TMI Blog2018 (11) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order dated 1.12.2016 is concerned, the same is not sustainable in law and the facts of the present case. The same is set-aside against the appellant with regard to flats in question. The provisional order is also quashed accordingly by allowing the appeal. As clarified that this tribunal has decided the appeal pertaining to the order passed on the attachment of flats allegedly purchased by the appellant. The finding shall have no bearing with regard to merit of other proceedings pending against the accused parties including extradition proceedings. It is alleged that the flats in question is one of the assets in which the Official Liquidator is appointed, therefore, the appellant, the respondent nos. 3, 5 and 8, unless the final order is passed in his favour, shall not create third party interest directly or indirectly. - FPA-PMLA-2001/MUM/2017 - - - Dated:- 1-11-2018 - Justice Manmohan Singh Chairman For the Appellant : Mr. Madhav Khurana, Advocate Ms. Richa Narain, Advocate For the Respondent : Mr. Rajeev Awasthi, Advocate JUDGEMENT FPA-PMLA-2001/MUM/2017 1. The Appellants have filed the present Appeal under Section 26 of the Prevention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the offender. Hence, during the course of investigation, various properties held/owned/acquired by Shri Vijay Mallya, including those through various companies and/or special purpose vehicle, which were controlled directly or indirectly by him, through dummy Directors appointed by him were identified, which included the subject property held in the name of M/s United Breweries (Holdings) Ltd. 10. It is admitted by the respondent that the appellants were not impleaded as Defendants in the proceedings before the Adjudicating Authority, despite of having knowledge about the transaction. 11. There is no denial on behalf of respondent no. 1 during hearing that no notice was issued to the Appellants by the Adjudicating Authority nor were the Appellants given any opportunity to be heard, as mandated under the Proviso to Section 8(2) of the PMLA, despite the fact that Appellants says that he is claimant for the purposes of the said Proviso, being bona fide innocent purchasers of the Property and the existence of the claim of the Appellants as bona fide innocent purchasers was within the knowledge of both, Respondent No.1 and also Adjudicating Authority before passing of the Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04/2010, the BDA approved the development plan and issued necessary work order. Similarly, the BBMP also approved the construction plan by an order bearing LPNO.54/10-11 dated 21/10/2010. Subsequently, Respondent Nos. 5 and. 8 entered into an Agreement dated 04.11.2010 with each other and agreed to name the said development and project referred in the Joint Development Agreement dated 26.04.2010 as Kingfisher Towers . iii) Pursuant thereto, Respondent No. 8 commenced the construction of the Kingfisher Towers, and simultaneously started marketing the sale of those units that would fall to its share. During 2012, a representative of Respondent Nos. 5 and 8 contacted the Appellants by claiming that it would be a world class high end luxury apartment, which is sold by invitation, exclusively to discerning clients. Thereafter, the representatives of Respondent Nos. 5 and 8 had several meetings on the proposal of the sale of a unit in the Kingfisher Towers. During the said meetings, Respondent Nos. 5 and 8 had informed the Appellants that they would first need to enter into two agreements namely, an Agreement to Sell and a Construction Agreement with Respondent Nos. 5 and 8 by payi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction Agreement. The Appellants were required to pay the balance consideration as per the Schedule of Payment to the said Agreement. Thus, the total and cumulative sale consideration payable by the Appellants for purchasing the Schedule Property from Respondent No. 5 is ₹ 22,46,67,000/- (Rupees Twenty Two Crores Forty Six Lakhs Sixty Seven Thousand). viii) Under the aforesaid agreements, Respondent Nos. 5 and 8 directed the Appellants to remit the consideration to a designated bank account maintained with Respondent No. 9 and accordingly the Appellants remitted all the payments to such designated account, as per the payment schedule. It is pertinent to mention that even though the Appellants paid timely as per the payment schedule, Respondent No. 8 failed to abide by the pace and the completion as stipulated in the schedule. However, notwithstanding the delay in construction, the Appellants, in furtherance of their bona fide, continued promptly and regularly remitting the amounts due under the said Agreements. The details of the payments made to the designated bank account by the Appellants are as follows: No. Date of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5 has acknowledged the receipt of all the amounts paid by the Appellants towards the sale and delivery and possession of the Schedule Property . x) The Appellants also entered into an agreement with an Architect and in consultation with the Architect, several changes were made in the Schedule B Property by the Respondent Nos. 5 and Respondent No. 8. (Copy of the e mail correspondence shared between the Architect, the