AI OCR 
TaxTMI 
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2014 (10) TMI 1036
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....arat Energy India Limited and Sri P. Trivikrama Prasad, Director on Board of Nava Bharat Projects Limited and Nava Bharat Energy India Limited. 2. Nava Bharat Power Private Limited (NPPL) was promoted by Sri P. Trivikrama Prasad and Sri Y. Harichandra Prasad with equal shares. To achieve primary objective to generate power, the company entered into power purchase agreement with Power Trading Corporation (PTC) in January, 2006 and entered into memorandum of understanding with Government of Odisha. The Government of Odisha promised to provide 42 cusecs of water from river Brahmani. NPPL promised to supply 25% of the power generated to the State of Odisha. Mahanadi Coal Fields Limited issued letter of assurance for supply of 2.404 MTPA of F grade coal. NPPL signed power purchase agreement with GRIDCO, where under GRIDCO agreed to purchase 25% of the power generated by NPPL. 3. On 13.11.2006, advertisement was published on behalf of the Government of India, inviting companies to apply for allotment of coal blocks for captive utilization of power plants. On the same day, NPPL entered into memorandum of understanding with Globeleq Singapore Private Limited. On 23.11.2006, Odisha Govern....
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....heir net worth for allotment of coal blocks and soon after the allotment of coal blocks, they have sold their equity at high premium and such high premium is nothing but proceeds of crime, knowingly became party and are actually involved in possessing, projecting and claiming that as untainted property and hence guilty of offence of Money Laundering in terms of Section 3 of the Act, 2002. Enforcement Directorate had reason to believe that the accused are in possession of proceeds of crime amounting to Rs. 186.11 crores in the form of shares, wind mills and lands and these properties are involved in money laundering. Thus, in exercise of power vested in the Enforcement Directorate under Section 5(1) of Act, 2002, order of provisional attachment of assets mentioned therein is passed in proceedings No. ECIR/02/HYZO/2013, dated 22.07.2014. This order of provisional attachment is under challenge in this writ petition. 7. Heard learned senior counsel Sri D.V. Sitarama Murthy for petitioners and standing counsel Sri P.S.P. Suresh Kumar for Enforcement Directorate. 8. Learned senior counsel contended that the provisional attachment is ex facie illegal and in excess of jurisdiction vested....
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....s etc. As on 12.7.2010, no prospecting licence was issued and in normal course, even if all clearances are available, exploration of coal itself would start only after 5 to 8 years. The valuation given by ESSAR Private Limited is based on transfer and permissions given for the project undertaken by NPPL, but not for coal blocks which was not even granted any prospecting licence and there was no mining lease agreement executed as on the said date. 11. Learned senior counsel further contended that though the share capital of NPPL was Rs. 20 crores in the year 2008, but the potential value of the company was high because the company secured permissions and licences in due compliance of all statutory requirements. ESSAR Power Limited was looking for a readymade company to venture into power generation and was attracted to NPPL since the company has secured all required formalities which are time consuming and require lot of paper work. Learned senior counsel further contended that even after the sale to ESSAR Power Limited, there was no change in the end user insofar as coal blocks is concerned. 12. Learned senior counsel further contended that Nava Bharat group is well established g....
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....r counsel by relying on the decision in Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi and Ors., (1978) 1 SCC 405 contended the order must contain the reason in support of the decision and those reasons cannot be supplemented by way of an affidavit. For the proposition that alternative remedy is not a bar, he relied on the following decisions. i) State of H.P. and others v. Gujarat Ambuja Cement Ltd., & Anr. AIR 2005 SC 3936 ii) Calcutta Discount Co. Ltd., v. Income Tax Officer, Companies District I, Calcutta & Anr. AIR 1961 SC 372 iii) Gujarat Steel Tubes Ltd. & Ors. V. Gujarat Steel Tubes Mazdoor Sabha & Ors. (1980) 2 SCC 593 On the proposition of effect of orders of Supreme Court on court monitoring, he relied on the following decisions. i) Supreme Court order dated 17.12.2013 in W.P. (Criminal) No. 120 of 2012. ii) Jakia Nasim Ahesan and Anr. v. State of Gujarat and Ors. MANU/SC/1061/2011 iii. Contending that the order of the Supreme Court regarding monitoring of the cases is not Obiter Dicta, he relied on the decision of Arun Kumar Aggarwal v. State of Madhya Pradesh and Ors. MANU/SC/1011/2011 For t....
