Allowed

FPA-PMLA-1776/DLI/2017 of M/s Horizon Info Solutions Pvt. Ltd. v/s The Deputy Director Directorate of Enforcement, Delhi

ATFP8 Feb 2018FPA-PMLA-1776/DLI/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal quashed an order confirming provisional attachment of a property claimed by a third-party purchaser. The court held that the Adjudicating Authority violated natural justice by failing to issue a notice or hear the purchaser, who was found to be a genuine buyer without involvement in the alleged money laundering.

What did the court decide?

The impugned order confirming provisional attachment was modified; the property was released from attachment forthwith.

FPA-PMLA-1776/DLI/2017 of M/s Horizon Info Solutions Pvt. Ltd… — Money Laundering | ATFP (2018)

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APPELLATE TRIBUNAL, PREVENTION OF MONEY LAUNDERING ACT AT NEW DELHI

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Date of Decision: 08.02.2018

¶3

MP-PMLA-3476/DLI/2017 (Exp.) MP-PMLA-3477/DLI/2017 (COD) & FPA-PMLA-1776/DLI/2017 M/s Horizon Info Solutions Pvt. Ltd. … Appellant/Applicant Versus The Deputy Director Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who appeared

¶5

For the appellant	:	Shri K. Datta, Advocate
For the respondent	:	Shri S.K. Sharma , Advocate
CORAM
JUSTICE MANMOHAN SINGH	:	CHAIRMAN
JUDGEMENT

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FPA-PMLA-1776/DLI/2017

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The present appeal has been filed under Section 26 of the Prevention of Money Laundering Act, 2002 (herein after referred to as the “PMLA” ) against the order dated 03.02.2017 passed by the Adjudicating Authority confirming the PAO in OC No. 642/2017. After passing the order, the notice dated 17.02.2017 of the Directorate of Enforcement whereby the Deputy Director has directed the appellant to vacate and handover the possession of the premises i.e. situated at B-1/A-20,

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FPA-PMLA-1776/DLI/2017

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Page 1 of 32

¶10

Mohan Cooperative Industrial Estate, Mathura Road, New Delhi110044.

¶11

The appellant was not arrayed as party in the OC. At the time of passing of the provisional attachment order, the respondent was aware that the appellant was claiming owner of the property by virtue of sale deed party who had purchased the property from third party but despite having knowledge no notice was issued by the Adjudicating Authority. No opportunity was given to the appellant to file reply, who was also not heard at the same of confirmation despite mandatory provisions. The prescribed period of 180 days under Section 5 of the Act has already expired. There is no provision in the act of review of the impugned order or the order of provisional attachment order. There is no provision in the PML Act, 2002 for extension of time after the expiry of 180 days. The present dispute in the appeal is only pertaining to above referred property.

¶12

It is true that if the ED and Adjudicating Authority were having no knowledge about the claim of owner of the property in question which was purchased by the appellant then no notice was required and the situation would have been different. But in the present case both authorities were fully aware all this facts and supporting documents executed in favour of the appellant but despite that no notice was given, the appellant were not heard who was the aggrieved party. The appellant is simply a purchaser of the property in question. The appellant is not involved in any criminal proceedings and under the PMLA Act, 2002 complaint. As per the case of the appellant, the appellant is bonafide purchaser of the property and innocent party.

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FPA-PMLA-1776/DLI/2017

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Page 2 of 32

¶15

Section 8(1) (2) are reproduced hereunder:-

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8 Adjudication. —

¶17

(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an¹³ [offence under section 3 or is in possession of proceeds of crime], he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government:

¶18

Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property.

¶19

(2) The Adjudicating Authority shall, after—

¶20

(a) considering the reply, if any, to the notice issued under sub- section (1);

¶21

(b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and

¶22

(c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering:

¶23

Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering.

¶24

The appellant is claiming ownership and thus an aggrieved party

¶25

as the impugned order was passed against the appellant in relation to the property in question, therefore, the appeal has been filed, otherwise the respondent would take incase the possession under Section 8(4) of the Act is taken by the respondent, the appellant would be left with no remedy. The interim order in favour of appellant has already been passed

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FPA-PMLA-1776/DLI/2017

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Page 3 of 32

¶28

in favour of the appellant. In the present appeal both parties do not dispute that with regard to other attached property. The operation of order would continue against the accuse party.

¶29

Facts of the Case The facts of the matter is that the Central Bureau of Investigation, New Delhi took up the investigation and registered 8 FIRs bearing Nos. RC BDI 2009 E 0001, 0002, 0005, 0006, 0008, 0009, 0010, and 0013, for commission of offences punishable under Section 120-B, r/w 420, 460 & 471 of IPC, 1860 and Section 13 of PC Act 1988 for which charge sheets have been filed under Section under Section 173 of Cr. PC 1988 against H.B. Chaturvedi, Chairman-cum-Managing Director, Amit Chaturvedi, Joint Managing Director, Sanjay Chaturvedi, Director, Sumit Chaturvedi, Director and Parvin Juneja, Director (Corporate Finance) of M/s. Shamken Spinners Ltd., M/s. Shamken Multifab Ltd., M/s. Dwarkadhish Spinners Ltd. and M/s. Shamken Cotsyn Ltd. amongst others (hereinafter referred to as „the accused persons‟ ).

