TaxTMI 
TaxTMI 
2018 (2) TMI 1059
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....ponding to CC No. 8 of 2012 before the Special Judge for CBI Cases, Hyderabad (CBI Case). By this common order, we propose to decide all the above said five appeals. 2. Two appeals have been filed by M/s Jagati and M/s Janani: 1. FPA-PMLA-435/HYD/2013 - M/s.Jagati Publications Pvt.Ltd. 2. FPA-PMLA-436/HYD/2013 - M/s.Janani Publications Pvt. Ltd. 3. The rest of three appeals have been filed by private parties i.e. companies Aurobindo and Hetero & Group companies/investors. 4. Following private parties 3. FPA-PMLA-474/DLI/2013- Hetero Drugs (for short Hetero) 4. FPA-PMLA-462/DLI/2013- APL Research Centre. 5. FPA-PMLA-463/DLI/2013- Aurobindo Pharma (for short Aurobindo) (Herein after they would be referred as private parties) 5. The allegations against the private parties in Appeal nos. FPA- PMLA-474/DLI/2013, FPA-PMLA-462/DLI/2013 & FPA-PMLA- 463/DLI/2013 against Auroindo Pharma by CBI/ E.D contend that 75 acres of land in Industrial Development Area (IDA) Jedcharla was allotted by Andhra Pradesh Industrial Infrastructure Corporation (APIIC), IDA at the instance of the then Y.S Rajshekhar Reddy (Y.S.R) at a concessional price of Rs. 7 lakhs per acre instead of Rs. 15 la....
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...., Andhra Prades (Serial No. 9 of the list of properties attached) valued at Rs. 2,30,060/-, which is incorrectly mentioned as being situated in Krishna District. c. 5 Acres of land at Village Borapatla, Hathnoora Mandal, Medak District, Andhra Pradesh (now State of Telengana) (Serial No. 42 of the list of properties attached) valued at Rs. 16,27,500/-. 10. It is alleged by Aurobindo that substantial portion of the properties attached involves properties of APL Research Ltd., which is a 100% subsidiary of Aurobindo Pharma Ld. Pertinently, APL Research Centre Ltd. has not been accused of any crime whatsoever, whether of any Schedule Offence or any offence under the PMLA, nor is it alleged to be in possession of proceeds of crime. 11. It is submitted by Aurobindo Pharma Ltd. that a fixed deposit No. 0033605 dated 29.08.2012 for a sum of Rs. 3 Crores owned by the Aurobindo Pharma Ltd. (Serial No. 6 of the list of properties attached) owned by the appellant has also been attached by Provisional Attachment Order No. 1/2012 Dt. 04.10.2012. 12. In Hetero Drugs, being appeal no. FPA-PMLA-463/DLI/2013 it was contended by the CBI/ E.D that 75 acres of land in IDA Jedcharla was allotted b....
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....s are in possession of the proceeds of crime although their case is that no reasons have been provided by the Respondent No. 1 for provisional attachment of the assets of appellants despite it not being in possession of proceeds of crime. 16. The allegation against another company Trident by the CBI/E.D. was that an extent of Ac 30.33 in Pashamylaram, Medak dist was transferred from Aurobindo to Trident by wrongly projecting Trident as a fully owned subsidiary and thereby paying discounted transfer rate to APIIC. It was alleged by the respondent no. 1 that a benefit of Rs. 4.3 crore was conferred on Trident with resultant loss to APIIC. 17. It is not denied by the Hetro, APL and Aurobindo that they have made investment into the appellant companies i.e. Jagati, Janani for alleged benefit. Investor Alleged benefit (Rs. Cr) Investment into Jagati Investment into Janani Aurobindo & promoters 8.6 3 - Trident 4.3 7 - Hetero 8.6 15 4.5 Total 21.5 25 4.5 18. The main observation of Respondent No. 1 in the impugned order is that Hetero is in possession of proceeds of crime of Rs. 8.60 crores as a result of the alleged wrongful gain made by virtu....
