TaxTMI 
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2026 (1) TMI 655
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....peal No. 1051 Of 2019 - -<br>PMLA<br>A.S. GADKARI AND RANJITSINHA RAJA BHONSALE, JJ. For the Appellant-ED in all Appeals: Ms. Manisha Jagtap a/w Ms. Mansi Joshi. For the Respondent: Mr. Gaurang Mehta a/w Mr. Shahzad A. K. Najam-ES-Sani and Ms. Rhea Mehta i/by Maneksha & Sethna No. 1 in APEAL/1051/2019 a/w IA/724/2021 and IA/3140/2025. JUDGMENT [PER: RANJITSINHA RAJA BHONSALE, J]:- 1) By the present Appeals filed under section 42 of the Prevention of Money Laundering Act, 2002 (PMLA), the Appellant i.e. Union of India, seeks to challenge the Order dated 17th January, 2019 (Impugned Order) passed by the Learned Appellate Tribunal, New Delhi under the PMLA in FPA-PMLA-1407/MUM/2016,FPA-PMLA-1104/MUM/2015, FPA-PMLA-1105/MUM/2015, FPA-PMLA-1406/MUM/2015, FPA-PMLA-1408/MUM/2015, FPA-PMLA-1409/MUM/2015,FPA-PMLA-1410/MUM/2015, FPA-PMLA-1479/MUM/2016, FPA-PMLA-1211/MUM/2016 filed by Shapoorji Pallonji & Company Private Limited and in FPA-PMLA-1491/2016 filed by SRB Developers, the Respondent No. 2. The Impugned Order also disposes 3 Appeals filed by the Kalyani Group (Respondent No. 1) being FPA-PMLA-1220/MUM/2016, FPA-PMLA-1221/MUM/2016 and FPA-PMLA-1213/MUM/2016. 1.1) By....
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....und July 2007, SPCL and M/s. PRS Enterprises, a concern related/connected to Mr Nilesh Thakur entered into an agreement to procure land for SPCL. The SPCL, vide its letter dated 16th July, 2007, awarded to M/s PRS Enterprises/Nilesh Thakur, the task of acquisition 900 acres of land, at the maximum price of Rs. 30.00 Lakhs per acre. The acquisition was to be carried out within a period of 5 years. M/s. PRS Enterprises/Nilesh Thakur by letter dated 19th July, 2007 accepted the terms recorded in SPCL's letter dated 16th July, 2007. The letters dated 16th July, 2007 and 19th July, 2007 together constituted an Agreement between SPCL and M/s. PRS Enterprises/Nilesh Thakur for acquisition of land (the Agreement). 3.2) From the record it appears that, Mr Nilesh Thakur is a sole proprietor of M/s. PRS Enterprises, M/s. PRS Developers, M/s. Siddhivinayak Enterprises. Nilesh Thakur is also the Promoter/Director of companies namely viz. M/s. PRS Enterprises, M/s. PRS Developers, M/s. Aishwarya Investments, M/s. Ace Card Infrasol Pvt. Ltd, M/s. Shoreline Exports, Ace Card Trading Pvt. Ltd, Ace Card Agro Industries Pvt. Ltd, Ace Card Power Pvt. Ltd, Ace Card Media Pvt. Ltd, Ace Card HR Pvt. L....
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.... was registered, by the Crime Branch, CID, Chembur, Unit-VI of Mumbai Police (First FIR) against Shri. Nitish J Thakur, his brother Shri. Nilesh J. Thakur, Shri. Sunil Bhayade, Shri. Santosh Konekar, Shri Ganibhai and others for having committed offences of forgery, cheating and extortion under Sections 387, 467, 471 & 420 of Indian Penal Code. The complainants, Mr. Mukesh Waghela and Mr. Pandurang Thakur, contended that each of them, were cheated by the accused to the extent of 5% commission on the total amount of Rs. 131,04,70,0291/- received by M/s. PRS Enterprises and PRS Developers as PMC, from SPCL, for the Samata Nagar Project. SPCL is not made an accused in this FIR. 3.8) On 7th May, 2011, chargesheet was filed before the learned Additional Chief Metropolitan Magistrate, 37th Court Esplanade, Mumbai, under Section 387, 467, 471, 40 of Indian Penal Code against Nilesh Thakur and others. The said case is numbered as C. C. No. 403/PW/2011. On 10th May, 2011 on the basis of first FIR the Directorate of Enforcement started proceedings under PMLA Act and registered crime namely ECIR No. 03/2011 dated 10th May, 2011 under Sections 3 and 4 of the PMLA Act. 3.9) Since, M/s. PR....
