TMI Blog2016 (1) TMI 1349X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds of crime generated by Shri Madhu Koda, in the form of share capital money and unsecured loans procured by Shri Binod Sinha and his associates through accommodation entries from entry operators, made in the Provisional Attachment Order and in the Original Complaint. - M.P.-PMLA No. 34/LKW/2011 (SP) and F.P.A.-PMLA No. 181/LKW/2011 - - - Dated:- 22-1-2016 - Shri Arun Kumar Agarwal, Chairperson and Dr. Rabi Narayan Dash, Member Shri Vijay Kumar Pandey, Advocate, for the Appellant. Shri Harshvardhan Reddy, Advocate, for the Respondent. JUDGMENT [Judgment per : Arun Kumar Agarwal, Chairperson]. - FPA-PMLA-181/LKW/2011 : The present appeal is filed challenging order dated 6th April, 2011, passed by the adjudicating authority in original complaint No. 78/2010, confirming the attachment of properties provisionally attached vide Provisional Attachment Order No. 4/2010, dated 10th November, 2010 in ECIR No. 2/PAT/2009, dated 8th October, 2009. With the consent of counsels for the parties, the appeal was taken up for final arguments and disposal. 2. Brief facts - A Public Interest Litigation (PIL) No. 4700 of 2008 was filed in the Hon ble High Court of Jha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oated for the purpose of investing the illegal earnings of Shri Madhu Koda. It is alleged that in the matter of collection and laundering of the ill gotten money, Shri Madhu Koda s close friend Shri Binod Kumar Sinha had played a pivotal role along with Shri Sunil Kumar Sinha, Shri Vikas Sinha, Shri Vijay Joshi, and others. It is alleged that Shri S.K. Naradi, a chartered accountant and some other persons who are described as entry operators, organized the accommodation entries through various companies. These companies based in Kolkata are described by the respondent as paper companies as they had no business and existed on paper only to give accommodation entries. These companies issued cheques to various companies controlled by Shri Madhu Koda or his associates on receipt of cash which was delivered to them at Kolkata by Shri Binod Sinha and associates. 7. In the complaint at page nos. 137 138, the respondent alleged that it was established in the investigation that proceeds of crime generated by Shri Madhu Koda were invested in various companies including M/s. Shivans Steel Pvt. Ltd., the present appellant. 8. Based upon the investigation carried out by the respondent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel was not accepted on the ground that the appellant company has refused notice dated 9-12-2010 and as the final adjudication order is likely to be finalised, if he so desires, the counsel can file the reply to the complaint within a week s time. 13. He submitted that the counsel for the appellant company was left with no option and as such he filed reply/written statement dated 23-3-2011 merely on the basis of bare perusal of the incomplete Provisional Attachment Order and the complaint wherein it was stated that the fixed assets sought to be attached have been acquired through the appellant s capital/loan/business income which have been declared in the Income Tax Returns and that the appellant company is a separate legal entity and as such its assets cannot be attached, and that the share capital cannot be attached since the same do not belong to the appellant but its ownership vests with the shareholders. He submitted that the Adjudicating Authority delivered the final order and judgment on 6th April, 2011 without appreciating the facts and submissions of the appellant s case in its proper perspective, contrary to the principles of natural justice and fair play and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11:00 am Complainant 10-3-2011 (Thursday) 11:00 am Defendant Nos. 1-9 10-3-2011 (Thursday) 2:30 pm Defendant Nos. 10, 11, 12, 15, 16, 17 18 11-3-2011 (Friday) 11:00 am Defendant Nos. 13, 14, 19, 20, 21 22 No further opportunity shall be given. We direct that a copy of this order sheet should be served upon all the Defendants who were not represented before the Bench today, for their information. We also direct that a copy of this order sheet be sent to the Director of Enforcement for information and necessary action. 15. The learned counsel submitted that in compliance of the order dated 28th January, 2011 of the Adjudicating Authority, the respondent/complainant served show cause notice under Section 8(1) of PMLA, dated 28-1-2011 on 3rd February, 2011 by hand to Shri Tanushree Sankar, an employee of M/s. S.K. Naredi Co., 21, Hemanta Basu Sarani, Suit No. 204, 2nd Floor, Kolkata - 700001. He submitted that the appellant company was not having office at the above address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on judgment of Hon ble Andhra Pradesh High Court in M/s. DCL Maritech Ltd. v. Government of Andhra Pradesh wherein the Hon ble High Court has ruled that notice to a company is required to be served or delivered at its registered office by post under a certificate of posting or by registered post or by leaving it at its registered office. Reliance was also placed on judgment by Hon ble Calcutta High Court in Harender Nath Ghoshal v. Superfoam Pvt. Ltd. wherein it was held that it is the mandate of law that a summon on a limited company has to be served at its registered office in accordance with Section 51 of the Companies Act, 1956 and when that procedure has not been followed then it must be held that the summon was not duly served. 