TMI Blog2017 (12) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the impugned order which was passed in mechanical manner and without application of mind without considering and consulting law.. The appellant is an innocent person. No criminal complaint is pending against her. It is purely a civil dispute. She has no link or nexus with Hardeep Singh Thapar directly or indirectly. Both orders are accordingly set-aside. All the four appeals are allowed. The attachment of only immovable properties stands released. The appellant may take the necessary steps as per law. ED and Adjudicating Authority has totally ignored the said vital facts involved in the present matter. Both orders are passed in mechanical manner. Infact, had ED applied its mind of the peculiar facts of the matter, the provisional attachment order would not have been passed. Both provisional attachment orders and confirmation orders are perversed and against the law. - MP-PMLA-1858/CHD/2015 (U/s 39) FPA-PMLA-936/CHD/2015, MP- PMLA-2552/CHD/2016 (COD) & 2. FPA-PMLA-1288/CHD/2016, MP- PMLA-2554/CHD/2016 (COD) & 3. FPA-PMLA-1289/CHD/2016, MP- PMLA-2556/CHD/2016 (COD) & 4. FPA-PMLA-1290/CHD/2016 - - - Dated:- 20-12-2017 - Justice Manmohan Singh Chairman And Shri G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur had invested part of amount in development of land and some amount has been given to relatives as financial assistance and had made FDRs of that money. On 10.08.2007 the husband of Pritam Kaur entered into the settlement with his brother Kulwant Singh and paid him ₹ 95,00,000/- to buy peace of mind and to settle all the litigation going on in between the parties. It is pertinent to mention here that the answering defendant no. 4 did not get any property or shops in lieu of ₹ 95,00,000/- given to Mr. Kulwant Singh. 10. On 19.07.2008 Mr. Hardip Singh Thapar tried to take the forceful possession of the property of the appellant who filed the Civil Suit No. 803/19.07.2008 for permanent injunction restraining the Mr. Hardip Singh Thapar and his companion from interfering into the peaceful possession of the land. 11. One Mr. Narendra Kumar Chandna (complainant) who earlier paid ₹ 3,61,00,000/- (Rs. Three Crore Sixty One Lacs) to Shri Hardeep Singh Thapar through cheques for purchasing 22-25 acres of land in Amritsar for further developing it for AWHO. 12. He himself was dealing in Real Estate. Shri Hardeep Singh Thapar and his sons Manish and Vikas Thapar to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant by R-4, the quantum of land and the rate of the land per square yard, etc. In the said agreement, it is clearly mentioned, inter alia, that the date of registration of sale deed fixed as 01.12.2006 shall not be extended in any manner, oral or legal. It is further mentioned that on the failure of registration on the part of vendee, the earnest money so paid shall stand forfeited. 17. During the course of investigation, the respondent No. 1 attached the properties in question vide provisional attachment order (PAO) No. 1/2014 dated 31.12.2014 (Annexure A-11) and filed the Original Complaint no. 405/2015 before the Adjudicating Authority under PMLA for confirmation of the provisional attachment order. In the said complaint the present appellant Smt. Pritam Kaur is defendant no. 4 and herein we are dealing with properties of Smt. Pritam Kuar attached under this PAO 1/2014 and confirmed in O.C. 405/2015. 18. In statement dated 25.04.2014 and 12.12.2014 recorded u/s 50 of PML Act, Shri Hardeep Singh Thapar admitted investment of ₹ 1,34,50,000/- (Rs. One Crore Thirty Four Lacs and Fifty Thousand Only) with Smt. Pritam Kaur of village Daburjee, G.T. Road, Amrit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the money received by the appellant cannot be held as proceeds of crime. f. The respondent No. 1 has not attached the properties of respondent No. 3 and 4. 21. The Adjudicating Authority affirmed the attachment order No. 01/2014 against Pritam Kaur but while dismissing the attachment order against the persons who were not party before the Adjudicating Authority gave liberty to Deputy Director to issue fresh attachment order under section 5 (1) of Prevention of Money Laundering Act, 2002. 22. The said order has been challenged before us which is subject matter of appeal no. FPA-PMLA-936-CHD/2015. 23. In response to the grounds taken in the memorandum of appeal, the respondent No. 1 filed his reply, inter alia, on the following grounds: a. Section 467 of IPC was a schedule offence prior to the amendment dated 15.02.2013, hence, ECIR can be registered under the provisions of said Act only on the basis of Section 467 of IPC. b. Appellant was in possession of proceeds of crime generated by Hardeep Singh Thapar and his sons so the attachment. c. Section 467 of IPC was a schedule offence in FIR No. 66 dated 28.02.2007 hence ECIR was registered as per the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed by the Adjudicating Authority by passing the order dated 18.03.2016 against the appellant Pritam Kaur her husband Sukhpal Singh, mother and another relative. 27. On 8.03.2016, the Adjudicating Authority by its order dated 08.03.2016 in complaint no. 644/2015 in provisional attachment order 1 of 2015 dated 28.09.2015 in ECIR No. CDZO/10/2013 confirmed the Provisional Attachment Order No. 1 of 2015 dated 28.09.2015. 