TMI Blog2022 (12) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... The cross examination from the witnesses would be in reference to the documentary evidence for which an opportunity has been given to the appellant to contest the notice by filing reply and documents. The application to seek cross examination was filed even before filing reply to the notice along with the documents. It is otherwise a fact that Mr. Avinash Bhosale is connected with the appellant and an accused in the matter to be cross examined to espouse his own cause, cannot be permitted - the cross examination of witnesses sought by the appellant is for the sake of it and to delay the proceedings before the Adjudicating Authority. The principle of natural justice would apply when some real prejudice is going to be caused out of the action of one party. In the instant case, the appellant has failed to reflect as to what prejudice is going to cause to him if the cross examination of witness is not permitted. It is apart from the fact that the material on record shows that the allegations against the appellant are in reference to the documentary evidence which has not been refuted by the appellant by filing reply. Sufficient safeguard has been provided and looking to the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o set aside the impugned order with a direction to the Adjudicating Authority not to proceed in the matter till it is constituted as per Section 6 (2) of the Act. In absence of it, the Bench suffers from coram non-judice . Elaborate arguments have been made and would be referred while discussing the issue raised by the appellant. The stay of the proceedings till constitution of the Adjudicating Authority as per Section 6 (2) was prayed. It is after taking interpretation of the provision, that a Single Member would not constitute coram for hearing the case. In all circumstances three Members Bench would constitute the coram. To appreciate the argument, we may quote Section 6 of the Act of 2002; 6. Adjudicating Authorities, composition, powers, etc .- (1) The Central Government shall, by notification, appoint [an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act. (2) An Adjudicating Authority shall consist of a Chairperson and two other Members: Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy. (3) A person shall, however, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member, then, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Adjudicating Authority from the stage at which the vacancy is filled. (11) The Chairperson or any other Member may, by notice in writing under his hand addressed to the Central Government, resign his office: Provided that the Chairperson or any other Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (12) The Chairperson or any other Member shall not be removed from his office except by an order made by the Central Government after giving necessary opportunity of hearing. (13) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson of the Adjudicating Authority until the date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Petition W.P. (MD) No.11454/2018. The relevant para of the judgment is quoted here under; v) The contention regarding coram non-judice, that the Adjudicating Authority is manned only by a single Member also cannot be countenanced with reference to explicit provision contained in Section 6 of PMLA and allied provisions, wherein it is provided for formation of Bench by less than three Members. Therefore, the issue of coram non-judice is answered against the writ petitioners, notwithstanding the fact that at the time of pronouncement of this order, the Adjudicating Authority is consisting of three Members. The judgment supra was rendered on the similar facts thus covers the issue. The learned counsel for the appellant however referred to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary Versus Union of India reported in 2022 SSC OnLine SC 929 to impress upon the constitution of Bench with three Members. We have gone through the judgment in the case supra and find that three Members are referred for the constitution of Adjudicatory Authority and not for formation of Bench. Thus, the judgment of the Apex Court in the case supra does not help ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authorities) Rules 2007, although it states that the AA should have three members, that has to be read along with Section 6(5)(b) that there can be single-member benches. A contrary interpretation would actually frustrate the working of the AA. The Court, therefore, rejects the contention of the Petitioners that there cannot be any single-member benches of the AA. In view of the above, we do not find any merit in the appeal no.5227/2022 and any error in the impugned order which has denied stay of the proceedings on the grounds urged by the appellant. The other issue has been raised by the appellant in appeal no.5226/2022, where an application submitted by