TMI Blog2024 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the schedule offence under PML Act - The prime intention of any legislation more particularly in the matters relating to economic offences would be to restore back the position or status of victim or deceived as much as possible by recovering the property illgotten from the accused. Mere confiscation of the property to the State would not serve the purpose of legislation, if it would not come to the rescue of the victim. Though the PML Act is a central legislation having overriding effect that too subsequent in point of time to the State legislation i.e. APPDFE Act, the interest of the depositors would well be subserved if the properties of the accused firm remained attached under APPDFE Act so that there may be equitable distribution among the depositors. The Enforcement Directorate may go on investigating the case initiated by it into the offences said to have been committed by accused. However, in view of the reasons given above that the attachment made under the provisions of the APPDFE Act would subserve the interest of the depositors, the Provisional Attachment Orders passed by the Enforcement Directorate are liable to be quashed, for the reason that the same would deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n vide W.P.No.9441 of 2021 is filed by M/s. Agri Gold Farm Estates Pvt. Limited for a writ of certiorari calling for the records pertaining to the Provisional Attachment Orders 04/dated 21.12.2020 in proceedings ECIR No. ECIR/HYZO/09/2018 passed by the Directorate of Enforcement and the consequential proceedings in OC No.1391 of 2021 pending before the Adjudicating Authority, under the provisions of PML Act and quash the same being illegal, arbitrary, violative of principles of natural justice. 4. The writ petition vide W.P.No.16770 of 2021 is filed by Sai Fortune Apartment Owners Association for writ of mandamus declaring the action of respondent nos.1 and 2- Union of India, rep. by Secretary, Ministry of Finance and the Director of Enforcement in issuing the provisional attachment order vide (POA) No.04/2020 dated 24.12.2020 in ECIR/HYZO/09/2018 passed by the 2nd respondent- Director of Enforcement and the consequential proceedings in OC No.1391 of 2021 pending before the 4th respondent-Adjudicating Authority and quash the same being illegal and arbitrary. 5. Writ Petition vide W.P.No.5183 of 2022 is filed by M/s. BLG Infra Projects Private Limited for a writ of mandamus declarin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisional attachment order passed by Enforcement Directorate and filing and pendency of Original Complaint (OC) before the Adjudicating Authority. 9. As much as the issue involved in all these writ petitions is similar, these writ petitions are heard together and being disposed of by this common order. 10. The facts that are essential for disposal of all these writ petitions can be summarized as under: (i) M/s.Agri Farm Estates India Private Limited and its associate/subsidiary companies purchased various large extents of lands suitable for real estate ventures and converted/developed such lands into residential/farm plots and had sold, registered, transferred, allotted several lakhs of plots to customers including Fortune Helapuri Apartment constructed in the year 2010. The petitioners in W.P.No.16770 of 2021 are bona fide purchasers of the plots in the said Apartment prior to 01.03.2015. (ii) M/s. Singaraya Hills Green Power Genco Pvt. Ltd., and M/s. Agri Gold Farm Estate India Pvt.Ltd., are under the Management of M/s.Agri Gold Group. At the request of M/s. Singaraya Hills Green Power Genco Pvt.Ltd., Union Bak of India (Erstwhile Corporation Bank) sanctioned Term Loan of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vate Limited under sections 120B, 420 IPC, section 5 of Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 (for short, APPDFE Act) and Section 45 of the RBI Act and Sections 3,4 and 5 of Prize Chit Money Circulation (Banning) Act, 1978 and the Government of Andhra Pradesh by invoking the provisions of Section 3 of the APPDFE Act, 1999 issued G.O.Ms.No.22 and G.O.Ms.No.23 of Home (Arms SPF) Department, dated 20.02.2015, G.O.Ms.No.73 of Home (Gen A2) Department, dated 05.06.2015, G.O.Ms.No.21 of Home (General-A2) Department, dated 29.02.2016 and G.O.Ms.No.39, Home (General-A) Department, dated 15.02.2019 and attached the properties of the Company. Thereafter, the CID, Andhra Pradesh filed petitions before the Special Court, Eluru designated to deal with the offences under APPDFE Act and the Special Court, Eluru passed orders on 23.09.2015, attaching all the properties of the company covered under G.O.Ms.22 and 23, dated 20.02.2015 and G.O.Ms.No.73 dated 05.06.2015. (v) As many as fifteen (15) criminal cases in the State of Andhra Pradesh, three (03) criminal cases in the State of Telangana and some criminal cases in the State of Karnataka, Orissa and also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction Company, which constructed Helapuri Apartment, Fathebada at Eluru, is one of the accused company in Crime No.3 of 2015 of Pedapadu Police Station. The said property was attached under Section 3 of the APPDFE Act vide G.O.Ms.No.23, dated 22.02.2015 and the said attachment was made absolute by the Special Court-cum-PDJ, Eluru on 23.09.2015. Merely because the flats in the subject Apartment were purchased prior to registration of Cr.No.3 of 2015 of Pedapadu Police