TaxTMI 
TaxTMI 
2019 (5) TMI 1463
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....w Delhi against Satish Kumar Goyal and others. Charge-Sheet dt. 07.03.2016 came to filed by CBI for the offences punishable under section 120 B, 409, 420, 467, 468, 471 of IPC and section 13(2) r/w 13(1) (c) and 13(1) (d) of PC Act against Bharat Bomb, Shankar Khadelwal, Vipul Kaushik, Santosh Kumar Gupta and Usha Gupta. Investigation against Satish Kumar, Sanjiv Kumar, Deshraj Meena, Adarsh Manchanda, Awadesh Tiwari, Piyush Jain and Vineet Jain is shown to be pending. ECIR dt. 11.07.2016 came to be registered by the Enforcement Director as the offences under section 120 B, 420, 467 and 471 of IPC and section 13(2) r/w 13(1) (d) of PC Act are the scheduled offences. The Charge-Sheet reveals that without requisite KYC documentation, over 386 bank accounts were opened by the suspects in the said three branches of Syndicate Bank at (i) Malviya Nagar branch, Jaipur, (ii) M.I. Road branch, Jaipur and (iii) Bapu Nagar Branch, Udaipur by using identification documents of genuine account hodlers in other banks with the nexus of bank officials for diverting the bank funds to the tune of 1055.79 Cr. to various destinations by adopting three different modus operandi i.e. (i) discounting of fo....
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....nies including those of Shankar Khandelwal, his family members & his group of companies; Himanshu Verma & his companies; Pavitra Kothari, family member & his companies for investment/loan purpsoe by way of complex maze of financial transactions. Bharat Bomy through the accounts of his associates, and his fictitious firms transferred about Rs. 231.20 Cr. in accounts of Shankar Lal Khandelwal of Guman Group, his family members and his companies out of the Proceeds of Crime generated from Syndicate Bank Fraud and out of the above fund about Rs. 103.07 Cr. has been repaid by Shankar Lal Khandelwal of Guman Group, his family members, his companies and more than Rs. 128,13,64,438/- is still outstanding. Further, Shankar Lal Khandelwal committed fraud aggregating to Rs. 58,22,00,000/- by availing fraudulent housing loans in the name of his associates, employees, family members by showing illicit booking of flats in various projec ts of Guman Group. That in aggregate Shankar Lal Khandelwal of Guman Group, his family members and his companies are beneficiary of more than Rs. 1,86,35,64,438/- which are Proceeds of Crime generated out of Syndicate Bank fraud. Further, Pavitra Kothari....
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....(xii) Movable & Immovable properties registered in the name of Santosh Kumar Gupta, Chief Manager, Syndicate Bank (Retired) and his family members (xiii) Movable & Immovable properties registered in the name of Deshraj Meena, Chief Manager (Suspended), Syndicate Bank and his family members (xiv)Immovable properties of Himanshu Verma and his companies (xv) Immovable properties of Pavitra Kothari, Daulatraj Kothari, Priya Kothari (xvi) Vill No. 40, Pafrth City Kalwar Road, Jaipur registered in the name of Mahendra Meghwal and cash of Rs. 66,88,400/- seized by CBI from Mahendra Meghwal (xvii) Plot No. A-5, Airport Enclave (Airport Plaze Extension) Tonk Road, Jaipur admeasuring 7276.40 Sq. Mtrs in the name of M/s. A. Gangwal Real Estate LLP (xviii) Proceeds of Crime available in various bank accounts of different firms/persons whose accounts were used by Bharat Bomb in defrauding Syndicate Bank (xix) Proceeds of Crime available in various bank accounts of different firms/persons controlled by Shankar Lal Khandelwal. f) It is evident that prime facie the Defendants are in possession of the proceeds of crime and/or have committed the offence of money laundering punishable under ....
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....nt of the original documents of the Secured Property as per details filed as Annexure A-4 01.06.2015 As per the PAO, the allegation, basis which the Secured Property has been attached, is that the Accused obtained 43 fraudulent housing loans from Syndicate. Fraudulent housing loan in the name of Sushila Agarwal (who was not even the registered owner of the property) against the Secured Property was disbursed by Syndicate Bank on 01.06.2015 i.e., after the Appellant's mortgage on the same had been created. by Syndicate Bank against the Secured Property Serial No.27 of the table of loans in the Impugned Order 31.12.2016 Amendment made to the Loan Agreement, whereby, the loan amount was reduced to Rs. 49,83,629/-, hence new New Loan Account No.419CSL32972388 allotted 24.08.2017 Proceedings under Section 13 (2) of the SARFAESI Act initiated by the Appellant for recovery of outstanding dues of Rs. 54,56,939/- (including interest) 26.12.2017 Notice taking over possession of the Secured Property, and other properties of the Respondent No.2 and 3, under Section 13 (4) of the SARFAESI Act issued by the Appellant who has filed as Annexure A-9 (Colly.) 16.05.2018....
