9911796707
TMI Blog2023 (7) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... dia) Ltd. v. Axis Bank has been given where it was held that the reasons for passing of an order shall be given therein and cannot be substituted - It is found that the order impugned therein was containing reasons but additional reasons were given before the court for the first time. Such a practice was not accepted. The case in hand is not of similar nature. In this case, there is no order under challenge but a notice under Section 8 (4) of the Act of 2002 which does not direct for giving reasons in the notice for possession. In fact, the provision aforesaid allow possession of the property forthwith on passing order of confirmation of provisional attachment order. The stage for taking possession comes forthwith on the confirmation of order of provisional attachment and it does not mandate assignment of reasons therein for causing possession. The notice otherwise does not require a reply from the effected person so as to assign the reasons for its reply. The appellants have failed to make a differentiation between the administrative order and the notice under the statute not requiring assessment of reasons for taking possession - In fact, it is in view of the judgement of Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atever fund was taken from ABG International Pvt. Ltd., was not out of the bank loan taken by ABG Shipyard Ltd., but out of their own earnings in cash. The fact could not be substantiated and, further with regard to the loan amount said to have been re-paid to the company through a notarized assignment deed, it is stated by the Notary that there is no entry of the said document in the register and that it bears an odd no. 12-A which can happen only in a case of interpolation. The respondents have successfully shown that even the alleged re-payment through the assignment deed is out of the funds of associated companies of ABG Shipyard by routing the proceeds of crime and not after taking loan from the bank or earning for its re-payment. Conclusion - The money trail is enough to show that the proceeds of crime was diverted for purchase of property in question and thereby the flat no. 4-C was purchased out of the proceeds of crime. The possession of the attached property should not be taken by invoking Section 8(4) of the Act of 2002 as a rule but can be as an exception. The appellant s application for an interim order dismissed - The notice for possession upheld. Application dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d grand daughter. Shri Kamlesh Aggarwal is at the age 80 years and suffering from ailment. The eviction from the flat would cause irreparable inconvenience to him but ignoring the aforesaid, notice for possession has been served. Thus, on the aforesaid ground also, a case is made out for grant of stay. Counsel for the appellant has otherwise made reference of the facts of this case. It is submitted that the flat in question has not been purchased out of the proceeds of crime rather the amount for it was borrowed from a company and has been re-paid through an assignment deed. To be precise, it was submitted that a sum of Rs. 17.30 crores were taken from ABG International Pvt. Ltd. on 07.09.2007 and the said amount was re-paid through an assignment deed. Thus, even if allegation exists against ABG International Pvt. Ltd. for acquisition of proceeds of crime out of money laundering, though denied, the loan having been re-paid to the said company, the purchase of flat cannot be said to be out of proceeds of crime. The learned counsel for the appellant has further submitted that payment by ABG International Pvt. Ltd. to the appellant company was not out of the bank loan said to be proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscation of property. The learned counsel for the appellant has given reference of the judgment of this Tribunal in the case of Kartik P. Chidambaram vs The Deputy Director, Directorate of Enforcement dated 03.09.2019. We are not elaborately referring to those judgments as it is nothing but repetition of the ratio propounded by the Apex Court in the case of Vijay Madanlal Choudhary (Supra). Other than the argument aforesaid, no other argument was raised by the counsel for the appellant thus, we would be recording our finding only on the grounds raised orally before us. The application is seriously contested by the learned counsel for the respondent. A detailed reply to the application has been filed to justify the notice for possession by invoking Section 8 (4) of the Act of 2002 read with rule 5 (2) of the rules of 2013. The counsel for the respondent has given complete background of the case to show how the appellant and other companies cheated and committed fraud on the consortium banks to obtain loan of Rs. 22,842 Crores. The complete facts in that regard were narrated and would be referred by us while dealing with rival arguments of the parties. The counsel for the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misleading this Tribunal by producing assignment deed created in specious manner to show repayment of the proceeds of crime. The reference of the assignment deed, alleged to have been notarized has been given. The entry of alleged assignment deed in the register is at item no. 12 A, which happens only when someone has to interpolate the entry. The statement of notary shows that no entry for the assignment deed was made yet the appellant gave reference of the assignment deed to mislead the Tribunal. A serious view on the aforesaid should be taken. It is further stated that even so called assignment deed to show re-payment of the loan amount to the ABG International Pvt. Ltd. is not out of the profit earned by the appellant company or by taking it from bank but by manipulating and routing the proceeds of crime given to a subsidiary company of ABG Shipyard. The entry was nothing but to rotate the proceeds of crime. It is in view of the fact that after obtaining a loan of Rs. 22,842 Crores by ABG Shipyard, it was given to many subsidiary and associate companies and one of the companies is with whom assignment deed is said to have been entered by the appellant company. The company wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uxuries rather needs to be handle strictly and without misplaced sympathy. The prayer is accordingly to dismiss the application. We have considered the rival submissions of the parties and scanned the matter carefully. Before dealing with rival arguments raised by the counsel for the parties, it would be relevant to refer history of the case which revolves not only against the appellant but ABG Shipyard Ltd. and its associate companies. The fact in this regards have been given by Adjudicating Authority and are referred hereunder: Subsequent to the receipt of the complaint the reasons u/s 8 (1) of PMLA 2002 was recorded by the Adjudicating Authority for the purpose of issue of notice U/s 8 (1) as under: - 1) "The Original Complaint (OC) 1824/2022 and its annexures/ RUD were received on 20.10.2022, with reference to the Deputy Director, Enforcement Directorate, Ahmedabad's Provisional Attachment Order No. 08/2022 dated 21.09.2022. Following a review of the aforementioned documents and the exhibits thereto, the pertinent facts are briefly stated below for the purpose of issuing a notice under section 8 (1) of the Act. 2) On the basis of the written complaint dated 25.08.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d engaged in the business of shop building and ship repair. ABG Group, promoted by Shri Rishi Kamlesh Agarwal was the major player in the Indian Shipbuilding Industry. ABGSL's Shipyard were located at Dahej and Surat, Gujarat. ABG International Ltd. (AIPL) was the holding company of ABG Shipyard Ltd. 7) The complainant has brought on record the contents of the investigation conducted and statement u/s 50 (2) & 50 (3) of the PMLA as mentioned on pages 34-240 of the OC, elaborating the modus operandi of the generation of the proceeds of crime and deployment thereof. 8) Investigation under PMLA has revealed that ABG Shipyard Ltd., its Chairman and Managing Director, Mr. Rishi Kamlesh Agarwal, ABG International Pvt. Ltd. in connivance with others, have misappropriated the credit facilities availed from the consortium of banks led by ICICI Bank and utilized the funds for the purposes other than its actual cause that eventually caused monetary loss to the tune of Rs. 22,842/- Crores to the consortium. ABGSL, its promoter/directors and other associated entities. Persons have colluded together and diverted the funds availed from credit facilities to various paper entities incorporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts/ loans/ advances/ guarantees/ payments are nothing but Proceeds of Crime within the meaning of section 2 (1) (u) of PMLA, 2002. 12) Hence, the complainant has reasons to believe that attached properties were Proceeds of Crime and were liable for attachment in view of second proviso of Section 5 of PMLA, 2002. As the Charge Sheet in the present case is yet to be filed by the LEA and the schedule of Attached Properties covers various assets including bank accounts and immovable properties which could easily change hands, and if not attached, the same were likely to be concealed, transferred of dealt with any manner which may result in frustrating any proceedings relating to confiscation of POO. 13) The complainant, having described the nature of offence and their relation to the movable/ immovable properties attached, issued Provisional Attachment Order No. 08/2022 dated 21.09.2022 under sub section (1) of section 5 for provisional attachment in the form of movable/immovable properties to the tune of Rs. 27,47,69,57,435/- (Rupees Two Thousand Seven Hundred Forty-Seven Crores Sixty-Nine Lakhs Fifty-Seven Hundred Forty Seven Crores Sixty-Nine Lakhs Fifty-Seven Thousand Four Hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the appeal but have touched upon the facts to find out a prima facie case of organised crime. The facts on record shows that huge amount was rotated in an illegal manner through associated companies in an organised manner and thereby even the properties worth of the equivalent amount of proceeds of crime could not be attached rather value of attached properties after the order of Adjudicating Authority is only of a sum of Rs. 2041 Crores out of the properties worth of Rs. 2747 Crores, so attached. The Crime was committed by the ABG Shipyard Ltd. and associated companies in connivance with the officers of the bank and, therefore, a case was registered even for an offence under Prevention of Corruption Act also. Thus, it is a serious case where properties of equivalent value to the proceeds of crime could not be attached. In view of the above, a case has been made out to show exception for taking possession of the flat no. 4-C of Gold Croft Properties. The crime against the country cannot be viewed casually rather seriousness to it has to be attached. It cannot be taken to be a case of simple nature or a theft of trivial amount but is an offence committed after proper planning w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imate victim is the collective. It creates a hazard in the financial interest of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skilfully contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of offences which travel far ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its own seriousness, for it creates a concavity in the solemnity that it expected in financial transactions. It is not such a case where one can pay the amount and obtain a " no due certificate" and enjoy the benefit of quashing of the criminal proceedings on the hypostasis that nothing more remains to be done The collective interest of which the court is the guardian cannot be a silent or a mute spectator to allow the proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under Article 226 of the Constitution or under section 482 of the Code and quash the proceedings. It is not legally permissible. The Court is the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent that conspiracies involving huge loss to the public funds need to be viewed seriously as they affect the economy of the country. In this case, the amount involved and the manner in which it was siphoned off by the group of companies and thereupon projected it to be out of