TaxTMI 
TaxTMI 
2024 (10) TMI 459
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....ellant against the order dated 1-6-2015 passed by Ld. Adjudicating Authority under Prevention of Money Laundering Act, 2002 (PMLA- 2002) in Original Complaint (OC) No. 411/2015 seeking following reliefs:- (i) The impugned order of the Adjudicating Authority passed against the Appellant on 1-6-2015 in Original Complaint No. 411/2015 in ECIR No. 02/BSZO/2014 dated 09/01/2015 confirming the said PAO, be quashed and set aside as not maintainable on the facts and circumstances of the case, and (ii) The immovable property of the Appellant as detailed Khata No. 68, Plot No. 4, Tahasil: Jatni, Village: Harapur, District - Khurda, Area: 20 Acres, Odisha be released from the provisional attachment. 3. Brief facts of the case. The Enforcement Directorate provisionally attached 20 acres of land in Khata No. 68, Plot No. 4, Tahasil Jatni, Village: Harapur, District - Khurda and building thereon of Bhubaneshwar Institute of Technology (BIT). It is, inter alia, seen from the record that the Orissa Millennium Education Trust (OMET) i.e. the Appellant is a trust established on 20-3-2006 by way of a registered trust deed founded by Rabi N. Mahapatra (Founder/Author), Mrs. Sum....
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....pellant Trust on 11-11-2009 by way of a nomination by the Founder Member and Chairman Ravi N. Mahapatra unaware of the fact that Shri Dash could be engaged in a criminal activity and that the trustees of the Appellant Trust became aware about the allegations of financial irregularities committed by Shri Dash in the month of July, 2012 when the matter was reported in the Media and then the trustees convened an emergency telephonic meeting on 20-7-2012 and passed resolutions to remove Shri Prashant Kumar Dash from the position as a trustee in the Appellant Trust. 7. The Appellant Trust, in its pleading has admitted that between the period 2009-2012 Shri Prasant Kumar Dash had, in a phased manner contributed a sum totaling Rs. 9,01,66,000/- to the corpus of the Appellant Trust and the founder/chairman of the trust asked Shri Dash to vacate the trust vide their letter dated 21-7-2012. However, construction of the college building continued during the period when Shri Dash was a trustee in the Appellant Trust and the construction of the college building was carried out by the contributions as stated above and there is no evidence on record to suggest that the contributions of Shri Da....
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....ken the following grounds: A. The Adjudicating Authority acted contrary to and in excess of its power and jurisdiction and its order is also contrary to law; B. Principle of natural justice has not been followed by the Adjudicating Authority, wrongfully rejected the evidence submitted by the Appellant by drawing inferences contrary to the real facts; C. Shri Dash has made the offence and without the knowledge of the Appellant induced the proceeds of crime in the Appellant Trust; D. There was no allegation that any of the funds of the Appellant Trust until the end of the financial year 2008-09 represents proceeds of crime; E. The first charge of the college building vests with Syndicate Bank; F. The trustees were not aware of involvement of Shri Dash at the time of induction into the trust and that after they came to know about the financial irregularities resolution was passed asking Shri Dash to vacate the position as a trustee in the Trust; G. The Adjudicating Authority has failed to take the cognizance of audited balance sheet until the financial year 2012-13; H. The Syndicate Bank was not heard to prove tha....
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....nds on priority basis. (ii) That further, both MT and Chairman will make sure that the departing trustees also get the bank clearance that they gave in the form of guarantee to secure the term loan for the trust to initiate the BIT Engineering College project. It is understood by the Chairman and the MT that the obligations of the trust towards the departing trustees are not completely over, until both the funds and the bank clearances are made available to them. (iii) That the MT will ensure sufficient funds are made available for BIT in the short term, defined as the term from now until September, 2010 and in the near term defined as the term from investments. He will support the academic growth plans as per the vision of BIT to become the best technical institute in the state in the next 5-6 years. (iv) That the MT will possess the power for the entire financial control of the project. He will review and approve the financial expenses planned for the project. (v) That any reinvestment plan for BIT and similar projects will be decided jointly by the MT and the Chairman. (vi) That the details of the timing, amount and the process of tra....
