TMI Blog2019 (8) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. ( BCCL then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions - proceeds of crime. HELD THAT:- It is an admitted position by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer. It is the admitted fact that the investment made by the various entities/ companies was a bona fide investment in the Appellant Company. Upon transfer of the shares of the various compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06, 3008, 3010/HYD/2016, 3190/HYD/2017 (Stay), 2989/HYD/2015 (Misc.), 2990, 2993, 2995, 2999, 3001, 3003, 3005, 3007, 3009, 3011/HYD/2016 (Misc.), 3095/HYD/2017(Exem), FPA-PMLA-1573-77, 1579, 1582-88/HYD/2016, 1619/ HYD/2017 JUDGEMENT JUSTICE MANMOHAN SINGH: CHAIRMAN FPA-PMLA-1573 1577, 1579, 1582 1588 1619/HYD/2016 1. By this common order, this Tribunal proposes to decide the above-mentioned 14(fourteen) appeals filed against Order dated 23.11.2016 by the Adjudicating Authority made in Original Complaint No. 618 of 2016 confirming the attachments made vide Provisional Attachment Order No. 02/2016 dated 29.06.2016 (PAO) in ECIR/09/HZO/2011. PAO passed corresponding to CC No. 25 of 2013 before The Special Judge for CBI Cases, Hyderabad (CBI Case). Earlier, the appeals were heard by the Chairman and the Hon ble Member. The appeals were listed for clarification/ re-hearing. In the meanwhile, the Hon ble Member retired/resigned. The appeals were re-heard and the orders were reserved. 2. The PAO arises out of registered case no. ECIR/09/HZO/2011 dated 30.8.2011 filed by the Respondent, in pursuance of an FIR fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Pvt. Ltd. and Group ₹ 154.29 Crs ₹ 152.84 Crs - M/s. Bharathi Cements Corporation Pvt. Ltd. (Fixed Deposits) ₹ 1.45 Crs Mr. Jella Jagan Mohan Reddy (Immovable and movable properties) 4. The Provisional Attachment Order was confirmed by the impugned order dated 23.11.2016. 5. The following appeals have been filed: Y.S. Jagan Mohan Reddy Group: 1. Appeal Nos. 1573 of 2016 Mr. Y.S. Jagan Mohan Reddy 2. Appeal Nos. 1575 of 2016 M/s. Classic Realty Pvt. Ltd. 3. Appeal Nos. 1576 of 2016 - M/s. Sandur Power Company Pvt. Ltd. 4. Appeal Nos. 1577 of 2016 - M/s. Silicon Builders Pvt. Ltd. 5. Appeal Nos. 1582 of 2016 - M/s. Silicon Infrastructure Pvt. Ltd. 6. Appeal Nos. 1583 of 2016 - M/s. Capstone Infrastructure Pvt. Ltd. 7. Appeal Nos. 1584 of 2016 - M/s. Revan Infrastructure Pvt. Ltd. 8. Appeal Nos. 1585 of 2016 - M/s. Bhagavath Sanidhi Estates Pvt. Ltd. 9. Appeal Nos. 1586 of 2016 - M/s. Utopia Infrastructure Pvt. Ltd. 10. Appeal Nos. 1587 of 2016 - M/s. Saraswati Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the Proceeds of Crime (PoC). i) ₹ 30 Crs by Mr. Y.S. Jagan Mohan Reddy - ₹ 30 Crs invested by Mr. Y.S. Jagan Mohan Reddy were funneled by monies payed by Mr. Nimmagadda Prasad which were occasioned by VANPIC favours. ii) ₹ 252.5 Crs by Mr. Nimmagadda Prasad group companies i.e. the investments are stated to be in lieu of VANPIC favours. iii) ₹ 15 Crs by M/s. Silicon Builders Pvt. Ltd. - ₹ 15 Crs invested were funneled by Mr. Nimmagadda Prasad s group company, M/s. Beta Avenues Pvt. Ltd., through M/s. Carmel Asia Holdings Pvt. Ltd. which are also occasioned by VANPIC favours. Allegations in the CBI charge-sheet 8.1 As far as monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL, the allegations are that ₹ 30 Crs were received as bribe amount by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad in lieu of VANPIC favours and was guised as sale consideration for sale of shares held by Mr. Y.S. Jagan Mohan Reddy in M/s. Sandur Power Company Ltd. (Sandur Power) to Mr. Nimmagadda Prasad. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney. ii) ₹ 15 Crs was paid to M/s. Saraswati Power and Infrastructure Pvt. Ltd. as Share Application Money. Thus, it is stated that Tangible Fixed Assets as detailed in the Audited Balance sheet for 2013-14 being equivalent to the proceeds of Crime valued at ₹ 118.49 Crs is being attached. 8.4 Relating to M/s. Classic Realty Pvt. Ltd. (and merged entities i.e., M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Infrastructure Pvt. Ltd (Defendant No. 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17), the allegations are that M/s. Classic Realty Pvt. Ltd. (Classic Realty) has received, in total, an amount of ₹ 193.50 Crores (₹ 126.50 Crs from Mr. Y.S. Jagan Mohan Reddy and ₹ 67 Crs form Sandur Power) as Share Application Money from ₹ 416.20 Crs realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to M/s PARCIFIM SAS, France on 27.04.2010. Thereafter, an amount of ₹ 196.85 Crs was utilized in the following nature: i) ₹ 58 Crs was returned to Mr. Y.S. Jagan Mohan Reddy against earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and is in receipt of ₹ 15 Crs fromSandur Power which in-turn received from Mr. Y.S. Jagan Mohan Reddy and another ₹ 8 Crs as Share Application Money from Mr. Y.S. Jagan Mohan Reddy. Therefore, immovable and movable properties worth ₹ 32.33Crs is being attached. 8.9 With regard to M/s. Silicon Infrastructure Pvt. Ltd. , M/s. Bhagavathi Sannidhi Pvt. Ltd., M/s. Utopia Infrastructure Pvt. Ltd. and M/s. Harish Infrastructure Pvt. Ltd., no reference or allegation regarding investment of monies into the above companies is made.The above companies are arrayed for having beneficial ownership with other defendants and their properties are attached. 