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....e for Pharmaceutical Formulatins, the appellant and Aurobindo Pharma Ltd. were roped in as „Anchor Clients‟ for the said SEZ. Notably, as per the extant policy, land within the SEZ area could only be allotted on „a lease basis‟ as will be evident from Mr. B.P. Acharya‟s statement, which is extracted below for the ease of reference: "As regards the rate offered the Board of APIIC vide its first resolution passed in January 1974, has delegated "full powers" to the M.D. considering various aspects such as the land of development, importance of the project, etc. In case of SEZ, the allotment, as per the SEZ Rules has to be only on lease basis, whereas the other industrial parks, land is allotted on outright sale on freehold basis." [Emphasis supplied] 21. Out of the aforesaid 250 acres, 75 acres of the said land was allotted in-principle to the appellant on lease for a period of 25 years on an "as is where is basis" subject to payment of lease premium of Rs. 7 lacs per acre and annual lease rent of 1% of the lease premium. Subsequently, two lease agreements dated 19.06.2008 and 31.10.2008, were executed for 66 acres and 9 acres respectively, in favour....
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....ts subsidiary was less than 45 acres and as such the cost incurred by the Appellant towards lease premium per acre would increase. The computation of per acre cost to the Appellant referred by Hetero is given below: Total for 75 Acres Per acre cost for of 45 Acres NUA Lease Premium Paid Rs. 5.25 Crores Rs. 11.6 Lakhs Cost of Construction and development of land Rs. 4.49 Crore Rs. 9.9 Lakhs Compensation paid to erstwhile farmers Rs. 1 Crore Rs. 2.22 Lakhs Total Cost Rs. 10.74 Crores Rs. 23.58 Lakhs/acre 25. M/s. Hetero Drugs Ltd., a leading pharmaceutical company in India and the world‟s largest producer of Anti-retroviral drugs, with a current turnover of Rs. 3,300 Crores. Similar is the position of Aurobindo. 26. It is also the case of the Hetero that the cost to the appellant was Rs. 23.58 lakhs per acre whereas the maximum cost fixed by the Price Fixation Committee was Rs. 20.23 lakhs per acre. As such the question of the Appellant unduly gaining or possessing any proceeds of crime does not even arise. This information was placed before the Ld. Adjudicating Authority during the course of arguments as well as in the detailed Written Submissio....
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.... day as the application by the appellant viz. 17.11.2006; b. That no advertisements were issued by APIIC for allotment of the land; c. That oral directions were given by the then Chief Minister Mr. Y.S.R. Reddy, to Mr. B. P. Acharya (VC, APIIC), who then orally directed Mr. T.L. Ramachandran (CGM, Projects, APIIC) to allot the land in favour of the Appellant on concessional rate. 30. In reply, it is submitted by the appellants that the finding that the file was processed in one day is contrary to the record in as much as the letter dated 12.09.2017 clearly indicates that prior discussions were ongoing between the Appellant, Aurobindo Pharma Ltd. and APIIC, at least two months prior to the in-principal allotment, for setting up of the pharma SEZ. This fact is again corroborated by the statement of Mr. Srinivasa Reddy made under Section 50 of the PMLA, 2002, wherein he states that he had met Mr. B. V. Acharya, then CMD of APIIC, from April 2006 to November 2006 for discussing the allotment of the land. The relevant extract of his statement is as follows: "We have met 5-6 times, Shri B. P. Acharya (and I), between April 2006 to November 2006 to discuss the objective of allotmen....