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....of Maharashtra to 23rd March 2010 as Deputy Collector, which was in excess of his legal remuneration. On the basis of this second FIR, ECIR No. 6/M20/2012 dated 18th June, 2012, was registered under Sections 3 and 4 of the PMLA Act. It is Pertinent to note, that the offence under Prevention of Corruption Act was made a predicate offence vide an amendment and was effective from 1st June 2009. 3.12) Based on the FIR and investigation under PMLA, Directorate of Enforcement, between period April, 2012 to January, 2013 issued three Provisional Attachment Orders i.e. PAO No. 3 of 2012 dated 17th April, 2012, PAO No.7 of 2012 dated 27th November, 2012 and PAO No. 2 of 2013 dated 24th January, 2013. Said PAO's pertinent to or are related to the first FIR/ECIR No. 03/2011. 3.13) In the Assessment Proceeding under the Income Tax Act, pertaining to SPCL for the period January to March 2013, the Assessing Officer passed an Order dated 11th February, 2013, expressing doubts about the nature of transactions relating to payment made by SPCL to M/s. PRS Enterprises/Nilesh Thakur for acquisition of the land under the agreement. 3.14) In the meantime Original complaint Nos.140/2012 dated 15....
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.... filed chargesheet bearing No. 5/2014 on 15th March, 2014, inter-alia, against Respondent No. 2 and 3 under Sections 13(1) (e) 13(2) of the Prevention of Corruption Act read with Section 109 of the Indian Penal Code. According to the Directorate of Enforcement, all properties of SPCL, which were acquired by the aggregate sum of Rs. 141.50 Crores advanced by SPCL to Respondent No.3 under the subject agreement for land aggregation, were alleged to be disproportionate assets of the Nitish Thakur. 3.19) SPCL received summons from Director of Enforcement requiring SPCL to produce certain documents. SPCL by its letter dated 25th June, 2014 forwarded the documents including the copy of the Consent Decree passed by this Hon'ble Court to the Enforcement Director and requested to the Enforcement Director not to attach the properties under the Consent Decree, which belong to SPCL. 3.20) The Directorate of Enforcement, between, September,2014 to March-2015, on the basis of second FIR/ECIR No. 6/MZ20/2012 dated 18th June, 2012, issued Provisional Attachment Orders being PAO No. 19 of 2014 dated 30th September, 2014 and PAO No. 23 of 2014 dated 31st December, 2014. 3.21) The prosecution....
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.... Authority by separate Orders both dated 27th August, 2015 passed in O.C. 465/15 held that properties attached by way of the PAO's are proceeds of crime, involved in money laundering and therefore confirmed the PAO No. 13/15 and PAO No. 16/15. Said Order dated 27th August, 2015, was challenged by SPCL, by filing Appeal No. FPA/PMLA Nos.1104/2015 and 1105/2015. 3.28) Pursuant to the order dated 17th May, 2015, SPCL, filed 5 Miscellaneous Applications with Adjudicating Authority under Section 8(2) of the PMLA Act challenging Order passed by Adjudicating Authority in the Original Complaint relating to the PAO's i.e O.C. No. 140 of 2012 and PAO 3 of 2012; O.C. No. 174 of 2013 and PAO 2 of 2013; O.C. No. 169 of 2012 and PAO 7 of 2012; O.C. No. 370 of 2014 and PAO 19 of 2014; and O.C. No. 408 of 2015 and PAO 23 of 2014. 3.29) Between June, 2015 and January, 2016, SPCL filed Miscellaneous Applications under the proviso of Section 8(2) of PMLA objecting to the other attachments. SPCL brought on record, all the facts and documents, based on which it contended that, it was the legal and beneficial owner of the properties sought to be attached by Directorate of Enforcement by way of sai....
