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2018 (4) TMI 600

in haste without following the procedure established by law. The only reason given in the impugned order for upholding the provisional attachment order passed by the ED in respect of the said property is that the said property was owned by M/s Shamken Multifab Ltd. as the registration in favour of the Appellant was never done. The impugned order of the Ld. Adjudicating Authority does not even consider whether the said property was proceeds of the crime. - The legal effect of the registered Agreement to Sell between M/s Shamken Multifab Ltd. and M/s Arindam Sekhar Garments Marketing Pvt. Ltd. and thereafter of the sale deed which had been executed between M/s Shamken Multifab Ltd. and the appellant and presented for registration on 09.11.2013. - Despite the sale consideration as provided in the said agreement to sell, i.e. ₹ 5.66 crore and the payment of the requisite stamp duty and registration fees pursuant to the same having been paid by the Appellant, the Ld. Adjudicating Authority has not even thought it fit to call the Appellant under Section 8 (2). - Despite the sale consideration as provided in the said agreement to sell, i.e. ₹ 5.66 crores, has been .....

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dispute in the appeal is only pertaining to above referred property. 3. It is true that if the ED and Adjudicating Authority were having no knowledge about the claim of owner of the property in question which was purchased by the appellant then no notice was required and the situation would have been different. But in the present case both authorities were fully aware all this facts and supporting documents executed in favour of the appellant but despite that no notice was given, the appellant were not heard who was the aggrieved party. The appellant is simply a purchaser of the property in question. The appellant is not involved in any criminal proceedings and under the PMLA Act, 2002 complaint. As per the case of the appellant, the appellant is bonafide purchaser of the property and innocent party. 4. Section 8(1) (2) are reproduced hereunder:- 8 Adjudication. - (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an 13[offence under section 3 or is in possession of proceeds of crime], he .....

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008, 0009, 0010, and 0013, for commission of offences punishable under Section 120-B, r/w 420, 460 & 471 of IPC, 1860 and Section 13 of PC Act 1988 for which charge sheets have been filed under Section under Section 173 of Cr. PC 1988 against H.B. Chaturvedi, Chairman-cum-Managing Director, Amit Chaturvedi, Joint Managing Director, Sanjay Chaturvedi, Director, Sumit Chaturvedi, Director and Parvin Juneja, Director (Corporate Finance) of M/s. Shamken Spinners Ltd., M/s. Shamken Multifab Ltd., M/s. Dwarkadhish Spinners Ltd. and M/s. Shamken Cotsyn Ltd. amongst others (hereinafter referred to as the accused persons‟). 7. It was alleged in the said FIRs that one M/s. Shamken Group of Companies and its Directors had committed various financial frauds by misrepresenting facts and by furnishing false and fabricated information/documents to banks for availing loans worth ₹ 118.5 Crores during the years 1998-2003 for procurement of plant and machinery but instead utilized during the years 1998-2003 for procurement of plant and machinery but instead utilized and siphoned off disbursed funds for the purposes other than for those sanctioned, thereby attaching the provision of S .....

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No. 0417984224 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001 64,894.38 07.04.2016 b. A/c No. 04222922225 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001 54,340 07.04.2016 c. A/c No. 094252061-001 HSBC Bank, The Hongkong and Shanghai Banking Corporation Ltd., Birla Towers, 25 Barakhamba Road, New Delhi-110001 34,59,53,800 04.04.2016 d. A/c No. 011105000129220 of IDBI Bank, Surya Kiran Building, Ground Floor, 19, Kasturba Gandhi Marg, New Delhi 4,58,308 18.05.2016 e. A/c No. 0011778000000019 of IDBI Bank, Surya Kiran Building, Ground Floor, 19, Kasturba Gandhi Marg, New Delhi 63,560 18.05.2016 f. A/c No. 038403003851-195001 of Catholic Syrian Bank, Kosi Kalan, Mathura District, UP 281 403 5,14,983 11.07.2016 8. Shamken Spinners Ltd. (SSL) a. A/c No. 0421866228 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001 2,21,141.26 07.04.2016 b. A/c No. 051-219681- 001 HSBC Bank, The Hongkong and Shanghai Bankin Corporation Ltd. Birla Towers, 25 Barakhamba Road, New Delhi-110001 8,94,91,350.8 04.04.2016 c. A/c No. 20342000000438 HD .....

