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....Maheshwari, Advocates, Shri Rajshekhar Rao & Shri Karthik Sundar, Advocates For the Respondent: Mohammad Faraz, Advocate ORDER JUSTICE MANMOHAN SINGH: CHAIRMAN FPA-PMLA-751 to 755, 673, 747, 672, 670, 671, 668/DLI/2014 & FPAPMLA-2202/HYD/2018 1. By this order, this Tribunal proposes to decide above-mentioned twelve appeals. These appeals were earlier heard, however, before rendering order, the Hon'ble Member resigned from this Tribunal. Left with no option, but to rehear the appeals. The appeals were again heard and reserved for orders. 2. Two sets of appellants have filed appeals against Order dated 19.08.2014 by Adjudicating Authority made in Original Complaint No. 276 of 2014 confirming the attachments made vide Provisional Attachment Order No. 01/2014 dated 04.03.2014 (PAO) in ECIR/09/HZO/2011. PAO passed corresponding to CC No. 14 of 2012 before The Special Judge for CBI Cases, Hyderabad (CBI Case). 3. Three appeals have been filed by Y.S. Jagan Mohan Reddy & Group, i.e. i) Appeal Nos. 668 - Mr. Y.S. Jagan Mohan Reddy ii) Appeal Nos. 670 - M/s. Jagati Publications Pvt. Ltd. iii) Appeal Nos. 671 - M/s. Carmel Asia Holdings Ltd. ....
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....arge sheet"), wherein, Vanpic Projects Pvt. Ltd., one of the Appellants hereto, was arraigned as Accused No.10 for commission of offences under section 120B r/w 409, 420, 467, 468, 471 and 477-A of IPC. Vanpic Ports Pvt. Ltd. has not been arraigned as an accused in the Charge-sheet. Charges are yet to be framed, therefore, the trial has not even began. 6. On the basis of the CBI Charge-sheet, the Respondent, passed the Provisional Attachment Order No. 01 of 2014 dated 4th March 2014 (hereinafter the "First PAO"), whereby, 1416.91 acres of lands that form part of the VANPIC Project which were provisionally attached by the Respondent after recording the statement of many witnesses under Section-50 of the Act. FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 6 of 119 7. In view thereof, the Respondent filed Original Complaint No. 276 of 2014 dated 27.03.2014 (hereinafter the "First OC"). The reply was filed by the Appellants. The Adjudicating Authority confirmed the First PAO, vide Order dated 19.08.2014. The said order was challenged by above mentioned two groups which are the subject of eleven appeals. 8. When appeals were being heard before Tribunal, the re....
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....zampatnam ports. In 1996, GoAP issued notifications for declaration of port limits for inter aliaVadarevu and Nizampatnam ports. 10.2 In 1999-2000, GoAP awarded the project for setting up of a portcum- ship breaking unit in Vadarevu to M/s Andhra Seaports Limited on MoU basis, but it was not materialised. The idea was abandoned due to public resistance and environmental concerns. 10.3 After post-liberalization of the economic policy of India, in 2001, GoAP enacted the Andhra Pradesh Infrastructure Development Enabling Act, 2001 ("APIDEA") i for regulating and encouraging private sector participation in infrastructure projects in the State so as to provide for rapid development of both physical and social infrastructure. 10.4 In 2005, Infrastructure Corporation of Andhra Pradesh Ltd. ("INCAP") was set up under the aegis of Infrastructure and Investment Department of Andhra Pradesh ("I &I Dept.") with a specific mandate to facilitate setting up of Public-Private Partnership Projects ("PPP") and make policy for the same. INCAP, in its public policy documents ii contemplates Infrastructure Development by way of Government-to-Government ("G2G") initiatives inv....
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....ression of interest is subject to detailed due diligence including consideration of investment requirements, pre-feasibility studies including financial viability to be established after a detailed project report is completed" [Emphasis supplied] 11.3 Subsequently, this was followed up by a letter dated 12.02.2008 by the then advisor to the GoRAK, which stated as under: "This has reference to letter dated 10th January 2008, addressed by His Highness Shaikh Saud Saqr Al Qassimi, Crown Prince and Deputy Ruler, Ras Al Khaimah to your government, expressing interest in participating in the Nizampatnam Port SEZ. With reference to the above subject the Government of Ras Al Khaimah and RAK Investment Authority wishes to convey its preliminary expression of Interest to undertake and participate in the Nizampatnam &Vadarevu Port Project at an outlay of around US $ 4.35 billion" [Emphasis supplied] 12. The CBI, and now the Respondent No.1, has failed to consider the letter dated 10.01.2008 sent by the Ruler of Ras al Khaimah, presumably since the same would demonstrate beyond doubt the Government-to-Government nature of the VANPIC Project as alleged by the appellan....
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....he Industrial Policy of the State at the relevant point in time for backward areas and have been accorded to all similar projects. 15. The observations of the Hon'ble Supreme Court of India in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir,inwhich it was held that with approval by the constitutional bench in the Presidential Reference No. 1 of 2012, relating to Allocation of Natural Resources, which reiterates the settled position of law that auctions are not the only constitutional mandate and further held that Government has the power to negotiate directly with private FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 12 of 119 proponents. The relevant paragraphs from Kasturi Lal Lakshmi Reddy (supra) are extracted and reproduced below: "22. Now the 2nd respondents had made an offer for putting up a modern plant for manufacture of rosin, turpentine oil and other derivatives within the State provided they were assured a definite supply of resin every year. But having regard to the commitments already made by it, it was not possible for the State to make any definite allocation of resin to the 2nd respondents and a proposal was therefore mooted t....
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....nd tell the people that it wants a particular industry to be set up within the State and invite those interested to come up with proposals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn out to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry, the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry. The State is not obliged to tell such party: "Please wait I will first advertise, see whether any other offers are forthcoming and then after considering all offers, decide whether I should let you set up the industry." It would be most unrealistic to insist on such a procedure, particularly in an area like Jammu and Kashmir which on account of historical, political and other reasons, is not yet industrially developed and where entrepreneurs have to be offered attractive terms in order to persuade them to set up an industry. The State must be free in such a case to negotiate with a private entrepreneur w....
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....ast decade, there has been change in the scenario of cargo traffic at ports and the significance of ports has increased manifold; the Andhra Pradesh coast will have a very large requirement of port facilities to meet the increasing traffic demand due to major developments in special economic zones, power sector, industrial sector, agricultural activities, fisheries, mineral exploitation etc. Recognising this, GoAP desires to implement various port projects in the state with private sector participation and one of the key priorities of GoAP is the development of the VANPIC Project (as defined below)" [Emphasis supplied] 16.1 VANPIC Project consists of several project components which are as under: Ports at Vadarevu and Nizampatnam: • All-weather, deep-water, fully-mechanized ports at Vadarevu (Motupalli) and Nizampatnam. The ports will act as a hub for the entire cluster and will form the backbone for VANPIC. Shipyard: • A state of the art shipbuilding and ship repair facility is integrated into the Vadarevu Port. The proposed development of shipyard adjacent to the Port will optimize the resource utilization by way of common i....
