Partly allowed

FPA-PMLA-1586/ HYD/2016 of M/s. Utopia Infrastructure Pvt. Ltd. v/s The Joint Director Directorate of Enforcement, Hyderabad

ATFP26 Jul 2019FPA-PMLA-1586/ HYD/2016

Case brief

AI extract

What is this about?

In common appeals regarding attachment orders under PMLA, the Tribunal allowed most appeals. It set aside attachments based on flawed 'beneficial ownership' concepts, triple attachment errors, and retrospective application of law. However, due to money laundering allegations, the Tribunal modified orders to require appellants to furnish Bank Guarantees for a portion of released assets.

What did the court decide?

Most attachments released; for specific retained funds, appellants directed to furnish Bank Guarantees for Rs. 192 crores within four weeks as a condition for release of the balance.

FPA-PMLA-1586/ HYD/2016 of M/s. Utopia… — Pension and Retirement Benefits | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS & PBPT ACT AT NEW DELHI

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Date of Decision : 26.07.2019

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1. MP-PMLA-2987/HYD/2016 (Stay) FPA-PMLA-1573/HYD/2016
Shri Y.S. Jagan Mohan Reddy	…	Appellant
Versus
The Joint Director Directorate of Enforcement, Hyderabad	…	Respondent
2. MP-PMLA-2988/HYD/2016 (Stay) MP-PMLA-2989/HYD/2015 (Misc.) FPA-PMLA-1574/HYD/2016
Shri Y. S. Bharati Reddy	…	Appellant
Versus
The Joint Director Directorate of Enforcement, Hyderabad	…	Respondent
3. MP-PMLA-2991/HYD/2016 (Stay) MP-PMLA-2990/HYD/2016 (Misc.) & FPA-PMLA-1575/ HYD/2016
M/s. Classic Reality Pvt. Ltd.	…	Appellant
Versus
The Joint Director Directorate of Enforcement, Hyderabad	…	Respondent
4. MP-PMLA-2992/HYD/2016 (Stay) MP-PMLA-2993/HYD/2016 (Misc.) & FPA-PMLA-1576/ HYD/2016
M/s. Sandur Power Company Pvt. Ltd.	…	Appellant
Versus
The Joint Director
Directorate of Enforcement, Hyderabad	…	Respondent
5. MP-PMLA-2994/HYD/2016 (Stay) MP-PMLA-2995/HYD/2016 (Misc.) FPA-PMLA-1577/ HYD/2016

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M/s. Silicon Builders Pvt. Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent 6. FPA-PMLA-1579/ HYD/2016 M/s. Bharati Cement Corporation Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent 7. MP-PMLA-2998/HYD/2016 (Stay) MP-PMLA-2999/HYD/2016 (Misc.) & FPA-PMLA-1582/ HYD/2016 M/s. Silicon Infrastructure Pvt. Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent 8. MP-PMLA-3000/HYD/2016 (Stay) MP-PMLA-3001/HYD/2016 (Misc.) & FPA-PMLA-1583/ HYD/2016 M/s. Capstone Infrastructure Pvt. Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent 9. MP-PMLA-3002/HYD/2016 (Stay) MP-PMLA-3003/HYD/2016 (Misc.) & FPA-PMLA-1584/ HYD/2016 M/s. Ravan Infra Pvt. Ltd. … Appellant FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 2 of 74

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Versus

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The Joint Director Directorate of Enforcement, Hyderabad …Respondent

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10. MP-PMLA-3004/HYD/2016 (Stay) MP-PMLA-3005/HYD/2016 (Misc.) & FPA-PMLA-1585/ HYD/2016 M/s. Bhagavath Sannidhi Estates Pvt. Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent 11. MP-PMLA-3006/HYD/2016 (Stay) MP-PMLA-3007/HYD/2016 (Misc.) & FPA-PMLA-1586/ HYD/2016 M/s. Utopia Infrastructure Pvt. Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent

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12. MP-PMLA-3008/HYD/2016 (Stay) MP-PMLA-3009/HYD/2016 (Misc.) & FPA-PMLA-1587/ HYD/2016 M/s. Saraswati Power and Industries Ltd. … Appellant Versus The Joint Director Directorate of Enforcement, Hyderabad … Respondent

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13. MP-PMLA-3010/HYD/2016 (Stay) MP-PMLA-3011/HYD/2016 (Misc.) & FPA-PMLA-1588/ HYD/2016

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 3 of 74

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M/s. Harish Infrastructure Pvt. Ltd. … Appellant

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Versus

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The Joint Director Directorate of Enforcement, Hyderabad … Respondent

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14. MP-PMLA-3190/HYD/2017(Stay) MP-PMLA-3095/HYD/2017(Exem) & FPA-PMLA-1619/ HYD/2017 Jella Jagan Mohan Reddy … Appellant

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Versus

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The Joint Director Directorate of Enforcement, Hyderabad … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants : Mr. Ranjan Reddy, Sr. Advocate Mr. Rajiv Nayyar, Sr. Advocate (for BCCL) Mr. Raghenth Basant, Sr. Advocate with Mr. Siddharth Rao, Advocate Ms. Namita Wali, Advocate Ms. Shikha Tandon & Shivanshu Bhardwaj, Advocates For the Respondent : Mohammad Faraz, Advocate

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For the Respondent

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CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN

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JUDGEMENT

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016

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By this common order, this Tribunal proposes to decide the above-mentioned 14(fourteen) appeals filed against Order dated 23.11.2016 by the Adjudicating Authority made in Original Complaint No. 618 of 2016 confirming the attachments made vide Provisional Attachment Order No. 02/2016 dated 29.06.2016 (PAO) in

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 4 of 74

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ECIR/09/HZO/2011. PAO passed corresponding to CC No. 25 of 2013 before The Special Judge for CBI Cases, Hyderabad (CBI Case). Earlier, the appeals were heard by the Chairman and the Hon‟ble Member. The appeals were listed for clarification/ re-hearing. In the meanwhile, the Hon‟ble Member retired/resigned. The appeals were re-heard and the orders were reserved.

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The PAO arises out of registered case no. ECIR/09/HZO/2011 dated 30.8.2011 filed by the Respondent, in pursuance of an FIR filed by Central Bureau of Investigation (hereinafter referred to as „ CBI‟) being RC 19(A)/ 2011-HYD dated 17.8.2011, alleging that the alleged offences made out by the CBI under Section 120B, Section 420 of Indian Penal Code, 1860 (hereinafter referred to as „IPC‟) andSection 13 of the Prevention of Corruption Act, 1988 (hereinafter referred to as „PCA‟), which are Scheduled Offences under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as „PMLA‟).

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Total Attachments effected in the entire O.C. 618 of 2016 totalling to Rs. 746.17 Crs.

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a) Mr. Y. S. Jagan Mohan Reddy & Group – Rs. 569.57 Crs

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Rs. 179.74 Crs - Mr. Y.S. Jagan Mohan Reddy (Shares of M/s. Bharathi Cements Corporation Pvt. Ltd. and M/s. Sandur PowerCompany Pvt. Ltd, Classic Realty Pvt. Ltd. and M/s. Silicon Builders Pvt. Ltd.)

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Rs. 49.45 Crs - M/s. Classic Realty Pvt. Ltd (Immovable Property of land and building)

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Rs. 181.00 Crs - M/s. Sandur Power Company Pvt. Ltd. (Immovable Property including plant and machinery)

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Rs. 32.33 Crs M/s. Saraswati Power and Industries Pvt. Ltd. (Immovable and Movable properties)

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Rs. 8.11 Crs M/s. Nivesh Infrastructure Pvt. Ltd.; now merged into M/s Classic Realty Pvt. Ltd. (Immovable Property)

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Rs. 43.70 Crs M/s. Shalom Infrastructure Pvt. Ltd.; now merged into M/s Classic Realty Pvt Ltd. (Immovable Property)

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Rs.24.88 Crs M/s. Capstone Infrastructure Pvt. Ltd. (Immovable and Movable properties)

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 5 of 74

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Rs. 23.53 Crs M/s. Utopia Infrastructure Pvt. Ltd. (Immovable Property)

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Rs. 8.46 Crs M/s. Harish Infrastructure Pvt. Ltd. (Immovable Property)

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Rs.1.53 Crs M/s. Marvel Infrastructure Pvt. Ltd.; now merged into M/s Classic Realty Pvt. Ltd. (Immovable Property)

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Rs. 6.70 Crs M/s. Revan Infrastructure Pvt. Ltd. (Immovable Property)

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Rs.6.42 Crs M/s Inspire Hotels Pvt. Ltd.; now merged into M/s Classic Realty Pvt. Ltd. (Immovable Property)

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Rs. 6.63 Crs M/s Bhagavathi Sannidhi Estates Pvt. Ltd. (Immovable and Movable properties)

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b) Mrs. Y.S. Bharathi Reddy – Rs. 22.31 Crs .

