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2017 (6) TMI 1401
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.... immovable properties:- Sr. No. Particulars of the Property and date of Acquisition Name of the Current Holder of the Property Value (Accepted Bid Amount) 1. "Vishal House" Opposite Sales India, Ashram Road, Ahmedabad- Land bearing Plot NO. 169/14 of Mouja Shaikhpur- Khanpur of City Taluka : Ahmedabad M/s J.M.D. Media Pvt. Ltd. Ahmedabad Rs. 1,89,00,000/- 2. Jay Bungalow, Ishavashyam Society, [Near Rupmadhuri Society, Nr. Lav Kush Society] Vastrapur, Ahmedabad situated at Survey NO. 398 (Paiki) of T.P. Sheme No. 5, Final Plot No. 213 (Paiki), Sub-Plot NO. 4/A(Paiki), 4/B (Paiki) and 4/C of Mouje Vejalpur of City Taluka. M/s Alive Hospitality and Foods Pvt. Ltd. Ahmedabad Rs. 2,15,00,000/- In the present case, we are only concerned with property no.-1 i.e. Vishal House. 2. The facts of the case - as submitted by the appellants are that the appellants are based in Admedabad who came to know that a property viz. Vishal House described hereinabove, was for sale through a broker. Being interested in buying the said property situated in the limits of Mouje: Shaikhpur-Khanpur, Sub -Plot, No. 14 of Final Plot No. 169 of town planning scheme no. 3 w....
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....ired amount, the sale of the aforesaid units at Sr. Nos. 1 to 16 was confirmed and a sale certificate dated 5.9.2009 and the original title deeds of the aforesaid units at Sr. Nos. 1 to 16 were handed over to M/s. JMD Media Pvt. Ltd. At the same time, the vacant and peaceful possession thereof was also given to M/s JMD Media Pvt. Ltd. 2.5 Thereafter, on 28.3.2011, the sale deed pertaining to the aforesaid units at Sr. Nos. 1 to 16 was done and on the very date was registered in the office of concerned Registrar at Ahmedabad (Respondent no. 3). Accordingly, the said property was owned and was in possession of M/s JMD Media Pvt. Ltd. 2.6 In the meantime, the appellants came to know from a broker that the owners of the aforesaid property called Vishal House were inclined to sell the said property, in the month of October, 2010 and accordingly, the appellant approached the concerned persons. The sale price of the said property was fixed at Rs. 2,25,00,000/- and in this regard, an amount of Rs. 6,00,000/- was initially paid to M/s JMD Media Pvt. Ltd. vide a cheque dated 13.12.2010. Subsequently thereto, cheques of different amounts were given on different dates to M/s JMD Media Pv....
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....the factual position in detail and requested that since the appellants are bonafide purchasers of the said property, the sale deed be registered. 3. Thereafter, a summon dated 16.1.2012 was issued by the Enforcement Directorate to Shri Jagdishbhai Ishwarbhai Patel, Karta of Shri Jagdisbhai Ishwarbhai Patel HUF, under provisions of section 50(2) of the said Act for remaining present on 19.01.2012. However, since Shri Jadishbhai Ishwarbhai Patel was unwell on the said date, he could not remain present and sough for an extension. 4. The appellants thereafter on 20.01.2012 received a copy of the letter dated 10.1.2012 addressed to the Assistant Directorate, Enforecement Directorate by the Joint Sub-Registrar requesting him for making appropriate orders regarding registration of the sale deed pertaining to the said property. 5. In the letter dated 21.7.2011, a Circular no. IGR/ADM/113/2010/9658 to 9724 dated 30.6.2010 issued by the Inspector General of Registrar, Government of Gujarat giving directions to all Sub Registrars was referred. The said circular informed the Sub Registrar that in cases where attachment orders under Section 5(1) of the said Act were issued attaching pr....
