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TMI Blog2024 (12) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... FIRs, namely, FIR No. RC-02(A)/2012-CBI/SC-II/NDLS dt. 02.01.2012; FIR No. RC-03(A)/2012/CBI/SC-II/NDLS dt.02.01.2012; and FIR No. RC2202012E0003 dt. 18.01.2012, were registered by CBI, New Delhi in compliance with order dt. 15.11.2011 passed by the Hon'ble High Court of Judicature at Allahabad, Lucknow Bench, Lucknow in Writ Petition No. 3611(MB) of 2011(PIL) and connected Writ Petition No. 2647(MB) of 2011(PIL). The allegations levelled in the FIRs revealed that the accused persons in the aforesaid cases, including Sh. Saurabh Jain (one of the two appellants herein), and his cousin Sh. Vivek Jain, had entered into a conspiracy to defraud government funds allocated under National Rural Health Mission (NRHM) so as to derive illegal gains. Since the alleged offences mentioned in the above FIRs constituted 'scheduled offences' under the Schedule to the Prevention of Money Laundering Act, 2002 ("PMLA, 2002"), and 'proceeds of crime' as defined under the said Act appeared to have been utilised by the accused persons for acquisition of various movable/immovable properties and projected as untainted, investigations under the provisions of PMLA, 2002 were initiated by the Directorate of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., during the period Sh. Saurabh Jain and Smt. Rajni Jain were shown as directors and substantial shareholders. 5. The investigation under PMLA, 2002 also revealed that during the same time period that Sh. Saurabh Jain and Smt. Rajni Jain are shown to have acquired shareholding and management and control of three companies, i.e., M/s Shivali Constructions Pvt. Ltd., M/s Renu Constructions Pvt. Ltd. and M/s BA Properties Pvt. Ltd. It is evident that POC was invested to acquire the control and shareholding of the aforesaid three companies as well. 6. Further, proceeds of crime to the tune of Rs. 74 Lakh was withdrawn and received in cash by Sh. Saurabh Jain out of the bank account of M/s Kapil Medical Agencies (proprietor Sh. Vivek Jain, cousin of Sh. Vivek Jain). The investigation under the Act also revealed that POC of Rs. 513.75 lakh parked in the bank account of M/s Siddhi Traders (proprietrix: Rajni Jain) was withdrawn in cash during the relevant period. Thus, proceeds of crime of an aggregate amount of Rs. 587.75 lakh was in the hands of Saurabh Jain who smurfed, layered and integrated the same by showing acquisition of flat No.- 701-C, Kasmanda Regent Apartment, 2 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2015 dt. 23.09.2015 came to be passed, whereby the following movable/immovable properties were provisionally attached: S. No. Details of the property POC invested (Rs.) Market value as computed 1. Flat No. G-01, Kasmanda Regent Apartments, 2 park Road, Lucknow admeasuring 1490.04 m2 in the name of M/s Darpan Mercantile Pvt. Ltd. 2,49,00,000/- Rs. 5,19,74,339/- 2. Flat no.- 701-C, Kasmanda Regent Apartments, 2 park Road, Lucknow admeasuring 142.38 m2 in the name of Sh. Saurabh Jain 8,00,000/- Rs. 49,66,214/- 3. Building No.13/29, Kabir Marg, Lucknow admeasuring 832.62 m2 in the name of DIGI Entertainment Pvt. Ltd. 1,08,00,000 Rs.2,16,48,120/- 4. Commercial property at 26 Pusa Road, New delhi admeasuring 8470 ft2 in the name of M/s Shivali Constructions Pvt. Ltd. 66,38,406 188,00,00,000/- (Estimated Value) 5. Commercial property at 26, Pusa Road, New Delhi admeasuring 8470 ft2 in the name of M/s Renu Constructions Pvt. Ltd. 1,30,15,567 6. Commercial property at 26, Pusa Road, New delhi admeasuring 8470 ft2 in the name of M/s BA Constructions Pvt. Ltd. 1,33,95,506/- 7. Vehicles (two Maruti Eeco bearing regis. no.- UP16-AE- 0059 and UP16-Z-4970 in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 701-C, Kasmanda Regent Apartments, Park Road, Vikramaditya ward, Lucknow, having area 142.38 sq. m. is not in the ownership of M/s Siddhi Traders and nor it was purchased from the funds of M/s Siddhi Traders. The aforesaid flat is the sole ownership of M/s Somya Prakashan which had no transaction under NRHM scheme. and therefore, purchase of M/s Somya Prakashan cannot be put under attachment." 