9. It is stated that it was revealed from the Charge Sheet filed by CBI with the Hon ble Court that S/Shri Y.S Jagan Mohan Reddy, V. Vijay Sai Reddy, Jella Jagan Mohan Reddy others committed the offences of criminal conspiracy, cheating and criminal misconduct by abusing official position of Late Dr. Y.S. Rajsekhara Reddy, the then Chief Minister of Andhra Pradesh, punishable under Section 120-B read with Section 420 of the Indian Penal Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Bharathi Cement Corporation Private Limited. It may be noticed/taken note that, during the course of investigation under PMLA, 2002, in Charge Sheet No. 14/2012 dated 13.08.2012 filed by CBI, these Proceeds of Crime which are being received by Shri Y.S. Jagan Mohan Reddy are provisionally attached in the form of immovable properties and shares from Shri Y.S. Mohan Reddy by the Directorate of Enforcement, HIU, Delhi vide PAO No. 01/2014 dated 04.03.2014 and has been confirmed by the Adjudicating Authority, PMLA, New Delhi vide order dated 19.08.2014 in Original Complaint No. 276/2014 dated 27.03.2014. iv) As regards, 1,50,00,000 shares of ₹ 10/- each purchased by M/s. Silicon Builders Private Limited in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by Shri Y.S. Jagan Mohan Reddy from Shri Nimmagadda Prasad, Shri Y.S. Jagan Mohan Reddy, out of the bribe amounts received by him through his group companies from Shri Nimmagadda Prasad, transferred an amount of ₹ 15 Crore to M/s. Silicon Builders Private Limited for which he received 1.5 Crore shares of ₹ 10/- each of M/s. Bharathi Cement Corporation Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Corporation Private Limited has not extracted limestone from the mining lease area till 2008-09 since 27.03.2006, i.e. from the date on which the company obtained mining lease fraudulently. ix) Investigation conducted also revealed that M/s. Bharathi Cement Corporation Private Limited had excavated the Lime Stones using Mine License illegally granted to them by the then Government of Andhra Pradesh. x) Investigation conducted with Department of Mines Geology, Government of Andhra Pradesh revealed that the price of Lime stone is ranging between ₹ 30 per MT to ₹ 150/- per MT during the above period. 10. It is alleged by the respondent that in view of above, the value of the limestone excavated by M/s. Bharathi Cement Corporation Private Limited has been worked out to be of ₹ 152,84,61,315/- for the period from 2009-10 to 2015-16. 11. It is stated that from the above, it is evident that the pecuniary gain derived by M/s. Bharathi Cement Corporation Private Limited on account of excavation of Lime stone from the Mining License granted illegally amounts to ₹ 152,84,61,315/- which is proceeds of crime in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Capital gains tax of ₹ 6.69 Crs paid by Mr. Y.S. Jagan `Mohan Reddy on sale consideration of ₹ 30 Crs from Mr. Niammagadda Prasad. 17.01.2008: Shares of Sandur Power were split into 3 blocks and were transferred to Mr. Nimmagadda Prasad. b) The concept of VANPIC Project was conceived only in January, 2008 and hence, the question of payment of illegal gratification in January, 2007 cannot sustain. The I.T. returns filed on 31.07.2007 clearly evidences the genuine transaction of sale of shares and falsifies the theory of respondents. c) The sale of Sandur Power shares is a genuine transaction and is evidenced by the fact that Mr. Nimmagadda Prasad is an entrepreneur with a proven track record of being a successful serial investor (like in Matrix Labs and Maa Television) and only after mutual deliberations, Mr. Y.S. Jagan Mohan Reddy agreed to sell Sandur Power shares held by him to Mr. Nimmagadda Prasad in two trenches for ₹ 35 Crs at ₹ 140 per Share. d) It is pertinent to note that CBI has made no allegations against the establishment or functioning of Sandur Power after a full-fledged investigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent companies having regard to the projected boom of infrastructure projects in India. Each of the investors made their own independent assessment of the worth and business potential of the company and made investments totaling to the following and number of shares given hereunder: Sl No Investor Total Investment No. of Shares Held 1. Dalmia Cements (Bharat) Ltd. 94,99,95,750/- 21,83,899 2. India Cements Ltd. 95,32,60,850/- 18,03,973 3. Mr. Nimmagadda Prasad s Group 285,49,81,915/- 83,50,023 b) The fact that such investments were per business prudence is evidenced by the fact that when each of the investors sold their shares to M/s. PARFICIM SAS, France, they derived the following corresponding amounts in relation to the investments made by them: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of Sandur Power cannot be termed as proceeds of crime as it would amount to execution of double attachment, which is contrary to the scheme of the PML Act. d) Sandur Power has parted valuable shares worth ₹ 80.27 Crs for receiving an amount of ₹ 80.27 Crs. Therefore, it is the shares worth ₹ 80.27 Crs purchased by Mr. Y.S. Jagan Mohan Reddy that could be, at best, be categorized as Proceeds of Crime. e) Sandur Power was established in 1998 and is a successful profit making business entity engaged in the business of production and distribution of electricity. The appellant was acquired by Mr. Y.S. Jagan Mohan Reddy only in 2001 by acquiring a stake of 44.26% in the company. f) As per the audited balance sheet, the assets owned by Sandur Power s net worth itself is ₹ 332.56 Crs. This shows that not only there is wrongful attachment but excessive attachment compared to the alleged proceeds of crime of ₹ 80.27 Crs. 14. The details of other heads would also be discussed in the later part of the order. Parties have mainly argued the appeals on the main issue pertaining to the mining lease granted by BCCL. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as Mining Lease ). The main reasons mentioned in the PAO are that by grant of the Mining Lease in favour of the Appellant, who has been benefitted to a great extent which is to the detriment of either the Government of Andhra Pradesh or of Gujarat Ambuja or both. 18. The main allegations in the charge-sheet as well as the provisional attachment orders are for allotment of mining lease granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that Y. S. Jagan Mohan Reddy, in a criminal conspiracy with certain public officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. ( BCCL then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions. On the basis of such mining lease, Mr. Y. S. Jagan Mohan Reddy proceeded to establish BCCL Plant, for which establishment. The following investments were made by the investors, the same is Proceeds of Crime (PoC). i) ₹ 30 Crs by Mr. Y.S. Jagan Mohan Reddy - ₹ 30 Crs invested by Mr. Y.S. Jagan Mohan Reddy were funneled by monies payed by Mr. Nimmagadda Prasad which were occasioned b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (two) years, i.e., until September 12, 2004, in terms of the renewal application filed by Gujarat Ambuja. (d) There was no application filed for a further extension of the Prospecting Licence, either before or after September 12, 2004. Accordingly, the Prospecting License expired by efflux of time on September 12, 2004; (e) However, Gujarat Ambuja continued to carry out prospecting operations for another 1 (one) year, i.e. until October 31, 2005 when the State Government finally cancelled the Prospecting License after prior issuance of a show cause notice vide memo No. 16794 on September 21, 2005. (f) There is hardly any dispute that Gujarat Ambuja enjoyed the prospecting license from September 13, 2000 until October 31, 2005 i.e. for a period of 5 years and 48 days (approx.). (g) The proviso to Section 7(2) of the Mines and Minerals (Development and Regulation Act, 1957 (hereinafter referred to as MMDR Act ) provides that the total period for which a Prospecting License may be granted to any party (including extensions) cannot a maximum period of 5 (five) years. (h) Thus, the Prospecting License for a period greater t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gujarat Ambuja was ended, the Government (State) is not precluded to invite the filing of an application for grant of Mining Lease as per rules, nor was Government of Andhra Pradesh (hereinafter referred to as GoAP ) was precluded from granting the same in its favour, but as per set procedure and due process. After the rejection of Gujarat Ambuja s Prospecting License on October 31, 2005, a Gazette Notification for re-grant of the prospecting license area under the applicable rules was published on November 21, 2005 by the competent authority. 26. It is also submitted on behalf of appellants that in terms of Rule 59 of the Mineral Concession Rules, 1960, an area which was previously held under a reconnaissance permit, prospecting license or mining lease would not be available for re-grant unless the availability of the area of the grant is notified in the Official Gazette and a date (being a date not earlier than thirty days from the date of the publication of such notification in the Official Gazette) is specified from which such area shall be available for grant. 27. One of the allegations of the respondent is that the notification dated 21.11.2005 iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fetched, unfounded and without any basis in law. 29. It is submitted on behalf of appellants that the purported statement by Mr Jella Jagan Mohan Reddy, the director of the Appellant company, that a copy of the Mining Lease deed had to be submitted to financial institutions before March 31, 2006 and it was submitted without prejudice. As long as there is no illegality in the executing of the Mining Lease, the mere fact of it being executed expeditiously cannot form the basis to reach a conclusion of a conspiracy. It is denied by the appellant that the entire process was completed within a day. Rather, it was submitted that due process was followed and the said process had taken about one month. 