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....n for substitution of the property with payment of Rs. 9,01,66,000/- quantified as proceeds of crime is no more pressed and, accordingly, treated as disposed of. 15. The Appellant has filed written submissions along with Annexures, on three occasions i.e. 16-1-2019, 24-7-2019 & 19-9-2023 and Additional Written Submissions dated 12.12 2023 in addition and relying on the grounds of appeal and Rejoinder. The averments of the Appellant made in the written submissions, in brief, are as below: A. There is no link or nexus between the attached property and the proceeds of crime. B. Increase in the total strength of the students. C. Recognition of OMET as a Charitable Institution by the Income-tax Department. D. Loan of Rs. 6.80 Crores from Syndicate Bank by the Appellant on 9-6-2008 for the purpose of establishment of BIT and constructions of buildings etc. E. Donation received from Shri P.K. Dash during the period 2009 to 2012. F. There is no allegation against Shri P.K. Dash at the time of induction and ousting of Shri P.K. Dash after the knowledge of his criminal activity by the Appellant. G. Amount of donation has been ....
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....f Enforcement 2014 SCC OnLine Mad 10702, Paras 45 & 46; and (v) Joti Parshad v. State of Haryana 1993 Supp (2) SCC 497, Para 5. M. In addition to above it is also pleaded the Impugned Order is null & void being flagrant violation of statutory provisions of PMLA as the Adjudicating Authority has not followed the prescribed procedure to be followed in a particular manner. In this regard he has relied on the following judgments: (i) OPTO Circuit India Ltd. v. Axis Bank [2021] 127 taxmann.com 290/165 SCL 703 (SC)/(2021) 6 SCC 707, Para 14 (decided by the Constitution Bench); (ii) State of Rajasthan v. Mohinuddin Jamal Alvi [2016] 12 SCC 608, Para 61; and (iii) Dipak Babaria v. State of Gujarat [2014] 3 SCC 502, Para 61; and (iv) Seema Garg (supra) Para 45. Besides above, the Ld. Counsel for the Appellant also argued the appeal orally reiterating that are stated in the Memo of Appeal, Rejoinder and Written Submission. On the basis of above, the Ld. Counsel for the Appellant prayed for quashing and setting aside of the Impugned Order and release/return of the attached properties to the Appellant forthwith. 16. The....
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....2002 having overriding effect on any other law for the time being in force: i. Raman Sharma v. Director, Directorate of Enforcement [2020] 113 taxmann.com 114 (Delhi)/Crl.Rev.P 1033/2019; ii. Fairdeal Supplies Ltd. v. Union of India [2021] 127 taxmann.com 73 (Cal.)/(23-4-2021 - CALHC): MANU/WB/0326/2021; and iii. P. Chidambaram v. Directorate of Enforcement [2019] 109 taxmann.com 57/156 SCL 104 (SC)/(CRL APPEAL No. 1340/2019) Respondent ED has referred & relied on to relevant paras of following judgments: a. Vijay Madanlal Choudhary (supra) Paras 250, 252, 269, 270, 280, 295, 301, 303, 313 & 314. b. P. Rajendran v. Asstt. Director, Directorate of Enforcement [Criminal Original Petition No. 19880 of 2022, dated 14-9-2022] Para 9 & 10 c. Radha Mohan Lakhotia (supra), 2010 Para 13 & 19 d. J. Sekar v. Union of India [2018] 89 taxmann.com 159/145 SCL 637 (Delhi)/2018 SCC OnLine Del 6523 Para 50 e. Shiv Shakti Coop. Housing Society v. Swaraj Developers [2003] 6 SCC 659; Para 19 f. Nav Nirman Builders & Developers (P.) Ltd. v. Union of India [Cr. M.P. No. 3608 of 2022, dated 27-2-2023] Para 32 & 33 ....
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.... to the students, purchasing bus, organizing seminars and cultural events among other things as provided in Annexure-2 filed by Appellant Trust. It is also admitted by the Appellant Trust in the said written submission that during the year 2010-2011 a sum of Rs. 2.71 Crores donated by Shri Dash was utilized in furthering the construction of computer center cum hostel for SC/ST Student, paying salary to the staff providing free food to the students, purchasing bus, buying furniture and various other things as detailed in Annexure-2. It is further admitted by the Appellant Trust in the said written submission that during the year 2011-2012 a sum of Rs. 3.55 Crores was received as donation from Shri Dash and was utilized by the Appellant Trust for running Bhubaneshwar Institute of Technology and for its day-to-day expenses as well as for completing the remaining construction of Dr. B. R. Ambedkar Study Center from hostel for SC/ST students. The Appellant Trust has cited the audited receipts and payments account for the year ending 31st March, 2012 which is annexed as A-6. It is also an admitted fact that there is no donation during the financial year 2012-2013 made by Shri Dash it is ....