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....hat the economic impact of VANPIC Project would be as under; • The estimated incremental effect of VANPIC investments on the Gross State Domestic Product (GSDP) of Andhra Pradesh in FY 2017-18, on the assumption that the projected investments are completed by FY 2016-17 starting from FY 2012-13 was expected to be in the region of Rs. 168 billion to Rs. 199 billion. • This represents an incremental effect of 2.61% to 3.10% on GSDP of AP in FY 2017-18 based on the VANPIC Project investment projections & economic trends observed in AP over 2001-02 to 2011- 12. • The impact of VANPIC investments on the Secondary Sector GSDP (secondary sector of the economy consists of manufacturing, construction, electricity, gas and water supply etc.) of Andhra Pradesh in FY 2017-18 was estimated to be Rs. 41.88 billion. The incremental impact will be 2.8% of Secondary sector GSDP in FY 2017-18. • The own tax revenue of AP was expected to increase by 2.11% to 2.50% as against a situation of no VANPIC Project. • The estimated direct employment potential of the VANPIC project over the 2012‐13 to 2017-18 period was likely to be in the....
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.... intent of the main parties to the VANPIC Project and steps to be taken for evolving a definitive framework. Therefore, it appears that both agencies i.e. CBI and Enforcement Directorate try to step into the shoes of a policy maker and suggest that the Government does not have the ability to deviate from a preliminary document such as a Memorandum of Understanding and the investigating agencies encroaching are entitled to decide the same and not the domain of Governmental policy making and ought not to be entertained. 17.5 VANPIC Project was outlined in the MOU dated 11.03.2008, which has evolved and acquired a definitive framework with the execution of the Concession Agreement dated 11.07.2008. 17.6 In respect of a Government Nominee on the Boards of VANPIC SPVs, it is submitted that the CEO of Vanpic Ports Pvt. Ltd. made a request vide letter dated 07.06.2008 to GoAP for non-inclusion of Government Nominee on the board of VANPIC SPVs since there would be no equity contribution by GoAP, which aspect was specifically placed before the Cabinet for approval in the Cabinet Memorandum dated 28.06.2008and the same was acceded to. 17.7 It is submitted ....
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....ly verified by the Principal Secretary, I&I Department and in a file noting endorsed by him on 14.04.2010, he has observed that "There are no variations between the Draft Concession Agreement approved by the FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 21 of 119 Cabinet and the agreement finally signed between Government and Concessionaire." This document is also part of the Charge-sheet filed by the CBI, which has been mala fide, as alleged by the appellants intent suppressed by the Complaint for oblique purposes. The impugned Order and the underlying attachment ought to be set aside for this reason alone as alleged. f) The appellants also referred the Cabinet Resolution No.231/2008 dated 30.06.2008, which reads as under; "Agenda Item No.18 Infrastructure & Investment Dept - Development of Minor Ports in the State - Development of Nizampatnam and Vadarevu Sea Ports and Industrial Corridor - MoU signed - Proposal for Award of the Project and approval of the Draft Concession Agreement - Reg. Council Resolution No.231/2008 Approved. Second time exception of Stamp Duty and Registration Fee from original SPV (Vanpic Ports....
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....ndent No.1. The Appellants have placed on record of the Adjudicating Authority, the Cabinet Memorandum, contents of which have been completely ignored by the Authority. i) In respect of 'crucial issue A' purportedly not mentioned in the Cabinet Memorandum, it is relevant to reproduce the extract of Cabinet Memorandum in this regard, which will demonstrate the oblique motives of the Respondent No.1; "The Developer has requested for granting of exemption of Stamp Duty and Registration Fee of land in second time transaction also. Submitted that in respect of other port projects, these exemptions are granted by GoAP for the first transfer of lands, as part of State Support. However, in the present case, the request has been made as VANPIC project has several components such as Sea Ports, Ship Yard, Power Plants, Specialized Industrial Parks etc. Each of these components require setting up of separate SPVs to attract and facilitate participation by strategic partners of International repute. In order to save on project time lines, the Developer has commenced the land acquisition process and it may so happen that the land registered in one special Purpose Compa....
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....GoAP is required to facilitate acquisition of lands by the 'Developer' on outright purchase basis. Furthermore, as per Andhra Pradesh Alienation of State Lands and Land Revenue Rules, 1975 r/w Board Standing Order 24, land in excess of 10 acres or land with market value beyond 10 lakhs cannot be alienated to any private party without the prior approval of the Council of Ministers. As such, no govt. land/assigned land has been alienated to Vanpic Project without the approval of the Cabinet and in the present case were in fact approved by the cabinet. The allegation that the Council of Ministers were misled in respect of the extent of allocation of land is baseless and contrary to the record. Therefore, every subsequent alienation of land for VANPIC Project was subject to obtaining cabinet approval afresh and non-mentioning of the extent of land has no bearing in reality. 21. It is also submitted on behalf of the appellants that there is no illegality owing to deviations between Krishnapatnam & Gangavaram Concession Agreement for VANPIC Project on the following reasons:- i) As per the cabinet resolution dated 30.06.2008, the Council of Ministers approved the Draft Concess....
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....eived and deliberately misleading but also beyond the competence of the Respondent No.1. vi) It is mentioned that the Vanpic Project is being developed in a backward area with no industrial hinterland while the Gangavaram Port is in a developed area with rich industrial hinterland. GoAP is not incurring any cost for land acquisition and no government land is being given free of cost or at a concessional rate for Vanpic Project. However, GoAP has provided 2800 Acres of Land acquired at their cost to Gangavaram Port Ltd. out of which 1,800 Acres were given in lieu of equity at Rs. 2.86 Lakhs per Acre for GoAP, when the prevailing market rates were much higher, and balance 1,000 Acres on Lease basis. vii) If Vanpic Project has to be compared with that of Gangavaram Port then it must also be noted that land acquisition has been done on consensus with the farmers in VANPIC Project, while the land acquisition for Gangavaram Port was subject to large-scale public protests, which even resulted in the death of one person owing to police firing in 2006. 22. It is alleged that despite all prior efforts of the GoAP to develop ports at Vodarevu and Nizampatnam have failed, ....
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....ts, shipyard and airport), the ownership of which will always vest with GoAP and the same will be leased back to VANPIC SPVs.Annual Lease rentals are fixed at 2% of the Market Value (With annual escalation of 6.5%), which will be adjusted against the cost of acquisition of land (excluding goodwill payments). However, such cost of acquisition does not include interest and opportunity cost borne by VANPIC for the capital, which is nearly 14% and 25% annually. 25. The goodwill payments were made voluntarily during the course of acquisition in order to ensure expeditious, fair, and peaceful acquisition of land, unlike in the case of Gangavaram port where there was serious opposition to acquisition of land leading to police firing that resulted in deaths of farmers. 26. The exemption from stamp duty and registration fees is provided for first transfer at the time of Land Acquisition and one further transfer amongst the SPVs notified for the purpose of the VANPIC Project. Total exemption of stamp duty and registration fees availed so far is only Rs. 1.17 Crores, which is miniscule when compared to the project cost incurred so far. 27. It has come on record as per pleadings of th....
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.... work, he rose through the ranks to eventually become the CEO and Managing Director of Vorin Labs, a subsidiary of Ranbaxy Laboratories. During his tenure as the head of Vorin Labs, from 1995 to 1999, he turned it around from a struggling enterprise to a profitable enterprise. ii) In early 2000, Mr. Nimmagadda Prasaddecided to become an entrepreneur and purchased an Active Pharmaceutical Ingredients (API) manufacturing facility in Hyderabad of Herren Drugs and Pharmaceuticals, a BSE-listed sick and bankrupt company with about 160 employees Within a span of 6 years, he turned around a sick industrial unit with 160 employees to one of the largest generics companies in India known as Matrix Laboratories Ltd. (Hereinafter referred to as the "Matrix Labs") with 11 thousand employees and valued over USD 1 Billion. This earned Mr. Nimmagadda Prasad several awards including "Fastest Wealth Creator" award which was awarded to him consecutively for three years from 2004 to 2006. iii) In 2006, Matrix Labs was acquired by Mylan Inc., a global generics behemoth, listed on New York Stock Exchange (NYSE), at a valuation of over Rs. 4,500 Crores, which at the time, was the larges....