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Rs. 22.31 Crs – Mrs. Y.S. Bharathi Reddy (Immovable and movable properties)

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c) M/s. Bharathi Cements Corporation Pvt. Ltd. and Group – Rs. 154.29 Crs

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Rs. 152.84 Crs - M/s. Bharathi Cements Corporation Pvt. Ltd. (Fixed Deposits)

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Rs. 1.45 Crs – Mr. Jella Jagan Mohan Reddy (Immovable and movable properties)

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The Provisional Attachment Order was confirmed by the impugned order dated 23.11.2016.

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The following appeals have been filed:

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Y.S. Jagan Mohan Reddy & Group :

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Appeal Nos. 1573 of 2016– Mr. Y.S. Jagan Mohan Reddy

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Appeal Nos. 1575 of 2016 – M/s. Classic Realty Pvt. Ltd.

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Appeal Nos. 1576 of 2016 - M/s. Sandur Power Company Pvt. Ltd.

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Appeal Nos. 1577 of 2016 - M/s. Silicon Builders Pvt. Ltd.

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Appeal Nos. 1582 of 2016 - M/s. Silicon Infrastructure Pvt. Ltd.

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Appeal Nos. 1583 of 2016 - M/s. Capstone Infrastructure Pvt. Ltd.

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Appeal Nos. 1584 of 2016 - M/s. Revan Infrastructure Pvt. Ltd.

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Appeal Nos. 1585 of 2016 - M/s. Bhagavath Sanidhi Estates Pvt. Ltd.

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 6 of 74

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Appeal Nos. 1586 of 2016 - M/s. Utopia Infrastructure Pvt. Ltd.

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Appeal Nos. 1587 of 2016 - M/s. Saraswati Power and Industries Pvt. Ltd.

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Appeal Nos. 1588 of 2016 - M/s. Harish Infrastructure Pvt. Ltd.

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Appeal Nos. 1574 of 2016 – filed by Mrs. Y.S. Bharathi Reddy.

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Appeal Nos. 1579 of 2016 – M/s. Bharathi Cements Corporation Pvt. Ltd.

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Appeal Nos. 1619 of 2017 - Mr. Jella Jagan Mohan Reddy.

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With regard to appeal no. 1619/2017, filed by Jella Jagan Mohan Reddy, separate order is being passed. By this common order, thirteen appeals are being decided.

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CBI did not file charge sheets against all the persons / entities indicated in the FIR dated 17.08.2011, CBI, Hyderabad filed a Memo dated 23.09.2013 before the Special Judge for CBI Cases, Nampally, Hyderabad wherein it is inter alia stated

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as -

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“… 5. It is further submitted that during the course of investigation, in respect of the following issues no quid pro quo could be established, however, it came to light that the overt acts, irregularities, violations committed by the firms/ individuals coming under the purview of Enforcement Directorate, Income Tax, Registrar of Companies and Govt. of A.P. Accordingly, matters were referred to the department concerned for taking necessary action as deemed fit in respect of the following, as the case may be –

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i. M/s Sandur Power Company Ltd.

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ii. M/s Carmel Asia Holdings Pvt. Ltd.

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iii. M/s PVP Business Ventures

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iv. M/s Jubilee Media Communications

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v. M/s Classic Realty Ltd. and M/s Brahmani Infratech Pvt. Ltd.

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vi. M/s RR Global Enterprises Pvt. Ltd.

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vii. M/s Saraswati Power & Industries Ltd.

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viii. M/s Mantri Developers ….”

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 7 of 74

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The main allegations in the charge-sheet as well as the provisional attachment orders are for allotment of mining lease granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that Y. S. Jagan Mohan Reddy, in a criminal conspiracy with certain public officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. (“BCCL” then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions. On the basis of such mining lease, Mr. Y. S. Jagan Mohan Reddy proceeded to establish BCCL Plant. The following investments were made by the investors, which is the Proceeds of Crime (PoC).

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i) Rs. 30 Crs by Mr. Y.S. Jagan Mohan Reddy - Rs. 30 Crs invested by Mr. Y.S. Jagan Mohan Reddy were funneled by monies payed by Mr. Nimmagadda Prasad which were occasioned by VANPIC favours.

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ii) Rs. 252.5 Crs by Mr. Nimmagadda Prasad & group companies i.e. the investments are stated to be in lieu of VANPIC favours.

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iii) Rs. 15 Crs by M/s. Silicon Builders Pvt. Ltd. - Rs. 15 Crs invested were funneled by Mr. Nimmagadda Prasad‟s group company, M/s. Beta Avenues Pvt. Ltd., through M/s. Carmel Asia Holdings Pvt. Ltd. which are also occasioned by VANPIC favours.

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Allegations in the CBI charge-sheet

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8.1 As far as monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL, the allegations are that Rs. 30 Crs were received as bribe amount by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad in lieu of VANPIC favours and was guised as sale consideration for sale of shares held by Mr. Y.S. Jagan Mohan Reddy in M/s. Sandur Power Company Ltd. (Sandur Power) to Mr. Nimmagadda Prasad. The said Rs. 30 Crs were utilized in purchasing 3,00,00,000 shares of BCCL

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 8 of 74

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at Rs. 10 per share. Mr. Y.S. Jagan Mohan Reddy sold 62,00,972 shares held by him in BCCL to PARFICIM SAS, France at Rs. 671.20 per share totaling to Rs. 416.20 Crs on 28.04.2010. The Rs. 416.20 Crs so realized were transferred into various group companies controlled by Mr. Y.S. Jagan Mohan Reddy.

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The initial investments into BCCL and subsequent investments by companies such as M/s. Dalmia Cements, M/s. India Cements Ltd. and Mr. Nimmagadda Prasad‟s group of companies at high valuations are nothing but bribe money paid as quid pro quo for the benefits derived by such companies.

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8.2 The allegations also relating to Mr. Bharathi Reddy are that Mrs. Y.S. Bharathi Reddy had become the Director of BCCL solely on behest of Y.S. Jagan Mohan Reddy and has been drawing a high remuneration equating to Rs.3,90,00,000/- per year from the year 2011 and an amount of Rs.19.50 Crores is categorized as proceeds of crime in respect of remuneration drawn for five (5) years ending with 31.12.2015. She, as director of M/s Silicon Builders Pvt. Ltd (“M/s Silicon Builders”), had facilitated a smooth transfer and investment by Silicon Builders in the equity capital of BCCL towards promoter‟s contribution from monies allegedly routed from Mr. Nimmagadda Prasad‟s group company M/s. Beta Avenues Pvt. Ltd.

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She is in receipt of a total of Rs. 15.5 Crs from Mr. Y.S. Jagan Mohan Reddy out of the monies realized from sale of his shares in BCCL to PARFICIM SAS, France.

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8.3 The allegations in relation to M/s. Sandur Power Company Pvt. Ltd. (Sandur Power) are that out of Rs 416.20 Crs arising out of the sale of Mr. Y.S. Jagan Mohan Reddy‟s shares in BCCL to M/s PARCIFIM SAS, France treated as proceeds of crime, a sum of Rs 80.27 Crs was received by Sandur Power towards the sale of following shares:

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 9 of 74

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i) Rs 65 Crs for purchase of 88,103 shares of M/s Classic Realty Pvt Ltd.

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ii) Rs 2.86 Crs for purchase of 2,58,181 shares of M/s Silicon Builder Pvt Ltd.

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iii) Rs 12.41 Crs for purchase of 1,85,000 shares of BCCL

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Thereafter, an amount of Rs. 82 Crs was utilized by Sandur Power in form of

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i) Rs. 67 Crs was paid to M/s. Classic Realty Pvt. Ltd. as Share Application Money.

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ii) Rs. 15 Crs was paid to M/s. Saraswati Power and Infrastructure Pvt. Ltd. as Share Application Money.

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Thus, it is stated that „Tangible Fixed Assets as detailed in the Audited Balance sheet for 2013-14‟ being equivalent to the proceeds of Crime valued at Rs. 118.49 Crs is being attached.

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8.4 Relating to M/s. Classic Realty Pvt. Ltd. (and merged entities i.e., M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Infrastructure Pvt. Ltd (Defendant No. 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17), the allegations are that M/s. Classic Realty Pvt. Ltd. (Classic Realty) has received, in total, an amount of Rs. 193.50 Crores (Rs. 126.50 Crs from Mr. Y.S. Jagan Mohan Reddy and Rs. 67 Crs form Sandur Power) as Share Application Money from Rs 416.20 Crs realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to M/s PARCIFIM SAS, France on 27.04.2010.

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Thereafter, an amount of Rs. 196.85 Crs was utilized in the following nature:

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i) Rs. 58 Crs was returned to Mr. Y.S. Jagan Mohan Reddy against earlier received Share Application Money.

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 10 of 74

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ii) Rs. 56 Crs returned to BCCL against earlier received Share Application Money.

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iii) Rs. 57 Crs paid to G2 and Suguni Constructions for acquiring Silicon Builders Shares.

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iv) Rs. 25.85 Crs invested into 4 companies.

