TaxTMI 
TaxTMI 
2019 (8) TMI 72
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....09, 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 alleged offences made out by the CBI under Secti....
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.... 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 regard to appeal no. 1619/2017, filed by Jella Jagan Mohan Reddy, separate order is being passed. By this common order, thirteen appeals are being decided. 7. CBI did not file charge sheets against all the persons / entities indicated in the FIR dated 17.....
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....d 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 Cements, M/s. India Cements Ltd. and Mr. Nimmagadda Prasad's group of companies at high valuations are nothing but bribe money paid as quid pro quo for the benefits derived by such companies. 8.2 The allegations also relating to Mr. Bharathi Reddy are that Mrs. Y.S. Bharathi Reddy had become the Director of BCCL solely on behest of Y.S. Jagan Moha....
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.... 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. 49,45,62,869/- (includes company's asset - Building named Commerce @ Mantri, Bannerghatta Road, Bangalore) 8.5 The allegation in relation to M/s. Silicon Builders Pvt. Ltd. Are that M/s. Silicon Builders Pvt. Ltd. (Silicon Builders) is in receipt of Rs. 15 Crs from M/s. Carmel Asia Holdings Pvt. Ltd. (not arrayed in the Complaint) and Sandur Power. Carmel Asia has in-turn received such moniesfrom Mr. Nimmagadda Prasad's group company, M/s. Beta Ave....
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....an 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/concessions by the then Government of Andhra Pradesh by influencing his father Late Shri Y.S. Raja Sekhar Reddy. Shri Y.S. Jagan Mohan Reddy further got mining lease in the name of M/s. Bharathi Cement Corporation Private Limited employing illegal means and by influencing public servants in criminal conspiracy with others. Smt. Y.S. Bharathi Reddy who was appointed as Director of M/s. Bharathi Cement Corporation Private Limited by virtue of the Stake held by Shri Y.S. Jagan Mohan Reddy and hi....
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....nues 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 hold 2,38,06,435 shares of Rs. 10/- each in M/s. Bharathi Cement Corporation Private Limited which were acquired by him out of the bribe amounts received by him and these shares forms part of Proceeds of Crime as defined under Section 2(1)(u) of PMLA, 2002. Shri Y.S. Jagan Mohan Reddy, out of illegally benefitted amount of Rs. 416,20,92406/-, transferred to various companies/his own accounts which were further transferred to various companies/individuals as investments. vi) It is stated by the respondent that ....
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....n 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. Bharathi Reddy 7.18 Crs Salaries of Mr. Jella Jagan Mohan Reddy ---------------- 766.97 Crs Total quantification of PoC Total value of properties attached as 'Proceeds of Crime' is Rs. 748.95 Crs. 13. Case of Y.S. Jagan Mohan Reddy and group companies owned by him 13.1 Relating to monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL (Appeal No. 1573 of 2016): - (i) Sale of Sandur Power Shares to Mr. Nimmagadda Prasad by Mr. Y.S. Jagan Mohan Reddy: a) Mr. Y.S. Jagan Mohan Reddy has received Rs. 30 Crs as quid pro qu....
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....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 for Rs. 10 per share and had acquired a total of 3,00,00,000 Shares in BCCL. b) Mr. Y.S. Jagan Mohan Reddy had 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. It is pertinent to note that the sale of BCCL shares to PARFICIM SAS, France is not faulted with either with CBI or the respondents. The said monies were 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. c) As the initial seed capital of Rs. 30 Crs received from Mr. Nimmagadda Prasad is a genuine business transaction and is therefore untainted, all the shar....
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....d 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 Power from the internal accruals of the company on the following dates: 1. 88,103 shares of Classic Realty on Sept 2006 2. 2,58,181 shares of Silicon Builders in March 2006(10,000shares), January 2008 (1,50,000) and January 2009 (98,181 shares) 3. 1,85,000 shares of BCCL in October 2006 c) Further, as value in relation to proceeds of crime are already attached in form of shares held by Mr. Y.S. Jagan Mohan Reddy, any monies in the hands of Sandur Power cannot be termed as proceeds of crime as it would amount to execution of double attachment, which is contrary to the scheme of the PML Act. d) Sandur Power has parted valuable shares worth Rs. 80.27 Crs for receiving an amount of Rs. 80.27 Crs. Therefore, it is the shares worth Rs. 80.27 Crs purchased by Mr. Y.S. Jagan Mohan Reddy that could be, at best, be categor....