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.... various following grounds set out there. 13. The following chronology of dates and events was submitted by the learned counsel for appellant for ready reference. CHRONOLOGY OF DATES AND EVENTS Sr. No. Date Events 1. 11.3.1991 Anand Owners Association purchased a plot admeasuring 339 sq. mts in an auction sale from Income Tax Department. Conveyance deed is executed in favour of Anand Owners Association. A building having 19 units is constructed on that plot. 2. 5.10.1991 Share certificates pertaining to 16 units of the said property were issued to concerned owners of the property. 3. December 1999 Share certificates pertaining to other 3 units of the said property were allotted to Shri Darshit Mehta, Shri Vishal Mehta and Shri Jay Mehta. 4. M/s. Vishal Exports Overseas Ltd., a company incorporated with which the appellants have no connection whatsoever had obtained financial assistance from consortium of State Bank of India for which 16 units of the said property were mortgaged to State Bank of India by depositing title deeds. Punjab National Bank which was a part of consortium of Banks, also sanctioned funds to M/s Visha....
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.... 15. 24.10.2011 Appellant and other 2 HUFs entered into Agreement to Sell which was registered by Sub Registrar at S.No.12069/2011 and then a Possession Note pertaining to the entire property along with physical possession thereof was given to the appellant and the other 2 purchasers (HUFs). 16. 5.11.2011 An amount of Rs. 15 lakh vide three different cheques of Rs. 5 lakh each was paid to JMD Media Pvt. Ltd. 17. 1.12.2011 6 cheques totaling to Rs. 25 lakh were issued, out of which 3 cheques of Rs. 2 lakh each were given to Shri Jay D. Mehta, Shri Darshit D. Mehta and Shri Vishal P. Mehta, whereas 2 different cheques of Rs. 6 lakh and 1 cheque Rs. 7 lakh were given to M/s. JMD Media Pvt. Ltd. 18. 10.12.2011 Sale Deed was drawn on the requisite stamp papers and was signed by the appellant along with 2 other purchasers and M/s. JMD Media Pvt. Ltd., Shri Jay Dipak Mehta, Shri Darshit Dipak Mehta and Shri Vishal Pradip Mehta. 19. 12.12.2011 Requisite registration charges were paid and the parties presented the duly executed sale deed to the Sub Registrar for registration. The duly executed sale deed was accepted by the Sub Registrar and receip....
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....limitation stipulated under PML Act, appellant filed captioned appeal in this Hon'ble Tribunal challenging the aforesaid order dated 10.7.2012. 27. 9.10.2012 Enforcement Directorate issued notice to the appellant for vacating the property and handing over possession thereof within 10 days from the date of receipt of notice. The possession was however not taken as stipulated in the notice. 28. 12.10.2012 Appellant filed additional affidavit and sought amendment in its writ petition being SCA No.1059 of 2012 for placing subsequent facts on record. 29. 31.7.2013 Hon'ble Gujarat High Court disposed of appellant's writ petition being SCA No.1059 of 2012 relegating the appellant and the co- owners to alternate remedy. However, status quo regarding possession of property was directed to be maintained till final disposal of appeals by the Tribunal. 30. Appellant's challenged the said judgment to the extent it was against the appellant before the Division Bench of Gujarat High Court by way of an LPA being No.1038 of 2013. 31. 21.2.2014 The said appeal was dismissed by the Division Bench and the order of the Single Bench was....
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....to the sale of subject property. No objections were received. Thereafter, an agreement to sell was entered into between the parties and was registered with the Sub- Registrar on 24.10.2011. Physical possession was given to the appellant. Requisite stamp papers were then obtained and a sale deed was drawn thereon. It was signed by the parties on 10.12.2011. The duly signed and executed sale deed was then presented by the parties in the office of the Sub- Registrar on 12.12.2011. The instrument as was presented was accepted by the Sub- Registrar and the requisite registration fee was also paid. An entry was made in Additional Book 1 by the Sub- Registrar in terms of the requirement of the Registration Act, 1908. All the procedures required to be followed and the steps to be taken as stipulated in the Registration Act for registration of the sale deed were duly followed and taken by the parties. Nothing more was required to be done by the parties and only a ministerial job was required to be done by the Sub- Registrar of putting it's stamp and appending signatures thereon. As per the Gujarat Registration Rules, 1970, the Sub- Registrar was merely required to ensure:- i. T....
