TaxTMI 
TaxTMI 
2025 (1) TMI 1671
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....s of crime Rs. 94,24,090 M/s Raja Aederi Consultants Pvt. 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 o....
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.... respectively. He did not find other companies, including M/s Raja Aederi Consultant Pvt. Ltd., suitable. 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. ....
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....d by the Accounts Section as per practice. In the statement, it was shown that M/s Raja Aederi Consultant Pvt. Ltd. was eligible for both tenders on the 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 S....
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....r plus for four storeys with basement in each stadium. For this, the venue briefs dated 19.11.2006 and May, 2007 for the Talkatora Stadium and Shivaji Stadium 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 Ae....
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....(2) r/w section 13(1)(d) Prevention of corruption Act, 1988, mentioned in the FIR No. RC 217220114002 dated 09.03.2011 are specified as Scheduled offences under the Schedule 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 initi....
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....eeking the reasons to believe. In fact, the said application was directed to be considered at the final stage without the Respondent being asked to file a reply which caused serious prejudice to the Appellant as it was asked to file the reply to the original complaint 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 ....
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.... 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." 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 th....
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....ous legislation like PMLA, 2002 must act in a reasonable manner in complete letter and spirit of the enactment. 24. It is also argued that as per Clause 13 of the Adjudicating Authority (Procedure) Regulations 2013, the Summons 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. 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 ....
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....f the Respondent 30. The Respondent has firstly pointed that on completion of trial in the scheduled offences, Hon'ble Trial Court passed a judgement dated 08.05.2017 wherein it has been held as under: "163. From the facts stated above, the only conclusion that can be drawn is that accused M/s Raja 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 Bh....
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....he law as expounded by the Hon'ble Delhi High Court in the case of J. Sekar. In this regard, at the outset, we have noted that reasons to believe have been discussed in detail in the Provisional Attachment Order in paragraphs to which inter alia refer to registration of FIR by CBI against various persons, including M/s Raja Aederi Consultants 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, an....
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....otice to the department and may result in frustrating the proceedings resulting in confiscation of such proceeds of crime. It is also reasonably believed that it is possible that trial of offences under PMLA may take considerable time and hence if power of provisional attachment, under section 5(1) of PMLA, 2002, is not exercised at this stage, when there are demands 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 no....
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....d 17.06.2019 and also stated that there is no dispute between the present appellant and the NDMC on the said amounts. 40. Having considered the above facts, we find that no prejudice has been caused to the appellant on account of non-issue of copy of the notice to the NDMC. The Act enables any person aggrieved by an order of the AA to file an appeal before this Appellate 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,- ....
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....e Appellant is that the work assigned to the Appellant was duly completed and even though the Appellant stands convicted, there was no pecuniary advantage gained and therefore, there was no proceeds of crime. In this regard, it may be stated at the outset that the Appellant gained a valuable right through fraud and misrepresentation which it would otherwise not have gained. Needless to say, no amount would 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 t....
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....ence for the authority to validly invoke the powers of provisional attachment. Having perused the PAO passed in the present case, however, we find that at the stage of passing of the order of provisional attachment, among other documents, the conviction order against the appellants under Section 420 IPC and 120-B IPC read with Section 420 IPC have been duly taken into account by the authority. The relevant text from the order 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....
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....y the Act. Mere attachment of property does not alter the position with regard to the ownership or even possession of the properties which are the subject matter of such attachment. Therefore, at this stage, the balance of interests clearly lies in favour of continued attachment of the properties pending a decision on its confiscation or release. 49. The Appellant had also argued that as per Clause 13 of the Adjudicating Authority (Procedure) Regulations 2013, the Summons 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 sak....
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....) has been decided by this Appellate Tribunal through a detailed order in the case of Sadananda Nayak v Deputy Director, FPA-PMLA-5612/BBS/2023 (order dated 14.10.2024). The relevant part of that order is extracted below: "12. The reference of the judgment of the Apex Court in the case of Pavana Dibur (supra) and also of Kerala High Court in the case of Satish Motilal Bidri (supra) has been given. To analyze the issue, we may quote the definition of `proceeds of crime' given under Section 2(1) (u) of the Act of 2002, 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 th....
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....bur (supra) to hold that the properties acquired prior to commission of crime would not fall in the definition of "proceeds of crime". We are unable to accept the arguments which may otherwise make second part of the definition of "proceeds of crime" to be redundant. It would be for the reason that if the definition is taken only in two parts leaving the middle part, then it would be difficult for the enforcement agencies to protect the property till completion of the crime to save the victim from crime committed by the accused. It would be for the reason that 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 t....
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....rm of money (cash) being undue advantage and dishonestly gained, is tainted property acquired "directly" by a scheduled offence and consequently "proceeds of crime". Any other property acquired using such bribe as consideration is also "proceeds of crime", it having been obtained "indirectly" from a prohibited criminal activity within the meaning of first limb of the definition. 107. In contrast, the second and third kinds of properties mentioned above would ordinarily be "untainted property" that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for 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 th....
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....ala High Court did not argue that the definition of "proceeds of crime" has three limbs and unfortunately the view expressed by Delhi High Court in Axis Bank (supra) was not discussed elaborately while it was cited by the counsel. 20. The Ld. Single judge of Kerala High Court did not subscribe the judgment aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of Seema Garg Vs. Deputy Director, Directorate of Enforcement, reported in 2020 SCC OnLine Punjab & Haryana 738. With due respect, we are unable to apply the judgment of Kerala High Court going against Para 68 of the judgment 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 e....
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....ank. On a plain textual interpretation of Section 2(1)(u) as well as in the backdrop of the amendatory history of that provision, this Court finds itself unable to agree with the line of reasoning adopted in Seema Garg. As held hereinbefore, affirmation of Seema Garg would amount to virtually deleting the phrase ―or the value of any such property from Section 2(1)(u). That would not only violate the well settled tenets of statutory construction but would clearly amount to the Court rewriting the provision itself in a manner that it stands deprived of vital and purposive content. The Court further notes that Axis Bank had enunciated important 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 subsequ....
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....t would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved." 21. The issue aforesaid was not raised in the case of Pavana Dibbur (supra). The counsel appeared therein did not elaborately argue the issue by referring to the definition of "proceeds of crime" having three limbs to give meaning to each limb for the interpretation of the definition of the "proceeds of crime". The reference 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....
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....n those circumstances the property of equivalent value can be attached. The word "the value of any such property" signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given circumstance. Thus, we are not in agreement with the counsel for the appellant who has questioned the attachment in reference to the property acquired prior to commission of crime. We are not going even further that the properties have nexus with the proceeds out of the crime but even in given circumstances and scenario that the property was acquired prior to commission of crime then, also under certain circumstances, it can be attached for "the value of any such property." 23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank (supra) and Prakash Industries (supra) for the definition of "proceeds of crime" would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission of crime would not fall in the definition of ....