TaxTMI 
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2025 (1) TMI 1671
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.... Ltd TOTAL Rs. 94,24,090/- Facts in brief 2. The relevant facts briefly are that an FIR, i.e., FIR No. RC 21722011A002 dated 09.03.2011 was registered by the CBI against, (i) Shri Sanjib Sengupta, the then Chief Architect, New Delhi Municipal Corporation (NDMC), (ii) Shri R.S. Thakur, the then Supdt. Engineer, NDMC, (iii) Sh. V.K. Gulati, the then Executive Engineer, NDMC, (iv) Shri P.V. Gupta the then Supdt. Engineer, NDMC, (v) Sh. K.K. Mutreja, Engineer-in-Charge, NDMC, (vi) Shri H.S. Dogra, the then ADG CPWD, (vii) Sh. Sarad Bhatia, the then A.D.G (Arch), CPWD (viii) Sh. Raja Aederi, Chairman M/s Raja Aederi Consultant Pvt. Ltd. (ix) Sh. Uday Bhat, Director, M/s Raja Aederi Consultant (Pvt.) Ltd. (x) other known officials of NDMC. (xi) M/s Raja Aederi Consultant Pvt. Ltd. under sections 120B of the erstwhile Indian Penal Code (IPC) and sections 13(2) r/w section 13(1)(d), Prevention of Corruption Act, 1988 (P.C. Act, 1988). It has been alleged that the officials of the NDMC, in criminal conspiracy with M/s Raja Aederi Consultant Pvt. Ltd., abused their official position in the matter of award of the consultancy contract pertaining to upgradation/renovation of....
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....able. The reason for the same was that they did not have adequate experience and manpower to undertake the said work. Further, a sub-committee was constituted so that the final consultant could be appointed for the said work. 5. On 03.03.2006, a meeting of sub-committee was held which was chaired by Shri M.M. Rana, Advisor Consultant, NDMC, and fresh bids were called for. The bid documents for both the stadia were published in the newspaper on 24.04.2006. As per fresh bid documents, main eligibility criteria were prior expertise of developing/upgrading competition/training sports venue for hockey etc., sufficient number of in-house technical qualified professionals, sound financial position and three similar complete works of consultancy service in last five years. 6. In the response to the above public notice inviting tenders (NIT), following 6 firms/companies purchased tender documents of both stadia from NDMC: 1. M/s Kothari & Associates 2. M/s Kapoor & Associates 3. M/s Architectural Grids 4. M/s Raja Aederi Consultant Pvt. Ltd. 5. M/s Consulting Engineering Service (India) Pvt. Ltd. 6. M/s ARCH EN Design 7. For purchasing documents of Talkalora Stadium and Shiva....
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....he basis on experience of designing National Sports Club of India (NSCI), Worli, Mumbai and had also got the sufficient number of in-house technically qualified professionals such as Planners, Architects Engineers (Civil, Electrical, Electronics, Acoustic, Air-Conditioning, Lighting, Communication, Structural, Environmental), Project Managers etc. with minimum experience of five years. Further, the bid documents of M/s Raja Aederi Consultant Pvt. Ltd. for both stadia apparently show that it had dishonestly and fraudulently submitted false information in its bid documents to NDMC. 9. During investigation, it was revealed that M/s Raj Peshori & Associates was appointed as Architect consultant for Worli project of NSCI first and on termination of its services, M/s Shashi Prabhu & Associates was appointed by the authorities of NSCI and they have never appointed M/s Raja Aederi Consultants Pvt. Ltd. either for the above said project or any other project of NSCI. The NSCI authorities never appointed M/s Sterling Engineering Consultants Services Pvt. Ltd., for its Worli Project as it first appointed by M/s Raj Peshori and after that by M/s Shashi Prabhu & Associates as Structural Enginee....
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....dium respectively were sent by the OC to the NDMC. The additional/enhanced work in both the stadia were awarded to M/s Raja Aederi Consultant Pvt. Ltd. without going for fresh/retender, after the resolution dated 05.11.2007 of the Council of NDMC. The consultancy fee for this work was approved @3% of total construction cost for both stadia with a maximum capping of Rs. 2.25 crore in case of Talkatora Stadium and 2.00 crore in the case of Shivaji Stadium. The investigation disclosed that the decision of the NDMC for not going for fresh tender/retendering of the enhanced of work and continuing with the already appointed consultant, M/s Raja Aederi Consultant Pvt. Ltd., was taken of view of existing circumstance due to time constraint. The contention of NDMC official was that it would not be practically possible to appoint a new consultant at that stage. Even if the reason such as a time constraints are considered for not inviting fresh tender for enhanced work, Sh. V.K. Gulati and the Sh. R.S. Thakur, who knew that M/s Raja Aederi Consultant Pvt. Ltd did not qualify initially, ought to have examined critically the claim of M/s Raja Aederi Consultant Pvt. Ltd. with regard to the....