untainted money shows their intent to commit the crime in an organised manner. It is not that the respondents have invoked Section 8 (4) to take possession of the flat no. 4-C of Gold Croft, Mumbai without application of mind. Despite being a case of exceptional nature, the respondent has not issued notice for possession of flat no. 06 in the same society which is occupied by Kamlesh Agarwal. The flat no. 4-C was lying vacant while flat no. 06 was found occupied at the time of search. Therefore, the respondent has acted reasonably in causing notice for possession only of flat no. 4-C, leaving out flat no. 06. The appellants, however, submitted that even flat no. 4-C is occupied by Shri Kamlesh Agarwal who is occupying flat no. 06 also. The fact aforesaid has been controverted by the respondent. It is stated that at the time of search, flat 4-C was lying vacant and seems to have been occupied only when a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." We find that the order impugned therein was containing reasons but additional reasons were given before the court for the first time. Such a practice was not accepted. The case in hand is not of similar nature. In this case, there is no order under challenge but a notice under Section 8 (4) of the Act of 2002 which does not direct for giving reasons in the notice for possession. In fact, the provision aforesaid allow possession of the property forthwith on passing order of confirmation of provisional attachment order. Section 8 (4) is quoted hereunder for ready reference: "4. Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under section 5 or frozen under subsectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgement in the case of Vijay Madanlal Choudhary and are quoted here under: "304. The other grievance of the petitioners is in reference to the stipulation in sub-section (4) of Section 8 providing for taking possession of the property. This provision ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. In that, merely because the provisional attachment order passed under Section 5 (1) is confirmed, it does not follow that the property stands confiscated; and until an order of confiscation is formally passed, there is no reason to hasten the process of taking possession of such property. The principle set out in Section 5 (4) of the 2002 Act needs to be extended even after confirmation of provisional attachment order until a formal confiscation order is passed. Section 5 (4) clearly states that nothing in Section 5 including the order of provisional attachment shall prevent the person interested in the enjoyment of immovable property attached under sub-section (1) from such enjoyment. The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y eventually decide the issue in favour of the person in possession of the property as not being proceeds of crime or for any other valid ground. Before such order is passed by the Special Court, it would be a case of serious miscarriage of justice, if not abuse of process to take physical possession of the property held by such person. Further, it would served no purpose by hastening the process of taking possession of the property and then returning the same back to the same person at a late date pursuant to the order passed by the Court of competent jurisdiction. Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can proceed only if it is established that the person has directly or indirectly derived or obtained proceeds of crime as a result of criminal activity to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime. 307. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or discharge in connection with the scheduled offence. Resultantly, we would sum up by observin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f organised crime. The relevant para of the said judgment is quoted hereunder: "17.27. In Vijay Madanlal Choudary & Ors v. Union of India, SLP (Civ.) No. 4634 of 2014 and others, this Court dealt with confiscation proceedings under Section 8 of the Prevention of Money Laundering Act, 2002 ("PMLA") and limited the application of Section 8 (4) of PMLA concerning interim possession by authority before conclusion of final trial to exceptional cases. The Court distinguished the earlier cases in view of the unique scheme under the impugned legislation therein. Having perused the said judgment, we are of the opinion that the aforesaid ratio requires further expounding in an appropriate case, without which, much scope is left for arbitrary application. 17.28. From the above discussion, it is manifest that the Courts have read down the provisions of civil forfeiture to be dependent on the underlying criminal prosecution to temper the harsh consequences envisaged under such provisions. No doubt, such reading down was mandated to ameliorate harsh consequences of confiscatory laws which otherwise would have allowed the State agencies to take over the property without seriously pursuing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in no business but after taking funds, acquiring the properties and even utilizing them for purchase of shares and mutual funds etc. The conduct of the appellant is writ large in reference to the aforesaid otherwise money trail is given as under: ABG Shipyard Ltd A/c No. 10424010076900 (ICICI Bank - CC Account) 14.09.2007 Rs. 1.75 Crore 17.09.2007 Rs. 28.60 Crore ABG Shipyard Ltd. A/c No. 10424010076900 (PNB- erstwhile OBC) 17.09.2007 Rs. 30.20 Crore ONE OCEAN SHIPPING PVT. LTD. A/c No. 10421011000686 (PNB - erstwhile OBC) 17.09.2007 Rs. 30.20 Crore ABG International Pvt. Ltd. A/c No. 10421010080560 (PNB - erstwhile OBC) 17.09.2007 Rs. 17.30 Crore First Land Developers Pvt. Ltd. / Gold Croft Property Pvt. Ltd. A/c 10421131000061 (PNB - erstwhile OBC) 17.09.2007 First Land Developers Pvt. Ltd./ Gold Croft Property Pvt. Ltd. has acquired property Flat No. 4 C, Croft Building 39, Near Navroz Society, Bhulabhal Desai Road Cumballa Hill Breach Candy, Mumbai - 400026 on 17.09.2007 for Rs. 17.30 Crore. The money trail is enough to show that the proceeds of crime was diverted for purchase of property in question and thereby the flat no. 4-C was purchased out ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