the appellant to allow cross examination of certain witnesses was dismissed. The learned counsel for the appellant would submit that as per Section 6 (15) of the Act of 2002, the Adjudicating Authority should guide itself by the principle of natural justice subject to other provisions of the Act. The Authority has been given powers to regulate its own procedures. The principle of nature justice envisages an opportunity of cross examination to bring the truth on record yet appellant has been denied an opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddressing the issue, it would be relevant to give brief facts of the case in reference to which the proceedings under the Act of 2002 were initiated. The aforesaid would be relevant to analyse the issue to be raised by the appellant. It is even to find as to whether cross examination should have been permitted by the Adjudicating Authority by accepting the prayer of the appellant. The Enforcement Directorate provisionally attached the properties of the appellant vide Provisional Attachment Order No.15/2022 dated 02.08.2022. The PAO was issued consequent to ECIR dated 07.03.2020 filed against twelve (12) accused based upon the schedule offence registered by the CBI on 07.03.2020. The allegation in the RC lodged by the CBI is about alleged criminal conspiracy between Mr. Rana Kapoor, a Promoter Director of YES Bank and M/s. DHFL, wherein Rs.3,983 Crores investment was made by YES Bank in M/s. DHFL in lieu of kickback of Rs.600 Crores paid by M/s. DHFL to companies held by Mr. Rana Kapoor. The five (5) properties comprises of the apartment and four (4) pieces of land, valued around Rs.164,67,00,000/- were attached. These properties are the equivalent value of the part of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n transferred by DHFL immediately after receiving funds from Yes Bank and no such services were ever provided by Answering Defendants and ABIL Group entities. (Para 11.6, Page 39 of the OC) d. That pursuant to the registration of the ECIR, the Complainant/ED provisionally attached the properties of the Defendants vide Provisional Attachment Order bearing PAO No. 15/2022 dated 02.08.2022. The relevant portion/Order/para 28 of the provisional attachment order showing the details of properties attached is shown, hereunder: Schedule-A of properties Sr.No. Description of Property Approx. Value of Property being attached Name of Owner 1. Duplex Apartment No. 24 admeasuring 7118.17 Sq. Feet RERA Carpet on 53 rd and 54 th Floor SESEN Building, 29, Nepean Sea Road, Mumbai 400006 Rs. 103,60,00,000/- M/s Abbeys Realcon LLP, (this entity is beneficially owned by Mr. Avinash Bhosale) 2. Land parcel admeasuring 6,143.71 Sq. Meters situated at Gat No: 65, 63, Plinth No.147, Vllage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y LLP respectively. Also, as per the directions of Mr. Kapil Wadhawan, Mr. Sanjay Chhabria diverted a fund of Rs. 115 Crore to M/s Mentor Capital Ltd. Apart from this, huge part of this fund was used by Mr. Sanjay Chhabria for repayment of loans and interest thereon with regard to his other group companies. This project for which this loan had been disbused by DHFL is still incomplete and the loan has turned into NPA. b. It has been alleged in Para 11.2, Page 38 of the Complaint that amount of Rs. 267 Crores has been received by Nibodh Realty LLP from Radius Group of Companies during the period April 2018 onwards out of which, amount of Rs. 67.85 crores is the proceeds of crime and Rs. 25 crores received by ABIL Dairy LLP is the proceeds of crime. The relevant portion is reproduced as under: 11.3 One more conspiracy was hatched between Mr. Avinash Bhosale and Mr. Sanjay Chharia for illegally obtaining the said funds of approx. Rs. 431 Crore in one of his beneficially owned entities namely M/s Nibodh Realty LLP. It is important to mention here that out of this Rs. 431 Crore approx. a considerable amount to the tune of Rs. 267 Crore had been obtained by Mr. Avinash Bhosal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... YES Bank to DHFL against subscription for the NCDs. f. Directorate of Enforcement filed Original Complaint 1793/2022 dated 25.08.2022 under Section 5 (5) of PMLA before the Ld. Adjudicating Authority for confirmation of the provisional attachment done vide PAO No. 15/2022 dated 02.08.2022. Mr. Avinash Bhosale is connected with the appellant company and alleged to be involved in money laundering. The facts given above make a reference of a case registered by the CBI and ECIR registered by the Enforcement Directorate before the provisional attachment of five (5) properties. The allegations made by the department are based on the documents and copies of which were provided to the appellant to submit reply before the Adjudicating Authority where it can deny or admit the documents. The reply was not filed by the appellant before filing application in question. In the light of the documentary evidence produced