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....given in Prevention of Money Laundering Act (PMLA), 2002 (as amended), in terms of section 2(1)(y). Hence, an ECIR, namely, ECIR/21/DZ/2012 was recorded on 08.08.2012 against the following accused persons for commission of offence under Section 3 of Prevention of Money Laundering Act, 2002 (as amended), punishable under Section 4 of the said Act: 1. Sh Sanjib Sen Gupta the then Architect Chief, NDMC 2. Sh. R.S. Thakur, Superintending Engineer (S.E.). 3. Sh. V.K. Gulati, Executive Engineer (EE) 4. Sh. V.P. Gupta, Superintending Engineer (SE) NDMC 5. Sh. K.K. Mutreja, Engineer In-Charge NDMC 6. Sh. H.S. Dogra, ADG, CPWD. 7. Sh. Sharad Bhatia, Architect, CPWD. 8. Sh. Raja Aederi Chairman M/s Raja Aederi Consultant Pvt. Ltd. 9. Sh. Uday Bhat Director, M/s Raja Aederi Consultant Pvt. Ltd 10. M/s Raja Adheri Consultant Pvt. Ltd 11. Other Unknown Official of NDMC 13. After recording the ECIR, investigations were initiated under PMLA, 2002. During the course of the said investigation, statements of various persons, including Sh. Raja Aederi, Chairman M/s Raja Aederi Consultant Pvt. Ltd., Sh. Uday Bhat Director, M/s Raja Aederi Consultant Pvt. Ltd., Sh. Kamalakar Narh....
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....laint without the 'reasons to believe' and, consequently, the right to file reply was closed. 16. It is also argued that there is a grave infraction of law leading to complete vitiation of the proceedings. It is no longer res integra and has been unequivocally decided by a Division Bench Judgment dated 11.01.2018 of the Hon'ble Delhi High Court in J. Sekar vs. Union of India & Ors. reported as 2018 SCC OnLine Del 6523 that there is a mandatory requirement of communicating the 'reasons to believe' to the Appellant at the stage of issuance of a Notice to Show Cause under Section 8(1). 17. It is also argued that the Adjudicating Authority has adopted an unfair and discriminatory approach against the Appellant while passing the impugned order. It is stated that on the one hand the Adjudicating Authority has relied upon certain portions of the judgment passed by the Division Bench of the Hon'ble High Court in J. Sekar vs. Union of India & Ors., 2018 SCC Online Del 6523 in support of the case of the Respondent but at the same time while dealing with the submissions of the Appellant, the Adjudicating Authority has held that the said judgment of the Hon'ble High Court....
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....likely to frustrate any proceeding under this Act." It is contended that it is an admitted position that the property attached in the present case is not in the possession of the Appellant and thus, by no stretch of imagination it can be presumed that 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 the Act and thus the attachment is illegal, frivolous and baseless. 20. It is also argued that the Adjudicating Authority failed to take note of the fact that though the Appellant has been convicted for the scheduled offence, however, it is worthwhile to mention that it was never the case of prosecution/CBI in the scheduled offence that any loss in whatever manner has been caused to NDMC in the said contract. Attention is drawn in this regard to para 101 of the judgment. It is submitted that without any pecuniary advantage, there cannot be any proceeds of crime derived by the Appellant from a scheduled offence and thus, no offence under PMLA has been committed. It was also submitted during the course of oral arguments that the work of the two stadia was completed to....
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.... in a prescribed form, viz., Form 3, 4, 5, 6. A bare glance at the said forms would indicate that no such "Postscript" viz. "PS" finds mention therein, as is mentioned in the Notices received by the Appellant. 25. It is also argued that the Directorate of Enforcement has not conducted any independent investigation / inquiry into the allegations levelled by the CBI in their report under Section 173(2) Cr. P.C. 26. It is also argued that the Directorate of Enforcement has adopted an egregious manner of recording purported statements under Section 50 of the Act of 2002, whereby leading questions are placed before witnesses, who then give the answers that are suggested within the question. Since these statements are placed at a much higher pedestal when compared to statements under Section 161 Cr. P.C., it is mandatory that the normal rules of evidence and prudence are judiciously maintained by the investigating agency, but since the same have not been followed by the investigating agency, the said statements cannot be relied upon. 27. It is also argued that the purported witnesses giving answers to leading questions places an insurmountable barrier before the Appellant to discharge....