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....rated 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 impugned PAO was passed, the amount of INR 152,84,61,315 allegedly represented 'proceeds of crime' to the extent of the purported pecuniary gain allegedly derived by the Appellant company from the extraction of 1,74,93,605 MT of limestone from the areas under the mining lease granted in its favour during the period from 2009-10 to 2015-16, for the limestone area of 2037.52 acres in Kadapa District (hereinafter referred to as 'Mining Lease'). The main reasons mentioned in the PAO are that by grant of the Mining Lease in favour of the Appellant, who has been benefitted to a great extent which is to the detriment of either the Government of Andhra Pradesh or of Gujarat Ambuja or both. 18. The main allegations in the charge-sheet as well as the provisional attachment orders are for allotment of mining lease granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that....
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..... 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 prospecting work, it applied for a renewal of the Prospecting License for a further period of 2 (two) years, i.e., from September 13, 2002 until September 12, 2004. (c) As no reply was received from the State authorities, there was deemed renewal of the Prospecting License for a further period of 2 (two) years, i.e., until September 12, 2004, in terms of the renewal application filed by Gujarat Ambuja. (d) There was no application filed for a further extension of the Prospecting Licence, either before or after September 12, 2004. Accordingly, the Prospecting License expired by efflux of time on September 12, 2004; (e) However, Gujarat Ambuja continued to carry out prospecting operations for another 1 (one) year, i.e. until October 31, 2005 when the State Government finally cancelled the Prospecting License after prior issuance of a show cause notice vide memo No. 16794 on September 21, 2005. (f) ....
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.... 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 allegations against the appellants, one thing is very clear that Gujarat Ambuja as per the mandatory provision of the Act, was not entitled for renewal of prospective mining lease after the expiry of five years. 25. Once the preferential right in favour of Gujarat Ambuja was ended, the Government (State) is not precluded to invite the filing of an application for grant of Mining Lease as per rules, nor was Government of Andhra Pradesh (hereinafter referred to as 'GoAP') was precluded from granting the same in its favour, but as per set procedure and due process. After the rejection of Gujarat Ambuja's Prospecting License on October 31, 2005, a Gazette Notification for re-grant of the prospecting license area under the applicable rules was published on November 21, 2005 by the competent authority. 26. It is also submitted on behalf of appellants that in terms of Rule 59 of the Mineral Concession Rules, 1960, an area which was previously held under a reconn....
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....ded 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 Notification dated November 21, 2005 was not issued for a mining lease, and second, the Appellant's application for mining lease pursuant to the same is evidence of a purported criminal conspiracy, are far-fetched, unfounded and without any basis in law. 29. It is submitted on behalf of appellants that the purported statement by Mr Jella Jagan Mohan Reddy, the director of the Appellant company, that a copy of the Mining Lease deed had to be submitted to financial institutions before March 31, 2006 and it was submitted without prejudice. As long as there is no illegality in the executing of the Mining Lease, the mere fact of it being executed expeditiously cannot form the basis to reach a conclusion of a conspiracy. It is denied by the appellant that the entire process was completed within a day. Rather, it was submitted that due process was followed and the said process had taken about one month. 30. It is also submitted that there is no illegality in grant of conditional mining lease in fa....
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....ortrayed 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 Revision Application filed by Gujarat Ambuja. (c) In case Gujarat Ambuja's Revision Application had succeeded, the G.O. Ms 95 or Mining Lease granted in favour of the Appellant would not come in the way. (d) In addition to the same being subject to the outcome of the Revision Application, the Appellant was, inter alia, required to obtain environmental clearances within 6 (six) months and set up a cement unit within a period of 3 (three) years. (e) That even during the pendency of a revision application filed by a party, the grant of a mining lease to another party is within the contemplation of the Mineral Concession Rules, 1960. (f) Sub-rule 2 of Rule 54 of the Mineral Concession Rules, 1960 clearly provides that in every application for revision under Sub-rule 1 filed against the order of a State Government refusing to grant a prospecting license, any person to whom a prospecting license/mining lease was granted in respect of the same area or for a part thereof, shall be impleaded as party. ....