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....nce by the Ld. Adjudicating Authority on purported oral directions given by the then Chief Minister Mr. Y. S. R. Reddy, to Mr. B.P. Acharya (VC, APIIC), who then orally directed Mr. T.L. Ramachandran (CGM, Projects, APIIC) is merely observations in as much as no evidence was placed before it the form of statements of witnesses or documents to support such an assumption. 34. Prima facie, it appears to us that if the allegations made by the Respondent No. 1 are taken to be correct, then it would be a case where the Appellants have paid a bribe of Rs. 29.50 Crores for obtaining a benefit of Rs. 21.5 Crores, as per the Respondent No. 1‟s quantification, which is not in practical and possible. 35. It is not denied by the respondent no. 1 that the appellants and the other accused approached the Hon‟ble High Court at Hyderabad under Section 482 of the Cr. P.C. seeking quashing of the aforementioned proceedings in C.C. No. 8 of 2012. The Hon‟ble High Court was pleased to issue notice in the said petition and vide Order dated 18.04.2016 granted interim stay of proceedings in C.C. No. 8 of 2012, which continues to remain in force as date. No charges framed against the app....
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.... or intangible" including title to or interest in such a property and their assets, wherever located. The explanation to Section 2(1)(b) defines property to mean property to mean property of any kind used in the commission of an offence under the PMLA itself or of any scheduled offence. Therefore, the expression „value of any such property‟ would be a value equivalent to the value of a property derived or obtained directly or indirectly by any person as a result of criminal activity. The property itself may no longer be available but the equivalent value of such a property, whether held in cash, etc., would be available for attachment. 40. The Hon‟ble Bombay High Court therein reiterated the mandatory nature of S. 5(1)(c) of PMLA, 2002 as under: "11. ...Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the purposes of the said section to resort to action of "attachment of property" if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property,....
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....ision of this Court in Fatima Amin, was also included herein. Once the show cause notice is found to be illegal, the same would vitiate all subsequent proceedings. ... 56. Submission of Mr. Singh that the appellants have not been able to discharge the burden of proof which was on them from the impugned orders, it would appear that they have utterly failed to prove their own independent income; they being close relative of the detune as in terms of the statutory requirements, it was for them to show that they had sufficient income from those properties." [Emphasis supplied] 42. In the present case, even assuming that the preconditions as given under Section 5(1)(a) and (b) had been satisfied by Respondent No. 1, the requirement under Section 5(1)(c) has not been fulfilled, as is evident from the bare perusal of the Provisional Attachment Order passed against the Appellant as the Provisional Attachment Order is contrary to the express mandate of S. 5 (1) (c) of PMLA in as much as the Respondent No.1 has even failed to record his satisfaction that the property attached as „proceeds of crime‟ in the present case are likely to be concealed, transferred or dealt with in....
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.... lease. It is not denied by the respondent no. 1 during the course of argument that it was lease and no sale. The entire investigation, the attachment and the subsequent actions against the appellant had proceeded on a complete misconception and failure to appreciate the natural distinction between freehold property and leasehold property. The finding are totally erroneous. The nature of a lease have been compared to price fixed by Price Fixation Committee of Andhra Pradesh Industrial Infrastructure Corporation ("APIIC") for the purpose of sale of non-SEZ land and thereby resulted in a loss to the exchequer. 47. The Appellants i.e. private parties well established company with turnover in excess of Rs. Thousand of crores. The question of proceeds of crime not being available for the purpose of confiscation does not even arise and the extraordinary power of provisional attachment has been exercised by the Respondent No. 1 without having due regard for the provisions of Section 5 (1) of the PMLA. 48. Therefore, even assuming that the allegations made against the Appellant‟s were true, and that an order of attachment was necessary in the circumstances, the simplest recourse wo....
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....nt is as follows: "Looking at the future potential of real estate companies and boom, we invested in Janani Infrastructure at the Premium Value of Rs. 102 per share. ... With regards to Jagati Publications they have informed us that in their business plan, they can achieve circulation of 5 to 6 Lakh copies at the time of the launch as they have more than 10 Lakh Congress workers who they felt would subscribe to the newspaper." [Emphasis supplied] In fact, in the present case, Jagati Publication‟s circulation is far in excess of those projected. 54. It was the case of investors i.e. private parties that the investments made into M/s Jagati Publications Ltd and M/s Janani Infrastructure are genuine investments and advances made in course of bona fide commercial transactions. The allegations as to overvaluation and ante- dating of valuation reports with respect to M/s Jagati Publications Ltd. are completely baseless and erroneous. The premium fixed for the shares of M/s Jagati Publications Ltd. is based on sound commercial analysis, including cogent valuation. The premium fixed contemporaneously by other market participants would evince that the premium of M/s Jagati P....