¶30

It was alleged in the said FIRs that one M/s. Shamken Group of Companies and its Directors had committed various financial frauds by misrepresenting facts and by furnishing false and fabricated information/documents to banks for availing loans worth Rs. 118.5 Crores during the years 1998-2003 for procurement of plant and machinery but instead utilized during the years 1998-2003 for procurement of plant and machinery but instead utilized and siphoned off disbursed funds for the purposes other than for those sanctioned, thereby attaching the provision of Sections 120-B, r/w 420, 460 & 471 of IPC, 1860 for which charge sheets have been filed under Section 173 of Cr. PC in the matter of eight FIRs. It has been further alleged that funds availed through loans for specific purposes were not utilized in FPA-PMLA-1776/DLI/2017 Page 4 of 32

¶31

Page 4 of 32

¶32

accordance but rotated around to the accounts of other group companies such that they are outstanding to this date. The said alleged acts are stated to have been committed during the period 1998-2003.

¶33

On the basis of said FIR and allegation, the responses registered ECIR and after investigation, the respondent passed the provisional attachment order No. 7/2016 dated 15.09.2016 passed by Directorate of Enforcement.

¶34

By the said PAO, the following property were attached:

¶35

S.No.	Name of the		Details of	the	Property Value	Valuation
	Party		property		(in Rs.)	Date
1	Shri H.B. Chaturvedi,	a.	Jewellery as Annexure J val	per ued	1,49,50,200	23.06.2014
	Shri Sanjay		at Rs.
	Chaturvedi,		1,49,50,200/-	of
	Shri Amit		Panchnama
	Chaturvedi	b.	Cash as	per	10,50,000/-	-do-
	98, Eastern Avenue		Annexure C of 10,50,000/-	Rs.
	Sainik Farms, New	c.	Honda City DL3CBE 5465	No.	4,05,300	05.07.2016
	Delhi- 110062	d.	Skoda Su Elegance	perb No.	14,71,900	-do-
			DL8CZ0811
		e.	Renault Duster No. DL8CZ9910	RXL	10,65,400	-do-

¶36

FPA-PMLA-1776/DLI/2017

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Page 5 of 32

¶38

		f.	Mercedes Benz No. DL3CH0394	1,19,200	-do-
2.	Shri H.B. Chaturvedi, Shri Sanjay Chaturvedi, Shri Amit Chaturvedi	a.	One Box marked A11 containing 25 jewellery worth Rs. 36,41,088/- as per Annexure J	36,41,088	23.06.2014
	97-D, Eastern	b.	One Gold watch of Rolex make	22,05,000	31.07.2014
	Avenue Sainik Farms, New	c.	Innova-Reg. No. DL3CBX0843	5,54,500	05.07.2016
	Delhi- 110062	d.	Scorpio-Reg. No. DL3CAS4213	7,07,400	-do-
		e.	Elantra – Reg. No. DL3CBP8137	8,42,550	-do-
3.	Mrs.		98, Eastern Avenue	43,96,12,800

¶39

FPA-PMLA-1776/DLI/2017

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Page 6 of 32

¶41

	Maharani Chaturvedi		Sainik Farms, New Delhi 110062
	w/o Shri H.B. Chaturvedi, Mrs. Neelima Chaturved
	w/o Shri Amit Chaturvedi
4.	Sh. Sohit Chaturvedi		97-D, Eastern Avenue Sainik
	s/o Shri Sanjay Chaturvedi, Shri Eshan Chaturvedi		Farms, New Delhi 110062
	s/o Shri Amit Chaturvedi
5.	Shamken Cotsyn	a.	A/c No. 20342000000359	8,23,893.35	02.04.2016
	Limited		HDFC Bank, B 6/3,
	(SCL)		Safdarjung Enclave, New Delhi-59

¶42

FPA-PMLA-1776/DLI/2017

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Page 7 of 32

¶44

		b.	A/c No. 05032320000593	9,715.03	05.05.2016
6.	Shamken Multifab Ltd.		Shamken House, B- 1/A-20, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi-110044	5,66,00,000	01.09.2011
7.	Shamken Multifab Ltd. (SML)	a.	A/c No. 0417984224 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001	64,894.38	07.04.2016
		b.	A/c No. 04222922225 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001	54,340	07.04.2016
		c.	A/c No. 094252061-001 HSBC Bank, The	34,59,53,800	04.04.2016

¶45

FPA-PMLA-1776/DLI/2017

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Page 8 of 32

¶47

	Hongkong and Shanghai Banking
	Corporation Ltd.,
	Birla Towers, 25
	Barakhamba Road, New Delhi-110001
d.	A/c No.	4,58,308	18.05.2016
	011105000129220 of IDBI Bank, Surya Kiran Building,
	Ground Floor, 19,
	Kasturba Gandhi
	Marg, New Delhi
e.	A/c No.	63,560	18.05.2016
	0011778000000019 of IDBI Bank, Surya
	Kiran Building,
	Ground Floor, 19,
	Kasturba Gandhi
	Marg, New Delhi
f.	A/c No.	5,14,983	11.07.2016
	038403003851- 195001 of Catholic
	Syrian Bank, Kosi
	Kalan, Mathura
	District, UP 281 403