Station does not absolve the fact that the subject property was purchased and constructed by an accused company in the said crime with the amounts collected from the depositors as such the subject apartment is one of the derived proceeds of crime. The petitioner Association of flat owners, did not raise any objection before the Special Court-cum-Principal District Judge, Eluru before the attachment of the said property was made absolute vide order dated 23.09.2015. The inadvertent mention of note in G.O.Ms.No.23, dated 22.02.2015 that except the plots that were registered in the respective Sub Registrar Offices before the Criminal cases were registered i.e. on 01.03.2015 at Pedapadu, West Godavari District, the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1999. The allegations against the accused in crime registered emanate from the violation of Section 5 of the APPDFE Act, 1999, which is not a schedule offence under PMLA Act. Therefore, the objectives sought to be achieved under the State Act cannot be frustrated by the supervening orders of attachment issued under the PMLA more specifically, in the context of the primary objective of the State Act inter alia to mitigate the hardship of depositors who have suffered on account of the default of the accused in repaying the dues arising from such deposits. Therefore, to subserve the ends of justice and to ensure that there is no frustration of the objectives of the State imposed upon it under a validly made State Law to protect the interest of depositors and also the public interest, the continuance of the proceedings under the State Act is very much essential. The remainder of the sale proceeds, if any, after meeting out the requirements of payment to the depositors, shall be continued to be remained in deposit with the Special Court subject to such further conclusion of proceedings under the PML Act. 12. The contentions raised by the Directorate of Enforcement in all these writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worth Rs. 4109.13 Crore and various immovable properties worth Rs. 31.99 Crore of Agri Gold Group, its promoters/ Directors and other connected persons respectively. Further, investigation is under progress to trace the remaining Proceeds of Crime amounting to more than Rs. 2000 crore. The entire amounts collected by Agri Gold group into their different companies in the form of their unregulated Collective Investment Scheme, are from general public under the pretext of real estate business. All the properties purchased by the Companies and the Directors and other family members, are from these public funds only. The Enforcement Directorate had attached the properties under Section 5(1) of PML Act, 2002 and clearly justified the reasons for such attachment. It is true that ED is also a respondent in PIL No.193/2015, whereas the prayer of the petitioner in the said PIL itself is seeking directions of the Hon ble Court for investigation by Central Agencies like CBI and ED, as the said Agri Gold scam is massive and spread over various states in India. Hence, the action taken by Enforcement Directorate, in passing an attachment order, is not against any law/ directions of any Court, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority (PMLA) praying for confirmation of the attachment orders. The Adjudicating Authority as per Section 8 of the Act is proceeding with the adjudication proceedings, including issuance of show cause notice to the accused of the crimes, for which they can file a written counter/reply to the Original Complaints filed by the Enforcement Directorate. After following due procedures and after hearing both sides, the Adjudicating Authority would confirm/not confirm the Provisional Attachment orders as stipulated under Section 8(2) and 8(3) of the PML Act, 2002, by order in writing. If any party, aggrieved by the said order , can approach the Appellate Tribunal (PMLA) by filing an Appeal under Section 26 of PMLA,2002. If any party is still aggrieved by the orders passed by the Appellate Tribunal, may approach this Court under Section 42 of the PML Act, 2002. Hence, it is clear that the PML Act is providing all the remedies to the parties under principles of natural justice. The petitioners have an efficacious statutory remedy available under Section 8 of the PML Act. Instead of exhausting the statutory remedy available in PML Act, these writ petitions have been filed invoking Article 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit facility availed by the company from the petitioner Bank, the bank is having first charge and as a first charge holder, the petitioner bank is having priority of charge over others. Therefore, the attachment orders passed by the investigating agency in the predicate offences as well as the Provisional Attachment Order passed by Enforcement Directorate in relation to the property which were purchased with the credit limit advanced by the petitioner bank and mortgaged to the bank are illegal, arbitrary and unconstitutional. Accordingly, prayed to allow the writ petitions vide W.P.Nos.4043 4044 of 2019 and W.P.No.7987 of 2021. 