18. The learned counsel placed reliance on judgment of Hon ble High Court of Madras in the case of P. Bhaskaran v. Ayyakannu Chettiar and Ors. - Manu/TN/1752/2008 and contended that the Adjudicating Authority has not followed the procedures contained in the Order 5, Rules 19 and 20 of CPC and any deviation in this regard would invalidate the consequent confirmation order passed by the Adjudicating Authority. 19. The learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by a postal employee to the effect that the defendant or his agent had refused to take delivery of the postal article containing the summons or not claimed, the authority issuing the summons/notice shall declare that the summons/notice had been duly served on the defendant. (d) Where the Adjudicating Authority is satisfied that there is reasons to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons/notice cannot be served in the ordinary way, the Adjudicating Authority shall order service by an advertisement in a daily newspaper circulating in the locality in which the defendant in last known to have actually and voluntarily resided, carried on business or personally worked for gain. (e) Service substituted by order of the Authority shall be as effective as if it has been made on the defendant personally. 20. The learned counsel for the appellant submitted that the appellant was served show cause notice by publication in a local newspaper Prabhat Khabar Jamshedpur edition dated 9th February, 2011, which is adverted to as follows : Government of India Ministry of Finance Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice. 22. The learned counsel submitted that admittedly the show cause notice dated 9th December, 2010 which was sent by courier, was received back by the respondent as it could not be served to the appellant, and the second show cause notice dated 28th January, 2011 was served at the wrong address and was also simultaneously served by publication in the local newspaper on 9th February, 2011 which shows that the original complaint and the copy of relied upon documents filed by the respondent before the Adjudicating Authority was not served to the appellant. He submitted that this fact of non-supply of Original Complaint and relied upon documents was brought to the notice of Adjudicating Authority on 10th March, 2011 and adjournment was sought so as to enable the appellant to proceed further with the matter. However, the request of appellant was declined by the Adjudicating Authority and the appellant was allowed to file reply to the complaint within a week. He submitted that the appellant had to file a reply before the Adjudicating Authority in the absence of original complaint and relied upon documents. He submitted that the appellant was not afforded a fair opportunity in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. He drew our attention to the endorsement on behalf of appellant on show cause notice dated 28-1-2011 which is as follows: Received Notice to Show cause No. 76/2010 along with Original Complaint No. 76/2010 relied upon documents in five volumes photocopy of order sheet dated 28-1-11 for and on behalf of Shivans Steel (P) Ltd. 26. The counsel submitted that the primary objective of service of notice to the appellant was to give it an opportunity to defend itself in the adjudication proceedings and as the first notice could not be served through courier and at the time of service of notice dated 28-1-2011 to Shri Tanusree, it was intimated that the appellant has shifted office, therefore, the appellant was also served through publication in local newspaper so that he gets notice of adjudication proceedings. 27. The counsel submitted that as per the schedule of hearing drawn by the Adjudicating Authority on 28th January, 2011, the respondent/ED was granted preliminary hearing on 9th March, 2011 to present the complaint. He submitted that during preliminary hearing on complaint the Adjudicating Authority is merely apprised on the facts and allegations as stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Money Laundering O.C. No. 76/2010 Lucknow Sh. Prabhakant Deputy Director Director of Enforcement Lucknow Complaint Vs. Sh. Madhu Koda Others . ..Defendant Present: - Sh. Mr. Karan Lahiri, Advocate, Mr. Amrit Singh Advocate, Mr. Vikash Pathak, Advocate, and Mr. Kamal Singh, EO for the Complaint. Mr. Manoj, Ms. Aparna Sing for Defendant No. 12, 15, 16, 17 and 18. Mr. Rajeev Singh, Advocate, Shivansh Singh, Advocate, Alok Shukla, Advocate for Defendant No. 1, 2, 3, 4, 5, 7, 8 and 9. Mr. S.K. Srivastava, Advocate, Mr. Marees P. Shay, Advocate for Defendant No. 6. Mr. Piyush Kumar, Advocate and Reena Rawat for defendant No. 11. Mr. Vaibhav Mishra, Advocate for defendant No. 20. Dr. Prabhat Kumar, Advocate for defendant No. 10. Mr. S.K. Poddar, Advocate for defendant No. 14, 19, 21, 22. The following ld. Counsels made their oral submissions for their clients as mentioned below : Advocate for the Defendant Defendant No. Mr. Manoj Def. No. 12, 15, 16, 17 and 18. Mr. Pyiush ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office in September, 2008, however, in the affidavit of Shri Ashok Kumar Sinha of March, 2011 filed in support of reply dated 23-3-2011 of the appellant before Adjudicating Authority, the address of appellant is mentioned as Center Point, 21 Hemant Basu Sarani, Kolkata - 700001, West Bengal which is adverted to as follows : AFFIDAVIT I, Ashok Kumar Sinha, Authorised Signatory on behalf of M/s. Shivans Steel Pvt. Ltd., Center Point, 21 Hemant Basu Sarani, Kolkata-700001, West Bengal do hereby solemnly affirm and state on oath as under :- . 