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....ned around by Mr. NimmagaddaPrasadhave directly and indirectly contributed over Rs. 2000/- crores in various taxes and provide direct employment to over 25,000 persons. 29. With regard to Vanpic Projects Pvt. Ltd., it is stated on behalf of appellants that it was originally incorporated as Matrix Enport Holdings Pvt. Ltd. by Mr. NimmagaddaPrasadand which had nothing to do with Vanpic Project. In fact as per the meeting of the Board of Directors on 19.01.2008, it was to even bid for the Hyderabad metro project as well. In terms of the provisions of the MoU dated 11.03.2008, GoRAK notified GoAP, vide letter dated 29.03.2008, that Matrix Enport Holdings Pvt. Ltd. led by Shri Nimmagadda Prasad, the Nimmagadda Prasad, would be its local Indian partner for the VANPIC Project, which was in terms of the provisions of the MoU dated 11.03.2008. In the Cabinet Memorandum, the Developer i.e., Matrix Enport Holdings Pvt. Ltd. had commenced acquisition of private/patta land in April 2008, prior to entering into the Concession Agreement dated 11.07.2008, in the interest of speedy implementation of the Project and to offset the losses that would be caused due to escalation of the prices of the ....
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....Saud Bin Saqr Al Qasimi, Member of the UAE Supreme Council and Ruler of Ras al Khaimah had written to the Hon'ble Prime Minister of India on FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 35 of 119 16th August 2011 and reiterated that the VANPIC Project is a collaboration between GoAP and GoRAK and that Matrix Enport Holdings Pvt. Ltd. led by Mr. N. Prasad has been selected as the local partner. Relevant extracts of the said letter dated 16.08.2011 is extracted below for ready reference: "The Emirate of Ras Al Khaimah (RAK), United Arab Emirates (UAE) has made several investments in India through its investment arm RAK Investment Authority (RAKIA), and through other majority RAK government owned institutions. Investments include projects involved in aluminium smelting, vitrified and ceramic tile manufacture, real estate, and ports along with port based industrial development. We are also considering further investments that will be mutually beneficial to both the parties. One such investment in India, executed on Government-to- Government (G2G) basis, was the development of Vadarevu and Nizampatnam Ports and Industrial Corridor (VANPIC) Project i....
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....ster of Andhra Pradesh and assured him of GoRAK's commitment to the VANPIC Project and requested for expediting resolution of pending issues. CEO of RAKIA addressed a letter dated 3rd April 2012 to the Hon'ble Chief Minister of Andhra Pradesh reiterating RAK's commitment to VANPIC Project, highlighting the substantial progress made by the Project and sought an expeditious resolution of regulatory issues and hurdles. As a gesture of goodwill and to reinforce its participation in the VANPIC Project, GoRAK assured GoAP that it would restore the status quo ante in respect of its shareholding pattern, though they are in no manner obliged to so do under the Concession Agreement 11.07.2008. GoRAK through its General Legal Counsel, addressed another letter dated 25th June 2012 to the Hon'ble Chief Minister requesting an appointment for discussing the future of the VANPIC Project to which GoRAK has committed. 33. Prior to the arrest of Mr. NimmagaddaPrasadby the CBI and subsequent detention, the officers of the Respondent had asked Mr. NimmagaddaPrasadto arrange for meeting the representatives of GoRAK since it was a cumbersome and lengthy process to utilize diplomatic and official ch....
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....allegations levelled indirectly and about the involvement of GoRAK was, no doubt, diplomatic embarrassment for the Government of India as well as the State of AP. 38. It has come on record that all lands were purchased/alienated for the Vanpic Project at the market rate fixed by the Government and in most cases Vanpic has paid the amount fixed by the Government with additional amount as Goodwill and documentary records in respect of this aspect were made available to the Respondent No.1. 39. As per the Andhra Pradesh Alienation of State Lands and Land Revenue Rules, 1975 r/w Board Standing Order 24, land in excess of 10 acres or land with market value beyond 10 lakhs cannot be alienated to any private party without the prior approval of the Council of Ministers. As such, no govt. land/assigned land has been alienated to Vanpic Project without the approval of the Cabinet. Therefore, the allegation that the Council of Ministers was misled in respect of the extent of allocation of land is wholly baseless and contrary to the record. As per Board Standing Order 24, assigned land can be resumed by GoAP on behalf of a Private Company only for a public purpose on payment of compensat....
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....ion and is unusual, particularly, for development in a Backward Area with no industrial development, whereas the norm is to give large incentives and financial assistance.11,800 Acres is earmarked for the Industrial Corridor, to be acquired at the cost of VANPIC SPVs, have been conditionally assigned by GoAP. The lands provided under the conditions of BSO 24/Land Acquisition Act, 1894 are to be used only for the purpose of setting up industries that generate cargo for the Ports and NOT for real estate development. It was the pre-condition that if the land is not utilized for the purpose granted, then, GoAP has the power to resume the land. 43. Thus, it is not correct to allege that there is no financial outgo from the Government exchequer for acquisition of land and "Government has been divested of its legitimate right to these lands" when as per appellants, the lands belonging to the Government are about 1000 acres, which was to be alienated to VANPIC SPVs at its costs or are leased to VANPIC SPVs on payment of Lease Rental and are to be used strictly in accordance with the prescribed conditions and for the purpose of setting up industries that generate cargo. VANPIC has so far....
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....ceipts have been obtained by farmers for payments made. It is submitted by him that the exemption granted to the Petitioner under Urban Land Ceiling Act has no relation to the Vanpic Project and is not even the subject matter of the present case. Exemptions, if any, granted to Mr. NimmagaddaPrasador Matrix Labs were in accordance with extant policy in 2007 pursuant to G.O.Ms. 615 of 2008, wherein, more than 1400 other persons were also granted the same exemption in the period 2008 - 2012. 46. During one of the oral arguments, the counsel for the Enforcement Directorate made the following two submissions: a) Firstly, Vanpic Ports Pvt. Ltd. was the concessionaire under the Concession Agreement dated 11.07.2008 and therefore, allotment of land to Vanpic Projects Pvt. Ltd. (Which was formerly Matrix Enport Holdings Pvt. Ltd.), is illegal and contrary to the Concession Agreement dated 11.07.2008. Additionally, that there is no communication to the then Government of Andhra Pradesh ("GoAP") that Vanpic Projects Pvt. Ltd. is an SPV; and b) Secondly, the investment made by Mr. Nimmagadda Prasad in Bharathi Cement Corporation Ltd. is a bribe since Mr. Y.S. Jagan Moha....
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....ay be. The cost towards the transfer of the lands shall be borne by the Developer or its Affiliates, Associates, subsidiaries or nominees. The lands to be acquired for this purpose are more particularly described in Schedule [E]. All such lands shall absolutely vest in the special purpose vehicles for the development and implementation of the VANPIC Project as the Concessionaire/Developer may specify in its discretion without any restriction on usage or on dealing with such lands." 49. It is thus clear from above that the ports were to be developed by the Concessionaire i.e., Vanpic Ports Pvt. Ltd., whereas, the Industrial Corridor was to be developed by RAKIA and/or Matrix Enport Holdings Pvt. Ltd. and/or their strategic partners. For this purpose, GoAP was to facilitate land acquisition at fair market value. Therefore, as per the Concession Agreement, vide letter dated 06.08.2008, it was communicated that Vanpic Ports Pvt. Ltd. would have to be allotted the lands for ports and Vanpic Projects Pvt. Ltd. (Formerly Matrix Enport Holdings Pvt. Ltd.) and to be allotted the lands for the industrial corridor. After detailed examination and with the approval of the Council of Minister....
