TMI Blog2015 (11) TMI 1694X X X X Extracts X X X X X X X X Extracts X X X X ..... PA-PMLA-158/CHD/2011 - - - Dated:- 3-11-2015 - Arun Kumar Agarwal (Actg. Chairperson) And Dr. Rabi Narayan Dash (Member) For the Appellant : S. L. Gupta For the Respondent : S. A. Saud JUDGMENT Arun Kumar Agarwal (Actg. Chairperson) FPA-PMLA-158/CHD/2011 1. The present appeal is filed challenging the order dated 25th November, 2010 passed by the Adjudicating Authority confirming the attachment of residential houses No. B-32-E, 14/6290, Plot No. 53-54, New Akash Nagar, Village Bhura, Jalandhar By Pass, Ludhiana standing in the name of appellant Shri Sanjeev Kumar in Original Complaint No. 26/2009 dated 09.01.2009 which was provisionally attached vide provisional attachment order No. 1/2008 dated 23rd December, 2008 in ECIR No. 03/JL/2006 dated 21.11.2006. Brief Facts 2.1 It is alleged that Shri Paramjit Singh Sandhu s/o Sh. Bachan Singh with other accused persons projected M/s. Agrofed India as a Government of India undertaking and lured unemployed persons for government jobs; that the accused persons had also deputed agents in Haryana, Punjab other places for alluring unemployed persons who were offered jobs in M/s. Agrofed India after tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 19th March, 2009 passed by the Adjudicating Authority confirming attachment of the subject property, Shri Sanjeev Kumar filed an appeal being FPA-PMLA/33/CHD/2009 before this Tribunal challenging the order dated 19th March, 2009 passed by the Adjudicating Authority confirming provisional attachment of the subject property. This Tribunal remanded the matter back to the Adjudicating Authority vide order dated 28th July, 2010 for re-adjudication after giving proper opportunity to appellant to file documents and pleadings. After re-adjudication, the Adjudicating Authority has passed order dated 25th November, 2010 confirming the provisional attachment of the above property which is now being contested by the appellant in the present appeal. 3. The learned counsel for the appellant submitted that the appellant is a business man and he is a partner in the partnership firm M/s. M.K.S Fabrics, Gurubaksh Nager, Bahadar Ke Road, Ludhiana. He was drawing salary, interest and share in profit from the partnership firm M/s. M.K.S. Fabrics on regular basis. Both the appellant as well as the partnership firm M/s. M.K.S. Fabrics are income tax assessees having income tax permanent account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner of M/s. M.K.S. Fabrics for the financial year 2007-08 showing entry for withdrawal of cash for purchase of the subject property. The counsel submitted that the appellant has taken a housing loan of ₹ 11 lakhs from PNB Housing Finance Limited and out of this, ₹ 8 laksh was utilized for purchase of the house and balance ₹ 3 lakhs was utilized for repair and construction of the said house. He submitted that the appellant is regularly paying EMI of the housing loan and repayment of the housing loan is continuing till date. 4. The counsel for the appellant drew our attention to the copies of the Special Report on Title dated 23/01/2008 issued by Sh. Vijay Kumar Gupta, Advocate, Non- encumbrance Certificate issued by Sub-registrar, Ludhiana and legal opinion on investigation of title and search report dated 23rd January 2008 by Shri Vijay Kumar Gupta, advocate in respect of subject property obtained by PNB Housing Finance Limited in order to grant housing loan of ₹ 11 lakhs. He drew our attention to the copy of legal opinion and Search Report specially to the following paragraph which shows that after taking into consideration of documents including Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Manohar Singh and Gurdeep Kaur w/o Sh. Sucha Singh sold this property to Sh. Jagtar Singh s/o Sh. Nabib Singh and Pali Singh s/o Sh. Nasib Singh. The jamabandi of the year 1999-2000 and 2004-05 shows this property to be the ownership of Sh. Jagtar Singh and Pal Singh sold this property to the present owner Smt. Parminder Kaur w/o Sh. Paramjit Singh. I have scrutinized the original sale deed bearing Vasika No. 791 dated 18/4/2006 favouring the present owner. It is in order. Thereafter Smt. Parminder Kaur has given general power of attorney in favour of Sh. Gurmeet Singh s/o Sh. Mohan Singh regarding the above said property which is duly registered in the office by Sub Registrar, Ludhiana at Vasika No. 2419 dated 20/11/2007. Vide this General power of attorney Smt. Parminder Kaur has authorized Sh. Gurmeet Singh to sell the above said property on her behalf