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....ja Aederi Consultants Pvt. Ltd. and its Directors, Raja Aederi and Uday Shankar Bhat have put NDMC to deception and acted dishonestly and misrepresented in Appendix A and Appendix B that accused no.5, had experience of architectural consultancy in respect of NSCI stadium and was also doing ongoing architectural consultancy project in NSCL, Worli, Mumbai, while in fact it had not worked in such stadium. Further, accused no 3 to 5 have concealed the fact that accused no.5, had no architectural consultancy experience of renovation/upgradation of any sports stadium. By such act accused no. 3 to 5 succeeded in getting contract although not eligible for it." *** "172. Pondering over the ongoing discussion, I am of the considered opinion that:- i. Prosecution has succeeded to bring home the guilt of accused no.3, Raja Aederi, accused no.4, Uday Shankar Bhat and accused no.5, M/s Raja Aederi Consultants Pvt. Ltd., Mumbai, u/s 420 IPC and 120B r/w Section 420 IPC beyond shadow of all reasonable doubts. Accordingly, I hereby hold them guilty thereunder. ii. The prosecution has failed to bring home guilt of accused no.1, R.S. Thakur and accused no.2, V.K. Gulati, beyond the shadow of ....
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....s Pvt. Ltd. and its directors, Sh. Raja Aederi (Director), Sh. Uday Shankar Bhat (Executive Director), the filing of charge sheet and the allegations contained therein, the nature of violations alleged as well as other factual findings which have already been discussed at some length in paragraphs to above. It is noteworthy that the Appellant already stood convicted by the Trial Court at the time of passing of the PAO. As such, upon perusal of the PAO, we do not find any reason to conclude that the Directorate had no reasons to believe in order to invoke the provisions of section 5(1). Insofar as the communication of reasons to believe is concerned, as pointed out, a single judge Bench of the Hon'ble Delhi High Court in the case of J. Sekar (supra) has held that reasons have to be communicated to the noticees. However, another single judge Bench of the Hon'ble Madras High Court, in G. Gopalakrishnan Vs. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019), has held that section 5 nowhere stipulates that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period....
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....nds of circumstances and existence of justifiable facts, it could result in defeating the very purpose for which PMLA, 2002 has been enacted. It is reasonably believed that if the part of proceeds of crime is transferred and changes hands, it could lead to creation of bonafide third party interest which may make it difficult to retrieve the same at later stage. In view of the reasonable belief entertained by the Deputy Director based on the facts that the amount of Rs. 43075910 is already received by M/s RACPL and its yet not traced and retrieved, the belief stands well justified." Having considered the same, we find that there was adequate justification for the attachment of the property which constituted money receivable by the appellant and could have been received and diverted/integrated by the appellant if not attached immediately. 37. An argument was raised that the property so attached is described as "balance amount lying with NDMC out of Proceeds of Crime". The original complaint did not implead/arraign NDMC which is a necessary party under the Adjudication proceedings in as much as any subsequential proceedings post the impugned order will qua the NDMC and thus, w....
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.... Tribunal. However, no such appeal has been filed by the NDMC, nor it has filed any application for impleadment in the present appeal though being fully aware of the attachment of the property. In view of these facts, and also considering the provisions of Section 68 of the Act, this contention of the appellant is hereby rejected. 41. It is next contended that the property attached in the present case is the balance amount still lying with the NDMC which never came to the Appellant and thus, cannot be termed as proceeds of crime in the hands of the Appellant in terms of section 2(1)(u) of the Act. In this context, we have perused the definition of the term "proceeds of crime" as it currently stands, which is as follows: "2. Definitions.-(1) In this Act, unless the context otherwise requires,- (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation.-For the removal of doubts, it is hereby cla....
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....ould have been received or receivable by the Appellant from the NDMC had it not misrepresented the facts which amounted to the offence of cheating under section 420 of the erstwhile IPC and therefore, did not qualify for award of the contract. Therefore, the payments clearly represented the proceeds of crime. 44. The next contention is that the Respondent has wholly failed to point out any link or connection of the property sought to be attached and the proceeds of crime. This contention of the Appellant clearly holds no water. Upon perusal of page 9 of the PAO passed by the Directorate, the following discussion is found: "During the course of investigation it is found that M/s Raja Aederi Consultants Pvt. Ltd. had submitted false information/documents with NDMC in order to get the contracts/works for upgradation/renovation of Talkatora and Shivaji Stadiums amounting to Rs. 5.25 Crores and since M/s Raja Aederi Consultants Pvt. Ltd. was not eligible for the award of these tenders, this entire amount of Rs. 5.25 Crores to be acquired by the company through criminal activity involving scheduled offence is the proceeds of crime. It is also found during the investigation....