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....t. It is stated by the appellant that none of seller of that land has filed any objection or initiated the civil and criminal proceedings against the appellants. The appellants have acquired the land without putting any pressure. The land was purchased much higher price. The said land acquisition policy for VANPIC was first considered by GoAP on 29.06.2008 at a meeting chaired by then Chief Minister of Andhra Pradesh. Acquisition of a total of 28,000 acres of land was initially envisaged for the VANPIC project. It is also a matter of fact that prior to MOU and agreement, Government of Andhra Pradesh earlier pointed out several times had made many efforts to venture various projects of similar nature but it was not materialised. It is wholly the choice of Government to implement or not. In the light of above, it is clarified that this Tribunal is not inclined to pass any order for enforcement of MOU and agreement. 51. These are only prima facie opinion of this Tribunal, subject to final outcome of the charge-sheet filed by the CBI before the Special Court or in the quashing proceedings, if pending in any Court. 52. Now coming to the issue with regard to Provisional Attachment ....
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....Power from YSJ for a value of Rs. 35 Crs on 17.01.2007 and 27.07.2007 Rs. 450 Crs - Invested into Jagati Publications as equity participation by Alpha Avenues, Alpha Villas, Gilchirst Investment and Beta Avenues. Rs. 285.5 Crs - Worth of Shares of BCCL were purchased including Rs. 33 Crs paid to YSJ as secondary purchase by Mr. Nimmagadda Prasadand his group companies. (These were later sold to PARFICIM SAS, France for Rs. 560.45 Crs enjoying a profit of Rs. 274.95 Crs) Rs. 57 Crs - G2 and Suguni Constructions invested Rs. 50 Crs and Rs. 7 Crs respectively as equity participation between Jan-May, 2008. Rs. 7 Crs - Donation to YSR Foundation by Mr. Nimmagadda Prasad. 55. As per allegation made by the respondent, the total investment in various companies promoted by Y.S. Jagan Mohan Reddy was Rs. 854.5 Crores by Mr. Nimmagadda Prasad. The rival submission on behalf of both parties would be discussed. Actually the issue of investment has arisen once the VANPIC project agreement was executed. The case of ED is that the investment is a bribe amount/quid pro quo in order to get the VANPIC project, on the other hand, the case of Y.S. Jagan M....
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....areholders) sold the instruments (shares) purportedly received to conceal the payments made under quid pro quo, to new shareholders. The sale of these instruments resulted in the following:- 1) The new shareholders are not found in any criminal activity as per charge sheet filed by CBI and have not derived or obtained any property directly or indirectly as a result of criminal activity relating to the scheduled offence. 2) The payment made by the new shareholder to the previous shareholders (who had paid illegal gratification under quid-pro-quo) has in fact resulted into the refund of illegal gratification with some additions. 3) The payments made by the new shareholders have also resulted that now that the proceeds of crime are in possession of Shri N. Prasad and his companies, and not with M/s Raghuram Cement Ltd. and Silicon Builders Ltd because N. Prasad and his companies have derived funds indirectly from the sale of instruments (shares) which they had acquired to cover the payment of illegal gratification under quid-pro-quo. 4) The possession and ownership of proceeds of crime amounting to Rs. 252.50 crore + Rs. 57 crore which was put in th....
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....is supplied] The Respondent No.1 sought to attach profits made by Mr. Nimmagadda Prasad from his investments in companies controlled by Mr. Y. S. Jagan Mohan Reddy, while at the same time it was pleaded that such investments were a 'bribe'. It was the case of the appellants that investments in the companies of Mr. Jagan Mohan Reddy are credible investments as they continue to be held by the Mr. Nimmagadda Prasad and his companies. The alleged payments in the form of investments were genuine investments and not bribes. It is not denied by the respondent that Mr. Nimmagadda Prasad and his companies have made profits on the investments. Therefore, the allegation that the said investments are a 'bribe' and the investments are not valid argument. 58. The main allegations against Mr. Y.S. Jagan Mohan Reddy (Appeal No. 668 of 2014) are that Mr. Y.S. Jagan Mohan Reddy in a criminal conspiracy with his father,Dr. Y.S. Rajashekara Reddy and certain public officials got extended various undue favours including VANPIC projects and large scale concessions from the Government to Mr. Nimmagadda Prasad and his group of companies between 2006 and 2009.As a quid pro quo, Mr. Nimmagadda Prasad ....
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....rix Labs and Maa Television) and only after mutual deliberations, Mr. Y.S. Jagan Mohan Reddy agreed to sell Sandur Power shares held by him to Mr. Nimmagadda Prasad in two trences for Rs. 35 Crs at Rs. 140 per Share. d) CBI has made no allegations against the establishment or functioning of Sandur Power after a full-fledged investigation. e) Sandur Power is a successful running company established in 1999 and taken over by Mr. Y.S. Jagan Mohan Reddy in the year 2001. Sandur Power acquired M/s. Classic Realty Pvt. Ltd. (Classic Realty), an industrial park in Bangalore from internal revenue generated by sale of power generated and sold to State Electricity Board of Karnataka (MESCOM) and by availing a bank loan of Rs. 117 Crs doubling the profitability of Sandur Power. The hydro plant owned by Sandur Power continues to have one of the best PLF in all of Karnataka. Apart from the above, the net worth of Sandur Power at the time of the above transaction was over Rs. 250 Crs and therefore the purchase of Sandur Power shares by Mr. Nimmagadda Prasad was a genuine transaction with commercial interest. Therefore, the allegation of respondent are not sustainable in v....
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....) Therefore, the Respondent seeks to attach a total amount of Rs. 450 Crs as 'Proceeds of Crime' at the hands of M/s. Jagati Publications Ltd. 61. Reply to monies received by M/s. Jagati Publications Ltd. (Jagati Publications - Appeal No. 670 of 2014) a) Jagati Publications was incorporated on 14.11.2006 as private limited company and subsequently became a public limited company from 12.01.2009. b) All the investments made in Jagati Publications are genuine business transactions by the investors and they hold all rights upon such investment being held in form of share. c) The valuation of Jagati Publications' shares were arrived after taking the entire enterprise valuation of Sakshi News Paper Project with 'size and circulation' into effect. Sakshi regional newspaper was launched with a circulation of about 12 lakh copies with 23 printing centers simultaneously in States of Andhra Pradesh, Telangana, New Delhi, Karnataka, Tamil Nadu and Maharashtra. d) The valuation of Jagati Publications' shares is based on Discounted Cash Flow Method (DCF, which has been approved by the Reserve Bank of India under Foreign Exchange Management Act Notification....
