TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 887
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....l Code/Ranbir Penal Code. Subsequently, the ECIR was recorded on 27.01.2022 followed by investigation 3. The allegation in the FIR was for a property purchased by J&K Bank at Bandra Kurla Complex at a very high price simply to confer undue benefit to the vendor for kickback. The property was not required as there was sufficient space/accommodation available with J&K Bank in Mumbai for banking operations. The allegation of quid pro quo was made on facilitating the sale though an advertisement issued by the J&K Bank on 06.11.2008 to invite offers from interested parties for outright sale of integrated office premises at Bandra Kurla requiring 20000 sq. ft space. The offers were received and opened by the Committee constituted for the purpose and out of the offers received, eight properties at different locations were identified. A letter was then received from M/s Ashapura Builders showing its willingness to offer 3rd floor of the building measuring 30000 sq. ft. built up area @ Rs. 22,500 per sq. ft. A Committee was constituted with the approval of the Chairman to take a view with regard to the offer but the Committee did not take any decision on the offer given by M/s Ashapura B....
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....n the process causing loss to the bank's exchequers. 6. During the course of investigation, the statements were recorded under Section 50(2) and (3) of the Act of 2002 which includes the statement of Vyomesh Shah and others and even of Nihal Garware said to be involved in receipt of illegal gratification of Rs. 12.82 Crores. It is said to have been received through the Chartered Accountant Bharat Shah who took the help of other Chartered Accountants Rakesh Doshi, Praveen Goel, Amit Jain, Sitaram Arora and Subhash Agarwal with involvement of M/s AMR Construction Pvt. Ltd. for the purpose of accommodation entries. The illegal gratification to Nihal Garware was paid in the guise of brokerage through M/s AMR Construction Pvt. Ltd. without receiving any service to M/s Vishal Techno Commerce and Mrs. Kantarani Gulati. The payment of Rs. 12.82 Crores received by M/s AMR Construction Pvt. Ltd. was transferred after retaining the TDS credit of Rs. 59,40,000/- to few Kolkata based shell entities as suggested by Subhash Kumar Agarwala, CA. He was Kolkata based CA to arrange accommodation entries for M/s AMR Construction Ltd. for increasing company's turnover artificially. The payments ....
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....20 lakhs as direct proceeds of crime out of Rs. 42 Lakhs received from Nakshatra. No explanation was provided by the ED as to why they chose to disregard Rs. 22 Lakhs and considered only Rs. 20 Lakhs as direct proceeds of crime. It is with a further statement that the respondents have grossly relied on the statement of Bharat Shah who stated about receipt of the amount as an accommodation entry and referred to the ledger entry of Nakshatra. The facts recorded in the POC is in ignorance of the statement of Nihal Garware recorded on 21.03.2022 who said that the loan was advanced and was duly repaid on 18.06.2014. The Provisional Attachment Order and the impugned order is totally silent on the aforesaid. In fact, entire Rs. 42 Lakhs received from Nakshatra was repaid. 10. The other amount of Rs. 10 Lakhs was received from M/s Atharva Business Pvt. Ltd. which was considered to be direct proceeds of crime. It was again the loan advanced by the said Company and repaid on 07.07.2014. The Provisional Attachment Order was passed without recording the statement of M/s Atharva Business Pvt. Ltd. and even no document was seized from the said Company so as to refer it to be direct proceeds o....
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....wn a sum of Rs. 1 Crore to be direct proceeds of crime and otherwise no material could be produced to show remaining amount of Rs. 11 Crores to be proceeds of crime, rather investigation for it was not completed. However, the properties were provisionally attached. The respondents even ignored the statements of other witnesses and the source for purchase of the property disclosed by Nihal Garware. In the year 2012-13, a sum of Rs. 3.75 Crores was paid by M/s Garware Financial Corporation Limited towards purchase of subject property. In the year 2013-18, the remaining payment of Rs. 8.25 Crores was made by Nihal Garware from his two bank accounts with RBL and CITI Bank. The amount aforesaid was received by the appellant from his professional services. The source of funds to purchase the property was ignored by the respondents and accordingly on the facts itself, the impugned order deserves to be set aside. 15. The learned counsel for the appellant further submitted that the ED had erroneously applied the term equivalent value to the property purchased out of disclosed source of income going against the settled proposition of law laid down by the Apex Court in Vijay Madanlal Choud....
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....ument was made and would be referred while dealing with the arguments of the counsel for the appellant to avoid repetition of one and same facts and for the sake of brevity. The counsel for the respondents, however, made a specific reference to relevant facts and material available on record to indicate that Nihal Garware received a sum of Rs. 12,82,93,380/- from Vyomesh Shah and Rajkumar Gulati. The figure aforesaid was taken to be Rs. 12 Crores for attachment of the property. The counsel made a reference to entire money trail to indicate as to how the aforesaid amount of bribe was passed on to Nihal Garware who utilized it for purchase of the property. So far as the source of income disclosed by the appellant is concerned, it could not be proved. The arguments in reference to all the arguments raised by the appellant were contested and would be referred by this Tribunal in its order. Finding of the Tribunal: 20. The brief facts pertaining to the case have been given in the opening paras of this order. The allegation pertains to purchase of a premises for J&K Bank at Bandra Kurla Complex said to be without requirement and otherwise on a very high price to extend undue benefi....