31. The learned counsel for respondent submitted that even if it is held that there was violation of principle of natural justice as the first show cause notice could not be served or the Original Complaint and relied upon documents were not served, however, no prejudice whatsoever was caused to the appellant. He submitted that the appellant has failed to show how it was prejudiced and it has failed to demonstrate prejudice caused on account of non-supply of Original Complaint and relied upon documents. The learned counsel submitted that the appellant in appeal memo has made false statement that large number of reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on 11-3-2011 but the appellant did not appear on 11-3-2011 to avail the opportunity of personal hearing granted. He submitted that the appellant instead filed written reply dated 23-3-2011 before the Adjudicating Authority which was duly considered by the Adjudicating Authority as may be evident in the order as discussed in paragraphs 133 to 139 of the impugned order. 34. The learned counsel submitted that the appellant made its best possible reply/written submissions vide reply dated 23-3-2011 wherein he stated only about the legal position about share capital of the appellant company but no explanation was offered on genuineness/legitimate source of share capital money/loans received by the appellant. 35. The learned counsel submitted that the statements on record demonstrate that Sh. Madhu Koda indulged in corrupt practices and accepted illegal consideration, inter alia, for allotment of mines. Such statements also establish a close nexus with Sh. Binod Sinha, who was actively involved in the process of soliciting bribes on behalf of Shri Madhu Koda and collecting the bribe money and also investing such monies. Further, the evidence on record establishes that cash amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. He submitted that no such evidence was produced by the appellant before the Adjudicating Authority during adjudication proceedings. 36. The learned counsel contended that the appellant has not brought any new material on record during adjudication proceedings which it could not file due to shortage of time before the Adjudicating Authority and pleaded that there is no need to remand the matter to the Adjudicating Authority for re-adjudication as it will not serve any useful purpose. He drew our attention to the ruling enunciated by the Hon ble Supreme Court in the case of Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, Gauhati and Others - (2015) 8 Supreme Court Cases 519 = 2015 (320) E.L.T. 3 (S.C.) reiterating the necessity and importance of natural justice including right to a fair hearing and held that there was a requirement of issuance of show cause notice by the Deputy Commissioner before passing the order of recovery, irrespective of the fact whether Section 11A of the Act is attracted in the instant case or not. He submitted that the Hon ble Supreme Court noted that Even if it is found by the court that there is a violation of principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insofar as excisable goods falling under Chapter 24 are concerned. Conscious of the position that judgment in R.C. Tobacco (supra) stares at the face of the Appellant, Mr. Soli Sorabjee, learned senior counsel who appeared for the Appellant, has also made an endeavour to show that the said judgment in R.C. Tobacco (supra) is in clear conflict with earlier three Judge Bench judgment of this Court in J.K. Cotton Spinning and Weaving Mills Ltd. v. Union of India - MANU/SC/0403/1987 : (1987) Supp SCC 350. Thus, following three issues have arisen for consideration in these appeals : (a) Whether order of the Single Judge at pre-deposit stage can operate as res judicata on merits? (b) Whether recovery proceedings can be initiated without show cause notice under Section 11A of the Excise Act, which is mandatory? (c) Whether there is a conflict between the three Judge Bench judgment in J.K. Cotton (supra) and R.C. Tobacco (supra)? First issue is the basis for the judgment of the High Court. 