by the ED, we would analyse as to whether cross examination of the witness should have been permitted. The appellant had given details of the witnesses along with the question to be raised in the cross examination which are reproduced here under; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Complainant. He is required to be cross-examined to prove that: (a) The Appellant herein had no connection whatsoever with the alleged transaction with DHFL or any office bearer or any individual with regards to or even known or met at any point of time of Scheduled Offence. (b) The Appellant herein had remotely no connection whatsoever with the alleged Money Laundering Offence. (c) The Appellant herein had no connection whatsoever with any process related to the offence of money laundering. 4. Mr. Avinash Bhosale (S. No. 12 of RUD), statement recorded on 29.06.2022 to 10.07.2022 under Section 50(2) (3) of PMLA 2002. The witness has not made any incriminating statement against the Appellant herein, yet his statement is relied upon by the Original Complainant. He is required to be cross-examined to prove that: (a) The Appellant herein had no connection whatsoever with the alleged transaction with DHFL or any office bearer or any individual with regards to or even known or met at any point of time of Scheduled Offence. (b) The Appellant herein had remotely no connection whatsoever with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords and to the best of my knowledge, no such services have been provided by Avinash Bhosle Group or Arindam Developers LLP in respect of the project One Mahalaxmi . . Q.8. Was it a sham agreement? Ans. Yes Sir, It appears to be a sham agreement, as the funds were transferred by DHFL to Avinash Bhosle Group and Arindam Developers LLP, without they providing any service in project evaluation and structuring of the financial proposal(loan proposal) for project One Mahalaxmi The witness needs to be cross-examined on the aspect as to how he has concluded that that Mr. Sanjay Chabbria was introduced to Mr. Kapil Wadhawan by Mr. Avinash Bhosale. Further, he has to be examined on how he had declared the consultancy fee awarded to the Avinash Bhosale was a sham transaction. Many other aspects also deserve cross-examination. 7. Mr. Dayaramam Kedia (S. No. 23 of RUD), statement recorded on 19.07.2022 under Section 50(2) (3) of PMLA, 2002. The witness has not made any incriminating statement against the Applicant herein, yet his statement is relied upon by the Original Complainant. He i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidence for which an opportunity has been given to the appellant to contest the notice by filing reply and documents. The application to seek cross examination was filed even before filing reply to the notice along with the documents. It is otherwise a fact that Mr. Avinash Bhosale is connected with the appellant and an accused in the matter to be cross examined to espouse his own cause, cannot be permitted. One Mr. Srinivasan Govindan has also been called for cross examination and the questions have been referred with answers given by the said witnesses in his statement under Section 50 of the Act. The transfer of the amount was through the invoices and the documents are referable to prove the same and till date it has not been controverted by the appellant by filing reply. In view of the above, we find that cross examination of witnesses sought by the appellant is for the sake of it and to delay the proceedings before the Adjudicating Authority. It is after noticing that after an order for provisional attachment, the Adjudicating Authority has to pass an order within 180 days and therefore, the Adjudicating Authority has to proceed within the time frame given u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under [sub-section (3)] of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation .-For the purposes of this sub-section, person interested , in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating. The Courts cannot look at law in the abstract or natural justice as mere artifact. Nor can they fit into a rigid mould the concept of reasonable opportunity. If the totality of circumstances satisfies the Court that the party visited with adverse order has not suffered from denial of reasonable opportunity, the Court will decline to be punctilious or fanatical as if the rules of natural justice were sacred scriptures. It is not possible to lay down rigid rules as to when the principles of natural justice are to apply not as to their scope and extent. Everything depends on the subject matter, the application for principles of natural justice, resting as it does upon statutory implication, must always be in conformity with the scheme of the Act and with the subject- matter of the case. In the application of the concept of fair play there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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