TaxTMI 
TaxTMI 
2018 (11) TMI 309
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....aring "No. 9A" on the 9th Floor of the Kingfisher Towers ("theProperty") which was booked by the appellant. 4. The Appellantsare non-resident Indian who are currently residing in the United Arab Emirates and are industrialists engaged in the business of manufacture of pre-cast and modular construction materials and healthcare 5. The appellant is not arrayed in the FIR or charge sheeted. He was not involved in schedule offence. No prosecution complaint is pending against the appellant. 6. The Original Complaint No. 612/2016 was filed against Shri Vijay Mallya, M/s Kingfisher Airlines Ltd. &Ors., under Section 5(5) of the PMLA, 2002, wherein certain properties (movable & immovable properties) have been attached provisionally under Provisional Attachment Order No. 11/2016 dated 11.06.2016, under Section 8(3) of the PMLA, 2002. 7. The Enforcement Directorate, Mumbai has registered a case against Shri Vijay Mallya, M/s Kingfisher Airlines Ltd. (KAL) and others under Prevention of Money Laundering Act (PMLA), 2002, in the matter of IDBI Loan of Rs. 900 Crore. 8. The properties mentioned in the aforesaid Provisional Attachment Order have been provisionally attached under Section 5(5)....
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....onspiracy against the Appellants without any cogent evidence or material relied upon. Such details are missing if the material placed on record by the respondent no. 1. The appellant in the present appeal is only seeking the relief against the ED, who attached the property in which the appellant is claiming his right and interest. 14. As per pleadings of the appellant, the brief facts are as follows: i) On 26.04.2010 Respondent No. 5 being the sole and absolute owner of the immovable property being land bearing Municipal No. 24 (Old Nos. 24 and 33), VittalMallya Road, Bengaluru, situated in Ward No. 76 of Shantinagar Range, Bruhat Bangalore MahanagaraPalike, Bengaluru, admeasuring about 1,93,253 Sq. Ft., (which is described in greater detail in Schedule-A . The Respondent No. 5 had entered into a Joint Development Agreement dated 26.04.2010 with Respondent No. 8. ii) Under the said Joint Development Agreement, Respondent No. 8 had agreed to construct a multi storied luxury residential apartment complex with various amenities and deliver 55% of the built up area to Respondent No. 5, in consideration of Respondent No. 5 agreeing to permit Respondent No. 8 to sell 45% of the buil....
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....greater detail in Schedule-B. v) On 17.12.2012 the Appellants entered into an Agreement to Sell with Respondent Nos. 5 and 8 under which Respondent No. 5 agreed to sell 8321/767870th undivided right, title and interest in Schedule-A Property. The said land is described in Schedule-C herein below (hereinafter referred to as "Schedule-C Property"). vi) Under the Agreement to Sell, Respondent No. 5 had agreed to sell the Schedule-C Property for a total consideration of Rs. 5,23,54,875/- (Rupees five crores twenty three lacs fifty four thousand eight hundred and seventy five only). As on the date of entering into the Agreement i.e., 17.12.2012, the Appellants had paid Rs. 2,23,54,875/- (Rupees two crores twenty three lacs fifty four thousand eight hundred and seventy five only), receipt of which is acknowledged by the Respondent No. 5 in the Agreement to Sell. The Appellants were required to pay the balance consideration as per the Schedule provided to the said Agreement. vii) On 17.12.2012 The Appellants had also entered into a Construction Agreement with Respondent Nos. 5 and 8, under which Respondent Nos. 8 agreed to construct the Kingfisher Towers and deliver the Schedule- B ....
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....5.00 16. 30.06.2015 20,00,000.00 93,58,165.00 Total 5,23,54,875.00 17,23,12,125.00 Grand Total Rs. 22,46,67,000.00 ix) As of 07.06.2015, the Appellants paid the entire consideration of Rs. 22,46,67,000/- (Rupees Twenty Two Crores Forty Six Lakhs Sixty Seven Thousand) to Respondent Nos. 5 and 8 towards the sale and delivery of possession of the Schedule Property. Respondent No. 5 has acknowledged the receipt of all the amounts paid by the Appellants towards the sale and delivery and possession of the Schedule Property. x) The Appellants also entered into an agreement with an Architect and in consultation with the Architect, several changes were made in the Schedule B Property by the Respondent Nos. 5 and Respondent No. 8. (Copy of the e mail correspondence shared between the Architect, the Appellants and Respondent No. 5 and Respondent No. 8 along with Certificate U/s 65B, Indian Evidence Act are filed as Annexure - A6 Colly. xi) By June 2016, Respondent No. 8 completed the construction of Schedule-B Property up to the stage of handing over the possession to the Appellants for carrying out necessary interior and fit out works. In fact, Respondent ....