10. For answering this issue, it would be necessary to take into account the complete implication thereof with reference to the nature of recovery orders passed by Respondent No. 1, chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the prayer of pre-deposit of the Appellant be accepted. No doubt, while arguing for this relief, the Appellant had raised various contentions on the merits of the case in its endeavour to demonstrate that it had a good case on merits. It is also borne from the record that the learned Single Judge, while dismissing the writ petition, dealt with these issues, which touched upon the merits of the main issue. That is the reason that the order dated May 18, 2004 of the learned Single Judge dismissing the writ petition of the Appellant runs into 37 pages. Nevertheless, we find that the observations which were made by the learned Single Judge on the issues raised were only prima facie in nature and the prime focus of the judgment rested on the core issue, namely, whether the direction of the Commissioner (Appeals) directing the Appellant to make deposit of the amount as a pre-condition for hearing of the appeal was sustainable or not. The writ petition was dismissed affirming the said order. Therefore, any observations made by the learned Single Judge, which were tentative in nature, could not be taken into consideration by the Division Bench in the impugned judgment, thereby dismissing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle adopted by the CESTAT amounted to erroneous approach. He sought to draw a fine distinction in this behalf by contending that the Authority passing the order could not presume that prejudice would not be caused to a person against whom the action is contemplated and on that presumption dispense with the mandatory requirement of issuance of the notice. According to him, such a doctrine could be applied only by the courts while dealing with such issues where it is found that the action of the Authority was violative of principles of natural justice, the Court could still choose not to remit the case back to the concerned Authority if it finds that it will be a futile exercise. 16. As a pure principle of law, we find substance and force in the aforesaid submission of Mr. Sorabjee. No doubt, the Department was seeking to recover the amount paid by virtue of Section 154 of the Act of 2003 which was enacted retrospectively and the constitutional validity of the said Section had already been upheld by this Court in R.C. Tobacco (supra) at the time of issuance of notice for recovery. Further, no doubt, the effect of the said amendment retrospectively was to take away the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They must deal with the question referred both without bias and they must be given to each of the parties to adequately present the case made. It is perceived that the practice of aforesaid attributes in mind only would lead to doing justice. Since these attributes are treated as natural or fundamental, it is known as natural justice . The principles of natural justice developed over a period of time and which is still in vogue and valid even today were: (i) rule against bias, i.e. nemo iudex in causa sua; and (ii) opportunity of being heard to the concerned party, i.e. audi alteram partem. These are known as principles of natural justice. To these principles a third principle is added, which is of recent origin. It is duty to give reasons in support of decision, namely, passing of a reasoned order . 20. Though the aforesaid principles of natural justice are known to have their origin in Common Law, even in India the principle is prevalent from ancient times, which was even invoked in Kautilya s Arthashastra . This Court in the case of Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi and Ors. - MANU/SC/0209/1977 : (1978) 1 SCC 405 : AIR 1978 SC 851 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct decisions, which is not possible without adopting the aforesaid procedural fairness, by emphasizing that taking of correct decisions would demonstrate that the system is working well. On the other hand, if mistakes are committed leading to incorrect decisions, it would mean that the system is not working well and the social good is to that extent diminished. The rule of procedure is to see that the law is applied accurately and, as a consequence, that the social good is realised. For taking this view, Galligan took support from Bentham, who wrote at length about the need to follow such principles of natural justice in civil and criminal trials and insisted that the said theory developed by Bentham can be transposed to other forms of decision making as well. This jurisprudence of advancing social good by adhering to the principles of natural justice and arriving at correct decisions is explained by Galligan in the following words : On this approach, the value of legal procedures is judged according to their contribution to general social goals. The object is to advance certain social goals, whether through administrative processes, or through the civil or criminal trial. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure should be designed to ensure accurate or appropriate outcomes. In fact, procedural fairness is valuable in both instrumental and non-instrumental terms. 25. It is on the aforesaid jurisprudential premise that the fundamental principles of natural justice, including audi alteram partem, have developed. It is for this reason that the courts have consistently insisted that such procedural fairness has to be adhered to before a decision is made and infraction thereof has led to the quashing of decisions taken. In many statutes, provisions are made ensuring that a notice is given to a person against whom an order is likely to be passed before a decision is made, but there may be instances where though an authority is vested with the powers to pass such orders, which affect the liberty or property of an individual but the statute may not contain a provision for prior hearing. But what is important to be noted is that the applicability of principles of natural justice is not dependent upon any statutory provision. The principle has to be mandatorily applied irrespective of the fact as to whether there is any such statutory provision or not. De Smith captures the essence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of that rule was necessary for a just decision on the facts of that case. The rule that inquiry must be held in good faith and without bias and not arbitrarily or unreasonably is now included among the principles of natural justice. 