TaxTMI 
TaxTMI 
2025 (9) TMI 1705
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....A-91/HYD/2011 MP-PMLA-8792/HYD/2021 (Direction) FPA-PMLA-94/HYD/2011, MP-PMLA-8791/HYD/2021 (Direction) FPA-PMLA-95/HYD/2011 ., FPA-PMLA-97/HYD/2011, FPA-PMLA-98/HYD/2011, FPA-PMLA-99/HYD/2011, MP-PMLA-8790/HYD/2021 (Direction) FPA-PMLA-100/HYD/2011, MP-PMLA-8786/HYD/2021 (Direction) MP-PMLA-4316/HYD/2018 (U/s 35) FPA-PMLA-271/HYD/2011, MP-PMLA-8793/HYD/2021 (Direction) MP-PMLA-2314/HYD/2016 (Stay) FPA-PMLA-72/HYD/2011, FPA-PMLA-231/HYD/2011, FPA-PMLA-273/HYD/2011, FPA-PMLA-277/HYD/2011, FPA-PMLA-212/HYD/2011, FPA-PMLA-215/HYD/2011, FPA-PMLA-218/HYD/2011, FPA-PMLA-219/HYD/2011, FPA-PMLA-220/HYD/2011, FPA-PMLA-222/HYD/2011, FPA-PMLA-223/HYD/2011 FPA-PMLA-224/HYD/2011, FPA-PMLA-225/HYD/2011, FPA-PMLA-228/HYD/2011, FPA-PMLA-207/HYD/2011, FPA-PMLA-42/HYD/2010, FPA-PMLA-43/HYD/2010, FPA-PMLA-110/HYD/2010, FPA-PMLA-115/HYD/2010 . FPA-PMLA-117/HYD/2010, FPA-PMLA-123/HYD/2010, FPA-PMLA-125/HYD/2010, FPA-PMLA-78/HYD/2011, FPA-PMLA-80/HYD/2011, FPA-PMLA-85/HYD/2011, FPA-PMLA-90/HYD/2011, FPA-PMLA-96/HYD/2011, MP-PMLA-4100/HYD/2017 (U/s 35) FPA-PMLA-1189/HYD/2016, FPA-PMLA-236/HYD/2011, FPA-PMLA-237/HYD/2011, FPA-PMLA-238/HYD/2011, FPA-PMLA-239/HYD/2011, FPA-PMLA-240/HYD/2011, FPA-PMLA-241/HY....
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....A-87/HYD/2011, FPA-PMLA-109/HYD/2010 M. Suryanarayana Raju, K. Gopala Krishnam Raju, N. Rama Raju, B. Nandani Raju, N. Subba Raju, DVS Subba Raju, N.S.L.R. Prasad Raju, Tirathavati Agro P. Ltd, M/S NANDANAGIRI GREEN LAND, Ketumala Agro Pvt. Ltd., Shimsha Agro Farms P Ltd., Devakuta Agro Farms P Ltd., M/s. Gowardhanagiri Agro Farms P Ltd., Vajrakuta Agro Farms P Ltd., Shukla Agro Farms P Ltd., Mrugsira Agro Farms P Ltd. Chakragiri Agro Farms P Ltd. Dravira Greenfields (P) Ltd. Karaveera Agro Farm (P) Ltd. Vardhamangiri Agro (P) Ltd. Meghamala Agro Farm (P) Ltd. PUSHPA VARSHA AGRO (P) LTD. KAWSIKI AGRO (P) LTD. CHITRAKUTA AGRO FARMS (P) LTD. DHARAGIRI AGRO FARMS (P) LTD. TAPTI AGRO (P) LTD. MANGALA PRASTA AGRO (P) LTD. MUKTIMANTA AGRO FARMS (P) LTD. SHUKLAGIRI GREEN LANDS PVT. LTD DEVAGARBHA AGRO FARMS (P) LTD. VYADHURYA AGRO FARMS PVT. LTD HEMAKUTA AGRO FROMS (P) LTD. CHANDRA VAMSA AGRO FARMS P. LTD. SWARNAGARBHA AGRO PVT. LTD. KUHU AGRO FARMS PVT. LTD SUPARSHVA AGRO FORMS PVT. LTD. B. Rama Raju B. Teja Raju D. Gopala Krishanam Raju Mr. R. Satyanarayana Raju Mr. S. V. Soma Raju Smt. B. Jhansi Rani Smt. B. Radha A. Srinivas Raju DVS Ravi Kumar Raju A.V. Raghva Raju I. Mallapa Raju....
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..... Smt. B. Jhansi Rani Poorvabhadra Agro Farm Pvt. Ltd. B. Suryanarayana Raju B. Teja Raju B. Rama Raju (Jr.) M. Suryanarayana Raju Jeshta Farms Pvt. Ltd. Satabisha Agro Pvt. Ltd. Savana Agro Pvt. Ltd. Rohini Bio-Tech Pvt. Ltd. Chitta Farms Pvt. Ltd. Punarvasu Bio-Tech Pvt. Ltd. Hastha Agrotech Pvt. Ltd. Hansagiri Greenlands Pvt. Ltd. Vishnupadi Greenlands Pvt. Ltd. Arunagiri Agrofarms Pvt. Ltd. Shri B. Teja Raju N. Rama Raju I. Janaki Rama Raju I. Mallapa Raju B. Radha Smt. B. Jhansi Rani K. Gopala Krishnam Raju A.V. Raghava Raju NSLR Prasad Raju DVS Subba Raju Jhelum Greenfields Pvt. Ltd. Waingaanga Agro Pvt. Ltd. Darna Agro Farms Pvt. Ltd. Manhad Agro Farms Pvt. Ltd. Rupnarayana Agro Farms Pvt. Ltd. Bandiya Agro Farms Pvt. Ltd. Hiran Greenfields Pvt. Ltd. THAVA AGRO FARMS (P) LTD. M/s Kali Greenfields Pvt. Ltd. JUSTICE MUNISHWAR NATH BHANDARI, CHAIRMAN AND SHRI V. ANANDARAJAN, MEMBER For the Appellants : Shri Sridhar Potaraju, Sr. Advocate, Shri R K Handoo, Ms. Shiwani Tushir, Shri Aaysh, Shri Y.S. Reddy, Shri M.F. Philip, Shri Karamveer Singh Yadav, Shri Ashwin Kataria, Shri Yoginder Handoo, Shri U.K. Sagar, Bina Madhvan, Shri Tushar Singh, Shri Aditya Chaudhary, Advocates....
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....one. 4. The obvious discrepancy in the balance sheets had arisen because the profits disclosed in accounts were inflated and did not reflect the real profits. The gap between the real profits and inflated profits reflected in the books of accounts had snowballed over the years. This led to creation of fictitious assets. An unsuccessful attempt was made to substitute the fictitious assets with real ones by an acquisition deal with M/s MAYTAS which failed and the deal was aborted within few hours due to pressure from investors and the market. Consequently, the share value of M/s Satyam Computers dipped to lowest level after the confessional letter presented by Shri B. Ramalinga Raju which caused huge losses to the investors. A complaint was made by one of the investors Smt. Leena Mangat. The FIR was registered on 09.01.2009 against Shri B. Ramalinga Raju and others for the offence under Section 120-B read with Sections 406, 420,467,471,477A of Indian Penal Code (IPC). Section 409 IPC was subsequently added. The case was transferred to CBI under a Notification and accordingly the investigation thereupon was conducted by the CBI. The C....
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....f affairs as Directors. All those companies were registered at 12 common residential addresses of employees of M/s SRSR Advisory Service Ltd. and another group companies. The proceeds of crime flowed into these companies through loan Companies. Out of it, eighty-four (84) companies made investments in the immovable properties along with 23 other natural persons who also used the `proceeds of crime' for investment in immovable properties. 10. For the purpose of facilitating the flow of proceeds of crime through various layers and legal structures, Raju brothers had floated a private structure in the guise of M/s SRSR Holdings Pvt. Lrs. on 22.06.2006. These individuals by using their personal influence borrowed funds in their company from M/s DSP Merrill Lynch, a non- banking financial company without any security and invested such borrowings to the extent of Rs. 2200 crores approximately in M/s SRSR Holdings. The said company using the funds purchased the shares of M/s Satyam Computers belonging to Shri B. Ramalinga Raju and Shri B. Rama Raju along with Smt. Nandini Raju and Smt. B. Radha through the stock market and at the same time, money was paid back to M/s DSP Merrill Lynch ....