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It is stated as monies received are not parked with Classic Realty, the ED has sought to attach, on the basis of concept of beneficial ownership, „Tangible Fixed Assets of M/s Classic Realty Pvt Ltd as detailed in the Audited Balance Sheet for 2013-14 being equivalent to the proceeds of Crime valued at Rs.49,45,62,869/- (includes company‟s asset – Building named Commerce @ Mantri, Bannerghatta Road, Bangalore)

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8.5 The allegation in relation to M/s. Silicon Builders Pvt. Ltd. Are that M/s. Silicon Builders Pvt. Ltd. (Silicon Builders) is in receipt of Rs.15 Crs from M/s. Carmel Asia Holdings Pvt. Ltd. (not arrayed in the Complaint) and Sandur Power. Carmel Asia has in-turn received such moniesfrom Mr. Nimmagadda Prasad‟sgroup company, M/s. Beta Avenues as a quid pro quo in relation to alleged favours granted to Mr.Nimmagadda Prasad in VANPIC Project by the then Government of the erstwhile unified State of A.P.

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Silicon Builders had invested the said Rs. 15 Crs in BCCL and had purchased 1,50,00,000 share of Rs. 10/- each. From the said shares, Silicon Builders received an amount of Rs. 51.20 Crs as dividend.

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8.6 Relating to M/s. Capstone Infrastructure Pvt. Ltd., Capstone Infrastructure is a company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and is in receipt of Rs. 15.30 Crs from Classic Realty which in-turn received from Y.S. Jagan Mohan Reddy and Sandur

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 11 of 74

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Power. Therefore, immovable and movable properties worth Rs.24.88 Crs. is being attached.

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8.7 The allegations relating to M/s. Revan Infrastructure Pvt. Ltd. Are that the Revan Infrastructure is a company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and is in receipt of Rs. 2 Crs from Classic Realty which in-turn received from Y.S. Jagan Mohan Reddy and Sandur Power. Therefore, immovable properties valued at Rs. 6.79 Crs is being attached.

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8.8 In relation to M/s. Saraswati Power and Industries Pvt. Ltd., the allegations are that M/s. Saraswati Power and Industries Pvt. Ltd. (Sandur Power) is a company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and is in receipt of Rs. 15 Crs fromSandur Power which in-turn received from Mr. Y.S. Jagan Mohan Reddy and another Rs. 8 Crs as Share Application Money from Mr. Y.S. Jagan Mohan Reddy. Therefore, immovable and movable properties worth Rs.32.33Crs is being attached.

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8.9 With regard to M/s. Silicon Infrastructure Pvt. Ltd. , M/s. Bhagavathi Sannidhi Pvt. Ltd., M/s. Utopia Infrastructure Pvt. Ltd. and M/s. Harish Infrastructure Pvt. Ltd., no reference or allegation regarding investment of monies into the above companies is made.The above companies are arrayed for having beneficial ownership with other defendants and their properties are attached.

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It is stated that it was revealed from the Charge Sheet filed by CBI with the Hon‟ble Court that S/Shri Y.S Jagan Mohan Reddy, V. Vijay Sai Reddy, Jella Jagan Mohan Reddy & others committed the offences of criminal conspiracy, cheating and criminal misconduct by abusing official position of Late Dr. Y.S. Rajsekhara Reddy, the then Chief Minister of Andhra Pradesh, punishable under Section 120-B read with Section 420 of the Indian Penal Code, 1860 and Sections 9, 13(2) read with FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 12 of 74

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Section 13(1)(d) of the Prevention of Corruption Act, 1988. The offences under Section 120-B, Section 420 of IPC, 1860 and Section 13 of PC Act, 1988 are the scheduled offences as per Section 2(1)(y) of PMLA, 2002. The investigation carried out so far under PMLA, 2002, has revealed that, as a result of the above stated scheduled offences, following are the Proceeds of Crime in this case.

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i) Shri Y.S. Jagan Mohan Reddy built a Cement Factory with the quid pro quo investments received by him from the companies of S/Shri Nimmagadda Prasad, N. Srinivasn and Puneet Dalmia for the benefits/favours extended t them in the form of various approvals/concessions by the then Government of Andhra Pradesh by influencing his father Late Shri Y.S. Raja Sekhar Reddy. Shri Y.S. Jagan Mohan Reddy further got mining lease in the name of M/s. Bharathi Cement Corporation Private Limited employing illegal means and by influencing public servants in criminal conspiracy with others. Smt. Y.S. Bharathi Reddy who was appointed as Director of M/s. Bharathi Cement Corporation Private Limited by virtue of the Stake held by Shri Y.S. Jagan Mohan Reddy and his companies, received huge remunerations. Apart from the above, in lieu of the Criminal conspiracy by Shri Y.S. Jagan Mohan Reddy with others, Shri Y.S. Jagan Mohan Reddy got various benefits/ quid pro quo investments, etc., and the details are as follows:-

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ii) As regards, bribe of Rs. 35 Crore paid by Shri Nimmagadda Prasad to Shri Y.S. Jagan Mohan Reddy in the guise of investment in M/s. Sandur Power Company Private Limited and at a later date shares of M/s. Sandur Power Company Private Limited have been allotted with ante date. It may be noticed/taken note that, during the course of CBI, these Proceeds of Crime which are being received by Shri Y.S. Jagan Mohan Reddy are provisionally attached in the form of immovable properties and shares from Shri Y.S. Mohan Reddy by the Directorate of Enforcement, HIU, Delhi vide PAO No. 01/2014 dated 04.03.2014 and has been confirmed by the Hon‟ble

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 13 of 74

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Adjudicating Authority, PMLA, New Delhi vide order dated 19.08.2014 in Original Complaint No. 276 dated 27.03.2014.

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iii) As regards, Rs. 33 crore received by Shri Y.S. Jagan Mohan Reddy from group companies of Shri Nimmagadda Prasad towards secondary purchase of shares of M/s. Bharathi Cement Corporation Private Limited. It may be noticed/taken note that, during the course of investigation under PMLA, 2002, in Charge Sheet No. 14/2012 dated 13.08.2012 filed by CBI, these Proceeds of Crime which are being received by Shri Y.S. Jagan Mohan Reddy are provisionally attached in the form of immovable properties and shares from Shri Y.S. Mohan Reddy by the Directorate of Enforcement, HIU, Delhi vide PAO No. 01/2014 dated 04.03.2014 and has been confirmed by the Adjudicating Authority, PMLA, New Delhi vide order dated 19.08.2014 in Original Complaint No. 276/2014 dated 27.03.2014.

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iv) As regards, 1,50,00,000 shares of Rs. 10/- each purchased by M/s. Silicon Builders Private Limited in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by Shri Y.S. Jagan Mohan Reddy from Shri Nimmagadda Prasad, Shri Y.S. Jagan Mohan Reddy, out of the bribe amounts received by him through his group companies from Shri Nimmagadda Prasad, transferred an amount of Rs. 15 Crore to M/s. Silicon Builders Private Limited for which he received 1.5 Crore shares of Rs. 10/- each of M/s. Bharathi Cement Corporation Private Limited. M/s. Silicon Builders Private Limited continues to hold these shares till date which are the direct Proceeds of Crime.

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v) Shri Y.S. Jagan Mohan Reddy, purchased 3,00,00,000 Shares of Rs. 10/each in M/s. Bharathi Cement Corporation Private Limited from the bribe amounts received by him from Shri Nimmagadda Prasad. Out of these 3,00,00,000 shares, Shri Y.S. Jagan Mohan Reddy, in April 2010, sold 62,00,972 shares to M/s. Parficim, France at a rate of Rs. 671.20 per shares and benefitted by an amount of Rs. 416,20,92,406/- and the same was deposited in his bank account maintained at Oriental Bank of Commerce,

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FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 14 of 74

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Jubilee Hills Branch, Hyderabad (A/c No. 09242011001503). Shri Y.S. Jagan Mohan Reddy is till continues to hold 2,38,06,435 shares of Rs. 10/- each in M/s. Bharathi Cement Corporation Private Limited which were acquired by him out of the bribe amounts received by him and these shares forms part of Proceeds of Crime as defined under Section 2(1)(u) of PMLA, 2002. Shri Y.S. Jagan Mohan Reddy, out of illegally benefitted amount of Rs. 416,20,92406/-, transferred to various companies/his own accounts which were further transferred to various companies/individuals as investments.

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vi) It is stated by the respondent that the total sum of Rs. 416,20,92,406/received by Shri Y.S. Jagan Mohan from sale of shares of M/s. Bharathi Cement Corporation Private Limited to M/s. Parficim S.A.S., who has transferred his own companies or accounts. The details of the same are given as under:-

¶127

a. Rs. 80,27,72,000/- transferred to M/s. Sandur Power Company Private Limited.

¶128

b. Rs. 8,00,00,000/- transferred to M/s. Saraswati Power & Industries Private Limited.

¶129

c. Rs. 126,50,00,000/- transferred to M/s. Classic Realty Private Limited.

¶130

d. Rs. 177,20,00,000/- transferred to his own account maintained at OBC, Koramangala, Bangalore.

¶131

e. Rs. 5,00,00,000/- transferred to YSR Foundation towards donation.

¶132

f. Rs. 18,70,22,635/- transferred to his own account maintained at OBC, Jubilee Hills, Hyderabad.

¶133

vii)The above amounts are the proceeds of crime in terms of Section 2(1)(u) of PMLA, 2002 as the shares were acquired by Shri Y.S. Jagan Mohan Reddy from the bribe amounts received as discussed supra.