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....arge of duties by the public servant Mr Nitish Thakur. 3.34) By its Order dated 16th June 2016, passed in the Miscellaneous Applications, it was directed that the Directorate of Enforcement considers SPCL's claim/applications under Section 8(2) of the PMLA Act and that SPCL shall be heard. The Provisional Attachment Orders remained in force. SPCL, preferred 5 Appeals, before the learned Appellate Tribunal PMLA against the Order dated 16th June 2016, being FPA-PMLA Appeal Nos. 1406 of 2016; FPA-PMLA Appeal Nos. 1407 of 2016; FPA-PMLA Appeal Nos. 1408 of 2016; FPA-PMLA Appeal Nos. 1409 of 2016; FPA-PMLA Appeal Nos.1410 of 2016. The Appellate Tribunal, by Order dated 19th October 2016, stayed effect and operation of the Order dated 16th June, 2016. Appeals were also filed by SPCL, before the learned Appellate Tribunal, PMLA being Nos. FPA-PMLA-1104-1105, 1406-1410, 1479/MUM/2016, FPA-PMLA-1211 and 1491/MUM/2016 to set aside the Orders of the Adjudicating Authority confirming the Provisional Attachment Orders passed in the two ECIRS. 3.35) In August, 2016, the Adjudicating Authority, by separate Order dated 11th August, 2016 passed in O.C. No.596/16 held that, the attached proper....
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....ise the grounds before this Court. 6) This Court, is called upon, to decide preliminary objections of SPCL, before considering the Directorate of Enforcement's aforesaid Appeals on merits. In factual background of the present proceedings and various Orders passed therein and considering the seriousness/gravity of the offences, we are of the opinion that both the proceedings need to be heard together. We are of the considered view, that both the proceedings i.e Criminal Application and Criminal Appeals ought to be decided together, on merits. 7) Mr. Mehta, learned Counsel appearing for SPCL, in Criminal Application No 724 of 2021 contends that, the Impugned Order dated 17th January, 2019, apart from being based on merits, is also based on certain concessions or statement/admission, given by the Appellant-Directorate of Enforcement, through its appearing Advocate. The Advocate for the Directorate of Enforcement, has admitted and agreed that, the amounts advanced by the SPCL to the Nilesh Thakur Group of companies is not proceeds of crime nor is it tainted money. That, there is absolutely no connection between the monies paid by SPCL to Nilesh Thakur and/or his Group of Companie....
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....hakur were never produced by the Appellant-Directorate of Enforcement on any earlier occasion in the proceedings. That, there is no material at all before Directorate of Enforcement to arrive at "reason to believe" that the subject properties were proceeds of crime involved in the money laundering. 7.4) Mr Mehta, would contend, that the Appellant has not taken any steps to seek a clarification of the statements/admissions made by the Advocates of the Appellant before the learned Appellate Tribunal, PMLA. He relied on paragraphs 9, 10 and 11 of the Judgment and Order of Hon'ble Supreme Court dated 17th April, 2003 passed in the matter of Shankar K. Mandal Vs. State of Bihar reported in (2003) 9 SCC 519 to submit that the corrections, clarifications or actions requiring the rectification of the statements, if any, was to be done before the learned Appellate Tribunal and not before this court. 7.5) Learned counsel for the SPCL further relied upon Order and Judgment of Hon'ble Supreme Court dated 8th December, 2017 passed in the case of Joint Director, Directorate of Enforcement and ors. Vs. Tech Mahindra Limited and Anr. in Special Leave Petition (Criminal). Diary No.(s) 34143/2....
