TaxTMI 
TaxTMI 
2019 (8) TMI 131
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.... are that in 2010, Japan International Cooperation Agency (JICA) Project Goa was taken up under the Overseas Development Assistance loan from Govt. of Japan, whereby the Japan Bank of International Co-operation had given a loan of Japanese Yen 22,806,000,000/- and a tripartite agreement was signed by Japan, Central Govt. and State Govt. of Goa. M/s. Louis Berger International Inc. ("Louis Berger") was a part of a consortium consisting of a total of 4 firms. 3. On 21.07.2015, the Under Secretary (Home), Govt. of Goa filed a complaint bearing no. 27/14/2015-HD(G) before the Director General of Police, Goa alleging there that "one foreign company namely M/s. Berger International Inc. had allegedly paid an amount of US$ 9,76,000/- to some ministers in the Govt. of Goa in the year 2010..." 4. It was also alleged in the complaint that some ministers in Goa, conspired with Louis Berger to assist them in obtaining a consultancy contract for JICA and accepted a bribe of the said amount. 5. Based on the aforesaid complaint, FIR bearing no. 93/2015 dated 21.07.2015 for violation of Section 120B IPC and Section 7, 8, 9 and 13 of the PCA, 1988 against some ministers and Louis Berger wa....
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....t plot no. 29 known as 'Copengale' situated at Gogol, Survey under Chalta No. 3 of PT Sheet no. 57 of city survey Margoa having an area of 4047 square feet. Shri Digamber Kamat in his election affidavit dated 09.02.2012 declared the market value of the said plot at Rs. 22.95 lakhs. He has a residential building having 3046 square feet of area and 517 square feet of terrace at survey no. 235/1 of Taleigao Village. The said property was acquired in February 2009 and cost of the property at the time of puchases was Rs. 55.60 lakhs, Sh. Digamber Kamat is having 2 fixed deposit nos. 253100MB00004530 and 2531ooMB00004521 with Punjab National Bank, Margao branch amounting to Rs. 20.69 lacs. In addition, having 3 fixed deposits bearing nos. 253100MB00004460, 223MB00004451 and 2531MB00004479 jointly with his wife SMt. Asha Digamber Kamat with Punjab National Bank Margoa amount to Rs. 20.65 lakhs. Shri Digamber Kamat is in possession of proceeds of crime to the tune of Rs. 1.20 Crores. In terms of Section 2(1)(u) of PMLA, 2002 the aforesaid two immovable properties together valued at 78.55 lakhs and the Fixed Deposits of Rs. 41.35 lakhs constitute equivalent value of the proceeds of crime" [....
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....Berger, India and from the said money (illgotten money), the Appellants had purchased 4 flats each. Accordingly, the Respondent No. 1 attached the 4 flats each of the Appellants. The above 8 flats are situated in Village Varca, Salcette, Goa. 17. The Respondent thereafter filed a complaint u/s 5 (5) before the Adjudicating Authority against the Churchill and family members. The main case of the Respondent in his complaint dated 27.04.2017, against the Appellants is referred in sub-para 37, 48, 53, and 54 of para 6 of the Complaint. The sub-para 37 deals with income of the Appellant No.1 in the Assessment Years of 2009-10, 2010-11, 2011-12 as per the Income-tax Return of the Appellant No.1. The sub-para 48 deals with the statement of the witnesses recorded u/s 50 of the PML Act. The sub-para 53 and 54 deals with 4 flats each acquired by Appellants valued at Rs. 41 lakh and Rs. 34 Lakh respectively The Respondent No.1 has also referred the Sale Deed dated 1.3.2006 and Transfer Deed dated 13.11.2009. 18. The detais of the attached properties mentioned in para-2 of the impugned order,the same are reproduced hereunder:- Details of property provisionally attached: S.No. De....
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....name and style 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa in the name of Mrs. Maria Fatima Alemao 11.50 lakhs 14. Flat no. 201, Ground Floor, Building no. 2 under the name and style 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa in the name of Mrs. Maria Fatima Alemao 11.50 lakhs 15. Flat no. 607, 3rd Floor, Building no. 6 under the name and style 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa in the name of Mrs. Maria Fatima Alemao To the extent of Rs. 2 Lakhs. Total 194.9 Lakhs 19. The impugned common order dated 10.8.2017 passed by the Adjudicating Authority was challenged by both set of appellants in appeal nos. 1975, 1976/2017 on various grounds by alleging that the properties attached are not proceeds of crime or value thereof which are involved in money laundering, thus, question of attachment does not arise. 20. Properties no. 1 to 7 were attached of the appellants who have filed the appeal no.1976/2017. The property nos. 8 to 15 were attached of the appellants in appeal no. 1975/2017. 21. Admittedly, in the impugned order dated 10.8.20....
