AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 717
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....sional attachment order pertains to Shri Brij Bhushan Singal and Shri Neeraj Singal, former promoters of M/s Bhushan Steel Ltd. ('BSL') who acquired substantial loans from various banks and financial institutions. The Company aforesaid entered insolvency and accordingly Insolvency Resolution Professional was appointed on 31.03.2017. The outstanding loan amount was of Rs. 46,646.73 crore comprising working capital loan of Rs. 12,046.27 crore and term loan of Rs. 34,600.46 crore. The allegation against the company and the two individuals named above was to utilize network of the company and financial transactions to divert funds from BSL and M/s Bhushan Energy Ltd. ('BEL') starting from the fiscal year 2009-2010. The allegations were made even for siphoning of funds by Shri Brij Bhushan Singal and Shri Neeraj Singal and accordingly provisional attachment order of the properties belonging to the appellants was caused by the respondent. 3. It is a case where an FIR was registered against BSL and others for commission of crime under Sections 409, 467, 468, 471 and 120B of the Indian Penal Code, 1860. It was alleged that Shri Brij Bhushan Singal and Shri Neeraj Singal had obtained hug....
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....L, namely, Shri Neeraj Singhal and therefore to the extent of transfer of proceeds of crime, the plant and machinery apart from land has been attached. The PAO has been confirmed by the Adjudicating Authority and aggrieved by the same, the present appeal has been filed. BKM Mining Pvt. Ltd. 6. The BKM Mining Pvt. Ltd. is a company set-up with the majority shareholding of Mrs. Kusum Modi and Mr. B K Modi who are not connected with the BSL or Singal's but alleged to be parents-in-law of Shri Neeraj Singal. The appellant company was otherwise incorporated and came into existence on 20.07.2018 which is much later to the alleged check-period of the predicate offence which is between the year 2008-09 to 2016-17 and mainly against the affairs of BSL. The respondent provisionally attached 55,00,000 shares of OSISL held by the appellant company comprising 18.46% shareholding at the value of Rs. 5.50 Crores. Shareholding of 55,00,000 shares of OSISL were purchased by the appellant company from the Standard Chartered Bank for the consideration of Rs. 5.50 Crores. It is after obtaining loan from M/s SREI Equipment Finance Ltd. which is being served by the appellant. 7. They are said t....
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....he appellant company. The respondent failed to make difference between the Corporate and the individual shareholder while causing PAO thus remains based on the erroneous assumption. 9. The main allegation in the FIR and ECIR is against the BSL and its ex-promoters who said to have siphoned off funds generated by BSL amounting to Rs. 1770 Crores through certain controlled companies classified in Category 'B' and 'C'. It is with the further allegation that the same funds returned back to BSL for promoter related investments so as to maintain debt- equity ratio in BSL. The PAO mainly makes reference of deep involvement of BSL and its directors. However, it was caused ignoring that siphoned off funds to the Companies categorized in Class 'B' and 'C' were not containing the name of the appellant company and thus even as per the PAO, the fund did not travel to the appellant company so as to cause provisional attachment of the land, building and plant & machinery of the appellant- OSISL. The case predominately refers to the deeds of BSL and its Directors. 10. In the instant case, the impugned order was caused ignoring the balance-sheet of the company ending on 31.03.2008 where value....
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.... No. 1 to 16 in the PAO showing shareholding of OSISL had purchased the shares by public shareholder and not from subscription of shares from OSISL and otherwise entities at no. 2-10 acquired shares of OSISL prior to check-period of predicate offence i.e. from 01.04.2009. The entities at 11 to 16 were alleged to be controlled or beneficially owned by Singal family and said to have acquired the funds from Singal family without money trail and proof for the aforesaid. It is with further statement that even if it is assumed that 56.70% shareholding is with Singal family, the remaining shareholding was with others and on account of attachment of land, building, plant and machinery of the appellant, shareholders of the OSISL are made to suffer due to ignorance of the respondent to find out whether there exist proceeds of crime with the appellant company and what is required to be attached. In this regard, Shri P.K. Mohanty was holding 8.48% shares, while ICICI bank 6.71% and IPICOL is holding 4.89% shares. All these aspects were ignored by the respondent and they could not make out difference between the corporate and shareholders. 16. The provisional attachment was made even in refe....