and to receive sale consideration thereof. Smt. Parminder Kaur has submitted an affidavit duly attested by Notary Public, Amritsar to the effect that said general power of attorney is still intact and has not been revoked by her. Similarly Sh. Gurmeet Singh has submitted an affidavit duly attested by Notary Public, Ludhiana to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri Paramjit Singh Sandhu dated 2nd March, 2007 recorded under section 50 of PMLA who stated that the subject property was purchased by him in the name of his wife Smt. Parminder Kaur in the year 2006. He contended that the respondent as well as the Adjudicating Authority has failed to appreciate that no where the accused person Shri Paramjit Singh Sandhu had stated that the appellant was in custody of the property on his behalf. He further contended that the respondent as well as Adjudicating Authority has incorrectly come to the conclusion that the property was purchased by the appellant from Smt. Parminder Kaur, such view being factually and legally untenable and without any basis. 7. The counsel submitted that that PNB Housing Finance Limited had initially wrongly prepared the cheque for disbursement of housing loan of ₹ 8 lakh in the name of Smt. Parminder Kaur, however, when the appellant pointed out to the finance company that the appellant is purchasing the property from Shri Gurmeet Singh and the payment is to be made in favour of seller Shri Gurmeet Singh, on the request of appellant, PNB Housing Finance Limited made correction in the cheque and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the subject property same time in March, 2007 or thereafter; there would not have been any occasion for the accused to transfer the same in October, 2007. He vehemently denied the allegation of the respondent that the appellant has nexus with the accused and the transfer of property was with the objective of avoiding attachment and confiscation under PMLA. He argued that such allegations are completely baseless and are made to cover up acts of commissions and omissions. He submitted that the appellant is a bona fide purchaser of the subject property for consideration and subject property is not liable for attachment under the provisions of PMLA as the same is no longer proceeds of crime and prayed that the appeal may be allowed and attachment order in respect of subject property may be set aside. 10. The learned counsel for the respondent No. 1/Enforcement Director contested the pleas and contentions raised on behalf of the appellant. It was contended that sale of property to the appellant is not a valid sale; Agreement to sell dated 5th October, 2007 was merely an agreement to sell. It was an afterthought on the part of the Smt. Parminder Kaur to bring Shri Gurmeet Singh in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by her husband Shri Paramjit Singh Sandhu. He submitted that as the property in question was purchased by utilizing proceeds of crime therefore it has been rightly attached by the respondent No. 1 and there is no infirmity in the order dated 25th November, 2010 passed by the Adjudicating Authority confirming the provisional attachment of property and prayed that the appeal should be dismissed. 13. We have heard both the parties and carefully considered the appeal and documents filed on record. The perusal of Provisional Attachment Order dated 23rd December, 2008 reveals that the respondent has recorded the details of property on page (4) as follows: B. IMMOVABLE PROPERTIES (a) House No. 53, New Akash Nagar, Jalahdhar Bye-Pass, Ludhiana purchased by Shri Paramjit Singh Sandhu in the name of his wife Smt. Parminder Kaur in the year 2006 for an amount of ₹ 13,40,000/- as stated by Shri Paramjit Singh Sandhu in his statement dated 2.3.2007 recorded under section 50 of PMLA 2002. (Presently the property is in custody of Shri Sanjeev Kumar s/o R.R. Sharma of Ludhiana who had purchased the house from Smt. Parminder Kaur as per enquiry conducted by officer of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order Provisional Attachment of the properties mentioned below for a period of 90 days (ninety days) and further order that the same shall not be transferred, disposed, removed, parted with or otherwise dealt with in any manner, whatsoever, until or unless specifically permitted to do so by the undersigned. 