17. It is contended that the above facts were not disputed, but rather admitted, by Directorate of Enforcement while filing their rejoinder Affidavit against the written submission of the appellant. The Ld. AA had recorded the admission of ED in the impugned order confirming the attachment order in the following manner: "27. The answering defendant have claimed that loan of Rs. 50 lakh was given by Saumya Prakashan to CNC Metal Forming Pvt. Ltd. by the defendant No.8 at the behest of Sh. Navneet Sehgal and that the said loan has since been repaid. The answering defendants have further claimed that Saumya Prakashan has not dealt with any transaction in NRHM funds. In this regard it is submitted that Saumya Prakshan has not been arrayed as a defendant in the present proceedings. In suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, there has been no compliance of the relevant provisions contemplated under section 5 and 8 of the Act. 23. The appellant had complied with the conditions under section 8(1) of the Act by explaining the source of his income out of which he had acquired the property. Despite this, Ld. AA confirmed the provisional attachment order mechanically against the mandate of law. 24. It is also contended that there is no allegation against the appellant that the appellant's wife Smt. Rajni Jain proprietor of M/s Siddhi Traders had purchased the attached flats in the name of her husband Shri Saurabh Jain from the funds of M/s Siddhi Traders and as such the appellant was the nominal purchaser of the disputed flat. The impugned order passed by the Ld. Adjudicating Authority was based on conjecture and surmises without material to substantiate the allegation to purchase the disputed flat from the funds of M/s Siddhi Traders. 25. It is also contended that M/s Sommya Prakashan is a proprietorship firm of the Appellant, hence the property purchased from its funds shall be treated as having been purchased by the appellant only. 26. A legal contention has also been raised that the impugned pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he non-attachment is likely to frustrate the proceedings under the Act. Hence, the ratio decidendi of the aforesaid judgements of the Hon'ble Supreme Court relied upon by the Appellant do not apply to the facts in the instant case. Analysis and findings 30. We have given careful consideration to the material on record and the arguments presented from either side. At the outset, we note that the present case relates to only one property, namely a flat, bearing the address 701-C, Kasmanda Regent Apartment, Lucknow which has been treated as proceeds of crime and has been placed under attachment by the respondent directorate. 31. A copy of the sale deed in respect of the subject property is on record at pg. 979 of the appeal paperbook filed by the appellant, which reveals that the said flat was purchased through a sale deed dated 01.03.2011 for a registered consideration of Rs. 8,00,000/- which was paid in cash. A copy of an extract of the statement of bank Account No. 4070002100009379 standing in the name of "Sommya Prakashan (Sourabh Jain S/O Mahendra Kumar Jain)" in the Punjab National Bank, Moradabad Kanth Road Branch for the period 20.01.2011 to 22.03.2011 has also been placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002. If the same remain unattached there is likelihood of further transfer or concealment of the same to frustrate the proceedings under the PMLA, 2002. The said movable / immovable properties are listed as under:" 32. The table that follows reflects the flat in question at Sl. No. 2. 33. Secondly, it is pointed out that the impugned order has been passed against the appellant., Sh. Saurabh Jain, in his capacity as the director of M/s Renu Constructions Pvt. Ltd., M/s BA Properties Pvt. Ltd. & Shivali Constructions Pvt. Ltd. and Proprietor of M/s Guru Kripa Enterprises as is evident from the list of defendants on page 2 of the said order. The name of M/s Sommya Prakashan has consciously been left out as this entity had nothing to do with the NRHM scam nor there are any findings against it. This fact has been affirmed in para-27 (page 236) of the impugned order which records as below: "27. The answering defendants nave claimed that loan off Rs 50.00 lakh was given by Saumya Prakashan to CNC Metal Forming Pvt. Ltd. by the defendant No.8 at the behest of Sh. Navneet Sehgal and that the said loan has since been repaid. The answering defendants have further claimed that Saumya Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 8(1), 23 and 24 the Act. On the contrary, there is every reason to believe that the amount was sourced from the proceeds of crime derived from NRHM funds. 36. As regards the legal contention that that impugned provisional order was confirmed on 24.02.2016 and at that time, there was no prosecution complaint under section 8 of the PMLA which was mandatory to have been filed prior to confirmation of the impugned attachment order, we are of the view that the correct legal position is the one upheld by this Appellate Tribunal in the case of M/s Nirved Traders ), FPA-PMLA- 1394/MUM/2016 Order dated 15.04.2024 wherein it was held as under: "23. Insofar as the issue of limitation period for filing of prosecution complaint u/s 8(3)(a) is concerned, we find the legal position to be as follows: Upto 18.04.2018 No time limit 19.04.2018 to 19.03.2019 90 days from the date of Adjudicating Authority's order W.e.f. 20.03.2019 365 days from the date of Adjudicating Authority's order 24. We have taken note of the fact that the relevant amendment to Section 8(1)(a) was made through the Finance Act, 2018. The "Notes on Clauses' accompanying the Finance Bill, 2018 reads as below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution case against the accused. Accordingly, we do not find any merit in the appellant's challenge to the impugned order on account of prosecution complaint not being pending when the same was passed. 