TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 1530
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....nt order after recording ECIR. The provisional attachment order was confirmed by the Adjudicating Authority. An appeal has been preferred to challenge the said order. After confirmation of the provisional attachment by the order dated 14.03.2023, the respondent issued a notice under Section 8(4) of the Act of 2002 on 12.04.2023 for possession of the flat refer to above. The notice for possession has been issued without giving any exceptional reasons rather caused as a rule. It is ignoring the judgment of the Apex Court in the case of Vijay Madanlal Choudhary vs. Union of India reported in 2022 SCC Online SC 929. The notice for possession dated 12.04.2023 does not give any exceptional reasons so as to evict the appellant from Flat 4-C in Gold Croft Building at Mumbai. In absence of disclosure of exceptional reasons in the notice despite a mandate of the Apex Court in the case of Vijay Madanal Choudhary (Supra), the impugned notice for possession deserves to be stayed during the pendency to the appeal. The respondents have filed reply to supply exceptional reasons for taking possession but when impugned order does not contain reasons, it cannot be now supplemented by way of reply. T....
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....gly to allow the application. The learned counsel for appellant has given reference to the judgment of the Apex Court and also of various High Courts to support his argument. The first judgement referred by the appellant is in case of Vijay Madanlal Choudhary (Supra). Reference of para 304 to 307 of the judgement (Supra) has been given. It is submitted that stage of taking possession of the property comes on an order of confiscation. In the instant case, the stage of confiscation has not yet come rather it would be on conclusion of the trial and only when an order of conviction is passed. It is not a case where exceptional circumstance exist. In the case of Union of India Vs Ganpati Dealcom Pvt. Ltd. dated 23.08.2022 in Civil Appeal No. 5783/2022, the Apex Court has illustrated out few exceptions for taking possession. It can be when appellant is involved in terrorist activities or in drug cartels. It can also in a case of organized crime. The case in hand is not falling in any of such category thus referring to the aforesaid judgment, the appellant prayed for an interim order. The another judgment referred by the counsel for the appellant is of Telangana High Court in the case ....
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....ble. The loan was otherwise taken by committing fraud. All those facts came on an Audit after the matter was taken for insolvency before NCLAT. The way fraud was committed not only shows the intention of the appellant and other companies but would show the organized crime. If the proceeds of crime is out of the organized crime, the possession of the property thereupon is considered to be on exceptional ground. To support the argument, reference of the judgment of the Apex Court and different High Court has been given and would be referred while analyzing the arguments. The learned counsel for the respondents submitted that as against the loan of Rs. 22,842 Crores taken by ABG Shipyard and given to its associated companies and others, the attachment of properties could be only for a sum of Rs. 2747 Crores. The loan was syphoned by the ABG Shipyard Ltd. and Subsidiary Companies and it cannot be without committing a crime in organized manner. It is a crime against the country and the public which cannot be ignored rather the Tribunal should take a serious view on it. The residential flat where Kamlesh Aggarwal and family are residing has not been subjected to eviction rather it is f....
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....ptional reason in the notice for causing possession of the property rather what has been directed that an action for possession should be an exception and not as a rule. Exceptional reasons have been given to contest the application therefore a challenge to the eviction notice on the ground that it does not disclose reasons is not tenable. The Apex Court in the case of Vijay Madanlal Choudhary (Supra) has referred to the possession at the stage of confiscation of the property but in para 304 to 307 itself, it has permitted eviction after confirmation of the provisional attachment order but not as a rule but as an exception. There exists some contradiction in the judgment of the Apex Court and in any case what should prevail is the statutory provisions having been held to be constitutionally valid. Statutory provision cannot be re-written by a court and thereby it is absolutely erroneous on the part of the appellant to submit that notice for eviction can be caused only at the stage of confiscation rather if that stage comes, the property immediately vests in the government. In view of the above, the respondents were justified to cause a notice for eviction. The appellants have inv....
