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2019 (2) TMI 962 - ATPMLAOffence under PMLA - provisional attachment - definition of the expression “proceeds of crime” - allegations of the ED in the present case is that wrongful gain to the Appellant M/s. VGN Proprty Developers Pvt. Ltd. and wrongful loss to the Government of India of ₹ 115 Crores has been caused by sale of the property admeasuring about 10.46 Acres in Guindy Village, Chennai (hereinafter referred to as the “said property”) at a sale price of ₹ 272 Crores whereas the guidelines value for the same was ₹ 387 Crores (and hence the loss) Held that:- No reasons to believe are produced before us in order to satisfy us that the property was attached under second proviso if the same is not attached immediately, the purpose would be frustrated any proceedings. It is also not stated either in PAO or in impugned order that the respondent no. 1 has made any efforts to trace out the other property of VGN and respondent no. 1 is unable to find out any other property of the Managing Director/ Director of the Company in view of impugned mortgaged property. The respondent no. 1 has failed to discuss the interest of the buyers who have stake in the attached property. The pre-requisite for ordering attachment is that the property to be attached should constitute the proceeds of crime. In the present case, the said project in question prima facie may not be termed as proceeds of crime since the same was acquired by utilizing the money advanced from the appellant and respondent no. 4. Unless the property comes within the definition of the expression „proceeds of crime’ under Section 2(1)(u) of PMLA, it could not have been attached under Section 5(1)(a) of PMLA. A careful look at the definition of the expression “proceeds of crime” would show that to come within the definition of the said expression, the following pre-requisites are to be satisfied: a. that the same should be any property or the value of any such property; b. that it should have been derived or obtained directly or indirectly; c. that it should have been obtained or delivered by any person as a result of criminal activity relating to a Scheduled Offence. The Respondent no. 1 did not follow the mandate of Section 8(2) and the finding was given. No cogent and cohesive reason was given for rejection of the submissions in writing. The impugned order is mechanical, without application of judicious mind and as such is liable to be set at naught. In fact, the replies and material produced by the appellants have not been considered by the Adjudicating Authority. There were no discussions about the stand taken by them in their replies. The respondent no. 1 despite being aware that thelendersthat they prior in time interest in the subject Property, Respondent No. 1 - ED proceeded to pass a PAO No. 02/2018 dated 13.02.2018, wherebyattachedthe subject Property to the value of ₹ 115 crore as proceeds of crime. In the PAO, in the column „Present Status of theproperties‟, the ED identified that the Subject Property wasmortgaged in favour of the lenders and IL&FS i.e.Piramal. In the light of above and in the interest of justice, the order passed by the Adjudicating Authority is set-aside by allowing the present appealsfiled by the lenders. The findings are not sustainable in law and the facts of the appeals of lenders. With regard to the appeal of VGN is concerned, we wish to impose certain terms and we pass the order to secure a sum of ₹ 115 crores as per the version of the ED and direct the VGN to give a surety of the equal amount. As a matter of fact, at the interim stage, VGN has already offered security of the land having value more than ₹ 119 crores situated at Sekkadu Village, Avadi Taluk, Tiruvallur District ad-measuring 10.21 acres, the other property is attached which is owned by the Managing Director/Chairman of VGN. The relevant papers alongwith the affidavit have been filed at the interim stage. If the criminal complaints are finally decided by the Special Court in favour of VGN, the said property shall be released. Till that time, VGN shall not dispose the said property directly or indirectly. Subject to above, the impugned property is released forthwith which was attached under the provisional attachment order i.e.admeasuring about 10.46 acres in Guindy Village, Chennai at VGN Fairmont, Thiru Vi Ka Industrial Estate, Guindy, Chennai-32and the impugned order of confirmation was passed.
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