TMI Blog2019 (1) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... ime the very exercise of powers by the respondents under PMLA is beyond jurisdiction. The contentions of Appellants have not been met including denial of cross-examination. The properties of the appellants were attached towards value thereof. The said properties were not purchased from the proceed of crime. It is inter-se disputes between the appellants and Nilesh J. Thakur about the money parked at the hand of Kalyani Group. However, it is not disputed by any party that the said amount was originally owned by the SPCL which is not tainted even as admitted by the counsel for the ED. Thus, the question of proceed of crime or money laundering by any appellant in all appeals does not arise. The appellants‟ properties, therefore, wrongly attached by the ED. Appeals allowed. - MP-PMLA-2386/MUM/2016(Stay), FPA-PMLA-1220/MUM/2016, MP-PMLA-2389/MUM/2016(Stay) FPA-PMLA-1213/MUM/2016, MP-PMLA-2390/MUM/2016(Stay) FPA-PMLA-1221/MUM/2016 - - - Dated:- 17-1-2019 - Justice Manmohan Singh Chairman For the Appellants : Shri R.K. Handoo, Advocate For the Respondent : Shri Neeraj Atri, Advocate JUDGEMENT FPA-PMLA-1220/MUM/2016, FPA-PMLA-1213/MUM/2016 FPAPMLA- 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order being contrary to the criminal jurisprudence is void ab initio. D. For that the whole proceedings against the appellant and others are bad from root to fruit, inasmuch as, the Ld. Attaching Officer in the complaint and the Ld. Adjudicating Authority has failed to focus their attention to the first requirement of determination as to whether there is any proceed of crime as envisaged under section 2(u) of PMLA. The appellant submits that there is no material adduced by the respondent to show that the money sourced to or received from M/s. S.D. Corporation to M/s. PRS Enterprises and others, is result of any criminal activity relating to any scheduled offence. The appellant humbly submits that in the absence of the basic ingredient as to the proceeds of crime being available, the attachment and confirmation of complaint is void abinitio. E. For that the authorities below have miscarried themselves to conclude that all or any transaction conducted with the person arraigned in a scheduled offence is a proceed of crime . The focus ought to be on property derived or obtained as a result of criminal activity relatingto the scheduled offence as against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge-sheet of scheduled offence and that too on the basis of the statement/transcript of the bank account showing movement of funds from one account to another in legal manner by way of cheques on account of normal legal transactions duly recognized by law. The whole approach of the authorities below is erroneous and contrary to law rendering the impugned orders null and void. 6. It is not disputed by any party including ED that the money received by the Appellants is traceable to source of Shapoorji Pallonji, which is admittedly clean money . This clean money of Shapoorji Pallonji given to M/s. S.D Corporation and further to M/s. PRS Enterprises and thereafter to Appellants for business purposes does not become proceeds of crime , merely because the ACB has registered offence u/s 13(1)(e) of P.C Act against Shri. Nitesh, brother of Shri. Nilesh. 7. The use of money does not make such money proceeds of crime . As per definition of Section 2(u) of PMLA, the proceeds of crime is the property, movable or immovable, derived or obtained as a result of criminal activity relating to scheduled offence. 8. Therefore, the property must be the consequence of criminal activity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be attached was derived or obtained from any scheduled crime. 18. A plain reading of the impugned order indicates that there is no material whatsoever on the basis of which the ED could have possibly W.P.(C) 5537/2018 Page 9 of 11 concluded that the investments made by HEPL were derived or obtained as a result of any criminal activity relating to a scheduled offence. In the impugned order, the ED has elaborately discussed the allegation made against HEPL. It is also recorded that at the time of filing of the application for allocation of coal block, the capital of HEPL was 5 lakhs which had swelled upto 7.91 crores after filing application for a coal block. The investment made by joint venture constituents of HEPL, namely, Himachal Pradesh Power Corporation Ltd. and EMTA, were further invested by HEPL; including in subscribing to the shares of CGL. The same cannot by any stretch be held to be proceeds of crime. The ED has, essentially sought to attach the investments made in HEPL on the allegation that the same have been used in commission of a scheduled offence. This is apparent from