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.... to the document" In the light of the above, the submission of the appellant is that it had followed the entire procedure as stipulated in the Act and the Rules framed there under and being the bona fide purchaser, the registering authority could not have refused to register the instrument. It ought to have registered it. The Registering Officer being a creature of the statute cannot go beyond the statute and therefore registering officer was under an obligation to register the documents when presented to it on 12.12.2011 for registration. The registering officer neither registered the document nor rejected the document submitted for registration but merely kept the same with himself. This act of registering officer in doing so was beyond the purview of the Registration Act. The act of not registering the sale deed is illegal. Once the sale deed is registered, the same would relate back to the date of execution which is 10.12.2011 in this case and is much prior to the date of POA. Hamada Ammal v. Aviappa Pathar [1991] 1 SCC 715 is on this point. 17. As far as transfer of property in question is concerned, the ownership thereof stands transferred in favour of the appella....
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.... matter of sale. No adverse inference could be drawn on this basis. During the course of hearing, the appellants placing reliance on the said sequence of events /facts - vehemently pleaded that no allegation had been made against the appellant/defendant no. 4 i.e. JMD Media Pvt. Ltd on 10.12.2011. Mentioning further that the sub-registrar informed the appellant that the sale deed cannot be registered in view of notice dated 21.07.2011 issued by the Enforcement Directorate, attention was drawn to the fact that he was not in any way connected with M/s Vishal Exports Ltd. and further argued that even if the sale deed had not been registered, the mere execution of the sale deed was sufficient to establish the ownership of the property, in view of the decision of the Apex Court in the case of the Suraj Lamp Case. The above contentions of the appellants were strongly refuted by the respondent. As regards the appellants' contention that for issuing the show cause notice, there must be "reasons to believe" which were absent in the instant case, the respondent stated that the show cause notice itself contains the reasons of forming such a believe as sufficient material do exist in....
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....fence and that such proceeds of crime are likely to be concealed, transferred, dealt with in any manner which may result in frustrating any proceedings relating to confiscation of proceeds of crime, may by a written order provisionally attach the property. Section 5(2) provides that the authority mentioned therein shall immediately after provisional attachment forward a copy of the order along with the material in possession to the Adjudicating Authority in the manner prescribed therein. The provisions of section 5 therefore contemplate provisional attachment of property in situations mentioned therein. Section 8 of the PML Act contains provisions pertaining to adjudication of a complaint or applications mentioned therein. The scheme of the Act therefore envisages attachment of property and confirmation thereof or otherwise after adjudication. The scheme of the Act does not empower the authority to issue instructions to an other authority to refuse registration of a document inasmuch as the authority which is a creature of statute has no legal competence to issue directions for the purpose of bye-passing relevant provisions contained in the Registration Act as well as Rules framed ....
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.... fact that before confirmation of attachment, the appellant were duly heard by the Adjudicating Authority. 21. The second submission of the appellant is that in the present case, provision of section 5 of the PML Act and the scheme of the Act as a whole, there are no powers vested in the authorities under PML Act to direct any other authority to refuse registration. However, the respondent Enforcement Directorate vide letter dated 21.7.2011 illegally and beyond the scope of its authority directed the Sub-Registrar not to register the sale deed pertaining to the property in question referring to section 3 of PML Act and conveying that in case the sale or transfer was allowed despite instructions and order of statutory authority, it would compel the Enforcement Directorate to conclude that by allowing registration of property by way of sale/transfer/ alienation/ modification assistance has been given to activities connected with offence of money laundering rendering the Sub-Registrar liable to penal action under PML Act. This notice was issued without any powers in that regard. The Enforcement Directorate is taking an advantage of the said situation by contending that the aforesai....