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.... of its renewal application/ cancellation of Prospecting License was dismissed on merits vide final order dated September 8, 2006. It cannot be denied that despite the Gazette Notification being in the public domain and known to Gujarat Ambuja, it chose to apply for a stay under Rule 55(5) of the Mineral Concession Rules, 1960 only on February 21, 2006, almost 4 (four) months after rejection of its renewal application and 3 (three) months after the Gazette Notification was published. 35. It is also factual position that Gujarat Ambuja had also filed a second revision petition challenging the grant of Mining Lease in favour of the Appellant vide G.O. No. 95 dated March 27, 2006, however, the same was also dismissed as withdrawn without liberty to re-file a fresh application, which evidencing that Gujarat Ambuja, the Respondent' is trying to display the card Gujarat Ambuja who was not interested to file the application for approval, who itself had no case to make out against the said Mining Lease having been granted in favour of the Appellant. The said orders have since attained finality. The said party after withdrawal of the second Revision Petition and granting the mining lease ....
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.... In fact, by the allegations of the PAO itself, wherein it is detailing out the extent of lime stone extracted by the Appellant, it is evident that the said area indeed and indisputably contained sufficient reserves of minerals. 40. The PAO itself reveals that (a) the GoAP had recorded and accepted that the existence of mineral contents therein has been established; and (b) the post facto occurrences, i.e., the lime stone extracted by the Appellant from the area, evidence the correctness of the said recordal. 41. Under the provisions of Section 5(2) of the MMDR Act, a mining lease can be granted to a party who has not carried out the prospecting operations in the same area, however, it depends upon situation to situation. In the present case, it was observed in the PAO that the limestone was extracted by the appellant from the area. 42. It is submitted on behalf of the appellant that the impugned PAO has erred in holding that prior approval of the Minister (Mines and Geology) was not obtained for issuance of G.O. No. 95 dated March 27, 2006. As regards, it is submitted on behalf of the appellant the process for obtaining approvals for grant of mining lease in favor of the App....
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....tted by Gujarat Ambuja as confidential, had been requested or followed and as such, the Appellants were free to use all such information within the framework of the MMDR Act, and the Mineral Concession Rules, 1960.It is submitted that there is not even a single averment in either the charge sheet, the PAO or the impugned order that Gujarat Ambuja had marked their reports and information as confidential and as such, in terms of the said rule, the said reports and information could be used by any person, including the appellant herein. 47. It is matter of fact that Gujarat Ambuja had the opportunity to submit its application for grant of Mining Lease on the basis of information available with it after the area was notified in terms of the mentioned Gazette Notification, but the said party did not do so. In the absence of Gujarat Ambuja itself not having applied for grant of Mining Lease, there cannot possibly be a grievance against use of all available information even if the same was generated by Gujarat Ambuja. It is a matter of fact that Gujarat Ambuja has taken any action civil and criminal against the appellants for using the said information. It is also alleged on behalf of a....
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....ard: (a) Chairman & MD, BPL Ltd. v. S.P. Gururaja and Others, (2003) 8 SCC 567 [paragraphs 34 and 35] "34. Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be malafide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the Impugned allotment of land could not have been interfered with. What was only necessary to, be seen was as to whether there had been a fair play in action. 35. The question as to whether any undue haste has been shown in taking an administrative decision is essentially a question of fact. The States had devolved a policy of Single Window System with a view to get rid of red-tapism generally prevailing in the bureaucracy. A decision which has been taken after due deliberations and upon due application of mind cannot be held to be suffering from malice in law on the ground that there had been undue haste on the part of the State and the....
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....ollowing the established norms, procedure or the provisions of law in granting the Mining Lease to the Appellant. 55. It is admitted 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 122,77,05,799. 56. It is argued on behalf of the appellants that as a matter of fact the benefit has accrued to the Government on account of the mining activities of the Appellant on its own private land purchased from private parties, and without any support from the Government, in the form of acquisition proceedings or otherwise. 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, it is alleged that, 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 exchequ....
