TMI Blog2018 (2) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... proof has not been discharged by the appellant, their request for release of all the properties cannot be acceded to. As regard Hetero and Aurobindo, they have agreed to secure total sum of ₹ 15.50 crores till the complaints are finally decided by the Special Court. As against Jagati and Janani, we are of the view that remaining ₹ 15 crores must be secured by Jagati and Janani without- prejudice as the total amount of bribery as per CBI and ED is ₹ 29.50 crores. The ED has already attached fixed deposit of ₹ 14.50 crores from Jagati. Subject to deposit of balance of ₹ 15 crores, properties of Janani shall stand released. In case the sum of ₹ 15 crores is not deposited by the appellant within six weeks from the date of order then the provisional attachment of land and property as per provisional attachment order shall continue till the final outcome of the matter which is pending before the special judge. These directions are passed without prejudice in order to secure the entire alleged amount. The fate of securing of ₹ 29.50 crores in respect of M/s. Janani & Jagati would be dependent upon the final decision passed by the Special Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 reads as under: The investigation carried out so far has thus established that the said criminal activities were carried out for the allotment/acquisition of the lands and to receive money in the form of equity contribution (in the said 2 companies) in lieu of the favour in the allotment/acquisition of lands at a lower rate, by the accused persons as per facts and circumstances of the case stated hereinabove. The said criminal activities have resulted into generation of the proceeds of crime. The amount of losses incurred by APIIC in the illegal allotment of lands to the companies at a lower rate and the amount of money received in lieu of illegal favour by way of investments in M/s Jagati Publications Pvt. Ltd. and M/s Janani Infrastructure Pvt. Ltd. are the proceeds of crime and in fact acquired as a result of the aforesaid criminal activities. [Emphasis supplied] 7. Attachments effected in the entire O.C. 166 of 2012 totaling to ₹ 51 Crs, the details are given as under:- i) M/s. Jagati Publications Pvt. Ltd. - Fixed Deposits worth for ₹ 14.5 Crs. ii) M/s. Janani Publications Pvt. Ltd. - Land and properties for ₹ 15 Crs. iii) Hetero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of ₹ 8.6 Cr was derived by Hetero with resultant loss to APIIC. 13. The following properties owned by the Hetero have been provisionally attached by the Respondent No. 1 vide Provisional Attachment Order No. 1/2012 dated 04.10.2012. Sl. No. Details of asset/property Amount involved 1. 34 acres and 13 cents vide Sale Deed No. 2245/07 at Parwada with Unit VI, Nakkapalli (Portion and parcel of land), District Vishakhapatnam Rs. 517.97 Lakhs 2. 1 acre land vide Sale Deed No. 1132/2007 dated 19.02.2007, Dy. No. 72/1A, at Lankelapalem with with Unit VI, Nakapalli, District Vishakapatnam Rs. 19.71 Lakhs 3. 65 cents land vide Sale Deed No. 3111/2008 dated 23.09.2008, Sy. No. 71/4, ACO. 65 cent at Lankelapalem with Unit VI, Nakapalli, District Vishakhapatna Rs. 16.43 lakhs 4. Fixed Deposit No. 723199 dated Rs. 3 crore 14.08.2012 vide Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndo promoters 8.6 3 - Trident 4.3 7 - Hetero 8.6 15 4.5 Total 21.5 25 4.5 18. The main observation of Respondent No. 1 in the impugned order is that Hetero is in possession of proceeds of crime of ₹ 8.60 crores as a result of the alleged wrongful gain made by virtue of allotment of 75 acres of Land at GIP SEZ at Dadcherla, Mahaboobnagar District, Andhra Pradesh by APIIC at a lower rate of ₹ 7 Lakhs per acre as against the alleged applicable rate purported to have been fixed by the Price Fixation Committee, APIIC, of ₹ 15 Lakh per acre, for the first 50 acres, and ₹ 20.23 Lakhs per acre, for the remaining 200 acres and the substance of the allegation is that as quid pro quo for the aforesaid alleged undue benefit, the appellant, inter alia invested a total sum of ₹ 19.50 crores, namely, ₹ 15 Crores in Janani Infrastructure Ltd. and ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect, etc. In case of SEZ, the allotment, as per the SEZ Rules has to be only on lease basis, whereas the other industrial parks, land is allotted on outright sale on freehold basis. [Emphasis supplied] 21. Out of the aforesaid 250 acres, 75 acres of the said land was allotted in-principle to the appellant on lease for a period of 25 years on an as is where is basis subject to payment of lease premium of ₹ 7 lacs per acre and annual lease rent of 1% of the lease premium. Subsequently, two lease agreements dated 19.06.2008 and 31.10.2008, were executed for 66 acres and 9 acres respectively, in favour of the appellant and its subsidiary viz. Hetero Labs Ltd. for lease period of 33 years subject to payment of ₹ 7 lacs per acre as lease premium and annual lease rent at the rate of 2% of the lease premium. 