21. In Chairman, Board of Mining Examination v. Ramjee - MANU/SC/0061/1977 : (1977) 2 SCC 256, the Court has observed that natural justice is not an unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating. The Courts cannot look at law in the abstract or natural justice as mere artifact. Nor can they fit into a rigid mould the concept of reasonable opportunity. If the totality of circumstances satisfies the Court that the party visited with adverse order has not suffered from denial of reasonable opportunity, the Court will decline to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is, therefore, all the more necessary that an opportunity of hearing is provided. 27. From the aforesaid discussion, it becomes clear that the opportunity to provide hearing before making any decision was considered to be a basic requirement in the Court proceeding. Later on, this principle was applied to other quasi-judicial authorities and other tribunals and ultimately it is now clearly laid down that even in the administrative actions, where the decision of the authority may result in civil consequences, a hearing before taking a decision is necessary. It was, thus, observed in A.K. Kraipak s case (supra) that if the purpose of rules of natural justice is to prevent miscarriage of justice, one fails to see how these rules should not be made available to administrative inquiries. In the case of Maneka Gandhi v. Union of India and Anr. - ANU/SC/0133/1978 : (1978) 1 SCC 248 also the application of principle of natural justice was extended to the administrative action of the State and its authorities. It is, thus, clear that before taking an action, service of notice and giving of hearing to the noticee is required. In Maharashtra State Financial Corporation v. Suvarna Board M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be applied in any straight-jacket formula. It all depends upon the kind of functions performed and to the extent to which a person is likely to be affected. For this reason, certain exceptions to the aforesaid principles have been invoked under certain circumstances. For example, the Courts have held that it would be sufficient to allow a person to make a representation and oral hearing may not be necessary in all cases, though in some matters, depending upon the nature of the case, not only full-fledged oral hearing but even cross-examination of witnesses is treated as necessary concomitant of the principles of natural justice. Likewise, in service matters relating to major punishment by way of disciplinary action, the requirement is very strict and full-fledged opportunity is envisaged under the statutory rules as well. On the other hand, in those cases where there is an admission of charge, even when no such formal inquiry is held, the punishment based on such admission is upheld. It is for this reason, in certain circumstances, even post-decisional hearing is held to be permissible. Further, the Courts have held that under certain circumstances principles of natural justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tone of prejudice . The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing. 32. In Managing Director, ECIL (supra), the majority opinion, penned down by Sawant, J., while summing up the discussion and answering the various questions posed, had to say as under qua the prejudice principle : 30. Hence the incidental questions raised above may be answered as follows : xxx (v) The next question to be answered is what is the effect on the order of punishment when the report of the enquiry officer is not furnished to the employee and what relief should be granted to him in such cases. The answer to this question has to be relative to the punishment awarded. When the employee is dismissed or removed from service and the inquiry is set aside because the report is not furnished to him, in some cases the non-furnishing of the report may have prejudiced him gravely while in other cases it may have made no difference to the ultimate punishment awarded to him. Hence to direct reinstatement of the employee with back-wages in all cases is to reduce the rules of justice to a mechanical ritual. The theory of reasonable opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. He says that in view of these circumstances it was not necessary for the Board to have issued a show cause notice. We are unable to accept this contention. Whether a duty arises in a particular case to issue a show cause notice before inflicting a penalty does not depend on the authority s satisfaction that the person to be penalised has no defence but on the nature of the order proposed to be passed. 