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c No. 18250310017586 of UCO Bank, Ferozeshah Road, New Delhi 79,367 06.05.2016 D A/c No. 18250310018620 of UCO Bank, Ferozeshah Road, New Delhi 1,56,927 06.05.2016 E A/c No. 18250310018613 of UCO Bank, Ferozeshah Road, New Delhi 1,56,932 06.05.2016 F A/c No. 18250310018644 of UCO Bank, Ferozeshah Road, New Delhi 1,38,948 06.05.2016 G A/c No. 18250310042601 of UCO Bank, Ferozeshah Road, New Delhi 63,353 06.05.2016 16 Kotwan Traders Pvt. Ltd. A/c No. 007010300021739 of Axis Bank, Statesman House, 148, Barakhamba Road, Connaught Place, New Delhi-110001 27,867.02 25.05.2016 Total 96,38,35,580.17 Admittedly that the said property had been purchased by M/s. Shamken Group of Industries in the year 1992 which not only is much prior to the alleged transactions but is even prior to the PMLA Act being enacted and therefore, the said property cannot be said to a proceed of crime . The said property had already been sold to the Appellant, the said fact having been brought to the knowledge of the Adjudicating Authority but despite an order of attachment in respect of the said property has been passed without even affording an opportunity of hearing to the appellant. 10. The Adjudicating Authorit .....

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ad agreed to sell the said property in question to M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. for a sale consideration of ₹ 5.66 crores. The said Agreement to Sell was duly registered in the office of the Sub-Registrar-V on 05.09.2011. The requisite stamp duty amounts of ₹ 33,96,000/- had been paid by M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. for the registration of the said agreement to sell. In terms of the said agreement to sell, it had been categorically agreed to that M/s. Shamken Multifab Ltd. will apply and obtain the necessary sale permission/no objection certificate from the concerned authorities for the transfer of the said property in favour of the M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. at its cost and expense. It had been further agreed that pursuant to receipt of the said permission, M/s. Shamken Multifab Ltd. will execute an appropriate sale deed in respect of the said property in favour of M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. or his nominees. The possession of the said property was also handed over to M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. by virtue of the said Agreement to Sell. Copy of the registered Agreemen .....

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11.2003. Copy of the Sale Deed dated 09.11.2013 executed and submitted to the sub-Registrar‟s office is filed as ANNEXURE-A8. 18. The parties, thereafter, approached the office of the sub -Registrar for the purposes of registration of the sale deed in respect of the said property. the requisite formalities for the purpose of registration were duly carried out at the sub-Registrar‟s office on 09.11.2013 and the Appellant was given a slip and was directed to collect the sale deed in respect of the said property after a couple of days upon the representation of the said slip from the sub-Registrar‟s office. The copy of the slip evidencing the fact of registration being done issued by the sub- Registrar‟s office is filed as ANNEXURE-A9. 19. Admittedly, the appellant herein is not a Director and/or Shareholder in any of Shamken Group of Companies nor had any business relations with Shamken Group of Companies and/or its Directors/Shareholders, save and except to the limited extent of having purchased the said property which was owned by M/s. Shamken Multifab Ltd. 20. The appellant, on visiting the sub-Registrar‟s office after a couple of days to collect the .....

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investigation. However, despite the assurances, the said property was no released by the Directorate of Enforcement even after passage of a substantial period of time. On making enquiries, the Appellant was informed that investigation in respect of the assets of Shamken Group of Companies and its Directors was still ongoing and it would take some time before the requisite orders in respect of the said property were passed. The Director of the Appellant was also called in the course of the said investigation by the Directorate of Enforcement. The purchase transaction which had taken place was duly brought to the notice of the Dy. Director and he was informed that the sale deed was not being released by the sub-Registrar due to the directions which had been issued by his office. In view of facts involved in the present case, issuance of such letter was uncalled for. 23. It is stated that as the Appellant was bonafidely awaiting the order releasing the said property in question being passed, it was later on after confirmation of order, it was learn that an order dated 15/09/2016 was passed by the Deputy Director, Directorate of Enforcement under Section 5 of the PMLA directing provis .....

