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2019 (6) TMI 1149 - AT - Money LaunderingAttachment of Bank Accounts - reasonable belief - proceeds of crime - It is alleged on behalf of respondents that despite of several follow-ups, the Respondent received a reply from HDFC Bank after eight months on 06.03.2019 that the release of the properties of the Respondent had been declined based on the directions of the Appellant to not release the attached bank accounts of the Respondent - HELD THAT:- No reasonable belief was formed by the Appellant against the Respondent in the Provisional Attachment Order dated 03.01.2018 passed under section 5(1) of the Prevention of Money Laundering Act, 2002 - No criminal liability of the transferor company can be transferred to an entity formed by amalgamation of the transferor and transferee company, by virtue whereof the Respondent was incorporated in the instant matter. There is no force in the contention of the Appellant that the Respondent paid Income Tax on such income to give it corporate colour. It is clarified by the respondents that M/s CHIDCO Limited is a company constituted as a special purpose vehicle for the purpose of completing the project and any amount given to M/s CHIDCO Ltd. was for the purpose of implementing the project. The entire transaction has been declared and the requisite taxes have also been paid as per the case of the respondents. It appears from the impugned order that the Adjudicating Authority has held that no proceeds of crime are available with the Respondents and as such no property of the Respondents is involved in money laundering based on the facts and materials placed before the Adjudicating Authority. It is also held by the Adjudicating Authority that the business transactions were fair, and in the normal course thereof did M/s Dynasty Developers Pvt. Ltd. and M/s Embassy Realtors Pvt. Ltd. had made profits, as is discernible from the above quoted excerpts of the impugned order. The Appellant has failed to establish any nexus whatsoever of the Respondent Company even remotely being linked to the alleged offences, and neither has the Appellant produced even a single document. It is a settled principle of law that upon amalgamation between two Companies the transferor Company dies a civil death which is akin to death of an individual. Where after, the criminal proceedings if any stands abetted - the transferee Company can no longer be prosecuted or cannot be held to be liable for the criminal acts of the transferor company. The Adjudicating Authority has correctly noted that the Appellant did not adduce any reason for attaching the properties of the Respondent, which was admittedly not the recipient of any proceeds of crime whatsoever. For attaching the properties of the Respondents was essential for the Appellant to form and express the reasonable belief as to why the properties of the Respondent herein are being attached as value of the proceeds of crime. No valid reason to belief were recorded by the Joint Director as it was a very casual approach. The said valid opinion has not formed on the basis of settled law by the Supreme Court and various High Court. There is no reasonable belief formed with regard to the separate existence of the entities involved and as to reasons why such individual corporate existence of each of the entities is acknowledged, though the said entities are legally, independent, and separate entities. Without assigning any reason for the attachment of properties of the Respondent, the attachment cannot be permitted mere repetition of language of Section in the last paras after recording the allegation and facts are no valid reason to belief. No separate reason to believe were recorded. Appeal dismissed.
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