TMI Blog2018 (4) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 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 - MP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide 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 may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized under section 17 or section 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamken 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 Sections 120-B, r/w 420, 460 471 of IPC, 1860 for which charge sheets have been filed under Section 173 of Cr. PC in the matter of eight FIRs. It has been further alleged that funds availed through loans for specific purposes were not utilized in accordance but rotated around to the accounts of other group companies such that they are outstanding to this date. The said alleged acts are stated to have been committed during the period 1998-2003. 8. On the basis of said FIR and allegation, the responses registered ECIR and after investigation, the respondent passed the provisional attachment order No. 7/2016 dated 15.09.2016 passed by Directorate of Enforcement. 9. By th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Amit Chaturvedi 98, Eastern Avenue Sainik Farms, New Delhi 110062 43,96,12,800 4. Sh. Sohit Chaturvedi s/o Shri Sanjay Chaturvedi, Shri Eshan Chaturvedi s/o Shri Amit Chaturvedi 97-D, Eastern Avenue Sainik Farms, New Delhi 110062 5. Shamken Cotsyn Limited (SCL) a. A/c No. 20342000000359 HDFC Bank, B 6/3, Safdarjung Enclave, New Delhi-59 8,23,893.35 02.04.2016 b. A/c No. 05032320000593 9,715.03 05.05.2016 6. Shamken Multifab Ltd. Shamken House, B-1/A-20, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi-110044 5,66,00,000 01.09.2011 7. Shamken Multifab Ltd. (SML) a. A/c No. 0417984224 Citi Bank, N.A., Global Consumer Bank, Jeevan Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Phelps Building, Connaught Place, New Delhi-110001 1,58,383.22 04.03.2016 c. A/c No. 18250100001667 of UCO Bank Ferozeshah Road, New Delhi 8,442.38 06.05.2016 11. Amit Chaturvedi A/c No. 18250100000431 of UCO Bank, Ferozeshah Road, New Delhi 14,262 06.05.2016 12. Neelima Chaturvedi a. A/c No. 18250310017562 of UCO Bank, Ferozeshah Road, New Delhi 78,576.00 06.05.2016 b A/c No. 18250310017579 of UCO Bank, Ferozeshah Road, New Delhi 78,905 06.05.2016 C A/c No. 18250310018606 of UCO Bank, Ferozeshah Road, New Delhi 1,51,900 06.05.2016 D A/c No. 18250310018637 of UCO Bank, Ferozeshah Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rozeshah Road, New Delhi 63,338 06.05.2016 R A/c No. 18250310051023 of UCO Bank, Ferozeshah Road, New Delhi 70,141 06.05.2016 13 Sanjay Chaturvedi A/c No. 52110291332 of Standard Chartered Bank, 7A, DLF Cyber city, Gurgaon-122002 1,63,775.07 13.05.2016 14 Sohit Chaturvedi a A/c No. 164701500127 ICICI Bank, E-147, Opposite PVR Cinema, Saket, New Delhi-17 1,72,400.63 20.05.2016 15 Anju Chaturvedi B A/c No. 18250310017555 of UCO Bank, Ferozeshah Road, New Delhi 74,091 06.05.2016 C A/c No. 18250310017586 of UCO Bank, Ferozeshah Road, New Delhi 79,367 06.05.2016 D A/c No. 18250310018620 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an opportunity of being heard to the appellant, whose rights are adversely affected by the said impugned order. The said impugned order is thus liable to be set aside to the extent it adversely affects the rights of the appellant. 12. It is not denied by the respondent that the factum of the sale of the said property having been brought to the notice of Directorate of Enforcement as well as the Ld. Adjudicating Authority by the accused persons against whom the proceedings under PMLA have been initiated, however, the Directorate of Enforcement as well as the Adjudicating Authority without calling upon the appellant still proceeded to pass an order of attachment in respect of the said property without affording an opportunity of being heard to the Appellant. 13. With regard to property in dispute, as per material placed on record, it is evident that the said property had been purchased by M/s. Shamken Multifab Ltd. from Mr. O.P. Gupta, the original allottee, as way back as on 04.11.1992 for a consideration of ₹ 33 lakhs. The copy of the perpetual lease deed in favour of Mr. O.P. Gupta dated 04.05.1978 by virtue of which Mr. O.P. Gupta derived his title in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rments Marketing Pvt. Ltd. with whom the registered Agreement to Sell dated 01.09.2011 had been executed. On receipt of the said information, M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. approached the Appellant herein for the sale of the said property as pleaded. 17. It is the case of the appellant that prior to entering into the Sale Deed dated 09.11.2013, the Appellant had carried out the requisite due diligence in respect of the said property. The sub-Registrar‟s office and the Registrar of Companies had been duly inspected in order to ascertain whether there was any registered charge, lien and/or encumbrance on the said property. Upon an inspection, the said property was found to be free from any charge, lien, encumbrance, restriction and/or third party claims in any manner whatsoever. It was only pursuant thereto and upon bonafidely believing the representations and assurances made by M/s Shamken Multifab Ltd. and M/s. Arindam Sekhar Garments Marketing Pvt. Ltd., the Appellant agreed to purchase the said property for a valuable consideration of ₹ 10 crores. Pursuant to discussions which took place between the parties and relying on the representations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same would be provided only pursuant to receipt of a clearance from the office of the Directorate of Enforcement. The appellant thereafter visited the office of the Directorate of Enforcement and made enquiries. The appellant was informed that an investigation against Shamken Group of Companies and its Directors was underway and the said property in question was a part of the said investigation. As per settled law that after execution of sale deed and exchanges consideration, the registration of sale deed is merely formality. In the present case the entire consideration was paid by the appellant. There is no allegation against the appellant that any part of black money is involved. Rather no criminal complaint of schedule offence is pending or under the PMLA. 22. It is alleged by the appellant that the correct details in respect of the said property and the sale agreement entered into with the appellant were duly brought to the notice of the Dy. Director of the Directorate of Enforcement before passing the provisional attachment order and after hearing, the appellant was assured by the Dy. Director that he has no response to worry as evidently the said property had been bonaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 25. In order to understand that the brief chronological description of the transfer of the title of the said property over the years is as under:- 04.05.1978 A perpetual lease dated 04.05.1978 was executed in favour of Mr. O.P. Gupta with respect to the said property. 