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....mission of the offences and acquisition of proceeds there from having occurred prior to the offences being notified in the Schedule of PMLA. The impugned order has referred the following decision- B. Rama Raju v. Union of India - Hon'ble Andhra Pradesh High Court in Writ Petition No. 10765, 10769 & 23166 of 2010 decided on March 4, 2011 (para 50 and 51) "50. On analysis of the provisions of Section 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudication and confiscation in Chapter-III. Attachment or confiscation of proceeds of crime in the possession of a person who is not accused or charged of an offence under Section 3 isthus not an incorporation for the first time by the provisions of the Second Amendment Act, 2009. The contention on behalf of the Petitioners that the second proviso to Section 5(1) of the Act, applies only to property acquired/possessed prior to enforcement of this provision or if interpreted as being retrospective, the provision itself must be invalidated for arbitrary retrospective operation is there....
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....amani and Anr., (2004) 8 SCC 579. "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes." iii) The Hon'ble High Court has clearly stated that analysis of the provisions of PMLA by it in the Rama Raju judgment, has been confined to the narrow set of facts and circumstances of the cases on hand i.e. the judgment will not be a judgment in rem, and will not have precedential value in the facts of the present case as mentioned in paragraphs 13 and 14.....
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....gy Limited Versus Union of India and Others (2012) 11 SCC at page 90 paras 153 & 154 held that: "153. Having carefully considered Section 17-A, I have no hesitation in holding that the said provision is prospective. There is no indication in Section 17-A or in terms of the amending Act that by insertion of Section 17-A Parliament intended to alter the pre-existing state of affairs. Parliament does not seem to have intended by bringing in Section 17-A to undo the reservation of any mining area made by the State Government earlier thereto for exploitation in public sector. Parliament has no doubt plenary power of legislation within the field assigned to it to legislate prospectively as well as retrospectively. As early as in 1951 this Court in Keshavan Madhava Menon v. State of Bombay [AIR 1951 SC 128 : (1951) 52 Cri LJ 860] had stated about a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. In Principles of St....
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....e them retrospective; and the retrospective operation will be limited only to the extent to which it has been so made by express words, or necessary implication. The second rule is that the intention of the legislature has always to be gathered from the words used by it, giving to the words their plain, normal, grammatical meaning. The third rule is that if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so that it is capable of two meanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it should be adopted. The fourth rule is that if the strict grammatical interpretation gives rise to an absurdity or inconsistency such interpretation should be discarded and an interpretation which will give effect to the purpose the Legislature may reasonably be considered to have had will be put on the words, if necessary even by modification of the language used." d) K. C. Arora and Another Versus State of Haryana, 1984 (3) SCC 281, para 15 [3 Judge Bench of SC], held that: "15. It may be pointed out at the very outset that the Parliament as also the State Legis....
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....words in the statute affecting the existing rights of unless there is clear manifestation of the intention of the Legislative on the basis of which it can be said that the law is retrospective in character, and even vested rights have been taken away or new liabilities have been created or new disabilities have been imposed. There are laws and law's and cases, the real question of application of the cardinal rule of construction which is propounded and considered above. It is also well established that there is a presumption against retrospectivity and this presumption can only be rebutted by express words in the Statute or by necessary intendment of the statute. It is also well established that only to what extent, retrospectivity may be considered of the provisions in the statute which necessary arises from the express words or from necessary intendment. Beyond that extent, retrospectivity should not be considered to have arisen. 67. In the recent judgement passed by the Division Bench of High Court of Judicature at Hyderabad for the state of Telangana and the State of Andhra Pradesh on 31.12.2018 in the case of 'Satyam Computer Services Limited vs. Directorate of Enforcement, ....