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....question of payment of illegal gratification in December 2006 and January, 2007 cannot sustain. • The sale of Carmel Asia's shares is a genuine transaction and is evidenced by the fact that Mr. Nimmagadda Prasad is an entrepreneur with a proven track record of being a successful serial investor (like in Matrix Labs and Maa Television) and only after mutual deliberations, had agreed to purchase Carmel Asia's shares. • Despite attaching the properties of Carmel Asia's shares in Jagati Publications worth Rs. 20 Crs in OC 276 of 2014, the respondents seek to make further attachments of shares worth face value of Rs. 15 Crs (and recognised market value of much higher) of BCCL held by M/s. Silicon Builders Pvt. Ltd. and Rs. 51.20 Crs of dividends thereon in OC 618 of 2016 (BCCL Attachment) on the contention that M/s. Silicon Builders Pvt. Ltd. received monies from Carmel Asia and had used the same amounts to purchase BCCL shares. 64. Before going to the merit of the case with regard to investment, let this Tribunal may deal with the legal issues involved as argued by the parties. Section 5 of PMLA, 2002 reads as under:- "5. Attachment of property inv....
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....e order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under subsection (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under subsection (3) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the "person interested," in the enjoyment of the immovable property attached under subsection (1) from such enjoyment. Explanation.- For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1), shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. 65. Section 5 of the PMLA mandates that the co....
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....ded 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." This decision has been followed in various judgments by various Courts, including the Hon'ble Supreme Court of India. 70. 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 justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker ....
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.... 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. Lakhmani Mewaldas 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 provides for two statutory requirements on the part of the authority viz: (i) he has to form an opinion in regard to his `reason to believe'; and (ii) he must record reasons therefor. Both the statutory elements, namely, `reason to believe' and `recording of reasons' must be premised on the materials produced before him....
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....facts of such attachment", as prescribed by Section 5(5) of the PMLA. 72. The purported basis for the instant provisional attachment is set out in Paragraph 35 of the Complaint, which is set out hereunder for ready reference; "35. It is humbly submitted that the investigation in this case is still in progress. At present there is adequate material on record as aforesaid, to draw a reasonable belief that the properties provisionally attached and as mentioned in para 2 of the complaint (to the tune of Rs. 863.71 crore as mentioned in the provisional attachment order no. 01/2014 dated 04.03.2014) are the proceeds of crime in terms of section 2 (1)(u) of PMLA and is liable for confirmation." [Emphasis supplied] 73. In Radha Mohan Lakhotia v Deputy Director PMLA, which is relied upon by the Respondent No.1, 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 reas....
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....orcement, has not recorded valid "reason to believe"as required. The mandatory pre-requisite for provisional attachment required by Section 5(1) is missing in the present case. It is submitted on behalf of appellant that in the above thereof the Adjudicating Authority ought not to have even issued notice under S. 8(1) of the Act, leave alone confirm the Provisional Attachment Order. The relevant para-21 of Provisional Attachment Order is reproduced hereunder: "21. NOW THEREFORE, on the basis of material in my possession as per Annexure - R and in exercise of the powers conferred upon me under section 5(1) of 'the PMLA, 2002' (15 of 2003), the authority vested in me by the Authorization dated 07.02.2007 and its addendum dated 12.10.2011 issued by the Director of Enforcement in exercise of his powers under sub-section (1) of section 5 of 'the PMLA, 2002'(15 of 2003), I hereby order for provisional attachment of the properties as per Annexure - 'A' and further order that the same shall not be transferred, FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 66 of 119 disposed, parted with or otherwise dealt with in any manner, whatsoever, by the holders having own....
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.... or any of the properties referred to in the notice issued under subsection (1) are involved in money-laundering: 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. (3) Where the Adjudicating Authority decides under subsection (2) that any property is involved in money laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of Section 5 or retention of property or record seized or frozen under Section 17 or Section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property or record shall- (a) continue during investigation for a period not exceeding ninety days or the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed....
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....sider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering: Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed. 76. In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to 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 or the means with which he has acquired the property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA. 77. The mandate of Section 8(2) (c) cast ....
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....ing the statutory requirements which are condition precedent therefor, a valid proceeding can be said to have been initiated for forfeiture of the property. Only in a case where a valid proceeding has been initiated, the burden of proof that any property specified in the notice is not illegally acquired property, would be on the "person" affected. ... 40. Both the statutory elements, namely, "reason to believe" and "recording of reasons" must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. Indisputably, therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show-cause notice on his own ipse dixit. A roving enquiry is not contemplated under the said Act as properties sought to be forfeited must have a direct nexus with the properties illegally acquired. ... 41. It is now a trite law that whenever a statute provides for "reason to believe", either the reasons should appear on the face of the notice or they must be available on the materials which had b....
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.... 60. We are not unmindful of the purport and object of the Act. Dealing in narcotics is a social evil that must be curtailed or prohibited at any cost. Chapter V-A seeks to achieve a salutary purpose. But, it must also be borne in mind that right to hold property, although no longer a fundamental right, is still a constitutional right. It is a human right. 61. The provisions of the Act must be interpreted in a manner so that its constitutionality is upheld. The validity of the provisions might have received constitutional protection, but when stringent laws become applicable as a result whereof some persons are to be deprived of his/her right in a property, scrupulous compliance with the statutory requirements is imperative." [Emphasis supplied] 80. In the present case, it is submitted on behalf of appellants that the Provisional Attachment Order has been issued on 04.03.2014 in relation to an FIR registered on 17.08.2011 and a Final Report dated 13.08.2012 under S. 173(8) of the Cr.P.C., which indicates that there was absolutely no justifiable apprehension and/or basis for concluding that the alleged 'proceeds of crime' "...are likely to be concealed, transferred....
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....tter while forwarding such index, order and the material to the Adjudicating Authority in a sealed envelope". However, the copy of the Provisional Attachment Order supplied to the Appellants does not contain the signatures of the Respondent No.1 as stipulated under Rule 3. 84. The Adjudicating Authority did not notice the said fact or ignored the same to the effect that the Provisional Attachment Order suffered from serious infirmity including, inter alia, for failing to comply with the mandatory preconditions under Section 5 (1) (b) of the PMLA. Under the circumstances, the following observations in the Impugned Order are completely shocking: "But it is seen these case laws do not apply to the provisions of the PMLA. As per the provisions of Section 5 of the PMLA reasons are required to be recorded in writing by the Respondent No.1 but these are not required to be conveyed as it is to the defendants. It is further seen that while framing the PAO and O.C., these have been conveyed in the PAO and O.C. and that meets the ends of Justice in as much as defendants know what is case against them." [Emphasis supplied] 85. The said observations are contrary to law laid do....
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....of the Appellants. It is evident from the PAO which indicates that the properties have not been attached as 'proceeds of crime' but to secure the "value" thereof. Thus, it appears that even ED's case was that the properties are not per se involved in money laundering but have been attached merely to secure the value of the alleged 'proceeds of crime'. 90. It is stated on behalf of the appellants that the material appended to the Provisional Attachment Order is insufficient as it does not contain a number of documents adverted to in the Respondent No.1 and the Provisional Attachment Order, on the basis of which the Respondent No.1 has purportedly formed an opinion that the Appellants are allegedly in possession of 'proceeds of crime'. 91. It is submitted that the main allegation of the CBI, which has now been relied upon by the Respondent No.1 without application of mind, except it was alleged of furtherance of a criminal conspiracy between the public servants and Shri Nimmagadda Prasadrelating to the Vanpic Project were not "incorporated in the cabinet memorandum" that has been placed before the Council of Ministers while obtaining approval for the Concession Agreement dated ....