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....ily. The individuals were benami owners of the properties acquired with ultimate gain of Shri B. Ramalinga Raju and his family. Therefore, out of the loan amount of Rs. 1866.45 Crores, amount invested in the properties was treated to be `proceeds of crime'. 16. Besides the landed properties, the respondents attached 34,08,095 shares of M/s Satyam Computers available in the Demat account of M/s SRSR. Those shares were obtained through falsification of accounts, forged balance sheets and annual financial statements. As such, in the opinion of Deputy Director, it was also representing the `proceeds of crime'. In nutshell, the summary of the complaint would be that Shri B. Ramalinga Raju and his associates by falsification of accounts and forged documents had cheated the investors by presenting a rosy financial picture of M/s Satyam Computers which was far from the reality. In the process, initially the share value of M/s Satyam Computers got inflated and accordingly at the opportune time, the accused and others transferred their shares for undue gains and channelized it by creating 10 web of legal structures. The money was used with circular tran....
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....ght of the aforesaid, the attachment of shares becomes illegal because it could not have been considered to be `proceeds of crime'. It is more so when transfer of shares by individuals to M/s SRSR was not illegal and otherwise the shares attached by the respondents were never sold to make an undue gain by the accused. It is also that M/s SRSR Holdings was not connected with M/s Satyam Computers in any manner. However, the respondents unnecessarily connected two companies to attach the shares in Demat account of M/s SRSR Holdings treating it to be the `proceeds of crime' without showing as to how it satisfies the definition of the `proceeds of crime' given under Section 2(1)(u) of the Act of 2002. 21. At this stage, learned counsel for the appellant made a reference of the judgment of the Constitutional Bench of the Apex Court in the case of Bacha F Guzdar Vs. Commissioner of Income Tax reported in 1955 (1) SCR 876. It is to support his argument that M/s SRSR Holdings cannot be claimed as an associate of the shareholders. The shareholders keep their rights to participate in the profits and to raise voice in administering the affairs of the comp....
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....for the appellant made a reference of the judgment of the Apex Court in the case of Vijay Madanlal Choudhary Vs. Union of India reported in 2022 SCC Online SC 929 to support his argument. The action of the respondent is illegal for that reason also. 24. The next argument was in reference to the Act of 2002 alleging that there was no material to show a case falling under Section 3 of the Act of 2002 because mere possession of the alleged `proceeds of crime' could not have invited attachment unless other conditions given under Section 3 of the Act of 2002 are satisfied and thereby even on the aforesaid ground, prayer was made to set aside the order. 25. The appellants have challenged the order of Adjudicating Authority after making reference of Section 24 of the Act of 2002. It is mainly on the ground that initial burden of proof would always remain on the prosecution/ED and if a prima facie case for the offence of money laundering and proceeds of crime derived or obtained out of the scheduled offence is made out, the burden to defend the allegation would be on the accused or the person against whom the proceedings have been initiated. It is submitted that the....
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....n from NBFCs. A loan of Rs.1866.45 Crores was obtained in rightful manner but it is erroneously taken to be the `proceeds of crime' in ignorance of fact that out of the aforesaid amount, a sum of Rs.1230.40 was invested in the Satyam Group of companies. It is with a further statement that respondent subsequently attached the property worth of Rs.822 Crores out of Rs.1230.40 Crores. It was excluding the amount received from M/s Maytas Properties Pvt. Ltd. and M/s Maytas Infra Ltd. as the provisional attachment order against those companies was set aside by the Telangana High Court in Writ Petition No. 37487/2012 vide its order dated 31.12.2018. 29. The counsel for the appellant submitted that alleged inflated share price and offloading of shares of M/s Satyam Computers is fallaciously taken to invoke the Act of 2002 by treating it to be a case of money laundering. It was submitted that the ingredient of money laundering, as defined under Section 3 of the Act of 2002 was not satisfied in this case. There was no element of offence of money laundering and in absence of it, even the ECIR could not have been recorded so as the Provisional Attachment Order. ....
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....ing to avoid repetition of the same facts and for the sake of brevity. Finding of the Tribunal 34. It is a case where an FIR was registered by the CID Hyderabad on 09.01.2009 against Shri B. Ramalinga Raju, B. Rama Raju MD and Vadlamani Srinivas. The respondents took cognizance of the FIR registered against the accused and accordingly recorded ECIR on 23.01.2009. The three charge sheets were thereupon filed on 07.04.2009, 22.11.2009 and 07.01.2010 against the individuals and the companies for different offences. The provisional attachment orders were issued on 18.08.2009, 25.11.2009 and 30.03.2010 and sent to the Adjudicating Authority for its confirmation. The Adjudicating Authority confirmed the provisional attachment orders and aggrieved by those orders, batch of appeals have been filed. The appellants have raised many legal and factual issues which would be dealt with issue-wise but before that we may refer the alleged role of accused and others for clarity on facts to deal with legal and factual issues raised by the appellant: - Role Played by B.Ramalinga Raju, Ex-Chairman M/S Satyam Computer Services Ltd. 35. M/s SCSL had ....
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.... (8) M/S Harangi Agro Farms Pvt Ltd., (9) M/S Viswamitri Greenlands Pvt Ltd., and (10) M/S Seshadri Greenfields Pvt Ltd., and are five investment companies as detailed at Para (ii) supra, facilitating the sale of shares of the family members. 40. 327 Companies are located at 12 addresses common to all and it transpired that all the Directors were either the family members or relatives of Shri B. Ramalinga Raju or trusted employees who admitted that they simply lent their names to facilitate the acquisition of landed property by Shri B. Ramlinga Raju and his family members. 41. One of the companies viz., M/S SRSR Advisory Services Pvt Ltd., was incorporated in the year 1999. This company is headed by Shri B.Suryanarayana Raju in the capacity of Director and Smt.B. Nandini Raju w/o Shri B.Ramalinga Raju, Smt.B.Radha w/o Shri B. Rama Raju and Shri B.Teja Raju s/o Shri B. Ramalinga Raju are the other Directors. This company was floated for the purpose of facilitating the accounting and advisory services to the remaining companies mentioned above. 42. Investigation transpired that on 22-06-2006, a private limited company, M/S SRSR Holdings Pvt. Ltd., was floated wit....
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.... 48. The investigation revealed that an amount of Rs.1,425 crores out of proceeds of crime amounting to Rs.1866.45 crores generated by transferring [pledging (within the meaning of section 2(1)(za) of PMLA, 2002) of their equity to various NBFCs was transferred to the bank accounts of M/S SCSL as temporary advance by 37 out of the 327 companies over a period of time ranging from 17.11.2006 to 30.10.2008 under the instructions of Shri B.Ramalinga Raju. Out of this amount, an amount of Re. 194.60 crores was returned by M/S SCSL during the months of October and November, 2008 to 15 out of the above 37 companies. Thus, proceeds of crime to the tune of Rs.1230.40 crores still subsists in M/S SCSL as the laundered properties. This fact has been confirmed by Shri B.Ramalinga Raju in his letter dt. 07-01-2009 addressed to the Board of Directors of M/S SCSL. 49. By indulging in criminal activity relating to a Scheduled Offence interalia by continuously publishing inflated ba}ance sheets and inflated incomes and profits of M/S SCSL Shri B.Ramalinga Raju portrayed an incorrect picture of the financial health of M/S SCSL., and lured the small investors which resulted in artificially....
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....loated by his family members. He replied that there is a clear need to view the relationship from "social relationship and economic relationship" and stated that his wife, children and other extended family members have always maintained an independent economic status and dealt with their businesses and assets and liabilities in a manner they deemed fit. He also stated that he is not aware of the existence of such large number of companies (327) as he didn't keep track of ownership of companies in which he is not interested. Later, in his statement dated 10-06-2009 given under summons, he admitted that he lent his helping hand when the companies (327) borrowed funds from NBFCs and companies in the market, From the above, it appears that Shri B.Ramalinga Raju, was evasive and selfcontradictory in his replies given during the course of statements recorded under section 50 PMLA, 2002. 53. In his statement given under summons Shri B.Ramalinga Raju, interalia stated that the companies provided the funds to the tune of Rs. l,425 crores to M/S SCSL on the strength of published Satyam Ba!ance Sheet and no additional securities were sought by those compa....
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....res of SCSL held by his family, his brother Shri B.Suryanarayana Raju had the 'Power of Attorney' of both the brothers and arranging loans through M/S SRSR Holding Pvt Ltd., and gave instructions on utilisation of proceeds of crime (funds). 57. The Directors in the 327 companies apart from the family members are other relatives and trusted employees who only lent their names and they did not have any independent financial powers and decision making as stated by them that they were only name sake 'Directors' and some of them had given their home address as the registered office address of these shell structures. 58. 327 companies had no independent source of funds except the proceeds of crime used during the course of laundering. 59. The statements of Shri B.Suryanarayana Raju given under summons clearly confirms that the transfer of funds to M/S SCSL., was done on the instructions of Shri B.Ramalinga Raju and Rs.1425 crores of proceeds of crime was projected as loan to M/S SCSL. Thus, the creation and movement of proceeds of crime for laundering thereof was controlled by Shri B.Ramalinga Raju with the assistance of Shri B.Rama Raju and Shri B.Suryanarayana ....