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....ver the same to the Appellants by 30.06.2015; though, the said Agreements also provided for a grace period of six months, and the same expired on 31.12.2015. xiv) The Agreement to Sell and the Construction Agreement do not empower the Appellants to terminate the contract on grounds other than non-payment. The Appellants, by performing all terms and conditions of the Agreement to Sell and Construction Agreement including the complete and total payment of the sale consideration have become de facto owners of the Schedule B & C Property. There are no other disputes between the Appellants and Respondent Nos.5 and8, regarding fulfilment of the terms and conditions under the aforesaid two agreements. Despite, repeated requests and reminders, Respondent No. 8 has not conveyed and delivered the Schedule Property. xv) The Appellant paid the entire Purchase Consideration from their own personal bank account having funds from his independent sources and earnings, which had no relation whatsoever with any of the Respondents named above nor was the purchase consideration part of, directly or indirectly, any transaction(s) with the Respondents named above. xvi) On 29.07.2015 pursuant to a ....
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....e Deed. 16. The appellant is not even named/mentioned in the FIR or the ECIR or the captioned Original Complaint. It is not even the case of the Enforcement Directorate/ Respondent No. 1 that the appellant is involved or connected in any manner with the alleged offence under PMLA or the predicate offence and at the time of issuance of Provisional Attachment Order, the ED/ Respondent No. 1 was aware of the purchase of the said property by the appellant and the appellant himself brought the same to the ED"s notice; however, the ED did not investigate it further or if it did investigate it, then the same did not result in any inculpatory findings. 17. There is no material on record to show that the appellant has any link, association or relation with any of the defendants i the captioned Original Complaint. It is the case of appellant that the purchase of the said property was after arms-length negotiations. 18. The Respondent ED"s allegation is that the Appellant has attempted to help the accused Vijay Mallya and has connived with him by entering into the Agreements to Sell is without any substance as there is no evidence or material on record. 19. However, the Respondent ED has ....
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....against it because this Tribunal has held in "Standard Chartered Bank vs. The Deputy Director Directorate of Enforcement, Mumbai FPA-PMLA-1604, 1711, 1760 & 1761/MUM/2017" that once there is an Order passed by the Hon"ble Debt Recovery Tribunal, the same shall have precedence over the claim of the Respondent No. 1. b) Furthermore the present Appeal is limited to the determination of the validity and legality of the Order of Provisional Attachment within the four corners of the Act. c) Consequently, the issues for consideration before this Tribunal in the present Appeal are whether, firstly the Property is proceeds of crime and secondly whether the Appellants are in possession of the proceeds of crime. In this regard, it is submitted that the Property was attached vide the Impugned Order. However, at the prevalent time, there was no apprehension, as required under Section 5(1) of the Act, that the Property will be concealed, transferred or dealt with in a manner that will frustrate the proceedings under the Act. Interestingly Respondent No. 1 alongwith its reply has relied upon two orders passed by the Hon"ble High Court at Karnataka which themselves demonstrate that on the da....
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....oney Laundering Act, 2002 ("Act")? ii) Issue 2-Whether the subject property is proceeds of crime and the Appellant is in possession of proceeds of crime? 25. With regard to issue 1, it is not even the case of the Respondent that the Appellant has committed any offence under Section 3 or is in any manner involved in the commission of the same. The Appellant is the purchaser of the subject property, for which he paid the complete consideration through duly documented legal banking channels, even prior to the date of registration of the FIR or the ECIR. 26. On second issue, it is admitted position that the subject property has been attached as "value thereof". The Appellant has vested rights in the subject property prior to the attachment by Respondent-ED. It is the case of the appellant the same could never have been attached as "value thereof" of the proceeds of crime. At the time of issuance of the Provisional Attachment Order there is no Confirmation Order that any proceeds of crime have flowed to UBHL. 27. The next submission of the respondent is that since the application of the appellant for similar relief is pending before the Hon"ble Court, therefore, the matter should n....