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.... judgment and order? (ii) Whether the amount of Rs. 141.50 Crores advanced by SPCL to the Nilesh Thakur Group of Companies can be termed as 'proceeds of crime. QUESTION NO. (i): 10) The Supreme Court in the case of Daman Singh and others Vs. State of Punjab and Ors. reported in (1985) 2 SCC 670, has in paragraph 13 observed as follows: "13. .... It is not unusual for parties and counsel to raise innumerable grounds in the petitions and memorandum of appeal etc., but, later, confine themselves, in the course of argument to a few only of those grounds, obviously because the rest of the grounds are considered even by them to be untenable. No party or counsel is thereafter entitled to make a grievance that the grounds not argued were not considered. If indeed any ground which was argued was not considered it should be open to the party aggrieved to draw the attention of the court making the order to it by filing a proper application for review or clarification. The time of the superior courts is not to be wasted in enquiring into the question whether a certain ground to which no reference is found in the judgment of the subordinate court was argued before that c....
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....at even in the special leave petition no substantial question of law in this behalf has been raised nor has any affidavit been affirmed by the learned advocate who had appeared before the High Court or by any officer of the appellant who was present in court that certain other submissions were made before the High Court which were not taken into consideration." The Supreme Court in the case of Bhavnagar University V/s Palitana Sugar Mill Pvt Ltd & Others, after referring to the judgments in the matter of Daman Singh and others (supra) and State of Maharashtra v. Ramdas Shrinivas Nayak (supra), has observed that a statement of fact as to what transpired at the hearing, recorded in the order are conclusive of the facts so stated and no one can contradict such statements or recording of facts. 10.3) The Supreme Court in the case of Shankar K. Mandal Vs. State of Bihar reported in (2003) 9 SCC 519 has observed that: - "10. It is not open for the appellants to take such stand before this Court, as they are bound by the observations of the High Court. If there was any wrong recording of the stands, the course to be adopted is well known. 11. If really there was no....
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.... note that, the Review Application filed by the Appellant, to withdraw/modify the said statements/contentions was withdrawn. The Appellant, had made a statement that, the required Affidavit of the concerned Advocate would be filed, but the same never saw the light of the day. It was never filed. This was, in spite of the fact that, the Appellants themselves made a statement that, it will take steps to rectify the said statements/observations before the learned Appellate Tribunal. Nothing has been done, before the learned Appellate Tribunal. The said statements, admissions or concessions given by the learned Advocate for Directorate of Enforcement for Appellate Tribunal, still stand. 13) The Appellant has, instead now raised the said challenge by way of amendments in the present Appeal. Even during the present hearing, we have repeatedly asked and enquired with the Advocate appearing for the Appellants, to take instructions and inform the Court, if there is any material on record to contradict the said statements or concessions or admissions made before the learned Appellate Tribunal, PMLA. On instructions, the reply is, a categorical no. A perusal of the Impugned Order, passed b....
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....ith or incidental thereto. The object of the Act is to deal with and confiscate property derived from, or involved in, money-laundering. 15) Some of the provisions, which are relevant for considering the present case are as under: 15.1) Section 3 of the PMLA Act deals with the offence of money laundering. Section 3 reads as under; Section 3. Offence of money-laundering. Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. [Explanation.--For the removal of doubts, it is hereby clarified that,-- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:-- (a) concealment; or (b) possession; or ....
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....relatable to the scheduled offence, defined under section 2(y) of the PMLA Act. According to us, the definition has broadly three ingredients/attributes, (i) there should be a property (ii) it should have been derived from criminal activity and (iii) the criminal activity should relating or relatable to a scheduled offence. The said three aspects are interconnected and must appear and exist together so as to term a property as a proceeds of crime. It cannot be that the property is only derived from a criminal activity or a criminal activity not related to a scheduled offence. 18) For an offence of money laundering to be made out, there has to be a "proceeds of crime", which in turn has to be and include a property generated/derived directly or indirectly by and from a criminal activity, which criminal activity is relating to or relatable to a scheduled offence. We have also noted that in the definition of "Proceeds of Crime", a proviso/ explanation was inserted in the year 2019, to include a property which is a result of a criminal activity relatable to a scheduled offence. "Proceeds of crime", is a must to constitute an offence of money-laundering.....