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.... A useful reference may be made in this regard to the judgements of the Supreme Court in STO v. Oriental Coal Corporation MANU/SC/0427/1988 : 1988 (Suppl) SCC 308 and in K.S. Paripoornan v. State of Kerala MANU/SC/0200/1995 : (1994) 5 SCC 593. In Oriental Coal Corporation the Supreme Court pointed out that where there is no hint of retrospectivity, in the statute itself, it is not possible to read retrospectivity. Similarly, in K.S. Paripoornan, the Supreme Court indicated the distinction between a statute dealing with substantive rights and a statute, which relates to procedure or evidence or is declaratory in nature. A statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect. On the contrary, a statute concerned mainly with matters of procedure, or evidence or which is declaratory in nature has to be construed as retrospective, unless there is clear indication to the contrary. 71. The PMLA is not a statute dealing merely with matters of procedure or evidence or which is declaratory in nature. It is a statute which affects substantive rights of parties. Therefore, by the test indicate....
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.... Reddy was appointed Director of BCCL, which is a company incorporated and is subject to regulations framed under the Companies Act, 1956. The allegation leveled against Mrs. Y.S. Bharathi Reddy that she is continuing to be a Director of BCCL, which shows the wrongful tacit relation between Mr. Y.S. Jagan Mohan Reddy and BCCL is without any substances as the appointment of Mrs. Y.S. Bharathi Reddy as a Director has been done in a legal manner and is in accordance with the provisions of the Companies Act. The appointment and the remunerations paid to Mrs. Y.S. Bharathi Reddy are in consonance with the relevant provisions and regulations of the Companies Act. 72. No allegations of any such appointment and remuneration paid to Mrs. Y.S. Bharathi Reddy being wrongful have therefore been raised either by the CBI in their investigation nor has been the subject matter of any issue in the enquiry/proceedings under the IT Act initiated by Income Tax Department, which have been substantially relied upon by the CBI and the respondents herein. 73. Income derived by a person working in a post can never be, therefore, termed as proceeds of crime. Mrs. Y.S. Bharathi Reddy has been serving the....
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....an 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. 1.5 Crs and Rs. 14 Crs received by Mrs. Y.S. Bharathi Reddy cannot be termed, much less be attached as proceeds of crime. 76. PML Act does not empower the respondents to attach the legitimate earnings made by Mrs. Y.S. Bharathi Reddy for rendering her services connected with legitimate activity of a company. Further, attachment of past earnings of an alleged proceeds of crime is beyond the power of the respondents under Section 5 of the PML Act. 77. Thus, the salaries amount received by Mrs. Y.S. Bharati Reddy and remuneration received by Jella Mohan Reddy are not proceed of crime. The appeal is accordingly allowed. 78. Thus, the appeal filed by her is allowed as it was not proceed of crime. The attachment order was wrongly passed. 79. With regard to remuneration received by Mr. Jella Jagan Mohan Reddy, the appeal filed by him is allowed by passing separate order. 80. The only premise of contending that the share application money paid by Sandur Power to Classic Realty be treated as ....
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.... Pvt. Ltd. 3. Marvel Infrastructure Pvt. Ltd. 4. Inspire Hotels Pvt. Ltd. b) Nivish Infrastructure: Classic Realty had purchased shares in Nivish Infrastructure against a consideration of Rs. 8.20 Crs from the monies it had received from Mr. Y.S. Jagan Mohan Reddy. As the monies realized by Mr. Y.S. Jagan Mohan Reddy are from a genuine business transaction, monies at the hands of Nivish Infrastructure cannot be termed or attached as proceeds of crime. c) Shalom Infrastructure: No allegations have been leveled against Shalom, other than a bare allegation that Shalom Infrastructure received Rs. 33 Crs from Silicon Builders (which are totally distinct and irrelevant to the instant complaint). ED has sought to attach properties worth more than Rs. 43.70 Crs without any justification and has claimed the same to be part proceeds of crime and part equivalent to the value of proceeds of crime without distinguishing the quantum of the same. d) Marvel Infrastructure: Classic Realty invested an amount of Rs. 30 Lakhs into Marvel Infrastructure. Disproportionally, respondents sought to attach Rs. 1.53 Crs as value equivalent to Proceeds of Crime. As the monies realized by Mr. Y.....