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....epartment cannot be allowed to take advantage of its own wrongful and illegal act. In moulding relief, this Court has always applied principles of equity in order to do complete justice between the parties." 22. In support of his submission, it is submitted by the appellant that there is no allegation against the appellant in the charge-sheet No.13 of 26-11-2009. The allegation is that a conspiracy to cheat Punjab National Bank, International Branch , Ahmedabad was hatched during 2005-06 in the borrowal account of Vishal Export Overseas Offences Ltd. through its Director Pradip Mehta, Deepak Mehta, Subhashchandra Mehta, R.N. Savarkar, the then Chief Manager and L V Raghvan, the then Senior Manager. It has been alleged that the facts disclose commission of offences under sections 120B, 420, 468, 471 and 477A of Indian Penal Code and section 13 of Prevention of Corruption Act. The appellant is no where connected with the commission of the alleged offences. Be that as it may, sections 120B, 420, 468, 471 and 477A of Indian Penal Code and section 13 of Prevention of Corruption Act were not scheduled offences prior to 1.6.2009. It is only with effect from 1.6.2009 that sections 120B,....
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....e alleged joint owners of the property purchased. It is denied by the respondent that the complaint is only pending against two co-joint owners. We do not find any force in the arguments of the appellant as in this context we have refer to the following observations of Hon'ble Bombay High Court in the case of Radha Mohan Lakhotia first appeal no. 527 of 2010 judgment dated 05.08.2010, with reference to section 5(1) of the PMLA. "The appellants however, have placed emphasis on the expression "such person" used in Clause (b) of Section 5(1) of the Act. According to them, the word "such person" is prefix to the word "person" In Clause (b). That is not superfluous, but to ascribable to the person referred to in Clause (a). Which means that even Clause (a) deals with person who has been charged of having committed a scheduled offence. It is not possible to countenance this submission. We are conscious of the fact that penal provisions should be strictly constituted. At the same time, we cannot overlook the language of section 5 as applicable at the relevant time. In our Opinion, clause (a) refers to "any person"- whether he has been charged of having committed a scheduled o....
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....mplated in the proviso to sub-section (1) of Section 17 is made, the proceedings are not sustainable. As noticed in greater detail, the ultimate object of Section 5 is provisional attachment of the property. The object appears to prevent destruction of the evidence which may be produced in the proposed criminal proceedings or to take in possession the property involved in the money-laundering, though the proceedings can be initiated on the basis of the reports or complaint, etc., as contemplated in the first proviso to Section 5. In view of second proviso, proceedings can be initiated under Section 5 even in absence of compliance of first proviso. Various safeguards impose fetters upon the attaching officer obliging him to immediately send the order made by him and the factum of attachment of the property made by him within the prescribed period to the Adjudicating Authority to enable it to adjudicate upon such attachment. It is pertinent to note that the legislative intent in so far as powers of the Adjudicating Authority are concerned, is made clear under Section 6(15) by clarifying that it is not bound by the procedure laid down by the Code of Civil Procedure. Thus, if the Adjud....
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....eze the properties preceding the provisional attachment under Section 5 of P.M.L. Act. Paragraphs-5 and 6 of the said case can be quoted herein for convenience: 5. Having heard learned counsels for the parties and on perusal of the record of the case, I find substance in the contention of the respondents that the given statutory mandate under the PML Act makes it imperative for the authorities in the course of investigation i.e. collection of facts to establish specific details of the suspected properties from the concerned authorities prior to issuance of the provisional attachment order under section 5 of the Act. As such, it has to be issued with abundant caution. It is therefore necessary that the requisite information/details are ascertained from the repositories of such information. Such repositories may be required during preliminary enquiry/investigation under the Act to be restrained from allowing normal operations in respect of a property suspected to be involved in the offence of money laundering. It is therefore, crucial to achieve the objectives of the Act that the authorities under PML Act are empowered to collect and if need be, compel disclosure of relevant....
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....985 SCC(1) 260), the Apex court has held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the tribunal and thereafter to have the cases stated to the High Court, it was not for the High Court to exercise its extra ordinary jurisdiction under Art. 226 of the Constitution ignoring as it were, the complete statutory machinery. 9. In yet another case of Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement & Another Civil Appeal No. 3221 of 2010 Date of judgment 12.04.2010 the Hon'ble Supreme Court has observed that : .... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the C....