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....rores. The operations Louis Berger were headed by Mr. James McClung. The main allegation against Digamber Kamat is that he had accepted bribe of Rs. 1.20 crores in connivance with the then PWD Minister of Goa, Shri Churchill Alemao. The appellant in their reply filed on 29.06.2017 before the Adjudicating Authority denying that the said properties were acquired from proceeds of crime. The appellant specifically averred that no property was purchased nor any FDR was acquired by the appellants after 2010. A chart detailing how and when the properties and FDR's were acquired was also filed in order to prove the same. A rejoinder was filed on 21.07.2017 by the ED before the Adjudicating Authority wherein it did not deny that the said properties were acquired prior to the alleged commission of crime. 24. The case of Churchill Alemao and another in its reply before the Adjudicating Authority was - a) The case of the Appellants as per the notice issued was filed before the Respondent No. 2 in the written Reply. The Appellants submitted that the flats which had been provisionally attached had been obtained in 2007 by the Appellants, where as the alleged scheduled offence has ....
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....r obtaining a loan from Japan Bank of International Cooperation by the Government of India for implementation of water supply and sewerage project in the state of Goa. He stated that the project implementation unit called for the bids for appointment of project consultants for the JICA project with the prior approval of JICA; that after holding a meeting of preproposal conference on 21.11.2008 under the chairmanship of project director in which 5 bidders participated; that after the approval of JICA the bid evaluation committee headed by project director PWD Government of Goa opened the bids received, evaluated the bids and with approval of JICA selected the highest ranked bid of a consortium headed by Nihon Suido Consultants Co. Ltd; that he had no role in the entire process of calling the bids, opening the bids, negotiation of bids and selection of bidders; that he had never met Shri Sanjay or Shri Malladi Shivrama Prasad and that he had never received Rs. 1.2 crore from Louis Berger's officials relating to Goa Project." "31. Shri Digambar Kamat, the then Chief Minister of Goa vide letter dated 07.10.2015 submitted copies of bank account statements for the period 2008-09....
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....i with the help of a Hawala Dealer. Thereafter, the inappropriate payments to Sh. Digamber Kamat and Sh. Churchill Alemao were made in cash. Graphic representation in respect of the money trail is given on page [xxvi] of OC." 30. In the present appeals, from the pleadings of respondent and from the impugned order, it is admitted that there was no direct role to select the consultants, however, in the impugned order, it was observed that it cannot be denied that the appellants may influence and could be exerted with Project Director or Executing Agency. 31. Let me first deal with the case of Churchill Alemao and other appellant who are appellants in appeal no. 1975/2017 whereby eight flats were attached. It is to be examined as to whether the said flats were acquired from the alleged proceed of crime or not. If the answer is 'no', then whether those can be attached under section 5(1) read with section 2(1)(U) of the Act without the reason to believe. 32. It has come on record that a company named "Getmore" was incorporated and the said land was sold to Getmore on 1.3.2006. Thereafter 50% shares were transferred to developers, named Handa's for development of the property on....
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....ir son for reimbursement of the improvement charges of the land and 11 fully furnished flats were given in kind to the Appellants and their son. It was further stipulated that the Appellants and their son were not liable to pay any amount for the said eleven flats. A copy of the said Settlement Agreement is filed as Annexure- I. e. Share-purchase Agreement dated 11.9.2007- this agreement was executed between the Appellants and their son as the Vendors and the Ashwin Kumar Handa, Madhu Handa and Nitin Handa as the Purchasers. All the shares of Getmore were purchased by the Handas, and a total consideration of Rs. 75 lakh was paid to the Appellants and their son. A copy of this deed is filed as Annexure-J. f. Transfer Deed dated 13.11.2009 - This deed was executed between the Appellants and their son on the one side and Get more, represented by Handa on the other side for the final transfer of the possession of the 11 flats. 4 flats were transferred to each of the Appellants, whereas 3 flats were transferred to their son. A copy of this deed is filed as Annexure-K (Colly). 35. In view of above-said titles and documents on record, it is apparent that the above-ref....
