TaxTMI 
TaxTMI 
2026 (7) TMI 463
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....mmon, they are heard together and are decided by this Common Judgment. 3. For convenience, the facts in C.M.S.A.No.30 of 2019 are discussed hereunder. 4. The instant is an appeal filed by the appellant / Enforcement Directorate under Section 42 of the Prevention of Money Laundering Act, 2002 (for short, 'PMLA Act') assailing the order dated 26.07.2019, passed by the Appellate Tribunal for PMLA Act at New Delhi, in FPA-PMLA-752/DLI/2014. 5. The brief facts of the case are that a Special Purpose Vehicle was constituted for the implementation of the Vodarevu and Nizampatnam Ports and Industrial Corridor Project (for short "VANPIC Project"). The VANPIC Project was a Government-to-Government initiative conceptualized pursuant to an arrangement between the Government of Andhra Pradesh and the Government of Ras al Khaimah, one of the Emirates of the United Arab Emirates. For the purposes of VANPIC Project, VANPIC Ports Private Limited and another Special Purpose Vehicle, namely VANPIC Projects Pvt. Ltd., acquired a total extent of 13,221.69 acres of land, comprising both assigned land and patta land. 6. That in the year 2011, the erstwhile High Court of Andhra Pradesh, vide it....
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....ment Order dated 04.03.2014. Aggrieved the respondent preferred an appeal before the Appellate Tribunal which was registered as FPA-PMLA-752/DLI/2014. While the aforesaid appeal was pending, the ED passed another provisional attachment order i.e. Provisional Attachment Order No.06 of 2017, dated 28.07.2017, attaching the remaining 11804.78 acres of land, which forms part of VANPIC Project, in addition to the earlier attachment. 10. After hearing the parties, the learned Appellate Tribunal for PMLA in Appeal No.FPA-PMLA-752/DL1/2024, passed a common order on 26.07.2019, which is the impugned order in the present appeal partly allowing the appeal, copy of which was served upon the respondent only on 26.08.2019. While partly allowing the appeal, the learned Appellate Tribunal passed an order directing the respondent to furnish indemnity bond as surety amount with an undertaking that, in the event if the final order is passed by the Court under PMLA against the appellant, they shall secure the said amount with the appellant, i.e., the respondent before the appellate authority. Rest of the order of attachment of the properties was set aside and the properties were ordered to be relea....
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....also failed to consider the aspect that the respondent herein, i.e., M/s. G2 Corporate Services LLP, of having actually involved in transfer of proceeds of crime from Sri Nimmagadda Prasad to Sri Y.S. Jagan Mohan Reddy, of the then Hon'ble Chief Minister, Sri Y.S. Rajashekar Reddy. 13. As regards the PAO is concerned, learned counsel for the appellant contended that the Tribunal had failed to appreciate the procedure that was followed by the adjudicating authority insofar as issuance of show-cause notice under Section 8(1) of the PMLA-II and also at the time of receipt of provisional attachment order and the original complaint. He further contended that the PAO as also the original complaint produced before the adjudicating authority had sufficient material to form sufficient reasons to believe and therefore it need not be mentioned for the second time in the show-cause notice issued under Section 8(1) of the PMLA-II to the respondent; and therefore, contended that the finding arrived at by the Tribunal in this regard also is unsustainable. 14. Per contra, learned counsel for the respondent contended that the impugned order does not warrant interference for the reason that it....
