AI Drafter 
TaxTMI 
TaxTMI 
2019 (8) TMI 72
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...., 2995, 2999, 3001, 3003, 3005, 3007, 3009, 3011/HYD/2016 (Misc.), 3095/HYD/2017(Exem), FPA-PMLA-1573-77, 1579, 1582-88/HYD/2016, 1619/ HYD/2017 JUDGEMENT JUSTICE MANMOHAN SINGH: CHAIRMAN FPA-PMLA-1573 - 1577, 1579, 1582 - 1588 & 1619/HYD/2016 1. By this common order, this Tribunal proposes to decide the above-mentioned 14(fourteen) appeals filed against Order dated 23.11.2016 by the Adjudicating Authority made in Original Complaint No. 618 of 2016 confirming the attachments made vide Provisional Attachment Order No. 02/2016 dated 29.06.2016 (PAO) in ECIR/09/HZO/2011. PAO passed corresponding to CC No. 25 of 2013 before The Special Judge for CBI Cases, Hyderabad (CBI Case). Earlier, the appeals were heard by the Chairman and the Hon'ble Member. The appeals were listed for clarification/ re-hearing. In the meanwhile, the Hon'ble Member retired/resigned. The appeals were re-heard and the orders were reserved. 2. The PAO arises out of registered case no. ECIR/09/HZO/2011 dated 30.8.2011 filed by the Respondent, in pursuance of an FIR filed by Central Bureau of Investigation (hereinafter referred to as 'CBI') being RC 19(A)/ 2011-HYD dated 17.8.2011, alleging that the al....
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....ed by the impugned order dated 23.11.2016. 5. The following appeals have been filed: Y.S. Jagan Mohan Reddy & Group: 1. Appeal Nos. 1573 of 2016- Mr. Y.S. Jagan Mohan Reddy 2. Appeal Nos. 1575 of 2016 - M/s. Classic Realty Pvt. Ltd. 3. Appeal Nos. 1576 of 2016 - M/s. Sandur Power Company Pvt. Ltd. 4. Appeal Nos. 1577 of 2016 - M/s. Silicon Builders Pvt. Ltd. 5. Appeal Nos. 1582 of 2016 - M/s. Silicon Infrastructure Pvt. Ltd. 6. Appeal Nos. 1583 of 2016 - M/s. Capstone Infrastructure Pvt. Ltd. 7. Appeal Nos. 1584 of 2016 - M/s. Revan Infrastructure Pvt. Ltd. 8. Appeal Nos. 1585 of 2016 - M/s. Bhagavath Sanidhi Estates Pvt. Ltd. 9. Appeal Nos. 1586 of 2016 - M/s. Utopia Infrastructure Pvt. Ltd. 10. Appeal Nos. 1587 of 2016 - M/s. Saraswati Power and Industries Pvt. Ltd. 11. Appeal Nos. 1588 of 2016 - M/s. Harish Infrastructure Pvt. Ltd. 12. Appeal Nos. 1574 of 2016 - filed by Mrs. Y.S. Bharathi Reddy. 13. Appeal Nos. 1579 of 2016 - M/s. Bharathi Cements Corporation Pvt. Ltd. 14. Appeal Nos. 1619 of 2017 - Mr. Jella Jagan Mohan Reddy. 6. With reg....
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.... - Rs. 15 Crs invested were funneled by Mr. Nimmagadda Prasad's group company, M/s. Beta Avenues Pvt. Ltd., through M/s. Carmel Asia Holdings Pvt. Ltd. which are also occasioned by VANPIC favours. Allegations in the CBI charge-sheet 8.1 As far as monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL, the allegations are that Rs. 30 Crs were received as bribe amount by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad in lieu of VANPIC favours and was guised as sale consideration for sale of shares held by Mr. Y.S. Jagan Mohan Reddy in M/s. Sandur Power Company Ltd. (Sandur Power) to Mr. Nimmagadda Prasad. The said Rs. 30 Crs were utilized in purchasing 3,00,00,000 shares of BCCL at Rs. 10 per share. Mr. Y.S. Jagan Mohan Reddy sold 62,00,972 shares held by him in BCCL to PARFICIM SAS, France at Rs. 671.20 per share totaling to Rs. 416.20 Crs on 28.04.2010. The Rs. 416.20 Crs so realized were transferred into various group companies controlled by Mr. Y.S. Jagan Mohan Reddy. The initial investments into BCCL and subsequent investments by companies such as M/s. Dalmia Cement....