30. It is also submitted that there is no illegality in grant of conditional mining lease in favour of the Appellant during pendency of Revision Applications- Revision Applications filed by Gujarat Ambuja challenging the following, namely (a) rejection of its Prospecting License; and (b) grant of mining lease in favour of the Appellant vide G.O. No. 95, both dismissed. It is alleged that the first and second revision petition filed by Gujarat Ambuja challenging the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase granted in favour of the Appellant would not come in the way. (d) In addition to the same being subject to the outcome of the Revision Application, the Appellant was, inter alia, required to obtain environmental clearances within 6 (six) months and set up a cement unit within a period of 3 (three) years. (e) That even during the pendency of a revision application filed by a party, the grant of a mining lease to another party is within the contemplation of the Mineral Concession Rules, 1960. (f) Sub-rule 2 of Rule 54 of the Mineral Concession Rules, 1960 clearly provides that in every application for revision under Sub-rule 1 filed against the order of a State Government refusing to grant a prospecting license, any person to whom a prospecting license/mining lease was granted in respect of the same area or for a part thereof, shall be impleaded as party. (g) There is no provision under the MMDR Act or the Mineral Concession Rules, 1960 which prohibits the grant of a mining lease while pendency of a revision application. On the contrary, Sub-rue 2 of Rule 54 contemplates the situation that a mining license may be granted during pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Ambuja, it chose to apply for a stay under Rule 55(5) of the Mineral Concession Rules, 1960 only on February 21, 2006, almost 4 (four) months after rejection of its renewal application and 3 (three) months after the Gazette Notification was published. 35. It is also factual position that Gujarat Ambuja had also filed a second revision petition challenging the grant of Mining Lease in favour of the Appellant vide G.O. No. 95 dated March 27, 2006, however, the same was also dismissed as withdrawn without liberty to re-file a fresh application, which evidencing that Gujarat Ambuja, the Respondent is trying to display the card Gujarat Ambuja who was not interested to file the application for approval, who itself had no case to make out against the said Mining Lease having been granted in favour of the Appellant. The said orders have since attained finality. The said party after withdrawal of the second Revision Petition and granting the mining lease to appellants have not challenged the same in any court of law as of today. 36. The Adjudicating Authority did not properly dealt with this issue that even Gujarat Ambuja did not express any interest in pursuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeed and indisputably contained sufficient reserves of minerals. 40. The PAO itself reveals that (a) the GoAP had recorded and accepted that the existence of mineral contents therein has been established; and (b) the post facto occurrences, i.e., the lime stone extracted by the Appellant from the area, evidence the correctness of the said recordal. 41. Under the provisions of Section 5(2) of the MMDR Act, a mining lease can be granted to a party who has not carried out the prospecting operations in the same area, however, it depends upon situation to situation. In the present case, it was observed in the PAO that the limestone was extracted by the appellant from the area. 42. It is submitted on behalf of the appellant that the impugned PAO has erred in holding that prior approval of the Minister (Mines and Geology) was not obtained for issuance of G.O. No. 95 dated March 27, 2006. As regards, it is submitted on behalf of the appellant the process for obtaining approvals for grant of mining lease in favor of the Appellant, the following facts are relevant: (a) It has been admitted by the Respondent that after receiving the combined pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed and as such, the Appellants were free to use all such information within the framework of the MMDR Act, and the Mineral Concession Rules, 1960.It is submitted that there is not even a single averment in either the charge sheet, the PAO or the impugned order that Gujarat Ambuja had marked their reports and information as confidential and as such, in terms of the said rule, the said reports and information could be used by any person, including the appellant herein. 47. It is matter of fact that Gujarat Ambuja had the opportunity to submit its application for grant of Mining Lease on the basis of information available with it after the area was notified in terms of the mentioned Gazette Notification, but the said party did not do so. In the absence of Gujarat Ambuja itself not having applied for grant of Mining Lease, there cannot possibly be a grievance against use of all available information even if the same was generated by Gujarat Ambuja. It is a matter of fact that Gujarat Ambuja has taken any action civil and criminal against the appellants for using the said information. It is also alleged on behalf of appellants that in the absence of any restriction on usag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Chairman MD, BPL Ltd. v. S.P. Gururaja and Others, (2003) 8 SCC 567 [paragraphs 34 and 35] 34. Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be malafide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the Impugned allotment of land could not have been interfered with. What was only necessary to, be seen was as to whether there had been a fair play in action. 