TMI Blog2009 (11) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said consignment with M/s. Megha International Pte. Ltd., Singapore which had marketing arrangement for execution of orders with M/s. Royal Global Exports Pte. Ltd., Singapore and the consignment was shipped from Ecuador. The officers of Narcotic Control Bureau (NCB), Mumbai Zonal Unit had specific information with regard to the said consignment of 200 kgs. being sent to India stashed in containers containing teak logs in May/June, 2006. The vessel was intercepted in Indian waters by the Officers of the NCB. The cocaine was seized on dt. 3/4th June, 2006 in the presence of the directors of M/s. OPM International Pvt. Ltd., namely, 1) Sh. O.P. Nogaja, 2) Sh. Vijay Kumar Nogaja and 3) Sh. Umesh B. Bangur and Managing Director of M/s. Mayur Clearing Agency, Custom House Agent 4) Mr. Vijay A. Throve. Investigations were carried out by NCB and on the basis of investigation a complaint was registered by NCB, Mumbai with the Hon''ble Court of Special Judge for NDPS Cases, Greater Mumbai on 8.12.2006 against aforesaid three persons at S. no. 1, 3 4 u/s. 23 and section 29 apart from other sections of The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS). Since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legitimate sources and was invested in shares of reputed companies, units of mutual funds, immovable and other properties and was projected as untainted property. 3. On the basis of the investigation, proceedings were commenced under Sec. 5 of the Act for provisional attachment of the properties standing in the names of various persons/companies. The properties were attached and complaints were filed with the Adjudicating Authority under Sec. 5(5) of the Act. The matter was placed before the Adjudicating Authority and the orders of provisional attachment were confirmed by detailed orders which are now being assailed before us in the present proceedings. 4. Ld. Counsel for the appellants assailed the orders on the following grounds:- i) That the orders of provisional attachment and their confirmation by the Adjudicating Authority are on the basis of assumptions and presumption only and no link/nexus has been established by the Authorities under Act to prove that the properties attached are proceeds of crime and gifts/money received by the appellants are not from legitimate sources. ii) That the appellants has not been charged of having committed a Schedule Offence which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is investment. Shri Modani was banking with ING Bank and was having portfolio account and total net value of holding by way of trading and securities as on 27th January, 2006 was US$ 2,06,942.75. Shri Modani had also since the year 2000 placed different deposits with the State Bank of India and effective 29th December 2000 holding deposit certificate to the tune of US$ 2,45,000 and the same certificate at maturity increased to US$ 4,45,000. Thus, Shri Modani earned huge money over the period of 14 years through valid sources by doing business, drawing salary, making portfolio investment, rendering professional services and he has out of his natural love and affection gifted money to Sh. Radha Mohan Lakhotia and others who are his relatives. The gifts/money were given vide gift letters/share application letters accompanied with duly authorized cheques and these gift letters/applications were submitted before the defendant. Thus, an inference can not be drawn that the remittances in NRE a/c of Shri R.P. Modani are proceeds of crime. 6. He further contended that since the proceedings before the defendant were in the nature of quasi judicial, the entire burden of proving the allegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having committed a scheduled offence. Fulfilment of both the conditions as laid down in section 5(1)(a) (b) of the Act are sine qua non for initiation of any proceedings for provisional attachment of any property. He argued that the expression such person in sec. 5(1)(b) the Act has reference to persons referred to in Sec. 5(1)(a) of the Act and therefore the person in possession the property must be the person charged of having committed a schedule offence. He further argued that in the present appeals, none of the appellants has been charged of having committed a scheduled offence and as such only for this reason the provisional attachment orders vis- -vis order''s of the Adjudicating Authority confirming these provisional attachment orders are void ab-initio. 8. The Ld. Counsel for defendant controverted the contentions of the appellants and made elaborate submissions in all the appeals. It was contended that requirements of Sec. 5 of the Act are fully met. Counsel states that the scope of the appeal is limited. The Tribunal has to see whether the attachment was correctly made in terms of the Act and Rules. The appellants have failed to satisfy that the propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is prima facie established that money remitted in NRE a/c of Shri R.P. Modani was proceeds of crime. 