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.... 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17), the allegations are that M/s. Classic Realty Pvt. Ltd. (Classic Realty) has received, in total, an amount of Rs. 193.50 Crores (Rs. 126.50 Crs from Mr. Y.S. Jagan Mohan Reddy and Rs. 67 Crs form Sandur Power) as Share Application Money from Rs. 416.20 Crs realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to M/s PARCIFIM SAS, France on 27.04.2010. Thereafter, an amount of Rs. 196.85 Crs was utilized in the following nature: i) Rs. 58 Crs was returned to Mr. Y.S. Jagan Mohan Reddy against earlier received Share Application Money. ii) Rs. 56 Crs returned to BCCL against earlier received Share Application Money. iii) Rs. 57 Crs paid to G2 and Suguni Constructions for acquiring Silicon Builders Shares. iv) Rs. 25.85 Crs invested into 4 companies. It is stated as monies received are not parked with Classic Realty, the ED has sought to attach, on the basis of concept of beneficial ownership, 'Tangible Fixed Assets of M/s Classic Realty Pvt Ltd as detailed in the Audited Balance Sheet for 2013-14 being equivalent to the proceeds of Crime valued at Rs. 49,45,6....
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....r defendants and their properties are attached. 9. It is stated that it was revealed from the Charge Sheet filed by CBI with the Hon'ble Court that S/Shri Y.S Jagan Mohan Reddy, V. Vijay Sai Reddy, Jella Jagan Mohan Reddy & others committed the offences of criminal conspiracy, cheating and criminal misconduct by abusing official position of Late Dr. Y.S. Rajsekhara Reddy, the then Chief Minister of Andhra Pradesh, punishable under Section 120-B read with Section 420 of the Indian Penal Code, 1860 and Sections 9, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The offences under Section 120-B, Section 420 of IPC, 1860 and Section 13 of PC Act, 1988 are the scheduled offences as per Section 2(1)(y) of PMLA, 2002. The investigation carried out so far under PMLA, 2002, has revealed that, as a result of the above stated scheduled offences, following are the Proceeds of Crime in this case. i) Shri Y.S. Jagan Mohan Reddy built a Cement Factory with the quid pro quo investments received by him from the companies of S/Shri Nimmagadda Prasad, N. Srinivasn and Puneet Dalmia for the benefits/favours extended t them in the form of various approvals/conces....
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....imited in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by Shri Y.S. Jagan Mohan Reddy from Shri Nimmagadda Prasad, Shri Y.S. Jagan Mohan Reddy, out of the bribe amounts received by him through his group companies from Shri Nimmagadda Prasad, transferred an amount of Rs. 15 Crore to M/s. Silicon Builders Private Limited for which he received 1.5 Crore shares of Rs. 10/- each of M/s. Bharathi Cement Corporation Private Limited. M/s. Silicon Builders Private Limited continues to hold these shares till date which are the direct Proceeds of Crime. v) Shri Y.S. Jagan Mohan Reddy, purchased 3,00,00,000 Shares of Rs. 10/- each in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by him from Shri Nimmagadda Prasad. Out of these 3,00,00,000 shares, Shri Y.S. Jagan Mohan Reddy, in April 2010, sold 62,00,972 shares to M/s. Parficim, France at a rate of Rs. 671.20 per shares and benefitted by an amount of Rs. 416,20,92,406/- and the same was deposited in his bank account maintained at Oriental Bank of Commerce, Jubilee Hills Branch, Hyderabad (A/c No. 09242011001503). Shri Y.S. Jagan Mohan Reddy is till continues to hol....
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.... Rs. 152,84,61,315/- for the period from 2009-10 to 2015-16. 11. It is stated that from the above, it is evident that the pecuniary gain derived by M/s. Bharathi Cement Corporation Private Limited on account of excavation of Lime stone from the Mining License granted illegally amounts to Rs. 152,84,61,315/- which is proceeds of crime in terms of Section 2(1)(u) of PMLA, 2002. 12. The total alleged proceeds of crime as per respondents as per Provisional Attachment Order dated 29.06.2016 and O.C. No. 618 of 2016 are as follows: 416.20 Crs Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of 62,00,972 shares to M/s. PARFICIM SAS at Rs. 671.20 per share. 23.80 Crs Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad) 15.00 Crs Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad) 81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL 51.20 Crs Dividend received by Silicon Builders on 1,50,00,000 Shares of BCCL 152.84 Crs Value of limestone extracted by BCCL. 19.50 Crs Salaries of Mrs. Y.S. ....
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.... trenches for Rs. 35 Crs at Rs. 140 per Share. d) It is pertinent to note that 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 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. f) 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. ii) Purchase of 3,00,00,000 shares of BCCL for Rs. 30 Crs and monies realized from sale of BCCL to PARFICIM SAS, France: a) Mr. Y.S. Jagan Mohan Reddy had utilized the Rs. 30 Crs amount to purchase shares in BCCL ....