14. Subsequently respondent has filed Original Complaint No. 26 of 2009 dated 9th January, 2009 before the Adjudicating Authority praying confirmation of Provisional Attachment Order on page 32 as follows: XII. INVESTIGATIONS INTO PROCEEDS OF CRIME INVESTED INTO IMMOVABLE PROPERTIES BY DEFENDANT NO. 2 IN HIS NAME AS WELL AS IN THE NAME OF DEFENDANT NO. 3 HIS WIFE AND ALSO SOLD OUT TO DEFENDANT NO. 4 During investigations the following immovable properties were identified as proceeds of crime, which were purchased by Sh. Paramjit Singh Sandhu either in his own name or in the name of his wife out of tainted money collected by Sh. Paramjit Singh Sandhu, fraudulently showing M/s. Agrofed India as a Govt. of India undertaking and employing a number of persons by taking huge sums of money. a) House No. 53-54, New Akash Nagar, Ludhiana which was purchased for ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Kaur cannot be rejected. 17. A careful consideration of the documents filed on record reveals that following documents have been executed by Shri Gurmeet Singh and Smt. Parminder Kaur: (a) Agreement to sell dated 5th October, 2007 between Smt. Parminder Kaur and Shri Gurmeet Singh for sale of the subject property. (b) Note for extension of date of registry from 5th November, 2007 to 12th November, 2007 executed between Smt. Parminder Kaur and Shri Gurmeet Singh. (c) Note for extension of date of registry from 12th November, 2007 to 19th November, 2007 executed between Smt. Parminder Kaur and Shri Gurmeet Singh. (d) Receipt for payment of six lakhs by Shri Gurmeet Singh to Smt. Parminder Kaur and extending the date of registry up to 20th November, 2007. (e) Agreement of sell full and final between Smt. Parminder Kaur and Shri Gurmeet Singh executed on 20th November, 2007. (f) Affidavit of Smt. Parminder Kaur dated 20th November, 2007 executed by appearing in person before the Executive Magistrate, Ludhiana. (g) The General Power Attorney dated 20th November, 2007 executed by Smt. Parminder Kaur in favour of Shri Gurmeet Singh duly registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Affidavit of Parminder Kaur, General Power of Attorney etc. Respondent has neither recorded statement of M/s. Shiv Adiya Property Advisors nor brought any other material on record to show that transaction of Agreement to sell dated 5th October, 2007 was an afterthought. 19. The contention of respondent that there is no evidence of possession being given by Smt. Parminder Kaur to Shri Gurmeet Singh as the Agreement to sell full and final executed on 20th November, 2007 cannot be relied upon as it has many deficiencies, cannot be sustained in view of the facts emerging from documents executed on 20th November, 2007 i.e. Affidavit by Smt. Parminder Kaur before Executive Magistrate, Ludhiana, Registered General Power of Attorney executed by Smt. Parminder Kaur in favour of Shri Gurmeet Singh and Will of Smt. Parminder Kaur in favour of Shri Gurmeet Singh. A careful consideration of Affidavit, WILL and General Power of Attorney executed by Smt. Parminder Kaur on dated 20th November, 2007 shows that she had handed over possession of the subject property to Shri Gurmeet Singh after receipt of the entire sale consideration. The affidavit of Smt. Parminder Kaur dated 20th November, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 situated in village Bhaura. H. No. 88 Tehsil and District Ludhiana, Abadi New Akash Nagar, which has been sold by me through an agreement to S. Gurmeet Singh son of S. Mohan Singh resident of Village Jagirpur Tehsil and District Ludhaina and have received the entire consideration amount, and possession has been given. But the Registry has still not got done, therefore I with my own consent and full sense execute this Will that may God not do that at the time of Registry, I may not be in this world and in that event, the sole owner of the above said House No. B-32-E/14/6290, Plot No. 53-54 area 249 square yards (Two hundred forty nine Sq. yards) situated in village Bhaura H. No. 88 Tehsil and District Ludhiana Abadi New Akash Nagar will be the above said S. Gurmeet Singh, no other person or any member of my family will have any right or concern in it. Therefore this Will has been executed so that it may be used at the time of need. Witness Harpal Singh Vill. Mongli Tonda Ludhiana Smt. Parminder Kour Executor of the Will Witness Jaspal Former Sarpanch Vill. Jagirpur, Lu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f subject property by appellant still be held to be a bona fide transaction? In the present case material available on record does not show that the appellant had any nexus or collusion with Smt. Parminder Kaur or her husband Shri Paramjit Singh Sandhu or had any prior knowledge of criminality or taint in the subject property which is alleged to have been