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....nd amount of Rs.66.38 crores received on the shares of M/S SCSL by Shri B.Ramalinga Raju and his family members, was derived as a result of criminal activity relating to a Scheduled Offence committed by Shri B.Ramalinga Raju. 64. The statements of the employees of M/S SRSR Advisory Services Pvt. Ltd., revealed that all the instructions came from Shri B. Ramalinga Raju and Shri B.Suryanarayana Raju which were executed by the employees, as also stated by Shri. K.V.N.Raju, Vice-President, Shri D. Gopala Krishnam Raju, General Manager of M/S SRSR Advisory Services Pvt. Ltd. and Shri P.N. Anand Kumar, Accountant of M/S SRSR Advisory Services Pvt Ltd. The 327 companies had no independent source of funds except the proceeds of crime placed during the course of laundering. The statement of Shri B.Suryanarayana Raju, clearly confirms that the transfer of funds were on the instructions of Shri B.Ramalinga Raju and Rs.1425 crores of proceeds of crime was projected as loan to M/S SCSL. Thus, the creation and movement of proceeds of crime for laundering thereof was controlled by Shri B. Ramalinga Raju with the assistance of Shri B.Rama Raju and Shri B.Suryanarayana Raju. 65. The statement....
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....oceeds of crime within the meaning of section 2(1) (u) of PMLA, 2002 as the above dividend amount is not in consonance with the financial performance of M/s SCSL. 70. Shri B.Rama Raju, who was aware of the true financial position of M/s SCSL, but projected a much rosy picture as reflected in balance sheet of the relevant period alongwith his brother Shri B.Ramalinga Raju which in fact was the outcome of criminal activity relating to Scheduled Offence committed by him and this way he managed to get through the proposals of bonus shares and dividends (being the recommending authorities by virtue of his position as Managing Director of M/s SCSL at the point of time) to him and also to his relatives and to the legal structures viz., M/s SRSR Holdings Pvt Ltd., created by them. The above wrongful gain of bonus shares to M/s SRSR Holdings Pvt Ltd., the legal structure represents the proceeds of crime within the meaning of section 2(1) (v) of PMLA, 2002. 71. Shri B.Rama Raju, with the active connivance of Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju and other accused in the CBI Charge Sheet in RC-04(S)/2009 in CC.No.187/09 dated 07-04-2009 generated proceeds of crime by committi....
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....e requirements of EMRI and Byrraju Foundation which are involved in charitable activities and transferred almost the entire share holding of 1,07,19,000 shares of M/s SCSL to M/s SRSR Holdings Pvt Ltd., to avail the benefits of tax extended by the Government and there is no change in the beneficial ownership of the shares since M/s SRSR Holdings is floated by himself and his brother Shri B.Ramalinga Raju. He further, stated that at the request of his brother Shri B.Ramalinga Raju, he had pledged his entire share holding in M/s SRSR Holdings with the NBFCs to raise the loans and they raised approximately Rs. 1700 crores from NBFCs by pledging M/s SCSL shares held by M/s SRSR Holdings Pvt Ltd. He clarified that out of the amounts raised as loans, an amount of Rs.1425 crores approximately was advanced to M/s SCSL corroborating the facts enumerated by Shri B.Ramalinga Raju, in his e-mail dated 07-01-2009. 76. It was also stated that in some of the companies in which they had invested, in which his wife, Smt. B. Radha is a Director, he was managing the affairs of those companies with advisers, consultants and auditors. He admitted of having received some dividend amounts on the share....
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.... fraudulent acts. He is the Director of M/s SRSR Advisory Services Pvt Ltd., which is a key company providing accounting and Advisory Services to all the 327 companies and as such Shri B.Suryanarayana Raju is responsible for all the covert and overt acts of these companies. 83. Shri B.Suryanarayana Raju got arranged Rs. 1425 crores as loan to M/s SCSL.. by transferring [Pledging (within the meaning of section 2(1)(Za) of PMLA, 2002)] the shares of Shri B.Ramalinga Raju, Shri B.Rama Raju and their spouses in NonBanking Financial Companies (NBFCs) through M/s SRSR Holdings Pvt Ltd., for which he is the Director and resorted to laundering of money through the 327 companies of M/s SRSR Advisory Services Pvt Ltd. 84. In the statements given under summons, the non-family Directors of some of the group companies (327) floated by Shri B.Ramalinga Raju and his family members interalia, stated that to the best of their knowledge, the 327 companies were floated by Shri B.Ramalinga Raju and his family members and they are the Directors of the companies only for name sake. They clarified that all these 327 companies are the group companies of M/s SRSR Advisory Services Pvt Ltd., whose day....
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....d on the papers / documents as instructed by Shri B.Suryanarayana Raju and by the staff of M/s SRSR Advisory Pvt Ltd. They are not aware of the properties purchased in their names and Shri B.Suryanarayana Raju had purchased the properties in their names by arranging the requisite money. 89. All the Directors (non-family) of the group companies, mentioned supra in their respective statements deposed that any payment for acquiring landed properties of any kind was being made by Shri B.Suryanarayana Raju, with the knowledge/ instructions of his elder brother Shri B, Ramalinga Raju. 90. Shri K.Venkata Narasimha Raju s/o Shri K.Narasa Raju, Vice-President of M/s SRSR Advisory Services Pvt Ltd., in his statements given under summons interalia, stated that Shri B.Suryanarayana Raju was the whole time Director of the company, Shri B.Nandini Raju, Smt. Radha and Shri B.Teja Raju were the other Directors. The company was promoted by the family members of Shri Ramalinga Raju and he used to report to Shri B.Suryanarayana Raju who used to take care of day to day matters of M/s SRSR Advisory Services Pvt Ltd., and other group companies. He clarified that there were 327 companies floa....
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....roup companies (327) or from the individual accounts of the family members. From the above, it transpires that they resorted to multiple inter-connected transactions involving money laundering. He further clarified that the shares of M/s SCSL had been pledged on the instructions of Shri B.Ramalinga Raju and obtained loans in the names of group companies. That, the statements of the employees of M/s SRSR Advisory Services Pvt. Ltd., revealed that all the instructions came from Shri B. Ramalinga Raju and Shri B.Suryanarayana Raju which were executed by them. 95. The statement of Shri B.Suryanarayana Raju, corroborates to the statements of the other (non-family) Directors of the companies floated by Shri B.Ramalinga Raju and his family members in as much as the other Directors have interalia admitted that the requisite funds for purchase of immovable properties in the name of the companies were arranged by Shri B.Suryanarayana Raju. And Shri B. Suryanarayana Raju has confirmed that the requisite funds for the purchase of properties in the name of the companies have been arranged by him and other family members. 96. He admitted that shares on behalf of several group companies for....
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....linga Raju, Shri B.Rama Raju and Shri B.Suryanarayan Raju. She made Shri B.Surayanarayana Raju as the Power of Attorney Holder for the purposes of signing on documents for pledging of M/s SCSL shares etc. 101. Smt.B. Nandini Raju, w/o Shri B. Ramalinga Raju, in her statements inter alia stated that she was aware that she is the Director of a few group companies and that her shareholding in M/s SCSL had been transferred to M/s SRSR Holdings Pvt Ltd., owned by their family and that she was also aware of her shares being pledged with Non Banking Financial Companies. 102. Smt.B. Nandini Raju, received Rs.2,02,35,000/- as dividend income for the period from 01-07-2005 to 31-12-2008 on the shares held by her in M/s SCSL. The above wrongful monetary gain to the tune of Rs.2,02,35,000/- and also the dividends and bonus shares received by the structure viz., M/s SRSR Holdings Pvt Ltd., (to which she has sold her entire holding of M/s SCSL in Sep'2006) represents the proceeds of crime derived as a result of criminal activity within the meaning of section 2(1) (u) of PMLA,2002 as the above dividend amount is a result of a criminal activity related to a scheduled offence. 103. Smt....
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....the family members who were the Directors of the group companies and also from the companies related to them. 110. Smt.B. Radha received Rs.3,87,48,000/- as dividend income for the period from 01-07-2005 to 31-12-2008 on the shares held by her in M/s SCSL. The above wrongful monetary gain to the tune of Rs.3,87,48,000/- and bonus shares received by M/s SRSR Holdings' Pvt Ltd., (to which she has sold her entire holding of M/s SCSL in Sept'2006) represents the proceeds of crime derived out of criminal activity relating to a Scheduled Offence within the meaning of section 2(1) (u) of PMLA, 2002 as the above dividend amount is not in consonance with the financial performance of M/s SCSL. The dividend amount is not in consonance with the financial performance of M/s SCSL. 111. The investigation transpires that Smt.B.Radha, actively assisted Shri B. Ramalinga Raju, Shri B.Rama Raju and Shri B.Suryanarayana Raju by being a Director in several, group companies floated by them and also in acquiring immovable properties in the name of these companies with the proceeds of crime relating to a scheduled offence as mentioned supra. Role Played by Smt B.Jhansi Rani, Directo....