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....121,08,26,678/ - 25,75,65,828/ - 27 Mr. Nimmagadda Prasad's Group 285,49,81,915 /- 560,45,35,438/ - 274,95,53,523 /- 96 c) Therefore, all the allegations made with regard to Mr. Y.S. Jagan Mohan Reddy being in any manner connected with the alleged dealings with Dalmia Cement, India Cement and Mr. Nimmagadda Prasad's group with the Government of A.P. is entirely incorrect and Mr. Y.S. Jagan Mohan Reddy has no connection whatsoever with such distinct and independent transactions which the said entities may have had with the Government of A.P. 13.2 Relating to M/s. Sandur Power Company Pvt. Ltd. (Appeal No. 1576 of 2016): a) The transactions between Mrs. Y.S. Jagan Mohan Reddy and Sandur Power are genuine business transaction. Only on the premise of beneficial ownership, the said attachments at the hands of Sandur Power has been done as value equivalent to proceeds of crime. The proceeds of crime if any have already been attached at the end of Mr. Y.S Jagan Mohan Reddy. b) No allegations that amount paid for acquisition of shares by Mr. Y.S. Jagan Mohan Reddy are over-valued or excessive. The shares have been purchased by Sandur....
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.... FD916040025115772, and FD916040034051975 (only partial attachment) aggregating to INR 152,84,61,315 (Rupees One Hundred and Fifty Two Crores, Eighty Four Lakhs Sixty One Thousand Three Hundred and Fifteen) held in Axis Bank, Srinagar Colony, Hyderabad, stood confirmed as purported 'proceeds of crime' within the meaning of Section 5 (1) of the PMLA. Let me now deal with the case of appeal filed by Bharati Cement Corporation Pvt. Ltd. being appeal no. 1579/2016. The result of this appeal would have impact of other appeals also. 16. As already mentioned that the main allegation in the PAO is that the mining lease was illegally allotted in favour of the Appellant company upon an alleged wrongful cancellation of the prospecting license of M/s Gujarat Ambuja Cement Limited(hereinafter referred to as 'Gujarat Ambuja'). It is alleged that the said alleged illegality was perpetrated by the actions of Mr Y.S. Jagan Mohan Reddy (who is the son of the then Chief Minister of Andhra Pradesh, Mr. Y.S. Reddy), in conspiracy with others, and by influencing public servants and without due procedures being followed under the extant mining laws and rules made thereunder. 17. Accordingly, the im....
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....e are recorded in earlier part of my order. The response of appellants are also recorded. In case, even prima facie, this Tribunal would come to conclusive that mining lease is granted against the receipt of bribe amount paid to Jagan Mohan Reddy and his group at the instance of his father, who was the Chief Minister at the relevant period of time, then the attachment of the said FDs has to continue. 20. It is submitted on behalf of the appellant in appeal no. 1579/2016 that the Respondent has misinterpreted the statutory provisions as contained in the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as 'MMDR Act') and the rules made thereunder. The Respondent has wrongly come to the conclusion while ignoring relevant material in arriving at the finding of unlawful allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant as mentioned above. 21. As per pleadings, the admitted following facts are:- (a) Gujarat Ambuja was granted a Prospecting License for a period of 2 (two) years, i.e., from September 13, 2000 until September 12, 2002 vide a license deed. (b) After Gujarat Ambuja was unable to complete the....
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....rat Ambuja had not filed any application for grant of a mining lease for the subject area, whether within the period of 3 (three) months after the expiry of the Prospecting License, or even later as mandated by Section 11 of the MMDR Act. Therefore, the question of preferential right for grant of a Mining Lease in favour of Gujarat Ambuja does not arise for the subject area. 23. It is submitted on behalf of appellants that the the Adjudicating Authority did not appreciate that in absence of any right existing in favour of Gujarat Ambuja, as contained in the MMDR Act itself. The very genesis of the alleged conspiracy of grant of Mining Lease to the Appellant by surpassing Gujarat Ambuja, fails at the very threshold. Even the Revision Application filed by Gujarat Ambuja challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide a detailed final order dated September 8, 2006. 24. Admittedly, Gujarat Ambuja has not filed any other complaint, whether civil or criminal, in this regard. The said fact was admitted on behalf of respondent by the counsel as well as IO present. Under no circumstances, irrespective of any allega....