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.... Lacs as stated was also placed before the respondent No.1 by showing the Income-tax Return of the year 2007-08 wherein it was shown that 50 Lac was received from selling of 50% shares of Getmore and Rs. 1.10 crore was shown as the value of the 11 flats as a consideration receivable in kind towards the sale of the land under the head "Assets". In the Assessment Year 2010-11, there was a Capital Gain of the 11 flats, which is also reflected in the Income Tax Return of 2010- 11. 39. The Show Cause Notice under section 8(1) was issued on 2.5.2017 and direction was given to file the reply to the Show Cause Notice. The same was filed. The appellants have denied all allegations having received any bribe. The reasons for issuing the Provisional attachment order as stated in the complaint is : "The provisionally attached properties are proceed of crime in terms of s. 2 (1) (u) of PMLA. There is every reason to believe that attachment of proceed of crime were necessary as there existed a real possibility of transfer of the assets obtained using the proceeds of the crime by the beneficiaries of the proceed of the crime........." (para 7(i)) 40. When notice was issued under ....
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....of Goa, Mr. Anand Wachasunder had signed the agreement. Further, this loan agreement dated 14.9.2007 was after the property (8 flats) was already transferred to the Appellants on 11.9.2007. 44. It has come on record and material available that the properties of the appellants which were attached in appeal no. 1975/2017, were acquired prior to the alleged commission of the Scheduled Offences, therefore, those cannot qualify as 'proceeds of crime' under Section 2(u) of the PMLA, 2002. 45. When it was pointed out to the learned counsel appearing on behalf of respondent and asked him to produce the copy of reason to believe before passing the order of attachment, the counsel for respondent submitted that the same were not recorded separately or before passing the provisional attachment order. It is stated by him that Reason to believe is incorporated in the provisional attachment order itself. 46. According to him that there is no requirement to record the reason to believe at the stage of Section 5(1) of the Act separately or prior to the passing of the attachment order. The Adjudicating Authority, after examining the materials, attached the flats "equivalent value of the pro....
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....der this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act: [Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted] (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the 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 sub-section (3) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the "person interested," in ....
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....t for confirmation of attachment. 51. It is also a settled law that the authority cannot travel beyond the statutory provisions. In the present case, admittedly, officer concerned has not recorded the reason to believe separately prior to passing of attachment. There are twin conditions in Section 5(1) is the sine qua non or the condition precedent for the assumption or acquisition of the jurisdiction to pass the attachment order. 52. The law is a settled law that where a power is given to do a certain thing in a certain way, the thing must be done in that way, or not at all and other methods of performance are necessarily forbidden. This rule was adopted in Taylor v. Taylor in the 19th Century and the Hon'ble Apex Court has approved and applied this principle in several decisions. 53. Reason to believe The guidelines of recording the reason to believe have been laid down in various judgements of Apex Court and High Courts. It is held time and again by the said Hon'ble Courts directing that the approach should be not the subjective satisfaction of the officer concerned. Such power given to the officer concerned is not an arbitrary power and has to be exercised in accord....
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....mmovable property to be served on the transferor". It is, therefore, inconceivable that the order which is required to be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. Reasons for the order must be communicated to the affected party." 56. The above referred to decision has been followed in many subsequent judgments by various High Courts as well the Hon'ble Supreme Court of India. 57. Few decisions referred on behalf of appellants are:- i) 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 ....
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.... the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". ii) In Income Tax Officer v. LakhmaniMewaldas 1976 (3) SCR 956, the Supreme Court held that there should be a live link or close nexus‖ between the material before the ITO and the formation of his belief that income had escaped assessment. More recently, in Aslam Mohd Merchant v. Competent Authority (2008) 14 SCC 186, the entire legal position has been explained elaborately by the Supreme Court as under: 28. It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperati....
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....e has sufficient cause to believe the same. Section 26 IPC explains the meaning of the words 'reason to believe' thus: 26. Reason to believe - A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing and not otherwise." iv) In paras 74 to 77, the Double Bench of Hon'ble High Court of Delhi in its judgement J. Sekar v. Union of India and Ors. 2018 SCC Online Del 6523, has held that: 74. The Court, therefore, holds as under as regards the submissions of the learned counsel for the Petitioners with regard to the constitutionality of the second proviso to Section 5(1) PMLA: (i) Although the second proviso to Section 5(1) states that the property has to be 'involved in money-laundering' and section 5(1) states that mere possession of proceeds of crime is sufficient, the Court does not see any conflict in these expressions. When the definition in Section 3 PMLA is read with Section 2(1)(v) and the Explanation thereto, it becomes clear that the property which constitutes 'proceeds of crime' is the property involved in money-laundering. (ii) The reasons to believe at every stage must be noted down by....
