TaxTMI 
TaxTMI 
2022 (12) TMI 1198
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....nst M/s Karvy Stock Broking Limited (for short, 'KSBL') to which C.Pardhasarathy, is the Chairman, 3^rd petitioner herein and its Directors and FIR No.86 of 2021 against M/s Karvy Comtrade Limited and its Directors for the offence under Section 420 of IPC. The allegations leveled against them are that they have not repaid loans which are classified as fraud accounts. The Investigation under the provisions of the Act was initiated vide File No. ECIR/ HYZO/14/2021, dated 19.05.2021 by 2^nd respondent. Several other FIRs registered in respect of the case were also taken on record. The said C.Parthasarathy, was in judicial custody from 19.08.2021 to 25.06.2022 in various crimes at Chanchalguda Central Jail, Hyderabad. 4. According to 2nd respondent, their investigation would reveal that the loans outstanding in books of KSBL as on 31.03.2020 are Rs.1705.23 Crores. These loans were fraudulently obtained by KSBL from banks/Financial Institutions by declaring clients' shares as its own shares. Moreover, KSBL, transferred shares of fully paid up clients/clients who did not owe any funds to the company illegally and pledged with the banks/Financial Institutions. It involved the blatant m....
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....lling upon them to indicate the source of income, earning or assets out of they have acquired the properties attached under PAO No.15 of 2022 and why the said attachment should not be confirmed. The petitioners herein, through their counsel vide e-mail dated 29.10.2022 to 1st respondent sought adjournment for a period of four (4) weeks, to file an effective reply to the show cause notice. 1st respondent vide its e-mail dated 31.10.2022, granted additional two weeks time till 14.11.2022 to file reply. On 08.11.2022, the petitioners herein filed a writ petition vide W.P.No.41133 of 2022 to quash PAO No. 15 of 2022 dated 28 07 2022 passed by 2nd respondent and set aside the Show Cause Notice dated 19.09.2022. The petitioners also filed a petition vide I.A.No.1 of 2022 in the said writ petition seeking interim suspension of the said show cause notice dated 19.09.2022 and the said writ petition is reserved for orders. 7. Sri Avinash Desai, learned counsel for the petitioners would submit that by virtue of PAO, dated 28.07.2022, the properties mentioned therein of the petitioners were attached and the same will be continued under attachment until and unless Adjudicating Authority pass....
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....ers. There is no dispute that several properties were attached under the subject PAO, dated 28.07.2022. It is also not in dispute that some of the properties were acquired about two decades ago. The petitioners have to collect information and submit effective reply. It is also not in dispute that several documents running into about 5000 pages were furnished to the petitioners along with the show cause notice. They have to go through the same and submit explanation effectively. It is also not in dispute that Mr. C.Parthasarathy, Chairman of Karvy Group of Companies is involved in several crimes and he was arrested. He was released on bail only on 25.06.2022. The Courts concerned have imposed several conditions including the condition of his appearance before the Investigating Officer concerned and to cooperate with him by furnishing information/documents as sought by him in concluding investigation. 10. It is also not in dispute that one crime is pending in Bangalore and that he has to appear before the Investigating Officer in the said crime. He was hospitalized on 25.06.2022 itself and discharged on 30.06.3022, his samples were sent for biopsy and reports are awaited. His heal....
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.... the following grounds;- i) There are many properties mentioned in the PAO along with show cause notice, 5000 pages of documents were supplied to the petitioners herein. Some of the properties were acquired two decades ago and therefore, the petitioners have to collect information with regard to the same. ii) Several crimes were registered against the petitioners companies, Directors etc., and they have obtained bail in the said crimes. iii) The Courts concerned have granted bail to them on imposition of certain conditions including the condition of reporting before the Investigating Officers concerned on a particular day of the week. Therefore, they have to appear before the Investigating Officers in compliance of the said orders. They have to appear before the Investigating Officer weekly four days including one day before the Investigating Officer in Bangalore. iv) The Chairman of Karvy Group of Companies was released on bail on 25.06.2022, he was hospitalized on the very same day on 15.06.2022 and discharged from the hospital on 30.06.2022. v) His biopsy sample was sent to the Laboratory. vi) He is the main person acquainted....
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.... discussed supra, at the cost of repetition, it is relevant to note that in PAO, dated 28.07.2022, there are several properties and the documents furnished by 1st respondent along with the show cause notice running into 5000 pages. Some of the properties were acquired about two decades ago. Therefore, they have to collect information and submit reply effectively. 16. As rightly contended by Sri Avinash Desai, learned counsel for the petitioners, the attachment will be continued pursuant to the PAO dated 28.07.2022 till 1st respondent/ Adjudicating Authority passes an order in terms of Section 8(3) of the Act. The Adjudicating Authority, on consideration of the entire material available on record either may confirm or raise the attachment Until and unless, the said attachment is confirmed or raised, the PAO dated 28.07.2022 will be continued. No prejudice would be caused to 2nd respondent/ Investigating Agency. 17. No doubt that the adjudicating process as envisaged under Section 8 of the Act is time-bound process. Timelines are mentioned therein. Therefore, in view of the said discussion, according to this Court, the petitioners are entitled to grant of extension of some reas....