TaxTMI 
TaxTMI 
2024 (6) TMI 33
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....ction 5 (5) of PMLA; and to quash Notice to Show Cause dated 22.09.2021 purportedly issued in exercise of powers under Section 8 (1) by the respondent no 2 as the respondent no 2 is not a properly constituted Adjudicating Authority under Section 6 of PMLA. 2. The petitioner pleaded that the petitioner is a promoter company of Jindal Steel & Power Limited ('JSPL') and also the promoter of other companies of JSPL Group. The petitioner is engaged in the business of investment and finance operations by Inter corporate deposits and investment in equity shares/preference shares/debentures/ mutual fund. The petitioner was incorporated under name & style of M/s Navin Sponge Iron Limited on 24.02.1989 but subsequently the name of the petitioner was changed to M/s Gagan Sponge Iron Private Limited (GSIPL) on 30.01.2004. The name of the petitioner further changed to Gagan Sponge Iron Limited on 02.02.2007 and finally changed to its present nomenclature i.e. M/s Gagan Infraenergy Limited ('GIL') on 12.10.2009. CBI registered a FIR No. RC 219 2013 (E) 0006 dated 10.06.2013 for the offences under Section 120-B read with 420, 409 IPC (409 IPC was dropped at the time of framing of charge) and Sec....
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....are, the total number of equity shares became 25,00,000. Out of 25,00,000 shares, 2,19,198 shares were sold from 08.12.2005 till 28.02.2006 and 49,000 shares were sold from 11.06.2007 till 01/02.11.2007, thereby, the shares got reduced to 22,31,802. On 27.12.2007, a further sub-division in the face value of the shares from Rs. 5 to Rs. 1, the total number of shares swelled from 22,31,802 to 1,11,59,010. M/s JSPL on 19.09.2009 issued bonus shares in the ratio of 5:1 i.e. 1,11,59,010 x 5 = 5,57,95,050. The total number of shares as such becomes 6,69,54,060. Thereafter 4,50,000 shares on 21.06.2013 were bought from open market at the rate of Rs. 202.12 per share and thus, total shares of JSPL held by the petitioner rose to 6,74,04,060. Subsequently 1,76,94,108 shares were gifted to Glebe Trading Private Limited on 20.03.2014 in terms of a settlement and number of shares held by the petitioner got reduced to 4,97,09,952. The Income Tax Department pursuant to some demand/recovery against the petitioner attached 3,00,00,000 shares (3 crores shares) on 30.07.2019. 27,09,784 shares have been pledged to a lender towards borrowings and the balance 170,00,168 shares have been attached by the ....
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....under Section 5 (5) of PMLA by the respondent No. 1 and consequential Show Cause Notice issued by the respondent no 2 i.e. the Adjudicating Authority under Section 8 (1) of PMLA. The respondent directorate had initiated investigation and quantified the proceeds of crime to the tune of Rs. 2 crores at preliminary 'stage and later during further investigation proceeds of crime amounting to Rs. 59.34 crores were identified and attached where direct involvement of the petitioner was established. The Enforcement Directorate, Delhi Zonal Office had initiated investigation vide ECIR/12/DLZO/2014 dated 11.04.2014 against M/s Jindal Steel and Power Ltd., M/s Gagan Sponge Pvt. Ltd. & others for commission of offence under section 3 of PMLA punishable under section 4 of PMLA on basis of FIR RC No. 219 2013 E 0006 dated 10.06.2013 against the suspected person as mentioned in ECIR for commission of offences punishable under sections 120B read with section 420 IPC and section 13 (2) read with section 13 (1) (d) of the Prevention of Corruption Act, 1988. The Prosecution Complaint CC No. 1/2019 (Old CC No. 08/2018) was filed before the Special Court on 13.07.2018 and the Special Court has take....
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.... which the petitioner is unable to trade these shares in the open market. The current market value of these shares is Rs. 1286,91,27,176/- at a rate of Rs. 757 per share. The attachment of these shares is causing grave prejudice to the petitioner since it is engaged in the business of investment and finance operations by way of inter-corporate deposits and investments in equity shares/preference shares/debentures/mutual funds etc. The petitioner accordingly prayed that provisionally attached property be released, and be substituted with a bank guarantee/FDR/indemnity bond or any other security in the sum of INR 3,11,05,588/- It is also submitted that the physical attachment of the provisionally attached property is not required for any purpose or the completion of the trial and restoring property to the petitioner in lieu of a bank guarantee/FDR/indemnity bond or any other security of an equivalent amount would not impact the proceedings initiated by the ED. ED has power to release property on furnishing a fixed deposit even Provisional Attachment Order is confirmed by the Adjudicating Authority under the PMLA as per proviso to Rule 4 (2) of Prevention of Money Laundering Act, 2002....