¶48

FPA-PMLA-1776/DLI/2017

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Page 9 of 32

¶50

8.	Shamken Spinners Ltd. (SSL)	a. b.	A/c No. 0421866228 Citi Bank, N.A., Global Consumer Bank, Jeevan Bharti Building, 124, Connaught Circus, New Delhi-110001 A/c No. 051-219681- 001 HSBC Bank, The Hongkong and Shanghai Bankin Corporation Ltd. Birla Towers, 25 Barakhamba Road, New Delhi-110001	2,21,141.26 8,94,91,350.8	07.04.2016 04.04.2016
		c.	A/c No. 20342000000438 HDFC Bank, B 6/3, Safdarjung Enclave, New Delhi-110059	20,464	07.03.2016
9.	M/s Shamken	a.	A/c No. 18250200000134 of	1,00,968	06.05.2016
	International Ltd		UCO Bank, Ferozeshah Road, New Delhi
10.	H.B. Chaturvedi	b.	A/c No. 004601000683 of	1,58,383.22	04.03.2016
			ICICI Bank 9A,
			Phelps Building, Connaught Place,

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FPA-PMLA-1776/DLI/2017

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Page 10 of 32

¶53

			New Delhi-11	001
		c.	A/c 18250100001	No. 667 of	8,442.38	06.05.2016
			UCO	Bank
			Ferozeshah New Delhi	Road,
11.	Amit Chaturvedi		A/c 18250100000	No. 431 of	14,262	06.05.2016
			UCO	Bank,
			Ferozeshah New Delhi	Road,
12.	Neelima Chaturvedi	a	A/c 18250310017	No. 562 of	78,576.00	06.05.2016
			UCO	Bank,
			Ferozeshah New Delhi	Road,
		b	A/c 18250310017	No. 579 of	78,905	06.05.2016
			UCO	Bank,
			Ferozeshah New Delhi	Road,
		C	A/c 18250310018	No. 606 of	1,51,900	06.05.2016
			UCO	Bank,
			Ferozeshah New Delhi	Road,
		D	A/c 18250310018 of UCO	No. 637 Bank,	1,55,702	06.05.2016

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FPA-PMLA-1776/DLI/2017

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Page 11 of 32

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	Ferozeshah New Delhi	Road,
E	A/c	No.	1,38,206	06.05.2016
	18250310018	651 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
F	A/c	No.	74,092	06.05.2016
	18250310026	496 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
G	A/c	No.	74,095	06.05.2016
	18250310026	502 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
H	A/c	No.	74,094	06.05.2016
	18250310026	519 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
I	A/c	No.	74,093	06.05.2016
	18250310026	526 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
J	A/c	No.	74,095	06.05.2016
	18250310026	533 of
	UCO	Bank,
	Ferozeshah	Road,

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FPA-PMLA-1776/DLI/2017

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Page 12 of 32

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	New Delhi
K	A/c	No.	74,092	06.05.2016
	18250310026	540 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
L	A/c	No.	74,095	06.05.2016
	18250310026	557 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
M	A/c	No.	74,099	06.05.2016
	18250310026	564 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
N	A/c	No.	74,091	06.05.2016
	18250310026	571 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
O	A/c	No.	74,093	06.05.2016
	18250310026	588 of
	UCO	Bank,
	Ferozeshah	Road,
	New Delhi
P	A/c	No.	1,33,559	06.05.2016
	18250310033	104 of
	UCO	Bank,
	Ferozeshah	Road,

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FPA-PMLA-1776/DLI/2017

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Page 13 of 32

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			New Delhi
		Q	A/c No. 18250310042656 of	63,338	06.05.2016
			UCO Bank, Ferozeshah Road, New Delhi
		R	A/c No. 18250310051023 of	70,141	06.05.2016
			UCO Bank, Ferozeshah Road, New Delhi
13	Sanjay Chaturvedi		A/c No. 52110291332 of Standard Chartered Bank, 7A, DLF Cyber city, Gurgaon-122002	1,63,775.07	13.05.2016
14	Sohit Chaturvedi	a	A/c No. 164701500127 ICICI Bank, E-147, Opposite PVR Cinema, Saket, New Delhi-17	1,72,400.63	20.05.2016
15	Anju Chaturvedi	B	A/c No. 18250310017555 of UCO Bank, Ferozeshah Road, New Delhi	74,091	06.05.2016
		C	A/c No. 18250310017586 of UCO Bank,	79,367	06.05.2016

