TaxTMI 
TaxTMI 
2011 (9) TMI 1143
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....der was passed against other persons involved in connection with that transaction, which order has been confirmed not only by the Adjudicating Authority but by the Tribunal as well as this Hon'ble Court in the case of Radha Mohan Lakhotia, Radha Mohan Lakhotia, HUF and Asha Lakhotia. Those persons had filed Appeals being First Appeal Nos.527, 528 and 529 of 2010, which came to be dismissed by the Division Bench Judgment and Order dated August 5, 2010. Although the appellants in the present Appeals raised similar contentions already answered by the High Court in the above said Judgment, during the course of hearing, the learned Counsel for the appellants fairly accepted that it may not be possible for him to persuade the Court to distinguish the opinion recorded in the said decision on those issues or, for that matter, to re-consider the same. We place on record that the appellants have reiterated those issues even in the present Appeals, but, for the reasons already recorded in the abovesaid decision, we do not think it necessary to elaborate and repeat those matters. The present Judgment, however, will be confined to the other questions which have been raised in the present Appeal....
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.... EXHIBIT 'C' No. ECIR/04/MZO/2007 PROVISIONAL ATTACHMENT ORDER NO. I/2008 (Under Section 5 of the Prevention of Money Laundering Act, 2002) ........................................ 1. In exercise of the authorization dated 07.02.2007 issued by the Director of Enforcement under sub-section (1) of section 5 of the Prevention of Money Laundering Act, 2002 (15 of 2003) read with Notification No. GSR.441(E) dated 1st July, 2005, I, Atul Verma, Deputy Director, in-charge of Mumbai Zonal Office make the following order: 2. WHREAS on the basis of material placed before me such as copy of complaint No. NDPS Spl. Case No. 192/2006 dtd. 08.12.2006 filed by the Mumbai Zonal Office of the Narcotics Control Bureau, statement of bank accounts, statements of S/Shri Umesh Bangur, Vinay Kumar Nogaja, Om Prakash Nogaja and various documents gathered during the course of investigation in case no. ECIR/04/MZO/07 dated 24th January, 2007 and on its examination, I have reasons to believe that i) During the course of investigation it was revealed that two NRIs namely Smt.Nirmala Biyani and Smt.Madhubala Maheshwari both resident of Singapore had invested Rs. 2,50,00,000/- and R....
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.... PROPERTIES SR. NO. NAME OF THE BANK ACCOUNT NO. Type of Account Amount(Rs.) 1. BANK OF RAJASTHAN 06702411017229 Term Deposit 1,67,48,144 2. BANK OF RAJASTHAN 0670301115094 Current 23,44,051 3. HDFC BANK LTD. 0602320009475 Current 1,22,12,453 4. PUNJAB NATIONAL BANK 3731002104760684 Current 41,11,675 5. 3731002104761850 Current 10,62,893 6. 37310031000081939 F.D. 57,060 7. 373100PR00007724 F.D. 3,77,933 8. 373100PR00009184 F.D. 88,31,361 9. 373100PR00009218 F.D. 15,35,281 10. 373100PS00000658 F.D. 14,00,000 11. 373100PS00000667 F.D. 2,00,000 12. 373100PR00000861 F.D. 15,47,781 13. 373100PR00001091 F.D. 8,50,000 14. 373100PR00001204 F.D. 3,50,000 15. 373100PR00001365 F.D. 8,75,000 16. 373100PR00001383 F.D. 8,00,000 17. BANK OF INDIA, HYDERABAD 100562 Current 34,45,005 18. PUNJAB NATIONAL BANK, GANDHIDHAM 019002100034844 Current 57,88,179 19. CITIBANK, FORT, MUMBAI 340237005 Current 3,355 TOTAL &nbs....
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....ionally attached under sub-section (1) of Section 5 of the Prevention of Money Laundering Act, the evidence on which you rely and other relevant information and particulars and to show cause why all or any of such property should not be declared to be the properties involved in money-laundering, and confiscated by the Central Government. You are directed to appear before Adjudicating Authority at Jeevan Deep Building, 4th Floor, Room No. 25, Parliament Street, New Delhi in person or through an advocate/authorized representative, duly instructed on the 27th day of August Year 2008 at 10.30 a.m., failing which the complaint shall be heard and decided in your absence. Given under my hand and the seal of the Adjudicating Authority, this 15th day of July, 2008. Sd/- Suptd./Admn. Officer/Registrar Adjudicating Authority PMLA SEAL Recd. Sd/- 18/07/08 (Om Prakash Nogaja) M.D. OPM. Intl. Pvt. Ltd." 6. Pursuant to the said show-cause notice, the appellants filed their response and contested the proceedings before the Adjudicating Authority. The Adjudicating Authority, upon considering all aspects of the ma....
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.... enactment, action of forfeiture would be resorted to when the Court of competent jurisdiction finally concludes that the properties involved in the case are proceeds of crime. At this stage, the properties are required to be secured by provisional attachment thereof, so that, the same is not transferred or concealed resulting in frustration of proceedings relating to confiscation of such properties in case the scheduled offence is proved. The Authority further observed that even if the appellant company is a separate legal entity, the fact that it is in possession of proceeds of crime makes the property liable for attachment to avoid further layering of the property. The Authority thus concluded that the appellants have failed to prove the source of income, earning or assets out of which or by means of which they have acquired the property attached. It also noted that the present proceedings against the appellants have emanated out of the same transaction which is subject matter of attachment of properties held by other persons, which provisional attachment has been confirmed. Accordingly, the adjudicating Authority ordered that the provisional attachment of the properties r....