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....g to a scheduled offence as mentioned supra. Role Played by Shri B.Teja Raju, S/o Shri B.Ramalinga Raju, Director of Group companies. 118. Shri.B. Teja Raju, eldest son of Shri B.Ramalinga Raju is a Director of some of the companies floated by Shri B.Ramalinga Raju and his family members. He is responsible for converting the proceeds of money acquired assets through some of the said 327 companies floated Shri B.Ramalinga Raju, Shri B.Rama Raju and Sh B.Suryanarayana Raju. 119. Shri B.Teja Raju received Rs.28,52,750/- as dividend Income for the period from 01-07-2005 to 31-12-2008 on the shares held by him in M/s SCSL. The above wrongful monetary gain to the tune of Rs.28,52,750/- represents the proceeds of crime within the meaning of section 2(1) (u) of PMLA, 2002 as the above dividend amount is not in consonance with the financial performance of M/s SCSL and derived as a result of criminal activity related to a Scheduled Offence. 120. Shri B.Teja Raju off-loaded the shares of M/s SCSL during August/September 2005. 121. In the statements given under summons, Shri B.Teja Raju s/o B.Ramalinga Raju, interalia stated that the group companies are land owning compani....
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....2005 and gained Rs.48,55,63,711/-. Such wrongful gains represent the proceeds of crime within the meaning of section 2(1)(u) of PMLA, 2002, as mentioned supra. 128. In his statements, Shri B.Rama Raju (Junior) stated that he sold the shares worth approximately Rs.48.50 crores approximately in the year 2005-2006. Regarding the details of assets / immovable properties acquired out of the sale proceeds of shares of SGSL held by him, he replied that in addition to above income from M/s SCSL shares, he has other sources of income including salaries, interest earnings, dividends etc., that the sale proceeds of shares of M/s SCSL alongwith other sources of income have been used by him in various investments including immovable properties, investments in companies and deposits etc. 129. Regarding the details of movable and immovable properties acquired on or after 01-7-2005, alongwith source of funds for acquiring such properties, he clarified that he had acquired immovable properties in Maharasthra, Ranga Reddy District in A.P., in personal capacity. The source of funds for purchase of personal properties is, his salary, interest accrued on deposi....
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....ed by the statements given by the Directors of group companies, under summons Shri P.N.Anand Kumar, Accountant of M/s SRSR Advisory Services and Shri K.Venkata Narasimha Raju, Vice President of M/s SRSR Advisory Services, Shri B.Suryanarayana Raju, Smt.B.Nandini Raju and Smt.B.Radha, Shri B.Teja Raju, Shri B.Rama Raju (Jr.) and other non-family directors viz., Shri K.Gopala Krishna Raju and Shri D.Ravi Kumar. Role played by M/s SRSR Holdings Pvt Ltd., one of the group companies. 137. The investigation transpired that on 22-09-2006, a private limited company, M/s SRSR Holdings Pvt. Ltd., was floated with Shri B. Ramalinga Raju, Shri B. Suryanarayana Raju, and Shri B. Rama Raju as Directors. During September 2006, all the shares held in the accounts of Shri B. Ramalinga Raju, Shri B.Rama Raju, Smt. B. Nandini Raju and Smt. B. Radha were sold. to M/s SRSR Holdings Pvt Ltd., through the stock market. The above stated individuals borrowed funds from M/s DSP Merril Lynch, a Non-Banking Financial Company (NBFC), and Invested such borrowings to the extent of Rs.2200 crores (approximately) in M/s SRSR Holdings Pvt Ltd. This company purchased the shares of M/s SCSL, belonging to Shri B....
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....n 50 of PMLA.2002 revealed that the sale of the entire holding of Shri B.Ramalinga Raju, Smt.B.Nandini Raju, Shri B.Rama Raju and Smt B.Radha in M/s SCSL.. to M/s SRSR Holdings Pvt Ltd., through Escrow Account was a pre-planned move of Shri B.Ramalinga Raju with an ulterior motive to give the benefit of bonus shares issued by the Board of Directors of M/s SCSL., to M/s SRSR Holdings Pvt Ltd., apart from using the shares of M/s SCSL in raising money and investing in properties. 141. From the above, it is evident that Shri B. Ramalinga Raju and Shri B.Rama Raju, who were involved in criminal activity relating to Scheduled Offence, have in the year 2006 itself, contemplated a private structure in the guise of M/s SRSR Holdings Pvt. Ltd., and sold their personal holdings and the entire family holdings of M/s SCSL to that structure through the stock market. By transferring the shareholding within the meaning of section 2(1) (za) of PMLA] to various Non-Banking Financial Companies (NBFCs), they derived illegitimate gain of Rs.1866.45 crores. Such value derived by them is attributed to the criminal conduct relating to Scheduled Offence, [within the meaning of section 2(1) (u) of ....
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....u were the Chairman and Managing Director respectively of the company leaving an outstanding balance of Rs.1230.40 crores as the laundered property. 146. The remaining amount of proceeds of crime has been used for acquiring immovable properties in the name of their group companies for which the Directors were drawn from the family of Shri B. Ramalinga Raju, Shri B. Suryanarayana Raju and Shri B. Rama Raju and their relatives and trusted employees with an objective to project them as untainted properties. In carrying out this act of laundering of proceeds, Shri B. Ramalinga Raju was assisted by Shri B.Rama Raju and Shri.B.Suryanarayana Raju, his brothers, Smt.B.Nandini Raju, Smt.B.Radha, Smt. B. Jhansi Rani, their spouses and Shr B.Teja Raju and Shri B.Rama Raju (Jr.). 147. Besides the above, a total number of 34,08,095 M/s SCSL shares are available with M/s SRSR Holdings Pvt Ltd., (Client ID-52491182) maintained with ICICI Bank, Khairtabad Branch, Hyderabad (DPID No.IN303028) for the ISIN INE275A01028 out the bonus shares. As explained in the preceding paras, it is evident that M/s SRSR Holdings Pvt Ltd., had obtained bonus shares as a result of criminal activity relating to ....
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.... SRSR Holdings Pvt Ltd., has extended collateral security of M/s SCSL shares; that, the trail of cash clearly established this fact that the proceeds of crime of Shr B.Ramalinga Raju and Shri B.Rama Raju, is the source of funds for acquiring the properties. 153. The properties were acquired with the proceeds of crime through these companies with a view to project them as untained property. Role Played by Shri A.V.Raghava Raju, S/o Shri A. Venkatarama Raju. 154. Shri A.V.Raghava Raju, a Director in (1) M/s Highgrace Investments Pvt Ltd., (II) M/s Himagiri Greenfields Pvt Ltd., (iii) M/s Bhima Agro Farms Pvt Ltd., (iv) M/s Ganga Greenfields Pvt Ltd., (v) M/s Gomati Agrofarms Pvt Ltd., (vi) M/s Mahanadi Biotech Pvt Ltd., (vii) M/s Mahendragiri Greenlands Pvt Ltd., (viii) M/s Punarvasu Estates Pvt Ltd., (ix) M/s Seshadri Greenfields Pvt Ltd., (x) M/s Suvarnarekha Greenfields Pvt Ltd., and (xi) M/s Tapti Agro Pvt Ltd., etc., of the companies (327) inter alia stated that he is closely associated with the companies / organizations owned by Shri B,Ramalinga Raju, since 1983; that Shri B. Suryanaranayana Raju, brother of Shri B.Ramalinga Raju called him to the office of M/s SRSR Ad....
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....ns. However, Shri Bhaskar Raju, requested that his statement may be recorded through his son (authorized signatory) as he was immobile due to train accident in 2004 and his hand has been amputed. His request has been considered and Shri A.Srinivas Raju S/o A.Bhaskar Raju, has been allowed to depose on behalf of his father. 160. In the statement given on behalf of Shri A.Bhaskar Raju, it was interalia stated that his father owns 15 acres of agriculture land inherited from his grandfather late Shri A.Satya Gopala Krishna Raju. 161. In 2006 Shri B.Suryanarayana Raju / M/s SRSR Advisory Services Pvt Ltd., asked his father some property documents and his father signed on certain documents; that Shri B.Suryanarayana Raju is his brother-in-law and married to his sister Smt.B.Jhansi and hence he is son- in-law of his father Shri A.Bhaskar Raju. 162. When he was shown the records relating to purchase of 5 acres and 30 guntas, Ac.27.33 guntas, Ac.20.00 (totaling to Ac.52.63 guntas) of land at Loyapally Village from one Shri M.Kiran Kumar, Shri T.Ravinder Rao and others, registered on 18-7-2006 and asked to inform the source of funds, Shri A.Srinivas Raju, replied that he has c....
