TaxTMI 
TaxTMI 
2025 (7) TMI 415
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....), MP-PMLA-6833/DLI/2019 (Misc.), MP-PMLA-6676/DLI/2019 (Stay) & FPA-PMLA-3350/DLI/2019, MP-PMLA-209/DLI/2025 (Misc.), MP-PMLA-6834/DLI/2019 (Misc.), MP-PMLA-6677/DLI/2019 (Stay) & FPA-PMLA-3351/DLI/2019 JUSTICE MUNISHWAR NATH BHANDARI AND SHRI V. ANANDARAJAN For the Appellant : Mr. Kartik Venu, Mr. Shikhar Sharma, R. Jude Rohit, Advocates For the Respondent : Shri Pankaj Pandey, Advocate FINAL ORDER These appeals have been filed under Section 26 of the Prevention of Money Laundering Act, 2002 ("PMLA, 2002") challenging the order of the Ld. Adjudicating Authority ("AA") established under that Act. Appeals No. FPA-PMLA-3348 to 3351/DLI/2019 arise out of Order dated 14.11.2019 passed in Original Complaint (O.C.) No. 1158/2019 confirming the attachment of properties made vide Provisional Attachment Order ("PAO") No. 05/2019 dated 17.06.2019 under Section 5(1) of the said Act by the Directorate of Enforcement (ED) in ECIR No. ECIR/02/DZCR/2019 dated 26.02.2019. Appeals No. FPA- PMLA-5020/DLI/2022 and FPA-PMLA-5455/DLI/2023 arise out of the order of the Ld. AA dated 22.08.2022 in O.C. No. 1634/2022, confirming the attachment of properties made by the ED vide PAO No. 01/20....
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....s through bank accounts and by the use of cheques. These bogus transactions were carried out to avail credit facilities from the consortium of banks. The bogus transactions were shown with some proprietorship firms in Naya Bazar, Delhi which worked on a commission of 2 % per quintal. In reality these parties only issued receipts of sale and purchase and charged 2 % per quintal as commission but were actually not carrying out any business in purchase and sale of rice. They were sham companies and were used only for the purpose of rotation of money and the amount received in the bank account of these companies was returned to the bank account of M/s BFOPL on the same day. 6. Investigations by the ED further revealed that in 2011, Standard Chartered Private Equity acquired 29% shareholding in M/s BFOPL, through Standard Chartered Private Equity (Mauritius) II Ltd. and Standard Chartered Pvt. Equity (Mauritius) III Ltd. In and around September 2012, M/s KPMG India Private Ltd., on behalf of M/s BFOPL and Virkaran Awasty, approached M/s Hassad Food Company, the company of M/s. Hassad B V, inviting them to invest in the company as a strategic partner. KPMG India Pvt. Ltd. had prepared....
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....art of the team which evaluated BFOPL. He was given responsibility to see the assets, meet the BFOPL team and its advisors etc. He was part of the distributors' due diligence meetings and interviewed distributors. It was further alleged in the O.C. that he was aware that Virkaran Awasty was routing stocks through dummy/shell entities, and yet stated that distributors were genuine. He did not want detailed Question & Answer session with distributors. Many times, he visited warehouses and godowns of BFOPL with Virkaran Awasty and was well aware of the stock position of BFOPL. Despite knowing the true picture of stocks and finances, he waived off the red flags raised by auditors and others at various stages, including distributors' audit prior to acquisition, and offered that he would do such audit after acquisition of BFOPL. He also shared internal communication of his company with Virkaran Awasty. He compromised the due diligence process by giving critical advice on how to respond on the concerns raised by Hassad. He overruled a questionnaire prepared by E&Y for the distributor due diligence exercise, based on his "understanding" that the distributors are genuine. He gave clearance ....
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....) valued at 2,00,00,000 (attached to the extent of Rs. 89,75,038.49) 89,75,038.49 09.05.2013 11. Appeals No. FPA-PMLA/5020/DLI/2022 & FPA-PMLA/5455/DLI/2022 have been preferred against the confirmation of the further attachment of the immovable property bearing the address 501, Kritika Solitaire, Chembur, Mumbai standing in the names of Sai Chandrasekhar and Smt. Kamini Maratha to the extent of Rs. 1,10,24,961.50 vide PAO No. 01/2022 dated 22.08.2022. Notably, the said immovable property which was valued at Rs. 2,00,00,000/-, was attached partially, to the extent of Rs. 89,75,038.49 vide the first PAO (see Sl. No. 4 of the table above), holding it to constitute "value of such property" within the definition of "proceeds of crime" as provided under Section 2(1)(u). The same property subsequently became the subject-matter of a second attachment for the balance amount of Rs. 1,10,24,961.50, which has given rise to these two appeals. Arguments on Behalf of the Appellants 12. The main argument raised on behalf of the Appellants in these appeals is that there is no underlying predicate offence. It is contended that there cannot be a presumption as to commission of schedule....
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....ondents have filed detailed replies to both factual and legal issues raised in the appeals and strongly contest the averments made on behalf of the Appellants. In the interest of brevity and to avoid repetition, the arguments and submissions put forward by the respondents shall be referred to at the appropriate places while discussing our findings. Analysis & Findings 18. Since common arguments have been presented on behalf of the appellants for both sets of appeals, the same are discussed and disposed of together. 19. We have given careful consideration to the material on record and the rival contentions of the parties. The main argument raised by the appellants in these appeals is that there was no underlying predicate offence. We do not find any merit in this contention. The impugned order notes that an FIR numbered as FIR No.136 dated 13.12.2014 was filed for offences punishable under section 409, 420 and 120-B of the IPC against M/s BFOPL, Virkaran Awasty, Ritika Awasty, Namit Arora, Vinod Sirohi and Rahul Raisurana. Further, a chargesheet in the predicate offence case was also filed by the EOW on 08.08.2016 before the competent court under sections 409, 420, 468, 471....