28. The appellant and her husband, and other relative have challenged the order being appeal no. FPA-PMLA-1288/CHD/2016 also filed by Smt. Pritam Kaur and appeal no. FPA-PMLA-1290/CHD/2016 under section 26 of Prevention of Money Laundering Act, 2002 against the order dated 08.03.2016 in O.C. No. 529 of 2015 passed by the Adjudicating Authority. For the reasons stated in the application, the delay in filing the appeals are condoned as there was no oppositions at the time of hearing. 29. Separate appeals have also been filed by Mann Kaur whose FD for sum of ₹ 20,01,034/- has been attached and Sukhpal Singh husband of the Pritam Kaur whose F.D. for ₹ 800403/- has been attached. The amount received from Pritam Kaur being appeal no. FPA-PMLA- 1289 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson or any property is involved in money laundering or not. If there is no direct / indirect involvement of any person or property with the proceeds of the crime nor there is any aspect of knowledge in any person with respect to involvement or assistance nor the said person is party to the said transaction, then it cannot be said that the said person is connected with any activity or process with the proceeds of the crime. The same principle is to be applied while judging the involvement of any property of any person in money laundering. If the said seller who is not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said crime cannot be penalized for no fault of his/her. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/ indirect involvement in the proceeds of the crime. He or she cannot be made to suffer by attachment of his/her property without any fault on the basis of mere suspicion when the element of mens rea or knowledge is missing. 38. The issue pertaining to projection of the proceeds of crime has to be applied against the person who is directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under subsection (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c)taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of crime. The consequence of this is that while considering whether all or any of the properties provided under notice issued u/S 8(1) are involved in money laundering, the Adjudicating Authority can take into consideration the plea of innocence raised by any person and also the fact as to whether the property which has been attached has any nexus whatsoever with that of money laundering or not if the person before the Tribunal/ Adjudicating Authority is able to demonstrate that he neither directly nor indirectly has attempted to indulge nor with knowledge or ever assisted any process or activity in connection with proceeds or crime and the question of his involvement does not arise as he is third party, then the Tribunal/ Adjudicating Authority can consider the said plea depending upon whether there exist bona fide in the said plea or not and proceed to adjudicate the plea of innocence of the said party. 57. This is due to the reason that Section 8 allows the Adjudicating Authority to only retain the properties which are involved in money laundering which means as to whether properties attached are involved in money laundering or not is a pre-condition prior to confirming o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to commit the offence, but also preparation for the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such 'intention' and 'attempt' on the part of any of the petitioners. B. RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY: In JotiParshad v. State of Haryana, 1993 Supp (2) SCC 497 the Hon'ble Supreme Court has held as follows- 5. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of intention or knowledge or reason to believe . We are now concerned with the expressions knowledge and reason to believe . Knowledge is an awareness on the part of the person concerned indicating his state of mind. Reason to believe is another facet of the state of mind. Reason to believe is not the same thing as suspicion or doubt and mere seeing also cannot be equated to believing. Reason to believe is a higher level of state of mind. Likewise knowledge will be slightly on a higher plane than reason to believe . A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed on hands to the number of purchasers which includes the bona fide purchaser without notice, the said purchaser who is not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said transaction ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/ indirect involvement in the proceeds of the crime or its dealings can be made to suffer by mere attachment of the property at the initial stage and later on its confirmation on the basis of mere suspicion when the element of mens rea or knowledge is missing. 60. Similar principle has been laid down by Chennai High Court in the case of C. Chellamuthu (Appellants) Vs The Deputy Director, Prevention of Money Laundering Act, Directorate of Enforcement (Respondent) decided on 14.10.2015, relevant portion of which are reproduced below:- 20. The said sections read as follows:-- 23. Presumption in inter-connected transactions Where money-laundering involves two or more inter- connected transactions and one or more such transactions is or are proved to be invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven statements under Section 50 of the Act. They have categorically stated that they possess agricultural lands, cultivate GloriosaSuperba seeds and sell the same and derive considerable income. They have named the persons to whom they have sold the GloriosaSuperba seeds and produced Bank statements. Some of the Appellants have stated that they sold their lands and borrowed monies to purchase the property in question. There is nothing on record to show that the respondent had verified these statements. Especially, the respondent has not verified the Bank statement produced by the Appellants to ascertain the genuineness of the same and whether the money deposited came from genuine purchasers or from the persons involved in fraud and Money Laundering. The respondent does not allege that Appellants are Benamies of G. Srinivasan or no sale consideration passed to the vendor. 