Appellants and Respondent No. 5 and Respondent No. 8 along with Certificate U/s 65B, Indian Evidence Act are filed as Annexure A6 Colly . xi) By June 2016, Respondent No. 8 completed the construction of Schedule-B Property up to the stage of handing over the possession to the Appellants for carrying out necessary interior and fit out works. In fact, Respondent No. 8 issued an e-mail dated 21.06.2016 informing the Appellants of the fact that the Schedule B Property can be handed over to the Appellants. However, despite repeated requests Respondent No. 8 did not come forward to handover the possession of to the Appellants. Under such circumstances, vide letter dated 25.01.2017 the Appellants requested Respondent No. 8 to handover the Schedule-B Property fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction Agreement including the complete and total payment of the sale consideration have become de facto owners of the Schedule B C Property. There are no other disputes between the Appellants and Respondent Nos.5 and8, regarding fulfilment of the terms and conditions under the aforesaid two agreements. Despite, repeated requests and reminders, Respondent No. 8 has not conveyed and delivered the Schedule Property. xv) The Appellant paid the entire Purchase Consideration from their own personal bank account having funds from his independent sources and earnings, which had no relation whatsoever with any of the Respondents named above nor was the purchase consideration part of, directly or indirectly, any transaction(s) with the Respondents named above. xvi) On 29.07.2015 pursuant to a Preliminary Enquiry, an FIR No. RCD BSM 2015 E 0006 dated 29.07.2015 U/s 409 IPC R/w S. 120-B IPC and Section 13(2) R/w 13(1) (d) of Prevention of Corruption Act, 1988 was registered by Central Bureau of Investigation (Banking, Security and Fraud Cell) against inter-alia Respondent Nos. 2, 3, 5. It is stated that the Appellants herein were not arraigned as Accused in the aforesaid FIR and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 was aware of the purchase of the said property by the appellant and the appellant himself brought the same to the ED s notice; however, the ED did not investigate it further or if it did investigate it, then the same did not result in any inculpatory findings. 17. There is no material on record to show that the appellant has any link, association or relation with any of the defendants i the captioned Original Complaint. It is the case of appellant that the purchase of the said property was after arms-length negotiations. 18. The Respondent ED s allegation is that the Appellant has attempted to help the accused Vijay Mallya and has connived with him by entering into the Agreements to Sell is without any substance as there is no evidence or material on record. 19. However, the Respondent ED has not able to establish prima facie that the Appellant has any link, nexus or connection whatsoever with the Accused Vijay Mallya directly or indirectly, except mere vague allegations are made. The appellant was not charge-sheeted or any complaint under PML Act, 2002 was filed against the appellant. If the appellant was involved, then why no action was taken by the ED and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the determination of the validity and legality of the Order of Provisional Attachment within the four corners of the Act. c) Consequently, the issues for consideration before this Tribunal in the present Appeal are whether, firstly the Property is proceeds of crime and secondly whether the Appellants are in possession of the proceeds of crime. In this regard, it is submitted that the Property was attached vide the Impugned Order. However, at the prevalent time, there was no apprehension, as required under Section 5(1) of the Act, that the Property will be concealed, transferred or dealt with in a manner that will frustrate the proceedings under the Act. Interestingly Respondent No. 1 alongwith its reply has relied upon two orders passed by the Hon ble High Court at Karnataka which themselves demonstrate that on the day when the Investigating Officer passed the Order of provisional Attachment and also when the Impugned Order was passed, there existed absolutely no risk or chance whatsoever of the Property being concealed, transferred or dealt with in a manner that will frustrate the proceedings under the Act . The Hon ble High Court at Karnataka vide Order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commission of the same. The Appellant is the purchaser of the subject property, for which he paid the complete consideration through duly documented legal banking channels, even prior to the date of registration of the FIR or the ECIR. 26. On second issue, it is admitted position that the subject property has been attached as value thereof . The Appellant has vested rights in the subject property prior to the attachment by Respondent-ED. It is the case of the appellant the same could never have been attached as value thereof of the proceeds of crime. At the time of issuance of the Provisional Attachment Order there is no Confirmation Order that any proceeds of crime have flowed to UBHL. 27. The next submission of the respondent is that since the application of the appellant for similar relief is pending before the Hon ble Court, therefore, the