TMI Blog2017 (8) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... equential relief to the appellant. - MP-PMLA-1729/KOL/2015 (Ex-Parte Stay) & FPA-PMLA-915/KOL/2015 - - - Dated:- 28-2-2017 - Shri Kaushal Srivastava Member For the Appellant : Mr. Soumya Chakraborty, Sr. Advocate Shri Danish Zubair Khan, Advocate For the Respondent : Mr. S.A. Saud, Advocate JUDGMENT MP-PMLA-1729/KOL/2015 (Ex-Parte Stay) FPA-PMLA-915/KOL/2015 1. The appellant, United Mohun Bagan Football Team Pvt. Ltd ( Defendant No. 16 in the Original Complaint No. 380 of 2014 arising out of ECIR No. 01/KLZO/2013, UMBFT for short ) has preferred this appeal against the order dated 3.3.2015 passed in respect of the said O.C. by the Adjudicating Authority confirming the order of Provisional Attachment Order (PAO) dated 29.10.2014 provisionally attaching the amount of ₹ 32,11,997/- lying in Account No. 153010200032577 maintained by the appellant with Axis Bank Ltd, Mukti Chambers, Ground Floor, 4, Clive Row, Kolkata 700001. 2. The facts in brief are as follows:- 2.1 M/s Saradha Group of companies under the chairmanship of Shri Sudipta Sen and controlled and managed by Sudipta Sen and his close aides, had mobilized money from the common public u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94,50,000/- was paid by Saradha Group to M/s United Mohun Bagan Football Team Pvt. Ltd during the FY 2010-11, 2011-12 2012-13. 2.6 Vide letter dated 25.09.2014, Axis Bank Ltd, Mukti Chambers, Ground Floor, 4, Clive Row, Kolkata 700001 was requested by the respondent to not allow debit from the account no. 153010200032577 maintained in the name of M/s United Mohun Bagan Football Team Pvt. Ltd. The balance in the said account at the material time was ₹ 32,11,797/-. Since the said amount was involved in the activities of money laundering, it was provisionally attached vide PAO dated 29.10.2014. 2.7 Accordingly, the Joint Director, Directorate of Enforcement Kolkata filed an original complaint no. 380/2014 under section 5(5) of the PMLA against M/s Saradha Reality India Pvt. Ltd and Ors. with the appellant herein being arraigned as defendant no. 16 in the said O.C. 2.8 After issue of notice under Section 8(1) of the Act to the various defendants including the present appellant and on considering the replies submitted by the defendants and the complainant and also giving the parties an opportunity for personal hearing, the Adjudicating Authority confirmed the related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; activities nor the specific activities of the Saradha Group, of which the said co-sponsor claimed itself to be a Unit, was defined or clarified. Further, the terms of payment towards co-sponsorship for football seasons 2010- 11, 2011- 12 2012-13 for an amount of ₹ 2,00,00,000/- (Rupees Two Crore) per year were also mentioned in detail therein. 3.3 However, the co-sponsor turned out to be a habitual defaulter. After a few cheques issued by the co-sponsor were encashed, at the regular requests of the co-sponsor, other cheques could not be presented before the Bank for insufficient funds. Two cheques for a total sum of ₹ 60,00,000/- were returned by the appellant to the said co-sponsor on account of having been rejected by the bank. The appellant out of frustration decided to terminate the contract beyond the football season 2010-11. The co-sponsor when communicated about the displeasure of the club, by a letter dated 02.06.2010, on their own informed the Secretary of the club that owing to financial stringency, they were unable to keep their contractual commitment beyond the football season 2010-11. However, the appellant being in dire financial straits, persuaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other shareholders of the Company, as on 31.3.2013 are Gold Reef Investment Pvt. Ltd. (49.99%), Swapan Sadhan Bose (12.50%), Anjan Kumar Mitra (12.5%) and Srinjay Bose (12.5%). He further stated that Shri Srinjay Bose introduced the company with Saradha Group for sponsorship. Shri Srinjay Bose was found to have been involved with Sangvad Pratidin Television Pvt. Ltd., a company which had financial dealings with Bengal Media Pvt., Ltd., a company under umbrella of Saradha Group of Companies. Accordingly, an MOU was signed between Shri Anjan Mitra, Managing Director of United Mohun Bagan Football Team Pvt. Ltd. and the Managing Director of Saradha Group on 20.9.2010, according to which Saradha Group was to pay ₹ 2.0 Crore as sponsorship to the Club for using logo of Saradha Group. However, in total ₹ 1,94,50,000/- was paid by Saradha Group to M/s. United Mohun Bagan Football Team Pvt. Ltd. during the F.Y. 2010-11, 11-12, 2012-13. Therefore, Vide letter dated 25.9.2014, Axis Bank Ltd., Mukti Chambers, Ground Floor-4, Clive Row, Kolkata- 700001 was requested to not allow debit from the Account No. 153010200032577 maintained