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Page 14 of 32

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				Ferozeshah New Delhi	Road,
			D	A/c 18250310018	No. 620 of	1,56,927	06.05.2016
				UCO	Bank,
				Ferozeshah New Delhi	Road,
			E	A/c 18250310018	No. 613 of	1,56,932	06.05.2016
				UCO	Bank,
				Ferozeshah New Delhi	Road,
			F	A/c 18250310018	No. 644 of	1,38,948	06.05.2016
				UCO	Bank,
				Ferozeshah New Delhi	Road,
			G	A/c 18250310042	No. 601 of	63,353	06.05.2016
				UCO	Bank,
				Ferozeshah New Delhi	Road,
16	Kotwan Traders	Pvt.		A/c 00701030002	No. 1739 of	27,867.02	25.05.2016
	Ltd.			Axis Statesman	Bank, House,
				148, Bara	khamba
				Road, Co	nnaught
				Place, New 110001	Delhi-

¶66

FPA-PMLA-1776/DLI/2017

Page 15 of 32

Total

96,38,35,580.17

Admittedly that the said property had been purchased by M/s. Shamken Group of Industries in the year 1992 which not only is much prior to the alleged transactions but is even prior to the PMLA Act being enacted and therefore, the said property cannot be said to a “proceed of crime” . The said property had already been sold to the Appellant, the said fact having been brought to the knowledge of the Adjudicating Authority but despite an order of attachment in respect of the said property has been passed without even affording an opportunity of hearing to the appellant.

¶71

The Adjudicating Authority by impugned order has affirmed the order of provisional attachment bearing No. 7/2016 dated 15.09.2016, passed by the Directorate of Enforcement.

¶72

The appellant is aggrieved by the said orders to the extent about the attachment of property bearing No. B-1/A-20 Mohan Cooperative Industrial Estate, Mathura Road, New Delhi- 110 044 (hereinafter referred to as “the said property” ) which property was purchased for valuable consideration. The challenge in the present appeal is limited to only that extent.

¶73

It is alleged by the appellant that the Ld. Adjudicating Authority has erred in passing of the impugned order and the same is in violation of the principles of natural justice as the same has been passed without affording an opportunity of being heard to the appellant, whose rights are adversely affected by the said impugned order. The said impugned order

¶74

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Page 16 of 32

¶76

is thus liable to be set aside to the extent it adversely affects the rights of the appellant.

¶77

It is not denied by the respondent that the factum of the sale of the said property having been brought to the notice of Directorate of Enforcement as well as the Ld. Adjudicating Authority by the accused persons against whom the proceedings under PMLA have been initiated, however, the Directorate of Enforcement as well as the Adjudicating Authority without calling upon the appellant still proceeded to pass an order of attachment in respect of the said property without affording an opportunity of being heard to the Appellant.

¶78

With regard to property in dispute, as per material placed on record, it is evident that the said property had been purchased by M/s. Shamken Multifab Ltd. from Mr. O.P. Gupta, the original allottee, as way back as on 04.11.1992 for a consideration of Rs. 33 lakhs. The copy of the perpetual lease deed in favour of Mr. O.P. Gupta dated 04.05.1978 by virtue of which Mr. O.P. Gupta derived his title in respect of the said property is filed as ANNEXURE-A4 . The copy of the registered General Power of Attorney dated 04.11.1992 executed by Mr. O.P. Gupta, inter alia , in favour of M/s. Shamken Multifab Ltd. and other documents executed by Mr. O.P. Gupta in favour of M/s. Shamken Multifab Ltd. for the purpose of sale of the said property in favour of the letter is annexed with the appeal pursuant thereto, vide a registered Agreement to Sell dated 05.09.2011.

¶79

M/s. Shamken Multifab Ltd. had agreed to sell the said property in question to M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. for a sale consideration of Rs. 5.66 crores. The said Agreement to Sell was duly registered in the office of the Sub-Registrar-V on 05.09.2011. The

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Page 17 of 32

¶82

requisite stamp duty amounts of Rs. 33,96,000/- had been paid by M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. for the registration of the said agreement to sell. In terms of the said agreement to sell, it had been categorically agreed to that M/s. Shamken Multifab Ltd. will apply and obtain the necessary sale permission/no objection certificate from the concerned authorities for the transfer of the said property in favour of the M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. at its cost and expense. It had been further agreed that pursuant to receipt of the said permission, M/s. Shamken Multifab Ltd. will execute an appropriate sale deed in respect of the said property in favour of M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. or his nominees. The possession of the said property was also handed over to M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. by virtue of the said Agreement to Sell. Copy of the registered Agreement to Sell dated 05.09.2011 has been filed as ANNEXURE-A6 alongwith the appeal.

¶83

Thereafter, M/s. Shamken Multifab Ltd. got converted the leasehold rights in respect of the said property into freehold in its own name, from the President of India, through Delhi Development Authority, vide Conveyance Deed dated 30.10.2012, duly registered as Document No. 22100, in Addl. Book No. I, Volume No. 4575, on pages 128 to 130, on 31.10.2012, in the office of the sub-Registrar-VII, New Delhi. Copy of the Conveyance Deed dated 30.10.2012 is filed as ANNEXURE-A7 .

¶84

After the conversion of the said property from leasehold to freehold was communicated by M/s. Shamken Multifab Ltd. to M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. with whom the registered Agreement to Sell dated 01.09.2011 had been executed. On receipt of the said information, M/s. Arindam Sekhar Garments Marketing Pvt. Ltd.