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....ut no final order shall be passed. Rule 4 (2) of the Prevention of Money Laundering Act, 2002 (Taking possession of attached or frozen properties confirmed by Adjudicating Authority) Rules, 2013 is not applicable in present case. The respondents besides taking other pleas prayed that the application be dismissed. 6. It is appearing that the petitioner is a promoter company of Jindal Steel & Power Limited ('JSPL') besides promoter of other companies of JSPL Group and is engaged in the business of investment and finance operations by Inter Corporate Deposits and investment in equity shares/preference shares/debentures/mutual fund. CBI on the basis of findings of PE No. 219.2012.E.0002 dated 01.06.2012 registered a FIR bearing no. RC 219 2013 (E) 0006 dated 10.06.2013 for the offences under Section 120-B read with 420, 409 IPC and Sections 13 (2) read with 13 (1) (d) of Prevention of Corruption Act, 1988 against various accused including the petitioner on the basis of findings of PE No. 219.2012.E.0002 dated 01.06.2012 on allegations that JSPL and GSIPL on misrepresention, fraudulently obtained Amarkonda Murgadangal Coal Block in the State of Jharkhand. CBI after completion of the in....
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....at the Director or any other officer not below the rank of Deputy Director shall immediately after attachment forward a copy of the order along with the material in his possession to the Adjudicating Authority. Section 5 (5) further provides that the Director or any other officer who provisionally attaches any property under sub-section (1) shall within a period of thirty days from such attachment file a complaint stating the facts of such attachment before the Adjudicating Authority. Section 8 deals with Adjudication. Section 8 (1) provides that the Adjudicating Authority on receipt of a complaint under section 5 (5) and if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in 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 section 5 (1). Section 8 (3) provides that where the Adjudicating Authority decides that any property is involved in money-laundering then Adjudicating Authority shall by an order in writing confirm the att....
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....g to Rs. 59,34,21,420/- was issued for proceeds of crime derived from share price manipulations by M/s Gagan Sponge Iron Pvt. Ltd. (M/s GSIPL) and subsequently Original Complaint (O.C.) No. 1514/2021 dated 26.08.2021 was also filed before the Adjudicating Authority for adjudication. He further argued that issues and contentions raised in present petition have already been settled by the Supreme Court and High Court. The CGSC to counter issue whether property of equivalent value may be attached where property is not held or taken outside India relied on Vijay Madanlal Chaudhary & others V Union of India & others, SLP (Criminal) 4634 of 2014 wherein it was observed as under:- It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even In such a case, the ....
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....shares of JSPL attached as proceeds of crime based on equivalent in value of proceeds of crime vide the impugned Provisional Attachment Order No. 04/2021 dated 30.07.2021 and having book value at Rs. 3,11,05,588/- can be substituted by bank guarantee/FDR/Indemnity Bond or any other security as prayed on behalf of the petitioner. The perusal of impugned Provisional Attachment Order dated 30.07.2021 issued under signature of Sharad Kumar, Deputy Director, Directorate of Enforcement reflects that properties worth Rs. 59,34,21,420 including 1,70,00,168 shares of M/s Jindal Steel & Power Limited with GSPIL as detailed in impugned Provisional Attachment Order equivalent to the proceeds of crime were provisionally attached under section 5 (1) of PMLA. It was observed in impugned Provisional Attachment Order that direct proceeds of crime are not available for provisional attachment due to circular movement/rotation of funds through various transactions. It was also observed that these properties are likely to be transferred or dealt with in such a manner which may result in frustrating the proceedings relating to confiscation under Chapter III of PMLA. 10.1 The Supreme Court in Order date....
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....e field. 23. Before we advert to the order of the Appellate Tribunal insofar the related appeal is concerned, we may mention about Rule 5 (5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 which says that where the attached immovable property as confirmed by the adjudicating authority is in the form of land, building, house, flat etc. and is under joint ownership, the authorised officer may accept the equivalent value of fixed deposit to the extent of the value of the share of the concerned person in the property estimated by the authorised officer to be involved in money laundering. Therefore, it would not be correct to say that PMLA as well as the Rules framed thereunder does not have any provision for accepting alternative equivalent value of attached property. 10.1.2 The High Court observed that the Court is well within its power to alter or modify the status quo order passed by it and the interest of opposite party/appellant would be protected by directing various parties to provide bank guarantee equivalent to Rs. 192 crores. This Order passed by the Division Bench of Telangana ....