in the name of M/s. United Mohun Bag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now the business activities of the said M/s. Saradha Agro Development Limited at the time of execution of the contract. (a) In the agreement, M/s.Saradha Agro Development Limited did not specify the precise nature of their business. (b) Mohun Bagan is a club run on the love and passion of its supporters. The source of income of the club is uncertain. Depending on availability of sponsors and co-sponsors and the extent of their financial support, the annual budget of the football team is arrived at. Financial contributions therefore are not just welcome but the same is the life blood for running the club. Football loving corporate contributors in India being few and far between, it was not possible for the appellant company or any of their professional peers to embark on a roving enquiry, reject contributors on mere suspicion and accept financial contribution only upon foolproof screening of the nature of business of the contributors. (c) Moreover, the said M/s.Saradha Agro Development Limited has not been made an accused/defendant in the.present case. It being a distinct corporate personality and distinguishable from any other corporate person with the prefix of Saradha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the answering defendant should be recalled. (vi) There being no criminal conspiracy alleged between the appellant company and Defendant Nos. l to 9 in the O.C., the complaint did not even remotely suggest as to how the answering defendant could have been involved in the commission of cheating within the four corners of the Scheduled offence, Section 420 of I.P.C. (vii) It is inconceivable and has not been alleged whom has the answering defendant cheated or even intended to cheat. (viii) There being otherwise no proceeds of crime and in the face of the most transparent disclosure of the books of account by the answering defendant to the Income Tax and other authorities, the factum of concealment or transfer of the money received for further laundering could be safely ruled out. 3.8 The definition of the offence of money laundering in Section 3 of the Prevention of Money Laundering Act, 2002 is as under:- 3. Offence of money-laundering - Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Authority and other authorities and even otherwise, no allegation of concealment of any fact or any amount illegally laundered could be levelled against the answering defendant having regard to the decision of the Hon'ble Madras High Court in Commissioner of Income Tax, Madras vs. J.K.A. Subramania Chettiar - (1977) 110 ITR 602. 3.11 Since the appellant herein, even going by the prosecution case, did not have and never demonstrated any intention of participating in, possessing or further transferring laundered money being the proceeds of crime, even constructively and in law, they could not be alleged to have been possessing the proceeds of crime. In this regard, reliance was placed on in J.A. Pye (Oxford) Ltd. Anr. Vs. Graham and Anr. - (2002) 3 WLR 221, Their Lordships of the House of Lords held inter-alia that what is crucial to understand is that without the requisite intention, in law there can be no possession. 3.12 On the basis of the aforesaid judgments and arguments, it was submitted that the answering defendant cannot be alleged to have perpetrated the offence of money laundering as defined in Section 3 of the said Act. 3.13 It is further argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining two football seasons was terminated on account of financial stringency of the said co- sponsor. 4.1 It was contended that the entire amount received by the appellant from SADL, alongwith amounts received from the main sponsor and other co- sponsors, was utilized for making the payments of the dues of the players and other professional personnel attached to the Football team and the Club. All such payments were made by A/c payee cheques and were duly disclosed to the Income Tax and/or other relevant Authorities. Applicable tax deduction at source (TDS) against these payments was made by the appellant and also paid to the Income Tax Authority. No amount from the amounts received as sponsorship/co-sponsorship payment was ever intended or required to be or actually possessed or held back by the appellant. All income and expenditure were duly disclosed before the Income Tax Authority. In these circumstances, the amount of ₹ 32,11,797/- lying in its Bank Account as on 25.09.2014, the day on which it was attached, could not be said to be an amount involved in Money Laundering and therefore the attachment of the same and its confirmation vide the impugned order was un-su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2014, the appellant received a sum of ₹ 3,91,99,994/- from M/s United Spirit, Rs. 98,00,000/- from