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....arly specified in the text of the notification, viz., mining lease/ prospecting license. (b) The annexure of the notification which describes the notified land describes the names of previous lessee and nature of rights granted to them. In this regard, since the grant to Shri M. Obul Reddy was in the nature of a mining lease, the annexure to the notification stated so. Similarly, since the grant to Gujarat Ambuja was in the nature of a prospecting licence, the notification stated so. (c) Rule 59(1)(ii) of the Mineral Concession Rules, 1960 does not distinguish between a notification for grant of a prospecting license and a notification for grant of mining lease. In fact, the provision merely requires that the area for re-grant be notified. (d) The attempt in the PAO to restrict one of the notified areas as that for "mining lease" and the other for "prospecting licence" is contrary to the language of the notification itself. (e) In fact, nothing precluded Gujarat Ambuja from applying for a Mining Lease pursuant to the said notification, but it has chosen not to apply. (f) In view of the above, the allegations in the PAO that first, the No....
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....Rules, 1960 envisages an application by any person to the Central Government for revision of any order made by the State Government or other authority in exercise of the powers conferred on it by the MMDR Act or these rules that it is aggrieved by, to be made within three months of the date of communication of the order to him. 33. It is true that the grant of the Mining Lease has been doubted by the Adjudicating Authority and in the PAO due to the pendency of the revision petition at the time of grant of Mining Lease in favour of the Appellant. It is submitted on behalf of appellant that the Adjudicating Authority has failed to take cognizance of the following relevant facts: (a) The G.O. Ms. No. 95 dated March 27, 2006 granting the Mining Lease for Limestone over an extent of 2037.52 acres in Sy. Nos. 215 to 231 etc. in villages in Yerraguntla and Kamalapuram Mandals in Kadapa District in favour of the Appellant was by no means an unconditional grant, as has been sought to be incorrectly portrayed in the impugned PAO. (b) On the contrary, the GO clearly provides that the grant orders are subject to the outcome of the decision of the Government of India in the....
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.... Gujarat Ambuja so as to ensure execution of the mining lease in favour of the Appellant is clearly unfounded and unsubstantiated. In any case, both the Revision applications filed by Gujarat Ambuja were dismissed. (i) It is submitted that a party is not precluded from being granted a mining lease during the interim period, i.e., the period after a decision is taken by the State Government to deny the application of a party for grant of a prospecting license or mining lease, until the time such aggrieved party challenges the same in revision. (j) It was alleged that it is not within the contemplation of the mining rules that the competent authority is statutorily mandated to remain idle and not take decisions for grant of mining lease in respect of the same area until the period of limitation under Rule 54 expires, which interpretation will create a situation of absurdity and the same could not have been the intent of the framers. 34. It is a matter of fact that the First Revision Application filed by Gujarat Ambuja, challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide final order dated September....
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....ted the area from September 13, 2000, until the rejection of its renewal application on October 31, 2005, i.e., for period of more than 5 (five) years but had not completed the prospecting work or submitted the requisite final prospecting licence report. 38. In any case, the existence of mineral contents and limestone reserves in the area in question had already been established, which is clearly evidenced from the report of Mr. Shankar Narayana, Assistant Director (Mines & Geology) - "As per the exploration report of M/s Gujarat Ambuja Cement Ltd., the total estimated reserves are to the tune of 144.06 million tonnes considering an average workable thickness of 18 mts and 50% of the area for practical working leaving sufficient area for safety zone for blasting, green belt development and statutory limits from roads, lease periphery etc. " 39. It is submitted that as long as the existence of mineral content has been established (which was a clear finding of the GoAP), the grant of a mining lease (even without a prior prospecting license) cannot be questioned. In fact, by the allegations of the PAO itself, wherein it is detailing out the extent of lime stone extracte....
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....rial approvals were in place at the time of grant of mining lease in favour of the Appellant. It is aalso submitted that once the approvals of the Minister had already been obtained for grant of the Mining Lease, it could not have been the intent to seek repeated approvals on the same matter. 44. It is argued that Section 5(2) of the MMDR Act, do not bar the use of an earlier prospecting report in addition to other information which has been established other than by prospecting. Rule 16(3) - the Mineral Concession Rules, 1960 records the process to be followed in the event that information submitted by a person undertaking prospecting activities is to be treated as confidential. 45. The allegation was that both the Appellant and M/s Saraswati Power and Industries Private Limited had failed to submit prospecting reports from the Geological Survey of India or from any other private consulting agency, and had instead used the prospecting report of Gujarat Ambuja, or that the same wass unlawful. 46. It is submitted on behalf of appellants that no such process for treating the information submitted by Gujarat Ambuja as confidential, had been requested or followed and as such, ....
