TaxTMI 
TaxTMI 
2017 (11) TMI 838
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....is, a combined ECIR for all the three F.I.Rs was filed. 3. The entire case of the Respondent's case is that Tayal group of Companies wrongly and fraudulently availed loan facilities from UCO Bank during the period 2007-2013 and siphoned off the funds through certain entities for various purposes, including but not limited to Bank of Rajasthan. The Respondent has sought to explain the entire matrix of transactions by identifying the borrowers of such loan amounts, the entities through which such alleged funneling and siphoning off the funds took place. The names of the appellant or its borrower/co- borrowers or the tenant, M/s Multi Media Pvt. Ltd. do not feature in this route of siphoning off and funneling of funds. 4. Admittedly on 28.10.2014, the appellant sanctioned three separate loans, totaling to Rs. 46 Crores to three Companies, i.e.: (i) M/s Oak Leasing and Infotech [Loan of Rs. 15 crores]-against property No. 301, Building no. 7, Link Road, Mumbai (ii) M/s Rosette Leasing and Infotech [Loan of Rs. 15 crores]-against property no. 201, Building No. 7, Link Road, Mumbai (iii) M/s Upright Leasing and Infotech [Loan of Rs. 16 crores]-against pro....
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....e offending transactions). 11. The above properties were purchased in 2005 by the three companies by taking a loan from DHFCL. Later in 2014, this loan was assigned to the appellant as alleged by the counsel for the appellant. 12. Three separate tripartite Escrow Agreements dated 31.10.2014 were executed between the appellant, the three companies and IndusInd Bank Ltd. whereby the rent from the three mortgaged properties was to be deposited in escrow accounts and to be appropriated by the appellant for repayment of loan. 13. Before the sanctioning of all the three Terms Loans to these Borrowers and its disbursement, the appellant has followed the due process of law and exercised all possible diligence by asking for and receiving the following documents before approval of loan: a) Acceptance of sanction letter by borrower and co-borrower b) Execution of loan agreement by borrower and co-borrower c) Demand promissory note alongwith letter of continuity by borrower and co-borrower d) Board resolution by borrower and co-borrower e) 7 UDCs of not more than 3 Crores in favour of Aditya Birla Finance Ltd. alongwith an undertaking lette....
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....-3407/KOL/2017 (Misc); and (ii) MP-PMLA-3493/KOL/2017 (Misc.) in the present Appeal had prayed for the following reliefs: i. M/s MSM Pvt. Ltd. To deposit the rent for the two immoveable properties in question to the account of the Appellant, which till now is being deposited in the Escrow Accounts, being Escrow Accounts No. 200999779905 and 200999779912, Induslnd Bank, Lower Parel Branch, Mumbai. ii. The Appellant permitted to operate the Escrow Accounts, being Escrow Accounts No. 200999779905 and 200999779912, Induslnd Bank, Lower Parel Branch, Mumbai and withdraw the amounts lying in the Escrow Account, which comprises only of the instalments that were legitimately owed to the Appellant by the borrowers for the loans advanced to them. 20. Vide para 17 of the Order dated 27.07.2017, this Tribunal had granted the following reliefs to the Appellant: "(a) M/s Multi Screen Media Pvt. Ltd. To deposit the rent for the two immoveable properties in question to the below mentioned accounts of the appellant, which till now were being deposited in the Escrow Accounts, being account No. 200999779905 and 200999779912, Induslnd Bank, Lower Parel Branch, Mumbai: ....
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....to date of alleged offence and FIRs are registered against Tayal Group of Companies. 24. Rule 8 of The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 reads as: "Where the confirmed attached property is hypothecated or mortgaged or pledged to any bank, financial institution, etc., the authorised officer shall direct such bank, financial institution, etc. that such property and any interest or dividend payable thereon shall be retained subject to further orders of the authorised officer". 25. In view of the above provision, this Hon'ble Tribunal has the power to direct that the Mortgagee Bank [Appellant herein] may be allowed to access and retain the funds till the recovery of their dues or final determination by the Special Court whichever is earlier. The said position is not disputed by the appellant. 26. The case of the Appellant is closely similar to the case decided by this Tribunal on dated 14.07.2017 in State Bank of India and Ors. Vs. The Joint Director, Directorate of Enforcement, Kolkata. In Paragraphs 46 and 51 of the Judgment, this Tribunal found that the attached pr....