M/s Ripley and Company and Handling Pvt. Ltd, ₹ 16,66,000/- from Ripley and Company Ltd., 1,75,500/- from M/s Tata Teleservices Pvt. Ltd., ₹ 17,48,096/- from All India Football Federation, ₹ 26,00,500/- from different advertisers and lastly ₹ 19,780/- from sale of match tickets aggregating to ₹ 552.095 lakhs. Pertinently, there are no payments/amounts received from SADL during this period. Based on the above, it is contended that the attached amount of ₹ 32,11,797/-was not out of the amounts received by the appellant from M/s Saradha Agro Development or any other unit of the Saradha Group which were received only during September 2010 to October 2012 and were also utilized towards meeting the appellants day to day expenses near about the time when it was received. It has been argued that for the said reason also, the charge of money laundering could not be made against the appellant qua the attached amount The learned counsel also referred to the various judgments as mentioned in the appeal in support of his submissions. 5. Respondi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proceeds of crime aggregating to ₹ 1,94,50,000/- was received by the appellant from the Saradha Group of companies during the FY- 2010-11, 2011- 12, and 2012-13. He further stated that the investigation had shown than there was intermixing and intermingling of funds between the various Saradha Group of Companies. Moreover the agreement in terms of which the amounts were said to have been paid by the Saradha Group of Companies to the appellant was an un-registered agreement. Further doubt with regard to the authenticity of the said agreement dated 20.09.2010 is created due to the non-production of the original copy of the letter dated 02.06.2010 from M/s Saradha Agro Development ltd, to the appellant terminating the said agreement dated 20.09.2010. The contribution by Saradha Group of Companies to the appellant was detected during the course of examination of the accounts of the Saradha Group of Companies and therefore, there was a clear trail of movement of the proceeds of crime to the appellant. 5.2 The learned counsel for the respondent sought to distinguish the judgment of the Hon ble Madras High Court in the case of M. Saraswathy Ors. on the ground that the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Two Crores due for the football season 2010-11. According to the appellant, the agreement for the remaining two Football Seasons 2011-12 and 2012-13 was terminated by the co-sponsor (SADL) by the letter dated 02.06.2010 on account of financial difficulties. The respondent have however, argued that the said letter dated 02.06.2010 could not be accepted on its face value as the original copy of this letter was not produced at any stage of the proceeding and the date of the letter (viz. 02.06.2010) preceded the date of the agreement (viz. 20.09.2010). This aspect will be reverted to later in the order. Suffice to say for the present that it is neither party s case that any amount over the said amount of ₹ 1,94,50,000/- was received by the appellant from SADL. 8. The amount of ₹ 1,94,50,000/- received by the appellant from SADL was received vide forty different cheques during the period from September, 2010 to October 2012 . All these payments, along with payments received from other co- sponsors and main sponsors were deposited by the appellant in the said Bank Account viz. A/c No. 153010200032577 maintained by the appellant with Axis Bank Ltd., Mukti Chamber, Ground f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their contention that the amount was received by the appellant from SADL in the normal course of business for sponsoring of their professional football team merits acceptance. Moreover, the amount received by the appellant was also utilized by them in the normal course of its business and day to day activities viz. towards the payment of amounts to the players, coaches and administrative expenses etc. of the club. All the payments were made by cheque and with payment of appropriate TDS and declaration to the concerned authorities. These contentions of the appellant are not rebutted by the respondent in any manner. No evidence has been brought on the record by the respondent to show that any of the amounts received by the appellant from SADL or other units of the Saradha Group were held back or utilized for any other purposes other than as above. 