paragraphs 7 and 16 of the impugned order which are set out below: 7. AND WHEREA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittedly, in the present case, investigations were already conducted against the Appellants under ECIR No.3/MZO/2011 which as per written submission of Respondent No.1 was registered on 10.05.2011. In this ECIR the whole information was available with the Respondent, Enforcement Directorate as would be clear from Page 152 Vol. II in the statement where the department is asking the particulars of the Appellants and in the statement dated 4.12.2013 when the statement of Shri. Ravindra G Sapkal was recorded in ECIR No.3/MZO/ 2011 as is revealed on first Para of statement. All the investigations in this regard had already been done. 10. It has come on record that when the PAO was passed under the ECIR No.3/MZO/2011, the whole material was available with Enforcement Directorate but they did not issue any attachment order against Appellants. 11. The legal presumption is that then it was concluded by Competent Authority that there is no proceeds of crime with Appellants. Subsequently, to pass the attachment against the present Appellants, on 21.07.2015 in another ECIR No.06/MZO/2011 dated 18.06.2012 is illegal and arbitrary. Such exercise of powers by the authority is per se il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A sum of ₹ 61,42,00,000/- was given on loan by Ni lesh Thakur Group to Kalyani Education Group and other connected persons. The ED has sought to attach properties worth ₹ 56,02,05,718/- standing in the name of Kalyani Charitable Trust, Kalyani Education Pvt. Ltd. and one RavindraSapkal. The properties which are subject matter of attachment are as fol lows: - S. no. Date of execution of document Consideration mentioned in the deed Location 1 04.11.2011 65,00,000 Office premises at FO-22 [area 374.40 sq. ft.] alongwith open parking FD-10 at Shubhada CHS Pochkanwala Road Worli, Mumbai in the name of Ravindra Sapkal purchased from the account of Kalyani Charitable Trust‟s Axis Bank account 2 65,00,000 Fixed Deposit Syndicate Bank Byuculla 40,50,00,000 Building alongwith ancillary structures and the land upon which said immoveable property stands today in the Campus of Kalyani Charitable Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,718/- (i.e. 56.02 Crores) standing in the name of the Respondents (i.e. the Kalyani Group) on the alleged basis that the said properties had been acquired out of proceeds of crime involved in money laundering. 14.5 Based on the aforesaid PAO No. 18/15, Respondent No. 1 filed O.C. 512/15 before the Adjudicating Authority. 14.6 Being aggrieved by the attachment of properties in question, SPCL filed a Misc. Application on 28.10.2015 under proviso to section 8 (2) of the PML Act for being impleaded as a party Defendant to the said Original Complaint as it is the case of SPCL that it is the beneficial and the legal Owner of the aforesaid immovable properties, bank balances and fixed deposits, provisionally attached by the Enforcement Department as the said properties have been purchased/ created from the funds made available by Nilesh Thakur Group to the Kalyani Group, which in turn were advanced by SPCL to the Nilesh Thakur Group under the subject Agreement for land aggregation [which is referred to in the Common List of Dates]. 14.7 In view of the said Misc. Application, the Adjudicating Authority directed that SPCL be made a party Defendant to the Original Complaint and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust. The respondents and the Adjudicating Authority have miscarried itself in law by ordering attachment and confirmation of the attachment in the absence of any proceeds of crime . In the absence of proceeds of crime the very exercise of powers by the respondents under PMLA is beyond jurisdiction. The contentions of Appellants have not been met including denial of cross-examination. 20. The properties of the appellants were attached towards value thereof. The said properties were not purchased from the proceed of crime. It is inter-se disputes between the appellants and Nilesh J. Thakur about the money parked at the hand of Kalyani Group. However, it is not disputed by any party that the said amount was originally owned by the SPCL which is not tainted even as admitted by the counsel for the ED. Thus, the question of proceed of crime or money laundering by any appellant in all appeals does not arise. 21. The appellants‟ properties, therefore, wrongly attached by the ED. 22. All appeals are allowed. The impugned order dated 30.12.2015 and provisional attachment orders are set-aside against the appellants. The properties are released forthwith. 23. All MPs are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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