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....was at the time when Nihal Garware became Director of the Bank. In reference to the new advertisement, the offers were received and opened by the J&K Bank. On preparation of the comparative statement, M/s Ashapura Builders was found to be lowest but no heed was paid to the offer given by the said Company. The officers of J&K Bank shortlisted the companies offered their premises and then the premises offered by M/s Ackruti Gold BKC @26000/- per sq. fit was accepted ignoring the lower price offered by M/s Ashapura Builders. No explanation to accept the offer of M/s Ackruti Gold BKC was given involving Rs. 109 Crores. In any case, the amount of total sale consideration with stamp duty was worked out to be Rs. 1,80,57,05,200/-. It is more so when the rate quoted by M/s Ashapura Builders between 22000 to 25000 per sq. ft much below the rate quoted and accepted by M/s Ackruti Gold BKC. 23. The facts on record further shows that J&K Bank purchased a building earlier thus reason for further acquisition of property was given and even if it is ignored, the issue is as to whether the property was purchased at an appropriate rate without kickback to Nihal Garware. The facts on record shows ....
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....tatement, he disclosed that once the amount of brokerage was credited in the bank account of M/s AMR Construction Pvt. Ltd., Rakesh Doshi informed to collect the cash from the same locality in Mumbai. It was then informed Santosh Borkar to collect the cash from the address given by Rakesh Doshi. Santosh Borkar of Nihal Garware informed the note numbers of Rs. 10 available with him to be informed to Rakesh Doshi for delivery of cash and accordingly necessary arrangements, as required were made. Bharat Shah in his statement further admitted that he has provided several accommodation entries to others also where the cash is arranged in lieu of cheque or vice versa. He had given similar accommodation entries to Mrs. Jagruti Bharat Shah in the guise of loan or share capital investment of Rs. 15 Lakhs in M/s Garware Finance Corporation Ltd. On a further issue about the benefit to Bharat Shah for arranging such accommodation entries, it was clarified that brokerage bill in the name of M/s AMR Construction Pvt. Ltd. was arranged for passing of the money by M/s Vishal Techno Commerce Pvt. Ltd. and Mrs. Kanta Rani Gulati. They facilitated receipt of the said brokerage amount in cash on the r....
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.... Nihal Garware. It was with further statement that the source to purchase the property in Nizammudin East, New Delhi was disclosed but ignored by the Adjudicating Authority. To analyze the source, it is required to be noted that M/s Satman Strategies Pvt. Ltd. itself was purchased by Nihal Garware in the year 2012-13 through his company M/s Garware Finance Pvt. Ltd. The company was purchased apparently for holding the property at 22, Nizammudin East, New Delhi. Analysis of the financials of M/s Satman Strategies Pvt. Ltd. revealed that there was no business transactions in the company in the year 2012-13 except for making payment for purchasing the property and there were no funds available at their own. The analysis of the balance sheet and profit and loss account of M/s Satman Strategies Pvt. Ltd. was also made where insignificant amount was found not matching the amount of Rs. 12 Crores. The respondents otherwise gave money trail of the funds used for purchase of the property at 22, Nizamuddin East, New Delhi and is quoted thus: "Nihal Garware negotiated the deal between J&K Bank and the sellers for purchase of Ackruti Gold Building and asked for approx. Rs. 13 Crores i....
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....5 Crores out of the professional charges and Rs. 3.75 Crores was arranged by M/s Garware Finance Pvt. Ltd. to purchase the property valued at Rs. 12 Crores. To analyze the issue, we have gone through the bank statements of M/s Garware Finance Pvt. Ltd. and Satman Strategies Pvt. Ltd. It was obviously in reference to the sale deed dated 11.04.2018. The bank account does not reveal an accumulated amount of Rs. 8.25 Cores which was to be paid on the date of execution of the sale deed dated 11.04.2018. The minute examination of the bank statement does not reveal even transfer of the said amount to the seller of the property thus we do not find that other than statement of facts for the source, the appellant remained unsuccessful to prove the facts aforesaid. An amount of Rs. 3.75 Crores was paid by M/s Garware Finance Corporation Pvt. Ltd. in the year 2012-13 whereas the sale deed was executed in April, 2018 in the name of the appellant company. The payment therein was through the cheque and RTGS on different dates upto the year 2013 while the deed was extended in the year 2018 and thereby disclosure of fact that a sum of Rs. 8.25 Crores was arranged by Nihal Garware at his own sources....