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.... for approval on March 23, 2006. The same was signed on March 23, 2006/ March 24, 2006 and subsequently, the Approved Mining Plan was received by the Appellant. 49. It is submitted that in view of the above stated procedure undertaken by the Appellant and the various officials, the allegations contained in the impugned PAO as regards purported deficiencies in the Approved Mining Plan, and the basis on which the impugned order dated November 23, 2016 was passed without appreciation of the correct facts. In any case, it is submitted that the deficiencies in the Mining Plan, if any, had been rectified fully by the Appellant, which was subsequently also confirmed by the Dealing Assistant before being approved by the competent authority. 50. The entire process for approval of the Mining Plan took more than a month i.e. from February 21, 2006 (when the mining plan was submitted) to March 23, 2006/ March 24, 2006 (when approval was granted), and therefore the allegation that the approvals were done in less than a day was not correct. 51. The Appellant has relied upon the following judgement in this regard: (a) Chairman & MD, BPL Ltd. v. S.P. Gururaja and Others, (2003) 8....
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....95 Industries and Commerce (M. III) Department, Dt. 27.03.2006. I do not find any infraction in following the established norms, procedure or the provisions of the law." The inquiry conducted by a retired High Court Judge has given an unequivocal finding in favour of the Appellant as regards the lawful allotment of the Mining Lease. It is informed that the said report has not been challenged. 53. The Adjudication Authority did not care about the finding of a retired High Court Judge, heading a Commission constituted by the Government of Andhra Pradesh under the Commissions of Inquiry Act, 1952, rather it has given finding contrary to the report by coming to the conclusions that the allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant was unsupported by any cogent and reliable material on record. 54. The Respondent's stand is that the Hon'ble Commission only enquired into the legality of the grant of Mining Lease by the Government, however, the grant of Mining License to Appellant was illegal and despite of Hon'ble Commission had categorically noted in paragraph 8.9.3 that there had been no infraction in following the established norms, procedure or....
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....nces' by way of the Prevention of Money Laundering (Amendment) Act of 2009 (21 of 2009) which came into effect only June 01, 2009, much after the grant of the mining lease in the year 2006. 60. The Respondent has chosen also invoked the provisions of the offences of Section 13 of the PCA, Section 120-B and Section 420 of the IPC as 'Scheduled Offences' despite the fact that the purported offences were not 'Scheduled Offences' within the meaning of Section 3 read with Section 2(u) of the PMLA, at that period of time and these were not existed. They were incorporated w.e.f. 15.06.2009. It is submitted on behalf of appellants that the provisions of law cannot be retrospectively applied, as Article 20(1) of the Constitution bars ex-post facto penal laws and no person can be prosecuted under Sections 3 and 4 of the Act. on the allegations which occur earlier by applying the provisions of law, which have come into force after the alleged incident. 61. In the impugned order dated November 23, 2016, it is held that proceeds on the basis that the offence of money laundering under Section 3 of PMLA is a continuing one, despite the allegations of commission of the offences and acquisiti....
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....n of Satyam Computers over several years, inflated revenues, consequential artificial cash etc., contained in a letter dated January 7, 2009. In the present Appeal, the Appellant has always maintained that the grant of mining lease is lawful and in accordance with law. ii) The issues in the Rama Raju case relate to a challenge to the vires of the provisions of PMLA. The Petitioners, inter alia, seek invalidation of Sections 5(1), 8(1), 8(2), 8(3), 8(4), 23 and 24 of the PMLA and other consequential reliefs. The observations of the Hon'ble High Court as regards Article 20 is not the ratio decidendi and is merely obiter and is not an authority for Article 20 of the Constitution. In this regard, the Appellant's seek to rely upon the following judgment: Bhavnagar University v. Palitana Sugar Mill Pvt. Ltd. and Ors., (2003) 2 SCC 111 - "59. A decision, as is well-known, is an authority for which it is decided and not what can logically by deduced therefrom. It is also well-settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision..."; and (2) Bharat Petroleum Corporation Ltd. and....
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.... authority." 63. In Lauri v. Renad (1892) 3 Ch 402, by Lindley, L.J. that it is a fundamental rule of English Law that no "statute shall be construed so as to have a retrospective operation, unless its language is such as plainly to require such a construction. And the same rule involves another and subordinate rule, to the effect that a statute is not to be construed so as to have a greater retrospective operation than Us language renders necessary. It is stated that it is well recognized rule that statutes should be interpreted, if possible, so as to respect vested rights, but such a construction should never be adopted if the words are open to another construction. It is also stated that if a statute be ambiguous, the Court should lean to the interpretation which would support existing rights. 64. In the Queen v. The Inhabitants of St. Mary, Whitechapel (1848) 12 QB 120, the Court pointed out that "The Statue which in its direct operation of prospective cannot be properly called a retrospective statute because a part of the requisites for that action is drawn from the time antecedent to its passing". 65. The fundamental rule of interpretation of statutes. Following case....
