TaxTMI 
TaxTMI 
2026 (5) TMI 1594
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.... 26 of the Prevention of Money Laundering Act, 2002 (in short "the Act of 2002"), a challenge has been made to the order dated 14.03.2023 passed by the Adjudicating Authority confirming the Provisional Attachment Order ("PAO") dated 21.09.2022. Brief facts of the case: 2. The case in hand originating on a written complaint dated 25.08.2020 filed by Shri Balaji Singh Samantra, DGM, State Bank of India, SAM Branch, Colaba to Central Investigation of Investigation, AC-V, New Delhi. The FIR was registered on 07.02.2022 for commission of offence under Section 409, 420 read with Section 120-B of Indian Penal Code, 1860 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. It was mainly against the following accused : (a) ABG Shipyard Limited (ABGSL) (b) Shri Rishi Kamlesh Agarwal, Chairman, ABGSL (c) Shri Santhanam Muthuswamy, Director, ABGSL (d) Shri Ashwini Kumar, Director, ABGSL (e) Shri Sushil Kumar Agarwal, Director, ABGSL (f) Shri Ravi Vimal Nevatia, Director, ABGSL (g) ABG International Limited; and (h) Unknown Public Servant(s) and Private Person(s) 3. The FIR was co....
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..... 6. It was revealed that ABGSL in collusion with others have resorted to illicit practices of inflating the books of accounts by way of making circular transaction amongst its various group companies and other related entities so as to hoodwink the creditors and to enjoy enhanced credit limits from consortium of banks. The part of the funds availed from the credit facilities was transferred and diverted to various Singapore based entity companies like ABG Singapore Pte Ltd. as a loan of USD 71 million. The fund was further invested in Standard Chartered Trust (Cayman), however, out of USD 71 million, USD 28.1 million was brought back to India but for the remaining USD 43 million, ABGSL acquired preference shares of ABG Singapore Pte. Ltd. They, however, failed to prove the genuineness of the transaction. The facts have been given as illustration to show the modus operandi of the main accused company, ABGSL to launder the money by diverting the funds secured out of the credit facilities from the consortium of banks. 7. The respondent caused the provisional attachment of the properties of the appellants finding them to be the recipients of the proceeds of crime. The PAO has be....
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....nks to ABGSL and otherwise when it was fully repaid under the Assignment Deed duly acknowledged by the bank, no amount remained with the appellant so as to provisionally attach their properties. 12. Ld. Counsel for the appellant did not raise any other arguments then referred to above despite an opportunity to raise any factual or legal issue. Ld. Counsel for the appellant, rather, recorded his satisfaction to the issues raised above and prayed for its adjudication by this Tribunal. In M/s Tirupati Landmark Pvt. Ltd. 13. Ld. Counsel for the appellant submitted that the provisionally attached property was purchased by the appellant company which was earlier known as BFE Engineering in the year 1986. It was having no relation with the funds of ABG Shipyard Ltd.. The security deposit was advanced by ABG Shipyard for a sum of Rs. 3 Crore for the first time in the year 2004-05 i.e. much later to the purchase of the property. 14. In the light of the aforesaid, there was no reason to provisionally attached the property belonging to the appellant, M/s Tirputi Landmark Private Limited. The respondent wrongfully attached the property for value equivalent on an allegation that ABG....
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....nupama Agarwal 17. A challenge to the provisional attachment of the property in the hands of the appellant, Anupama Agarwal was made mainly on the ground that the property was purchased from two home loans of Rs. 3.75 Crore each from Yes Bank and only part of Rs. 2.50 Crore was utilized which was unconnected to any money or the funds of ABG Shipyard Ltd. or of credit facilities extended by the consortium of banks. The amount of Rs. 2.50 crores advanced by ABG Shipyard Ltd. was later on treated as security deposit and was returned to the consortium of banks in the year 2016 under a duly executed Deed of Assignment dated 17.03.2016. It was between ABG Shipyard Ltd., ABG International Private Limited, PFS Shipping (India) Ltd. and the appellant and others. PFS Shipping (India) Ltd. repaid the security deposit earlier paid to the appellant. It stepped into the shoes of ABG Shipyard Ltd. In fact, ABG Energy Himachal Pradesh paid same amount to Onaway Industries Ltd. the very same amount immediately transferred to ABG International Private Limited and therefore it never reached to the appellant. The payment received by the appellant from Onaway Industries Ltd. came from Onaway's own r....
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.... of the credit facilities given by the consortium of banks, the property of the appellant was attached, which needs to be interfered. 22. Ld. Counsel for the appellants prayed for interference in the impugned order based on the arguments referred to above. Ld. Counsel for the appellants was invited to raise any other factual or legal arguments. However, it was submitted that no other argument is required to be raised, rather, the Tribunal may deal with the arguments referred to above. It is despite an opportunity of hearing given to the appellant by this Tribunal to raise any other factual or legal issues. Accordingly, Ld. Counsel for the appellants closed their arguments. Arguments of the Ld. Counsel for the respondent: 23. Ld. Counsel for the respondent contested the appeals on all the issues raised by the appellants in different appeals. Elaborate arguments were made and would be referred while addressing each issue raised by the appellants in their respective appeals. It is to avoid repetition of the same facts and for the sake of brevity. Findings of the Tribunal: 24. I have considered the rival submissions of the Ld. Counsel for the parties and scanned the matt....