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....- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding s....
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....s acquitted of the charge for the scheduled offence, his prosecution under section 3 of the Act for the offence of Money-Laundering would also come to an end. It has also been kept open by the Karnataka High Court that a person against whom complaint under section 3 of the PML Act has been filed and he is being prosecuted for the offence of money-laundering, he can show before the court that he is innocent and has not received any proceeds of crime." It is clear that innocent person can approach the Adjudicating Authority of any competent court to demonstrate his innocence that he has not received any proceeds of crime. The consequence of this is that while considering whether all or any of the properties provided under notice issued u/S 8(1) are involved in money laundering, the Adjudicating Authority can take into consideration the plea of innocence raised by any person and also the fact as to whether the property which has been attached has any nexus whatsoever with that of money laundering or not if the person before the Tribunal/ Adjudicating Authority is able to demonstrate that he neither directly nor indirectly has attempted to indulge nor with knowledge or ever as....
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.... OR INDIRECT ATTEMPT: In State of Maharashtra v. Mohd.Yakub, (1980) 3 SCC 57, the Hon'ble Supreme Court observed that- "13. Well then, what is an "attempt"? ...In sum, a person commits the offence of "attempt to commit a particular offence" when (i) he intends to commit that particular offence and (ii) he, having made preparations and with the intention to commit the offence, does an act towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the course of committing that offence." Thus, an "attempt to indulge" would necessarily require not only a positive "intention" to commit the offence, but also preparation for the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such 'intention' and 'attempt' on the part of any of the petitioners. B. RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY: In JotiParshad v. State of Haryana, 1993 Supp (2) SCC 497 the Hon'ble Supreme Cou....
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....factors on the basis of which it can be said that whether any person or any property is involved in money laundering or not. If there is no direct / indirect involvement of any person or property with the proceeds of the crime nor there is any aspect of knowledge in any person with respect to involvement or assistance nor the said person is party to the said transaction, then it cannot be said that the said person is connected with any activity or process with the proceeds of the crime. The same principle should be applied while judging the involvement of any property of any person in money laundering. This is due to the reason that if the property has no direct involvement in the proceeds of the crime and has passed on hands to the number of purchasers which includes the bona fide purchaser without notice, the said purchaser who is not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said transaction ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/ indirect involvement in the proceeds of the crime or its deal....
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....at the transaction in favour of the said Gunaseelan, is not genuine. It is not the case of respondent that the said Gunaseelan is a Benami or employee of G. Srinivasan and that Gunaseelan did not pay any amount as sale consideration or the sale consideration paid by Gunaseelan was not legitimate money. There is no material to show nexus and link of Gunaseelan with G. Srinivasan and his Benamies. In the absence of any verification or investigation by respondent with regard to genuineness or otherwise of the purchase by Gunaseelan; whether he was connected with G. Srinivasan or the sale consideration is legitimate or not the property in the hands of Gunaseelan cannot be termed as proceeds of crime. 22. Further, the appellants have given statements under Section 50 of the Act. They have categorically stated that they possess agricultural lands, cultivate GloriosaSuperba seeds and sell the same and derive considerable income. They have named the persons to whom they have sold the GloriosaSuperba seeds and produced Bank statements. Some of the Appellants have stated that they sold their lands and borrowed monies to purchase the property in question. There is nothing on record t....