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....rstwhile Chartered Accountant of Nihal Garware. The facts were even proved based on the statement of Bharat Shah which has been criticized by the appellant without showing any reason or basis. In a similar manner, the amount received from Asha Suresh Shah was disclosed and has been questioned by the appellant in absence of material. We find a proper analysis of the fact was made by the respondents for the route of the amount of Rs. 1 Crore to be direct proceeds of crime. The facts aforesaid are borne out from the statement of Jagruti Bharat Shah and other statements for which no explanation or response could be given. In the light of the facts aforesaid, we do not find that the appellant remained successful to disclose the source for purchase of property. 28. The learned counsel for the appellant then raised a legal issue as per Section 5(1) of the Act of 2002. The counsel submitted that no reasons to believe along with the Provisional Attachment Order dated 19.05.2022 was given. The reasons to believe has to be recorded in writing based on the material in possession of the competent authority. The appellant sought a copy of the reasons to believe vide its letter dated 20.07.202....
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....lature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities". In a recent judgment in the case of Pradeep Nirankarnath Sharma Vs. State of Gujarat and Ors. reported in MANU/SC/0346/2025, the Apex Court held as under: "14. Further, this Court cannot issue a blanket direction restraining the registration of FIRs against the Appellant or mandating a preliminary inquiry in all future cases involving him. Such a direction would not only be contrary to the statutory framework of the Code of Criminal Procedure but would also amount to judicial overreach. As rightly observed by the High Court, courts cannot rewrite statutory provisions or introduce additional procedural safeguards that are not contemplated by law". 29. We may further refer to the judgment of the Madras High Court in the case of G. Gopalakrishnan Vs. The Deputy Director, Directorate of Enforcement & Ors. reported in MANU/TN/3622/2019 where it has been held that Section 8(1) of the Act of 2002 does not contemplate recording reasons to believe in writing and to be served. A reference of S....
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....rned Senior Counsel that at every stage, reasons need to be recorded as held by the Delhi High Court in the earlier decision, may not fit in to the factual matrix of the present case, particularly, for two reasons, firstly, that the initial provisional order of attachment itself has extensively dealt with several property transactions which acquired from the proceeds of the crime and secondly, that the show cause itself has advised that Section 8(1) has been satisfied by the Adjudicating Authority vide the copy of satisfaction recorded by the Adjudicating Authority can be obtained by applying to the Registry. In such view of the matter, this Court does not find that the objection raised on behalf of the writ petitioners in this regard, is tenable. In any event, even now these writ petitioners can approach the Adjudicating Authority and seek for any further opportunity in case they are advised to do so. Therefore, this Court is of the view that these Writ Petitioners are raising these objections only with a motive to frustrate the proceedings initiated under PMLA by stalling due process of law which was duly set in motion. 96. The above arguments may appear to be quite attr....
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....ean only when it is obtained or derived directly or indirectly out of the scheduled offence, rather it can be when the proceed acquired or derived out of the scheduled offence is not available or vanished, then the property of equivalent value can be attached. In that case also, such a property would fall in the definition of `proceeds of crime'. Thus, what can be attached is the property of equivalent value when the proceed obtained or derived directly or indirectly out of the commission of crime is not available or vanished. It is obviously after confirming the fact that non-attachment is likely to vitiate the proceedings of confiscation. 32. The other judgment relied by the counsel for the appellant is in the case of Seema Garg Vs. Deputy Director reported in 2020 SCC Online P&H 738. Paras 32 to 35 of the said judgment have been relied. The Punjab and Haryana High Court had taken a view that the definition of 'proceeds of crime' has three limbs. However, the true meaning of second limb of definition of 'proceeds of crime' was not applied and accordingly it was distinguished subsequently by Delhi High Court in the case of Enforcement Directorate v. Axis Bank, reported in 2019 ....
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....t High Courts are on the issue which was elaborately discussed and decided by the Delhi High Court in the case of Prakash Industries Limited (supra) which has also been referred by the appellant. In the case of Prakash Industries Limited (supra), the judgment of Punjab and Haryana High Court in the case of Seema Garg (supra) was also discussed but was not followed. The substance of all the judgments seems to be that the property can be provisionally attached when the Deputy Director authorized by the Director has reasons to believe that it is involved in money laundering and that belief should be on cogent evidence and not for the sake of it. In the instant case, we have referred to the evidence to indicate the basis to hold proceeds of crime in the hands of the appellant. It is not only in reference to the statement of Bharat Shah, CA of Nihal Garware of M/s. Satman Stategies Pvt. Ltd. but other evidences followed by the fact that the appellant could not disclose the source to acquire the property for a value of Rs. 12 Crores. The payment of consideration out of the earning and all facts have been elaborately discussed by us in earlier part of the judgment. The facts aforesaid hav....