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....ated 07.02.2022 alleged inter-alia, commission of offences of criminal conspiracy, cheating, criminal breach of trust, abuse of official position, thereby causing wrongful loss to the tune of Rs. 22,842/- Crores to the consortium of banks, comprising State Bank of India, erstwhile State Bank of Patiala (presently State Bank of India), Commercial Finance Branch, New Delhi, erstwhile State Bank of Travancore (presently State Bank of India), Commercial Branch, New Delhi etc. let by ICICI Bank. 4) The complaint dated 25.08.2020 filed by SBI alleged that the accused person has colluded together to commit illicit activities including diversion of funds, misappropriation and used the funds for purposes other than the purposes for which the funds were released by the bank. 5) The bank accounts of ABGSL were maintained at SBI, Overseas Branch, Mumbai, where the fraud occurred, the fraud had also taken place at the branches of erstwhile State Bank of Patiala, Commercial Finance Branch, New Delhi and State Bank of Travancore, Commercial Branch, New Delhi. The fraud perpetrated by the accused came to light consequent to the Forensic Audit conducted for the period from April, 2012 to July....
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....ansaction among its various group companies and other related entities so as to hoodwink the creditors and to enjoy enhanced credit limits from consortium of banks. Part of funds availed from credit facilities was transferred and diverted to various Singapore based entitles like ABG Singapore Pvt. Ltd as a loan of USD 71 million and the fund was further invested in Standard Chartered Trust (Cayman), however, out of USD 71 Million, USD 28.1 Million was brought back to India but for the remaining USD 43 million, ABGSL acquired preference shares of ABG Singapore Pvt. Ltd., however, it failed to prove the genuineness of this transaction, therefore, the end use of this amount remains unknown. 10) Further, as per the statement of Mr. Muthuswamy Santhanam, it is revealed that though he had been appointed director in various Singapore based entities/ companies of ABGSL but he was not able to explain the business activities carried out by those Singapore based entities/ companies. Mr. Rishi Kamlesh Agarwal, Mr. Dhananjay Datar and Mr. Balaji Gopal was the key persons controlling the affairs such Singapore based companies. 11) Further, the POC here, which were the loan amount received ....
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....n of Rs. 22,842 Crores from the consortium banks by resorting to the illicit practices of inflating the books of accounts of the company by way of making circular transaction among the various groups of companies and other related entities so as to hoodwink. It was to enjoy enhanced credit limit from consortium of banks. The part of funds availed from credit facilities were transferred and diverted to various Singapore based entities like ABG Singapore Pvt. Ltd. apart from others from whom substantial amount remain unpaid. The fund was even diverted to Standard Chartered Trust (Cayman) and many other companies located at different countries like Singapore, Mauritius, Dubai etc. The appellant is one among them, as are CG Property Pvt. Ltd., Aries Management Pvt. Ltd., Somerset State Pvt. Ltd., Thirupati Landmark Pvt. Ltd., ABG Power Pvt. Ltd., Agbros Leasing and Finance Pvt. Ltd. These companies have no business activities. They were incorporated only for the purpose of acquiring immovable properties through the funds diverted by ABG Shipyard Ltd. Those, immovable assets were projected to be untainted properties though are out of the proceeds of crime. It is shown that ABG Shipyard ....
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....of a trivial amount; but the offence with which we are concerned is as well planned and was committed with a deliberate design with an eye of personal profit regardless of consequence to the society at large. To quash the proceeding merely on the ground that the accused has settled the amount with the bank would be misplaced sympathy. If the prosecution against the economic offenders are not allowed to continue, the entire community is aggrieved. 12. In recent decision in Vikram Anantrai Doshi (Supra) this Court distinguished Nikhil Merchant's case and Narendra Lal Jain's case where the compromise was a part of the decree of the court and by which the parties withdrew all allegations against each other. After referring to various case laws under subject in Vikram Anantrai Doshi's case, this Court observed that cheating by bank exposit fiscal impurity and such financial fraud is an offence against society at large in para (23), this Court held as under: - "23. Be it stated, that availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the ....
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.... and quashed the criminal proceeding. The said quashment neither helps to secure the ends of justice not does it prevent the abuse of the process of the court no can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a finding in our view would be difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that the order of the High Court is wholly indefensible." The similar view was taken by the Apex Court in the case of Rohit Tandon vs. Enforcement Directorate Criminal Appeal No. 1878/2017 decided on 10th November, 2017 Para 18 of the said judgement is quoted hereunder: "18. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further, when attempt is made....