9. He invited our attention to judgment dt. 8.6.2009 by the Hon''ble High Court of Mumbai in the Criminal Application No. 1794 1796 of 2009 in the case of Asha Lakhotia Radha Mohan Lakhotia---Applicants vs. Union of India Others. The above applicants filed application before the Hon''ble High Court challenging the above order dt. 26.3.2009 issuing process passed by the Sessions Court, Mumbai. The Hon''ble High Court has held that the averments made in the complaint make out a case for proceeding against the applicants and no interference is called for. Excerpts from the judgment are reproduced below: ... 2. The Ld. Counsel for the Applicant has invited my attention to the averments made in the complaint. He submitted that there is no material on record to show that the amounts allegedly received by the applicant are proceeds of the crime within the meaning of section 2(u) of the said Act. He submitted that Shri R.P. Modani who is the person from whom the applicants have allegedly received the amounts has not been shown as accused. He invit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent to note that the complaint was lodged in August, 2008. The Ld. Counsel for the applicant has placed reliance on the communication dt. 23rd January, 2007 issued by the Superintendent of Narcotic Control Bureau in Mumbai. The said communication dated 23rd January, 2007 records that as on that date the link between the seized 200 kgs of cocaine by NCB and the funds transferred from R.P. Modani''s account to various individuals/companies in India count not be established. However, the said communication also records the fact that the concerned authorities in Bangkok have been requested to investigate the nature of business undertaken by Mr. R.P. Modani, his antecedents, source of funds transferred to India and whether the amounts were declared to the Tax Authorities in Bangkok. Therefore, reliance cannot be placed by the applicants on the said letter dated 23rd January, 2007 which is issued one year prior to the date of filing of complaint when investigation was in progress. 6. The averments made in the complaint make out a case for proceeding against the applicant. Merely because Mr. Modani is not shown as accused is no ground to say that the designated Court could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporting teak logs in the past also from Ecuador, South America. It is extremely impossible that an offender in his first crime will illegally import such a huge quantity of 200 kgs. of cocaine. He further argued that the proceeds of crime not only generate from sale of cocaine but they also generate from allied/ancillary incidental illegal activities like its transportation, export from country, transshipment of drugs etc. On investigation it has been established that the firm M/s. OPM International Pvt. Ltd. and its directors/shareholders have close relationships with the supplier firm M/s. Megha International Pte. Ltd., Singapore, M/s. Royal Global Exports Pte. Ltd., Singapore, M/s. SSMS Exports SA, Ecuador, M/s. Practi Power SA, Ecuador and their directors and shareholders and M/s. OPM International Pvt. Ltd. is regularly importing timber through these parties since 2004 and Shri Manek Maheshwari of M/s. Royal Global Exports Pte. Ltd. had paid freight charges of the consignment of timber in which Cocaine was seized, inspite of the fact that the consignor was M/s. Megha International Pvt. Ltd. He submitted that though M/s. OPM International Pvt. Ltd. was incorporated on dt. 24.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omic reason. He invited our attention to copies of documents submitted to M/s. Bharat Overseas Bank of Mumbai in respect of opening of bank a/c which included a letter no. 67/2006 dt. 29.6.06 from the Embassy of India, Bangkok certifying that Mr. R.P. Modani is working with M/s. Trupti International Co. Ltd., Bangkok since December, 1993. He argued that this letter shows that Shri R.P. Modani was working as an employee only and do not have such a huge earnings/savings to remit into his NRE account and made gifts of his hard earned income. He argued that these facts strongly indicates that the remittances by M/s. Royal Global Exports Pte. Ltd., Singapore and the self remittances from Singapore into the NRE account of Sh. R.P. Modani are nothing but proceeds generated out of illicit trade of narcotics drugs. He further submitted that transfer of this money by Shri Umesh Bangur to various persons/companies for no economic/business reasons clearly indicate that the said money was generated out of illegal trafficking of narcotics drugs and the entire transactions were for the purpose of layering, processing and projecting the proceeds of drug trafficking as untainted money by way of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two relatives in Mumbai, one is my brother in law Shri Radha Mohan Lakhotia who lives in Nerul, Navi Mumbai and another Shri Umesh Bangur, who is brother in law of my brother Shri Rajendra Prasad Modani. It might be possible that my brother