TaxTMI 
TaxTMI 
2019 (8) TMI 781
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....ure in the jurisdiction of Navi Mumbai Municipal Corporation (NMMC) thereby had cheated NMMC for obtaining excess amount of Rs. 2,69,12,282/- from them. 2.2 It is disclosed that the Encroachment Department of NMMC had invited tender/bids to carryy out demolition work of unauthorized structures, transportation of laborers and machinery required for demolition purpose and the contract for the same was granted to M/s. H. B. Bhise & Company which was owned by Shri H. B. Bhise. Company submitted the bills to NMMC for the work done by them, but during the audit, it was transpired that M/s H.B. Bhise & Company had cheated NMMC by overcharging the bills, manipulating bills, tempering/ overwriting/inflating the bills after submissions. a) During the preliminary examination by the Deputy Commissioner (Encroachment), NMMC, it was mentioned that the challan after obtaining the signature of ward officer has been overwrite and the numbers of vehicles, labour and working hours has been increased. b) During the preliminary investigation, it was revealed that M/s H.B. Bhise and Co. after signing the challan of ward officer has increased the numbers of vehicles, labour, machiner....
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....f crime or not. This Tribunal does not wish to express any opinion on the basis of allegations made in the charge-sheet nor the allegations made in the prosecution complaint under Section 45 of PMLA. 7. About the appellant, he is engaged in the business of construction and supply of machinery and transport like JCB, dumper, labour and has also supplied the same to various parties including M/s H.B. Bhise & Co. It is the case of the appellant that the appellant provided the said services to M/s H.B. Bhise & Co. in 2001-2002 for various projects and in lieu thereof, the appellant received the payments in and around 2002-2003. It is not in dispute that M/s H.B. Bhise & Co. got the contract from NMMC for demolition of unauthorized structure and made a request to the appellant for providing the services of JCB, poplan, labour services etc. and in lieu thereof payments were made by M/s H.B. Bhise & Co. to the Appellant over a period of time. A copy of Agreement between the Appellant and M/s H.B. Bhise & Co. is already filed with the Appeal. 8. It is not denied by the respondent that M/s H.B. Bhise & Co. submitted bills to NMMC for the work carried out, but during the audit, it w....
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....d ordered to conduct preliminary audit for the period April' 2007 to Sept' 2007 and based on the same he was directed to file complaint in the subject case. b) The statement of Shri Hanumantrao Bhise, Proprietor of Contractor firm M/s H B Bhise & Company was recorded on 17.09.2014 and 14.03.2018 under the provisions of the Section 50 (2) and 50 (3) of the PMLA, 2002, wherein he inter-alia stated that he was Civil Contractor having PWD's registration which was valid till 2007; that civil work job was carried out under the name of his firm M/s. H. B. Bhise & Company; that Shri Manohar Krishna Madhavi was the Corporator of NMMC; that during 2002, he (Shri Manohar Krishna Madhavi) had called him in his office and informed him that, he (Shri Manohar Krishna Madhavi) was not entitled to take the contract of NMMC; that he (Shri Manohar Krishna Madhavi) would obtain civil contract of demolition of unauthorized structures carried out by Navi Mumbai Municipal Corporation using his (Shri H. B. Bhise) firm's contract license and carried out the allotted work in his own capacity; that the contract awarded to Shri Manohar Krishna Madhavi through his firm was directly obt....
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....y and the said cheques were collected personally from him either by Shri Ajay Mhatre or by Shri Manohar Madhavi. c) The statement of Shri Manohar Krishna Madhavi was recorded under Section 50 of PMLA, 2002 on 30.09.2014 and 26.09.2016 wherein he inter-alia stated that, since 1982, he was engaged in the business of construction, supply of construction related material, infrastructure etc. and was having firm's viz. M/s. M. K. Construction, M/s. M. K. Transport, M/s. Mukkabika Enterprises; that since last 15 years, he is a Corporator of Navi Mumbai Municipal Corporation; that Shri H. B. Bhise was a Government approved contractor and as such involved in business of Civil Work.; that he (Shri H.B. Bhise) was doing such work under the name and style as M/s. H. B. Bhise and Company; that he procures Municipal Corporation's various work through Tenders such as Civil work, Water Pipe Line Installation, encroachment etc.; that during the year 2000, when he was elected as Corporator of Navi Mumbai Municipal Corporation, he (Shri H. B. Bhise) was doing civil work in Airoli, Koparkhairane area, where he was Corporator of Navi Mumbai Municipal Corporation; that Shri Bhise was i....