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....His brother-in-law Shri B.Suryanarayana Raju requested him to be a Director in three companies viz., (a) M/s Karaveera Agro Farms Pvt Ltd.. (b) M/s Tanasa Greenlands Pvt Ltd., and (c) M/s Highgrace Investments Pvt Ltd., for which he agreed. He clarified that he has no official relationship or any business connection with M/s SRSR Advisory Services Pvt Ltd., which was floated by his brother-in-law Shri B.Suryanarayana Raju. He further stated that he became a Director in the abovementioned three companies at the request of his brotherin-law Shri B.Suryanarayana Raju and signed certain documents relating to the formation of these companies and did not know anything about the transactions done by these companies or business deals. 167. It was also stated that he has not invested a single rupee in these companies neither while forming or later on and he was only a front man for Shri B.Suryanarayana Raju. That he has never attended any Board Meetings of the three companies mentioned supra and never participated in the discussions etc. Role Played by Shri A.Viswanadha Raju, S/o Shri A.Venkata Raju. 168. Shri A. Viswanatha Raju a non-family Director in some of the companies (327) ....
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....rs and the companies controlled by Shri B.Suryanarayana Raju assisted by Shri K.V.Narasimha Raju. That, he is not aware of the details of properties purchased / acquired on behalf of the companies in which he was a Director and all the transactions regarding purchase / commercial or sale or transfers of properties was being looked after by Shri B.Suryanarayana Raju. 176. Being an employee of a Private Firm, he used to sign on the papers furnished to him under the instructions of Shri B. Suryanarayana Raju; that M/s SRSR Advisory Services Pvt Ltd., was formed for acquiring and maintaining assets on behalf of Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju and Shri B.Rama Raju and their families. 177. Shri A.S.Venkata Krishnam Raju, finally stated that he is a dummy director without cheque powers and the above mentioned companies are created for acquiring land and to avoid attracting the provisions of Land Ceiling Act. Role Played by Shri K.Krishnam Raju, s/o Late K,Bhadri Raju. 178. Shri K. Krishna Raju interalia stated that, he is 74 years old and his second Son-in-law Shri A.V.Raghava Raju is working in Byrraju Foundation which is a Satyam Group Organisation; that he ....
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....as a Director. Role Played by Shri K.Gopalakrishnam Raju, S/o Late K.Rama Raju. 187. Shri K. Gopalakrishnam Raju, a Director in some of the companies (327) interalia stated that, he was presently working as Deputy General Manager(Commercial), in M/s SRSR Advisory Services Pvt Ltd., and Shri B.Suryanarayana Raju is the Executive Director of the company and overall incharge for running the day to day affairs of the company. 188. This company is a family owned company of Shri B.Ramalinga Raju, Shri B. Suryanarayana Raju and Shri B.Rama Raju. 189. M/s SRSR Advisory Services Pvt Ltd., was floated with an objective of taking care of assets and investments of Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju and Shri B.Rama Raju & their family members in addition to purchase of lands and development. 190. The lands were purchased in the name of M/s Ramagiri Greenfields Pvt Ltd., M/s Dhanssu Agro Farms Pvt Ltd., M/s Sreemukha Agro Farms Pvt Ltd., some of the companies (327) to the extent of nearly 94 acres at Pattayagudem Village, Chintalapudi Mandal, East Godavari District, Andhra Pradesh in the year 2007-08 for a consideration of Rs.5 lacs per acre. 191. He is a Director....
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....es, cheques used to be signed by Shri B.Suryanarayana Raju as authorized signatory or with the help of blank cheques which were already signed by name sake directors. 200. He clarified that to the best of his knowledge that the beneficiaries of all these transactions are Shri B. Ramalinga Raju, Shri B.Suryanaryana Raju and Shri B.Rama Raju. 201. A total amount of Rs.35,77,500/- was paid towards purchase consideration of 53 acres of land situated in Bodakonda Village referred to above. 202. To the best of his knowledge he sold the following land situated at Bachupally village, Quthbullapur Mandal, Ranga Reddy District to M/s Warna Greenlands Pvt Ltd., during the year 2007 and the above land was sold and registered vide document Nos. 12315/2007 to 12325/2007 and the extent of land sold was Ac 3.35 guntas for a consideration of Rs.38.75 lacs which was paid under cheque Nos. 40504 to 40514 all dated 22-9-2007. 203. The above mentioned cheques were handed over to him and he was instructed by Shri B.Suryanarayana Raju to hand over the above cheques to Shri N.Rama Raju the then Accounts Manager of M/s SRSR Advisory Services Pvt Ltd., and cousin brother of Shri B.Suryanarayana ....
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....an Raju, S/o Late Ramachandra Raju. 212. Shri K. Rajan Raju a non- family director in some of the companies (327) inter alia stated that he was working as a Supervisor with Adecco Flexion Work Force Solution Ltd., Hyderabad who are the Sub-contracts for Maytas Hillcounty. 213. There were five landed properties in his name in Loyapally Village, Ibrahimpatnam Mandal, Ranga Reddy District, Hyderabad. The source of money for purchase of the abovementioned properties in Loyapally Village was the money given by M/s SRSR Advisory Services Pvt Ltd., Hyderabad through Shri B.Suryanarayana Raju brother of Shri B.Ramalinga Raju. 214. During the year 2006 he was called to the office of M/s SRSR Advisory Services Pvt Ltd., and was asked to sign on the documents which he did not read or understood. 215. The person who asked him to sign the documents is an employee of M/s SRSR Advisory Services Pvt Ltd., whose name he did not know; that later he came to know that the above properties were purchased in his name. 216. He did not declare purchase of the abovementioned five landed properties in his Income Tax Returns; that the above properties belong to M/s SRSR Advisory Services Pvt L....
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....the Andhra Pradesh Land Ceiling Act. 225. 54 companies are the front companies of M/s SRSR Advisory Services Pvt Ltd., and the individuals are mostly, the employees of M/s SRSR Advisory Services Pvt Ltd. 226. 4,200 acres of Land was purchased at the rate of Rs.67,500 per acre and Shri K.V.Narasimha Raju, Shri K.Gopala Krishna Raju and Shri D.V.S.Subba Raju are also associated with him in the above purchase. 227. He used to keep safe custody of all the sale deeds of lands purchased on behalf of M/s SRSR Advisory Services Pvt Ltd., and its benami companies and Shri B.Suryanarayana Raju used to give cheques for purchasing the lands and he is overall controller of the finances. 228. The finance for purchase of lands was out of the sale/ pledge of proceeds of shares of Shri B.Ramalinga Raju and his family members. 229. 375 acres of land was purchased in a place near Nagpur in the names of spouses of the three brothers Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju, Shri B.Rama Raju and their children viz., Smt. B.Nandini Raju, Smt.B.Radha, Smt. B.Jhansi Rani, Shri B.Teja Raju and Shri B.Rama Raju (Jr.); that he is a name lending director in about 15 companies and has no....
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....hri B.Ramalinga Raju. 240. It is about 6 to 7 years back Shri B.Suryanarayana Raju, called him and told him that they are floating some companies and wanted him to lend his name as director of these companies for which he readily agreed. 241. He lent his name as Director of (a) M/s Uttarshada Biotech Pvt Ltd., (b) M/s Fincity Investments Pvt Ltd., (c) M/s Ganga Greenlands Pvt Ltd., and (d) M/s Tungabhadra Greenlands Pvt Ltd. 242. Shri Suryanarayana Raju used to inform him over phone that he was sending Shri Rama Raju with certain papers and send them back after affixing his signatures; that he used to affix his signature and return those papers to Shri B. Suryanarayana Raju. 243. He did not know anything about the sale of M/s Satyam Shares by M/s Fincity Investments Pvt Ltd., eventhough he is a Director of Company. As he is only a name lending Director he did not know that the proceeds of sale of shares has been credited. Role Played by Shri M.Suresh s/o Shri M.Satyanarayana Raju. 244. Shri M. Suresh a non-family Director in some of the 327 companies interalia stated that presently he was working as supervisor in M/s Maytas Properties Pvt Ltd., for a monthly....
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....s Pvt Ltd., d) M/s Nandanagiri Greenlands Pvt Ltd., e) M/s Dhavalgiri Agro Farms Pvt Ltd., f) M/s Jagruti Power Generation Pvt LTd., 254. He signed in all the papers related to the above companies under the instructions of Shri B.Suryanarayana Raju, Shri K.V.Narasimha Raju, Vice President M/s SRSR Advisory Services Pvt Ltd., and Shri P.N.Anand Kumar, Accountant, M/s SRSR Advisory Services Pvt Ltd. 255. He did not know anything about the activities of the companies in which he is the director being a small employee he signed on all the papers as directed by his superiors. 256. His signatures were obtained on the blank cheques by Shri N.Rama Raju; and did not receive any fees / consideration for being the director of the above companies. 257. He is only name sake director; and all these companies are controlled by Shri B.Suryanarayana Raju. 258. M/s Kethumala Agro Pvt Ltd., has been registered with his residential address. 259. Shri D. Gopala Krishna Raju, General Manager of M/s SRSR Advisory Services Pvt. Ltd., obtained his signatures on the blank applications in this regard and except using his residential address for the above company no business activity has tak....