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....ase was admitted on 01/08/2017. As no resolution plan materialized during CIRP, liquidation application was filed in NCLT Ahmedabad where Liquidation order was passed on 25.04.2019. That, Mr. Sundresh Bhatt the Resolution Professional during CIRP continued as Liquidator The liquidation of the assets of Corporate Debtor is under progress. 28. That, Forensic audit of the accounts was carried out by Ernst & Young LLP. The forensic audit of books of accounts of ABGSL was for the period April, 2012 to July, 2017. On the basis of findings of forensic audit report dated 18.01.2019, the fraud identification committee of SBI classified the accounts of ABOSI, as fraud on 19.06.2019; complaint was filed by SBI and FIR was registered with CBI, AC-V, New Delhi for causing wrongful loss of Rs. 22,842/- Crore to consortium of Banks comprising of ICICI Bank, SBI and others. The amount of Rs. 22,842/- Crore recorded in the FIR including interest due, penal interest, claims due to guarantee given by ABG Shipyard Ltd. for loans availed by its group companies etc.. 29. That, on examination of forensic audit report dated 18.01.2019 prepared by E&Y LIP, it is revealed that ABGSL. had made payments....
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....-trading Limited, Nissim Traders, A M Industries etc. 31. That, M/s NV Dand & Associates conducted the stock audit of ABGSL and observed that, there were difference in raw materials & Work in Progress (WIP); ABGSL had overstated current assets/understated liabilities, thereby ABGSL was drawing higher drawing power from CC account. 32. During the course of investigation, it emerged that immovable properties acquired by the companies Le. Gold Croft Property Private Limited, Tirupati Landmark Private Limited, Somerset Estate Private Limited, G. C. Property Private Limited, Agbros Leasing & Finance Pvt Ltd, ABO Power Pvt. Ltd and Aries Management Services Pvt Ltd were acquired by using funds of ABGSL. 33. That, Mr. Muthuswamy Santhanam had been appointed director in approximately 27 group companies of ABOSI., which were having no business at all. Those paper companies were just floated to facilitate circular transactions of the funds from ABGSL which were diverted and misappropriated. He was also appointed director in approx. 38 Singapore based group companies of ABG Shipyard Ltd.. It was on the instruction of Balaji Gopal, who was looking after Singapore operation of ABG Grou....
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....9.2007 and the said amount was thereafter transferred by the said company to ABG International Private Limited on the same date with further transfer to the appellant company on the same date. The transferred amount was out of credit facilities fraudulently obtained by ABGSL and accordingly finding proceeds of crime travelled to the appellant and utilized for purchase of the property, PAO was caused. The respondent has given complete money trail for acquisition of the property at 4-C Gold Croft Building, 39, Near Navroz Society, Bhulabhai Desai Road, Cumballa Hill, Breach Candy, Mumbai. It is alleged by the appellant that a sum of Rs. 30.20 Crore initially transferred to One Ocean Shipping Pvt. Ltd. was out of the surplus funds of ABGSL. However, I don't find any material to prove the aforesaid despite onus to prove lies on the appellant in terms of Section 24 of the Act of 2002. The plea regarding the Deed of Assignment dated 17.03.2016 has been taken between the group companies of ABGSL to set off/repay the amount received by the appellant. The fact aforesaid was considered in reference to the Forensic Audit report and in fact the FIR was registered by the financial institutions ....
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....se of money laundering by layering the proceeds of the property acquired by the appellant out of the funds of ABGSL was provisionally attached. The criminal case is still pending and it is not that the accused have been discharged or acquitted. 39. The argument has been raised that the amount was not transferred by ABGSL out of the credit facilities extended by the consortium of banks. The argument was without realizing that transferred amount was through banking channels. It is not that the amount received out of the credit facilities was marked with different number or colour so as to indicate that the said amount was not transferred to the appellant company. In fact, the amount was received by ABGSL out of the credit facilities came in their bank accounts. An amount of Rs. 30.20 Crore was transferred to One Ocean Shipping Pvt. Ltd. a group company of ABGSL with further transfer to ABG International Pvt. Ltd.. These companies were not having any business activity and largely group companies were on papers. The reason of rotation of funds has not been given and there is no material to prove that it was out of cash circular transactions of ABGSL. It is despite burden of proof on....
