TMI Blog2019 (4) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Adjudicating Authority is an abuse of the process of court. How can any authority comes to the conclusion in advance. The final judgement is yet to be delivered by the Special Court after evidence as to whether the accused has committed the schedule offence or not.In other cases, also similar observations are made against the person who are not even name in the FIR or any charge-sheet is filed under this Act. The Authority under this Act is duty bound to deal with the reply and materials on record within the meaning of Section 8(2) of the Act and decide the same on merit rather to simply adopt the CBI report and to give sweeping findings that the person concerned has committed the schedule offence when such matter is still pending before Special Court. The Adjudicating Authority in the Impugned Order merely on presumptions has come to the conclusions arrived at merely on the basis the CBI Final Report dated 19.12.2014, without conducting any independent inquiries, despite the Act requiring the authority to independently apply its mind to the entire matter. When it was pointed out to the learned counsel for the respondent who supports the impugned order. The said ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 10-4-2019 - Justice Manmohan Singh Chairman For the Appellant : Shri Rahshekhar Rao, Advocate, Shri Kotla Harshavardhan, Advocate And Shri Ayushman Kotwal, Advocate For the Respondent : Shri S.K. Sharma, Advocate JUDGEMENT FPA-PMLA-1458/CHD/2016 1. By this order, I propose to decide the present appeal filed under Section 26 of the Prevention of Money-Laundering Act, 2002 against the impugned Order dated 15.07.2016 in Original Complaint No.564 of 2014 passed by the Adjudicating Authority (hereinafter the Impugned Order ). The copy of the Impugned Order was served upon the Appellants by Speed Post on21.07.2016. 2. Appellant No. 1 is a retired Army officer. Appellant No. 2 is the wife of Appellant No.1 and Appellant No.3 is the son of Appellant No.1.The present proceedings arise out of a disproportionate assets case filed by the Central Bureau of Investigation [ CBI ] against the Appellant No. 1. All appellants submit that the income and assets of Appellant Nos. 2 3 have been incorrectly attributed to Appellant No.1, income of the Appellant No.1 has been suppressed and several other errors have been made in computation of income, assets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of source information, registered a F.I.R. being RC 0962012A0003 dated 18.10.2012 u/s 13(2) read with Sec 13(1)(e) of the Prevention of Corruption Act, 1988. The source information allegedly revealed that Appellant No. 1 and his family members during the period from 01.01.2007 to 23.02.3012 acquired disproportionate assets worth ₹ 1,68,63,936/- which was allegedly about 122.77% of his known sources of his income. c) Based on the said F.I.R. dated 18.10.2012, the C.B.I. conducted investigation and filed final report dated 19.12.2014 in the court of Learned Special Judge CBI, Shimla, HP. The CBI alleged that Appellant No. 1 while holding key posts acquired movable and immovable assets in his name as well as in the name of his family members during the check period from 01.01.2007 till 23.02.2012, which were disproportionate to his known sources of income. Therefore, the check period for calculation of the Appellant No. 1‟s income, assets, and expenditures was taken from 01.01.2007 till 23.02.2012. The Final Report alleged, inter-alia , that: i) Appellant No. 1 and his family members held assets to the tune of ₹ 86,51,669.88/-, prior to the check pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtraordinary power of provisional attachment has been abused by the Respondent in a wholly arbitrary, callous and irresponsible manner without even satisfying the mandatory preconditions laid down under Section 5(1) of PMLA and presumably for extraneous considerations. 5. It is submitted by the appellant that the immovable property being C-80, Sector-47, Noida attached vide the Provisional Attachment Order is the Appellants‟ residence and, therefore, it is the Respondent ex facie erred in attaching the property as there could be no apprehensions of the Appellants alienating the said property and frustrating PMLA proceedings. It is stated that in view of lack of any application of mind on part of the Respondent is evident as the Provisional Attachment Order does not contain even a whisper as to the reasonable grounds to believe held by the Respondent that the attached properties would have been concealed, transferred or otherwise dealt with in any manner to frustrate the confiscation proceedings under the Act. 6. It is submitted that on the basis of Complaint No. 564 of 2014 dated 11.04.2016 which is forwarded by the Respondent (hereinafter Complaint ), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with proof of repayment is annexed herewith and marked as Annexure D-5 (Colly.). Inflation of cost of construction 16. That as per Statement D of the Provisional Attachment Order, an expenditure to the tune of ₹ 1,26,38,000/- has been attributed towards cost of construction of three-storey building at Plot No. C-80 Sector-47, Noida. The said statement is as per the CBI Charge Sheet. The said amount is highly inflated and the valuation so done by the CBI is misconceived and has not been independently considered by the Complainant. 