35. The question as to whether any undue haste has been shown in taking an administrative decision is essentially a question of fact. The States had devolved a policy of Single Window System with a view to get rid of red-tapism generally prevailing in the bureaucracy. A decision which has been taken after due deliberations and upon due application of mind cannot be held to be suffering from malice in law on the ground that there had been undue haste on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Commission had categorically noted in paragraph 8.9.3 that there had been no infraction in following the established norms, procedure or the provisions of law in granting the Mining Lease to the Appellant. 55. It is admitted by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05,799. 56. It is argued on behalf of the appellants that as a matter of fact the benefit has accrued to the Government on account of the mining activities of the Appellant on its own private land purchased from private parties, and without any support from the Government, in the form of acquisition proceedings or otherwise. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, it is alleged that, irrespective of whether the Appellant was granted the mining lease or any other entity wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted November 23, 2016, it is held that proceeds on the basis that the offence of money laundering under Section 3 of PMLA is a continuing one, despite the allegations of commission of the offences and acquisition of proceeds there from having occurred prior to the offences being notified in the Schedule of PMLA. The impugned order has referred the following decision- B. Rama Raju v. Union of India Hon ble Andhra Pradesh High Court in Writ Petition No. 10765, 10769 23166 of 2010 decided on March 4, 2011 (para 50 and 51) 50. On analysis of the provisions of Section 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudication and confiscation in Chapter-III. Attachment or confiscation of proceeds of crime in the possession of a person who is not accused or charged of an offence under Section 3 isthus not an incorporation for the first time by the provisions of the Second Amendment Act, 2009. The contention on behalf of the Petitioners that the second proviso to Section 5(1) of the Act, applies only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decided and not what can logically by deduced therefrom. It is also well-settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision ; and (2) Bharat Petroleum Corporation Ltd. and Anr.v. N.R. Vairamani and Anr., (2004) 8 SCC 579. 9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. iii) The Hon ble High Court has clearly stated that analysis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt pointed out that The Statue which in its direct operation of prospective cannot be properly called a retrospective statute because a part of the requisites for that action is drawn from the time antecedent to its passing . 65. The fundamental rule of interpretation of statutes. Following case laws are cited:- a) Monnet Ispat and Energy Limited Versus Union of India and Others (2012) 11 SCC at page 90 paras 153 154 held that: 153. Having carefully considered Section 17-A, I have no hesitation in holding that the said provision is prospective. There is no indication in Section 17-A or in terms of the amending Act that by insertion of Section 17-A Parliament intended to alter the pre-existing state of affairs. Parliament does not seem to have intended by bringing in Section 17-A to undo the reservation of any mining area made by the State Government earlier thereto for exploitation in public sector. Parliament has no doubt plenary power of legislation within the field assigned to it to legislate prospectively as well as retrospectively. As early as in 1951 this Court in Keshavan Madhava Menon v. State of Bombay [AIR 1951 SC 128 : (1951) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of statutory provisions of this nature are well-established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the legislature has made them retrospective; and the retrospective operation will be limited only to the extent to which it has been so made by express words, or necessary implication. The second rule is that the intention of the legislature has always to be gathered from the words used by it, giving to the words their plain, normal, grammatical meaning. The third rule is that if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so that it is capable of two meanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it should be adopted. The fourth rule is that if the strict grammatical interpretation gives rise to an absurdity or inconsistency such interpretation should be discarded and an interpretation which will give effect to the purpose the Legislature may reasonably be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appear from the case law considered above that the rule of construction or interpretation is very well settled and well established that laws generally are prospective in character more particularly, law affecting vested or substantive rights or laws creating new liabilities or imposing new disabilities, unless there are express words