¶134

viii)M/s. Bharathi Cement Corporation Private Limited has not extracted limestone from the mining lease area till 2008-09 since 27.03.2006, i.e. from the date on which the company obtained mining lease fraudulently.

¶135

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ix) Investigation conducted also revealed that M/s. Bharathi Cement Corporation Private Limited had excavated the Lime Stones using Mine License illegally granted to them by the then Government of Andhra Pradesh.

¶137

x) Investigation conducted with Department of Mines & Geology, Government of Andhra Pradesh revealed that the price of Lime stone is ranging between Rs. 30 per MT to Rs. 150/- per MT during the above period.

¶138

It is alleged by the respondent that in view of above, the value of the limestone excavated by M/s. Bharathi Cement Corporation Private Limited has been worked out to be of Rs. 152,84,61,315/- for the period from 2009-10 to 2015-16.

¶139

It is stated that from the above, it is evident that the pecuniary gain derived by M/s. Bharathi Cement Corporation Private Limited on account of excavation of Lime stone from the Mining License granted illegally amounts to Rs.152,84,61,315/- which is proceeds of crime in terms of Section 2(1)(u) of PMLA, 2002.

¶140

The total alleged proceeds of crime as per respondents as per Provisional Attachment Order dated 29.06.2016 and O.C. No. 618 of 2016 are as follows:

¶141

416.20 Crs Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of62,00,972 shares to M/s. PARFICIM SAS at Rs. 671.20 per share. 23.80 Crs Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad) 15.00 Crs Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad)

¶142

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¶143

81.25 Crs Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL

¶144

51.20 Crs Dividend received by Silicon Builders on 1,50,00,000 Shares of BCCL

¶145

152.84 Crs Value of limestone extracted by BCCL.

¶146

19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy

¶147

7.18 Crs Salaries of Mr. Jella Jagan Mohan Reddy ---------------- 766.97 Crs Total quantification of PoC

¶148

Total value of properties attached as „Proceeds of Crime‟ is Rs.748.95 Crs.

¶149

Case of Y.S. Jagan Mohan Reddy and group companies owned by him

¶150

13.1 Relating to monies received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and the subsequent monies realized from sale of shares of BCCL (Appeal No. 1573 of 2016): -

¶151

(i) Sale of Sandur Power Shares to Mr. Nimmagadda Prasad by Mr. Y.S. Jagan Mohan Reddy:

¶152

a) Mr. Y.S. Jagan Mohan Reddy has received Rs. 30 Crs as quid pro quo for VANPIC Projects is completely false and based on surmises as the sale of Sandur Power shares to Mr. Nimmagadda Prasad was consummated a whole year before the conceptulisation of VANPIC Project in January 2008. A brief list of dated evidencing the same is as follows:

¶153

22.01.2007: Mr. Y. S. Jagan Mohan Reddy received Rs. 30 Crs by way of cheque No.686670 from Mr. Nimmagadda Prasad as sale consideration for 21,42,869 shares of Sandur Power held by him.

¶154

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¶155

19.02.2007: Share Transfer Form in form No.7B authenticated by Assistant Registrar of Companies, Bangalore bearing stamp and date.

¶156

22.02.2007: Mr. Y.S. Jagan Mohan Reddy had signed the said Share Transfer Form for a consideration of Rs. 30 Crs. The same is also attested.

¶157

31.07.2007: Capital gains tax of Rs. 6.69 Crs paid by Mr. Y.S. Jagan `Mohan Reddy on sale consideration of Rs. 30 Crs from Mr. Niammagadda Prasad.

¶158

17.01.2008: Shares of Sandur Power were split into 3 blocks and were transferred to Mr. Nimmagadda Prasad.

¶159

b) The concept of VANPIC Project was conceived only in January, 2008 and hence, the question of payment of illegal gratification in January, 2007 cannot sustain. The I.T. returns filed on 31.07.2007 clearly evidences the genuine transaction of sale of shares and falsifies the theory of respondents.

¶160

c) The sale of Sandur Power shares is a genuine transaction and is evidenced by the fact that Mr. Nimmagadda Prasad is an entrepreneur with a proven track record of being a successful serial investor (like in Matrix Labs and Maa Television) and only after mutual deliberations, Mr. Y.S. Jagan Mohan Reddy agreed to sell Sandur Power shares held by him to Mr. Nimmagadda Prasad in two trenches for Rs. 35 Crs at Rs. 140 per Share.

¶161

d) It is pertinent to note that CBI has made no allegations against the establishment or functioning of Sandur Power after a full-fledged investigation.

¶162

e) Sandur Power is a successful running company established in 1999 and taken over by Mr. Y.S. Jagan Mohan Reddy in the year 2001. Sandur Power acquired Classic Realty, an industrial park in Bangalore from internal revenue generated by sale of power generated and sold to State Electricity Board of Karnataka (MESCOM) and by availing a bank loan of Rs. 117 Crs doubling the profitability of Sandur Power. The hydro plant owned by Sandur Power continues to have one of the best PLF in all of Karnataka.

¶163

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f) Apart from the above, the net worth of Sandur Power at the time of the above transaction was over Rs. 250 Crs and therefore the purchase of Sandur Power shares by Mr. Nimmagadda Prasad was a genuine transaction with commercial interest.

¶165

ii) Purchase of 3,00,00,000 shares of BCCL for Rs. 30 Crs and monies realized from sale of BCCL to PARFICIM SAS, France:

¶166

a) Mr. Y.S. Jagan Mohan Reddy had utilized the Rs. 30 Crs amount to purchase shares in BCCL for Rs. 10 per share and had acquired a total of 3,00,00,000 Shares in BCCL.

¶167

b) Mr. Y.S. Jagan Mohan Reddy had sold 62,00,972 shares held by him in BCCL to PARFICIM SAS, France at Rs. 671.20 per share totaling to Rs. 416.20 Crs on 28.04.2010. It is pertinent to note that the sale of BCCL shares to PARFICIM SAS, France is not faulted with either with CBI or the respondents. The said monies were utilized for various purposes including purchasing of shares of other companies, investment in form of Share Application Money, clearing of bank loans, donation and payment of taxes.

¶168

c) As the initial seed capital of Rs. 30 Crs received from Mr. Nimmagadda Prasad is a genuine business transaction and is therefore untainted, all the shares purchased by Mr. Y.S. Jagan Mohan Reddy in BCCL along with the monies of Rs. 416.20 Crs realized from sale of 62,00,972 shares is also untainted/ clean money and cannot be subjected to the provisions of PML Act.

¶169

(iii) High Valuation of Investments from M/s. Dalmia Cements Ltd, M/s. India Cements Ltd and Mr. Nimmagadda Prasad‟s Group Companies:

¶170

a) Each of the investors into BCCL viz., Mr. NimmagaddaPrasad‟s group companies and companies like Dalmia Cements and Indian Cements made investments in BCCL on account of a studied and considered approach on the prospects of the cement companies having regard to the projected boom of infrastructure projects in India. Each of the investors made their own independent assessment of the worth and business potential of the company and made investments totaling to the following and number of shares given hereunder:

¶171

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Sl No	Investor	Total Investment	No. of Shares Held
1.	Dalmia Cements (Bharat) Ltd.	94,99,95,750/-	21,83,899
2.	India Cements Ltd.	95,32,60,850/-	18,03,973
3.	Mr. Nimmagadda Prasad‟s Group	285,49,81,915/-	83,50,023

¶173

b) The fact that such investments were per business prudence is evidenced by the fact that when each of the investors sold their shares to M/s. PARFICIM SAS, France, they derived the following corresponding amounts in relation to the investments made by them:

¶174

Investor	Total Investment	Return on Sale of Shares	Profits made	% of profit s
Dalmia	94,99,95,750/	146,58,33,009/	51,58,37,259/	54
Cements (Bharat)Ltd.	-	-	-
India Cements Ltd.	95,32,60,850/ -	121,08,26,678/ -	25,75,65,828/ -	27
Mr. Nimmagadda	285,49,81,915 /-	560,45,35,438/ -	274,95,53,523 /-	96
Prasad‟s Group

¶175

c) Therefore, all the allegations made with regard to Mr. Y.S. Jagan Mohan Reddy being in any manner connected with the alleged dealings with Dalmia Cement, India Cement and Mr. Nimmagadda Prasad‟s group with the Government of A.P. is entirely incorrect and Mr. Y.S. Jagan Mohan Reddy has no connection whatsoever with such distinct and independent transactions which the said entities may have had with the Government of A.P.

¶176

13.2 Relating to M/s. Sandur Power Company Pvt. Ltd. (Appeal No. 1576 of 2016):

¶177

a) The transactions between Mrs. Y.S. Jagan Mohan Reddy and Sandur Power are genuine business transaction. Only on the premise of beneficial ownership, the said attachments at the hands of Sandur Power has been done as value equivalent to proceeds of crime. The proceeds of crime if

¶178

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any have already been attached at the end of Mr. Y.S Jagan Mohan Reddy.