10. The appellant have contended that they had no occasion to know the business activities of Saradha Agro Development ltd. at the time of entering into the agreement. In the agreement, the Saradha Group of companies stated themselves to be engaged in various businesses of goods and services. The appellant being dependent on financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he letter (viz. 02.06.2010) being prior to the date of the agreement (20.09.2010), cognizance of the said letter terminating the agreement could not be taken. The appellant has contended that mentioning the date of the letter as 02.06.2010 was an obvious typographical error. The contention appears acceptable. Moreover, it is the admitted case of both sides that the total amount received by the appellant from M/s Saradha Agro Development Ltd or other Saradha Group of Companies was ₹ 1,94,50,000/- only. Considering that there is no evidence produced by the respondent to show that any amount over the amount of ₹ 1,94,50,000/- was received by the appellant from the M/s Saradha Agro Development Ltd. or other Saradha Group of Companies in terms of the said agreement dated 20.09.2010, which is also the case of the appellant, the non-production of the original copy of the said letter or the alleged discrepancy regarding the date of the letter (02.06.2010) being prior to the date of the agreement (20.09.2010) is of no material consequence. 12. In this regard, reference is also made to the Judgment dated 4.3.2011 of the Hon ble High Court of Andhra Pradesh at Hyderabad in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferor that constitutes proceeds of crime and the authorities may have to proceed against the property or value in the hands of the transferor . (emphasis supplied) In the present case, the appellant had received payments amounting to ₹ 1,94,50,000/- spread over the period Sept. 2010 to October, 2012 from SADL and other units of the Saradha Group in terms of the co-sponsorship agreement dated 20.09.2010 entered into between the two. On its part and as consideration for the said payments, the appellant provided various promotional services to the SADL and the Saradha Group of Companies from time to time. The payment received by the appellant from M/s SADL, along with that received from the main sponsor and other co-sponsors was utilized towards meeting its day to day expenditure including payments to players, coaches, medical staff etc. There is no allegation against the appellant that such payments or part thereof were held back by the appellant, diverted for other use etc. Accordingly, going by the ratio of the above decision/discussion, even if it was to be assumed that the payments made by the co-sponsor (SADL) to the appellant were part of proceeds of crime in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- from Ripley and Company Ltd., 1,75,500/- from M/s Tata Teleservices Pvt. Ltd., ₹ 17,48,096/- from All India Football Federation, ₹ 26,00,500/- from different advertisers and lastly ₹ 19,780/- from sale of match tickets during the said period. Pertinently, there are no payments/amounts received from SADL during this period. It has already been noted herein before that the entire amount received by the appellant from SADL and other companies of Saradha Group was received during the period September, 2010 October, 2012. Therefore, the amount of ₹ 32,11,797/- lying in the bank account of the appellant as on 25.09.2014, which was provisionally attached was not out of the amount received by the appellant from SADL and other units of Saradha Groups. 14. In the circumstances, the attached amounts of ₹ 32,11,797/- in the hands of the appellant cannot be said to be part of proceeds of crime or having been involved in Money Laundering within the meaning of these terms as per the PMLA. Further, it is not the case of the respondent at any stage that the amount has been attached towards value of proceeds of crime. 15. In coming to the above conclusion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of appellant is not proceeds of crime and therefore, not liable to provisions of attachment and confiscation under PMLA. 17. Considering the facts and circumstances as discussed above and following the principles enunciated by the Hon ble High Court of Andhra Pradesh in the case of B. Rama Raju, supra and following the ratio of the judgment of this Tribunal in the case of Jitender Kumar Lalwani , supra and Sanjeev Kumar supra, this Tribunal is of the view that the appellant did not have any nexus with the accused Saradha Group of Companies, that they did not know about the criminality attached to the subject payments received in terms of the co-sponsorship agreement between the parties and that the appellant is a bona fide receiver of the payments in good faith and for valuable consideration provided. It is accordingly held that the subject property in the hands of the appellant i.e amount of ₹ 32,11,797/- lying in the appellants Bank Account as on 25.09.2014, which was attached in this case and confirmed under the impugned order is not the proceeds of crime and is therefore, not liable to provisions of attachment and confirmation under PMLA. Consequently, the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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