TaxTMI 
TaxTMI 
2026 (2) TMI 1156
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....f Corruption Act, 1988 was registered by the CBI, BS & FB New Delhi. It was stated in the FIR that M/s Bhushan Power & Steel Limited (M/s BPSL) a public limited company incorporated on 22 February 1999, involved in manufacturing of basic iron & steel and having various units located at different places in the country, through its directors Sanjay Singal, Aarti Singal, Dinesh Kumar Yadav, Ravi Prakash Goyal, Ram Naresh Yadav, Hardev Chand Verma and Ravinder Kumar Gupta, and staff, availed various credit facilities from 33 different banks/ financial Institutions between 2007 to 2014 under the leadership of Punjab National Bank, Large Corporate Branch, Chandigarh for different purposes, namely, working capital, term loan for purchase of plant & machinery, non-fund based term loans etc., and defaulted on repayment. The outstanding defaulted amount as on 30.01.2018 was Rs. 47,204 crores. It was further alleged that M/s BPSL and its directors deliberately defaulted in repayment of loan amounts to lender banks/ financial institutions as per the time schedule and their accounts remained continuously irregular. Subsequently, the lead bank, i.e., the PNB, declared the account of M/s BPSL as ....
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....llant, M/s Bhushan Airways Services Pvt. Ltd. (M/s BASPL) was attached. 6. Pursuant to the above attachment, an Original Complaint (O.C. No. 1763/2022 dated 05.07.2022) was filed before the Ld. Adjudicating Authority (AA) as per the requirement of law. 7. As already mentioned, Ld. AA, vide order dated 23.11.2022, confirmed the attachment of the said property of the appellant. 8. Aggrieved by the said order of the Ld. AA, the appellant has filed this appeal under section 26 of the PMLA. ARGUMENTS & CONSIDERATION THEREOF 9. The Ld. Counsel for the appellant raised the following issues in support of the appellant's case: (i) Absence of 'reason to believe' under section 5 of the PMLA (ii) Excessive attachment beyond the quantum of alleged proceeds of crime (iii) No nexus between alleged proceeds of crime and the attached property, and absence of any money trail, yet the property has been attached as direct proceeds of crime 10. The issues raised on behalf of the appellant were strongly contested by the Ld. Counsel for the respondent. The rival contentions are discussed and disposed of seriatim in the succeeding paragraphs. 11. Issue No. 1....
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....h under the PMLA as also of scheduled offences, may take considerable time and if, power of provisional attachment is not exercised here, when there are demands of circumstances and existence of material facts, it could result in defeating the very purpose for which, PMLA has been enacted. • Therefore, if said properties being the proceeds of crime described as above, are not attached provisionally under section 5(1) of Prevention of Money Laundering Act, 2002 and the said property may be alienated, transferred or created encumbrance and thereby likely to frustrate the proceeding relating to confiscation of the property involved in money laundering under PMLA especially in view of the propensity of the accused to launder the proceeds of crime through a complex web of circuitous transactions. 7. Reason to invoke Second proviso to Sub-Section (1) of Section 5 of PMLA, 2002 The scheduled offence is being investigated by Central Bureau of Investigation which has not forwarded a report to the Magistrate under Section 173 of the Code of Criminal Procedure, 1973. Accordingly, if property as per Table VII below which is being attached is not attached immediat....
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....y attachment in the hands of the said company is one aircraft valued at Rs. 30.90 cr. As such, the question of attachment to tune of Rs. 4450 cr. does not arise in the present appeal. The case of the primary accused company, M/s Bhushan Power & Steel Ltd. (M/s BPSL) or any of the other individuals/entities of the group is not before the Bench at present and, therefore, no comment can be made about the overall quantum of proceeds of crime or the extent of cumulative attachment in the hands of various persons connected with M/s BPSL. 18. Secondly, an ECIR is registered by ED on the basis of the FIR registered in the scheduled offence case by the agency which is investigating that case. The allegations contained in the FIR are only the starting point of the investigations in the predicate (scheduled) offence case. It is not even the final outcome of the investigation in the scheduled offence case, not to speak of the final outcome of the investigation by the ED under the PMLA. If the facts stated in the FIR and the ECIR registered on the basis of the said FIR were to be the final determinant of the quantum of proceeds of crime, there would be no need for a separate investigation by....
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....g it through other group entities under the control of Sh. Sanjay Singal, ultimately landing in the bank account of BASPL. Though the remaining payments were financed by way of a bank loan of Rs. 21 Crores from PNB, however, with respect to repayment of the said loan, it has been found that money was being constantly routed from the bank accounts of various group companies viz Flawless Holdings & Industries Private Limited, Rail Track India Private Limited, M/s Gainda Mal Chiranji Lal Private Limited, M/s Kishorilal Constructions Private Limited & Evergrowing Finvest Private Limited which were shown as loans and advances and the same were ultimately retired/repaid from cash deposit in the accounts of Sh. Sanjay Singal and Smt. Aarti Singal ascribed to income generated from speculative transactions. Sh. Sanjay Singal & Smt. Aarti Singal failed to provide any evidence with respect to these so called speculative transactions undertaken by them for which not even a single piece of paper is available with them to justify the legitimate nature of the huge deposits made in cash in their bank accounts. Both of them failed to provide any explanation about the financial transactions in their....
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....urce of payments of Rs. 1,62,00,000/- and Rs. 88,35,000/- made by M/s BASPL on 26.04.2008 and 29.08.2008, respectively, on account of the admitted non-availability of books of accounts of M/s BASPL for the year 2008. Information called for and received by the Directorate from bank revealed amounts received from four companies, namely, M/s Olympian Finvest Ltd., M/s Vintage Steel Pvt. Ltd., M/s Aromatic Steel Pvt. Ltd. and M/s Titanic Steel Inds Ltd. in March and April 2008, amounting to 1.64 Cr. 26. It was further found that the said companies were controlled by Sanjay Singal, Director of Bhushan Steel and Power Ltd. which was controlling the appellant company. The source of income to the said four companies, in turn, was found to be from another two companies, namely, M/s Evergrowing Iron and Finvest Ltd. and M/s Flawless Holdings and Industries Pvt. Ltd. which were also controlled by Sanjay Singal. 27. With respect to the payment of Rs. 88,35,000/- made on 29.08.2008, the same was made out of amount of Rs. 90,00,000/- received by the appellant company directly from M/s. BPSL in its account 0133002100063993 on 29.08.2008. 28. Hence, the first mentioned amount of Rs. 9 cr.....
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....e same was accredited to income from speculative transactions. However, he could not provide any documentary evidence and source for the cash deposited in his bank account and in the bank account of his wife. 32. From the aforementioned, it can clearly be concluded that the funds utilized for the purchase of aircraft by M/s Bhushan Airways Services Private Limited were sourced from the loan account of M/s Bhushan Power and Steel Limited and hence, the Cessna Aircraft purchased by this company is nothing but proceeds of crime. 33. It is further pointed out by the respondent that upon receipt of the Show Cause Notice u/s. 8(1), the appellant did not file their reply. A day before availing the opportunity of being heard, the appellant filed the reply which was not taken on record as there was inordinate delay and no time was left to obtain the comments of the Enforcement Directorate on it. However, adhering to the principle of natural justice, the appellant was given the opportunity to put forward its arguments orally in course of the final hearing before the Ld. Adjudicating Authority. The provisions of Section 8 of the PMLA which provides for adjudication by the Adjudicating A....