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....y, Silicon Builders was requested to issue the shares favouring Classic Realty. Accordingly, the shares were issued by Silicon Builders in favour of Classic Realty, which continues to be the share-holder in Silicon Builders. 86. It has come on record that Sandur Power is a successful profit making business entity engaged in the business of production and distribution of electricity. Sandur Power continues to have one of the best plant load factors (PLF) in Karnataka. In the course of its business and from internal accruals generated from the sale of power generated by it, Sandur Power inter alia had also acquired shares in various other companies. It is contended by the appellants that prior to 13.12.2006, Carmel Asia did not receive any monies from Mr. Nimmagadda Prasad or his group companies. Therefore, Rs. 5.5 Crs which was received by Silicon Builders from Sandur Power on 30.10.2006 and 2.11.2006 prior to December, 2006 cannot be termed as proceeds of crime. The respondent's case that the amounts received from Carmel Asia into Silicon Builders are from that of Mr. Nimmagadda Prasad's Group Companies is misconceived. Thus, the investment of Silicon Builders into BCCL is a genui....
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....generated from genuine business transactions. Therefore, investments received by Capstone Infrastructure from Classic Realty cannot be termed as proceeds of crime. Thus, the same is released by allowing the appeal. 90. With regard to M/s. Revan Infrastructure Pvt. Ltd. (Appeal No. 1584 of 2016): It is the case of the appellants that investments received by Revan Infrastructure from Classic Realty are share subscription amounts in lieu of allotment of 20,00,000 shares of Revan Infrastructure to Classic Realty. The said transaction is a genuine business transaction and therefore, investment of monies into Revan Infrastructure cannot be faulted with and be termed as 'proceeds of crime'. Investments received by Revan Infrastructure from Classic Realty are monies which were in turn invested into Classic Realty by Mr. Y.S. Jagan Mohan Reddy from the monies accrued after sale of his shares in BCCL to PARFICIM SAS, France. Since the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares in BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions. Therefore, investments received b....
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....ares acquired by Mr. Y.S. Jagan Mohan Reddy from Sandur Powerhave been separately attached. It is pertinent to note that there is no allegation that the said shares were overvalued for the purpose of acquisition by Mr. Y.S. Jagan Mohan Reddy from Sandur Power. Even if Mr. Y.S. Jagan Mohan Reddy is alleged to have generated Rs. 80.27 Crs of proceeds of crime (out of the total of Rs. 416.20 Crores derived from sale of shares of PARFICIM SAS, France), Mr.Y.S. Jagan Mohan Reddy has used Rs. 80.27 Crs to acquire valuable securities and shares for the said value of Rs. 80.27 Crs from Sandur Power. The said shares have already been attached separately. Therefore, once the value in relation to proceeds of crime in the hands of Mr. Y. S. Jagan Mohan Reddy (pertains to the investments made to Sandur Power) are attached, the money in the hands of Saraswati Power, on the pretext that it had received monies from Sandur Power, cannot be called as proceeds of crime as it would amount to execution of triple attachment and for twice the value which is contrary to the scheme of PML Act. The said act on the part of respondent is not permissible in law. The findings in this regard are set-aside. 94.....
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....ment of Capital Gains Tax, is only Rs. 332 Crs (Rs. 416.20 Crs - Rs. 84 Crs). The value of the crime proceeds allegedly in the hands of Mr. Y.S. Jagan Mohan Reddy are such monies which remain after factoring the monies paid towards tax, and to the extent of the amounts paid towards tax, there is reduction in the quantum of the proceeds of crime in the hands of Mr. Y.S. Jagan Mohan Reddy. Disregarding such payments and the effect of such payments on the quantified crime proceeds, by reasoning perverse in law, the respondents proceeded to attach the entire money of Rs. 416.20 Crs. against the law and can be permitted as the French Company is charge-sheeted. It is admitted that the amount by the said company was untained money. Even profit made from selling the shares cannot be treated as proceed of crime unless the original investment was a bribe amount. b) Income Tax paid by Mrs. Y.S. Bharathi Reddy: In respect of remunerations paid to Mrs. Y.S. Bharathi Reddy which can, by no stretch of imagination, be called as proceeds of crime, the respondents deliberately chose not to exclude the income tax paid thereon, amounting to Rs. Rs. 6.37 Crs for computing any net amount as 'Proceeds....