23. Considering the materials on record and judgments reported in 2010 (5)Bom CR 625 [supra] and : [2011] 164 Comp Cas 146(AP) [supra], I hold that appellants have rebutted the presumption that the property in question is proceeds of crime. The respondent failed to prove any nexus or link of Appellants with G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhotia Vs. Deputy Director, PMLA, Directorate of Enforcement, Mumbai in first appeal No. 527/2010. In this case it held by the Bombay High Court that the property bought without the knowledge that the same is tainted could be subjected to Provisional Attachment Order. 23. In the instant case the only point to be decided is whether the properties bought by any person against clean money and without any knowledge that properties have been acquired directly or indirectly through scheduled offence could be subject matter of provisional attachment order. 24. It is an admitted position that the Defendants (D-2 to D-8) had no knowledge that the properties in the hands of the vendor was proceeds of crime. They have also verified the papers relating to these properties before the deal. No point has been raised with regard to the financial capability of these Defendants to buy these properties. However, the Bombay High Court decision in Radha Mohan Lakhotia has been pressed into service to make out a plea that the properties could be attached in such circumstances under the PMLA. Provisional attachment was sought to be continued only based on the judgment of Bombay High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complainant. 41. In the present case, as Pritam Kaur was never involved in the criminal activities. She has no link and nexus with the allege accuse. She is the innocent party. Furthermore, it is the admitted position that the subject of the property was not purchased by proceed of crime as admitted by the respondent No.1. The dispute in the present case is of a civil nature - where the advance amount was paid as per agreement. Time was the essence of the contract, since no remaining amount was paid, thus the earnest money was forfeited. The suit for recovery of earnest money has already become time barred in December, 2009. Therefore, the facts in the present are different. Even otherwise the provisions as referred under NDPS are not codified under the PML Act, 2002. Therefore, the said decision is not applicable to the facts of the present case. 42. There has no link or nexus with the Hardeep Singh Thapar or the complainant or having relation with them. In nut-shell she was innocent seller when the deal was struck. When the remaining amount was not paid, the advance amount was forfeited as per law and agreement. 43. Under Section 2(u) of Prevention of Money Laundering A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance of the contract and that the respondent was entitled to forfeit the deposit amount when the appellant committed a breach of the contract and dismissed the suit. (Shree Hanuman Cotton Mills (1969) 3 SCC 522). The High Court confirmed the decision taken by the trial court. This court, considering the scope of the term earnest , laid down certain principles, which are as follows: (Shree Hanuman Cotton Mills (1969) 3 SCC 522). 21. From a review to the decisions cited above, the following principles emerge regarding earnest : (1) It must be given at the moment at which the contract is concluded. (2) It represents a guarantee that the contract will be fulfilled or, in other words, earnest is given to bind the contract. (3) It is part of the purchase price when that transaction is carried out. (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser. (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest 45. In DDA v. Grihsthapana Coop. Group Housing Society Ltd. (1995) Supp (1) SCC 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a right to forfeiture and acquired the illegal property of the relative associates. However, in the present case under the PMLA Pritam Kaur is neither the relative or the associates of Shri Hardeep Singh Thapar. At the time of making the payment by Shri Hardeep Singh Thapar no criminal case under the schedule offence or PMLA was pending. At that time the amount received by Pritam Kaur was earnest money cannot be considered as tainted under the PML Act and even she was not aware about any activities about Shri Hardeep Singh Thapar on the date of execution of the agreement. It was a bonafide transaction. 48. The Adjudicating Authority has not discussed any relevant issue involved in the impugned order which was passed in mechanical manner and without application of mind without considering and consulting law.. The appellant is an innocent person. No criminal complaint is pending against her. It is purely a civil dispute. She has no link or nexus with Hardeep Singh Thapar directly or indirectly. Both orders are accordingly set-aside. All the four appeals are allowed. The attachment of only immovable properties stands released. The appellant may take the necessary steps as p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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