¶180

b) No allegations that amount paid for acquisition of shares by Mr. Y.S. Jagan Mohan Reddy are over-valued or excessive. The shares have been purchased by Sandur Power from the internal accruals of the company on the following dates:

¶181

88,103 shares of Classic Realty on Sept 2006

¶182

2,58,181 shares of Silicon Builders in March 2006(10,000shares), January 2008 (1,50,000) and January 2009 (98,181 shares)

¶183

1,85,000 shares of BCCL in October 2006

¶184

c) Further, as value in relation to proceeds of crime are already attached in form of shares held by Mr. Y.S. Jagan Mohan Reddy, any monies in the hands of Sandur Power cannot be termed as proceeds of crime as it would amount to execution of double attachment, which is contrary to the scheme of the PML Act.

¶185

d) Sandur Power has parted valuable shares worth Rs. 80.27 Crs for receiving an amount of Rs. 80.27 Crs. Therefore, it is the shares worth Rs. 80.27 Crs purchased by Mr. Y.S. Jagan Mohan Reddy that could be, at best, be categorized as Proceeds of Crime.

¶186

e) Sandur Power was established in 1998 and is a successful profit making business entity engaged in the business of production and distribution of electricity. The appellant was acquired by Mr. Y.S. Jagan Mohan Reddy only in 2001 by acquiring a stake of 44.26% in the company.

¶187

f) As per the audited balance sheet, the assets owned by Sandur Power‟s net worth itself is Rs 332.56 Crs. This shows that not only there is wrongful attachment but excessive attachment compared to the alleged proceeds of crime of Rs 80.27 Crs.

¶188

The details of other heads would also be discussed in the later part of the order. Parties have mainly argued the appeals on the main issue pertaining to the mining

¶189

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lease granted by BCCL. It was alleged by the respondent and as per allegations of CBI in the charge-sheet that the bribe was paid in order to get the mining lease which was granted in haste. The investment was just eye wash. The shares issued by the BCCI were just waste of papers The appellants have denied all allegations. It was alleged that the investment was genuine. All allegations are false.

¶191

By the impugned order dated November 23, 2016, the PAO dated June 29, 2016 was confirmed by the Adjudicating Authority, and the provisional attachment of 11 (eleven) fixed deposits of the Appellant bearing Nos. FD916040019493653, FD916040019494643, FD916040019033374, FD916040019032627, FD916040019033154, FD916040019793652, FD916040019796172, FD916040028197351, FD916040022370240, FD916040025115772, and FD916040034051975 (only partial attachment) aggregating to INR 152,84,61,315 (Rupees One Hundred and Fifty Two Crores, Eighty Four Lakhs Sixty One Thousand Three Hundred and Fifteen) held in Axis Bank, Srinagar Colony, Hyderabad, stood confirmed as purported „proceeds of crime‟ within the meaning of Section 5 (1) of the PMLA. Let me now deal with the case of appeal filed by Bharati Cement Corporation Pvt. Ltd. being appeal no. 1579/2016. The result of this appeal would have impact of other appeals also.

¶192

As already mentioned that the main allegation in the PAO is that the mining lease was illegally allotted in favour of the Appellant company upon an alleged wrongful cancellation of the prospecting license of M/s Gujarat Ambuja Cement Limited(hereinafter referred to as „Gujarat Ambuja‟). It is alleged that the said alleged illegality was perpetrated by the actions of Mr Y.S. Jagan Mohan Reddy (who is the son of the then Chief Minister of Andhra Pradesh, Mr. Y.S. Reddy), in conspiracy with others, and by influencing public servants and without due procedures being followed under the extant mining laws and rules made thereunder.

¶193

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¶194

Accordingly, the impugned PAO was passed, the amount of INR 152,84,61,315 allegedly represented „proceeds of crime‟ to the extent of the purported pecuniary gain allegedly derived by the Appellant company from the extraction of 1,74,93,605 MT of limestone from the areas under the mining lease granted in its favour during the period from 2009-10 to 2015-16, for the limestone area of 2037.52 acres in Kadapa District (hereinafter referred to as „Mining Lease‟).

¶195

The main reasons mentioned in the PAO are that by grant of the Mining Lease in favour of the Appellant, who has been benefitted to a great extent which is to the detriment of either the Government of Andhra Pradesh or of Gujarat Ambuja or both.

¶196

The main allegations in the charge-sheet as well as the provisional attachment orders are for allotment of mining lease granted to M/s. Bharathi Cement Corporation Pvt. Ltd. (BCCL) are that Y. S. Jagan Mohan Reddy, in a criminal conspiracy with certain public officials and Mr. Jella Jagan Mohan Reddy, got a mining lease wrongfully awarded in favour of M/s Bharathi Cement Corporation Pvt. Ltd. (“BCCL” then M/s. Raghuram Cements Pvt. Ltd.) in violation of the statutory provisions. On the basis of such mining lease, Mr. Y. S. Jagan Mohan Reddy proceeded to establish BCCL Plant, for which establishment. The following investments were made by the investors, the same is Proceeds of Crime (PoC).

¶197

i) Rs. 30 Crs by Mr. Y.S. Jagan Mohan Reddy - Rs. 30 Crs invested by Mr. Y.S. Jagan Mohan Reddy were funneled by monies payed by Mr. Nimmagadda Prasad which were occasioned by VANPIC favours.

¶198

ii) Rs. 252.5 Crs by Mr. Nimmagadda Prasad & group companies i.e. the investments are stated to be in lieu of VANPIC favours.

¶199

iii) Rs. 15 Crs by M/s. Silicon Builders Pvt. Ltd. - Rs. 15 Crs invested were funneled by Mr. Nimmagadda Prasad‟s group company, M/s. Beta Avenues

¶200

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Pvt. Ltd., through M/s. Carmel Asia Holdings Pvt. Ltd. which are also occasioned by VANPIC favours.

¶202

As far as investment of Rs.30 crores and Rs.252.5 crores by Nimmagadda Prasad is concerned, in separate order, the said issues are discussed and decided in connected appeals nos. 751/2014, 752/2014, 753/2014, 754/2014, 755/2014, 673/2014, 747/2014, 672/2014, 670/2014, 671/2014 & 668/2014. The said order also be read as part of this order.

¶203

As far as allegations of CBI and ED are concerned, the same are recorded in earlier part of my order. The response of appellants are also recorded. In case, even prima facie, this Tribunal would come to conclusive that mining lease is granted against the receipt of bribe amount paid to Jagan Mohan Reddy and his group at the instance of his father, who was the Chief Minister at the relevant period of time, then the attachment of the said FDs has to continue.

¶204

It is submitted on behalf of the appellant in appeal no. 1579/2016 that the Respondent has misinterpreted the statutory provisions as contained in the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as „MMDR Act‟) and the rules made thereunder. The Respondent has wrongly come to the conclusion while ignoring relevant material in arriving at the finding of unlawful allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant as mentioned above.

¶205

As per pleadings, the admitted following facts are:-

¶206

(a) Gujarat Ambuja was granted a Prospecting License for a period of 2 (two) years, i.e., from September 13, 2000 until September 12, 2002 vide a license deed.

¶207

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(b) After Gujarat Ambuja was unable to complete the prospecting work, it applied for a renewal of the Prospecting License for a further period of 2 (two) years, i.e., from September 13, 2002 until September 12, 2004.

¶209

(c) As no reply was received from the State authorities, there was deemed renewal of the Prospecting License for a further period of 2 (two) years, i.e., until September 12, 2004, in terms of the renewal application filed by Gujarat Ambuja.

¶210

(d) There was no application filed for a further extension of the Prospecting Licence, either before or after September 12, 2004. Accordingly, the Prospecting License expired by efflux of time on September 12, 2004;

¶211

(e) However, Gujarat Ambuja continued to carry out prospecting operations for another 1 (one) year, i.e. until October 31, 2005 when the State Government finally cancelled the Prospecting License after prior issuance of a show cause notice vide memo No. 16794 on September 21, 2005.

¶212

(f) There is hardly any dispute that Gujarat Ambuja enjoyed the prospecting license from September 13, 2000 until October 31, 2005 i.e. for a period of 5 years and 48 days (approx.).

¶213

(g) The proviso to Section 7(2) of the Mines and Minerals (Development and Regulation Act, 1957 (hereinafter referred to as „MMDR Act‟) provides that the total period for which a Prospecting License may be granted to any party (including extensions) cannot a maximum period of 5 (five) years.

¶214

(h) Thus, the Prospecting License for a period greater than the maximum period contemplated by the MMDR Act, could not have sought or obtained any extension of the Prospecting License after September 12, 2015 (i.e. upon expiry of the statutorily prescribed outer limit of

¶215

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five years). No further extension of the Prospecting License is contemplated or permitted under the mining laws. The same is not denied by the Respondent which is also prescribed under Subsection (2) of Section 7 of the Act.

¶217

(i) After the completion of the maximum period of 5 years, the Prospecting License expired by efflux of time under the law under deeming provision. Had Gujarat Ambuja applied for a further renewal after September 12, 2005, although no such application was made. In fact, the proviso to Section 7(2) of the MMDR Act prohibited any renewal after September 12, 2005, once the prescribed period of five years enjoyed.