38. It is also to be borne in mind that at this stage of the proceedings, the subject property has only been attached. As per the definition of the term "attachment" provided u/s 2(1)(d), "attachment" means prohibition of transfer, conversion, disposition or movement of property. Attachment of property per se does not alter the ownership status of the property. It does not even alter the status of possession and user of the property, unless in a given case, owing to exceptional circumstances, the provisions of section 8(4) are invoked by the Directorate in order to take possession of the property. In this regard, the Hon'ble Supreme Court in its landmark judgment in the case of Vijay Madanlal Choudhary Spl. Leave Petition (Civil) No. 28394 of 2011 (Order dated 27.07.2022) has held that Section 5 of the Act provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 14.07.2015 received as sale proceeds from Bar/Restaurant and room rent. Out of the same, the Appellant deposited cash of Rs. 20,61,748/- in bank account and disbursed staff salary of Rs.6,77,519/-, aggregating to total of Rs. 27,39,967/-. The remaining cash, Rs.10,77,155/-, was in the head of M/s Midtown Hotel and Banquets on 14.07.2015. However, the explanation provided by the appellant was rejected on the ground that tax receipts for tax payments in respect of the transactions had not been produced. It is contended that the Appellant deposited Service Tax of Rs.1,41,270/- on 03.07.2015, i.e., before the date of search by ED, against services of air-conditioned restaurants having licence to serve alcoholic beverages in relation to service of food or beverages and Rs.16,845/- on 03.07.2015 for providing service of accommodation. This substantiates the authenticity off the transactions. It is also pointed out that the respondents have held the said cash to be direct proceeds of crime (not 'value of such property'). 42. It is further submitted that the same facts were also placed before the Ld. AA but the Ld. AA did not record any finding on the same. 43. The appellant further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained a work order for Rs. 13.69 crore under the NRHM Scheme and she is an accused in the prosecution complaint filed by the ED under PMLA, 2002. In the search conducted by the ED at 26, Panchsheel Colony, Moradabad, Rs. 9.90 lakh was found on 15.07.2015. Out of the said amount, Rs.40,000/- was left for expenses and the rest 9.50 lakh was seized. Importantly, a statement of the Appellant was recorded on the spot in which she denied any knowledge of how and when the cash came to be placed in the two rooms of the residential premises. 50. It is also significant to note that M/s Siddhi Traders the other proprietary concern of the appellant, got the tender to supply outdoor media materials such as- hoardings, community notice boards, wall paintings, banners, against which it received Rs.9.24 Cr. from September, 2010 to January, 2011. Investigations revealed that the said items were not supplied, only hoardings were supplied, according to the statement of the CMO, Muzaffarnagar and other CMOs. Various officials/CMOs were pressurized to sign the challan form and completion certificate by Minister of Family Welfare- Babu Singh Kushwaha, along with others. Therefore, M/s Siddhi Traders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saurabh Jain and Smt. Rajni Jain etc. In our view on these provided sufficient tangible material to the Enforcement Directorate and the Ld. AA to believe that properties have been purchased out of proceeds of crime. Having perused the facts on record, we are of the view that more than adequate material is available to come to such a conclusion. In Radha Mohan Lakhotia vs. Deputy Director, Enforcement Directorate, MANU/MH/1011/2010, the Hon'ble Bombay High Court has observed that at the stage of attachment all the authority is required to show is that there was sufficiently probable cause to form opinion that the property under attachment is proceeds of crime. Moreover, in the present case, the appellant herself as well as her husband, Shri Saurabh Jain, stand accused of the offence of money- laundering and criminal trial in the said case is pending. As such, our observations in para 38 above are squarely applicable to the present case also. 52. The other issues raised by the appellant have already been discussed and disposed of while considering the appeal of Sh. Saurabh Jain above. Accordingly, relying on the discussions in paragraphs 36 to 39 above, the arguments of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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