17. At the outset, it is relevant to note that the check period expired on 23.02.2012, the valuation was based on an inspection done 14 months later, i.e. on 16.04.2013. 18. It is submitted that the valuation done by the CBI is wholly exaggerated inasmuch as per the valuation report of an Independent Government approved Surveyor appointed by the Defendants, the correct total value of construction arrived at is ₹ 85,64,000/-. Therefore, it is submitted that the CBI has inflated this expenditure by at least ₹ 40,74,000/-. The reason for such inflation is that the CBI has adopted the plinth area method which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marked as Annexure D-7. Miscellaneous 26. 50% of Plot No.11, Aradhana Enclave, Dehradun, was acquired by Mr. M.S. Ahuja, who is a relative of Defendant No.1.The entire consideration was paid by Mr. Ahujafor purchase of this property and nothing was contributed by the Defendant No.3. It is submitted that the same ought not to have be considered for the purpose of computation of disproportionate assets. It is submitted that the only reason for the CBI to consider the said property as an asset is solely on the ground that the Defendant No.3had credit balance in his bank account at the time of purchase of the property. This, it is submitted, is insufficient to conclude that the Defendant No.3in any manner contributed to the acquisition of the said property. 27. Furthermore, complete non-application is also evident from the fact that the Flat C-1545 at Gurgaon has been shown in the list of assets at the end of the check period despite the admitted fact that the same was disposed of by the Defendants during the check period. SOURCES OF INCOME 28. The source of income for acquisition of the Plot bearing No.C-80, Sector 47, Noida, i.e. the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge sheet to make out a wholly false and untenable case against the Defendants. As such, the documentation is not readily available with the Defendants and they are seeking the assistance of their Chartered Accountant in compiling the relevant documentation from his records. Therefore, the Defendants seek leave of this Hon ble Authority to file the same within two weeks. 32. It is submitted that the Defendant No.1 has an unblemished record in the Indian Army, except for the present case, which has been foisted upon him for extraneous reasons at the fag end of his career. The Defendant No.1 has held key posts during his service and has got periodical promotions due to his merit. It is submitted that the Immovable Property, which has been attached is the sole residential house of the Defendants and they do not have any other property in National Capital Territory Region for their residence and therefore, it is most humbly submitted that if the Provisional Attachment Order were to be confirmed, it would cause them grave injustice and irreparable injury. 33. In conclusion, it is submitted that the Complainant is required to act in a non-adversarial and impartial manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the present Provisional Attachment Order. The said explanations are repeated herein below for ease of reference of this Authority as per the case of the appellants:- Suppression of Income i) The CBI,and consequently also the Complainant, has suppressed the income of Defendant No.3 and Defendant No.2 and has unfairly clubbed the same with Defendant No.1. This unfair clubbing has led to the incorrect conclusion that both Defendant No.2 and Defendant No.3 had no ability to purchase assets on their own. ii) Assuming that the methodology adopted by the CBI is correct, it is submitted that they have suppressed the income of Defendant No.3 from 2007-08 to 2011-12 amounting to ₹ 15,78,740/-; and the income of Defendant No.2 from 2007-08 to 2011-12 amounting to ₹ 18,19,040/-, which ought to have been considered towards income. iii) The CBI and the Complainant have further erred in not considering that an Agreement to Sell dated 15.04.2011 with regard to Flat bearing No. A-403 was entered into by the Defendant No.3 and one another person. Under the said agreement, the Defendant No.3 had received advance sale consideration to the tune of ₹ 25,00,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no basis for the apprehension on the part of the Complainant that such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter , which is a pre-requisite for any action of attachment under the PMLA. No reasons to believe are produced either at the stage of Section 5(1) and Section 8(1) of the Act. The reasons to believe are also not mentioned in the notice itself nor any copy was annexed with the counter-affidavit filed. The contention of the respondent is that it is not required. 