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....has serviced interest of over Rs. 95 Crores till January, 2025 without any default and accordingly it has discharged interest liability to the tune of over Rs. 95 Crores The regular servicing of interest is duly supported by Form-16A and otherwise disclosed in the returns of income but all these relevant facts have been ignored by the respondent while causing provisional attachment in reference to the loan taken by the appellant. The respondent were expected to note the check-period of the crime and the loan taken by the appellant company and if the loan facility with NBFC was out of the proceeds put by Shri Neeraj Singal, the appellant is servicing the loan, thus could not have been considered to be recipient of proceeds of crime. 18. Coming to the statement recorded under Section 50(2) of the Prevention of Money Laundering Act of 2002 ( in short "the Act of 2002"), it was submitted that those statements cannot be read against the documentary evidence and otherwise taken under pressure. In fact, the respondent have attached land and building apart from plant and machinery of OSISL ignoring the period of purchase of properties involved in proceeds of crime and could not have bee....
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....ance Company Private Limited, Brightsun Merchant Private Limited, Ujjwal Holding Private Limited and Lotus Capital Services Private Limited. OSISL was funded under the guise of loans through those entities which were controlled and managed by Singal family. These patterns established multi-layered laundering route tied directly to BSL's diverted funds. The chart referred in the PAO unambiguously show how the money has been masked and layered into Brightsum Merchant and for that income-tax refund was wrongly claimed. It is with the further statement that the proceeds of crime was layered and routed in NBFC and injected in the funds of OSISL. 23. Ld. Counsel for the respondent further submitted that M/s Bhushan Energy Limited ('BEL') has purchased 35 lakh share warrants of OSISL for a sum of Rs. 15.74 Crores in the year 2016-17. The BEL converted these warranted into 27.90 lakh equity shares after making additional payment of Rs. 39.75 Crores to OSISL. A detailed examination of bank statements of BEL and various other companies controlled by the Singal Family demonstrated that the funds used for both purchase and conversion of warrants originated directly from BSL out of the proce....
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....ed to be prior to the check-period for commission of crime and remaining companies said to have received proceeds routed it by the accused involved in the commission of crime. The respondent have attached the land and building apart from plant and machinery of the appellant-OSISL and 55,00,000 shares of OSISL with M/s BKM Mining Pvt. Ltd. It is finding it to be out of the proceed of crime. The fact aforesaid has been strongly refuted by the appellant giving background of the incorporation of the appellant, OSISL. It was incorporated in the year 1979 as a Joint Sector Company. It was involving Government entities and thus was taken to be a Joint Sector company since its inception. The said company acquired loan in the year 1980 and after completion of the construction, plant was commissioned in the year 1982-83. The plant and machinery apart from land and building of the said company has been provisionally attached alleging to be recipient of the proceeds of crime. It is said to be in the shape of acquisition of shares out of the proceeds of crime and accordingly the accused, Shri Neeraj Singal could acquire 56.70% shareholding in OSISL. 26. The respondent have made serious alleg....
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....unds to M/s SRN Minerals and Mining Private Limited incorporated in May, 2008. The entire subscription amount was routed through various companies controlled by ex- promoters of BSL which invested the amount back to BSL. The allegation is even for the acquisition of the shares through adjustment entries without physical movement of funds. 28. The respondent have referred to the fact for arrangement of the loan to the tune of Rs. 104.50 Crores from M/s SREI Equipment Finance Ltd. to fund the outstanding bank loan of the appellant, OSISL. The amounts of proceeds of crime were transferred to the funds for operation of OSISL and accordingly the respondent provisionally attached the properties belonging to the appellant company. The appellants have referred to service of the loan amount and thus questioned the action of the respondent for provisionally attachment of the properties of the appellant, OSISL. 29. The respondent have otherwise given the complete money trail where the proceeds of crime with BSL was routed through other companies which includes SREI groups and M/s Barc Iron and Steel Private Limited. 30. The statements of Shri Neeraj Singal were recorded under Section....
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....refore, even if the loan was served, extension of loan was out of the proceeds of crime and therefore the defence taken by the appellant cannot be accepted. Therefore, we are not inclined to interfere in the impugned order. IN BKM Mining Pvt. Ltd. 32. The facts of the appellant, BKM Mining Pvt. Ltd. were narrated in brief earlier. It is being controlled by Shri Bharat Kumar Modi and his wife Smt. Kusum Modi. They are said to be the parents-in-law of main accused, Shri Neeraj Singal. It was otherwise admitted in the statement under Section 50(2) of the Act of 2002 that BKM Mining Private Limited was incorporated in the year 2018 while the matter of BSL was pending consideration before the NCLT. The incorporation of the Company was with the motive to siphon off the proceeds of crime through NBFC controlled by Shri Neeraj Singal, rather, proceeds of crime was injected in those NBFCs, which ultimately funded loan to Shri Bharat Kumar Modi for purchase of 55 lakhs shares of OSISL by BKM Mining Pvt. Ltd. The shares were purchased from Standard Chartered Bank. However, it is involving the loan amount of NBFCs which were having proceeds of crime injected by the main accused, Shri Nee....