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.... the appellant even on the ground that no reason has been given therein, whereas administrative order should disclose the reason. The reference of the judgement of Apex Court in the case of OPTO Circuits (India) Ltd. v. Axis Bank, (2021) 6 SCC 707 has been given where it was held that the reasons for passing of an order shall be given therein and cannot be substituted: Para 12 of the said judgment is quoted thus: - "12. The action sought to be sustained should be with reference to the contents of the impugned order/communication and the same cannot be justified by improving the same through the contention raised in the objection statement or affidavit filed before the Court. This has been succinctly laid down by this Court in Mohinder Singh Gill v/ Chief Election Commr. [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] as follows : (SCCp. 417, para 8) "8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit otherwise. Otherwise, an order bad in the beginning may, by the time it c....
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.... Court in the case of Vijay Madanlal Choudhary (Supra) that provision of Section 8 (4) cannot be invoked as a course but as an exception. The said judgment does not mandate assignment of the reason in the notice itself. What has been ruled is that the possession should not be sought as a course but as an exception. In such circumstance notice was not required to contain the reason for taking possession of the attached property. The reasons can be supplied by the respondents as and when the notice is questioned by the aggrieved party. At this stage it may be clarified that depending on the nature of the administrative order, reasons may require to be assigned therein but not for a notice requiring no mandate under the law for assignment of reasons. The respondents have otherwise made out a case to fall in the category of exception to invoke Section 8 (4). Thus, we are unable to accept the ground urged by the appellant to question the validity of the notice under Section 8 (4) of the Act. The learned counsel for the appellant has even made reference of the judgment of the High Court propounding a ratio on Section 8 (4) of the Act of 2002 after referring to the judgement of the Apex....
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....n the peculiar facts of a particular case so as to invoke the option available under sub-section (4) of Section. 305. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act regarding the manner of taking possession of attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8 (4) for taking possession of the property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order, should be an exception and not a rule. That issue will have to be considered on case-tocase basis. Upon such harmonious construction of the relevant provisions, it is not possible to countenance challenge to the validity of sub-section (4) of Section 8 of the 2002 Act. 306. The learned counsel appearing for the Union of India, had invited our attention to the recommendations made by FATF in 2003 and 2012 to justify the provision under consideration. The fact that non-conviction based confiscation model is permissible, it does not ....
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....ceptional nature, it can be after confirmation of provisional attachment order. If we strictly go by the Section 8 (4), the right of the respondents to invoke aforesaid provision comes in existence forthwith upon confirmation of the provisional attachment order. The statutory provision cannot be ignored by us and even by the court. In fact, possession at the stage of confiscation of the property remains automatic because on confiscation of the property, it vests in the government and would be along with the possession and therefore, Section 8 (4) was brought on the statute to allow possession of the property even prior to confiscation and the said provision has been upheld by Apex Court where its constitutional validity was challenged. Once the provision is held to be constitutionally valid, a view contrary or offending the statutory provision cannot be taken. Thus, we are not in agreement with the appellant that possession of the property can be taken only on confiscation. It would be rewriting Section 8 (4) of the Act though possession after confirmation of the provisional attachment order would not be as a rule but an exception. The issue now remains as to what would be an exce....
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.... herein. Accordingly, we leave the aforesaid question of law open." The judgement (Supra) refers to exception to invoke Section 8 (4) and the present case falls is one of the category carved out by the Apex Court. The present case being a case of organised crime, we find that exception exit to invoke Section 8 (4) to take possession of the property. Thus, for all the reasons given above, we are unable to accept the arguments raised by the learned counsel for the appellant. Before parting with the judgment, we would further comment on conduct of the appellant. As per the statement made by them, the purchase of the property is shown to be out the funds earned in cash and not out of the proceeds of crime. It is stated that whatever fund was taken from ABG International Pvt. Ltd., was not out of the bank loan taken by ABG Shipyard Ltd., but out of their own earnings in cash. The fact aforesaid could not be substantiated and, further with regard to the loan amount said to have been re-paid to the company through a notarized assignment deed, it is stated by the Notary that there is no entry of the said document in the register and that it bears an odd no. 12-A which can happen only in....