¶218

It is the admitted position that Gujarat Ambuja had not filed any application for grant of a mining lease for the subject area, whether within the period of 3 (three) months after the expiry of the Prospecting License, or even later as mandated by Section 11 of the MMDR Act. Therefore, the question of preferential right for grant of a Mining Lease in favour of Gujarat Ambuja does not arise for the subject area.

¶219

It is submitted on behalf of appellants that the the Adjudicating Authority did not appreciate that in absence of any right existing in favour of Gujarat Ambuja, as contained in the MMDR Act itself. The very genesis of the alleged conspiracy of grant of Mining Lease to the Appellant by surpassing Gujarat Ambuja, fails at the very threshold. Even the Revision Application filed by Gujarat Ambuja challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide a detailed final order dated September 8, 2006.

¶220

Admittedly, Gujarat Ambuja has not filed any other complaint, whether civil or criminal, in this regard. The said fact was admitted on behalf of respondent by FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 26 of 74

¶221

the counsel as well as IO present. Under no circumstances, irrespective of any allegations against the appellants, one thing is very clear that Gujarat Ambuja as per the mandatory provision of the Act, was not entitled for renewal of prospective mining lease after the expiry of five years.

¶222

Once the preferential right in favour of Gujarat Ambuja was ended, the Government (State) is not precluded to invite the filing of an application for grant of Mining Lease as per rules, nor was Government of Andhra Pradesh (hereinafter referred to as „GoAP‟) was precluded from granting the same in its favour, but as per set procedure and due process. After the rejection of Gujarat Ambuja‟s Prospecting License on October 31, 2005, a Gazette Notification for re-grant of the prospecting license area under the applicable rules was published on November 21, 2005 by the competent authority.

¶223

It is also submitted on behalf of appellants that in terms of Rule 59 of the Mineral Concession Rules, 1960, an area which was previously held under a reconnaissance permit, prospecting license or mining lease would not be available for re-grant unless the availability of the area of the grant is notified in the Official Gazette and a date (being a date not earlier than thirty days from the date of the publication of such notification in the Official Gazette) is specified from which such area shall be available for grant.

¶224

One of the allegations of the respondent is that the notification dated 21.11.2005 issued under MMDR Act was not issued for Mining Lease is unfounded as Rule 59)1)(ii) of the Mineral Concession Rules, 1960 does not distinguish between as notification for grant of Prospecting License and notification for grant of Mining Lease. Therefore, the attempt of the respondent to restrict one of the notified areas as that „for mining‟ and one for „Prospecting License‟ is an attempt to give the notification as untenable interpretation. The respondents‟ also allegation is that FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 27 of 74

¶225

the mining lease was granted to BCCL without prior prospecting of the area is evidence of a criminal conspiracy is unfounded and without basis.

¶226

28. The appellants reply to the submission of the respondent on a Gazette Notification

¶227

(a) The annexure was merely a description of the nature of the land which was being notified and not a description of the nature of rights proposed to be granted thereunder. In fact, the nature of rights proposed to be granted had been clearly specified in the text of the notification, viz., mining lease/ prospecting license.

¶228

(b) The annexure of the notification which describes the notified land describes the names of previous lessee and nature of rights granted to them. In this regard, since the grant to Shri M. Obul Reddy was in the nature of a mining lease, the annexure to the notification stated so. Similarly, since the grant to Gujarat Ambuja was in the nature of a prospecting licence, the notification stated so.

¶229

(c) Rule 59(1)(ii) of the Mineral Concession Rules, 1960 does not distinguish between a notification for grant of a prospecting license and a notification for grant of mining lease. In fact, the provision merely requires that the area for re-grant be notified.

¶230

(d) The attempt in the PAO to restrict one of the notified areas as that for “mining lease” and the other for “prospecting licence” is contrary to the language of the notification itself.

¶231

(e) In fact, nothing precluded Gujarat Ambuja from applying for a Mining Lease pursuant to the said notification, but it has chosen not to apply.

¶232

(f) In view of the above, the allegations in the PAO that first, the Notification dated November 21, 2005 was not issued for a mining

¶233

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lease, and second, the Appellant‟s application for mining lease pursuant to the same is evidence of a purported criminal conspiracy, are far-fetched, unfounded and without any basis in law.

¶235

It is submitted on behalf of appellants that the purported statement by Mr Jella Jagan Mohan Reddy, the director of the Appellant company, that a copy of the Mining Lease deed had to be submitted to financial institutions before March 31, 2006 and it was submitted without prejudice. As long as there is no illegality in the executing of the Mining Lease, the mere fact of it being executed expeditiously cannot form the basis to reach a conclusion of a conspiracy. It is denied by the appellant that the entire process was completed within a day. Rather, it was submitted that due process was followed and the said process had taken about one month.

¶236

It is also submitted that there is no illegality in grant of conditional mining lease in favour of the Appellant during pendency of Revision Applications- Revision Applications filed by Gujarat Ambuja challenging the following, namely (a) rejection of its Prospecting License; and (b) grant of mining lease in favour of the Appellant vide G.O. No. 95, both dismissed. It is alleged that the first and second revision petition filed by Gujarat Ambuja challenging the grant of Mining Lease in favour of the Appellant vide G.O. No. 95 had no bearing after the expiry of five years and was also dismissed as withdrawn without liberty to re-file a fresh application, which is evidencing by the conduct of Gujarat Ambuja itself. The Adjudicating Authority failed to appreciate that even Gujarat Ambuja did not express any interest in pursuing a mining lease for the subject area. Even the said party obtained interim order as the mining lease granted to Bharati Cement Corporation Pvt. Ltd. subject to the outcome of Revision Petition.

¶237

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¶238

It is argued on behalf of appellants that there is no illegality in grant of conditional mining lease in favour of the appellant during pendency of revision applications – revision applications filed by Gujarat Ambuja challenging the following, namely (a) rejection of its Prospecting License; and (b) grant of mining lease in favour of the appellant vide G.O. No. 95, both were dismissed.

¶239

Sub-rule 2 of Rule 54 of the Mineral Concession Rules, 1960 envisages an application by any person to the Central Government for revision of any order made by the State Government or other authority in exercise of the powers conferred on it by the MMDR Act or these rules that it is aggrieved by, to be made within three months of the date of communication of the order to him.

¶240

It is true that the grant of the Mining Lease has been doubted by the Adjudicating Authority and in the PAO due to the pendency of the revision petition at the time of grant of Mining Lease in favour of the Appellant. It is submitted on behalf of appellant that the Adjudicating Authority has failed to take cognizance of the following relevant facts:

¶241

(a) The G.O. Ms. No. 95 dated March 27, 2006 granting the Mining Lease for Limestone over an extent of 2037.52 acres in Sy. Nos. 215 to 231 etc. in villages in Yerraguntla and Kamalapuram Mandals in Kadapa District in favour of the Appellant was by no means an unconditional grant, as has been sought to be incorrectly portrayed in the impugned PAO.

¶242

(b) On the contrary, the GO clearly provides that the grant orders are subject to the outcome of the decision of the Government of India in the Revision Application filed by Gujarat Ambuja.

¶243

(c) In case Gujarat Ambuja‟s Revision Application had succeeded, the G.O. Ms 95 or Mining Lease granted in favour of the Appellant would not come in the way.

¶244

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¶245

(d) In addition to the same being subject to the outcome of the Revision Application, the Appellant was, inter alia, required to obtain environmental clearances within 6 (six) months and set up a cement unit within a period of 3 (three) years.

¶246

(e) That even during the pendency of a revision application filed by a party, the grant of a mining lease to another party is within the contemplation of the Mineral Concession Rules, 1960.

¶247

(f) Sub-rule 2 of Rule 54 of the Mineral Concession Rules, 1960 clearly provides that in every application for revision under Sub-rule 1 filed against the order of a State Government refusing to grant a prospecting license, any person to whom a prospecting license/mining lease was granted in respect of the same area or for a part thereof, shall be impleaded as party.

¶248

(g) There is no provision under the MMDR Act or the Mineral Concession Rules, 1960 which prohibits the grant of a mining lease while pendency of a revision application. On the contrary, Sub-rue 2 of Rule 54 contemplates the situation that a mining license may be granted during pendency of a revision application and, merely imposes a requirement to implead the party who was granted the mining lease in respect of the same area. In this regard, reliance is placed upon the judgment passed by the Hon‟ble Bombay High Court in Vidarbha Mining Association v. Central Government Tribunal Revisional Authority, New Delhi & Ors. , 2014(5) Mh.L.J. 346 (based on similar facts where a mining lease was granted by the Central Government during pendency of revision petition), wherein it was held that:

¶249

“ The plain reading of the above rule and sub-rule leaves no doubt that any person whose application has been rejected by the State Government can very well challenge the said order by filing revision application invoking Rule 54. The only duty cast upon him is to implead as a party to a person

¶250

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¶251

to whom the prospecting license or mining lease has been granted vide the impugned order. ”

¶252

(h) Therefore, it is alleged that the allegation of criminal conspiracy or of suppressing the factum of pendency of the Revision Application filed by Gujarat Ambuja so as to ensure execution of the mining lease in favour of the Appellant is clearly unfounded and unsubstantiated. In any case, both the Revision applications filed by Gujarat Ambuja were dismissed.