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....of three appeals, viz., CMSA. No. 6 of 2020, CMSA. No. 8 of 2020 and CMSA. No. 9 of 2020 stood allowed, where the High Court dismissed the appeal preferred by the Enforcement Directorate. From the remaining nine appeals, in five appeals, viz., CMSA. No. 31 of 2019, CMSA. No. 33 of 2019, CMSA.No.1 of 2019, CMSA. No. 4 of 2020 and CMSA. No. 5 of 2020, this High Court had already ordered for releasing the attached property on furnishing an indemnity bond to the extent of value of the attached property. The three appeals which were dismissed by the High Court confirming the order passed by the Tribunal, CMSA. No. 6 of 2020, CMSA. No. 8 of 2020 and CMSA. No. 9 of 2020 have arisen out of the proceedings drawn against M/s. Vanpic Projects Pvt. Ltd. 17. It would be relevant at this juncture to take note of the three appeals which stand adjudicated upon by this High Court in CMSA.Nos.6, 8 and 9 of 2020. The judgment under challenge in those three appeals was flowing from the very same common order passed by the Tribunal. The allegations and counter-allegations were almost similar in all the appeals including the present one. The stand taken by the appellant as also the respective respond....
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....the Joint Director while exercising power under Section 5(1) failed to record his reason to believe (there is no reference to it in the provisional attachment order) that petitioner is in possession of proceeds of crime in the form of the attached property and that such proceeds of crime are likely to be concealed etc., which may frustrate any proceeding relating to confiscation of such proceeds of crime. 70. The above order of provisional attachment was forwarded by the Joint Director to the adjudicating authority by way of a complaint under sub-section (5) of Section 5 of PMLA which was numbered as O.C.No.276 of 2014. By the order dated 19.08.2014, the provisional attachment order was confirmed. Before the adjudicating authority an argument was advanced on behalf of the appellant that there were no reason to believe for provisional attachment under sub-section (1) of Section 5. In the absence of reason to believe attachment could not be sustained. To this, adjudicating authority in paragraphs 4 and 5 of the adjudication order mentioned that as per the provisions of Section 5 of PMLA reasons are required to be recorded in writing by the complainant (attaching authority) b....
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.... Attachment Order shows that mere the language of section has been mentioned in the "reason to believe" after recording the facts and statement under section 50 of the Act, though the officer concerned has to be satisfied as per requirements of Sections 5(1)(a) of the PMLA by referring the details of investigation about the attachment of properties and proceed of crime for each head, a merely formality does not amount to valid reason to belief." 73. The Appellate Tribunal examined the order of the adjudicating authority and held that the adjudicating authority overlooked the fact that the provisional attachment order suffered from serious jurisdictional infirmity and held as follows: "84. The Adjudicating Authority did not notice the said fact or ignored the same to the effect that the Provisional Attachment Order suffered from serious infirmity including, inter alia, for failing to comply with the mandatory preconditions under Section 5 (1) (b) of the PMLA. Under the circumstances, the following observations in the Impugned Order are completely shocking: "But it is seen these case laws do not apply to the provisions of the PMLA. As per the provisions of ....
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....al manner without even affording an opportunity to the Adjudicating Authority to apply its mind. No valid reasons are mentioned on the notice itself or any separate order is passed before issuance of notice which is requirement as per settled law. 76. Thus, from the above it is evident that Appellate Tribunal found that the notice under Section 8(1) was not in conformity with the requirement of the statute and that the adjudicating authority did not form any reason to believe that the noticee had committed an offence under Section 3 or is in possession of proceeds of crime. Therefore, the very foundation for issuance of notice under Section 8(1) was absent. Applying the decision of the Delhi High Court in J. Sekhar v. Union of India (1 supra), the above omission strikes at the very root of the matter rendering the adjudication proceedings as well as the provisional attachment order illegal. 77. Various other flaws vitiating the order of the adjudicating authority were pointed out by the Appellate Tribunal observing that the same reflected non-application of mind. Appellate Tribunal opined that no purpose would be served by continuing with the attachment. Since the....
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.... Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:] [Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed.] 162. In view of peculiar facts and circumstances, the appellants are granted liberty to approach the Special Court on this issue. It is directed that Government of Andhra Pradesh may also appear before the Special Court and raise its specific stand so that the appropriate order be passed by the Special Court. Till that time, the attachment shall continue." 20. To....