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....LA, 2002 wherein he inter-alia stated that he was having the following Bank accounts in the name of his firms wherein he was the Proprietor: Name of the Company Name. of the Proprietor Account No. Name of the Bank and Branch M/s Aditya Transport Dhanaji Kashinath Mhatre 023/3057 Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Branch M/s Aditya Construction Dhanaji Kashinath Mhatre 023/3562 Gopinath. Patil Parsik Janta Sahakari Bank Ltd. Airoli Branch M/s D A Transport Dhanaji Kashinath Mhatre 1674 Mahanagar Co operative Bank Ltd, Airoli Branch. In the year 2006-07, his cousin brother Mr. Ajay J Mhatre, opened bank accounts in respect of the firms viz. M/s. Aditya Transport M/s. Aditya Construction and M/s. D A Transport mentioning that he was the Proprietor of those firm and for that purpose he (Shri Ajay Mhatre) had taken his PAN Card, Aadhar Card and Driving License and obtained his signature on the bank papers; that after opening of the bank account, the bank authorities issued him cheque book in respect of each account of his firm for withdrawal of the amount from the said accounts; that thereafter Shri Ajay J Mhatr....
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....umber CA 1196 of M/s M K Construction with the Mahanagar Co-operative Bank Limited. Therefore on being asked to explain the details of the credit transaction of Rs. 15,28,840/- dated 27.07.2006 reflected in the said account statement and utilization thereof, he stated that he was not recalling the name of the remitter from whom he received the amount of Rs. 15,28,840/- in the account no. CA 1196 of M/s M K Constructions with the Mahanagar Co operative Bank Limited. Further, on being asked about the source documents (invoice, loan agreement, rent agreement etc) with regard to the said transaction of Rs. 15,28,840/-, he stated that no source documents (invoice, loan agreement, rent agreement etc) were prepared. As regards to the utilization of the amount of Rs. 15,28,840/-, he stated that he had withdrawn the cash of Rs. 8,00,000/- in three tranches viz. Rs. 500000 on 02/08/2006, Rs. 100000 on 30.08.2006 and Rs. 200000 on 20/10/2006 from the said account and he was not recalling the name of the persons / firms to whom he had given the said money in cash and that no documents with regards to the said transaction were prepared by him. Further during recording of the statement, Sh....
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....ratik Corner Society, Sector-7, Airoli, Navi Mumbai 1000 sq. ft.(G+2 floor) 4. 2011 Flat No. 04, Ground Floor, Plot No. 18, Type AL-6, Panchwati Building No. 25, Near Omkareshwar Temple, Sector-5, Airoli, Navi Mumbai 67.48 sq. meters 5. 2003 Plot No. 35,Near Good Will Residency,Sector-19, Airoli, Navi Mumbai along with the construction erected thereon. 563.05 sq. meters 13. Extracts of documents collected and received during investigations under PMLA, 2002 : Sr. No. Documents submission details Description documents Scrutiny analysis 1. Document submitted by Shri Manohar Madhavi under his statement dated 30.09.2014 Copy of the agreement executed between M/s. M.K. Constructions and M/s. H.B. Bhise This is the agreement between the firms of Shri Manohar Madhavi and M/s. H.B. Bhise for the supply of documents. 2 Copy of NMMC. letter dated 16.02.2016 NMMC by letter dated 16.03.2016 submitted the financial year-wise break-up of the amount totalling to Rs. 2,69,12,292/- for which NMMC was cheated Confirmation by the NMMC authorities with regard to the amount i.e. proceeds of crime for which NMMC by cheated. 3 Documen....