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....unsel appearing for the petitioner regarding the noncompliance of the provisions of Section 102(3) of the Code. I may only say that the procedure that has been followed by the authority under the PML is one under the provisions of the PMLA. When seizure or any search or any attachment is by officers under the PMLA other than the police, non-compliance with Section 102(3) would not vitiate the proceedings. However, at the same time, I am of the view that an order or instructions of attachment/freezing of bank account passed or issued by the authority under the PMLA in exercise of his powers under Section 102 of the Code read with Section 65 of the PMLA should not continue or remain in operation for an indefinite period of time. Section 5(4) of the PMLA provides for the enjoyment of the immovable property. Section 5(4) reads as under : "5. Attachment of property involved in money laundering.- (1) to (3)xxx xxx xxx (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.- For the purposes of this sub-section, 'person interested' in relat....
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.... the mean time the authority had passed any order of provisional attachment under Section 5 of the Act or whether it intended to pass such order in the near future if adequate material has been collected during the course of the investigation carried out so far. The learned Assistant Solicitor General of India, after taking instructions from the officer of the Department present in the Court, made a statement that the authority has been able to collect sufficient material on the basis of which the authority now intends to pass an appropriate order of provisional attachment under Section 5 of the PMLA. On one hand if an order of provisional attachment is passed under Section 5 of the PMLA, the life of it is 150 days subject to the further orders that may be passed by the adjudicating authority, whereas if an order of attachment is passed under Section 102 of the Code read with Section 65 of the PMLA, then there is no time period prescribed so far as its Page 42 of 43 HC- NIC Page 42 of 43 Created On Tue Jun 13 15:50:56 IST 2017 R/SCR.A/150/2015 CAV JUDGMENT operation is concerned. Such a situation should not crop up. In light of the statement made by the learned As....
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....ppears from the said order that the respondent was under the impression that the possession of the alleged proceeds of crime. 'Vishal House' was with M/s JMD Media Private Limited. However, it is an admitted and undisputed position of the fact that from 24.10.2011 onwards the appellant was in peaceful possession of the said property. This evidently shows non-application of mind on the part of respondent qua the first requirement of section 5(1). Even assuming without admitting that the appellant was in possession of the said property, alleged proceeds of crime, then in that case also the second requirement i.e. such person having been charged of committing a scheduled offence is not fulfilled inasmuch as admittedly and undisputedly the appellant was not charged of having committed any scheduled offence. Therefore, the basic requirements for invoking the said section 5(1) have not been fulfilled. In such a situation, the provisional attachment order was bad in law and unsustainable. 27.2 It is also submitted that similarly, the Adjudicating Authority grossly erred in not appreciating that the term "proceeds of crime" covers not only the property derived. Under the circums....
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....ndent in para 6 of the said order has merely stated that in case no provisional attachment order is passed against the proceeds of crime mentioned therein at this crucial stage, then the same are likely to be concealed, transferred or dealt with in such a manner, which may result in frustrating further proceedings, without giving any reasons whatsoever. Considering all aspects the property or value thereof could not be termed as "proceeds of crime". Under the circumstances, the provisional attachment order could not have been passed. This apart, in the present case, as aforesaid, the appellant was not charged of committing any scheduled offence whereby the requirement under the said proviso was also not fulfilled. Accordingly, the provisional attachment was without jurisdiction. 27.5 It is stated on behalf of the appellant that section 2(u) of the Act defines 'proceeds of crime' to mean property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence or the value of any such property. Thus, in terms of the said section, either the property derived or obtained, directly or indirectly, as a result of criminal activity r....
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.... being a bonafide buyer is established from the affidavit-in-reply filed by the Enforcement Directorate before Hon'ble Gujarat High Court in writ petition being Special Civil Application No.1059 of 2012 filed by the appellant, when it has been stated on oath that the Enforcement Directorate be directed to return the money received against sale of property to the petitioner. The provisions of Act do not empower the authorities to trace and chase property purchased by bonafide buyers like the appellant in the present case instead of the consideration thereof which is passed on to the seller of the same i.e. value thereof. By provisionally attaching the property of a bona fide buyer and its confirmation thereafter, as has been done in the present case, such a buyer, for no fault on his part would be deprived of possession of property till criminal proceedings against some third party are concluded under section 8(4) and 8(5), which is contrary to provisions of Article 300A of the Constitution of India. 27.9 It is also submitted that the provisions of section 24 of the Act provide that when a person is accused of having committed the offence under section 3 of the Act, the bu....