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....am imponere debet non praeteritis i.e. "a new law ought to regulate what is to follow, not the past". The presumption of prospectivity operates unless shown to the contrary by express provision in the statute or is otherwise discernible by necessary implication." b) Keshavan Madhava Menon Versus State of Bombay, AIR 1951 SC 128 - para 7 [7 Judge Bench of Hon'ble Supreme Court] "7. ............................................................................ Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation. ............... ................................................................................................ ............................................" c) Mahadeolal Kanodia Versus Administrator, General of West Bengal, AIR 1960 SC 936 - para 8 [3 Judge Bench of Hon'ble Supreme Court], held that: "8. The principles that have to be applied for interpretation of statutory provisions of this nature are well-established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they a....
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....d in respect of them are governed by S. 13 of the East Punjab Urban Rent Restriction Act, 1949, as applicable to Union Territory of Chandigarh, Their Lordships, with regard to the rule of interpretation regarding retrospectively observed (at pages Sc 93 and 94, Air 1948) "All laws which affect substantive rights general operate prospectively and there is a presumption against their retrospectivity if they affect vested rights and obligations unless the legislative intent is clear and compulsive. Such retrospective effect may be given where there are express words giving retrospective effect or where the language used necessarily implies that such retrospective operation is intended. Hence, the question whether a statutory provision has retrospective effect or not depends primarily on the language in which it is couched. If the language is clear and unambiguous effect will have to be given to the provision in question in accordance with its. (32) It would appear from the case law considered above that the rule of construction or interpretation is very well settled and well established that laws generally are prospective in character more particularly, law affecting....
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....at such property involved in the money-laundering or which has been have effect. used for commission of the offence of money-laundering shall stand confiscated to the Central Government. 69. It may be seen from the above table that prior to the amendment, the attachment of a property will cease to have effect, the moment the persons concerned are acquitted on conclusion of trial for any scheduled offence. But after the amendment, the conviction of a person for a scheduled offence has no nexus to the confiscation of the property. What is now important is to see whether the Special Court finds the commission of an offence of money laundering or not. 70. The contention of Mr. S. Ravi, learned senior counsel for the petitioner is that the petitioner company was not even implicated as an accused in the criminal case. All the accused, who were individuals and who were at the helm of affairs of the petitioner company, were prosecuted and they were convicted by the Special Court by a judgement dated 09-04-2015. Since the charge sheets filed prior to the amendment and since the petitioner was not one of the accused, the amendment to Section 8(5) will not apply to the case ....
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.... 69. This Tribunal has also noticed that there are many issues raised by the appellants either to have been ignored or not decided as per law by the adjudicating authority. 70. Total Alleged Proceeds of Crime: The transactions labelled as alleged proceeds of crime according to the Provisional Attachment Order dated 29.06.2016 and O.C. No.618 of 2016 are as follows: 416.20 Crs Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of shares to M/s. PARFICIM SAS at Rs. 671.20 per share. 23.80 Crs Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad) 15.00 Crs Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad) 81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL 51.20 Crs Dividend received by Silicon Builderson 1,50,00,000shares of BCCL 152.84 Crs Value of limestone extracted by BCCL 19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy 7.18 Crs Salaries of Mr. JellaJagan Mohan Reddy ------------- 766.97 Crs Total quantification of PoC Total value of propertie....
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....ity imputed to the functioning of Mrs. Y.S. Bharati Reddy as Chairperson and being paid remuneration therefor. 75. The allegations of the salaries being improperly drawn also stand contradicted by the admitted circumstance that BCCL is now controlled in majority by PARFICIM SAS, France, a multi-national company. As neither Mr. Y.S. Jagan Mohan Reddy nor his associated shareholders have a majority stake, the insinuation that the salary amounts are dictated by collateral considerations would be impermissible. a) The flow of investments from Silicon Builders into BCCL is in regular course of business and the transaction in itself is completely legal and stands test to standards of the Companies Act. Therefore, Mrs. Y.S. Bharathi Reddy, only by being in virtue of the director of Silicon Builders at the time of such investment, cannot be faulted with. Rs. 15.5 Crs. received from Y.S. Jagan Mohan Reddy is accrued from genuine business transaction. a) Mrs. Y.S. Bharathi Reddy received Rs. 1.5 Crs and Rs. 14 Crs from her husband, Mr. Y.S. Jagan Mohan Reddy on 14.06.2010 and 01.10.2010 respectively from the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the ....
