TaxTMI 
TaxTMI 
2017 (12) TMI 1103
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....ention of Money Laundering Act, 2002 hereinafter referred as that the "said Act" against the order dated 12.05.2015 passed by learned Adjudicating Authority in the matter of OC 405/2015. 2. The brief facts are that Smt. Pritam Kaur, appellant is exclusive owner in possession of the land measuring 26 Kanal 18 marla alongwith other land in revenue State of Sultan Wind Sub Urban, Mahal-II, Tehsil and District Amritsar. 3. On 05.07.2006 One Mr. Hardip Singh Thapar S/o Lt. K.S. Thapar approached the appellant to purchase the land measuring 26 Kanal 18 Marla @ 5000/- per sq yard and the registered agreement to sale dated 05.07.2006 has been executed and for which Mr. Hardip Singh Thapar has paid Rs. 1,34,50,000/- as earnest money and fixed the date 01.12.2006 for execution and registration of sale deed. 4. It is mentioned in agreement that the date for execution of sale deed will not be extended either orally or in writing and time was made essence of contract. 5. On 15.11.2006 the appellant send legal notice dated 15.00.2006 and 20.11.2006 to the Mr. Hardip Singh Thapar in regard of execution of sale deed. 6. On 01.12.2006 Mr. Hardip Singh Thapar failed to execute the sal....
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....of Rs. 3,61,00,000/- but both the cheques were dishonoured. 13. In view of aforesaid reason, Shri Narender Kumar Chandna filed the complaint and on the basis of thereof an FIR bearing No. 66 dated 28.02.2007 was registered in the police station DLF Phase-II, Gurgaon for the alleged commission of offence allegedly committed under Sections 420/467/468/471/ of IPC against Hardeep Singh Thapar and his sons namely, Manish Thapar and Vikas Thapar. The said accused persons dishonestly induced Shri N.K. Chandna to advance a sum of Rs. 3,61,00,000/-( Rupees Three Crore Sixty One Lakh only) After investigation charge sheet and supplementary charge sheet have been filed against the aforesaid FIR named persons on dt. 31.07.2009& 15.01.2010 respectively u/s 420/467/468/471/120B/201 of IPC. 14. On the basis of above, case under the "said Act" was registered by the Enforcement Directorate, Delhi Zone vide ECIR/63/DZ/2010 AD (SC) dated 27.10.2010 was registered for investigation. Subsequently, due to territorial reorganization, the case was transferred to Chandigarh Zonal office of the Enforcement Directorate for further investigation and renumbered as ECIR No. CDZO/10/2013. 15. The respo....
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....(through Cheque No. 112852 for Rs. 1,29,50,000/-, Cheque No. 112818 for Rs. 3, 00,000/- both dated 07.07.2006 and Rs. 2,00,000/- cash). As this amount of Rs. 1,34,50,000/- was paid from the proceeds of crime generated by Shri Hardeep Singh Thapar and his sons by cheating, Shri Narinder Chandana for which FIR No. 66/2007 dated 28.02.2007, PS DLF Phase-II, Gurgaon was registered against Shri Hardeep Singh Thapar and his sons i.e. Manish and Vikas Thapar. 20. The Adjudicating Authority passed the impugned order on 12.05.2015 in OC No. 405/2015 confirming the aforesaid PAO. The said order of Adjudicating Authority is under challenge before us, inter alia, on following grounds: a. No proceedings under the PMLA can be initiated against the appellant as she is neither a named person in the FIR nor has been charged under a schedule offence. b. The provisions of PMLA cannot be applied to her retrospectively as the provisions of amendment Act 2 of 2013 of Prevention of Money Laundering Act is applicable w.e.f. 15.02.2013. He has relied on the judgment passed in Arun Kumar Mishra vs. Directorate of Enforcement, by Hon"ble High Court of Delhi. c. The appellant has....
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....en though the civil suit was also for the forfeiture of amount. f. No other properties as alleged could be detected during the investigation of the ECIR. 24. It is a matter of fact that after passing the order dt. 12.05.2015 in O.C. No. 405/2015 on 28.09.2015 respondent no. 1 again issued provisional attachment order against the Pritam Kaur by passing the provisional attachment order 1 of 2015 dated 28.09.2015 attaching the movable properties by alleging that after the receipt of advance amount for the sum of Rs. 1,34,50,000/- by Pritam Kaur from Shri Hardeep Singh who was M.D. of Thapar Infrastructure Ltd. had made F.D worth Rs. 16,00,660/- which were attached by PAO 1/2014 dated 31st December, 2014 which was confirmed by order dated 12th May, 2015 and F.D. of Rs. 20,01,034/- which was name of the mother. The money which was received from Pritam Kaur as well as 8,00,403/- which was in the name of her husband Sukhpal Singh. The ED has also attached the agricultural land in the name of Pritam Kaur measuring 26 Kanal 18 Marlas as per PAO 1/2015. 25. As far as remaining amount it has come on record that after receiving the advance amount, admittedly on 10.08.2007 the hu....