34. In view of the aforesaid enunciation of law, Mr. Sorabjee may also be right in his submission that it was not open for the authority to dispense with the requirement of principles of natural justice on the presumption that no prejudice is going to be caused to the Appellant since judgment in R.C. Tobacco (supra) had closed all the windows for the Appellant. 35. At the same time, it cannot be denied that as far as Courts are concerned, they are empowered to consider as to whether any purpose would be served in remanding the case keeping in mind whether any prejudice is caused to the person against whom the action is taken. This was so clarified in the case of Managing Director, ECIL (supra) itself in the following words : 31. Hence, in all cases where the enquiry office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round whatsoever as it is bound by the dicta in R.C. Tobacco (supra). Likewise, even the officer who passed the order has no choice but to follow the dicta in R.C. Tobacco (supra). It is important to note that as far as quantification of the amount is concerned, it is not disputed at all. In such a situation, issuance of notice would be an empty formality and we are of the firm opinion that the case stands covered by useless formality theory . 38. In Escorts Farms Ltd. [Previously known as Escorts Farms (Ramgarh) Ltd.] v. Commissioner, Kumaon Division, Nainital, U.P. and Ors. - MANU/SC/0144/2004 : (2004) 4 SCC 281, this Court, while reiterating the position that rules of natural justice are to be followed for doing substantial justice, held that, at the same time, it would be of no use if it amounts to completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. It was so explained in the following terms : 64. Right of hearing to a necessary party is a valuable right. Denial of such right is serious breach of statutory procedure prescribed and violation of rules of natural justice. In these appeals preferred by the holder of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(1) of PMLA through newspaper publication with clear 30 days notice as required under the provisions of Section 8(1) of PMLA and they entered appearance on 10-3-2011 and filed reply dated 23-3-2011 before the Adjudicating Authority and no prejudice was caused to them, has considerable force. Further, from perusal of reply dated 23-3-2011 of the appellant as filed before the Adjudicating Authority and appeal containing copy of Original Complaint, it is clear that the appellant had access to complete copy of Original Complaint at the time of adjudication and thereafter. A perusal of order sheet dated 10-3-2011 reveals that the appellant did not make any submissions regarding non-supply of complete copy of Original Complaint whereas some other defendants have demanded the same which is duly recorded in the order sheet. As pointed out by the learned counsel for respondent from the appeal memo at para 10, the appellant itself has stated that the reply dated 23-3-2011 filed before the Adjudicating Authority was prepared on the basis of Provisional Attachment Order and Original Complaint which is adverted to as follows : 10. The counsel for the Appellant was left with no option and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by publication in newspaper. In this regard para 11 of the Misc. Application dated 20-5-2013 is adverted to as follows 11. That it is submitted that it is a matter of record that on 10-3-2011 counsel for the Appellant appeared before the ld. Adjudicating Authority. A request was also made on behalf of the Appellant seeking 10 days time but the same was rejected. It is necessary to point out here that no documents were received by the Appellant Company as a result of which proper reply could not be prepared. Ld. Adjudicating Authority in sheer violation of principles of natural justice did not even give time to the Appellant for filing its response and hence the Appellant was forced to file its reply without receipt of proper documents. This is a gross violation of natural justice and the entire order sheet of the Authority points out to the fact that the authority seemed to be in great hurry to conclude the proceedings without even following the basic principles of natural justice. A true typed copy of the order dated 10-3-2011 passed by the Adjudicating Authority is annexed herewith and marked as Annexure A6. 42. From careful consideration of the above facts disclosed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Sinha was close friend of Shri Madhu Koda and handled his ill-gotten money and invested ill-gotten money in M/s. Shivans Steel Pvt. Ltd. in the name of different companies by giving cash through chartered accountant for the entries. 