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TMI Blog2025 (4) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to uphold the order. The respondent remained unsuccessful even in the appeals against the judgment of High Court of Delhi in WP(C) No. 3531 of 2018 which was challenged by LPA No. 179 of 2019. The appeal against the order of this Tribunal was also dismissed by the High Court of Delhi and thus the second round of action by the respondent under section 5(1) of the Act of 2002 to attach the shares is nothing but a designed attempt to harass the appellants. 3. Before we further to refer the earlier litigation, it would be relevant to state brief facts of the case and cause of attachment of the shares. Brief of the case: 4. It is a case where the Ministry of Defence, Government of India filed a complaint on 12.02.2013 to Central Bureau of Investigation, New Delhi with a request to register a case and investigate the alleged unethical dealings of M/s Finmeccanica, Itlay, (parent company of M/s Agusta Westland International Limited, UK) in the matter of procurement of 12 VVIP/VIP Helicopters from M/s Agusta Westland International Limited, UK. Accordingly, on 12.03.2013, CBI registered a case vide RC No. RC-217 2013 A0003 against Shri S P Tyagi, Air Chief Marshal (Retd) and others f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Global Services FZE, United Arab Emirates and Global Trade & Commerce Limited, United Kingdom to transfer the funds, which was proceeds of crime within the meaning of section 2(1)(u) of Prevention of Money Laundering Act, 2002. These proceeds of crime were used for bribing the public servants and others in India to influence the VVIP/VIP helicopter deal. Christian Michel James was extradited from United Arab Emirates and subsequently, arrested on 22.12.2018 by Directorate of Enforcement and Prosecution Complaint was filed against him in the Special Court, Rouse Avenue, New Delhi. He is presently in Judicial Custody. 4.4 Out of the kickbacks of Euro 70 million, an amount of Euro approx. 28 million was paid by M/s Agusta Westland Spa to Mr. Carlo Gerosa and Mr. Guido Haschke through their companies being other chain of payment of kickbacks. From the amount which was received by them in their company, M/s IDS Information Technology and Engineering Sarl, Tunisia, an amount of at least Euro 12.4 million were transferred during the period from 2009 to 2012 to M/s Interstellar Technologies Limited, Mauritius under the guise of consultancy agreement, whereas no services were provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred as RAKGT) and in terms of their business needs in 2008, their father Mr. Ali Obeid Balsharaf arranged loan / advances to RAKGT, through the assistance of his close friend Mr. Gautam Khaitan, a renowned international solicitor, amounting to USD 24,624,305 from 20.09.2008 to 16.03.2010 for and on behalf of the petitioners for purchase of rice and other material from RAKGT. The father of the petitioners unfortunately expired on 25.05.2011. 2. Mr. Omar Ali Balsharaf further gave an amount aggregating to USD 59,221,294 to RAKGT against regular supply of rice and services to M/s Omar Ali Balsharaf from April 2008 to 31.12.2016. 3. RAKGT in terms of the business relations from time to time regularly made supplies of goods and services / payments to M/s Omar Ali Balsharaf for the value of USD 82,341,584 since December 2008 to 31.12.2016. 4. Thus, only an amount of USD 1,504,015 was outstanding to be payable by RAKGT to M/s Omar Ali Balsharaf as on 31.12.2016. 5. The said amounts were given by the lenders to RAKGT under a loan agreement which is a contract executed beyond the territories of India. 6. From the data seized by Income Tax Department during their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning 78,38,330 shares of M/s KRBL were defrozen by the Enforcement Directorate in pursuance to the order of this Tribunal dated 29.08.2019. In the earlier appeal, challenge was to the order of freezing of the shares under section 17(1) of the Act of 2002 and its confirmation by the Adjudicating Authority. The appeal was allowed by this Tribunal. The order of this Tribunal was challenged before High Court of Delhi but finding appeal to be barred by limitation, it was dismissed. The appellant has projected a case in reference to the earlier litigation where the appellant remained successful. The appellant made reference of relevant paras of the judgment of High Court of Delhi and this Tribunal to show that subsequent attachment is in teeth of those orders. The appellant was involved in the business of rice and therein purchased the shares which could not