¶85

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¶86

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¶87

approached the Appellant herein for the sale of the said property as pleaded.

¶88

It is the case of the appellant that prior to entering into the Sale Deed dated 09.11.2013, the Appellant had carried out the requisite due diligence in respect of the said property. The sub-Registrar‟s office and the Registrar of Companies had been duly inspected in order to ascertain whether there was any registered charge, lien and/or encumbrance on the said property. Upon an inspection, the said property was found to be free from any charge, lien, encumbrance, restriction and/or third party claims in any manner whatsoever. It was only pursuant thereto and upon bonafidely believing the representations and assurances made by M/s Shamken Multifab Ltd. and M/s. Arindam Sekhar Garments Marketing Pvt. Ltd., the Appellant agreed to purchase the said property for a valuable consideration of Rs. 10 crores.

¶89

Pursuant to discussions which took place between the parties and relying on the representations of M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. and M/s. Shamken Multifab Ltd. and the due diligence conducted by the Appellant, the parties executed into a Sale Deed dated 09.11.2013 wherein M/s. Shamken Multifab Ltd. was the Seller, M/s. Arindam Sekhar Garments Marketing Pvt. Ltd. was the confirming Party and the Appellant herein was the purchaser. The requisite stamp duty for the purposes of the purchase of the said property to the tune of Rs. 80,55,000/- was duly paid by Appellant on 10.11.2003. Copy of the Sale Deed dated 09.11.2013 executed and submitted to the sub-Registrar‟s office is filed as ANNEXURE-A8 .

¶90

The parties, thereafter, approached the office of the sub –Registrar for the purposes of registration of the sale deed in respect of the said property. the requisite formalities for the purpose of registration were FPA-PMLA-1776/DLI/2017 Page 19 of 32

¶91

duly carried out at the sub-Registrar‟s office on 09.11.2013 and the Appellant was given a slip and was directed to collect the sale deed in respect of the said property after a couple of days upon the representation of the said slip from the sub-Registrar‟s office. The copy of the slip evidencing the fact of registration being done issued by the subRegistrar‟s office is filed as ANNEXURE-A9 .

¶92

Admittedly, the appellant herein is not a Director and/or Shareholder in any of Shamken Group of Companies nor had any business relations with Shamken Group of Companies and/or its Directors/Shareholders, save and except to the limited extent of having purchased the said property which was owned by M/s. Shamken Multifab Ltd.

¶93

The appellant, on visiting the sub-Registrar‟s office after a couple of days to collect the original of the registered sale deed, they refused to provide the same. On making enquiries, the Appellant was informed that the sub-Registrar‟s office has received a letter dated 10.10.2013 from the office of the Directorate of Enforcement informing the sub-Registrar that the said property was the subject matter of investigation under the provisions of the Act and it was requested to not register any document pertaining to transfer of the said property. Copy of the letter dated 10.10.2013 is filed as ANNEXURE-A10 .

¶94

It is alleged by the appellant that the sub-Registrar refused to give the copy of the registered sale deed to the Appellant and informed it that the same would be provided only pursuant to receipt of a clearance from the office of the Directorate of Enforcement. The appellant thereafter visited the office of the Directorate of Enforcement and made enquiries. The appellant was informed that an investigation against Shamken

¶95

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¶96

Page 20 of 32

¶97

Group of Companies and its Directors was underway and the said property in question was a part of the said investigation. As per settled law that after execution of sale deed and exchanges consideration, the registration of sale deed is merely formality. In the present case the entire consideration was paid by the appellant. There is no allegation against the appellant that any part of black money is involved. Rather no criminal complaint of schedule offence is pending or under the PMLA.

¶98

It is alleged by the appellant that the correct details in respect of the said property and the sale agreement entered into with the appellant were duly brought to the notice of the Dy. Director of the Directorate of Enforcement before passing the provisional attachment order and after hearing, the appellant was assured by the Dy. Director that he has no response to worry as evidently the said property had been bonafidely purchased by the Appellant. Further, the said property could not be stated to have been purchased by M/s. Shamken Multifab Ltd. from the alleged proceeds of crime, as the investigation pertained to a later period. The appellant was further assured that the said property would be released and requisite orders would be passed once the investigation was over. Believing the oral assurances of the Dy. Director, the Appellant did not take any immediate steps for the release of the said property from the scope of the said investigation.

¶99

However, despite the assurances, the said property was no released by the Directorate of Enforcement even after passage of a substantial period of time. On making enquiries, the Appellant was informed that investigation in respect of the assets of Shamken Group of Companies and its Directors was still ongoing and it would take some time before the requisite orders in respect of the said property were passed. The Director of the Appellant was also called in the course of the

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said investigation by the Directorate of Enforcement. The purchase transaction which had taken place was duly brought to the notice of the Dy. Director and he was informed that the sale deed was not being released by the sub-Registrar due to the directions which had been issued by his office. In view of facts involved in the present case, issuance of such letter was uncalled for.