Rajendra Prasad Modani has got these cheques deposited in Mumbai through them. Qus: Pay order for ₹ 10,00,000/- was deposited in your account on 8/02/2006. From which bank that was withdrawn, who withdrew and who deposited in your account ?. Ans: This pay order was withdrawn from my brother Shri Rajendra Prasad Modani''s NRE a/c with Bharat Overseas Fort Branch. Like my earlier reply, I would state here also that It might be possible that one of my relatives who lives in Mumbai have withdrawn this pay order and deposited in my HDFC account. He strongly argued that though Shri R.P. Modani had made gifts to his brothers Shri S.N. Modani and Shri S.S. Modani but they are not aware of the fact who, when, where and under what circumstances, the cheques/pay order were deposited into their saving bank accounts maintained in Bhilwara. These facts lead to a very strong presumption that funds transferred are nothing but proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n further strengthened by the amendment in section 8 and particularly insertion of the following proviso in section 5 of the Act by The Prevention of Money Laundering (Amendment) Act, 2009: Provided further that, notwithstanding anything contained in clause (b), any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. 13. We have heard both the parties at length. Prior to enactment of The Prevention of Money Laundering Act, 2002 , there existed many enactments like The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA), Terrorist and Disruptive Activities (Prevention) Act, 1987, The Prevention of Terrorism Act, 2002, Narcotic Drugs and Psychotropic Substances (Amendment) Act, 1988 (NDPS) (Chapter VA), Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te processes of placement, layering and integration of money earned through illegal activities like drug trafficking, terrorist activities, illegal dealing in arms and ammunition, corruption, counterfeiting, extortion etc. and projecting the same as legitimate earnings/properties to conceal or disguise the true nature, source, location, disposition, movement or ownership of or right with respect to property. The dimensions of money laundering activities extends to national and international territories. Multiple layers of integration, placement, layering, transfer of property are created so that it becomes extremely difficult to unravel the complex web of transactions and trace the true source/origin/ownership of money/property i.e. proceeds of crime. 14. Money Laundering has been defined in section 2(p) of the Act. It says that money laundering has the meaning assigned to it in section 3. Section 3 of the Act reads thus: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arliament by referring not only to the language of the statute but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy. Where the language of the statute in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity presumably not intended, a construction may be put upon which advances the laudable purpose then to paralyze the provision. Therefore the provisions of the Act which are designed to prevent/suppress money laundering have to be construed in a way which advances the remedy and suppress the mischief. 15. Thus, we are in full agreement with the reasoning of the Adjudicating Authority given in its order in Original Complaint no. 6 of 2007 and hold that property which is proceeds of crime and is in possession of any person, even though he is not charged of having committed a schedule offence, can be attached. Thus, the appellants are covered under the Act and attachment proceedings commenced by the authorities under the Act were valid proceedings. 16. As regards the contention of the appellants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odani, seized during search of residential premises of Umesh Bangur and admission of Sri Niwas Modani and Shyam Sunder Modani in their statements before defendant that they were not aware as who deposited the cheques/pay order in their accounts, strengthens the contentions raised by the defendant that the properties attached are proceeds of crime and involved in money laundering. In view of the facts that value of 200 kgs. of cocaine runs into several hundred crores and such a huge illegal import of cocaine can not be the first ever crime of Shri Om Prakash Nogaja and Shri Umesh Bangur, directors of M/s. OPM International Pvt. Ltd. and others who have been regularly importing teak logs in the past from Ecuador, South America and the freight charges were paid by Shri Manek Maheshwari of M/s. Royal Global Exports Pte. Ltd. paid the freight charges of the consignment in which Cocaine was seized, the contention of the defendant that the remittances into NRE account of Shri R.P. Modani are proceeds of crime is strengthened. 18. The Special Court under the Act i.e. Session Court, Mumbai in proceedings for trial of offence against appellants u/s. 3 r/w. section 4 of the Act have come t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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