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....PAO, without even considering or discussing the reply filed by the Appellant. 7. The ED has provisionally also attached a property bearing Flat No. B-104, Block B, First Floor, Guman Eternity, situated at Plot No. GH2, RPA Road, Shastri Nagar, Jaipur - 302 016 ("Secured Property"), which has been mortgaged to the Appellant prior to commission of the Scheduled Offence. The appellant is only concerned with the said property attached. 8. It is argued on behalf of the appellant that the present case is squarely covered by the recent judgment of the Hon'ble Delhi High Court in Directorate of Enforcement v. Axis Bank & Ors.., wherein, it has been observed as under: "163. Having regard to the above scheme of the law in PMLA, it is clear that if a bonafide third party claimant had acquired interest in the property which is being subjected to attachment at a time anterior to the commission of the criminal activity, the product whereof is suspected as proceeds of crime, the acquisition of such interest in such property (otherwise assumably untainted) by such third party cannot conceivably be on account of intent to defeat or frustrate this law. In this view, it can be conclude....
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....ues of the Appellant case are similar to the judgement rendered by Hon'ble Delhi High Court as (a) The Appellant is not an accused and is bona fide third party to the transactions complained of by the ED; (b) The Appellant disbursed a loan in accordance with law to the Respondents Accused and created a mortgage over the Secured Property prior to the commission of the Scheduled Offence in respect of the Secured Property; and (c) The Appellant commenced the proceedings under SARFAESI Act against the Secured Property prior to its provisional attachment. (d) The said property was not acquired from the proceed of crime. 11. The Appellant has already initiated recovery proceedings under the SARFAESI and RDDBFI Act and insolvency proceedings under the I&B Code for enforcement of its interest. S. 13 SARFAESI allows secured creditors to enforce security. 12. In terms with the statutory safeguards incorporated in the Act, any party aggrieved by the confirmation of the Provisional Attachment Order by the Adjudicating Authority may challenge such confirmation in an appeal to this Tribunal U/s 26 of the Act and then before the Hon'ble High Court U/s 42 of the Act against the order of this....
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....ime involved in money laundering, as such properties are required to be liquidated in favour of the bank, who are custodian of public fund may amount to putting a premium on such unchecked activities carried on by the officers due to irresponsible approach or connivance of the bank management....The pleas of the mortgagees, therefore cannot be granted at this stage of confirmation of the provisional attachment order, as such grant of the relief would interject with the scheme of the Act, deliberately provided. As aforesaid section 8(8) of the PMLA provides for rights of claimant with a legitimate interest with the property provisionally attached/confiscated, who may have suffered a quantifiable loss as a result of the offence of money laundering....In view of the legal provisions above referred and the object sought to be achieved by the PMLA, I humbly and with great respect cannot concur with the view expressed by the Appellate Tribunal, PMLA in the Judgments of the Appellate Tribunal cited by D-21 and D-22." It is matter of fact and as per material available on record that the mortgaged property was not acquired from the proceed of crime. 15. This tribunal does not agrees w....
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....ilability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 56. Insofar as this case is concerned, we are convinced that the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy." 19. B. RAMA RAJU V. UOI AND ORS. Reported in (2011) 164 company case 149(AP)(DB) who has dealt with the aspect of bonafide acquisition of property in para 103. The same read as under:- "103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating aut....
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....Act. Those complaints are to be decided as per law. 22. Under Section 8(1), upon receipt of a Complaint U/s 5(5) of the Act, if this Hon'ble 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 U/s 5(1) of the Act. Reasons to believe pertaining to the appellant 23. Counsel appearing on behalf of ED submits that it is not necessary to record the reasons to believe prior to passing the provisional attachment order and it could only be recorded in order of provisional attachment order itself. 24. Copy of the same is not be served to aggrieved party even at the stage of arguments in the main appeal or any subsequent proceedings. These cannot be shown to the appellant. 25. The guidelines of recording the reason to believe have been laid down in various judgements of Apex Court and High Courts. It is held time and again by the said Hon'ble Courts directing that the approach should....
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....erty to be served on the transferor". It is, therefore, inconceivable that the order which is required to be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. Reasons for the order must be communicated to the affected party."[ The above referred to decision has been followed in various judgments by many High Courts, as well the Hon'ble Supreme Court of India in subsequent decisions. 28. a)In Kranti Associates v. Masood Ahmed Khan (2010) 9 SCC 496, the legal position was summarized as under:- a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of jus....
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....s and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". b) In Income Tax Officer v. LakhmaniMewaldas 1976 (3) SCR 956, the Supreme Court held that there should be a live link or close nexus‖ between the material before the ITO and the formation of his belief that income had escaped assessment. More recently, in Aslam Mohd Merchant v. Competent Authority (2008) 14 SCC 186, the entire legal position has been explained elaborately by the Supreme Court as under: 28. It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperative before a show cause notice is issued. Section 68- H of the Act provid....
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....6 IPC explains the meaning of the words 'reason to believe' thus: 26. Reason to believe - A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing and not otherwise." 29. In the light of above, it is held that the provisional attachment order in the present case is bad as no valid reason to believe pertaining to appellant herein has been recorded within the meaning of the provision of Section-5(1) of the Act. Recording of reason to believe under the said provision is not a formality rather it is the duty of the authorized officer to record the valid reason to believe. As far as reason of believe within the meaning of Section 8(1) is concerned, if the Adjudicating Authority chooses to record the same, it must be recorded after having gone through the entire material and copy of complaint and provisional attachment order, the same shall have to be satisfied fully with the mandatory condition as to whether the person-concerned has committed the offence within the meaning of Section 3 of the Act or not or is in possession of proceed of crime. Only than, the notice under section 8(1) is to be issued, otherwise notice is to be dec....