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....ama Raju, Shri B.Suryanarayana Raju; that neither he nor his brother have received any money towards the sale consideration even though the property was in their name. 270. The company to which it is sold viz., M/s Indrakeeladri Agro Farms Pvt Ltd., is the benami company of Shri B.Ramalinga Raju and his family members. 271. The cheques issued in his and his brother's name as sale consideration for the sale of the above property have been handed over to Shri N.Rama Raju, alongwith bank application forms and cheques on the instructions of Shri B.Suryanarayana Raju after signing on the backside of the cheques and hence they have not received any sale consideration. Role Played by Shri D.V.S. Subha Raju S/o Late Shri Krishna Raju. 272. Shri D.V.S. Subba Raju a Director in some of the companies (327) inter alia stated that he was working as Vice President, Liasion Department in M/s Maytas Properties Ltd. 273. He is the Director in 53 companies (327) that these companies were formed to take care and acquire land and fixed assets for Shri B.Ramalinga Raju, Shri B.Rama Raju, Shri B.Suryanarayana Raju and their families and that a....
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....e correspondence received at his residential address to Shri K.V. Narasimha Raju, Vice President M/s SRSR Advisory Services Pvt Ltd. 283. The land in Survey No.187/P and 189/P situated at Bachupally Village, Qutubullapur Mandal, Ranga Reddy District, in his name and in the name of some of the employees of M/s SRSR Advisory Services Pvt Ltd., viz., Shri D. Gopalakrishnam Raju, Shri K.V.V.Krishnam Raju, Shri M.V.Krishnam Raju, Shri I.V. Krishnam Raju purchased by Shri B.Suryanarayana Raju previously and others has been sold to the benami companies of Shri B.Ramalinga Raju, Shri B.Suryanaryana Raju and some individuals; that he has not received sale consideration for the same. Role Played by Shri M.Suryanarayana Raju. S/o Shri M.V.Ramakrishnam Raju. 284. Shri M. Suryanarayana Raju a Director in some of the 327 companies interalia stated that he was presently working in M/s SRSR Advisory Services Pvt Ltd., as Senior Assistant Accounts for a salary of Rs.20,000/- and that to the best of his knowledge he is the Director of the following firms viz., (a) M/s Pingala Agro Farms Pvt Ltd., M/s Giriputra Greenfields Pvt Ltd., (c) M/s Ekadanta Greenfields Pvt Ltd., (d) M/s Balagh....
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....hri B.Ramalinga Raju, Shri B.Suryanarayana Raju and their family members. 293. The transactions and other activities are supervised by Shri B.Suryanarayana Raju; that he does not know the details of other directors of the company; that he has no investment in the abovementioned companies and all these companies are floated by Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju and Shri B.Rama Raju; that he is a name sake director. 294. He has not received any amount other than his monthly salary for being the director of the above mentioned companies and he is only a dummy director in the above mentioned companies. 295. On the instructions of Shri B.Suryanaryana Raju, he signed on all the papers. 296. One day, Shri B.Suryanarayana Raju called him to his office and told him that he wanted trusted people like him to be the Directors of the companies floated by him for which he agreed. 297. He did not know the address of the companies in which he is the director and these are benami companies floated by Shri B.Suryanarayana Raju, Shri B.Rama Raju and Shri Ramalinga Raju and he has no interest in the above companies. 298. The land purchased in the name of the companies i....
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....yanaryana Raju and Smt.B.Nandini Raju w/o Shri B.Ramalinga Raju. 308. e did not possess the sale deeds of the above mentioned property and also does not know from whom the above mentioned property has been purchased; that these details will be known only to Shri B.Suryanaryana Raju, Shri B.Ramalinga Raju. 309. He finally concluded that he has not paid any Income Tax. Role Played by Shri I.V.Krishnam Raju. 310. Shri I.V. Krishna Raju a Director in some of the 327 companies interalia stated that he was working in the mango orchards of Shri B. Suryanarayana Raju for the last 15 years for a monthly salary of Rs.15,000/-. 311. Some years back, one person by name Shri M.Rama Raju working in M/s SRSR Advisory Services Pvt Ltd., took him to the office of the Sub- Registrar, Moosapet, Medchal and made him sign on the documents pertaining to the lands and also took his photographs and used the same for registration. 312. He did not know the exact details of the lands purchased in his name and was not told also: that he learnt that some lands were purchased in his name by Shri B.Suryanarayana Raju; that the extent was not known to him. 313. Shri B.Suryanarayana Raju has a....
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....olavarm Mandalam, West Godavari District which were saved out of the 3 acres of land inherited by his father. 322. 325 companies were floated by his relations S/Shri B.Ramalinga Raju, Shri.B.Rama Raju, Shri B.Suryanarayana Raju and he is a second Director in around 79 companies; that one day his relative Shri B. Suryanarana Raju called him and asked him to be Director in some of the companies for which he agreed and signed on some documents and cheques; that apart from these things he did not know any other details. 323. He was only a name sake director that he has not invested any capital in these companies and he did not know the details of these transactions and activities of these companies. 324. He used to sign wherever he was asked to sign and his earlier residential address viz., 1-11-192, Flat No.202, Kamala Arcade, 2nd Floor, Shamlal Building, Begumpet, Hyderabad was used as the office address for 40 companies as per the request of Shri B.Suryanarayana Raju; that there was no other transactions / affairs pertaining to these companies. 325. He clarified that the below mentioned companies in which he was Director purchased the following immovable properties:- ....
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....has not invested any amount in the companies in which he is the Director. 332. All these companies were floated by Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju and Shri B.Rama Raju. 333. These companies were benami companies of Shri B.Ramalinga Raju and his brothers and he has not received any extra amount other than his salary for being director of so many companies. 334. Several companies have been floated in this manner by Shri B.Ramalinga Raju and his brothers and in all such companies mostly the employees of M/s SRSR Advisory Services Pvt Ltd., are the directors. 335. He had no interest whatsoever in the activities of the companies, and signed on the relevant forms and correspondence in the capacity of Director as instructed by Shri B.Suryanarayana Raju or Shri K.V.Narasimha Raju, Vice President of M/s SRSR Advisory Services Pvt Ltd. 336. M/s SRSR Advisory Services Pvt Ltd., takes care and maintain the fixed assets of Shr B.Ramalinga Raju and other family members spread over all over Andhra Pradesh, Chennai and Bangalore. 337. Shri K.V.Narasimha Raju looks after most of the financial transactions of the company and directly reports to Shri B.Suryanaraya R....
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....ayana Raju. 343. For the source of funds required for purchase of the lands mentioned above; funds were deposited in their accounts by the accounts personnel under the direction of Shri B.Suryanarayana Raju. 344. As regards the cheques dated 22-09-07 issued as consideration for sale of lands to the extent of (Ac.3.25 guntas) in his name and (Ac.1.00) in the name of his wife Smt. V. Lakhsmi, he explained that Shri B.Suryanarayana Raju called him and told him that he(K.V.V.Krishnam Raju) has to sign on certain documents and cheques to be brought by Shri N.Rama Raju, his first cousin (Shri Suryanarayana Raju's) and accordingly Shri N.Rama Raju came to his residence with some bank account opening forms on which he and his wife have signed. Subsequently, after two or three days Shri N.Rama Raju came to his residence with blank cheques on which he and his wife signed and handed over to Shri N.Rama Raju; that apart from the above how much money was withdrawn and where these chqeues were presented. etc., were unknown to them. That they have not received any money for sale of the abovementioned lands; that his wife signed on the blank cheques as per his instructions. Role Playe....
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.... Raju and he is only a name lender. Role Played by Shri M.Nagaraju. 355. Shri M. Nagaraju, a Director in some of the 327 companies interalia stated that he resigned from M/s Maytas Infra on 3103-2009; that at the time of resignation his monthly was Rs.18,300/- that during the year 2006 Shri B.Suryanarayana Raju called him to his office and informed that they were opening certain companies for acquiring land and requested him to be one of the Directors in some of the companies and also told him that certain lands will be purchased by them in his name and accordingly he was made Director in four companies. 356. He signed on documents like balance sheets, Income Tax statements, blank cheques for the companies in which he is a Director. 357. He is not aware of the activities of the above companies nor have attended Board meetings of the four companies. 358. The land of Ac.52.61 guntas has been purchased in his name in Loyapally in survey No.352 / P vide sale deeds Nos.9299/06, 9298/06 and 9300/06; that these lands have not been purchased from his source of Income and these lands belongs to Shri B.Ramalinga Raju and his family members. 359. He is only a name lender and....