in the statute affecting the existing rights of unless there is clear manifestation of the intention of the Legislative on the basis of which it can be said that the law is retrospective in character, and even vested rights have been taken away or new liabilities have been created or new disabilities have been imposed. There are laws and law s and cases, the real question of application of the cardinal rule of construction which is propounded and considered above. It is also well established that there is a presumption against retrospectivity and this presumption can only be rebutted by express words in the Statute or by necessary intendment of the statute. It is also well established that only to what extent, retrospectivity may be considered of the provisions in the statute which necessary arises from the express words or from necessary intendment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the criminal case. All the accused, who were individuals and who were at the helm of affairs of the petitioner company, were prosecuted and they were convicted by the Special Court by a judgement dated 09-04-2015. Since the charge sheets filed prior to the amendment and since the petitioner was not one of the accused, the amendment to Section 8(5) will not apply to the case of the petitioner. That vested rights cannot be taken away by retrospective application of the law (especially quasi criminal) is too well settled. A useful reference may be made in this regard to the judgements of the Supreme Court in STO v. Oriental Coal Corporation MANU/SC/0427/1988 : 1988 (Suppl) SCC 308 and in K.S. Paripoornan v. State of Kerala MANU/SC/0200/1995 : (1994) 5 SCC 593. In Oriental Coal Corporation the Supreme Court pointed out that where there is no hint of retrospectivity, in the statute itself, it is not possible to read retrospectivity. Similarly, in K.S. Paripoornan, the Supreme Court indicated the distinction between a statute dealing with substantive rights and a statute, which relates to procedure or evidence or is declaratory in nature. A statute dealing with substantive rights is pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL 51.20 Crs Dividend received by Silicon Builderson 1,50,00,000shares of BCCL 152.84 Crs Value of limestone extracted by BCCL 19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy 7.18 Crs Salaries of Mr. JellaJagan Mohan Reddy ------------- 766.97 Crs Total quantification of PoC Total value of properties attached as Proceeds of Crime @ Pg. 52 of PA Order dated 29.06.2016 is ₹ 748.95 Crs. 71. Relating to Mrs. Y.S. Bharati Reddy (Appeal No. 1574 of 2016): Salaries received by Mrs. Y.S. Bharathi Reddy Mrs. Y.S. Bharathi Reddy was appointed Director of BCCL, which is a company incorporated and is subject to regulations framed under the Companies Act, 1956. The allegation leveled against Mrs. Y.S. Bharathi Reddy that she is continuing to be a Director of BCCL, which shows the wrongful tacit relation between Mr. Y.S. Jagan Mohan Reddy and BCCL is without any substances as the appointment of Mrs. Y.S. Bharathi Reddy as a Director has been done in a legal manner and is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etely legal and stands test to standards of the Companies Act. Therefore, Mrs. Y.S. Bharathi Reddy, only by being in virtue of the director of Silicon Builders at the time of such investment, cannot be faulted with. ₹ 15.5 Crs. received from Y.S. Jagan Mohan Reddy is accrued from genuine business transaction. a) Mrs. Y.S. Bharathi Reddy received ₹ 1.5 Crs and ₹ 14 Crs from her husband, Mr. Y.S. Jagan Mohan Reddy on 14.06.2010 and 01.10.2010 respectively from the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares of BCCL to PARFICIM SAS, France. It is submitted that the sale of 62,00,972 shares to PARFICIM SAS, France by Mr. Y.S. Jagan Mohan Reddy for ₹ 416.20 Crs is a genuine business transaction. b) As the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions, the ₹ 1.5 Crs and ₹ 14 Crs received by Mrs. Y.S. Bharathi Reddy cannot be termed, much less be attached as proceeds of crime. 76. PML Act does not empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and for twice the value which is contrary to the scheme of PML Act. 83. Therefore, as the monies received by Sandur Power (which have been separately attached at the hands of Sadur Power) which have further been paid to Classic Realty as share application money cannot be attached as the same would amount to triple attachment of property. The said practise cannot be allowed. The proceed of crime amount has to be finally identified, otherwise, there would be no end. 84. Relating to amalgamated entities viz, M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Infrastructure Pvt. Ltd (Defendant No. 