have been attached. Arguments of the respondent: 10. The Counsel for the respondent has contested the appeals on all the grounds. It is not only by referring the facts of the case but the order of the Tribunal and judgment of High Court of Delhi in the earlier litigations. The plea taken by the appellant regarding purchase of 1,50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference, relevant paras of the judgment of the High Court of Delhi are quoted hereunder: 102. In this regard, the learned counsel for the Enforcement Directorate referred to the affidavit filed on behalf of the Enforcement Directorate in compliance with the orders passed by this Court that the books of accounts of RAKGT had revealed that money was received by RAKGT from the petitioners and had credited in the ledger account maintained in the name of OAB-GK. Paragraphs 2 and 3 of the said affidavit are relevant and are set out below:- "2. That further, the books of account of M/s RAKGT revealed that the money was received by M/s. RAKGT from the Petitioner Omar Ali Balsharaf and the same has been shown as credited in its ledger account maintained in the name of OAB-GK. Basis the money trail, there are strong reasons to believe that the same are Proceeds of Crime parked in the said ledger account and investigation to ascertain the exact nature of the transaction is still ongoing..... 3. That therefore, approximately Rs 111 Crores were found credited in the ledger account of Petitioner Omar Ali Balsharaf from the above companies, which are directly or indirectly in receipt of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares in question do not fall within this part of the definition. This is so because shares were subscribed by remittances paid through banking channels much prior to commission of any alleged crime and much prior to the PMLA coming into force. 108. The second part of the definition of the expression "proceeds of crime" includes within its ambit, a property equivalent to the value of the property, which is derived from any criminal activity and is held outside the country. In other words, if any property that is derived or obtained from any criminal activity relating to a scheduled offence is held outside India, then a property of an equivalent value held in India, would also fall within the scope of expression of "proceeds of crime". Thus, if it is established that the petitioners hold any property overseas, which is derived or obtained by a scheduled offence, then the Enforcement Directorate would be well within its right to initiate proceedings against any property held by the petitioners in India to the extent of the value of the proceeds of crime held overseas. In such a case, it would be irrelevant whether the assets acquired in India were acquired prior to or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll passing of the order and even no prosecution complaint was filed. This Tribunal yet passed an order to direct the appellant to execute an indemnity bond by way of an undertaking to the tune of Rs. 111 crores within four weeks with further directions therein. The order aforesaid would be relevant to the facts available then and not to the subsequent fact because after the order aforesaid, the prosecution complaint was filed against the accused which includes the appellants. The prosecution complaint has shown the role of the appellants in commission of crime. In the earlier litigation before the Tribunal, the investigation was pending and therefore findings were recorded based on the material available at that stage. However, taking note of pending investigation, the appellant was directed to furnish bond of Rs. 111 crores. The said order of Tribunal would not affect the subsequent attachment of the shares of the appellant under an independent action because it is based on the material to show involvement of the appellants in commission of crime which was not available at the time when this Tribunal passed the order, referred to above, but came in the pending investigation. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment, which revealed that the books of accounts of M/s RAKGT and M/s KRBL DMCC were forwarded to M/s KRBL Limited on quarterly basis for integration of financials for declaration of quarterly results of M/s KRBL Limited. In the books of accounts of RAKGT, two ledger accounts in the name of (i) Omar Ali Balsharaf - DO and (ii) Omar Ali Balsharaf - GK were maintained. It has transpired from the ledger account maintained in the name of Omar Ali Balsharaf - GK that RAKGT had received money directly from M/s Interstellar Technologies Ltd. and other companies including M/s Carisma Investment Ltd., M/s Choice Point Trading, M/s Duet Ltd., M/s Future Key Trading, M/s High Image Trading, M/s Windsor Group Holdings Limits, M/s Capital Infrastructure Limited etc. In the ledger account, some of the entities sending money to RAKGT were not mentioned. During investigation, through execution of various Letter of Requests, documents / information was received which revealed the name of some of the entities that were not mentioned in the ledger account Omar Ali Balsharaf - GK...... The bank accounts of M/s Interstellar Technologies Limited, Mauritius were received from Mauritius in executio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Carisma Investment Limited and USD 245,000 was transferred to M/s Palmira Consulting Services Limited. USD 526,948.85 was transferred to the bank account of RAKGT from the bank account of M/s Carisma Investments Limited. Mrs. Pareen Khan is also the client of Mr. Gautam Khaitan and in her email dated 08.08.2019 she has stated that Gautam Khaitan was using her company's bank Account without her knowledge. Therefore, from the investigation it was revealed that funds to the tune of USD 24,624,305 (approximately Rs 110 crores) have been received by M/s RAKGT from various companies. Also, the said funds so parked in the accounts of RAKGT are maintained in the ledger accounts of RAKGT under the head M/s Omar Ali Balsharaf - GK. The said funds have been received by M/s RAKGT from different companies other than Omar Ali Balsharaf. Thus, the ill-gotten money is suspected to be parked in the accounts of RAKGT under the ledger entries of M/s Omar Ali Balsharaf - GK. 20. Apart from the material disclosed above, certain other facts revealed in the investigation and are relevant, thus referred hereunder: "While the examination of Mr. Anoop Gupta and Mr. Anil Mittal in the investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to proceeds of crime and / or records relating to money laundering which can be useful for or are relevant to the investigation and other proceedings under the PMLA 2002 may be secreted in their premises. During the course of investigation action under section 17 of PMLA was taken on 22.03.2018 and search was conducted at the premises of M/s SMC Global Securities Limited, 11/6B, Pusa Road, New Delhi - 110060 and during the search 78,38,330 shares of M/s KRBL Limited owned by Omar Ali Obaid Balsharaf and Abdullah Ali Balsharaf in DMAT a/c nos. 1201910103642803 in the name of Omar Ali Obtaid Balsharaf and 1201910103642797 in the name of Abdullah Ali Balsharaf, were freezed vide Freezing Order dated 22.03.2018 in terms of Section 17(1A) of the Prevention of Money Laundering Act and the said order was issued to M/s SMC Global Securities Limited, Mr. Omar Ali Balsharaf and Mr. Abdullah Ali Balsharaf. Accordingly, O.A. No. 14/18 was filed before the Ld. Adjudicating Authority on 20.04.2018. Action under section 17 of PMLA was taken on 14.06.2018 and search was conducted at the premises of M/s SMC Global Securities Limited, 11/6B Pusa Road, New Delhi -110060 and 64,94,891 shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 50 of the Prevention of Money Laundering Act, 2002, in which he has denied giving any loan from his companies to Omar Ali Balsharaf and has stated that his bank accounts have been misused. Ms. Praveen Khan the owner of M/s Carisma investments Ltd. was contacted vide Email dated 23.04.2019 and she has sent her response through E-mail in which she has also denied giving any loan from her company to Omar Ali Balsharaf and has further stated that Gautam Khaitan was misusing her company accounts without her knowledge. Similar is the case of Shri Bhupinder Singh the owner of M/s Palladian Enterprises who has denied giving any loan from his company to Omar Ali Balsharaf in his statement recorded under section 50 of the Prevention of Money Laundering Act, 2002. Oracle General Trading belongs to Pankaj Kapur who is a known Hawala operator, and he has also stated in his statement recorded under Section 50 of PMLA, that third party entities might have been provided to M/s Rawasi AI Khaleej by his company M/s Oracle General Trading. The individual whose statements have been recorded have denied giving any loan to Omar Ali Balsharaf and Abdullah Ali Balsharaf and have on record state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to do the same. Further, funds received from Interstellar Technologies Limited by RAKGT have still not been returned. As per the documents received in response to the Letter Rogatory from Mauritius the company M/s Interstellar Technologies Limited has been struck off and the bank accounts of the company have been closed. During