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....rder is extracted below: "6 WHEREAS, on perusal of, and after taking into consideration the contents of record placed before me, including (i) the copy of Charge Sheet dated 28.09.2012 filed by CBI in FIR No. RC 21722011A002 dated 09.03.2011 for offences u/s 120-B, IPC an section13(2)r/w section 13(1)(d), Prevention of corruption Act, 1988, (ii) Statements of Sh. Raja Aderi, Director of M/s Raja Aederi Consultants Pvt. Ltd. recorded on various dates under PMLA, (iii) Statements of Sh. Uday Bhat recorded on various dates under PMLA, (iv) Statement of Sh. Kamalakar Narhari Hadker recorded under PMLA, (v) Information/documents submitted by NDMC regarding the payments made to M/s Raja Aederi Consultants Pvt. Ltd and also balance payments to be made to M/s Raja Aederi Consultants Pvt. Ltd in respect of the CWG projects of Shivaji and Talkatora Stadiums and other relevant documents/reports in the instant PMLA case vide ECIR/21/DLZO/2012 dated 08.08.2012 and result of investigations made in the matter, the following facts have been revealed: a. ....... b. .......... c. ......... d. The trial in the Scheduled offence is completed and M/s Raja Aederi Consultants Pvt. Ltd. alongwit....
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....mons or Notice during the course of adjudication would be served in a prescribed form viz. Form 3, 4, 5, 6. A bare glance at the said forms would indicate that no such "Postscript" viz. "PS" finds mention therein, as is mentioned in the Notices received by the Appellant. 50. We have considered the above submission. It is not the case of the appellant that no notice was issued or even that the body of the notice was in the correct format as prescribe by the rules. What is contended is that some additional information was added by way of 'postscript' in the notice. We do not see how the same has prejudiced the appellant in any manner. Moreover, even if the contention of the appellant were to be accepted for the sake of argument, the same would stand protected by the provisions of Section 68 which reads as below: "68. Notice, etc., not to be invalid on certain grounds.-No notice, summons, order, document or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of his Act shall be invalid, or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such n....
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....2, which is quoted thus: "(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation. For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;" 13. The perusal of the definition aforesaid shows three limbs. In between every limb word "or" has been used to divide the definition into three parts. The first part refers to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use....
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....at if the property acquired prior to commission of crime would not fall in the definition of "proceeds of crime", then the accused would commit the crime and immediately proceeds would be siphoned off or vanished so that it may not remain available for attachment. In fact, the word "the value of any such property" was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity. 16. At this stage, we may refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder: "68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion....
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.... activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for the pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this perspective, it is essential that, before the order of attachment is confirmed, there must be some assessment (even if tentative one) as to the value of wrongful gain made by the specified criminal activity unless it be not possible to do so by such stage, given the peculiar features or complexities of the case. The confiscation to be eventually ordered, however, must be restricted to the value of illicit gains from the crime. For the sake of convenience, the properties covered by the second and third categories may be referred to as "the alternative attachable property" or "deemed tainted property". 17. The judgment of the Delhi High Court makes it clear that the definition of "proceeds of crime" has three limbs and in the secon....
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....of the Apex Court in the case of Vijay Madanlal Choudhary (supra). The judgment of Seema Garg (Supra) has been dealt with by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087. The relevant paras are quoted hereunder: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the same meaning and effect. The learned Judges comprising the Division Bench then proceeded to hold that even if the intent of the legislature was to include any property in the hands of a person within the ambit of the expression proceeds of crime, there would be no need to create three limbs of definition of proceeds of crime. xxxx 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted property. The Act clearly as does Axis Bank take into consideration a situation where a person who has obtained proceeds of crime by commission of a scheduled offence....
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....rtant safeguards which would apply in respect of third-party interests in deemed tainted property. Those caveats duly secure and protect bona fide third- party interests created for valid consideration. This Court, thus, reaffirms those defences as were culled out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance. 81. The Court also takes note of the position that although SLP (Crl) No. 28906/2019 is pending before the Supreme Court against the decision rendered in Axis Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim order of 30 August 2019 passed in the aforesaid Special Leave Petition only requires parties to maintain status quo. Insofar as the judgement of the Punjab and Haryana High Court in Seema Garg is concerned, althou....
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....of Para 68 of the judgment of three judges Bench of the Apex Court in the case of Vijay Madanlal Choudhary (supra) was not cited and thus counsel for the respondent submitted that the judgment in the case of Pavana Dibur (supra) does not propound ratio on definition of "proceeds of crime" and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case. 22. It has already been clarified by us that if the definition of "proceeds of crime" is given interpretation by dividing it into two parts or by taking only two limbs, then it would be easy for the accused to siphon off or vanish the proceeds immediately after the commission of scheduled offence and in that case none of his properties could be attached to secure the interest of the victim till conclusion of the trial. This would not only frustrate the object of the Act of 2002, but would advance the cause of the accused to promote the crime of money laundering. The Judgment in the case of Vijay Madanlal Chaudhary (supra) is of three judges bench while the judgment in the case of Pavana Dibbur (supra) is of two judges bench. The issue has otherwise been dealt with by this Tribunal ....