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.... is wrongly done. The appeal is allowed accordingly. 82. It is rightly alleged that the said shares acquired by Mr. Y.S. Jagan Mohan Reddy from Sandur Power have been separately attached and there is no allegation that the said shares were overvalued for the purpose of acquisition. Therefore, as the value in relation to alleged proceeds of crime in the hands of Mr. Y.S. Jagan Mohan Reddy is attached (in form of shares), the money in the hands of Sandur Power cannot be called as proceeds of crime as it would amount to execution of double attachment and for twice the value which is contrary to the scheme of PML Act. 83. Therefore, as the monies received by Sandur Power (which have been separately attached at the hands of Sadur Power) which have further been paid to Classic Realty as share application money cannot be attached as the same would amount to triple attachment of property. The said practise cannot be allowed. The proceed of crime amount has to be finally identified, otherwise, there would be no end. 84. Relating to amalgamated entities viz, M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Inf....
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....o BCCL are from Sandur Power's power generation monies. Prejudice to the contention that Beta Avenue's investments into Carmel Asia are genuine investments made in regular course of business, the respondents have wrongly assumed that Silicon Builders' stake in BCCL is only due to monies received from Carmel Asia. Silicon Builders had invested Rs. 15 Crs into BCCL from the funds received by it from Sandur Power as under: Amount Cheque No. Remarks Rs. 3,00,00,000/- 120848 Investment from M/s Sandur Power Rs. 2,50,00,000/- 761124 Investment from M/s Sandur Power Rs. 1,10,00,000/- 761133 Investment from M/s Sandur Power Rs. 5,00,00,000/- 120856 Investment from M/s Sandur Power Rs. 5,00,00,000/- 130812 Investment from Carmel Asia Holdings Pvt. Ltd. Subsequently requested to be treated as investment by Investment from M/s Sandur Power leading to refund of said advance back to Carmel Asia HoldingsPvt. Ltd. (Rs. 1,60,00,000/-) 108366 Returned back to M/s Sandur Power Rs. 5,00,00,000/- 120866 Investment from M/s Sandur Power (Rs. 5,00,00,000/-) 224277 Returned back to Carmel Asia Pvt. Holdings as per request jo....
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....thereafter proceed to attach Jagati Publication's Shares held by Carmel Asia. The respondent now 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 Silicon Builders and Rs. 51.20 Crs of dividends thereon in the instant Complaint i.e, O.C. No. 618 of 2016 on the contention that Silicon Builders received monies from Carmel Asia and had used the same amounts to purchase BCCL shares. Therefore, the attachment of 1,50,00,000 shares held by Silicon Builders in BCCL and the Rs. 51.20 Crs of dividend received by Silicon Builders ought to be released from any attachment. 89. Relating to M/s. Capstone Infrastructure Pvt. Ltd. (Appeal No. 1583 of 2016): It is the case of appellants that the investments received by Capstone Infrastructure from Classic Realty are share subscription amounts in lieu of allotment of 1,53,00,000 shares of Capstone Infrastructure to Classic Realty. The said transaction is a genuine business transaction and therefore, investment of monies into Capstone Infrastructure cannot be faulted with and be termed as 'proceeds of crime'. Investments received by Capstone Infrastructure from....
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....ime. Thus, the appeal is allowed. 92. Attachment of Rs. 15 Crs received from Sandur Power amounts to triple attachment: The investments of Rs. 15 Crs from Sandur Power into Saraswati Power made as share subscription monies against allotment of 1,50,00,000 Shares in Saraswati Power are monies received by Sandur Power from Mr. Y.S. Jagan Mohan Reddy as consideration against sale of shares of various companies held by it. Mr. Y.S Jagan Mohan Reddy had accrued such monies from the sale of his shares in BCCL to PARFICIM SAS, France, which is a genuine business transaction. Against him, no action is pending. Counsel for the respondent has admitted that amount paid by French Company against the shares is the clean money. The profit earned by the group companies cannot be treated as proceed of crime once the original purchase of shares are done under business transaction. It is therefore submitted that as the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions, the Rs. 15 Crs received by Saraswati Power through Sa....
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....its equity holders. The purported attachments caused to be made even beyond the wrongful terming of proceeds of crime in the hands of various companies on a premise that they are being beneficially owned by Mr. Y.S. Jagan Mohan Reddy would be legally impermissible as any such extension of liability cannot be fastened onto an independent juristic entity like a Company. Under the PMLA inter alia it is a mandatory prerequisite that a person/entity is in possession of proceeds of crime for issuance of an attachment order. Such powers cannot be extended beyond the scope of PML Act by adding the new concepts which is alien to the provisions of the PML Act. 95. The concept of beneficial ownership cannot be attributable under Sec. 2(fa) of the PML Act is not attracted in the facts of the case. Mr. Y.S. Jagan Mohan Reddy has no equity in most of the companies directly and does not control the said juridical entity and in the absence of such finding. The appeals are accordingly allowed by set-aside the impugned order. 96. Errors in computation of 'Proceeds of Crime' and attachment of the same: (i) Non-computation of Taxes paid: a) Capital Tax paid by Mr. Y.S. Jagan Mo....