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....ompany had cheated NMMC by overcharging the bill, manipulating bills, tempering/overwriting/inflating the bills to the tune of Rs. 2,69,12,200/-during the period from 27.02.2003 to 31.03.2009. (iii) In the charge-sheet filed by the police authorities it was alleged that Shri Manohar Krishna Madhavi, being elected Corporator, was not entitled to take the contract of NMMC and hence in order to avoid disqualification from being a Councilor as per the provision laid down under section 10 (1) (f) of the Bombay Provincial Municipal Corporation Act, 1949, he used Shri Hanumant Baurao Bhise's Contractor license to obtain the NMMC demolition contract and the amount of Rs. 2,69,12,200/- was obtained by way of criminal activities of fraud and cheating. It was also alleged in the charge-sheet that Shri Manohar Krishna Madhavi, Airoli Corporator of NMMC was the main beneficiary of the amount defrauded in the case. The NMMC authorities by letter dated 16.02.2016 forwarded the financial year- wise break-up of the amount of Rs. 2,69,12,292/- for which NMMC was cheated by M/s. H B Bhise & Company which is enclosed as Annexure-G. Therefore, the amount of Rs. 2,69,12,200/- has been generated o....
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..... 15,28,840/- Aditya Transport 27.07.2006 -Rs. 15,28,840/- 12. 13.06.2007 Rs. 14,02,688/- D A Transport 16.06.2007 Rs. 13,88,660/- 13. 02.11.2007 Rs. 35,78,602/- Aditya Construction 05.11.2007 Rs. 35,42,815/- 14. 03.04.2008 Rs. 30,37,432/- Aditya Construction 04.04.2008 Rs. 30,02,957/- 15. 17.05.2008 Rs. 47,63,191/- Aditya Construction 22/05/2008 Rs. 47,09,224/- 16. 03.07.2008 Rs. 21,65,340/- Aditya Construction 07.07.2008 Rs. 21,40,871/- 17. 03.09.2008 Rs. 36,25,969/- Aditya Construction 05.09.2008 Rs. 35,84,886/- 18. 04.04.2009 Rs. 30,51,974/- Aditya Construction 08.04.2009 Rs. 30,17,395/- Total Rs. 4,81,78,959/- Total Rs. 4,77,91,389/- From the above, it was seen that on receipt of payment from NMMC, every time almost full amount was transferred to bank account of business entities of Shri Manohar Krishna Madhavi on the same day or within 2-3 days leaving negligible amount in the account of M/s. H.B. Bhise & Company. (v) The bank statement of M/s. M. K. Constructions, M/s. M. K. Transport, M/s. Aditya Constru....
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....ement recorded under Section 50 of the PMLA, 2002. Sr. No. Name of the Firm Name of the Proprietor Shri 1 M. K. Construction Manohar Madhavi 2 M. K. Transport Manohar Madhavi 3 Aditya Construction Dhanaji Mhatre 4 Aditya Transport Dhanaji Mhatre 5 D A Transport Dhanatf Mhatre (viii) Further, Shri Ajay Mahtre had claimed that he was the proprietor of M/s. M.K. Construction having bank account CA 1196 of M/s. M.K. Construction with the Mahanagar Co-operative Bank Limited. The scrutiny of the account opening form in respect of the said M/s. M. K. Construction (enclosed with the bank statement as Exhibit-XX) had revealed that the name of the account holder of M/s. M. K.. Construction had mentioned as Shri Ajay Mhatre but the signature on behalf of M/s. M. K. Construction on the declaration form attached to the account opening form of the saidaccount appears to that of Shri Manohar Madhavi. Further the claim of the Shri Ajay Mhatre that he was the Proprietor of M/s. M K Construction was found to be incorrect in view of the following grounds: (a) Shri Ajay Mhatre had filed his Income Tax Return as the income from the salar....