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....n transferred to the Government of India by the Appellants by way of Advance Tax. An additional amount of Rs. 21.69 Crores was paid to the Government of India towards the total liability of income tax of Rs. 55.43 Crores on capital gains accrued from the said transactions. The same has not been accounted for by the Respondent No.1, who ought to have deducted the quantum of tax paid from the value of purported "proceeds of crime", because the said quantum of the purported "proceeds of crime" are no longer in possession of the Appellants and already vests with the Central Government. 95. With regard to the question of tax, the Adjudicating Authority finds as under: "35. The issue has been raised by the defendants that the amount of income tax paid out of earning from the proceeds of crime should be reduced to arrive at net proceeds of crime for attachment purpose. In this context the law required attachment with reference to the proceeds of crime and this attachment is ultimately a confiscatory in nature after the decision of the Trial Court. Payment of income tax is not confiscatory in nature and apparently should not be reduced from the gross proceeds of crime. Such a i....
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....ssed in earlier part of my order. 99. It is rightly submitted by the appellants that if the phrase "proceeds of crime" is characterized as has been done by the Respondent No.1 in this case, without reference to any causal nexus with the scheduled offences in question, it would lead to a situation where any revenues generated by persons accused of a scheduled offence would be attached, regardless of whether there is a causal link with criminal activities or not. Clearly, this would be contrary to the scheme and object of the PMLA. One is also failed to understand that on the one hand respondent no. 1 submits that it was a bribe amount and proceed of crime, the issuance of shares are just eyewash and waste of papers and on the other hand, when the shares are sold on higher price to the company who has not been charge-sheeted and its money is admittedly to be the clean money, then how two stands of the respondent no. 1 have any valid argument. Thus, in view of peculiar nature of the facts and circumstances in the present case, price facie, this Tribunal is of the view that the profit earned from the shares sold to the French Company cannot be considered as proceed of crime when it ....
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.... allegations are contrary to the records. It is submitted that there is no 'reason to believe' that the Appellants are in possession of 'proceeds of crimes' or that the properties attached are 'proceeds of crime'. 102. It has come on record that after disinvestment in Matrix Labs, Mr. Nimmagadda Prasadidentified five sectors with excellent growth prospects in the long run for the purpose of Investments, viz. a) Core infrastructure b) Power c) Healthcare d) Entertainment & Media e) Hospitality His investments were made taking into consideration the following factors which would ensure returns on his investments; a) Identifying the investment opportunity (company) b) Evaluating the project c) Company strength d) Promoters' passion for the project e) Promoters' competency f) Social impact of the project g) Mode of investment - one time / creeping h) Gestation period i) Exit option 103. It was explained by Mr. NimmagaddaPrasad in his statement dated 03.02.2012 as under: "During 2003/2005 I have conceived an investment plan named as "Project Pan....
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....which is a profit making company. The aforesaid holdings are of considerable value even if one were to take into account the adverse impact of the wholly motivated CBI proceedings and the proceedings under the PMLA against these companies. 107. Furthermore, Rs. 180 Crores, which represents 20% of the total investment, was invested in the years 2006 & 2007, which was much prior to the Mr. Nimmagadda Prasad being appointed as the local partner in the Vanpic Project and/or the decision of the State Government to revive the same after the termination of the previous Agreement with SKODA. Rs. 430 Crores, which represents 50% of the total investments, was invested after 2nd September 2009, post the demise of Dr. Y. S. Rajashekhara Reddy. Therefore, 70% of the total investments in companies allegedly held by Mr. Y. S. Jaganmohan Reddy were made either prior to Mr. Nimmagadda Prasad's association with the VANPIC Project or post the demise of Dr. Y. S. Rajashekhara Reddy. 108. Therefore, prima facie, it cannot be concluded by Respondent No.1 and Adjudicating Authority or by this Tribunal that Mr. Nimmagadda Prasad's FPA-PMLA-751 to 755, 673, 747, 672, 670, 671 & 668/DLI/2014 Page 84 o....
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....ment cost. At this time I invested 20.00 cr at Rs. 1450/share. The plant was commissioned around sep. 2009. At that time I invested Rs. 190 Crores at 1450/share. In total I invested around Rs. 285 crores for around 14.50% equity at an average price of Rs. 341/share. It is within the original plan of Rs. 300 crores for 15% stake. I tis to be noted that my investment was done on commercial basis after due diligence."^xii [Emphasis supplied] 110. The Appellant companies invested a total of Rs. 285 Crores for equity of 14.50% at an average price of Rs. 341/- per share and exited Raghuram Cements by sale of equity to M/s Parcifim SAS for a total sale consideration of Rs. 560.45 Crores (at a price of Rs. 671/- per share).While investing in Raghuram Cements, Mr. Nimmagadda Prasadwas informed that the Promoters held an indirect stake in Raghuram Cements through Silicon Builders Pvt. Ltd. and offered an investment opportunity. Mr. Nimmagadda Prasad as per his version decided to purchase a stake in Silicon Builders Pvt. Ltd. to further consolidate the stake in Raghuram Cements.At the time of exit from Raghuram Cements/Bharati Cements, Mr. Nimmagadda Prasad simultaneously exited from Si....
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....rticals of Sakshi Print and Broadcast held by Janani Infra, Jagathi Publications and Indira Television, which are the operating companies. In addition, the 37 MW hydel power plant would also add to the valuation of the Company. In fact, this investment too has borne fruit in as much as Sandur Power has been giving dividends as per the case of the appellants. 115. Investment was made by G2 Corporate Services Pvt. Ltd. on 18.01.2007 at an issue price of Rs. 104 (Rs. 10 face value + Rs. 94 premium) in Convertible Preference Shares and not Equity shares. Therefore, per se the price paid for Equity shares and Preference Shares are not comparable.The investments stated to have been made at a premium of Rs. 94 per share were not made by Alpha Villas, Alpha Avenues, Gilchrist Investments. These 3 companies became owners of shares of Bharathi Cements only through a secondary internal transfer of shares by G2 Corporate.The price paid is different at different periods depending on the project implementation stage. The average price to NP group is at Rs. 341.92 per share. 116. The comparison made between the quoted share price of India Cements and Dalmia Cements (Bharat) Limited vis-&agr....
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....e Appellant Companies, have earned a total income of Rs. 676,08,26,124 and during this period, have paid income tax to the tune of 138,77,08,176/-. 120. In the normal course of business, Mr. Nimmagadda Prasad(Including family members) usually made investments through his investment vehicles, including the Appellant Companies. G2 Corporate Services Pvt. Ltd. is the flagship company of the group of investment vehicles/companies controlled by the Nimmagadda Prasad. Sources of income of acquisition of each of the properties provisionally attached was explained in detail in the Reply filed by the Appellant, which has been completely ignored by the Adjudicating Authority in the Impugned Order. 121. It is stated on behalf of the appellants that the Memo dated 23.09.2013 filed by the CBI in RC 19(A)/2011-CBI-HYD, wherein, the CBI has categorically stated that no instance of quid pro quo was uncovered in respect of Carmel Asia Holdings Pvt. (Hereinafter "Carmel Asia") and Sandur Power Company Ltd. (Hereinafter the "Sandur Power"). It is stated that thus the investments of the Appellant companies cannot come under any cloud of suspicion.The Mr. Nimmagadda Prasad was invited to invest i....