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....of shares of BCCL held by Sandur Power, while quantifying the value for the purpose of attachment, the shares were undervalued at Rs. 18,50,000/- rather than the consideration value of Rs. 12.41 Crores paid by Mr. Y.S. Jagan Mohan Reddy as noted by the respondents in the Complaint itself. 98. Double Attachments: a) At the hands of Sandur Power, Classic Realty and Saraswati Power: As detailed above, the attachments at the hands of Sandur Power for sale of shares owned by it in various companies to Mr. Y.S. Jagan Mohan Reddy would constitute double attachment. Further attachments at the hands of Classic Realty and Saraswati Power on the pretext of receiving monies from Sandur Power constitutes triple attachment at the hands of Classic Realty and Saraswati Power respectively. b) Equivalent value of Rs. 30 Crs already attached in VANPIC Attachment: Further, an amount of Rs. 30 Crs was received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and group, which has already been attached in O.C 276 of 2014. Again, the attachments in the present proceedings to the tune of Rs. 416.20 Crs arise from sale of shares worth Rs. 6.2 Crs out of the same Rs. 30 Crs. Ther....
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....historical and were notified much earlier). This is wholly unsustainable in the eyes of law. d) The following chart depicts the result of such wrongful approach adopted by the respondent: No. Appellant Property Attached Classified as Attached Value Guideline Value 1. M/s Utopia Infrastructure Private Limited Tangible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company's asset at Plot No.7,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet) Golconda Mandal, Hyderabad Equivalent to Proceeds of Crime 58.40 64.30 M/s Marvel Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14 M/s Capstone Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company's asset at Plot No.3,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet) Golconda Mandal, Hyderabad. M/s Harish Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Standalone Financial Sta....
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....valent to Proceeds of Crime 118.49 118.49 10. M/s Classic Reality Private Limited Tangible Fixed Assets as detailed in Note 8 of the Audited Balance Sheet for 2013- 14 (Includes company's asset - Building named Commerce @ Mantri, Bannerghatta Road, Bangalore) Equivalent to Proceeds of Crime 49.45 181.62 TOTAL 328.27 535.04 100. It is alleged that the Rs. 416.20 Crs received by Mr. Y.S. Jagan Mohan Reddy was utilized for various purposes including purchasing of shares of other companies, investment in form of Share Application Money, clearing of bank loans, donation and payment of taxes. As far as above-mentioned amount received by him by selling of shares to M/s. Parficim SAS, France at the rate of Rs. 671.20 is concerned, it is admitted by the respondent that the said money paid by French Company is not the tainted amount. The said company is not charge-sheeted in any case being innocent party as admitted in the impugned order. 101. Errors in computing "Proceeds of Crime" which ought to be excluded 84.00 Crs Monies paid by Mr. Y.S. Jagan Mohan Reddy as Capital Gains Tax from the Rs. 416.20 Crs. received from sale of BCCL shares to PA....
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....s Bank, Srinagar Colony, Hyderabad, stood confirmed as purported 'proceeds of crime' within the meaning of Section 5 (1) of the PMLA. 104. It is an admitted position by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer. 105. The Respondent has, in passing, raised certain allegations as regards the valuation of the shares of the Appellant, which issue is already the subject matter in a separate OC No. 424 of 2015 out of which an appeal FPA-PMLA- 1035/HYD/2015 titled M/s Bharathi Cement Corporation Private Limited Vs. Jo....
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....ation that the mining lease was granted to BCCL without prior prospecting of the area is evidence of a criminal conspiracy and information. The BCCL has used the information and data of Ambuja Cement without its permission. The lease was granted while the interim order was operated, though it was granted subject to the decision of Review Petition. These are the main issues raised. The same are to be decided as to whether it is done deliberately or the act of appellants was bonafide or these are technical discrepancies. These aspects have to be considered by the Special Act on the basis of evidence. However, at present, it is difficult to conclude that due process has not been followed at all. These issues are either decided in quashing proceedings if initiated or after trial by the Special Court. 109. The Supreme Court held that the question of any undue haste in taking an administrative decision is a question of fact. It is held by the Supreme Court that the States had devolved a policy of single window system with a view to get rid of red tapism generally prevailing in the bureaucracy. In the present case, it also appears there are elements which would show the decision is tak....