¶103

It is stated that as the Appellant was bonafidely awaiting the order releasing the said property in question being passed, it was later on after confirmation of order, it was learn that an order dated 15/09/2016 was passed by the Deputy Director, Directorate of Enforcement under Section 5 of the PMLA directing provisional attachment of the said property. copy of the said order dated 15.09.2016 passed by the Deputy Director, Directorate of Enforcement.

¶104

After passing the impugned order dated 17.02.2017, the Directorate of Enforcement calling upon M/s. Shamken Multifab Ltd. to vacate and handover possession of the said property to the Directorate of Enforcement within a period of 10 days of the said notice. The said notice along with the impugned order and order dated 15.09.2016 came to the knowledge of the appellant only on 01.03.2017 and thereafter aggrieved by the said impugned order and notice under Section 8(4), the appellant has filed the present appeal before us.

¶105

In order to understand that the brief chronological description of the transfer of the title of the said property over the years is as under:04.05.1978 A perpetual lease dated 04.05.1978 was executed in favour of Mr. O.P. Gupta with respect to the said property.

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04.11.1992 Vide a GPA dated 04.11.1992 the said property was purchased by M/s. Shamken Multifab Ltd. from Mr. O.P. Gupta, the original allottee for a consideration of Rs. 33 lakhs ( Registered GPA dated 04.11.1992 and all other relevant documents are)

¶109

05.09.2011 A registered agreement to sell dated 05.09.2011 was executed between the M/s Arindam Sekhar Garments Marketing Pvt. Ltd. and M/s Shamken Multifab whereby M/s Shamken Multifab agreed to sell the said property to M/s Arindam Sekhar Garments Marketing Pvt. Ltd. for a sale consideration of Rs. 5.66 crores. The said Agreement to sell was duly registered in the office of the Sub-Registrar – V on 05.09.2011 and requisite stamp duty of Rs. 33,96,000/- had been paid by M/s Arindam Sekhar Garments Marketing Pvt. Ltd. ( Registered agreement to sell dated 05.09.2011

¶110

30.10.2012

¶111

Vide conveyance deed dated 30.10.2012, duly registered as document No. 22100 in Addl Book No. I, Volume No 4575 on pages 128 to 130 on 31.10.2012 in the office of the Sub-registrar – VII, New Delhi, the said property was converted into free hold from lease hold.

¶112

The appellant after doing the due diligence and checking the encumbrances on the said property agreed to purchase the same based on the representations of M/s Arindam Sekhar Garments Marketing Pvt. Ltd. and M/s Shamken Multifab Ltd.

¶113

09.11.2013 Sale deed dated 09.11.2013 was executed vide which the said property was sold to the Appellant by M/s Shamken Multifab Ltd. That in the same M/s Arindam Sekhar Garments Marketing Pvt. Ltd. was the confirming party. The requisite stamp duty for the purposes of the purchase of the said property to the

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tune of Rs. 80,55,000/- was duly paid by the Appellant on 10.11.2013.

¶117

As already stated that all the formalities for the purposes of registration were also completed by the Appellant on 09.11.2013 and the Appellant was given a slip and was directed to collect the sale deed in respect of the said property after a couple of days. On visiting the office of the Sub-registrar the Appellant was informed that the office had received a letter dated 10.10.2013 from the office of the Directorate of Enforcement informing the Sub-registrar that the said property was subject matter of investigation under the PMLA and it was requested to not register any document pertaining to the transfer of the said property. The said request of ED was not necessary. It is pertinent to mention that on one hand a letter was issued to sub-Registrar not to register sale deed in favour of the appellant and on the other hand, no notice was issued to the appellant which was mandatory under the law.

¶118

Counsel for the respondent has not denied the fact about the nonissuance of notice under Section 8(1) of the PML Act, 2002. He says that it was not necessary to issue the same as the appellant was not the legal owner/joint owner of the said property.

¶119

He admits that the prescribed period of 180 days are already expired under Section 5 of the Act. It was not denied by him that M/s. Shamken Multifab Ltd. had originally purchased the property in 1992 when the present Act was not in extentance. Even no notice under Section 8(1) was issued to Arindam Sekhar Garment who purchased the property at the first instant from Shamken on 05.09.2011. When the documents were confronted to him, it is admitted by him that ED and Adjudicating Authority were fully aware about the transfer of title of the

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property but no notice was issued as it was not required. It is also not denied by the counsel that the amount paid by the appellant was tainted. It is not denied by him that there is no provision of review of any order passed by the Adjudicating Authority. By the impugned order, large number of properties were attached and confirmed after hearing the respective parties except the appellant who even not given any notice. If the impugned order is set-aside and remand back the matter for rehearing, then all the parties would have to be reheard. Thus, both the parties have made their submissions on merit in the present appeal which is pertaining to one immoveable property.