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....oceeds of crime. These properties were purchased by these defendants without having any knowledge, whatsoever, that these properties were derived or obtained through criminal activities relating to schedule offence. It has been demonstrated by them that they verified the title deeds relating to the properties and after due verification of every details entered into the sale transactions as such these are bona fide deals entered by them against proper sale consideration and the money paid to the seller is also well explained. 22. Against the above arguments vehemently raised by the defendants, the complainant without disputing that the deals are bona fide heavily relied on the judgment of the Bombay High Court, dated 05.08.2010 in Mr. Radha Mohan Lakhotia Vs. Deputy Director, PMLA, Directorate of Enforcement, Mumbai in first appeal No. 527/2010. In this case it held by the Bombay High Court that the property bought without the knowledge that the same is tainted could be subjected to Provisional Attachment Order. 23. In the instant case the only point to be decided is whether the properties bought by any person against clean money and without any knowledge that prop....
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....cuments, the appellate authority failed to give any finding on merits after verifying with the concerned Bank." 49. From the scheme of the Prevention of Money Laundering Act, 2002 and its object, it is clear that the intention of the legislation was not to apply the Act to the transaction subject matter of the present case. 50. The ED in its provisional order as well as in the complaint before the Ld. Adjudicating Authority admitted that the properties which are subject matter are mortgaged with the appellants banks. The borrowers acquired and possessed by the respective owners since 2000, much before the borrowers availed the loan from the appellants banks and therefore no proceeds of crime were invested in these properties and even prior to the coming in force of the act of 2002. The copies of the sale deed/title deed of the properties show the date of acquisition to be prior to dates of alleged fraud committed in 2008-2009 as per the case of the respondent no. 1. Hence, it cannot be said the claim in any manner that these properties have been acquired out of the funds/loans availed from Union Bank of India. 51. The mortgaged properties are security to ....
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....ted 13th July, 2017 by Induslnd bank is reproduced herebelow:- "Ref No: CBG/ABFL/2017-18/125 July 13, 2017 Aditya Birla Finance Limited One India Bulls Centre, Tower-1, 18th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai- 400 013 Sub: Letter of No-Objection Please refer to the tripartite Escrow Agreements dated 31.10.2014 executed between Aditya Birla Finance Limited (ABFL), Induslnd Bank Ltd. and the Borrowers. Under the said Agreements we have opened two Escrow Accounts 200999779905 and 200999779912 in the name of Oak Leasing & Infotech Pvt. Ltd- Escrow A/c ABFL and Rossette Leasing & Infotech Pvt. Ltd- Escrow A/c ABFL and Rossette Leasing & Infotech Pvt. Ltd- Escrow A/c ABFL respectively. Induslnd Bank Ltd, as Escrow Account Bank, have no objection if the future rentals are routed through a separate account of ABFL. We are the Account Bank for benefit of Lender i.e. Aditya Birla Finance Ltd. as per the said Escrow Agreements. Yours Sincerely, For Induslnd Bank Ltd. Authorised Signatory" 31. It is argued by the counsel for the appellant herein and counsel....
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....id are follows:- a. Maintenance charges to Ferani Developers b. Property Tax to Brihan Mumbai Mahanagar Palika c. Service Tax to Service Tax Department, Govt. of India. 37. It is alleged by the borrowers that after passing of the provisional attachment order by the respondent they are not able to pay the above mentioned statutory dues to the authorities, who is now receiving default notices from the Office of Assistant Commissioner of Service Tax, Mumbai, Assistant Assessor & Collector, Brihan Mumbai Mahanagar Palika and from the office of Ferani Developers. True copies of notices received from the office of Assistant Commissioner of Service Tax, Mumbai, Assistant Assessor & Collector, Brihan Mumbai Mahanagar Palika and from the office of Ferani Developers have been filed alongwith applications filed in their respective appeals. It is submitted that the appellants in the said appeals are not able to deposit service tax for the period April-September, 2016-17 for which it has received a notice from the office of Assistant Commissioner, Service Tax, Mumbai and it is directed to file the return within two days showing its self assessed tax and payment particulars. The a....