¶253

(i) It is submitted that a party is not precluded from being granted a mining lease during the interim period, i.e., the period after a decision is taken by the State Government to deny the application of a party for grant of a prospecting license or mining lease, until the time such aggrieved party challenges the same in revision.

¶254

(j) It was alleged that it is not within the contemplation of the mining rules that the competent authority is statutorily mandated to remain idle and not take decisions for grant of mining lease in respect of the same area until the period of limitation under Rule 54 expires, which interpretation will create a situation of absurdity and the same could not have been the intent of the framers.

¶255

It is a matter of fact that the First Revision Application filed by Gujarat Ambuja, challenging the rejection of its renewal application/ cancellation of Prospecting License was dismissed on merits vide final order dated September 8, 2006. It cannot be denied that despite the Gazette Notification being in the public domain and known to Gujarat Ambuja, it chose to apply for a stay under Rule 55(5) of the Mineral Concession Rules, 1960 only on February 21, 2006, almost 4 (four) months after rejection of its renewal application and 3 (three) months after the Gazette Notification was published.

¶256

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¶257

It is also factual position that Gujarat Ambuja had also filed a second revision petition challenging the grant of Mining Lease in favour of the Appellant vide G.O. No. 95 dated March 27, 2006, however, the same was also dismissed as withdrawn without liberty to re-file a fresh application, which evidencing that Gujarat Ambuja, the Respondent‟ is trying to display the card Gujarat Ambuja who was not interested to file the application for approval, who itself had no case to make out against the said Mining Lease having been granted in favour of the Appellant. The said orders have since attained finality. The said party after withdrawal of the second Revision Petition and granting the mining lease to appellants have not challenged the same in any court of law as of today.

¶258

The Adjudicating Authority did not properly dealt with this issue that even Gujarat Ambuja did not express any interest in pursuing a mining lease for the subject area. It is the admitted position that despite knowledge of the Gazette Notification having been published, Gujarat Ambuja also did not apply for a mining lease.

¶259

The revisional authority had also considered both the revision applications as lacking in merit, which is revealed by the dismissal of one application on merits and dismissal of the other by way of withdrawal without liberty to re-file. Even otherwise, as admitted by both parties that the lease granted subject to the final outcome of Revision Petition.

¶260

It is submitted on behalf of appellants that grant of mining lease is permissible in law without prospecting operations by the same party as Sub-section 2 of section 5 of the MMDR Act merely requires the subjective satisfaction of the GoAP that there be evidence to show that the area for which the lease is applied for has been prospected earlier, or the existence of mineral contents therein has been established otherwise than by means of prospecting such area and it stands FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 33 of 74

¶261

admitted by the Respondent in the PAO that Gujarat Ambuja had prospected the area from September 13, 2000, until the rejection of its renewal application on October 31, 2005, i.e., for period of more than 5 (five) years but had not completed the prospecting work or submitted the requisite final prospecting licence report.

¶262

In any case, the existence of mineral contents and limestone reserves in the area in question had already been established, which is clearly evidenced from the report of Mr. Shankar Narayana, Assistant Director (Mines & Geology) -

¶263

“ As per the exploration report of M/s Gujarat Ambuja Cement Ltd., the total estimated reserves are to the tune of 144.06 million tonnes considering an average workable thickness of 18 mts and 50% of the area for practical working leaving sufficient area for safety zone for blasting, green belt development and statutory limits from roads, lease periphery etc. ”

¶264

It is submitted that as long as the existence of mineral content has been established (which was a clear finding of the GoAP), the grant of a mining lease (even without a prior prospecting license) cannot be questioned. In fact, by the allegations of the PAO itself, wherein it is detailing out the extent of lime stone extracted by the Appellant, it is evident that the said area indeed and indisputably contained sufficient reserves of minerals.

¶265

The PAO itself reveals that (a) the GoAP had recorded and accepted that the existence of mineral contents therein has been established; and (b) the post facto occurrences, i.e., the lime stone extracted by the Appellant from the area, evidence the correctness of the said recordal.

¶266

Under the provisions of Section 5(2) of the MMDR Act, a mining lease can be granted to a party who has not carried out the prospecting operations in the same area, however, it depends upon situation to situation. In the present case, it was FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 34 of 74

¶267

observed in the PAO that the limestone was extracted by the appellant from the area.

¶268

It is submitted on behalf of the appellant that the impugned PAO has erred in holding that prior approval of the Minister (Mines and Geology) was not obtained for issuance of G.O. No. 95 dated March 27, 2006. As regards, it is submitted on behalf of the appellant the process for obtaining approvals for grant of mining lease in favor of the Appellant, the following facts are relevant:

¶269

(a) It has been admitted by the Respondent that after receiving the combined proposal regarding grant of mining lease to the Appellant from the office of the ADMG, the DMG deemed it fit to consider the application subject to the condition that the Appellant shall establish a cement unit within 3 (three) years.

¶270

(b) Further, the note was put up through the Assistant Secretary, Deputy Secretary & Secretary to the Minister and the same was approved by the then Minister on February 7, 2006

¶271

(c) After receiving the approval of the Minister (Mines & Geology) on February 7, 2006, a draft memo was put up on February 14, 2006 and Memo No. 676 dated February 15, 2006 was issued by the concerned official in favour of the Appellant, informing the Appellant Company of the grant of a mining lease for limestone over an extent of 2037.52 acres. The Appellant was also called upon to submit the Mining Plan within a period of 6 (six) months as per law.

¶272

It is stated on behalf of appellants that due process was followed by the GoAP, including obtaining the approvals of the Minister (Mines & Geology) as admitted by the Respondent itself in the impugned order dated November 23, 2016 and it has been wrongly held as the requisite ministerial approvals were in place at

¶273

the time of grant of mining lease in favour of the Appellant. It is aalso submitted FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 35 of 74

¶274

that once the approvals of the Minister had already been obtained for grant of the Mining Lease, it could not have been the intent to seek repeated approvals on the same matter.

¶275

It is argued that Section 5(2) of the MMDR Act, do not bar the use of an earlier prospecting report in addition to other information which has been established other than by prospecting. Rule 16(3) - the Mineral Concession Rules, 1960 records the process to be followed in the event that information submitted by a person undertaking prospecting activities is to be treated as confidential.

¶276

The allegation was that both the Appellant and M/s Saraswati Power and Industries Private Limited had failed to submit prospecting reports from the Geological Survey of India or from any other private consulting agency, and had instead used the prospecting report of Gujarat Ambuja, or that the same wass unlawful.

¶277

It is submitted on behalf of appellants that no such process for treating the information submitted by Gujarat Ambuja as confidential, had been requested or followed and as such, the Appellants were free to use all such information within the framework of the MMDR Act, and the Mineral Concession Rules, 1960.It is submitted that there is not even a single averment in either the charge sheet, the PAO or the impugned order that Gujarat Ambuja had marked their reports and information as confidential and as such, in terms of the said rule, the said reports and information could be used by any person, including the appellant herein.

¶278

It is matter of fact that Gujarat Ambuja had the opportunity to submit its application for grant of Mining Lease on the basis of information available with it after the area was notified in terms of the mentioned Gazette Notification, but the

¶279

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¶280

said party did not do so. In the absence of Gujarat Ambuja itself not having applied for grant of Mining Lease, there cannot possibly be a grievance against use of all available information even if the same was generated by Gujarat Ambuja. It is a matter of fact that Gujarat Ambuja has taken any action civil and criminal against the appellants for using the said information. It is also alleged on behalf of appellants that in the absence of any restriction on usage of available information there can be no illegality, let alone criminality, attached to the usage of such information by the Appellant.

¶281

It is an undisputed fact that the Appellant, vide letter dated February 21, 2006, had submitted its Mining Plan to the Regional Controller of Mines, Hyderabad, within the statutory period of 6 (six) months, as directed. Thereafter, the Mining Plan with Scrutiny Comments was forwarded to the Controller of Mines (SZ), Indian Bureau of Mines, Bangalore, for further action. By letter dated March 16, 2006, the Appellant was directed to get the deficiencies rectified and submit 5 (five) bound copies of the Mining Plan within a period of 30 (thirty) days. Its director, Mr. Jella Jagan Mohan Reddy, on behalf of the Appellant, vide letter dated March 22, 2006 submitted 5 (five) bound copies of the Mining Plan, after rectifying the deficiencies observed by the Regional Controller of Mines, Hyderabad. And after having gone through the rectified Mining Plan, the Dealing Assistant had duly noted that the Mining Plan was “more or less satisfactory”, meaning thereby that it was fit to be put up for approval. Based on the notings of the Dealing Assistant, the Mining Plan was put up for approval on March 23, 2006. The same was signed on March 23, 2006/ March 24, 2006 and subsequently, the Approved Mining Plan was received by the Appellant.

¶282

It is submitted that in view of the above stated procedure undertaken by the Appellant and the various officials, the allegations contained in the impugned PAO as regards purported deficiencies in the Approved Mining Plan, and the basis on

¶283

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¶284

which the impugned order dated November 23, 2016 was passed without appreciation of the correct facts. In any case, it is submitted that the deficiencies in the Mining Plan, if any, had been rectified fully by the Appellant, which was subsequently also confirmed by the Dealing Assistant before being approved by the competent authority.

