2025 (5) TMI 856

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.... Adv. FINAL ORDER Present appeals under Section 26 of Prevention of Money Laundering Act, 2002 (PMLA) are filed by the appellants against the order dated 22.08.2022 passed by the Adjudicating Authority in Original Complaint No. 1607/2022 (OC), whereby it confirmed the attachment of the properties attached by ED in Provisional Attachment Order No. 03/2021 (PAO) dated 23.12.2021, detailed as under:- i. The list of 180 properties purchased by Shri Rebba Satyanarayana in the names of family members/benami names which are in physical possession of the Banks/NBFCs, which are mentioned in Table I of the impugned order from page No. 134 to 149. ii. The list of 62 properties which are "Proceeds of Crime", purchased in the name of family members/benami names, which are in the physical possession of Shri Rebba Satyanarayana as mentioned in table II, at page no. 149 to 156 of the impugned order. iii. The list of 8 properties which are "Proceeds of Crime", purchased in the names of family members/benami names and are stated to be donated to others, as gift or transferred by way of GPA or lease, but still under the control of Shri Rebba Satyanarayana as mentioned....

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....aid eight aggregators; that between 2009 to 2012, the Agri Processing Centre of IDBI Bank had sanctioned KCC loans to the tune of Rs 159.24 Crore to the said 226 borrowers in and around Bhimavaram, West Godavari District, Andhra Pradesh, without obtaining proper loan documents, without conducting pre-sanction and post-sanction inspections and without ensuring the end use of the loan; that after the sanction of loans, the loan amounts were disbursed to the savings accounts of the beneficiaries and later the loan proceeds were withdrawn and handed over to aggregators in cash by the beneficiaries and were misappropriated. All loans subsequently became NPA causing loss of public money. 4.3 The said FIR also contains that the panel valuers of the bank had intentionally overvalued the collateral properties and furnished inflated net worth certificates in respect of the borrowers. Furthermore, the fish tanks were not at all in existence and that in furtherance of the conspiracy the mediators/aggregators had created documents by showing falsely that such tanks were in existence in the names of the borrowers." Accordingly, Directorate of Enforcement Visakhapatnam recorded ECIR N....

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....JD, ED, Lucknow v. Naresh Grover, 2019 (12) TMI 1094; Hon'ble Delhi High Court in case of Mahanivesh Oils & Foods Pvt. Ltd. v. ED, 2016 (5), TMI 981. Some of the said properties are ancestral properties, and the some of the properties were purchased even before the PMLA Act came into force. Accordingly, he stressed that all the said properties being not connected with the proceeds of crime in any manner, cannot be attached. In support of his contention, he also relied upon the judgment of Hon'ble Supreme Court of India in case Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586. He further argued that Rebba Satyanarayana in fact stood as surety for the farmers, who took the loan for the purpose of construction of ponds and pisciculture. Many farmers already repaid the loan to the concerned bank, however, majority of the farmers could not repay the loan due to losses. He contended that the said persons were not employees of Rebba Satyanarayana as alleged by ED. He pointed out that the properties which are already gifted or transferred to the third persons (as mentioned in Table III at Para 1 above), cannot be attached as the said donee/ transferee is a Bonafide reci....

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....She also pointed out the incriminating material against the appellants. Her detailed contention will be reproduced while giving our findings in the following para. 5. We have considered the rival submissions. Coming to the first issue that ED also attached the properties acquired by the appellant prior to the alleged period of offence from 2009 to 2012, is devoid of any merits. To analyze this issue, it would be gainful to refer to the definition of "proceeds of crime" given under Section 2(1)(u) of the Act of 2002 and is quoted thus- "2. Definitions -(1) In this Act, unless the context otherwise requires, -  xx xx xx xx xx xx xx xx xx xx xx (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property' [or where such property is taken or held outside the country, then the property equivalent in value held within the country] [or abroad]; [Explanation.- For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but....

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....erved that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved." Further, this Tribunal has also given an elaborate judgment on the issue in the case of Sadananda Nayak Versus The Deputy Director, Directorate of Enforcement, Bhubaneswar reported in FPA-PMLA- 5612/BBS/2023 on 14.10.2024 where all the judgments on the issue have been considered and thereby this issue was decided in favour of ED. Further, in view of the para 68 of the judgment of Hon'ble Supreme Court of India in the case of Vijay Madanlal Chaudhary Vs. Union of India, wherein, it is held that- "68. 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 property equivalent in value held within t....

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....f Ld. Counsel for the appellants that there is no apprehension or reason to believe that the mortgaged properties, if not attached immediately, it can likely frustrate any proceeding, as per second proviso to section 5(1) of PMLA, 2002. Even at this stage, in case there is no attachment, then, some settlement could be arrived at with the mortgagee bank to pay the settled amount within the specific period and thereafter appellants can dispose of the properties by transferring the same in favour of any prospective buyer with condition to pay all the dues directly to the bank as per settlement. Under such circumstances, there will be no occasion for the ED to initiate the attachment proceedings, being already alienated by the mortgagors. This may result in multiplicity of proceedings on account of new vendee, who may take the plea of a Bonafide purchaser, on account of execution of sale deed and absence of any restriction of attachment on the said purchased properties. Therefore, second proviso to section 5(1) of PMLA, 2002, is clearly applicable in the present case for initiating & affecting the attachment proceedings. We cannot ignore the fact that proceeds of crime are already misa....