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....ovisional attachment of the disputed properties was to ensure that the same is not concealed, transferred or dealt with in any manner which may result in frustration of any proceedings relating to confiscation thereof under the PMLA. The Tribunal noted that the Scheme of PMLA is that if the person accused for scheduled offence were to be finally acquitted, the attachment of property shall cease to have effect and on the other hand, if the guilt of the accused person is proved and the order of the Trial Court becomes final, the adjudicating authority would proceed to confiscate the subject properties after giving opportunity of being heard to the person concerned. Reverting back to the case on hand, the Tribunal found that considering the fact that the company was neither a Public Limited Company which is listed on Stock Exchange coupled with the fact that the shares of the company are closely held by persons who are relatives, the Corporate veil of the company will have to be lifted to ensure that the purpose of the PMLA is not frustrated by collusive act of omission and commission of such persons. Only that approach would obviate any fraud being perpetrated behind the veil o....
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....mpany failed to produce evidence to prove the legitimate source of funds like source of income of the NRI investors, copies of their balance sheet, profit and loss account, Income Tax return, bank account, etc. The Tribunal also noted that, so far as persons outside India, i.e., Bangkok, Singapore, etc., are concerned, the "Letter of Rogatory" has been issued, and the investigation is in progress. The Tribunal, therefore, opined that the Appropriate Authority had reasons to believe that the property in question was proceeds of crime, necessitating order of provisional attachment as per the provisions of the PMLA. The Tribunal has also noted that the counsel for the appellants was already given opportunity to prove the genuineness / legitimate source of payment received from the NRE accounts of the two ladies, which opportunity was declined by him. The Tribunal, therefore, upheld the opinion of the Adjudicating Authority that the properties in question were required to be provisionally attached, as the same were involved in money-laundering. 8. The Company and O.P. Nogaja have filed separate appeals before this Court against the decision of the Tribunal. As mentioned earlier, sim....
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....thermore, in the present case, appellant Om Prakash Nogaja is an accused in the Scheduled Offence, and both the appellants are prosecuted for offence under Section 3 of the PMLA. That trial is still pending. The concerned Court has already taken cognizance of the offence. The order taking cognizance dated 26th March, 2009, read with the prosecution case, as stated in the complaint, in particular, paragraph 51, shows that there is sufficient material to make out a prima facie case that all the accused have received proceeds of crime of value exceeding Rs. 30,00,000/-. There is allegation of commission of offence under Part A of the Schedule, and it is alleged that the money involved is proceeds from illicit trafficking of drugs. Suffice it to observe that cognizance of offence punishable under Section 3, read with Section 4 of the PMLA and Section 120-B of I.P.C., has been taken by the concerned Court against all the accused. As a matter of fact, the said order taking cognizance of the offence against all the accused was challenged before this Court at the instance of the accused, which challenge, however, has failed. In that view of the matter, it is not open to the appellants to n....
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....ter, that the respondents have not explained as to how the goods as well as the money can flow in the same direction towards the Company does not take the matter any further for the appellants. 11. According to the appellants, out of the total investment made by Madhubala Maheshwari, a sum of Rs. 1,51,76,876/- came in the hands of the Company before coming into force of the PMLA, i.e., 1st July, 2005. As a result, the Authority could not have proceeded against the said amount. In the first place, on perusal of the judgments under appeal, it is noticed that this factual plea has been taken for the first time in the present appeals. We find force in the submission of the respondents that the relevant date is not the date of acquisition of the property by the Company, which is being provisionally attached by the Authority, but the relevant date is the date when the property is projected as untainted property. As aforesaid, the purport of Section 23 raises presumption and the burden of proof is on the accused and the person concerned to prove otherwise to the satisfaction of the Adjudicating Authority. In the present case, the appellants have failed to discharge the said burden. ....
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....n, the presumption under Section 23 of the PMLA would come into play, and it was for the appellants to prove to the satisfaction of the Adjudicating Authority that the amount received from NRE Account did not form part of the inter-connected transactions. Accordingly, we agree with the finding recorded by the Tribunal that the remittance from NRE Account was modus operandi so as to project the amount as untainted property. 14. The next argument of the appellants is that the provisional attachment could not have been made without giving notice to the two ladies who made investment in the Company towards share capital or that the shares represented the alleged funds could alone be attached and not the amount lying in the Share Capital Account to represent its own common funds. It would have been a different matter if the Appropriate Authority were to pass order of provisional attachment of the shares held by the shareholders of the Company, without giving notice to the shareholders in that behalf. In the present case, the provisional attachment is of the funds of the Company which have become tainted because of the inter-connected transactions. As aforesaid, the presumption under ....
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....being without jurisdiction. It was certainly not intended to frustrate the order of the High Court, but to further the purpose and object of the provisions of the PMLA, which, as aforesaid, is a special enactment. The effect of provisional attachment under the PMLA is that the property can be finally confiscated with the Central Government, in the event the accused person is found guilty by the Court of competent jurisdiction trying the Scheduled Offence. Such provisional attachment is imperative, as that would not only facilitate the confiscation of that property, but also secure the availability of that property for confiscation at the end of the trial against the accused persons relating to Scheduled Offence. 16. In this context, it was submitted that the amount was fully secured because of the condition imposed by the learned Single Judge, and the order of provisional attachment in respect of the said amount, therefore, suffers from non-application of mind. We are not inclined to accept this submission, as the law obliges the Appropriate Authority under the PMLA to proceed against the tainted property or which is proceeds of crime in a particular manner. The Appropriate Auth....