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....h are the operating companies. In addition, the 37 MW hydel power plant would also add to the valuation of the Company. In fact, this investment too has borne fruit in as much as Sandur Power has extremely strong fundamentals and has been doing well. From 2007 to 2008, the Mr. Nimmagadda Prasad invested a total of Rs. 100 Crores in Jagathi Publications Ltd., which directly held the Sakshi Newspaper business. 124. It is submitted that the Mr. Nimmagadda Prasaddid not depend on any valuation report for the investment in Jagati Publications but relied inter alia, on the valuation being discussed amongst the concerned people, in the proposed investment (January 2007) by Blackstone in Eenadu newspapers wherein, the valuation was estimated at over USD One Billion Dollars (Then approx. Rs. 4230 Crores). Therefore, the appellants believed that if Sakshi Newspaper achieved a projected circulation of 10 lakh - 10.5 lakh, within the first one and half year (which in fact it achieved in 2009), then a similar valuation would apply thereby fetching a substantial return on the investment made by the Appellant. It is stated that the appellants instinct in the inherent value of the Newspaper and....
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....ent in the companies controlled by Mr. Y. S. Jaganmohan Reddy is Rs. 230 Cr. after taking into account sale proceeds from sale of shares in Raghuram Cements and Silicon Builders Pvt. Ltd. 128. It is the case of the appellants that the Appellants investment in Companies controlled by Y. S. Jagan Mohan Reddy were for purely for commercial reasons and not for other reasons, as alleged by the CBI and the Respondent No.1.In any event, the aforesaid facts demonstrate that the investments had no nexus whatsoever with the alleged 'undue favours' viz., the VANPIC project. 129. The essential facet of natural justice is 'procedural fairness' and fair opportunity of hearing, which includes the right to know the opposing case. It would, therefore, be relevant to refer to the observations of Lord Denning in this regard: "If the right to be heard is to be real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them."^xiii [Emphasis supplied] ....
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....ppears at page 2073 of volume VII of reply submitted by defendant 3, 5 to 9. Complainant has covered that aspect at point no. 6 (1 to 6) in his rejoinder to submissions of defendant no. 3, 5 to 9. However defendant has stated that matter is pending at level of Advocate General of Andhra Pradesh who is yet to respond."^xiv [Emphasis supplied] It is submitted that the Appellants were never afforded an opportunity to respond to the allegations in the Rejoinder that constitute an entirely new case which is entirely impermissible. Therefore, the above finding is crucial finding by the Authority which forms the basis of confirmation of the Provisional Attachment Order was in violation of law. 133. The Adjudicating Authority has dealt with the objection of the Appellants for non-provision of the copy of the Rejoinder in the Impugned Order as under: " ...As per practice after filing the complaint by the complainant one opportunity is allowed to the defendants to file their detailed written submissions with evidence and on such written submissions one opportunity is allowed to the complainant side to file and present their detailed counter reply or rejoinder. Thereafter bo....
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....nce, so that one is not in a position to ascertain with exactness what each witness deposed - except insofar as any reference is made to it in the order. The learned Judges animadverted on this feature and we concur with them that this is far from satisfactory. Learned Counsel for the respondent drew to our attention the rules which have been framed under Section 59 of the Act which lay down the procedure to be followed by Revenue Officers conducting these enquiries, Rule 30(2) read with Rule 17(2) and pointed out that these rules did not require any record being kept of the evidence adduced and that in the absence of any such statutory provision there was no need for these tribunals to follow the procedure adopted by regular courts and that it could not be said that any principle of natural justice was violated by such a record not being kept. We agree that the maintenance of a record of the oral evidence adduced is not the requirement of any specific rule. It should not however be forgotten that the order passed in an enquiry into an objection filed under Section 44(1) of the Act is subject to an appeal under Section 44(3) to a prescribed Tribunal as authority. That appeal lies b....
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.... same in a mechanical manner without even affording an opportunity to the Adjudicating Authority to apply its mind. No valid reasons are mentioned on the notice itself or any separate order is passed before issuance of notice which is requirement as per settled law. 139. The Impugned Order is consisting of 206 pages. In first 192 pages, there is a reproduction of the OC, Reply filed by the Appellants and the Rejoinder of the Respondent No.1 and in 13 pages, 'discussions' was taken place. The 'discussions' of the Authority demonstrates that almost the same stand is taken as per charge-sheet filed by the CBI. The Authority has not applied its mind to the Common Reply filed by the Appellants and has even failed consider and deal with majority of the submissions made by the Appellants. 140. In paragraph 23 at internal page 89 of the Impugned Order, the Adjudicating Authority that "M/s Classic Realty Pvt. Ltd. is however in possession of proceeds of crime" is not wholly contrary to the record but even contrary to the Respondent No.1's observation which reads as under: "25. The investigation under PMLA has so far revealed that Shri N. Prasad and his companies had indirectl....
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....n French Company wanted transaction at market value, how this transaction has taken place at such high rate of Rs. 671 per share and why French Company did nor object." [Emphasis supplied] 143. It is admitted position that Respondent No.1 never questioned the investment by M/s Paraficim, the French company and in fact, treated it as genuine investments. The aforementioned findings by the Adjudicating Authority are therefore completely out of record/pleadings before it and finds place for the first time in the Impugned Order. M/s. Paraficim which is French company is not accused either in the schedule offence nor in the prosecution complaint. 144. The said finding shows complete non-application of mind by the Respondent No.1 in as much as there was no Section 3 (1) (c) in the Companies Act, 1956 and Section 3 (1) (c) of the Companies Act, 2013 (which is not applicable to the transactions in the instant case) pertains to One Member Companies. This is not only absurd but reeks of a desperate attempt to justify the predetermined outcome of the proceedings before the Authority. 145. Mr. Y. S. Jagan Mohan Reddy was the promoter of Bharathi Cements and in control of the same. ....
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....ments are addressed on behalf of respondent no. 1, rather it was admitted that the Pacifism SAS, French Company has bona-fide purchaser of shares. They are not involved for any offence. The said company is not even party to any criminal proceedings included prosecution complaint and their money was the clean money. Once the said admission is made by the respondent no. 1, subsequent investment by Nimmagadda Prasad and his group company cannot be treated as tainted money. There is no force in the arguments of the respondent no. 1 that investment is just eyewash and useless papers. Rather it proves that the investment may be genuine. 147. It is the case of the appellants quantification of Proceeds of Crime and Attachment in various heads amounts to double attachment: Double Attachment: Rs. 178.5 Crs worth of shares purchased by Mr. Nimmagadda Prasad's group companies (Alpha Avenues, Alpha Villas, Gilchirst Investment) in Jagati Publications have been attached at their hands. The respondents further sought to attach the monies received by Jagati Publications for sale of its shares by attaching the plant and machinery and also shares held by it in Indira Television.....
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....ould require the respondents to take the current value of the entire property into consideration for the purpose of attachment. Therefore, the value of the said property held by Mr. Y.S. Jagan Mohan Reddy would amount to much higher than the purported value ascribed by the respondents. S.No. Property Value (in Crs) Guidance Value (in Crs) 1 42.44 Acs of Agricultural Land at Vempally Mandal, Idupulapaya, Kadapa Dist. 0.06 0.54 2 10.36 Acs of land, Pulivendula Mandal, Bakarapuram Village, Kadapa Dist. 0.01 6.51 3 6.65 Acs of land, Pulivendula Mandal, Bakarapuram Village, Kadapa Dist. And 32186 Sq Ft Building thereon. 4.49 6.39 4 Land - 398 Sq Yards, Plot No. 98 of Sagar Society, Rd. No. 2, Banjara Hills, Hyderabad and 473 Sq Yards Building thereon 0.62 2.78 5 Commercial Property Land - 1815 Sq yards, Sy. No. 403/1, No. 8-2-269/4/B, Rd. No. 2, Banjara Hills And 37415 Sq ft Building thereon. 8.17 14.46 TOTAL 13.35 26.05 A total of Rs. 26.05 Crs worth of property (even as per the guideline value) is sought to be attached for "equivalent value" of Rs. 13.35 Crs. Therefore, it is a....