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....mpanies and clarified that he is only a name lending Director. Role Played by Shri N.Venkata Ramakrishna Verma. 369. He is the Director of M/s Aryaka Agro-Farms Pvt Ltd., one of the (327) companies floated by Shri B.Ramalinga Raju & his family members. 370. The summons dated 22-05-2009, 24-06-2009 and 8-072009 U/s 50 of PMLA, 2002 were issued to Shri N.Venkata Rama Krishna Verma for his appearance on 20-05-2009, 2906-09 and 16-07-2009 before the Assistant Director, Directorate of Enforcement, Hyderabad Zonal Office. However, the summons were returned with remarks "not claimed", "party left" and "addressee left" respectively. 371. AC.6.05 guntas vide document No.10151/06, in survey No.356/P In Loyapally Village, Ibrahimpatnam Mandal, Ranga District, Andhra Pradesh for a consideration of Rs.4,13,437/- has been acquired in the name of Shri N.Venkata Ramakrishna Verma. The source of income used for the purchase of the above, property could not be identified as a result of his nonappearance before the Assistant Director, Directorate of Enforcement, Hyderabad. Role Played by Shri N.Subba Raju, S/o Shri N.Janakirama Raju. 372. Shri N. Subba Raju a Director in some of ....
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....by M/s SRSR Advisory Services Pvt Ltd; that the entire purchase process has been controlled by Shri B.Suryanarayana Raju; that he has not paid any amount for purchase of the above property. 381. He has signed on the papers as per the instructions of Shri B.Suryanarayana Raju and Shri B.Ramalinga Raju and he is only a name lending Director in the above two companies. 382. The activities of the companies are controlled by Shri B.Ramalinga Raju, Shri B.Suryanarayana Raju, Shri B.Rama Raju and their family members. Role Played by Shri S.V.Somaraju, S/o Shri S.Narayana Raju 383. Shri S.V. Soma Raju, Director in some of the 327 companies interalia stated that he resigned from M/S SRSR Services Pvt Ltd., in April'2009, that at the time of resignation he was drawing a monthly salary of Rs.25,000/-; that during 2006, Shri B. Suryanarayana Raju called him and informed him that they were opening certain companies for acquiring lands and told him to be director in some companies and also told him that certain lands to be purchased in his name by them. 384. He was made director in M/s Dravina Greenfields Pvt Ltd., and M/s Satadru Greenlands Pvt Ltd., and also signed on docume....
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....espondents during the course of investigation which shows putting of employees to be Directors of the Companies to involve in the real estate out of the funds secured by the accused. The registration of the companies giving their address. The properties were taken in the name of the Companies and the persons having no status and, therefore, source to acquire property by those persons could not be disclosed, rather it was out of proceeds of crime. The employees were asked to sign the documents without disclosing the substance of documents which is coming out from the statements starting from the statement of Alluri Bhaskar Raju who admitted that he signed the papers to purchase the property as was directed by B. Suryanarayana Raju. Similar facts have been given in regard to the other transactions. A. Srinivas Raju S/o Alluri Bhaskara Raju was also used for that purpose. He was working as Senior Manager Corporate Affairs. It was stated that his brother-inlaw B. Suryanarayana Raju requested him to be a Director in three companies though he was having no relationship or any business connection with M/s SRSR Advisory Services Pvt. Ltd. In ....
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.... 397. The learned counsel appearing for M/s SRSR has challenged the attachment of Demat account having 34,08,095 shares of M/s Satyam Computers. It was submitted that once Shri B. Ramalinga Raju, Shri B. Rama Raju, Smt. B. Nandini and Smt. B. Radha had transferred shares of M/s Satyam Computers to M/s SRSR Holdings, floated on 22.06.2006, transferred shares become corporate shares of M/s SRSR Holdings and, therefore, the shares in the Demat account could not have been attached in reference to the allegations against Shri B. Ramalinga Raju and others who transferred the shares. The respondents failed to make differentiation between corporate entity and the individuals. Once the shares become the property of the corporate entity, action could not have been taken against the corporate in reference to the allegations against individuals even if they were Directors. Reference of the judgment of the Supreme Court in the case of Bacha F Guzdar (supra) was given to support his argument that for a liability or action against the individual, the property of the Corporate/Company cannot be attached. 398. The issue raised by the appellant has been ....
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....as incorporated on 22.6.2006 as a private limited company. According to him, his company owned 6,28,83,317 shares of SCSL, which were pledged as security for obtaining a loan amount of Rs.1258.88 crores. The said amount was borrowed to provide funds to 10 independent companies. Inasmuch as Rs. 1255 crores out of this sum have admittedly been repaid, partly through sale of the pledged shares, according to the learned senior counsel, this transaction of pledge cannot possibly drag his client into any violation of the 1992 Regulations. 33. Shri C.U. Singh, learned senior counsel appearing on behalf of the SEBI, has read to us the majority judgment of the Appellate Tribunal, in which it has been held that the amount that was borrowed was utilised to provide funds to 10 private limited companies, which were owned by the Raju family. Equally, the shareholding pattern of the appellant company, as it stood on and from 18.9.2006, made it clear that B. Ramalinga Raju and his wife Nandini Raju held 33.11% and 40.52% respectively, whereas the balance was held by his brother B. Rama Raju and his wife B. Radha. Obviously, therefore, as B. Ramalinga Raju and B. Rama Raju individually hel....
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....ons cannot be faulted." 34. We agree with this finding of the majority judgment of the learned Appellate Tribunal and, therefore, dismiss this appeal. CIVIL APPEAL NO.17383 of 2017 35. Shri Luthra, learned senior counsel appearing on behalf of the appellant, brought to our notice that the said appellant was neither a director nor a promoter of SCSL. The shares that were owned by this appellant in SCSL were sold by him from 5.2.2001 to 18.11.2004. According to the learned senior counsel, his case would be like the case of other family members of B. Ramalinga Raju, and any facts that are beyond the show cause notice cannot be looked at. According to the learned senior counsel, even though it is true that his client was indicted along with B. Ramalinga Raju and his brother B. Rama Raju in the SFIO's report, such report and the judgment of the Special Court, Hyderabad cannot be looked at as they are not relied upon in the show cause notice. Also, according to the learned senior counsel, they are not at all relevant under Sections 40 to 44 of the Indian Evidence Act, 1872 and, therefore, cannot be looked at. According to the learned senior counsel, adjudication proceed....
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....r us to appreciate the role of the appellant in the so-called Satyam scam. This report points out the following: "4.7.39. Shri Suryanarayana Raju is the younger brother of Shri B. Ramalinga Raju, Chairman and elder brother of Shri B. Rama Raju, Managing Director of SCSL. He has been adding, abetting and facilitating pledge, transfer, sale and management of funds for Shri B. Ramalinga Raju and Shri B. Rama Raju. He has been independently managing the affairs of SRSRHPL. In their statement given on oath, Shri B. Ramalinga Raju, Shri B Rama Raju, Smt. B. Nandini Raju and Smt. B. Radha Raju have confirmed that Shri Suryanarayana Raju has been helping them to fulfill various statutory formalities and meeting administrative exigencies. Shri Ramalinga Raju considered him as a trustworthy person to look after the statutory requirement of SRSRHPL. Shri B. Rama Raju in his statement dated 02.04.2009 (Annexure E-2.4), could not state reasons for appointment of Shri B. Suryanarayana Raju but stated that there was no restriction to appoint a director without holdings shares in the company. Smt. B. Nandini Raju in her statement dated 24.03.2009 (Annexure E-41.1), stated that Shri Suryan....
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....heating of unsuspecting investors by selling shares at manipulated high price based on falsified financial statement of SCSL. xxx xxx xxx 4.7.47. Shri Suryanarayana Raju was a Power of Attorney holder on behalf of the core-promoters and other family members of the core-promoters for sale/pledge of their shares at manipulated prices. The agreement here for doing any legal act was in the form of Power of Attorney giving him all powers to deal with the shares in SRSRHPL, a company promoted by the core-promoters. The act of facilitating sale and consequent pledge of shares was an illegal act which was carried out with deceptive motive for cheating the unsuspecting investors based on dishonest concealment of facts. By this dishonest and willful misrepresentation, investors were induced to purchase the shares of SCSL at highly manipulated prices. By this act of deception, Shri B. Suryanarayana Raju caused damage and harm to the investing public and hence committed the offence of cheating under Section 417, 420 read with Section 120B of the IPC, 1860 and make himself liable for prosecution under the above provisions of the Indian Penal Code, 1860." 39. Also, the judgment of the S....
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....rees, other than those mentioned in section 41. -- Judgments, orders or decrees other than those mentioned in section 41 are relevant if they relate to matters of a public nature relevant to the enquiry; but such judgments, orders or decrees are not conclusive proof of that which they state." This Court in K.G. Premshanker v. Inspector of Police, (2002) 8 SCC 87 at 94 stated: "22. In the facts of the present case, Section 42 would have some bearing and the judgment and decree passed in a civil court would be relevant if it relates to a matter of public nature relevant to the enquiry but such judgment and decree is not a conclusive proof of that which it states." While it is true that adjudication proceedings and criminal proceedings are separate proceedings, the relevance of the Special Court's judgment is only for the purpose of showing that the second part of the definition of an "insider" is made out in the appellant's case, for, if the appellant, along with his brothers, was party to the fraud practiced on the public, it is obvious that he was reasonably expected to have access to UPSI in respect of the securities of SCSL. This appellant's case, therefor....