44. It is further alleged that Shri S.K. Naredi, chartered accountant in his statement u/s 50 of PMLA stated inter alia that he had taken the cases of Shri Madhu Koda, Shri Binod Sinha and Shri Vikas Sinha since the year 2006; that Shri Bhud Narayan Gupta was an employee of his firm (S.K. Naredi and Company) since the last 7-8 years; that around 30-35 persons were employed in the offices of the firm; that Shri Budh Narayan Gupta was assigned to prepare data entries, audit and company law matters and also to carry out the work of Shri Binod Sinha and Shri Vikas Sinha, for this he (Budh Narayan Gupta) had to travel to Kolkata also; that the disclosures made in the statement by Shri Budh Narayan Gupta under the provisions of Income-tax Act during the course of searches of his firm were confirmed by him (S.K. Naredi); that following were the companies based at Kolkata to whom cash belonging to Shri Binod Sinha and Shri Vikas Sinha was handed over f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement dated 2-11-2009 of Shri S.K. Naredi, Chartered Accountant recorded under Income-tax Act are adverted to : Q.21 Please give details regarding manner in which such accommodation entries are arranged through Kolkata based companies. Ans. Some Chartered Accountants/entry operators maintain several files of companies registered in Kolkata through which they provide accommodation entries to various beneficiaries. These companies exhibit only in paper and no business activity is carried on by them. The CA/entry operators regularly file IT Return of these companies. Whenever a business concern wants accommodation entries arranged in their books of account in the form of Share Capital/Unsecured Loan. These CA/entry operators are approached. Cash is given by the business concern/beneficiary to these CA/entry operators and in return they issue cheque/DD in the name of the beneficiary to these CA/entry operators and in return they issue cheque/DD in the name of the beneficiary from one of such paper/investment companies in which balance is available. The cash so received by these CA/entry operators are generally routed in their paper/investment companies through banking channel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent has given details of some of the alleged accommodation entries taken by the appellant from Kolkata companies in para 52.6 at page 139 of the Provisional Attachment Order. 49. It is alleged that Shri Budh Prakash Gupta in his statement dated 4-11-2009 before the Income Tax Authorities, inter alia, stated that he was an employee of M/s. S.K. Naredi Co., Jamshedpur; that Shri Abhimanyu Singh, Uncle Ji (some Patel), Shri Shoubhik Chaterjee @ Shoubhik Chattopadhaya and Shri B.K. Jha were the persons who used to bring cash on behalf of the companies in which Shri Binod Kumar Sinha, his family members and his close associates were having stakes for getting Kolkata entries in their respective books of account that in the last three years approx. ₹ 40 crores had been sent to Kolkata for the companies and family members of Binod Kumar Sinha through him. 50. It is alleged that similarly Shri Chandra Bhushan Jha of Kolkata in his statement dated 25-12-2009 stated that he had provided accommodation entries under the cover of share capital money or unsecured loan to Shri Binod Sinha and group in lieu of cash received and against service charges of 2% to 4%. It is alleged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Jharkhand State; that there was a delay of approximately 7 months in finalization of tender by the Jharkhand State Electricity Board (JSEB) due to change in the Government of Jharkhand and interference of interested person on behalf of the Minister incharge of the power sector in Jharkhand; that Shri Binod Sinha was the person instrumental in finalization of the tender process; that the nature of overt act was the demand of commission at the rate of 3% of total tender amount after deducting 16% of Excise duty and 4% CST on supply value; that commission of 3% as negotiated with Shri Binod Sinha in finalization of the tender was bifurcated as 2.5% to Shri Madhu Koda then holding the charge of Power Ministry and 0.50% of the tender amount to Chairman of JSEB and other senior officials; that he (D.K. Srivastava) along with Shri Ashok Reddy, Director of IVRCL and Shri A.P. Srivastava, Project Manager of IVRCL at Ranchi met Shri Madhu Koda in the year 2007; that a total amount of ₹ 11.40 crore was paid to Shri Madhu Koda through Shri Binod Sinha against 2.5% commission towards getting the tenders in Jharkhand during the period 7-6-2007 to 24-12-2007; that Shri Binod Sinha was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Adjudicating Authority, appeal and documents produced before us reveal that the appellant has not countered the allegations made by respondent against it in the Provisional Attachment Order and Original Complaint in respect of the source of share capital money and loans, etc. In view of the material and information collected by the respondent, there is substantial probable cause to believe that the investment in acquisition of the appellant company and its assets was out of proceeds of crime. In response to show cause notice u/s 8(1) of PMLA, the appellant has neither explained nor produced any material to show that the allegation made against it are unsustainable/incorrect and the investments in the appellant company are out of legitimate sources. The appellant is completely silent about the alleged accommodation entries in the form of share capital money and unsecured loans pumped by Shri Binod Sinha and associates by laundering proceeds of crime generated by Shri Madhu Koda. Even at the stage of adjudication of present appeal, the appellant has neither filed any additional material to refute the allegations made by the respondent against it nor sought any opportunity to do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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