15. Sri S.Vivek Chandrasekhar, learned counsel for the petitioner, while reiterating the contents of the writ affidavit in W.P.No.5183 of 2022 and while reiterating the contentions raised by the learned Standing Counsel for the bank, further contended that the petitioner in this writ petition had purchased the property pursuant to proclamation of sale-cum- E auction conducted by Union Bank of India of the properties mortgaged to the said bank. Therefore, the said property stands outside the purview of the definition proceeds of crime under Section 2(u) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their money. As per directions of the PIL, a committee was constituted vide order dated 09.10.2015 and some of the properties were sold excluding the properties which were sold and registered to the members of the petitioner association in W.P.No.11520 of 2023 and finally the High Court of Telangana vide final order dated 25.02.2022 directed that all the issues are to be dealt with by the Principal District Judge, a special Court to deal with all the matters pertaining to the attachment made by the 5th respondent- Home Department. The special Court vide its orders dated 16.03.2023 had observed that the properties which are already sold to plot owners/ flat owners should be out of ambit of the attachment. Thus, the issue of attachment of the properties of the members of the petitioner association by the 5th respondent Government vide G.O.Ms.No.23 and others G.Os. is still pending before the Special Court. While so, the 1st respondent- Enforcement Directorate vide impugned provisional Attachment order dated 24.12.2020 had attached all properties that were originally attached by the 5th respondent vide various G.Os. including G.O.Ms.No.23, despite the clear mention made in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orcement Directorate is bound by the orders passed in the PIL and are estopped from registering ECIR/HYZO/09/2018 and in passing Provisional Attachment Orders. The reasons to believe mentioned in the Provisional Attachment Orders are not at all sustainable and they do not meet the requirement of Section 5 of PML Act. The learned counsel for the petitioners further submitted that though there is a statutory remedy provided under Section 8 of PML Act, 2002 to agitate before the Adjudicating Authority, since the Provisional Attachment Orders are passed in violation of the series of orders passed by the High Court in PIL No.193 of 2015 and attaching the properties which were already auctioned by this Court and since the same are in clear statutory violations, the requirement of exhausting the alternative remedy is not a bar for filing the writ petitions. The Provisional Attachment Orders in PAO No.12 of 2021, dated 30.11.2021 and PAO No.4 of 2020, dated 24.12.2020 in proceedings ECIR No.ECIR/HYZO/09/2018 are liable to be quashed and so also the consequential proceedings in OC No.1598 of 2022 and OC No.1391 of 2021. Accordingly, prayed to allow the writ petitions. 20. The learned Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits from depositors in contravention of Section 5 of the APPDFE Act, which is not a schedule offence under the PML Act. In the FIR, the accused was charged with IPC offences along with the main charging provision under Section 5 of the APPDFE Act. By that reason alone the proceedings of crime which are detectable during the course of investigation on the basis of such predicate offence, does not render the subject matters to be in the sole domain of the Enforcement Directorate to enforce the provisions of PML Act. The learned Advocate General further submitted that the objectives sought to be achieved under the State Act cannot be frustrated by the supervening orders of attachment issued under the PML Act more specifically in the context of the primary objective of the State Special Act, assented to by the Hon ble President, is to inter alia mitigate the hardship of the depositors who have suffered on account of the default of the accused in repaying the dues arising from such deposits. If the subject property is sought to be permitted to be attached subject to further consequences under the PML Act, 2002, the entire proceeds of crime would not be available to the State or its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 768] 21. Whereas, Sri Josyula Bhaskar Rao, learned Standing counsel for Enforcement Directorate, while reiterating the contents of the counter affidavits further contended that the writ petitions are not maintainable, in view of availability of efficacious alternative remedy. The Prevention of Money Laundering Act contains a mechanism and the persons aggrieved of Provisional Attachment Orders may approach the Adjudicating Authority and prove that the properties attached are not involved in money laundering. Further, the orders passed under Section 8(3) of the Act confirming Provisional Attachment are appealable before the Appellate Tribunal contemplated under Section 26(3) of the PML Act and if aggrieved by the orders of the Appellate Tribunal, further appeal under Section 42 of the PML Act lies to the High Court. Without availing the remedies before the Adjudicating Authority and Appellate Tribunal, the petitioners had straight away filed this writ petition and thus the writ petitions are liable to be dismissed on this ground alone. The learned Standing counsel would further submit that since FIRs were registered against M/s. Agri Gold Group including predicate offences, investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for attaching the properties by issuing Provisional Attachment Order as per Section 5(1) of the PML Act. In support of his contentions, the learned Standing Counsel for Enforcement Directorate relied on the decisions (1) The Deputy Director, Directorate