04.11.1992 Vide a GPA dated 04.11.1992 the said property was purchased by M/s. Shamken Multifab Ltd. from Mr. O.P. Gupta, the original allottee for a consideration of ₹ 33 lakhs ( Registered GPA dated 04.11.1992 and all other relevant documents are) 05.09.2011 A registered agreement to sell dated 05.09.2011 was executed between the M/s Arindam Sekhar Garments Marketing Pvt. Ltd. and M/s Shamken Multifab whereby M/s Shamken Multifab agreed to sell the said property 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 and requisite stamp duty of ₹ 33,96,000/- had been paid by M/s Arindam Sekhar Garments Marketing Pvt. Ltd. ( Registered agreement to sell dated 05.09.2011 30.10.2012 Vide conveyance deed dated 30.10.2012, duly registered as document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents were confronted to him, it is admitted by him that ED and Adjudicating Authority were fully aware about the transfer of title of the property but no notice was issued as it was not required. It is also not denied by the counsel that the amount paid by the appellant was tainted. It is not denied by him that there is no provision of review of any order passed by the Adjudicating Authority. By the impugned order, large number of properties were attached and confirmed after hearing the respective parties except the appellant who even not given any notice. If the impugned order is set-aside and remand back the matter for rehearing, then all the parties would have to be reheard. Thus, both the parties have made their submissions on merit in the present appeal which is pertaining to one immoveable property. 29. It is also mentioned in the said documents that the construction work was done from 1990 to 1999. It is further submitted that the property in question was not sold to M/s. Horizon Info Solutions Ltd. by M/s. Shamken Multifab Ltd. and the title of the property rests in the name of M/s. Shamken Multifab Ltd. There is no registered sale deed in favour of M/s. Horizon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question was held by the appellant at the time of passing the provisional attachment as well as at the time of confirmation of order. However, no notice was issued. No opportunity of being heard was given to the Appellant under Section 8(2) of the PMLA even though the property in question has been duly purchased by the Appellant. This fact was brought to the knowledge of the Ld. Adjudicating Authority through the statements of the accused persons themselves and yet the impugned actions were taken without hearing the Appellant. Once the fact of having sold the property was brought to the knowledge of the Ld. Adjudicating Authority, it was incumbent upon the Ld. Adjudicating Authority that the Appellant ought to have been called upon and asked to furnish proof relating to the true title of the said property in terms of Section 8(2) of the PMLA. 34. Thus, the Impugned Order was passed in violation the mandatory provisions as well as against the principles of natural justice. The Appellant was not arrayed a party to the said proceedings and was passed at the back of the appellant. In The impugned order dated 03.02.2017 itself notes at page No. 62 the entire transaction pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms a right in the property and Section 3 provides for passing an order in writing regarding confirmation of attachment. 38. This scheme of law has no scope for segregating the proviso of Section 8(1) and Section 8(2). The noticees as well as any other person who claims a right in the property has to be heard before a final order of confirmation of attachment is passed so that the submissions and pleas made by such a person are taken on record and given due consideration before arriving at a final decision by the Adjudicating Authority. No justification has been given by the counsel for the respondent that why despite of knowledge about the appellant who is claiming ownership of the property, no notice was given to him which is mandatory under the Act. Both E.D. and adjudicating authority are an expert bodies. Prescribed period of time of 180 days already expired. If, they were aware, now the respondent on their behalf cannot argue that the appeal is not maintainable because being the expert authorities, both did not apply their mind and they do not want to understand mandatory provisions of the act. It cannot be argued in the appeal now that the matter should not be decided and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid of adjudication under Section 8(2) of the Act, which may result in the Adjudicating Authority recording a finding that the property concerned is involved in money-laundering; therefore, it is also necessary that an offence of money-laundering is believed to have been committed and the same bears a live link with the property sought to be provisionally attached. 43. In present case, the property in question was neither purchased by Shamken in 1992 from the proceed of crime as it is not mentioned in the reason to believe nor it is alleged that the appellant was involved in any manner under the money laundering or had committed the schedule offence. No such complaint is pending against the appellant. 44. The Ld. Adjudicating Authority ought not to have reached an adverse conclusion affecting the rights of the Appellant and ought not to have acted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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