investigation, it has also been found that some of the transactional data of funds received in Rawasi AI Khaleej General Trading LLC, Dubai as reflected in the ledger account "Omar Ali Balsharaf - GK" and M/s KRBL Limited matched exactly. Further investigation in this regard is going on regarding the exact nature of transactions as neither of the claim of Omar Ali Balsharaf has been found to be valid / plausible. That Omar Ali Balsharaf, presently residing in Riyadh, Saudi Arabia was summoned for 19-03- 2018, 23-05-2018, 20-11-2018, 02-04-2019 and 18-04.2019 but he did not join the investigation deliberately and also did not provide information asked from him. While he has been availing his legal remedies before different Courts / Tribunals / Authorities including the Hon'ble High Court of Delhi and ATPMLA through his counsels, he is not joining the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Agusta Westland had paid kickbacks which had been received by KRBL Ltd. through the petitioners and in the process of laundering, the petitioners had acquired 3.19% shares each of M/s KRBL Ltd. This is ex facie erroneous. Even a perfunctory investigation would have revealed that the petitioners had acquired the shares of KRBL Ltd. in the year 2003, which was prior to allegation of any scheduled crime or any alleged kickbacks paid by AgustaWestland. Thus, the assumption/allegation that the said shares were acquired in the process of money laundering is perverse and without application of mind. Freezing of shares was done without proper authority Para 83. Clearly, the Deputy Director of the Enforcement Directorate had no authority whatsoever to freeze the shares, which were to be delivered in settlement to the purchaser. There was no allegation or any iota of suspicion against the purchaser who had purchased the shares from the floor of the exchange. ..... The communication instructing the withholding of the transaction is illegal Para 92. This Court in no manner can doubt that the communications issued by the officers of the Enforcement Directorate interdicting the sale transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taWestland..... 22. A small part of the para 74 has been referred by the appellant which is in reference to Section 102 of Cr. P.C. and not in reference to the action under the Act of 2002. The impugned order herein is not under Section 102 of Cr.P.C. but under Section 5(1) of the Act of 2002. 23. Paras 77 and 83 of judgment have also been referred to indicate that the shares were acquired in the year 2003 which is prior to the allegation of any scheduled offence and as a result of alleged kickbacks paid by AgustaWestland and thereby the Deputy Director of Enforcement Directorate had no authority to freeze the shares which were delivered in settlement to the purchaser and there was no allegation against the purchaser. 24. It is necessary to clarify that in the aforesaid judgment, cognizance of the freezing of shares under section 17(1) of the Act of 2002 was taken along with the appeal preferred by the appellant against the freezing order with appropriate liberty to pursue the appeal. If final conclusion would have been drawn by High Court of Delhi in favour of the appellant, there was no reason to allow the appellant to pursue the appeal. It is, further, necessary to clarify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. For constituting an offence under Section 3 of PML Act, it is the connection of transaction to proceeds of crime which is sufficient and not the crime. 105. Thus, in case of the proceeds of crime are being projected as being untainted and thereby ploughing such tainted money to the economy of the country, it would definitely have delirious effect and impact on the economy and as such the offence which has been committed and continuing would not wipe-out the offence committed on the premise that act is prospective and cannot have retrospective effect. It would be that date when a person is found involved in any process or activity connected with the proceeds of crime and projecting as untainted property, which would be the relevant date for the purposes of prosecution under Section 3 of the PML Act and not the date when the scheduled offence was committed. What is being targeted by Section 3 is the "laundering" of money which would be relevant. The expression "laundering" as used in Section 3 comprises of involvement in any process of activity by which the illicit money is being projected as untainted. In that view of the matter, the relevant date is not the date of acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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