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....e credit facilities extended by the consortium of banks. It was submitted that the respondent failed to disclose the money trail to prove that the amount came to the appellant was out of the credit facilities extended by the consortium of the banks. In fact, it was out of the cash surplus of ABGSL but ignored by the respondent. To support the argument, a reference of the Annual Report of ABGSL for the Financial Year 2007-2008 was given showing surplus of Rs. 299 Crore. As against the aforesaid, total borrowing was only of Rs. 117 Crore (net borrowings of Rs. 196.12 Crore - Rs. 79.12 Crore). It is with the further submission that the first tranche of credit facility of Rs. 43 Crore was sanctioned in August, 2007 and out of which Rs. 32.35 Crore said to have been diverted to the appellant's company. The allegation is without proof and based on wrong premise because no amount was disbursed out of Rs. 43 Crore. In fact Rs. 196.12 Crore was disbursed in the year 2007-2008 and was utilized for acquisition of fixed assets of Dahej Plant. 44. Ld. Counsel for the appellant made a reference of CDR and Master Restructuring Agreement dated 28.03.2014 where the bank itself had accepted the C....
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....antiated for the reason that the appellant has failed to disclose utilization of the funds for their business purpose or disclosing their business so as to secure the capital. The amount of fraud involved in these matters is Rs. 22,842 Crore. 47. The issue now remains about RBI's CDR Mechanism, Revised Guidelines on CDR and Master Directions on Frauds and restructuring. A reference of Master Restructuring Agreement dated 28.03.2014 has been given. The argument has been raised in ignorance of the fact. The investigation revealed a serious violation of the restructuring and the company was declared to be NPA. The detail facts about it has been given in the opening common paras. It was followed by Forensic Audit and that was the cause for registration of the FIR by the financial institutions. In fact, if it would have been genuine CDR then there was no reason to register the FIR. The entire money trail has been disclosed, which is as under:- 48. I find that plea taken by the appellant about CDR and that transfer of funds was not out of the credit facilities are without any substance. It is more so if the statements of the witnesses are analyzed and otherwise the appellant compan....
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....cuments does not demonstrate it,rather, if sequences of the fact are taken note of, then, the appellant herself submitted that the amount of Rs. 2.50 Crore received through the group companies of ABGSL was thereupon returned after taking it to be security. The facts, otherwise, show that the amount received by the appellant from M/s Onaway Industries Limited was used and taken on the current value and is one of the grounds of provisional attachment of the property over and above the value of alleged proceeds. The argument is not worth accepting in reference to the definition of "value" given under the Act of 2002. The current value could not be relevant for the purpose of adjudication in the light of the fact that the value of the property is to be taken as was the value at the time of acquisition and not subsequent or current value and accordingly utilization of Rs. 2.50 Crore received by the appellant was taken for attachment of the property for purchase of two flats. 56. Ld. Counsel for the appellant submitted that Rs. 2.50 Crore was received by the appellant from M/s Onaway Industries Limited out of their own funds and not out of transfer of funds from ABGSL to ABG Energy Hi....
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....icate as to how the appellants remain the beneficiaries of the proceeds of crime. The appellant, Shri Dhananjay Datta remained the Chief Financial Officer and Executive Director of ABGSL and was the central figure in financial management of the company. The testimonies from various associates revealed that Shri Dhananjay Datar exercised significant control over both the administrative and financial operations of the group. While he was reportedly settled in Zambia and failed to respond to official summons, his wife, Smt. Savita Dhananjay Datar made a statement in which she could not explain the origin of substantial funds credited in her personal accounts from ABGSL and its subsidiaries. The acquisition of Flat No. 6B, 6th Floor, Siddhi Apartment was taken into consideration where the fund of Rs. 4.50 Crore was involved. In the investigation, the money-trail reached back to ABGSL. It is a fact that Smt. Savita Dhananjay Datar paid Rs. 3.25 Crores from her personal account but source thereupon was direct connection with the proceeds. She was the authorized signatory of Sanyog Infrastructure Private Limited where her husband was a director and paid the remaining amount of Rs. 1.25 Cr....
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....ugh Sanyukta Trading Pvt Ltd and Sanyog infrastructure Pvt. Ltd. amounting to Rs. 93.10 Lakh. 63. Further, Account (A/c No. 001101511606) of Dhananjay Datar, CPO of ABG group had many credit entries from companies with which he was not associated with like Ashmit Mercantile Pvt. Ltd, Mahavir Distributors Pvt Ltd, One Ocean Shipping Pvt. Ltd and ABG FPSO Pvt Ltd. amounting to Rs. 1.05 Crore. Further, most of these credits have been made after the association of Dhananjay Datar had ended with ABG Group l.e. September, 2015. 64. Savita Datar was authorized signatory of Sanyog Infrastructure Pvt Ltd and Dhananjay Datar was director of the company. This company controlled and managed by Savita Datar and Dhananjay Datar had received multiple credit entries from group companies of ABO Shipyard Ltd i.e. Sanyukta Shipping & Logistics Private Limited (ABG FPSO Pvt Ltd) (10 Lakh), Onaway Industries Pvt Ltd (25 Lakh), Aries Management Pvt Ltd (1 Crore), aggregating to Rs. 1.35 Crore. 65. Total amount of credits into the accounts of Savita Dhananjay Datar, Dhananjay Datar & Sanyog Infrastructure Pvt Ltd were amounting to Rs. 3,69,10,000/- from group companies of ABG Shipyard Ltd. 66....