acquired by Shri Paramjit Singh Sandhu in the name of his wife Smt. Parminder Kaur out of proceeds of crime. On the contrary, the material on record shows that the source of payment for purchase of the subject property by appellant is out of legitimate means. The appellant has filed several documents such as copies of income tax returns showing income including income from partnership firm M/s. M.K.S. Fabrics, copies of capital account in firm M/s. M.K.S. Fabrics showing withdrawals in cash for purchase of subject property, copy of partnership deed of M/s. M.K.S. Fabrics, copies of balance sheets and ITR of M/s. M.K.S. Fabrics, copy of housing loan from PNB Housing Finance Ltd. showing monthly repayment of housing loan etc. to show the source of payments of sale consideration for purchase of subject property which was out of housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other relevant information and particulars. It is therefore clear that where a property is provisionally attached under Section 5, the person in possession of such property may avail the opportunity under Section 8 to indicate/establish that he has acquired the property attached (prima facie the proceeds of crime) out of his lawful earnings or assets, that he has the means to do so, and that his acquisition is therefore legitimate, bona fide and at fair market value of such property; and that the value paid for acquisition of the property and not the property in his possession that constitutes proceeds of crime, if at all. On such showing, to the satisfaction of the adjudicating authority, it would perhaps be not the property in possession of a person but the fair value for which he has acquired the property and paid to the transferor that constitutes proceeds of crime and the authorities may have to proceed against the property or value in the hands of the transferor. . .............. 44. The contention that the definition of proceeds of crime (Section 2(u)) is too broad and is therefore arbitrary and invalid since it subjects even property acquired, derived or in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociates will also be forfeited even if they are in no way connected with the convict/detenu. So far as the holders (not being relatives and associates) mentioned in Section 2(2)(e) are concerned, they are dealt with on a separate footing. If such person proves that he is a transferee in good faith for consideration, his property - even though purchased from a convict/detenu - is not liable to be forfeited. It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show-cause notice issued under Section 6, and which are held on that date by a relative or an associate of the convict/detenu, are not the illegally acquired properties of the convict/detenu, lies upon such relative/associate. He must establish that the said property has not been acquired with the monies or assets provided by the detenu/convict or that they in fact did not or do not belong to such detenu/convict. The Supreme Court concluded: The application of SAFEMA to the relatives and associates (in Clauses (c) and (d) of Section 2(2)) is equally valid and effective inasmuch as the purpose and object of bringing such persons within the net of SAFEMA is to reach the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After careful consideration of the peculiar facts and circumstances of the case, this Tribunal held that the appellant was a bona fide purchaser of shares of IDFC in good faith for consideration and any gain from such shares would not be proceeds of crime in the hands of appellant. 26. Considering the facts and circumstances as discussed above and following the principles enunciated by the Hon'ble High Court in the case of B. Rama Raju (supra) and following the judgment of this Tribunal in the case of Jitender Kumar Lalwani (supra), we are of the view that the appellant did not have any nexus with the accused Shri Praramjit Singh Sandhu or his wife Smt. Parminder Kaur, that he did not know about the criminality attached to the subject property and that the appellant is a bona fide purchaser of the subject property in good faith for consideration. We accordingly hold that the subject property i.e. residential house No. B-32-E, 14/6290 Plot No. 53 - 54, New Akash Nagar, Village Bhura, Jalandher By Pass, Ludhiana in the hands of appellant is not proceeds of crime and is therefore, not liable to provisions of attachment and confiscation under PMLA. Consequently, the appeal is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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