22. Upon the approval of the Co-Developer Status by the Ministry of Commerce Industry, Government of India, the Appellant entered into a Co-Developer Agreement dated 19.06.2008, with APIIC as the Co- Developer of the SEZ to the extent of the land allotted to the appellant and its subsidiary. A bare perusal of the said Agreement would be adequate to demonstr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 9.9 Lakhs Compensation paid to erstwhile farmers ₹ 1 Crore ₹ 2.22 Lakhs Total Cost ₹ 10.74 Crores ₹ 23.58 Lakhs/acre 25. M/s. Hetero Drugs Ltd., a leading pharmaceutical company in India and the world‟s largest producer of Anti-retroviral drugs, with a current turnover of ₹ 3,300 Crores. Similar is the position of Aurobindo. 26. It is also the case of the Hetero that the cost to the appellant was ₹ 23.58 lakhs per acre whereas the maximum cost fixed by the Price Fixation Committee was ₹ 20.23 lakhs per acre. As such the question of the Appellant unduly gaining or possessing any proceeds of crime does not even arise. This information was placed before the Ld. Adjudicating Authority during the course of arguments as well as in the detailed Written Submission filed. They have not derived any undue benefit is also evident from the fact that as per the records of the Sub-Registrar, the market price of lands at Jadcherla for the years 2006, 2007 and 2008 ranged between ₹ 32,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief Minister Mr. Y.S.R. Reddy, to Mr. B. P. Acharya (VC, APIIC), who then orally directed Mr. T.L. Ramachandran (CGM, Projects, APIIC) to allot the land in favour of the Appellant on concessional rate. 30. In reply, it is submitted by the appellants that the finding that the file was processed in one day is contrary to the record in as much as the letter dated 12.09.2017 clearly indicates that prior discussions were ongoing between the Appellant, Aurobindo Pharma Ltd. and APIIC, at least two months prior to the in-principal allotment, for setting up of the pharma SEZ. This fact is again corroborated by the statement of Mr. Srinivasa Reddy made under Section 50 of the PMLA, 2002, wherein he states that he had met Mr. B. V. Acharya, then CMD of APIIC, from April 2006 to November 2006 for discussing the allotment of the land. The relevant extract of his statement is as follows: We have met 5-6 times, Shri B. P. Acharya (and I), between April 2006 to November 2006 to discuss the objective of allotment of land for Pharmaceutical SEZ. [Emphasis supplied] 31. It is stated by the appellants that the question of non-issuance of advertisement by APIIC is concerned, to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted Mr. T.L. Ramachandran (CGM, Projects, APIIC) is merely observations in as much as no evidence was placed before it the form of statements of witnesses or documents to support such an assumption. 34. Prima facie, it appears to us that if the allegations made by the Respondent No. 1 are taken to be correct, then it would be a case where the Appellants have paid a bribe of ₹ 29.50 Crores for obtaining a benefit of ₹ 21.5 Crores, as per the Respondent No. 1‟s quantification, which is not in practical and possible. 35. It is not denied by the respondent no. 1 that the appellants and the other accused approached the Hon‟ble High Court at Hyderabad under Section 482 of the Cr. P.C. seeking quashing of the aforementioned proceedings in C.C. No. 8 of 2012. The Hon‟ble High Court was pleased to issue notice in the said petition and vide Order dated 18.04.2016 granted interim stay of proceedings in C.C. No. 8 of 2012, which continues to remain in force as date. No charges framed against the appellants in appeal No. FPA-PMLA-435/DLI/2013 and FPA-PMLA- 436/DLI/2013. The lease-deeds have not been cancelled either by the State Government or by any Court. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean property to mean property of any kind used in the commission of an offence under the PMLA itself or of any scheduled offence. Therefore, the expression value of any such property‟ would be a value equivalent to the value of a property derived or obtained directly or indirectly by any person as a result of criminal activity. The property itself may no longer be available but the equivalent value of such a property, whether held in cash, etc., would be available for attachment. 40. The Hon‟ble Bombay High Court therein reiterated the mandatory nature of S. 5(1)(c) of PMLA, 2002 as under: 11. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the purposes of the said section to resort to action of attachment of property if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such property until the criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. 56. Submission of Mr. Singh that the appellants have not been able to discharge the burden of proof which was on them from the impugned orders, it would appear that they have utterly failed to prove their own independent income; they being close relative of the detune as in terms of the statutory requirements, it was for them to show that they had sufficient income from those properties. [Emphasis supplied] 42. In the present case, even assuming that the preconditions as given under Section 5(1)(a) and (b) had been satisfied by Respondent No. 1, the requirement under Section 5(1)(c) has not been fulfilled, as is evident from the bare perusal of the Provisional Attachment Order passed against the Appellant as the Provisional Attachment Order is contrary to the express mandate of S. 5 (1) (c) of PMLA in as much as the Respondent No.1 has even failed to record his satisfaction that the property attached as proceeds of crime‟ in the present case are likely to be concealed, transferred or dealt with in any manner which may result in frustrating proceedings relating to confiscation under the Act. 43. It is clear that the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation, the attachment and the subsequent actions against the appellant had proceeded on a complete misconception and failure to appreciate the natural distinction between freehold property and leasehold property. The finding are totally erroneous. The nature of a lease have been compared to price fixed by Price Fixation Committee of Andhra Pradesh Industrial Infrastructure Corporation ( APIIC ) for the purpose of sale of non-SEZ land and thereby resulted in a loss to the exchequer. 47. The Appellants i.e. private parties well established company with turnover in excess of Rs. Thousand of crores. The question of proceeds of crime not being available for the purpose of confiscation does not even arise and the extraordinary power of provisional attachment has been exercised by the Respondent No. 1 without having due regard for the provisions of Section 5 (1) of the PMLA. 48. Therefore, even assuming that the allegations made against the Appellant‟s were true, and that an order of attachment was necessary in the circumstances, the simplest recourse would have been to attach the said amount in the hands of statutory authorities holding the Appellant‟s funds, rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested in Janani Infrastructure at the Premium Value of ₹ 102 per share. With regards to Jagati Publications they have informed us that in their business plan, they can achieve circulation of 5 to 6 Lakh copies at the time of the launch as they have more than 10 Lakh Congress workers who they felt would subscribe to the newspaper. [Emphasis supplied] In fact, in the present case, Jagati Publication‟s circulation is far in excess of those projected. 54. It was the case of investors i.e. private parties that the investments made into M/s Jagati Publications Ltd and M/s Janani Infrastructure are genuine investments and advances made in course of bona fide commercial transactions. The allegations as to overvaluation and ante- dating of valuation reports with respect to M/s Jagati Publications Ltd. are completely baseless and erroneous. The premium fixed for the shares of M/s Jagati Publications Ltd. is based on sound commercial analysis, including cogent valuation. The premium fixed contemporaneously by other market participants would evince that the premium of M/s Jagati Publications Ltd. shares is justified. 55. The record circulation has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is bad as well and the provisional attachment order is liable to be modified. 