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.... no suit for recovery of advance amount has been filed by Shri Hardip Singh Thapar and his company Thapar Infrastructure Ltd. or any by N.S. Chandana who lodged the FIR against Shri Hardeep Singh Thapar and Ors. 33. There is no evidence produced by the respondent No. 1 either before the Adjudicating Authority or before this Tribunal that the appellant has any knowledge about the said tainted money and she had knowledge that the respondent No. 4 has obtained it by way of criminal activity and as a result she had executed the agreement to sell on 05.07.2006. It is crystal clear from the facts and circumstances of the case that the appellant was not a party to the criminal activity of respondent No. 4. Had there been any such evidence than she would have been made an accused in the charge sheets filed against respondent No. 3 and others. She is not a party to the alleged crime. 34. It is one of the strong argument of the appellant that as per the terms and conditions of the contract time was the essence of contract and since the R-4 did not perform his part of the contract by 01.12.2006 so she has forfeited the entire amount of Rs. 1,34,50,000/- without parting with a single inc....
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....of proceed of crime u/s 2(u) of PML Act, 2001 the property should be as a result of criminal activity where as in the present case, the property was admittedly not purchased with illegal or tainted money. 39. This Tribunal in the case of IPRS in appeal no. FPA- PMLA1302/MUM/2016 decided on 22.06.2017 had dealt with the similar issue as to whether the innocent party whose immovable properties are attached by the ED can approach the Adjudicating Authority for release of the same in para no. 55 to 60 the same read as under:- 55. Whether innocent party whose properties i.e. movable or immovable are attached can approach the Adjudicating Authority for release of attached property. The Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating Authority for the purposes of release of properties which have been attached in terms of the provisions of Section 5 of the Act. This can be seen by reading Section 8(1) and the proviso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties referred to in the notice are involved in money laundering or ....
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....5.2016 by Allahabad High Court, it has been observed by the Ld. Single Judge after noticing the judgment of Karnataka High Court that the element of knowingly or mens rea have been provided under the Act so that the aspect of implicating any innocent person can be ruled out. Relevant para 26 of judgment is reproduced below:- "26. Thus, upon consideration of the law laid down by the Hon'ble Karnataka High Court, it is clear that the amendment incorporated in the Money Laundering Act was not held unconstitutional and ultra virus, but it was observed by the Karnataka High Court that the property of a person can be attached without there being any prosecution for the offence of Money Laundering, but so far as the prosecution of a person for the offence of money laundering is concerned, the proceedings under section 3 of the PML Act can be initiated only in case the person is held guilty of receiving proceeds of crime as a result of commission of scheduled offence. The Karnataka High Court has also held that the complainant in such a case is not required to wait for the result of trial being held for the scheduled offence. A complaint can still be filed against such person,....
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.... of Section 3 which define offence of money laundering. The aspect of knowledge or involvement has been discussed by Ld. Single Judge of Gujarat High Court in the case of Jafar Mohammed Hasanfatta and Ors (Appellants) Vs Deputy Director and Ors. (Respondents) wherein Ld Single Judge has observed as under:- "37. A holistic reading of this definition of 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive 'and', makes it luminous that any persons concerned in any process or activity connected with such "proceeds of crime" relating to a "scheduled offence" including its concealment, possession, acquisition or use can be guilty of money laundering, only if both of the two prerequisites are satisfied i.e.- "(i) Firstly, if he- (a) directly or indirectly 'attempts' to indulge, (b) "knowingly" either assists or is a party, or (c) is "actually involved" in such activity; and (ii) Secondly, if he also projects or claims it as untainted property;" 38. The first of the two pre-requisite to attract Section 3 of PMLA shall thus satisfy any of the following necessary ingr....
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....ually involved would mean actually involved into any process or activity connected with the proceeds of crime and thus scheduled offence, including its concealment, possession, acquisition or use. There is absolutely no material or circumstantial evidence whatsoever, oral or documentary, to substantiate any such allegation qua the petitioners, D. Neither any of the petitioners is arraigned as accused in the 'Scheduled Offences' punishable under Indian Penal Code for direct or indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of them." 39. The second of the two pre-requisite to attract Section 3 of PMLA would be satisfied only if the person also projects or claims proceeds of crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowledge of tainted nature i.e. the property being 'proceeds of crime' derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, would be utmost necessary, which however is lacking in the instant case." 59. These are four ingredients w....