matter should not be heard. It is not denied by the appellant that the appellant has filed the application before the Hon ble High Court of Karnataka for registering the sale deed and possession of the flats. The said application is still pending. This tribunal is not passing any direction either to execute the sale deed nor the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the material available on record and from the Impugned Confirmation Order that the Enforcement Directorate/Respondent No. 1 and the Adjudicating Authority were aware that the Appellant was a Claimant to the said Property in terms of proviso to Section 8(2), PMLA. The interest in the property by the appellant is not denied on behalf of the respondent no. 1 during hearing, except it was stated that the appellant was not necessary party, therefore no notice was required to be issued. The said arguments are wholly contrary to law and facts involved in the present appeal as the respondent no. 1 was aware who failed to investigate further in the matter. 32. Despite of having full knowledge about the transaction, Respondent No. 1 and the Adjudicating Authority failed to issue notice to the Appellant or to afford a hearing to her, during the adjudication proceedings. Thus, the Respondent No. 1 and the Adjudicating Authority have failed to comply with the mandatory statutory requirement of the Proviso to Section 8(2), PMLA. The mandatory notice has not been issued. After recording the statement of Manoj Kumar, an employee of M/s. U.B. Group, no further investigation appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two Agreements have not been registered. The said allegation is falsified for the followings reasons: a) Firstly , the Appellants have paid the complete sale consideration at market value via banking channels, i.e. ₹ 22,46,67,000 (Rupees Twenty Two Crores Forty Six Lakhs Sixty Seven Thousand only). b) Secondly , both the Agreement to Sell and Construction Agreement have been notarized at maximum value as prescribed under Section 5 (e)-ii and (j) of the Karnataka Stamp Act, 1957, i.e. ₹ 20,000/- (Rupees Twenty Thousand only) and ₹ 3,00/- (Rupees Three Hundred only) respectively. Consequently, merely because the sale Deed had not yet been registered, does not mean that the claim of the Appellants over the Property gets defeated. 36. The said arguments have no force as at the stage of adjudication under Section 8, PMLA and the onus upon any Claimant is only to show that the attached property is not involved in money laundering. It is not even the Respondent s case that the subject property is involved in money laundering, rather it is the value thereof . It is not even the case of the Respondent that the Appellant is involved, in any manner, in the offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arms-length transaction. 41. There is also no force in the submission of the respondent no. 1 that there was a connivance between the appellant and the accused parties as the filing of the winding of petition was published in the print as well as electronic media. 42. In the case of Laxmi Raj Shetty and another vs. Tamil Nadu reported in (1988) 3 S.C.C. 319 in para 25 the Hon ble Supreme Court hold that the courts cannot take judicial notice of the facts stated in a news item being in the nature of hearsay secondary evidence unless proved by evidence aliunde and presumption cannot be drawn under section 81 of the Evidence Act. In the present, the presumption can be attached that the appellant was aware about the news published in 2012 about the pendency of winding up petition. The funds were paid during the period 2012 to 2017 and the prayer in the winding up petition was allowed in 2017. 43. In the present case, the Agreement to Sell entered into by the Appellant with M/s UBHL is of the year2012 (i.e. prior to even the initiation of the winding-up proceedings) and the entire purchase consideration was duly paid in the year 2015( i.e. much prior to the subject Provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Agreement, including non-handing over of possession or nonexecution of sale deed in favour of the Appellant in due course. The said aspect cannot be determined in the present proceedings. In arbitration matter, the issue of attachment of property by ED and confirmation thereof cannot be determined. 47. The Respondent ED s next submission is that if the present Appeal is entertained by this Tribunal, it would result in according priority to the Appellant s claims over the claims of other secured creditors is wholly misconceived. It is a matter of fact that the appellant is neither seeking any direction from this Tribunal that the Appellant be handed over the possession of the subject Property nor that the sale deed(s) in respect of the subject Property be executed by M/s UBHL in favour of the Appellant. The scope of the present Appeal is limited to the determination as to whether the subject Property is involved in money-laundering or not. 48. As regard to plea as to whether right of the appellant would prevail over the rights of the other secured creditors, no opinion is being expressed. The said aspect would be considered by the Court where the prayer of executio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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