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17) a) The Hon ble High Court of Karnataka, vide Orders dated 11.03.2016 in C.A. 346 of 2015 ordered amalgamation of: 1. Nivish Infrastructure Pvt. Ltd. 2. Shalom Infrastructure Pvt. Ltd. 3. Marvel Infrastructure Pvt. Ltd. 4. Inspire Hotels Pvt. Ltd. b) Nivish Infrastructure: Classic Realty had purchased shares in Nivish Infrastructure against a consideration of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Cheque No. Remarks ₹ 3,00,00,000/- 120848 Investment from M/s Sandur Power ₹ 2,50,00,000/- 761124 Investment from M/s Sandur Power ₹ 1,10,00,000/- 761133 Investment from M/s Sandur Power ₹ 5,00,00,000/- 120856 Investment from M/s Sandur Power ₹ 5,00,00,000/- 130812 Investment from Carmel Asia Holdings Pvt. Ltd. Subsequently requested to be treated as investment by Investment from M/s Sandur Power leading to refund of said advance back to Carmel Asia HoldingsPvt. Ltd. (₹ 1,60,00,000/-) 108366 Returned back to M/s Sandur Power ₹ 5,00,00,000/- 120866 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and transferred ₹ 5 Crs on 14.12.2006 and ₹ 15 Crs on 03.01.2007. The said ₹ 20 Crs is the only investment received by Carmel Asia from Beta Avenues. The respondent alleges in O.C. No. 276 of 2014 that ₹ 20 Crs received by Carmel Asia from Beta Avenues were utilised for purchasing shares in M/s. Jagati Publication Ltd. and thereafter proceed to attach Jagati Publication s Shares held by Carmel Asia. The respondent now seek to make further attachments of shares worth face value of ₹ 15 Crs (and recognised market value of much higher) of BCCL held by Silicon Builders and ₹ 51.20 Crs of dividends thereon in the instant Complaint i.e, O.C. No. 618 of 2016 on the contention that Silicon Builders received monies from Carmel Asia and had used the same amounts to purchase BCCL shares. Therefore, the attachment of 1,50,00,000 shares held by Silicon Builders in BCCL and the ₹ 51.20 Crs of dividend received by Silicon Builders ought to be released from any attachment. 89. Relating to M/s. Capstone Infrastructure Pvt. Ltd. (Appeal No. 1583 of 2016): It is the case of appellants that the investments received by Capstone Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIM SAS, France. It is submitted that the sale of 62,00,972 shares to PARFICIM SAS, France by Mr. Y.S. Jagan Mohan Reddy for ₹ 416.20 Crs is a genuine business transaction. The monies accrued by Mr. Y.S. Jagan Mohan Reddy are from the sale of his shares in BCCL are earnings. The said shares were acquired with the monies generated from genuine business transactions, investments received by Saraswati Power cannot be termed as proceeds of crime. Thus, the appeal is allowed. 92. Attachment of ₹ 15 Crs received from Sandur Power amounts to triple attachment: The investments of ₹ 15 Crs from Sandur Power into Saraswati Power made as share subscription monies against allotment of 1,50,00,000 Shares in Saraswati Power are monies received by Sandur Power from Mr. Y.S. Jagan Mohan Reddy as consideration against sale of shares of various companies held by it. Mr. Y.S Jagan Mohan Reddy had accrued such monies from the sale of his shares in BCCL to PARFICIM SAS, France, which is a genuine business transaction. Against him, no action is pending. Counsel for the respondent has admitted that amount paid by French Company against the shares is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint, there is no reference or allegation regarding investment of monies into the above mentioned appellants. The respondents have alleged the concept of beneficial ownership for causing attachments in the hands of the above appellants. Section 5 of PML Act does not sanction employment of concept of beneficial ownership for the purpose of attachment of properties. A company is an independent juristic entity that has been incorporated under the provisions of the Companies Act. A Company bears an identity that is entirely distinct from its equity holders. The purported attachments caused to be made even beyond the wrongful terming of proceeds of crime in the hands of various companies on a premise that they are being beneficially owned by Mr. Y.S. Jagan Mohan Reddy would be legally impermissible as any such extension of liability cannot be fastened onto an independent juristic entity like a Company. Under the PMLA inter alia it is a mandatory prerequisite that a person/entity is in possession of proceeds of crime for issuance of an attachment order. Such powers cannot be extended beyond the scope of PML Act by adding the new concepts which is alien to the provisions of the PML A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent of such indirect taxes. However, in the case of direct taxes, such as Income Tax, the value of the property, gets reduced to the extent of the IT paid and therefore, ought to have been subtracted from the overall alleged proceeds of crime, for the purpose of attachment. The reasoning to the contrary by the authority is not correct. 97. Under-valuation of shares of BCCL held by Mr. Y.S. Jagan Mohan Reddy. Undisputedly, the respondent despite acknowledging that Mr. Y.S. Jagan Mohan Reddy had paid out of the total sale proceeds of ₹ 416.20 Crs, an amount of ₹ 12.41 Crores towards purchase of shares of BCCL held by Sandur Power, while quantifying the value for the purpose of attachment, the shares were undervalued at ₹ 18,50,000/- rather than the consideration value of ₹ 12.41 Crores paid by Mr. Y.S. Jagan Mohan Reddy as noted by the respondents in the Complaint itself. 