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....others, coupled with the motive under which M/s SRSR Holdings was incorporated by the main accused and the subsequent transfer of shares by them to M/s SRSR Holdings. 402. The judgment of the Apex Court in the case of Bacha F Guzdar (supra) would not apply to the facts of the case. It is not only that the facts involved in the case Bacha F Guzdar (supra) are quite different than of this case but the issue in that case was dealt with in reference to the different set of provisions and Statute. The argument of the appellant was otherwise on the pretext that M/s SRSR Holdings has not been arrayed as accused whereas the company is now one of the accused and otherwise the shares in Demat account were required to be attached because even the NFFCs could not recover the full loan account because after pledging the shares for obtaining loan by M/s SRSR Holdings, the price of shares had fell down and, therefore, NBFCs could not recover the entire amount. The respondents have otherwise relied on the judgment of the Apex Court in the case of DDA Vs. Skipper Construction Co. (P) Ltd. reported in 1996 (4) SCC 622 where it has been held that corporate entity was ....
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.... (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be: Provided further that, notwithstanding anything contained in clause (b),any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.". 404. The counsel for the appellant had made emphasis on Section 5(1) ignoring the second proviso added w.e.f. 01.06.2009. Prior to the amendment, the provisional attachment of the property could have been of the property of such person who has been charged for scheduled offence. However, the second proviso was added with non-obstante clause to override clause (b) of Section 5 (1) ....
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....nsfer the property, then what prompted them to challenge the attachment of the property because attachment debars concealment or transfer of the property and not from its use unless possession is taken. The filing of appeal shows the intention of the appellants to conceal the property. The material on record shows that properties are involved in money laundering. The attachment in this case is not in violation of Section 5(1) of the Act of 2002 in view of the amendment in Section 5 of the Act w.e.f. 01.06.2009. ISSUE No.3: 406. The counsel for the appellants then submitted that Section 5(1) of the Act mandates recording of reasons to believe in writing. The reasons to believe can be recorded based on the material in possession while in the instant case, no material was existing with the respondents to record reasons to believe about involvement of the property in money laundering. The facts on record shows a detailed finding that the property attached by the respondents is "proceeds of crime" and such a finding has not been contested to the extent required by the appellants and otherwise the Provisional Attachment Order was issued based on ....
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.... the Act of 2002. According to the appellant, mere possession of proceeds of crime would not attract Section 3 of the Act of 2002. The argument has been made in ignorance of the fact that anyone directly or indirectly attempts to indulge in the process of proceeds of crime would be guilty for commission of offence under Section 3. The appellants alleged to be in possession of the proceeds of crime and in fact Adjudicating Authority has recorded its opinion that proceeds in the hands of the appellant involve a case of money laundering. They projected the property to be untainted thus a case for commission of offence under Section 3 of the Act would be made. Thus, the attachment of the property in the hands of the appellant attracted Section 3 of the Act of 2002 and, therefore, the argument that mere possession of the proceeds of crime would not attract Section 3 of the Act of 2002 cannot be accepted when they projected it to be untainted property. ISSUE No.5: 408. The learned counsel for the appellant has raised an argument in reference to Section 24 of the Act of 2002 to challenge the impugned order. It is submitted that the presumption has....
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....SUE No.6: 410. The challenge to the impugned orders has been made even on the ground that the alleged sale of shares of M/s Satyam Computers by M/s SRSR does not lead to commission of offence. 411. The learned counsel for the appellant further submitted that while determining the value of the proceeds of crime, the respondents failed to take intrinsic value of the shares. It is not that the shares had no value in the hands of the appellants before alleged inflated price and, therefore, the entire value of the inflated price of shares to be taken as proceeds of crime. 412. The argument has been raised in ignorance of the fact that what has been attached is mainly the properties purchased by many entities out of the loan taken by M/s SRSR after pledging the shares with NBFCs. The transfer of shares to M/s SRSR Holdings was after giving rosy picture of the financial status of M/ Satyam Computers by B. Ramalinga Raju and others. The Apex Court in the case of Chintalapati Srinivasa Raju (supra) has made observation about manipulation in the books of M/s Satyam Computers during the period from 2001 to 2008 and the manner of pledging of the shares by M/....
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....17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in moneylaundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) - The Adjudicating Authority shall, after-- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him,by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, oth....
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.... relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in moneylaundering and confiscated by the Central Government: Provided that where a notice under this subsection specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after-- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in moneylaundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, ....
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....ce of money laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of moneylaundering after having regard to the material before it. (8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Pr....
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.... amendment Act 2 of 2013 came into being. Considering the purport of the amended provisions and the experience of implementing/enforcement agencies, further changes became necessary to strengthen the mechanism regarding prevention of money- laundering. It is not right in assuming that the attachment of property (provisional) under the second proviso, as amended, has no link with the scheduled offence. Inasmuch as section 5(1) envisages that such an action can be initiated only on the basis of material in possession of the authorised officer indicative of any person being in possession of proceeds of crime. The precondition for being proceeds of crime is that the property has been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. The sweep of section 5(1) is not limited to the accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. Such a person besides facing the consequence of provisional attachment order, may end up in bein....
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.... cause interference in the Provisional Attachment Order on the ground aforesaid. ISSUE No.9: 418. The counsel submitted that manipulation in the financial status of M/s Satyam Computers to give rosy picture was not amounting to scheduled offence and in a similar manner to create a structure of M/s SRSR Holdings for transferring the shares. The properties belonging to the appellants have been yet attached. 419. We have considered the submission and find that argument has been raised in ignorance of the fact that the main accused were convicted by the Trial Court finding a case of commission of predicate offence under IPC. The rosy picture of the financial status of the company was presented by manipulation and forging of the datas and records with a view to cheat the innocent investors and, therefore, rightly taken to be an offence. The judgment of the Apex Court in the case of Chintalapati Srinivasa Raju (supra) has been referred and shows and highlights the affairs of the accused to cheat the innocent investors and for that even to create M/s SRSR. Accordingly, we do not find any substance in this argument also. ISSUE No.10: 420. It is further subm....
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....ing recorded in the trial cannot be accepted. Rather, we find that serious allegations were levelled against the accused and has been tried by the Special Court with an order of conviction. ISSUE No.12: 423. The counsel appearing for B. Rama Raju (Jr) and B. Teja Raju both sons of Shri B. Ramalinga Raju, challenged the attachment of the properties acquired out of sale of the shares of M/s Satyam Computers by them in the year 2005. Those shares were not sold in the year 2006 or 2009, which is considered as opportune time in this case, rather it was sold in the year 2005. The amount secured out of the sale of the shares was used for acquisition of the property and thus could not have been considered to be proceeds of crime and, therefore, a challenge to the attachment of those properties acquired out of the funds received by the two appellants on legitimate sale of shares of M/s Satyam Computers has been questioned. 424. The respondents have contested the issue and submitted that the appellants B. Rama Raju (Jr) and B. Teja Raju were part of the Raju Group and sale of shares in the year 2005 was on a higher price. It was at the opportune time, thus rightly ....
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.... father sold shares of SCSL in 2006, no case has been made against them. Consequently, their appeals also stand allowed and the Appellate Tribunal judgment is set aside in this behalf". 426. The order quoted above makes a reference of the facts and the legal issues involved therein. So far as the legal issue is concerned, it was different than involved in the present matter but the facts are same and material available on record shows that the appellants had inherited the shares of M/s Satyam Computers much prior to the commission of crime and they sold the shares in the year 2005 and thereby B. Rama Raju (Jr) and B. Teja Raju got Rs.48,55,63,711/- and Rs.48,97,96,923/- respectively out of the sale of the shares. The purchase of the properties out of the sale of the shares by B. Rama Raju and B. Teja Raju has been considered to be proceeds of crime though it is a fact that the sale of the shares was not at the opportune time in the year 2006 or 2009 but was much prior to it. The order of the Apex Court would apply on the facts of this case. The sale of shares was in the year 2005 thus not at the opportune time. It was sold on a comparatively lower price and, th....
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....f the Act of 2002, was framed by the Adjudicating Authority immediately. It is said to be with non-application of mind because voluminous records could not have been seen by the Adjudicating Authority on the same date. 430. We do not find any substance in the argument because authority can look into the record and form reasons to believe on the same date. The perusal of the notice sent by Adjudicating Authority shows application of mind where all the issues relevant to the case were considered to form an opinion for reasons to believe as was required. It is otherwise a fact that we have passed a detailed order touching the facts on merit and legal issues. Thus, the ground raised by the appellants cannot be accepted. ISSUE No.14: 431. The learned counsel for the appellants submitted that the dividends arising out of the shares of M/s Satyam Computers could not have been considered to be proceeds of crime so as to attach the property and, therefore, Provisional Attachment Order so as its confirmation be interfered. 432. The learned counsel for the respondents on the other hand submitted that the dividends arising out of the shares of M/s Satyam Com....