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....ent case as per earlier discussions; therefore the impugned order is bad as well and the provisional attachment order is liable to be modified. 59. Alongwith the written submission, the appellant, i.e. Hetero has filed the affidavit securing the relevant amount. 60. Admittedly the following properties of the appellant, i.e. Hetero & company have been provisionally attached by the respondent no. 1 not as proceeds of crime, but, admittedly as the equivalent value of the alleged proceeds of crime purportedly in possession of parent company of the appellant, which has been quantified by the respondent no. 1 at Rs. 8.60 Crores. Sl. No. Details of asset/property Amount involved 1. 34 acres and 13 cents vide Sale Deed No. 2245/07 at Parwada with Unit VI, Nakkapalli (Portion and parcel of land), District Vishakhapatnam Rs. 517.97 Lakhs 2. 1 acre land vide Sale Deed No. 1132/2007 dated 19.02.2007, Dy. No. 72/1A, at Lankelapalem with Unit VI, Nakapalli, District Vishakapatnam Rs. 19.71 Lakhs 3. 65 cents land vide Sale Deed No. 3111/2008 dated 23.09.2008, Sy. No. 71/4, ACO. 65 cent at Lankelapalem with Unit VI, Nakapalli, District Vishakhapatna Rs. 16.43 lakhs 4. Fixed Deposi....
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....e purportedly in possession of the appellant, which has been quantified by the respondent no. 1 at Rs. 12.90 crores. a. 95.095 Acres of land situated at Village Kota Bhogapuram, Bhogapuram Mandal, District Vizianagaram, Andhra Pradesh owned by APL Research Centre Ltd. (Serial Nos. 7, 8, 10 to 41 of the list of properties attached) valued at Rs. 9,71,50,640/-. b. 0.35 acres of land situated at Village Lakshmipuram, Bhogapuram Mandal, District Vizianagaram, Andhra Pradesh owned by APL Research Centre Ltd. (Serial No. 9 of the list of properties attached) valued at Rs. 2,30,060/-, which is incorrectly mentioned as being situated in Krishna District; and c. 5 acres of land at Village Borapatla, Hathnoora Mandal, Medak District, Andhra Pradesh (now State of Telengana) owned by APL Research Ltd. (Serial No. 42 of the list of properties attached) valued at Rs. 16,27,500/-. d. Fixed deposit No. 0033605 dated 29.08.2012 for a sum of Rs. 3 Crores owned by Aurobindo Pharma Ltd. (Sr. No. 6 of the list of properties attached). 65. We accept the undertaking, the Aurobindo is also directed to deposit Rs. 9.90 Crores with the respondent in view of release of properties. 66. The statement....
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....udice and will be treated as securities against the attachment of properties. 69. The all appeals filed by the private parties and MPs are disposed of. No costs. 70. Now, we shall deal with the appeals filed by Jagati and Janani. The attachments against the Jagati and Janani were effected as under:- i) M/s. Jagati Publications Pvt. Ltd. - Fixed Deposits worth for Rs. 14.5 Crs. ii) M/s. Janani Publications Pvt. Ltd. - Land and properties for Rs. 15 Crs. 71. Section 24 reads as under: Section 24 Burden of Proof :- In any proceeding relating to proceeds of crime under this Act,- (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 launder; 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.] 72. With regard to the other attachments are concerned, the definition of proceeds of crime reads as follows: "proceeds of crime" means any property derived or obtained, directly of indirectly, by any person as a result of criminal activity re....