¶123

It is also mentioned in the said documents that the construction work was done from 1990 to 1999. It is further submitted that the property in question was not sold to M/s. Horizon Info Solutions Ltd. by M/s. Shamken Multifab Ltd. and the title of the property rests in the name of M/s. Shamken Multifab Ltd. There is no registered sale deed in favour of M/s. Horizon Info Solutions Ltd. As per Section 49 of the Registration Act 1908, no document required by Section 17 or by any provisions of the Transfer of Property Act, 1882 to be registered shall affect any immoveable property comprised therein, unless it has been registered. It is also submitted that columns in the Annexure 8 which is the true cop of the original documents are lying blank.

¶124

It is submitted by the respondent that statement of Shri Rajesh Mohan, Director of M/s. Horizon Info Solutions Pvt. Ltd. was recorded under Section 50 of PMLA on 30.08.2016 wherein he has stated that the property viz. Shamken House, B-1/A-20, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi- 110 044 has not been registered in the name of M/s. Horizon Info Solutions Pvt. Ltd. and on the date of FPA-PMLA-1776/DLI/2017 Page 25 of 32

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purchase clearly knew that this property was being investigated by the Directorate of Enforcement under PMLA.

¶126

It is also stated that it is the dishonest intention of the appellant are further illustrated through his dubious actions of not proceeding against the Shamken Group to recover his money when he knew that the said property was being investigated by the Directorate of Enforcement. In all the legal formalities, the appellant would have been bonafide to have proceeded against the Shamken Group.

¶127

The said arguments are without any substance, as the appellant has not purchased the property from the accused party. Even otherwise the accused party acquired the property in the year 1992 prior to the Act of PML Act enacted.

¶128

In the present matter, the appellant had the interest in the matter, who had paid the entire consideration in legal means. The appellant has no relation directly or indirectly with Shamken. The appellant is not involved in any complaint and under the schedule offence nor under the PML Act, 2002. The property in question was purchased by the Shamken in 1992. There are no allegation by the respondent that when it was purchased, it was from proceed of crime. The schedule offence was added on 01.06.2009. When the Shamken purchased the property in 1992, the Act does not exist. ED and Adjudicating Authority were fully aware about the statement recorded under Section 50 of the Act which would indicate that the appellant had claimed the ownership of the property.

¶129

The first proviso of Section 8(1) is a mandatory provision as the property in question was held by the appellant at the time of passing the

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provisional attachment as well as at the time of confirmation of order. However, no notice was issued.

¶133

No opportunity of being heard was given to the Appellant under Section 8(2) of the PMLA even though the property in question has been duly purchased by the Appellant. This fact was brought to the knowledge of the Ld. Adjudicating Authority through the statements of the accused persons themselves and yet the impugned actions were taken without hearing the Appellant. Once the fact of having sold the property was brought to the knowledge of the Ld. Adjudicating Authority, it was incumbent upon the Ld. Adjudicating Authority that the Appellant ought to have been called upon and asked to furnish proof relating to the true title of the said property in terms of Section 8(2) of the PMLA.

¶134

Thus, the Impugned Order was passed in violation the mandatory provisions as well as against the principles of natural justice.

¶135

The Appellant was not arrayed a party to the said proceedings and was passed at the back of the appellant. In The impugned order dated 03.02.2017 itself notes at page No. 62 the entire transaction pertaining to the said property and the fact that:

¶136

“Subsequently, because of the failure of arrangement to get the property converted by MCD the said property was sold to third party M/s Horizon IMPO Solution Pvt Ltd, through a sale deed dated 09.11.2013.”

¶137

The Ld. Adjudicating authority failed to appreciate that the proviso to Section 8(2) of the PMLA clearly stipulates that when the property is claimed by a person to whom the notice was not issued, such person shall also be given an opportunity of being heard, which was admittedly not done in the present case. Relevant portion of Section 8 of the PMLA is being reproduced hereunder for ready reference:

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Section 8 - Adjudication “…

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(2)…

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Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. ”

¶143

In this proviso which casts a responsibility on the Adjudicating Authority to afford a opportunity of hearing to any person who has not been issued a notice under section 8(1) but claims a right in the property in question.

¶144

12. The main question is whether this obligation has to be discharged before the order under Section 8(3) is passed or a post-decisional hearing would suffice to meet the requirements of law. In the case of Central Bank of India (Supra) this Tribunal has taken a view that the proviso to sub-section 2 of Section 8 speaks of only affording a opportunity of being heard to a person claiming right in the property but the timing of such hearing need not necessarily be prior to passing of the order under Section 8(3).

¶145

The provisions of Section 8, (1), (2) & 3 have to be read harmoniously and a holistic view has to be taken to interpret these provisions correctly. While Section 8(1) speaks of issue of show cause notice to the persons alleged to have committed an offence under Section (3) and to joint holders of the property and on whose behalf the property is held by some other person, Section 8(2) read with its proviso speaks of Principles of Natural Justice to be followed in the form of considering the reply to the show cause notice, hearing the aggrieved persons and the complainant and also hearing any person other than a person to whom the notice has been issued, who claims a right in the property and Section 3 provides for passing an order in writing regarding confirmation of attachment.