59. Alongwith the written submission, the appellant, i.e. Hetero has filed the affidavit securing the relevant amount. 60. Admittedly the following properties of the appellant, i.e. Hetero company have been provisionally attached by the respondent no. 1 not as proceeds of crime, but, admittedly as the equivalent value of the alleged proceeds of crime purportedly in possession of parent company of the appellant, which has been quantified by the respondent no. 1 at ₹ 8.60 Crores. Sl. No. Details of asset/property Amount involved 1. 34 acres and 13 cents vide Sale Deed No. 2245/07 at Parwada with Unit VI, Nakkapalli (Portion and parcel of land), District Vishakhapatnam ₹ 517.97 Lakhs 2. 1 acre land vide Sale Deed No. 1132/2007 dated 19.02.2007, Dy. No. 72/1A, at Lankelapalem with Unit VI, Nakapalli, District Vishakapatnam ₹ 19.71 Lakhs 3. 65 cents land vide Sale Dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63. Aurobindo has also filed the affidavit by way of undertaking offering to deposit the requisite amount in order to secure the amount. 64. The following properties of the Aurobindo company and its subsidiary viz. APL Research Ltd. have been provisionally attached by the respondent no. 1 not as proceeds of crime, but, admittedly as the equivalent value of the alleged proceeds of crime purportedly in possession of the appellant, which has been quantified by the respondent no. 1 at ₹ 12.90 crores. a. 95.095 Acres of land situated at Village Kota Bhogapuram, Bhogapuram Mandal, District Vizianagaram, Andhra Pradesh owned by APL Research Centre Ltd. (Serial Nos. 7, 8, 10 to 41 of the list of properties attached) valued at ₹ 9,71,50,640/-. b. 0.35 acres of land situated at Village Lakshmipuram, Bhogapuram Mandal, District Vizianagaram, Andhra Pradesh owned by APL Research Centre Ltd. (Serial No. 9 of the list of properties attached) valued at ₹ 2,30,060/-, which is incorrectly mentioned as being situated in Krishna District; and c. 5 acres of land at Village Borapatla, Hathnoora Mandal, Medak District, Andhra Pradesh (now State of Telengana) owned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent no. 1 within six weeks from today as deposit of the said amount the attachment of all the attached properties in view of the attached properties shall stand released forthwith as we are of the considered of the opinion that the provisional attachment order has been passed contrary to the facts and law. The same is not sustainable particularly when the appellants are prepared to secure the amount. The said deposit of private parties shall without prejudice and will be treated as securities against the attachment of properties. 69. The all appeals filed by the private parties and MPs are disposed of. No costs. 70. Now, we shall deal with the appeals filed by Jagati and Janani. The attachments against the Jagati and Janani were effected as under:- i) M/s. Jagati Publications Pvt. Ltd. - Fixed Deposits worth for ₹ 14.5 Crs. ii) M/s. Janani Publications Pvt. Ltd. - Land and properties for ₹ 15 Crs. 71. Section 24 reads as under: Section 24 Burden of Proof :- In any proceeding relating to proceeds of crime under this Act,- (a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all the properties cannot be acceded to. 76. As regard Hetero and Aurobindo, they have agreed to secure total sum of ₹ 15.50 crores till the complaints are finally decided by the Special Court. As against Jagati and Janani, we are of the view that remaining ₹ 15 crores must be secured by Jagati and Janani without- prejudice as the total amount of bribery as per CBI and ED is ₹ 29.50 crores. The ED has already attached fixed deposit of ₹ 14.50 crores from Jagati. Subject to deposit of balance of ₹ 15 crores, properties of Janani shall stand released. In case the sum of ₹ 15 crores is not deposited by the appellant within six weeks from the date of order then the provisional attachment of land and property as per provisional attachment order shall continue till the final outcome of the matter which is pending before the special judge. 77. These directions are passed without prejudice in order to secure the entire alleged amount. The fate of securing of ₹ 29.50 crores in respect of M/s. Janani Jagati would be dependent upon the final decision passed by the Special Court. 78. Two said appeals as well as MPs are disposed of. 79. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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