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....l blocks are monitored by the Supreme Court and even against the order of provisional attachment, the petitioners have to approach the Supreme Court and this Court cannot go into the issue of validity of order of provisional attachment under Section 5(1) at this stage. 18. The competent authority has conducted detailed investigation into the allegations of violation of the provisions of the Act, has examined the accused, recorded their statements, gone through the voluminous record and having found prima facie that the provisions of Section 3 of the Act are attracted decided to provisionally attach the shares to the value of alleged proceeds of crime. As mandated by Section 5(1), detailed exercise was conducted and having found that the petitioners are in possession of proceeds of crime and there is possibility of concealing the proceeds of crime/transferring/dealing with in any manner to frustrate the proceeding for confiscation the order is made. Enforcement Directorate cannot monitor the day to day functioning of the petitioners and does not have means to monitor sale of shares and other assets. Therefore, it is necessary to attach the shares to the extent of assessment of proc....
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....a Mohan Lakotia v. The Deputy Director, Enforcement Directorate, Mumbai. 2010 LawSuit(Bom) 1152 20. On various issues agitated in this writ petition, learned standing counsel extensively relied on the decision of Division Bench of this Court in B. Rama Raju and others v. Union of India, Ministry of Finance, Department of Revenue, rep. by its Secretary (Revenue) New Delhi and others. 2011(3) ALT 443 (D.B.) 21. I have given my anxious consideration to rival submissions. 22. Act, 2002 is brought out with principal object to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering. The object of this enactment is not only to punish the person who receives proceeds of crime after following due procedure, but the assets acquired by utilization of proceeds of crime should also be confiscated. 23. Section 3 of the Act, prescribes the offence of money laundering and Section 4 prescribes punishment for money laundering. To attract the provisions of Section 3, it is necessary that the person indulged in proceeds of crime, which means as defined in section 2(u), the property derived or obtained, directly or indirectly, by any person ....
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....porated into Section 5. Thus, before taking a decision to provisionally attach the property, the competent authority should have reason to believe and on the basis of material in his possession, that a person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating the proceedings and he must pass orders in writing for such provisional attachment. 28. The provisional attachment decision is a decision based on the understanding of the competent authority on the material available in his possession and it is a tentative decision. Such decision has to be affirmed by the Adjudicating Authority after following due process. Within thirty days from the date of provisional attachment the Enforcement Directorate has to file a complaint before the Adjudicating Authority stating the facts of such attachment. Such provisional attachment is valid only for a period of 180 days. 29. The decision of Enforcement Directorate under Section 5(1) is tentative and can become effective only after an order is passed by the adjudicating authority under Section 8. Provision in Section 5 cannot be se....
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....the adjudicating authority, it would perhaps be not the property in possession of a person but the fair value for which he has acquired the property and paid to the transferor that constitutes proceeds of crime and the authorities may have to proceed against the property or value in the hands of the transferor. .. .. 68. We consider Sections 5, 8(1), (2) and (3); 17; and 18 to comprise an intermeshing raft of provisions. The process of provisional attachment under Section 5; seizure under Section 17(1)(c) or 18(1) are, in the legislative scheme of the Act, intended to empower the appropriate authority to provisionally attach but without the consequence of dispossession from immovable property (under Section 5) or to seize a property (under Sections 17 or 18), on the basis of a unilateral satisfaction of the appropriate authority (if there is reason to believe; such belief to be recorded in writing), that such property constitutes proceeds of crime, in the possession, ownership or control of any person, whether or not accused of an offence under Section 3. 69. At the provisional attachment stage under Section 5(1) or a seizure under Section 17 or 18, ....
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.... not a bar to entertain a writ petition. Ordinarily the writ petition is not entertained under Article 226 if the aggrieved person has an efficacious and effective remedy provided by concerned statute where under an adverse decision is taken against the person, which he seeks to assail in the writ petition. Notwithstanding availability of alternative remedy in a case of exceptional nature or a case of glaring injustice writ Court can entertain a writ petition. Constitutional Courts have laid down parameters for exercising of such discretion. 35. In Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, (2014) 1 SCC 603 Supreme Court exhaustively reviewed the precedents on the subject. Supreme Court held as under: 11. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief....
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....inst any order passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 37. The petitioners have effective and efficacious statutory remedies to prove the nature of acquisition of assets and to ventilate their grievances. Furthermore, at the stage of provisional attachment the person concerned is not dispossessed of the property, but is only prevented from dealing with the property till orders are passed by the adjudicating authority under Section 8(2). Against order of the adjudicating authority under Section 8(2), appeal shall lie to the Appellate Tribunal under Section 26 and further appeal to the High Court under Section 42. The statute has provided enou....