¶146

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who claims a right in the property has to be heard before a final order of confirmation of attachment is passed so that the submissions and pleas made by such a person are taken on record and given due consideration before arriving at a final decision by the Adjudicating Authority. No justification has been given by the counsel for the respondent that why despite of knowledge about the appellant who is claiming ownership of the property, no notice was given to him which is mandatory under the Act. Both E.D. and adjudicating authority are an expert bodies. Prescribed period of time of 180 days already expired. If, they were aware, now the respondent on their behalf cannot argue that the appeal is not maintainable because being the expert authorities, both did not apply their mind and they do not want to understand mandatory provisions of the act. It cannot be argued in the appeal now that the matter should not be decided and it may be remanded back after having expired 180 days. It is their fault and misunderstanding. The innocent citizen cannot be harassed in this manner. When they ignored the law and facts.

¶148

Therefore, in light of the facts of the present case, the Ld. Adjudicating Authority erred in coming to the conclusion that since the said property was never registered in the name of the Appellant. Therefore, no opportunity could be granted to the Appellant. The Ld. Adjudicating Authority also did not consider the fact that the said property was never a part of the alleged transaction for which the FIRs were lodged and the investigation under the PMLA was being carried out. Both orders passed by ED as well Adjudicating Authority under Section 5 and 8 are contrary to law and facts.

¶149

In Paragraph No 3.2 of the impugned order dated 03.02.2017 it is mentioned that the FIRs against M/s Shamken Multifab Ltd. have been

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registered alleging that M/s Shamken Group of Companies and its Directors had committed various financial frauds by misrepresenting facts by furnishing false and fabricated information/ documents to banks for availing loans worth Rs. 118.5 crores during the years 19982003 for procurement of plant and machinery but instead utilized and siphoned off the funds for the purposes other than for those sanctioned.

¶153

Mere a perusal of the provisional attachment order would reveal that the primary averments in the complaint against M/s Shamken Group of Industries and its directors circle around having committed alleged financial frauds by having availed bank loans and having utilized the funds for purposes other than those for which the said loans had been availed during the period 1998 – 2003. However while appreciating the above facts the Ld. Adjudicating Authority failed to understand that it is evident from the GPA dated 04.11.1992 that the said property was transferred to M/s Shamken Multifab Ltd. in the year 1992 which evidently is not only much prior to the alleged transactions but is even prior to the PMLA Act being enacted and therefore, the said property cannot be said to a “ proceed of crime ” by any stretch of imagination.

¶154

It is mandatory that the property sought to be attached is one, which the concerned officer has reason to believe is the proceeds of a scheduled crime. Secondly, a provisional attachment under Section 5 is only in aid of adjudication under Section 8(2) of the Act, which may result in the Adjudicating Authority recording a finding that the property concerned is involved in money-laundering; therefore, it is also necessary that an offence of money-laundering is believed to have been committed and the same bears a live link with the property sought to be provisionally attached.

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In present case, the property in question was neither purchased by Shamken in 1992 from the proceed of crime as it is not mentioned in the reason to believe nor it is alleged that the appellant was involved in any manner under the money laundering or had committed the schedule offence. No such complaint is pending against the appellant.

¶158

The Ld. Adjudicating Authority ought not to have reached an adverse conclusion affecting the rights of the Appellant and ought not to have acted in haste without following the procedure established by law. The only reason given in the impugned order for upholding the provisional attachment order passed by the ED in respect of the said property is that the said property was owned by M/s Shamken Multifab Ltd. as the registration in favour of the Appellant was never done. The impugned order of the Ld. Adjudicating Authority does not even consider whether the said property was proceeds of the crime.

¶159

In the impugned order, the legal effect of the registered Agreement to Sell between M/s Shamken Multifab Ltd. and M/s Arindam Sekhar Garments Marketing Pvt. Ltd. and thereafter of the sale deed which had been executed between M/s Shamken Multifab Ltd. and the appellant and presented for registration on 09.11.2013.

¶160

Despite the sale consideration as provided in the said agreement to sell, i.e. Rs. 5.66 crore and the payment of the requisite stamp duty and registration fees pursuant to the same having been paid by the Appellant, the Ld. Adjudicating Authority has not even thought it fit to call the Appellant under Section 8 (2).

¶161

Despite the sale consideration as provided in the said agreement to sell, i.e. Rs. 5.66 crores, has been stated as the value of the said property in the list of assets prepared by him, it had failed to take note of FPA-PMLA-1776/DLI/2017 Page 31 of 32

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the fact that in light of the said agreement to sell no rights and interest in the said property continue to subsist in M/s Shamken Multifab Limited.

¶163

The impugned order confirming the order of provisional attachment of the Dy. Director has been passed without any application of mind and in a mechanical manner by the Ld. Adjudicating Authority. The Ld Adjudicating Authority without appreciating the merits and/ or demerits of the order of the Dy. Director has gone on to pass the impugned order without applying its mind, considering the facts in question or appreciating the statements made by various persons before it. The impugned order is more or less a replica of the order of the Dy. Director.

¶164

In view of aforesaid reasons, the impugned order against the appellant modified. Consequently the provisional attachment order and attached property against appellant and its attached property is setaside by allowing the appeal. The property in question is released from attachment forthwith.

¶165