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.... (a) in the case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering. 21. In the present case, one G. Srinivasan is accused of having played fraud and obtained a loan of Rs. 15,00,00,000/- by producing bogus and fabricated documents. From and out of the said amount, the property in question was purchased by him in the names of his Benamies. One Ayyappan was appointed as their Power Agent. One Gunaseelan purchased the property through the Power Agent Ayyappan. The said Gunaseelan was examined and his statement was recorded Under Section 50 of the Act. He had stated that he purchased the property for cultivation. He developed the property but geologist gave opinion that property will not yield proper income. In the circumstances, he sold the property to appellants. The respondent has not produced any document or material to disprove the statement of Gunaseelan. There is nothi....
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....nts had no knowledge that properties in the hands of their vendor was proceeds of crime. It was also not disputed by complainant that the appellants did not have financial capacity to buy properties. Paragraphs 21, 22, 23 and 24 of order of Adjudicating Authority is extracted herein for better appreciation. "21. The CBIBS & FC (BLR) has filed a charge sheet in the court of Spl. Judge for CBI cases Coimbatore, against Sh. Arivarasu, Sh. R. Manoharan, Sh. R. Selvakumar, Sh. G. Srinivasan, Sh. K. Martha Muthu, Sh. V. InduNesan, Sh. K. Vignesh, Sh. A. Sainthil Kumar, Sh. M. Ram Krishnan, for the offences punishable under Section 120-B read with 420, 467, 471 IPC and section 13(2) read with 13(1)(d) of PC Act 1988. The offences punishable under section 120-B, 420, 471 are schedule offence under Section 2(1)(y) of the PMLA and therefore on of the condition for issuing provisional attachment order is satisfied. The other important point to be determined is whether the properties attached vide Provisional attachment order are involved in money-laundering. The only defense or explanation raised by Defendants, particularly Def No. 2 to 8 is that the landed properties attached by the....
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....f crime. It is pertinent to note that in Mr. Radha Mohan Lokatia's case, Department had proved the nexus and link between the person possessing the property and person accused of having committed an offence. All the persons involved in that case were close relatives. 26. In the present case, the respondent failed to prove that the appellants did not have sufficient financial capacity to buy the property or that the money paid by them as sale consideration was not legitimate money derived by agricultural activities. No material was produced to show that the appellants are close relatives of person, who involved in criminal activities and the person, who sent monies to purchase the property did not possess financial capacity to provide such huge amounts and that they are not genuine purchasers of agricultural products of appellants. The respondent has not made any such investigation and has not produced any such material. Further, the Appellate Authority in fact considered the additional documents produced before it, but rejected the same on the ground that Appellants have not given any valid reasons for not filing the same before the Adjudicating Authority. Having consi....
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....nd in the present case the appellant had done any wrong, but, only done genuine agreement to sale in regard of her land and taken earnest money and further, when the person due to the slump in property market could not purchase her land, then she confiscate the earnest money as per the agreement to sale dated 05.07.2006 as per law. The said earnest money was forfeited in December, 2006 as per agreement. The limitation to recover the said amount after forfeiture is three years from the date of forfeiture. No Civil or criminal action was filed against her by buyer. As a matter of fact, the dispute on behalf of Pritam Kaur was over in December, 2006 itself once she forfeited the advance amount at that even no FIR was registered against Shri Hardeep Singh Thapar subsequently. 44. In Shree Hanuman Cotton Mills v. Tata Air Craft Ltd. (1969) 3 SCC 522 the Supreme court elaborately discussed the principles which emerged from the expression "earnest money". That was a case where the appellant therein entered into a contract with the respondent for purchase of aero scrap. According to the contract, the buyer had to deposit with the company 25% of the total amount and that deposit was to r....
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....n then is whether the respondents are entitled to forfeit the entire amount. It is seen that a specific covenant under the contract was that the respondents are entitled to forfeit the money paid under the contract. So when the contract fell through by the default committed by the appellant, as part of the contract, they are entitled to forfeit the entire amount." 44. Infact it is a civil dispute. She within her legal rights has received the advance amount and forfeited the same and prior to date of registration of FIR against Shri Hardip Singh Thapar. The date of registration of ECIR is 27th October, 2010. The date of provision attachment order is December, 2014 much after the expiry of three years. The claim of buyer was taken against her by buyer or the complainant. It was a commercial deal. She was/is innocent party. She is not involved in any criminal matter in this case. The respondent no. 1 has not produced any material evidence regarding her involvement in any criminal activity. No link and nexus has been established even prima facie and in view of the above facts the money in the hands of the appellant has been rightly forfeited by her as per agreement and as per law. T....