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....e aforesaid ground. On the other hand, the Ld. counsel appearing for the Respondent submitted that the word 'property' had been defined u/s 2(1)(v) of the PMLA, 2002 and that it includes the leased property also which can be attached and that there is no necessity of making Government of Odisha as a party either in the appeal or in the Original Complaint. Therefore, the contention of the Appellant Trust has no merit and as such liable to be rejected. It is necessary to consider the definition of the word 'property' as defined u/s 2(1)(v) of the PMLA, 2002. The provision is reproduced below: "Property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to or interest in, such property or assets, wherever located; [Explanation :- for the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the Scheduled offences;] On perusal of the aforesaid provision, it appears that it is an inclusive definition. It include....
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....aid discussions, we are of the considered view that the confirmation of the PAO by the Ld. Adjudicating Authority sans Government of Odisha is not bad in law. This issue is accordingly answered against the Appellant Trust. 19. The next legal issue raised by the Appellant Trust is that the essential ingredients of attachment of property as provided in section 5(1) PMLA, 2002 read with the second proviso to section 5(1)(b) PMLA, 2002, has not been satisfied. On perusal of records, it is revealed that Shri Dash had infused Rs. 9,01, 66,000/- with the Appellant Trust during the period 2009-2012 which was allegedly generated out of criminal activities by Shri Dash and that this amount was utilized for the purpose of construction of buildings, payment of salary of staffs of the Appellant Trust etc. It is also revealed from the record that some of the amount has also been utilized for the return of money to then existing trustees as per Letter of Intent. The trustees came to know about the alleged criminal activities of Shri Dash and donation of the aforesaid amount allegedly generated through criminal activities, through media in the year 2012 and that Shri Dash was asked to vacate....
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....ised and accordingly, this issue is answered against the Appellant Trust. 21. The claim of prosecution that the Appellant Trust is a bona fide receiver is not correct in view of the fact that Shri Dash himself was aware of the fact that the amount he was infusing is proceeds of crime generated out of criminal activity and that the said amount was utilized for the purpose of various developmental work etc. of the Appellant Trust during his tenure as a trustee of the Appellant Trust when he was in control of that Appellant Trust. In view of the above the claim of the Appellant Trust that it is a bona fide receiver has no legs to stand. 22. The Appellant Trust has raised the issue that the attachment is liable to be set aside as no prosecution complaint has been filed against the Appellant Trust within 365 days as stipulated u/s 8(3)(a) of PMLA, 2002. In this regard, it is seen from the record that the Appellant Trust has pleaded and argued that the PAO is confirmed on 1-6-2015 and till date no prosecution complaint/supplementary prosecution complaint for commission of offence u/s 3 punishable u/s 4 of the PMLA, 2002 has been filed against the Appellant Trust within 90/365 da....
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.... of the prosecution complaint in the year 2016, when there was no limitation provided u/s 8(3)(a) for continuation of the conformation of attached property either during the investigation or the pendency of the proceedings in related to any offence under this Act before a court. For the first time the limitation of 90 days was inserted in the PMLA, 2002 on dated 19-4-2018 and subsequently 90 days was substituted by 365 days on dated 20-3-2019. In other words, when the prosecution complaint was filed on 31-3-2016 there was no such limitation. The aforesaid provision of law does not speak about continuation of any investigation or criminal proceedings in any court of law against any person, but it states about the property. In the peculiar fact and circumstances of the case, the judgements and orders passed by this tribunal and relied upon by the Appellant Trust are not applicable to the present fact and circumstances of the appeal. The Appellant Trust has also relied on the judgement passed by the Hon'ble High court of Punjab and Haryana in the matter of Seema Garg (supra), so also the judgment of Hon'ble Supreme Court in the matter of Vijay Madan Lal Choudhary (supra)....
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....ssions made by the Appellant Trust admitting the receipt of the aforesaid amount. It is also observed in the impugned order that no bank has approached the authority claiming the property and also held that there is no requirement of supplying the recorded reasons to the defendants and that the PAO/OC sufficiently conveys what they have to meet as observed by the Hon'ble High Court, Bombay in the case of Brizo Reality Co. (P.) Ltd. (supra) The detailed discussions are made at pg. from 51- 56 of the impugned order. In view of the discussions made above, we are of the considered view that the Appellant Trust has no merit so far as this issue is concerned. Hence, this issue is answered against the Appellant Trust. 25. During the course of argument, the Ld. Counsel for the Appellant Trust submitted that there is no nexus or link between the attached property and the criminal activity relating to the alleged scheduled offence. We are unable to accept this argument because it has been admitted that a sum of Rs. 9,01,66,000/- which was generated allegedly from the criminal activity by Shri Dash has been infused into the Trust and that the same amount was utilized by the Appellan....