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....Rs. 13.35 crores. The allegation is that as quid pro quo, Mr.Nimmagadda Prasad had transferred Rs. 35 crores to Mr. Y.S. Jagan Mohan Reddy in guise of purchasing shares of M/s. Sandur Power Company Ltd. (Sandur Power) between 19.01.2007 and 27.07.2007 held by Mr. Y.S. Jagan Mohan Reddy and further Mr. Nimmagadda Prasad's group company, M/s. Alpha Vills transferred Rs. 33 Crores to Mr. Y.S. Jagan Mohan Reddy in guise of purchasing shares of M/s. Bharathi Cements Company Ltd. (BCCL) between July/August, 2009 held by Mr. Y.S. Jagan Mohan Reddy. 151. The allegation of the respondent no. 1 as well as in the impugned order that Mr. Y.S. Jagan Mohan Reddy has received Rs. 35 crores as quid pro quo for VANPIC Projects prima facie without any proper investigation, clear and cogent evidence under PMLA as Y.S. Jagan Mohan Reddy received Rs. 30 crores on 22.1.2007 by way of cheque no. 686670 from Mr. Nimmagada Prasad as sale consideration for 21,42,869 shares of Sandur Power held by him and on 19.2.2007 Share Transfer Form in form No.7B authenticated by Assistant Registrar of Companies, Bangalore bearing stamp and date. Mr. Y.S. Jagan Mohan Reddyhad signed the said Share Transfer Form for a....
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....asad's group company, Alpha Villas is not a genuine business transaction. Mr. Y.S. Jagan Mohan Reddy agreed to sell on higher price per share. The justification given on behalf of the appellants is that it was the agreement between the parties after mutual understanding and deliberation. The said allegation of CBI is yet to be decided, so far no charges are framed in the matter. It is not denied that BCCL is a profit making company and has been acquired by M/s. PARFICIM SAS, France for a total of Rs. 2711 Crs in April 2010. Mr. Nimmagadda Prasad and his group companies have invested about Rs. 285.50 Crs. in BCCL by purchasing shares at various prices and have made huge profits to the tune of Rs. 560.45 Crs after selling their shares to M/s. PARFICIM SAS, France for Rs. 671 per share. Therefore, it is evident that investments made by Mr Nimmagadda Prasad and his group companies into BCCL has earned profits of almost 96% which would show that such investments were in business prudence with commercial interests. Therefore, the argument of the counsel appearing on behalf of respondent that these shares were just waste of papers, has no substance as counsel on the other hand, has admitt....
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..../s. Beta Avenues Pvt. Ltd. through equity participation on 30.12.2006and31.01.2007.Despite attaching the properties of Carmel Asia's shares in Jagati Publications worth Rs. 20 Crs in OC 276 of 2014, the respondents seek to make further attachments of shares worth face value of Rs. 15 Crs (and recognised market value of much higher) of BCCL held by M/s. Silicon Builders Pvt. Ltd. and Rs. 51.20 Crs of dividends thereon in OC 618 of 2016 (BCCL Attachment) on the contention that M/s. Silicon Builders Pvt. Ltd. received monies from Carmel Asia and had used the same amounts to purchase BCCL shares. Carmel Asia had allotted its shares to Mr. Nimmagadda Prasad's group company M/s. Beta Avenues Pvt. Ltd at Rs. 262 per share for a total amount of Rs. 5 Crs on 30.12.2006 and Rs. 15 Crs on 31.01.2007. 158. The concept of VANPIC Project was conceived only in January, 2008, therefore, it cannot be accepted the argument of the respondent that the payment of illegal gratification in December 2006 and January, 2007 was made against the VANPIC Project. Even no contrary evidence is available on record. Therefore, the attachment is released forthwith. All the appeals filed by this group ar....
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....than ten years. The trial, if conducted if charges are framed, may take number of years. Therefore, the State Government has to take the stand about the said project. If necessary, the State Government may obtain the advice from Central Government, but the Chief Minister should not involve himself in said process directly or indirectly. 161. The amended provision of Section 8(8) of PMLA along with two proviso are reproduced hereunder:- "[Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:] [Provided further that the Special Court may, if it thinks fit, consider the claim of the....
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....nder the MOU and Concession Agreement, the rationale for identifying a sum of Rs. 267.45 Cr. (instead of which Rs. 274.45 Cr. approx. has been actually attached) is found at pages 82-87 of the Complaint. As per appellants, two sets of investments made and a donation by the Appellants have been wrongly identified as "illegal gratification" paid to Y. S. Jagan Mohan Reddy. The details of the same are given as under:- i. The investment of Rs. 285.50 Cr., for shares in Raghuram Cement Ltd. (which has been subsequently renamed as Bharati Cement Corporation Ltd.); ii. An investment of Rs. 57 Cr., for shares in Silicon Builders Pvt. Ltd., in which G2 Corporate Services Pvt. Ltd. invested Rs. 50 Cr.and Suguni Constructions Pvt. Ltd. invested Rs. 7 Crores; and iii. Rs. 7 Crores donated by to the YSR Foundation, which is a registered public charitable trust. It is a matter of fact that the donation made to YSR Foundation continues to remain with it and has not been returned to the Appellants, despite which the Complaint seeks to attach it in the hands of the Appellants. 165.1 The said shares were admittedly sold in 2010, as follows: - i. The sh....
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....eceived back by Shri N. Prasad and his companies along with the additions thereon." ii) The sum of Rs. 57 Cr. received from Classic Realty (also an innocent party) has been described as follows - "Investigation under PMLA has revealed that M/s Classic Realty is another group company of Shri Jagan Mohan Reddy. However, in the complaint, it is mentioned as the proceeds of crime amounting to Rs. 57 Cr. lying in M/s Silicon Builders Pvt. Ltd. as shareholders' money has been received back by the said two companies of Shri N. Prasad from M/s Classic Realty." iii) In the Complaint, at Para 25(2), these sums have been referred to as follows - "The payments made by the new shareholders to Sh. N. Prasad and his companies (who paid illegal gratification under quidpro- quo)have in fact resulted in the refund of illegal gratification with some additions to Sh. N. Prasad and his companies." 165.4 It is rightly explained on behalf of appellants that this logic of Respondent No.1 is incorrect:- i) Firstly, the returns which were generated from investments in M/s Silicon Builders Pvt. Ltd. and Bharati Cement Corporation Ltd. may be business transactions as at pre....
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....laid down by Code of Civil Procedure but shall be guided by the principles of natural justice and subject to the other provisions of this Act and Appellant Tribunal shall have powers to regulate its own procedure.One of the main objects and reasons of this Act is to confiscate of proceeds of crime apart to the criminal liability if the accused has committed under the provisions of this Act and schedule offense. Till the time final order is passed by the Special Courts, if a valid case is made by ED, the proceeds of crime must be preserved so that after final order it should be confiscated for the benefit of State. 167. Before this Act came into existence, it has been noticed that accused person used to dispose of proceeds of crime till the time final orders are passed under the Schedule Offense. Therefore in order to secure the proceeds of crime, some directions are required to be passed in appropriate appeals to preserve the proceeds of crime. 168. In case Order XXXVIII of code of Civil Procedural are read meaning manner it appears that the objects and reasons of Pmla to preserve the proceeds of crime to somehow similar.Order XXXVIIII provides the remedy of arrest and attach....