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....on of Corruption Act were mentioned. The said provisions were not scheduled offences prior to 1.6.2009. It is only with effect from 1.6.2009 that the provisions of sections 120B, 420 and 471 of the Indian Penal Code were brought in the schedule of the Act. Thus, for any alleged offences prior to the said date, the provisions of the Act could not have been made applicable in that regard inasmuch as the said provisions have not been given any retrospective effect by the legislature. A Division Benchin the matter of Obulapuram Mining Co. Pvt. Ltd. (supra) has authoritatively held that the petitioner can not be tried and punished for offences under PML Act when the offences were not inserted in the schedule of offences under the PML Act. Article 20(1) of the Constitution of India prohibits the conviction of a person or his being subjected to penalty for ex-post facto laws. For this reason also the confirmation of the provisional attachment order - the impugned order is liable to be set aside. Reliance is placed on following judgments: (a) Writ Petition No. 5962/2016 decided on 13.03.2017 by Division Bench of Karnataka High Court (b) State of A.P. v. Gandhi [2013] 5....
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....of investigation and transfer of funds are well explained in the complaint. 30. The entire arguments of the appellant was on the issue whether the respondent are within its power to issue prohibitory order. The appellants on that basis had approached before the Hon'ble Gujarat High Court and raising the same issue and seeking for quashing the complaint and the notice issued by the Adjudicating Authority. However, the Hon'ble High Court with detailed judgment more specifically in paras 15 & 16 Special Civil Application No. 4171/2012 and Special Civil Application No. 1059/2012 have held that prohibitory order issued by the respondent are within the four corners of the provisions of PMLA and the authority have right to issue such prohibitory order. 31. Similarly, Pradeep S. Mehta (Vishal Export) have also challenged the issuance of Such Prohibitory order while in relation to earlier attachment of the movable assets of his company of FFR Software, the Said Mr. Pradeep S. Mehta has filed the similar plea before the Hon'ble Gujarat High Court in FFR Software. The hon'ble High Court has held the such issuance of Prohibitory order are within for corner of the provisio....
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..... 35. As regards the appellant's other contention that the execution of the sale deed dated 24.10.2011 had resulted in the sale/transfer of the said property, it was argued by the respondent that the said agreement dated 24.10.2011 was a sham document prepared subsequent to a letter dated 21.7.2011 of the Enforcement Directorate issued to the Joint Sub-Registrar not to allow transfer/sell of any property to any person/party without prior approval of the Enforcement Directorate. In this background, the following facts emerge: (a) After having paid of sum of Rs. 6 lakhs to M/s JMD Media Pvt. Ltd. on 13.12.10, it was only in April, 2011 that the Respondent through their advocates had given a notice in the newspaper as regards any persons having objection to the sale of the said property and; implying hereby that the fact that there was some issue relating to the property in question was in the knowledge of the seller as well as the buyers and; (b) Though the appellants received a communication from his Advocate that he had not received any claim or objection to the sale of the said property only on 22nd September, 2011, an amount of Rs. 5 lakhs had been furthe....
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....een acquired. 38. Reasonable belief does not mean only conjectures and surmises but has to be based on some concrete facts and evidence in possession of the concerned authority which must be beyond what is mentioned in the complaint. What was the material before the Adjudicating Authority on the basis of which reasonable belief could be formed that the appellant was in possession of proceeds of crime? 39. Rather sufficient material were placed before the Adjudicating Authority to show and prove that there was no flow of income from the alleged offenders to the appellant or the co-purchasers and that the said property was purchased / acquired out of their legitimate and legal income, earnings or assets. However, without appreciating the said evidence, the Adjudicating Authority confirmed the attachment order of the property which was purchased bonafide by the appellant out of its legitimate and legal income. Therefore, the order confirming the provisional attachment order, without taking into account the material placed on record before him, is also bad in law. 40. We have considered the written submissions and the oral arguments made by the appellant as well as the respond....