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.... can probably be redacted before issuing copies thereof, after nothing the reasons for such redaction in writing in the file. But even such redacted material will have to be nevertheless shown to the noticee. 58. Though the operation of the aforesaid judgment has been stayed by the Hon'ble Supreme Court, the above dicta cannot cease to be law of precedential value and binding in other matters i.e. third parties, in view of settled law. One of such decision reported as vide Shree Chamundi Mopeds Ltd. v. Church of South India Trust Assn., (1992) 3 SCC 1 (para 10). A division bench of the Hon'ble Calcutta High Court in Niranjan Chatterjee v. State of West Bengal &Ors., 2007 SCC OnLine Cal 283 after relying on the aforesaid decision has held that: "17. After hearing the learned Counsel for the parties and after going through the aforesaid position of fact, we find that the Supreme Court by those interim order has, no doubt, stayed the operation of the order of the Division Bench of this Court by directing the parties to maintain status quo but at the same time, has even restrained the State from inducting the third parties on the lands which were the subject matters befo....
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....possession of proceeds of crime, it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of Section 5, or, seized or frozen under Section 17 or Section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this beh....
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....t. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of Section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offences of money laundering after having regard to the material before it. (8) 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, ....
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....grieved party, so that the aggrieved party may defend himself after going through the same. 66. The Respondent in the above-said appeal no. 1975/2017 served the notice u/s 8(1) PMLA to the Churchill Alemeo asking him to show cause as to the source of the income of the attached 8 flats. The same was duly explained and demonstrated by the Appellants before the Respondent No. 1. 67. The Adjudicating Authority did not follow the mandate of Section 8(2) (c) and the finding was given only in 7 lines. In the case of Churchill Alemao, when the Adjudicating Authority issued the notice u/s 8(1) to show cause, it was ordered to him about the source of income or earning of the attached 8 flats and as per this principle, the Appellant is required to explain the acquisition of the 8 flats which he has explained elaborately and succinctly, supported with registered documents, though it was the admitted position that the said flats were not acquired from proceed of crime. 68. The Hon'ble Supreme Court in the case of 'P.P. Abdulla v. Competent Authority', (2007) 2 SCC 510, while considering an order of confiscation under the SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPER....
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.... level playing field is a concept of fairness. Transparency in decision making is not merely essential, but it is also important for sustaining the litigants' faith in the justice delivery system and quasi-judicial. Thus, justice must not only be done, it must also appear to be done. 72. In the case of BRIZO REALITY CO. vs. ADITYA BIRLA FINANCE passed on 20.6.2014 by the High Court in WP(L) no. 1575/2014, which is being referred by the respondent in order to give reply. The said decision is on different facts as the petitioner filed the writ petition to quash the provisional attachment order dated 31.1.2014 after issuance of show cause notice issued dated 29.4.2014 by the Adjudicating Authority. The Hon'ble High Court after discussing Section 8(1) of the PMLA,2002 rejected the writ petition mainly on the reason that the Adjudicating Authority along with the notice has sent the copy of complaint and copy of provisional attachment order who has yet to consider the material placed on record and after hearing of both parties, it is to be decided as to whether the provisional attachment is to be confirmed or not. Therefore, merely on the basis of averments that the notice u/s 8(1) do....
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....e latter place having been qualified by use of the word "such", are situated in close proximity." [Emphasis supplied] 75. In the Impugned Order, it was held that "or the value of any such property" can be invoked in the facts of the instant case and holds in para 42 of the Impugned Order that: ".....if the accused is successful in concealing the original property, he cannot be given benefit any other property on which authorities can lay their hands on can be attached." 76. As per provision, the purpose of attachment of property when it is held within the country and where property is taken or held outside the country. Where the property is taken or held outside the country," property equivalent in value" can be attached. However, where the property is held within the country , then only the 'value of any such property' can only be attached after proper investigation and report that the proceed of crime amount has been vanished, spent, destroyed by the accused intentionally or otherwise and the officer concerned is unable to recover the same despite of best efforts. The said investigation report must be in writing or the proceed of crime amount if transferred to third part....