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ultifab Ltd. That in the same M/s Arindam Sekhar Garments Marketing Pvt. Ltd. was the confirming party. The requisite stamp duty for the purposes of the purchase of the said property to the tune of ₹ 80,55,000/- was duly paid by the Appellant on 10.11.2013. 26. As already stated that all the formalities for the purposes of registration were also completed by the Appellant on 09.11.2013 and the Appellant was given a slip and was directed to collect the sale deed in respect of the said property after a couple of days. On visiting the office of the Sub-registrar the Appellant was informed that the office had received a letter dated 10.10.2013 from the office of the Directorate of Enforcement informing the Sub-registrar that the said property was subject matter of investigation under the PMLA and it was requested to not register any document pertaining to the transfer of the said property. The said request of ED was not necessary. It is pertinent to mention that on one hand a letter was issued to sub-Registrar not to register sale deed in favour of the appellant and on the other hand, no notice was issued to the appellant which was mandatory under the law. 27. Counsel for the res .....

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has stated that the property viz. Shamken House, B-1/A-20, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi- 110 044 has not been registered in the name of M/s. Horizon Info Solutions Pvt. Ltd. and on the date of purchase clearly knew that this property was being investigated by the Directorate of Enforcement under PMLA. 31. It is also stated that it is the dishonest intention of the appellant are further illustrated through his dubious actions of not proceeding against the Shamken Group to recover his money when he knew that the said property was being investigated by the Directorate of Enforcement. In all the legal formalities, the appellant would have been bonafide to have proceeded against the Shamken Group. 32. The said arguments are without any substance, as the appellant has not purchased the property from the accused party. Even otherwise the accused party acquired the property in the year 1992 prior to the Act of PML Act enacted. 33. In the present matter, the appellant had the interest in the matter, who had paid the entire consideration in legal means. The appellant has no relation directly or indirectly with Shamken. The appellant is not involved in any co .....

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f the PMLA is being reproduced hereunder for ready reference: Section 8 - Adjudication … … (2)… Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. 36. In this proviso which casts a responsibility on the Adjudicating Authority to afford a opportunity of hearing to any person who has not been issued a notice under section 8(1) but claims a right in the property in question. 12. The main question is whether this obligation has to be discharged before the order under Section 8(3) is passed or a post-decisional hearing would suffice to meet the requirements of law. In the case of Central Bank of India (Supra) this Tribunal has taken a view that the proviso to sub-section 2 of Section 8 speaks of only affording a opportunity of being heard to a person claiming right in the property but the timing of such hearing need not necessarily be prior to passing of the order under Section 8(3). 37. The provisions of Section 8, (1), (2) & 3 have to be read harmoniously and a holistic view has .....

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ation under the PMLA was being carried out. Both orders passed by ED as well Adjudicating Authority under Section 5 and 8 are contrary to law and facts. 40. In Paragraph No 3.2 of the impugned order dated 03.02.2017 it is mentioned that the FIRs against M/s Shamken Multifab Ltd. have been registered alleging that M/s Shamken Group of Companies and its Directors had committed various financial frauds by misrepresenting facts by furnishing false and fabricated information/ documents to banks for availing loans worth ₹ 118.5 crores during the years 1998- 2003 for procurement of plant and machinery but instead utilized and siphoned off the funds for the purposes other than for those sanctioned. 41. Mere a perusal of the provisional attachment order would reveal that the primary averments in the complaint against M/s Shamken Group of Industries and its directors circle around having committed alleged financial frauds by having availed bank loans and having utilized the funds for purposes other than those for which the said loans had been availed during the period 1998 - 2003. However while appreciating the above facts the Ld. Adjudicating Authority failed to understand that it is .....

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the Appellant, the Ld. Adjudicating Authority has not even thought it fit to call the Appellant under Section 8 (2). 46. Despite the sale consideration as provided in the said agreement to sell, i.e. ₹ 5.66 crores, has been stated as the value of the said property in the list of assets prepared by him, it had failed to take note of the fact that in light of the said agreement to sell no rights and interest in the said property continue to subsist in M/s Shamken Multifab Limited. 47. The impugned order confirming the order of provisional attachment of the Dy. Director has been passed without any application of mind and in a mechanical manner by the Ld. Adjudicating Authority. The Ld Adjudicating Authority without appreciating the merits and/ or demerits of the order of the Dy. Director has gone on to pass the impugned order without applying its mind, considering the facts in question or appreciating the statements made by various persons before it. The impugned order is more or less a replica of the order of the Dy. Director. 48. In view of aforesaid reasons, the impugned order against the appellant modified. Consequently the provisional attachment order and attached property .....

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