of Enforcement vs. Axis Bank and others (Orders dated 02.04.22019 passed in CRL.A.No.143/2018 and batch passed by Delhi High Court) , (2) B.Rama Raju vs. Union of India (Orders dated 04.03.2011 passed in W.P.Nos.10765, 10769 23166 of 2010 passed by Division Bench of this Court) , (3) Union Bank of India vs. Satyawati Tondon Ors. (Orders dated 26.07.2010 passed in SLP(C) No.10145 of 2010 by Supreme Court of India) (4) Mr. John Kennedy vs. M/s. Martin Property Developers Pvt. Ltd., Coimbatore (Orders dated 17.12.2020 passed in W.P.Nos.25177 and 25231 of 2019 of High Court of Madras) (5) Sri P.Trivikrama Prasad vs. Enforcement Directorate (Orders dated 16.10.2014 passed in W.P.No.21124 of 2014 by High Court of Andhra Pradesh) (6) Union of India and another vs. Kunisetty Satyanarayana (Orders dated 22.11.2006 passed by Hon ble Supreme Court in Appeal (civil) 5145 of 2006.) , (7) Arun Kumar Mishra vs. Union of India (Orders dated 31.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under G.O.Ms.No.22, 23 and 73. Later, the CID filed petitions before the Special Court, Eluru for confirmation of attachment of the properties in respect of other properties covered in other G.Os. and the same is pending adjudication before the Special Court, Eluru. 24. The material would disclose that Telangana Agri Gold Customers and Agents Welfare Association filed Public Interest Litigation vide PIL No.193 of 2015 on the file of the High Court of Judicature at Hyderabad, for the state of Telangana and the State of Andhra Pradesh praying to issue a Writ Order or Direction more particularly one in the nature of Writ of Mandamus declaration the inaction of the respondent in not taking any action on the respondent No.7-M/s.Agri Gold Farms Estates India Private Limited, as illegal, arbitrary and unconstitutional, without any valid reasons, (b) direct the respondents to appoint a committee to conduct Sale/Auction of properties own by respondent no.7 to mobile money, (c) direct the respondents to return money paid by the depositors to save their rights/protect livelihood, d) Direct respondent 1-6 to conduct in depth investigation/enquiry on the lines of Sharada and Sahara scams, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made clear that the Company/C-1 shall accept the consideration only by Cheque/DD/Pay order or through RTGS and in any case n ot by cash. This Court shall take a serious view of the matter, if it is revealed that cash has been accepted by them. v. The E-auction is directed to be undertake under supervision of the Committee constituted by this Court and it shall be the responsibility of the Committee and C-1 to maintain complete confidentiality of E-auction details and every care is taken to avoid inside trading of information for direct, indirect, collateral or advantage in conduct of E-auction. vi. The Chairman of the Company and Agri Group shall make available to C-1 the details of title documents together with legal opinion on the right and entitlement of the company to sell and convey unencumbered right in the properties sought to be auctioned through C-1. C-1 is further directed to display the details made available either through this Court or through the Committee on the portal dealing with the subject E-auction. C-1 is further directed to display by way of notice in the proposed E-auction the pendency of the instant PIL and the orders under which the E-auction is being cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh) has also informed that the competent authority was also appointed long back in the matter. Meaning thereby, all claims in respect of the depositors are to be adjudicated by the Special Court constituted for the purpose. Learned Senior Counsel Sri P.B.Vijay Kumar has stated before this Court that various orders have been passed in the present cases and other connected matters from time to time and the Special Court be directed to consider those orders also while passing orders in respect of disbursement of amount. Not only this, he has stated that an amount of Rs. 50,42,70,521/- is lying with the Registry of this Court and therefore, the amount be transferred to the Special Court for distribution of the same to the depositors. After hearing the learned counsel for the parties in the present matters, this Court is of the opinion that it is the Special Court which is having jurisdiction to make equitable distribution of the money realized out of the property attached, among the depositors. Therefore, the amount of Rs. 50,42,70,521/- along with the accrued interest be transferred to the Special Court constituted for the purpose. The petitioners before This Court as well as al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f both the Acts to ascertain as to the procedure envisaged under which law would better serve the purpose of meeting the obligations of the depositors, whose hard earned money was collected by the accused luring them of high returns to amass wealth. 