2002. In this regard, it is seen from the record that the Appellant Trust has pleaded and argued that the PAO is confirmed on 1-6-2015 and till date no prosecution complaint/supplementary prosecution complaint for commission of offence u/s 3 punishable u/s 4 of the PMLA, 2002 has been filed against the Appellant Trust within 90/365 days in any Court of law. The Appellant Trust has relied upon the judgment passed in (1) Arvind Gupta (supra); (2) Serajuddin Co. (supra); (3) Ashok Kumar (supra); (4) R.B. Prajapati (supra) and also in the matters of (1) Seema Garg (supra); (2) Vijay Madanlal Chaudhary (supra). The first four judgments are the judgments passed by this Appellate Tribunal, in some of the said judgments one of us i.e. (G.C.Mishra, Member) was part of the said Bench. On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-3-2016 there was no such limitation. The aforesaid provision of law does not speak about continuation of any investigation or criminal proceedings in any court of law against any person, but it states about the property. In the peculiar fact and circumstances of the case, the judgements and orders passed by this tribunal and relied upon by the Appellant Trust are not applicable to the present fact and circumstances of the appeal. The Appellant Trust has also relied on the judgement passed by the Hon'ble High court of Punjab and Haryana in the matter of Seema Garg (supra), so also the judgment of Hon'ble Supreme Court in the matter of Vijay Madan Lal Choudhary (supra), para 467 (v)(d) have no application to the present fact and circumstances of the case. The present legal issue is considered on the basis of the submissions made by both the parties. In the light of discussions made above, the present legal issue is answered against the Appellant. 23. The next issue raised by the Appellant Trust is that the Trust is neither named in the FIR nor in the ECIR and not an accused in the scheduled offence or in the prosecution complaint. In this regard, it is a fact that the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the discussions made above, we are of the considered view that the Appellant Trust has no merit so far as this issue is concerned. Hence, this issue is answered against the Appellant Trust. 25. During the course of argument, the Ld. Counsel for the Appellant Trust submitted that there is no nexus or link between the attached property and the criminal activity relating to the alleged scheduled offence. We are unable to accept this argument because it has been admitted that a sum of Rs. 9,01,66,000/- which was generated allegedly from the criminal activity by Shri Dash has been infused into the Trust and that the same amount was utilized by the Appellant Trust in various construction work as well as payment of salary to staff, return of amount to the existing trustees invested by them etc. this was done when the Appellant Trust was managed by Shri Dash during the period 2009-2012 and that the said amount was not returned to him after his vacation from the Trust. These facts go to the root of the case that there is a nexus between the alleged proceeds of crime with the property in question attached herein. So, this argument of the Appellant Trust has no merit. Therefore, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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