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....ns Ltd. and therefore, Rs. 20 Crs worth of shares in Jagati Publication held by Carmel Asia are already attached in VANPIC Attachment. The respondents again seek to attach shares of BCCL with face value of Rs. 15 Crs held by Silicon Builders on the contention that Silicon Builders received Rs. 15 Crs from Carmel Asia from the same Rs. 20 Crs that Beta Avenues has invested. 99. Undervaluation of immovable assets attached as equivalent to proceeds of crime. a) Even while ostensibly claiming to cause an attachment of various properties as 'value' in relation of proceeds of crime, respondents have resorted to an arbitrary and perverse undervaluation of assets to maximize the attachment effect and for crippling the appellants. b) Section 2 (1) (u) defines proceeds of crime as: "any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country". (Emphasis supplied) If any such property contended to be derived/ obtained from proceeds of crimes not c....
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....ds of Crime 6.79 13.50 3. Saraswati Power & Industries Pvt. Ltd 903-28 acre of land situated at Guntur District Equivalent to Proceeds of Crime 31.84 31.84 4. M/s Silicon Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14. (Building at Koramangala, Bangalore rented out to Amity College) Equivalent to Proceeds of Crime 6.54 13.88 5. M/s Shalom Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company's asset Sakshi Towers, Road No.1, Banjara Hills, Hyderabad) Part Equivalent to Proceeds of Crime and Part Proceeds of Crime 43.70 43.70 6. M/s Silicon Builders Pvt. Ltd. Tangible Fixed Assets of M/s Silicon Builders Private Limited as detailed in the audited balance sheet for 2013-14 (include Company's assets - Land & Building constructed at Sy No.195 Corporation No.34, PID No.99-1-34, 2nd Main Road, Sadashiva Nagar, Nagalore& 1 acre 30 guntas land at Sy No.13/2, Harohalli, Yelhanka, Bangalore, Karnataka) Equivalent to Proceeds of Crime 9.06 24.41 7. Smt YS Bharathi Reddy 2500.69 square yards of land in Sy No.79/P & 80/2 at Ra....
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....O.C. No. 276 of 2014 as being investments from Mr. Nimmagadda Prasad and group Companies. 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 arise from sale of shares worth Rs. 6.2 Crs out of the same Rs. 30 Crs. 15.00 Crs Equivalent value already attached in VANPIC Attachment i.e., O.C. No. 276 of 2014 as being investments from Mr. Nimmagadda Prasad and group Companies. Therefore, attachment of Silicon Builders' shares is unsustainable. The said s attachment is sought to be done on an entirely wrong factual premise of Nimmagadda Prasad's investment through Beta Avenues in Carmel Asia being used to fund Silicon Builders. The said amounts have been accepted by ED itself as monies used by Carmel Asia to acquire Jagati Publication shares and which shares are attached. 51.20 Crs Consequently, on the contentions on Rs. 15 Crs. above, the dividends received by Silicon Builders from the shares held by it in BCCL. Many issues already dealt with in order being passed separately in OC 276/2014 in favour of appellants. 103. By....
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....ch transaction has clearly passed the scrutiny of the Respondent itself and the Reserve Bank of India without any shadow of doubt. 106. There are no findings against the majority shareholder of the Appellant concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI. In fact, in the order dated August 19, 2014 passed by the Adjudication Authority in OC No. 276 of 2015, it is unequivocally stated at Page 89, para 23(1) that there is no illegality on the part of PARFICIM, France and it is an "innocent investor" who "is not found in any criminal activity". 107. No doubt, when the lease was granted, the interim order was operating in the Revision petition filed by Gujarat Ambuja. No doubt the said petition was later on dismissed as withdrawn. It is not correct to allege that the process was not completed within a day. When the lease was issued, the same was granted subject to the final outcome of revision which was ultimately dismissed as withdrawn and for allotment, no interest was shown by Gujarat Ambuja by filing of fresh application for grant of lease nor after grant of lease to BCCL, the sa....