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....h was opened based on the introduction by Shri Ajay Mhatre account holder of M/s. M K Construction holder of Current Account No. 1196, with Mahanagar Co-operative Bank Ltd, Airoli Branch. As discussed in the preceding para that the ultimate beneficial owner of the transactions in the Current Account No. 1196 of M/s. M K Construction with Mahanagar Cooperative Bank Ltd, Airoli Branch was Shri Manohar Madhavi. Therefore, it can be inferred that the bank Accounts of M/s Aditya Construction, Aditya Transport and M/s D A Transport Accounts were used by Shri Manohar Krishna Madhavi through Shri Ajay Mhatre to conceal the trail of the misappropriated funds (POC) towards Shri Manohar Krishna Madhavi. Therefore, Shri Manohar Madhavi is the ultimate beneficial owner of the transactions in respect of the firms of Shri Dhanaji Mhatre viz. M/s. Aditya Construction, M/s. Aditya Transport and M/s. D A Transport. (x) Further the Hon'ble Bombay High Court by order dated 03.08.2009 rejected the Anticipatory Bail Application 3159 of 2009 filed by Shri Manohar - Madhavi. It was seen from the order dated 03.08.2009 of the Hon'ble Bombay High Court in respect of the Anticipatory Bail Applicati....
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....statement of M/s. M. K. Construction bearing number 023/2549 with Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch, had revealed that out of Rs. 1,25,34,994/- received from M/s. H B Bhise & Company, an amount of Rs. 65,97,000/- was withdrawn in cash under the head 'SELF' by the account holder i.e. Shri Manohar Krishna Madhavi. 15.5 The analysis of the account statement o fM/s. M. K. Transport bearing number CA/018110100000985 with Punjab and Maharashtra Co-operative Bank Ltd. Airoli Branch, had revealed that out of Rs. 66,58,920/- received from M/s. H B Bhise & Company, an amount of Rs. 27,00,000/- was withdrawn in cash under the head 'SELF' by the account holder i.e. Shri Manohar Krishna Madhavi. 15.6 The analysis of the account statement of M/s. Aditya Construction bearing number CA/3562 with Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch, had revealed that out of an amount of Rs. 1,99,98,148/- received from M/s H B Bhise and Company, an amount of Rs. 1,29,97,800/- was withdrawn in cash under the head 'SELF' by M/s. Aditya Construction. 15.7 The analysis of the account statement of M/s. Aditya Transport bearing number ....
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.... cannot be held answerable for the act of M/s Bhise & Co., a primary contractor of NMMC. In this regard, reliance is placed on the following judgement: (i) Ircon International Ltd. v. Vinay Heavy Equipments, (2015) 13 SCC 680 wherein the following observations have been made by the Apex Court: "9. Insofar as the question of primary liability therein is concerned, the law on subcontracts and employer liability is amply clear. In the absence of covenant in the main contract to the contrary, the rules in relation to privity of contract will mean that the jural relationship between the employer and the main contractor on the one hand and between the sub-contractor and the main contractor on the other will be quite distinct and separate.".........That subletting was provided for by the main contract, and indeed occurred, has been found by the Arbitrator (in both Arbitrations) and affirmed by the Courts below. This however, is quite distinct from concluding that SIPCOT contractually (in the main agreement) assumed primary liability for the Subcontractor-Respondent's payment claims in respect of agreements made with the Appellant." (ii) In Essar oil limited ....
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....bour and materials etc. for the said project. 20. On 10.03.2003, almost two week later, an Agreement between H.B. Bhise & Co., a proprietary firm of Mr. H.B. Bhise and M/s. M.K. Construction, a proprietary firm of Mr. M.K. Madhavi was executed to provide the aforesaid services. Para 3(vi) of the said Agreement is reproduced as under:- "3. The proprietors of the First Party and Second Party are known to each other since last many years. The First Party even though is involved in above said business, due to lack of funds, is not in a position to own its own vehicles, required for performing the terms of various contracts pertaining to civil work. In the same way, First Party requires from time to time various civil material. The terms of Government contract are usually that unless the contract is completed, or stipulated work is done, the Bills are not raised. However, for completion of such work and that too within the stipulated period many a times, a huge amount is required to be invested for purchasing of materials and/or for arranging various such vehicles for execution of contract work. Due to lack of funds, many a times it becomes difficult for the First Party to a....