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....re involved in moneylaundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. 31. It is evident from the material available on record and from the Impugned Confirmation Order that the Enforcement Directorate/Respondent No. 1 and the Adjudicating Authority were aware that the Appellant was a "Claimant" to the said Property in terms of proviso to Section 8(2), PMLA. The interest in the property by the appellant is not denied on behalf of the respondent no. 1 during hearing, except it was stated that the appellant was not necessary party, therefore no notice was required to be issued. The said arguments are wholly contrary to law and facts involved in the present appeal as the respondent no. 1 was aware who failed to investigate further in the matter. 32. Despite of having full knowledge about the transaction, Respondent No. 1 and the Adjudicating Authority failed to issue notice to the Appellant or to afford a hearing to her, during the adjudication proceedings. Thus, the Respondent No. 1 and ....
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....s are rendered. Even many pleas/objections are raised first time in the written-submissions as those were not the part of pleadings of respondent no. 1. 35. It is the contention of the Respondent No. 1 that the Appellants do not have a claim on the Property because the two Agreements have not been registered. The said allegation is falsified for the followings reasons: a) Firstly, the Appellants have paid the complete sale consideration at market value via banking channels, i.e. Rs. 22,46,67,000 (Rupees Twenty Two Crores Forty Six Lakhs Sixty Seven Thousand only). b) Secondly, both the Agreement to Sell and Construction Agreement have been notarized at maximum value as prescribed under Section 5 (e)-ii and (j) of the Karnataka Stamp Act, 1957, i.e. Rs. 20,000/- (Rupees Twenty Thousand only) and Rs. 3,00/- (Rupees Three Hundred only) respectively. Consequently, merely because the sale Deed had not yet been registered, does not mean that the claim of the Appellants over the Property gets defeated. 36. The said arguments have no force as at the stage of adjudication under Section 8, PMLA and the onus upon any Claimant is only to show that the attached property is not involved i....
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.... that the rights in any asset of a company acquired by any person prior to initiation of the winding-up proceedings against the said company are absolute and cannot be defeated by the windingup proceedings, subject to the transaction being an arms-length transaction. 41. There is also no force in the submission of the respondent no. 1 that there was a connivance between the appellant and the accused parties as the filing of the winding of petition was published in the print as well as electronic media. 42. In the case of Laxmi Raj Shetty and another vs. Tamil Nadu reported in (1988) 3 S.C.C. 319 in para - 25 the Hon"ble Supreme Court hold that the courts cannot take judicial notice of the facts stated in a news item being in the nature of hearsay secondary evidence unless proved by evidence aliunde and presumption cannot be drawn under section 81 of the Evidence Act. In the present, the presumption can be attached that the appellant was aware about the news published in 2012 about the pendency of winding up petition. The funds were paid during the period 2012 to 2017 and the prayer in the winding up petition was allowed in 2017. 43. In the present case, the Agreement to Sell en....
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....the Agreement to Sell has been entered into by the Appellant with M/s UBHL and not with Mr. Vijay Mallya. The Appellant may invoke the said arbitration clause against M/s UBHL in the event of breach of any covenants of the said Agreement, including non-handing over of possession or nonexecution of sale deed in favour of the Appellant in due course. The said aspect cannot be determined in the present proceedings. In arbitration matter, the issue of attachment of property by ED and confirmation thereof cannot be determined. 47. The Respondent ED"s next submission is that if the present Appeal is entertained by this Tribunal, it would result in according priority to the Appellant"s claims over the claims of other secured creditors is wholly misconceived. It is a matter of fact that the appellant is neither seeking any direction from this Tribunal that the Appellant be handed over the possession of the subject Property nor that the sale deed(s) in respect of the subject Property be executed by M/s UBHL in favour of the Appellant. The scope of the present Appeal is limited to the determination as to whether the subject Property is involved in money-laundering or not. 48. As regard to ....