14. The Adjudicating Authority issued the shows cause notice in a mechanical manner without applying its mind to the Complaint and materials forwarded by Appellant No.1 and without recording its satisfaction that it had reasons to believe that the Appellant had committed an offence under section 3 or is in possession of proceeds of crime , as is mandated under Section 8(1) of the Act without compliance of mandatory provisions of Section 8(1) and (2) of the Act as the Adjudicating Authority did not understand the judgement of the Hon‟ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct calculations made by the CBI. It is submitted on behalf of the appellant that all these aspects were brought to the attention of the Adjudicating Authority in the Joint Reply and the said letters dated 29.10.2015 and 09.11.2015 were also filed with the Joint Reply. The Appellants have suffered grave injustice in as much as the Respondent blindly adopted the CBI version without considering the explanations offered by the Appellants vide letters dated 29.10.2015 and 09.11.2015, and now, the Adjudicating Authority has accepted the Respondent‟s version without even perusing the Joint Reply to the Show Cause Notice. 17. The findings in the impugned order are arrived in para 7 of the order as well as last part of the conclusion, the same are read as under:- 7. (1) First two movable properties consisting of balance amount in accounts in Kotak Mahindra Bank and HDFC Bank, Saket, New Delhi totaling ₹ 20,26,545/-. As has been said earlier according to CBI investigation defendants are alleged to possess disproportionate assets of more than ₹ 228.9 lacs. Therefore they could not have surplus funds legally possessed by them for keeping in these accounts and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from para-7 of the impugned order, ED (being an independent agency), who is supposed to investigate the entire matter in independent manner and also other than the investigation of CBI or its charge-sheet filed, it is stranged to notice from the said para wherein it is held that the process adopted by CBI appears to be reliable and it does not appropriate to differ with them, the same is not the scheme of the Act. It is always argued on behalf of ED that it is an independent agency who investigates all matters independently and its findings are its own. In some of the cases, proceed of crime is much more than figures arrived by the CBI. If that is the position, the Adjudicating Authority and ED are duty bound to give its own finding on the basis of independent investigation rather to rely upon the calculation of other agency. The said findings are not only given in the present case, but in large number of other cases wherein the appeals are pending. 19. The CBI in its final report has merely charged the appellants for having committed the offences punishable under sections 12(2) r/w 13(1)(e)of the Prevention of Corruption Act, 1988 and under Section 120-B r/w Sections 465, 471 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he person concerned and material placed on record but the same has not been discussed. Section 8(2) of PML Act, 2002 is a mandatory provision if the reply and material available on record are not dealt with in the impugned order. The same is liable to be set aside. 24. The prescribed period of 180 days for adjudication has already been expired under Section 5 of the Act. Thus, there is no need to remand back the matter. Counsel for the appellant after hearing made the fair suggestion without prejudice which is quite reasonable. 25. Under these circumstances, the impugned order is accordingly modified. I is the admitted position that the charge-sheet against the appellants under the scheduled offence as well as prosecution complaint under PMLA and under this Act is also pending before the Special Court. 26. Without expressing any opinion on merit, the impugned order is modified to the following extent:- a) That as far as account maintained by Smt. Minni Narang and SumantNarang ( A/c. No. 0181012002249 of Kotak Mahindra Bank, Sector-18, NOIDA - balance amount as ₹ 5,66,604.74) and also account maintained by Smt. Minni Narang and Sh. J.K. Narang (account no. 00431000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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