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....ements, denied his relationship with M/s Harin Ventures Limited. However, during search and seizure operations conducted at his the residential and business premises, documents were found which proved his association with the said company. Based on the findings made in the course of investigation, the respondent Directorate sent a Letter of Request to UAE asking for the account details of M/s. Harin Ventures Ltd. The documents received from the NBD Bank, Dubai in response to the said Letter of Request revealed that M/s. Harin Ventures Ltd. was incorporated on 13.02.2013 and Sai Chandrasekhar, alongwith with his wife, was the owner of the said company. Further the main accused, Virkaran Awasty, had transferred USD 1,000,000 on 10.04.2013 and USD 1,500,000/- on 12.04.2013 to the account maintained with the Emirates NSD Bank in the name of M/s. Harin Ventures Ltd. from which AED 57,75,215 were transferred into the personal account of Sai Chandrasekhar. In addition, AED (UAE Dirhams) 93116 were transferred to Shri Mukundan Menon from whose account a part of the consideration for acquisition of immovable property in the name of Sai Chandrasekhar and his wife, was paid to the builder. As....
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....hority, drawing a total monthly salary of QR 52,000 as early as 2009 and a housing loan availed from Deutsche Bank. The relevant bank details were seized by the complainant and are not accessible to the defendant (appellant before us). 22. With regard to the above contentions of the appellants, we have already briefly touched upon the flow of proceeds of crime to the Appellant from the persons accused of scheduled offences and the utilization thereof by the Appellant for acquisition of immovable property which has been attached. To briefly reiterate the findings, in his statement recorded on 25.05.2019 Sai Chandrasekhar had stated that he took a loan of Rs. 1.15 crore from his uncle, Sh. C. Mukundan, for the purchase of property and the said amount was transferred by Shri Mukundan directly to the builder's account. However, perusal of the accounts statement of M/s. Harin Ventures Ltd. revealed transfer of AED 93116 to Mr. Mukundan from the account of M/s. Harin Ventures prior to transfer of money by Shri Mukundan to the builder. As such, the contention of the Appellant that he took a loan of Rs. 1.15 Crores from his uncle Shri Mukundan and the said loan was never repaid was foun....
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....money laundering in any manner whatsoever. Under Section 2(1)(u) of the PMLA, 2002, property must necessarily be derived or obtained directly or indirectly by any person as a result of criminal activities relating to a scheduled offence and unless such causal link/connection is established such property would not fall within the ambit of proceeds of crime. Moreover, the property, as defined under Section 2(1)(v) of the Act, is required to have a direct, proximate and intricate link to the commission of the scheduled offence and in the absence of the same the provisions of PMLA, 2002 would not get attracted at all. The submission made by the Appellants is both factually and legally untenable. Firstly, "proceeds of crime", as defined under section 2(1)(u) which the appellant himself has placed reliance upon, includes "the value of such property". The Hon'ble Supreme Court, in its landmark judgment in the case of Vijay Madanlal Choudhary (supra) has categorically observed that 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 prop....
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....fied crime, the essence of "money laundering" being its projection as "untainted property" (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired "directly" by a scheduled offence and consequently "proceeds of crime". Any other property acquired using such bribe as consideration is also "proceeds of crime", it having been obtained "indirectly" from a prohibited criminal activity within the meaning of first limb of the definition. 107. In contrast, the second and third kinds of properties mentioned above would ordinarily be "untainted property" that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for ....
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....tion may be addressed specifically in our order. We have considered the said Application filed by the Appellant. 27. We find that in the said application, the appellant has contended that the property sought to be substituted, namely, 501, Kritika Solitaire, Chembur Mumbai, has been attached as "value thereof". However, this position no longer holds good since the subsequent attachment of the property was as proceeds of crime per se and not as value thereof. Secondly, even on law, the prayer for substitution cannot be accorded to. In the case of Sanghavi Bullion Pvt. Ltd. v. FPA-PMLA-5895/MUM/2023 Order dated 29.05.2024, while dealing with the application for substitution of attached property, this Appellate Tribunal had held as held as follows: "We have considered the submissions and perused the record. The application for substitution of bullion with immovable property has been made. The application has been contested by the Learned Counsel for the Respondent in reference of Rules of 2013 on which both the Counsels have placed reliance. Rule 4 has been referred by both the Counsels and quoted hereunder:- "4. Manner of taking possession of movable property-(1)....
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....ferred in favour of the Director of Enforcement. (5) Where the property confirmed by the Adjudicating Authority is in the form of money lying in a bank or a financial institution, the Authorized Officer shall issue a direction to the bank or financial institution, as the case may be, to transfer and credit the money to the account of the Directorate of Enforcement." Rule 4 (2) allows all the Authorised Officers to sell the property by auction if it is liable to speedy and natural decay. It however allows the owner of the property to furnish the Fixed Deposit of the equivalent value to substitute the property liable to speedy decay or require higher maintenance charges. The second proviso of Rule 4 (2) permits it in the case of conveyance because standing vehicle may also lose its value therefore it can be substituted by similar arrangements. It does not exist for bullion and jewellery etc. rather it has to be kept in the locker. In the light of the aforesaid Rule, the bullion is liable to be kept in the locker and there is no provision for its substitution by Fixed Deposit or any other arrangement which otherwise exist for the property liable to decay etc." ....