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....ed under section 50 of PMLA. 22. On 23.06.2014, while disposing of the bail application of the ^ ^< Appellant, the learned Judicial Magistrate First Class, Vashi, inter alia, observed that- "...neither in the FIR nor in the statements of witnesses u/s Section 161. It is alleged that the forged bills were submitted by the applicant. Moreover, from the Notorized Agreement dated 10/03/2003 it is seen that the accused H.B. Bhise had entered into contract with the applicant M.K. Madhavi who used to supply JCB's, Dumpers etc. to the accused Bhise. That the agreement was executed way back in 2003, which is even prior to the period of the offence i.e. Financial Year 2007- 2008. So prima-facie it appears that the Notorized Agreement that the accused Bhise had entered into contract with applicant Madhavi. 23. The payments for the services provided to M/s Bhise & Co. pertain to the period 06.02.2004 to 08.04.2006. The provisions of Prevention of Money-Laundering Act, 2002 (PMLA) came into force only w.e.f. 01.07.2005. The offences u/s 420 & 120B IPC have been inserted as scheduled offences w.e.f. 01.06.2009 and, therefore, the same cannot be given retrospective eff....
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....mpany. Q 7 Whether the demolition contract allotted to M/s. H.B. Bhise & Co. was actually carried out by Manohar K. Madhavi? A:- No, I have no such idea, on being further asked, it is to state that, as per the NMMC's rule/criteria no such contract allotted to any sub-contractor. Q 8 Whether the Prop. Mr. Bhise of M/s. H.B. Bhise & Co has submitted the Bills/Challan to NMMC? A:- As per the official procedure Contractor has to submit the bills to the Enforcement Deptt. Q9 Whether NMMC has filed any complaint/FIR against M.K Madhavi or his firm/company for inflated demolition bill? A:- No, NMMC has not filed any complaint against M.K. Madhavi for inflation of demolition bills, as NMMC has not allotted any contract, to M.K Madhavi or his firm and company? In above statement, the Complainant deposed that NMMC has not allotted any demolition work contract to the Appellant or his firms but only to M/s H.B. Bhise & Co. alone. It is further clarified that NMMC has not even filed any complaint against the Appellant for inflation of demolition bills. 26. Role of the accused person as per respondent in the offence of money launder....
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....Manohar Madhavi). Also in order to conceal the tainted origin of the POC, Shri Ajay Mhatre had knowingly assisted Shri Manohar Madhavi by: (i) opening the bank accounts in the name of the firms viz. M/s. Aditya Construction, M/s. Aditya Transport and M/s. D. A. Transport specifying that those firms were proprietorship of his brother Shri Dhanaji Mhatre said firms; (ii) obtaining the Power of Attorney from his brother Shri Dhanaji Mhatre to operate the firms including its bank accounts and withdrew the POC in cash from the bank accounts of the above mentioned firms projected as untainted. 28. Therefore, this act of Shri Ajay Mhatre Madhavi is involved in assisting Shri Manohar Madhavi in respect of the concealment, possession, acquisition related to proceeds of crime and projected the same as untainted property, thereby had committed the offence of money laundering as defined under Section 3 of the PMLA, 2002, which is punishable under Section 4 of the PMLA, 2002. 29. In the statement dated 16.02.2015, Suresh Ramu Patil, Deputy Commissioner, Navi Mumbai Municipal Corporation (NMMC), it was stated that NMMC has not allotted any demolition work contract to the Appellant or....
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.... in view of non-action by the ED against M/s. H.B. Bhise and Company. 32. In the present case is that the specific complaint of NMMC is against M/s. H.B. Bhise and Company, who had submitted the forged bill. The appellant firm has received the amount from H.B. Bhise and Company who has allegedly committed the fraud and other schedule offence, however, no action was taken by the ED against the said company. The ED has not attached the property of M/s. H.B. Bhise and Company, nor any prosecution complaint has been filed. When this situation is confronted to the learned counsel and IO appearing on behalf of respondent, there was very vague answer. Firstly, it was admitted that no action under PMLA was taken against him. Secondly, it was mentioned that he may become approver. One is failed to understand that as per complaint, the FIR was registered and thereafter, on the basis of averment made in the complaint of NMMC, the charge sheet was filed against him also, how he can become approver as per allegation made against him. Only ED is aware why no action was taken if any case is made out on the basis of complaint and charge-sheet. 33. As far as the role of appellant is concerned....