98. Double Attachments: a) At the hands of Sandur Power, Classic Realty and Saraswati Power: As detailed above, the attachments at the hands of Sandur Power for sale of shares owned by it in various companies to Mr. Y.S. Jagan Mohan R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds of crimes not capable of being attached, then, any other property bearing the monetary value equivalent to such property derived/obtained from proceeds of crime is permissible for attachment. c) The respondents are seeking to wrongfully refer to and use the value at the date of acquisition as the value to be reckoned even in respect of alternate property. By adopting such erroneous method, the respondents have resorted to causing the attachment of a maximum number of properties by taking the value at the date of acquisition and not the market value which is much higher. Even the guideline value, adopted by the Registration Department is also much higher (though it does not correctly denote the current market value as such guideline values are historical and were notified much earlier). This is wholly unsustainable in the eyes of law. d) The following chart depicts the result of such wrongful approach adopted by the respondent: No. Appellant Property Attached Classified as Attached Value Guideline Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Equivalent to Proceeds of Crime 6.54 13.88 5. M/s Shalom Infrastructure Pvt Ltd Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company s asset Sakshi Towers, Road No.1, Banjara Hills, Hyderabad) Part Equivalent to Proceeds of Crime and Part Proceeds of Crime 43.70 43.70 6. M/s Silicon Builders Pvt. Ltd. Tangible Fixed Assets of M/s Silicon Builders Private Limited as detailed in the audited balance sheet for 2013-14 (include Company s assets Land Building constructed at Sy No.195 Corporation No.34, PID No.99-1-34, 2nd Main Road, Sadashiva Nagar, Nagalore 1 acre 30 guntas land at Sy No.13/2, Harohalli, Yelhanka, Bangalore, Karnataka) Equivalent to Proceeds of Crime 9.06 24.41 7. Smt YS Bharathi Reddy 2500.69 squ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Mohan Reddy as Capital Gains Tax from the ₹ 416.20 Crs. received from sale of BCCL shares to PARFICIM SAS, France. 6.37 Crs Income Tax paid by Mrs. Y.S. Bharathi Reddy from ₹ 19.50 Crs. received as remuneration. 12.22 Crs Deliberate undervaluation of BCCL Shares purchased by Mr. Y.S. Jagan Mohan Reddy from Sandur Power Company Pvt. Ltd. at ₹ 671 per share amounting to ₹ 12.41 Crs; but attaching the same at ₹ 10 per share amounting to ₹ 18,50,000/-. -------------- 102.59 Crs 102. Further errors in computing quantum of Proceeds of Crime 30.00 Crs Equivalent value already attached in VANPIC Attachment i.e., O.C. No. 276 of 2014 as being investments from Mr. Nimmagadda Prasad and group Companies. An amount of ₹ 30 Crs. was received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and group, which has already been attached in O.C. 276 of 2014. Again, the attachments in the present proceedings arise from sale of shares worth ₹ 6.2 Crs out of the same ₹ 30 Crs. 15.00 Crs Equivalent value already attached in VANPIC Attachment i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the Appellant, which issue is already the subject matter in a separate OC No. 424 of 2015 out of which an appeal FPA-PMLA- 1035/HYD/2015 titled M/s Bharathi Cement Corporation Private Limited Vs. Joint Director, Directorate of Enforcement has also been filed. It is the admitted fact that the investment made by the various entities/ companies was a bona fide investment in the Appellant Company. Upon transfer of the shares of the various companies/ entities to PARFICIM, France, they made a substantial gain on investment by way of a bona fide, unchallenged and arm s length sale of shares to a third party, viz., PARFICIM, France, against which no allegations of any nature have been made. There was a substantial profit to each of the investors, which profit was based on a third party purchase, which transaction has clearly passed the scrutiny of the Respondent itself and the Reserve Bank of India without any shadow of doubt. 106. There are no findings against the majority shareholder of the Appellant concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI. In fact, in the order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court that the States had devolved a policy of single window system with a view to get rid of red tapism generally prevailing in the bureaucracy. In the present case, it also appears there are elements which would show the decision is taken after deliberations and upon due application of mind cannot be held to be suffering from malice. Charges are yet to be framed in the matter. 110. It is also a matter of fact that despite of change of various Governments in the State by rival political parties, the lease has not been cancelled, rather licensing fee has been accepted without any protest. There are also no allegations that some advantage is taken by BCCL by which the State Government has lost revenue. In the impugned order, replies filed by all the appellants have not been discussed and dealt with. The Adjudicating Authority is duty bound to deal with each and every plea raised by the aggrieved party legally. The same cannot be ignored, otherwise, the order is not sustainable and liable to be set-aside. 111. In view of allegations in the charge-sheet filed by CBI and observation made in preceding paras, this Tribunal is of the view that it is appropriate t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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