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....med that the transaction between SPCL and Nilesh Thakur Group is a normal business transaction. 20.4) That Civil Suit No. 2576 of 2011, was filed in this Court and pursuant to the Consent Terms filed therein Consent Decree has been passed, wherein the properties of SPCL and its entitlement has been mentioned. Execution proceeding have been initiated pursuant to the consent Decree. The Orders passed therein still stand as valid and legal. 20.5) That the CIT Appeals, after considering all the documents, records and consent Decree, by its Order dated 17th May, 2013 recorded findings that transaction of advances for the purchase of land under subject agreement were lawful and correct. The observations of the Assessing Officer, which had been heavily relied upon by the Enforcement Directorate are now non-existent. The observations and findings of the Assessing Officer have been set aside by the Order dated 17th May 2013. The material on which opinion of "reason to believe" was formed is either non existing or set aside. The Order dated 17th May, 2013 has been upheld by the Income Tax Appellate Tribunal by its Order dated 10th April, 2015. 20.6) That pursuant to the summons rece....
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....ed, directly or indirectly," and "as a result of criminal activity" in our opinion, does not and cannot arise, as the monies has been transferred by SPCL from its own source and account, through banking channels and under an Agreement for a specific purpose i.e purchase of land at a predetermined price and within the specified period. The transaction was clearly known. We have also noted the fact that, it is not even the case of the Appellant that the monies have been transferred indirectly or through some sort of a layering transactions. As stated above, the record indicates that amount is in fact transferred to M/s. PRS Enterprises and M/s. Ace Card Infrasol Pvt. Ltd for specific purpose i.e. purchase of land and not received from them. 22) We may also note that, even during the course of the arguments before us, the Advocate for the Appellant was unable to point out any document, material or evidence from the record, to show that said amount can be termed as 'proceeds of crime'. Nor was the officer who was present in Court able to instruct the Advocate in that regard. The Order of Assessing Officer, wherein doubts was raised in regards to the nature of transaction of advancin....
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....eeds of Crime" under section 2 (u) of the PMLA. 25) Without a criminal activity and/or a scheduled offence there cannot be a "proceeds of crime". Pertinent to note, that it is not even the case or allegation of the Enforcement Directorate that the monies advanced by SPCL are generated from or of a criminal activity, let alone the same being relating or relatable to a schedule offence. 26) We find that, even in the Appeal before us and at the hearing thereof, the fact that the properties are not proceeds of crime, is not being seriously disputed by the Appellant. We find that, there is absolutely no material to connect or relate the monies paid by the SPCL to Nilesh Thakur, as being paid as a favour or to the discharge of public duties, by Mr Nitish Thakur or to term them as "proceeds of crime". There is no evidence, on record to that effect. Only being brothers or the fact that, a persons brother is a public servant would not be enough to doubt and/or find fault with the transaction between SPCL and Nilesh Thakur or presume that all transactions of Nilesh Thakur are nothing but fronts of Nitesh Thakur. We find that the entire action is based on the said untenable fact. Basing....
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....sualties are being suffered by the Indian Armed Forces while serving the Nation. There is a urgent and pressing need to provide for the families and widows of the soldiers who have lost their lives on the battlefield and in protecting the borders of the nation. In modifying the condition of refund of accrued interest we have considered the sacrifices of the soldiers for protecting the country and borders and also difficulties faced by the widows and the families of the soldiers who have sacrificed their lives for the country. We therefore, deem it fit to transfer 50% of the interest accrued on the said FD's to the Armed Forces Battle Casualties Welfare Fund (AFBCWF). We do this in a manner and with an object of balancing the equities. 29.3) As the present Appeals are being dismissed the Order Dated 17^th January, 2019 passed by the PMLA, Appellate Tribunal, New Delhi is confirmed with the aforesaid modification. We are directing that the amount of Rs. 45 Crores and Rs. 1.15 Crores as deposited by the Appellants in the Registry of the Court pursuant to the Order of this Court and placed as Fixed Deposits be liquidated and returned to Shapporji Pallonji and Co. Pvt. Ltd. 29.4) ....