30. The statement of Objects and Reasons of Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 read as under: Instances have come to the notice of the State Government, wherein a number of unscrupulous financial establishments in the State are cheating innocent, gullible depositors by offering very attractive rates of interest, collecting huge deposits and then vanishing suddenly. The depositors are being cheated and as put to grave hardship by losing their hard-earned savings. To curb these malpractices, the State Government had decided to bring a law to protect the interests of depositors of the financial establishment in the Sate and for matters connected therewith or incidental thereto. The above issue was also discussed in a conference of the State Chief Ministers and Finance Ministers presided by the Union Finance Minister on 14.9.1998 at Vigyan Bhavan, New Delhi. The Union Finance Minister also desired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty attached under this Act and after giving the Competent Authority an opportunity of being heard, make such orders as the Special Court considers just and reasonable for,-- (a) Providing from such of the property attached as the applicant claims an interest in such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been instituted against him in the Special Court under Section 5; (b) Safeguarding so far as may be practicable the interest of any business affected by the attachment and particularly by in the interest of any partners in such business. 11. Appeal:- Any person including the Competent Authority, if aggrieved by an order of the Special Court, may appeal to the High Court within thirty days from the date of such order. 14. Act to override other laws - Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any custom or usage or any instrument having affect by virtue of any such law. 34. Sub Section (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: 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 nonattachment of the property is likely to frustrate any proceeding under this Act.]. (2) The Director, or any other officer not below the rank of Deputy 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it would not come to the rescue of the victim. 40. The Prevention of Money Laundering Act, though a self contained code and provides for appeal over the decisions taken by the Adjudicating Authority, did not contain any provision in pari materia with that of Sub Section (4) of Section 6 of the APPDFE Act, which comes to the rescue of the depositors that were deceived by the accused, which would always to be the prime intention of any legislation dealing with economic offences in relation to private individuals. The provision contained in PML Act for confiscation of the property in case the accused person found guilty of the schedule offence, would not cater the needs of the deceived depositors. 41. In view of the above, though the PML Act is a central legislation having overriding effect that too subsequent in point of time to the State legislation i.e. APPDFE Act, the interest of the depositors would well be subserved if the properties of the accused firm remained attached under APPDFE Act so that there may be equitable distribution among the depositors. 42. At this juncture, it cannot be lost sight of the fact that Division Bench of this Court in PIL No. 193 of 2015 filed inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the case initiated by it into the offences said to have been committed by accused. However, in view of the reasons given above that the attachment made under the provisions of the APPDFE Act would subserve the interest of the depositors, the Provisional Attachment Orders passed by the Enforcement Directorate are liable to be quashed, for the reason that the same would deter the primary objective of the APPDFE Act in mitigating the hardship of the depositors. 46. All the depositors are natives of this State and the properties attached are situated in this State and the possible inconvenience that may be caused to the depositors, who had parted with their hard earnings with the Company by way of deposits, in approaching the Authority under PMLA Act for pursuing their claims to get back the amount, is also taken into consideration while reaching to the conclusion that proceeding with the matter before the Special Court designated under APPDFE Act would subserve the interest of the depositors. 47. Regarding the claim made by Union Bank of India (corporation bank) vide W.P.Nos.4043 4044 of 2019 for declaring G.O.Ms.No.23 and 39 to the extent of the properties mortgaged by M/s.Singa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attachment Orders impugned in these writ petitions, in accordance with the provisions of the PMLA Act. 51. Accordingly, (a) Writ Petition Nos.4043 4044 of 2019 filed by Union Bank of India (corporation bank) and Writ Petition No.5183 of 2022 filed by M/s.BLG Infra Projects, are disposed of and the writ petitioner can raise all the grounds that are available to the Bank in relation to G.O.Ms.NO.23 and 39 before the Special Court in relation to the properties mortgaged to the bank by M/s. Agri Gold Group and were purchased by M/s.BLG Infra Projects in E-auction. (b) Writ Petition nos.11520 of 2023 and W.P.No.16770 of 2021 are disposed of and the writ petitioners can raise all the grounds in relation to G.O.Ms.No.23 in relation to their flats are concerned. (c) In so far as the writ petitions vide W.P.Nos.7987 of 2021 filed by Bank, W.P.No.16770 of 2021 filed by Sai Fortune Apartment Owners Association, W.P.No.5183 of 2022 filed by BLG Infra Projects Private Limited, W.P.No.11520 of 2023 filed by All India Agri gold Customers Agents Welfare Association and W.P.No.9441 of 2021 filed by M/s. Agri gold Farm Estates Private Limited for quashing PAO No.04/2020 dated 24.12.2020 and also the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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