¶285

The entire process for approval of the Mining Plan took more than a month i.e. from February 21, 2006 (when the mining plan was submitted) to March 23, 2006/ March 24, 2006 (when approval was granted), and therefore the allegation that the approvals were done in less than a day was not correct.

¶286

The Appellant has relied upon the following judgement in this regard:

¶287

(a) Chairman & MD, BPL Ltd. v. S.P. Gururaja and Others , (2003) 8 SCC 567 [paragraphs 34 and 35]

¶288

“34. Undue haste also is a matter which by itself would not have been a ground for exercise of power of judicial review unless it is held to be malafide. What is necessary in such matters is not the time taken for allotment but the manner in which the action had been taken. The court, it is trite, is not concerned with the merit of the decision but the decision making process. In absence of any finding that any legal malice was committed, the Impugned allotment of land could not have been interfered with. What was only necessary to, be seen was as to whether there had been a fair play in action.

¶289

35. The question as to whether any undue haste has been shown in taking an administrative decision is essentially a question of fact. The States had devolved a policy of Single Window System with a view to get rid of red-tapism generally prevailing in the bureaucracy. A decision which has been taken after due deliberations and upon due application of mind cannot be held to be suffering from malice in law on the ground that there had been undue haste on the part of the State and the Board.”

¶290

It is admitted by the respondent that the Commission of inquiry constituted by the government of Andhra Pradesh found no wrongdoing in allotment of Mining FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 38 of 74

¶291

Lease in favour of the Appellant vide G.O. Ms. No. 648 Revenue (Assn. IV) dated May 14, 2007 constituted a Commission of Inquiry which was headed by Hon‟ble Mr. Justice P. Ramakrishnam Raju, a retired judge of the Hon‟ble High Court of Andhra Pradesh. One of the matters to be inquired upon by the said Commission was as under:

¶292

“Whether issue of G.O.Ms. No. 95 Industries and Commerce (M. III) Department, dated 27.03.2006 by the government of Andhra Pradesh granting Mining Lease M/s Raghuram Cements Limited, for establishing their proposed cement factory in Kadapa District was in conformity with the established norms, procedures and provisions of law.”

¶293

After a detailed inquiry into the above issue, the Hon‟ble Commission vide its report dated August 27, 2007, unequivocally concluded as under:

¶294

“… I have no doubt the State Government has followed the procedure indicated above following the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960. I have pursued the entire procedure followed for the issue of G.O. Ms. No. 95 Industries and Commerce (M. III) Department, Dt. 27.03.2006. I do not find any infraction in following the established norms, procedure or the provisions of the law.”

¶295

The inquiry conducted by a retired High Court Judge has given an unequivocal finding in favour of the Appellant as regards the lawful allotment of the Mining Lease. It is informed that the said report has not been challenged.

¶296

The Adjudication Authority did not care about the finding of a retired High Court Judge, heading a Commission constituted by the Government of Andhra Pradesh under the Commissions of Inquiry Act, 1952, rather it has given finding contrary to the report by coming to the conclusions that the allotment of the Mining Lease dated March 29, 2006 in favour of the Appellant was unsupported by any cogent and reliable material on record.

¶297

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¶298

The Respondent‟s stand is that the Hon‟ble Commission only enquired into the legality of the grant of Mining Lease by the Government, however, the grant of Mining License to Appellant was illegal and despite of Hon‟ble Commission had categorically noted in paragraph 8.9.3 that there had been no infraction in following the established norms, procedure or the provisions of law in granting the Mining Lease to the Appellant.

¶299

It is admitted by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05,799.

¶300

It is argued on behalf of the appellants that as a matter of fact the benefit has accrued to the Government on account of the mining activities of the Appellant on its own private land purchased from private parties, and without any support from the Government, in the form of acquisition proceedings or otherwise. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, it is alleged that, irrespective of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer.

¶301

It is also a matter of fact that despite several changes in political dispensation in the State of Andhra Pradesh, namely on September 3, 2009 (Government of Shri K. Rosaiah) on November 25, 2010 (Government of Shri N. Kiran Kumar Reddy), on March 1, 2014 (President‟s Rule in the state), and thereafter on June 8, 2014 till May, 2019 (Government of Telugu Desam Party), no attempts have been made either FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 40 of 74

¶302

to cancel the Mining Lease granted in favour of the Appellant or to satisfy the inquiry report submitted by Hon‟ble Mr. Justice P. Ramakrishnam Raju.

¶303

The next argument addressed on behalf of appellant is that there was no commission of a scheduled offence by the Appellant Company as envisaged within the meaning of Section 3 read with Section 2 (u) of the PMLA, for reasons elaborated hereinafter. No retrospective application of provisions of PMLA can be applied as the Mining Lease over the limestone area of 2037.52 acres in Kadapa District was admittedly allotted in favour of the Appellant as early as March 27, 2006 vide G.O. No. 95, and the Mining Lease Deed was executed as early as on March 29, 2006.

¶304

Admittedly, Sections 120-B and 420 of the IPC and Section 13 of the PCA were added as „Scheduled Offences‟ by way of the Prevention of Money Laundering (Amendment) Act of 2009 (21 of 2009) which came into effect only June 01, 2009, much after the grant of the mining lease in the year 2006.

¶305

The Respondent has chosen also invoked the provisions of the offences of Section 13 of the PCA, Section 120-B and Section 420 of the IPC as „Scheduled Offences‟ despite the fact that the purported offences were not „Scheduled Offences‟ within the meaning of Section 3 read with Section 2(u) of the PMLA, at that period of time and these were not existed. They were incorporated w.e.f. 15.06.2009. It is submitted on behalf of appellants that the provisions of law cannot be retrospectively applied, as Article 20(1) of the Constitution bars ex-post facto penal laws and no person can be prosecuted under Sections 3 and 4 of the Act. on the allegations which occur earlier by applying the provisions of law, which have come into force after the alleged incident.

¶306

In the impugned order dated November 23, 2016, it is held that proceeds on the basis that the offence of money laundering under Section 3 of PMLA is a FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 41 of 74

¶307

continuing one, despite the allegations of commission of the offences and acquisition of proceeds there from having occurred prior to the offences being notified in the Schedule of PMLA. The impugned order has referred the following decision-

¶308

B. Rama Raju v. Union of India - Hon‟ble Andhra Pradesh High Court in Writ Petition No. 10765, 10769 & 23166 of 2010 decided on March 4, 2011 ( para 50 and 51)

¶309

“50. On analysis of the provisions of Section 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudication and confiscation in Chapter-III. Attachment or confiscation of proceeds of crime in the possession of a person who is not accused or charged of an offence under Section 3 isthus not an incorporation for the first time by the provisions of the Second Amendment Act, 2009. The contention on behalf of the Petitioners that the second proviso to Section 5(1) of the Act, applies only to property acquired/possessed prior to enforcement of this provision or if interpreted as being retrospective, the provision itself must be invalidated for arbitrary retrospective operation is therefore without substance or force.

¶310

51. The above contention does not merit acceptance even otherwise. Article 20 of the Constitution enacts an injunction only in respect of ex post facto laws resulting in conviction for offences or imposition of penalties greater than which might have been inflicted under the law enforceable at the time of commission of the offence. No provision of the Constitution has been brought to our notice which prohibits a legislative measure which targets for attachment and confiscation proceeds of crime. On the text and authority of our Constitution while it may perhaps gainfully be contended that conviction for the offence of money-laundering cannot be recorded if the said offence is committed prior to the enforcement of Section 3 of the Act, such a contention cannot be advanced to target proceedings for attachment and confiscation, as these fall outside the pale of the prohibitions of the Constitution, in particular Article 20(1).”

¶311

Distinguishing factors:

¶312

i) The factual basis of the Rama Raju judgment was that the admission of guilt by B. Ramalinga Raju himself of acts of inflating cash and bank balances, falsification of projections of financial position of Satyam Computers over several years, inflated revenues, consequential artificial cash etc., contained in a letter dated January 7, 2009. In the present Appeal, the Appellant has always

¶313

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¶314

maintained that the grant of mining lease is lawful and in accordance with law.

¶315

ii) The issues in the Rama Raju case relate to a challenge to the vires of the provisions of PMLA. The Petitioners, inter alia , seek invalidation of Sections 5(1), 8(1), 8(2), 8(3), 8(4), 23 and 24 of the PMLA and other consequential reliefs. The observations of the Hon‟ble High Court as regards Article 20 is not the ratio decidendi and is merely obiter and is not an authority for Article 20 of the Constitution.

¶316

In this regard, the Appellant‟s seek to rely upon the following

¶317

judgment:

¶318

Bhavnagar University v. Palitana Sugar Mill Pvt. Ltd. and Ors. , (2003) 2 SCC 111 –

¶319

“59. A decision, as is well-known, is an authority for which it is decided and not what can logically by deduced therefrom. It is also well-settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision…” ;and (2) Bharat Petroleum Corporation Ltd. and Anr.v. N.R. Vairamani and Anr. , (2004) 8 SCC 579.

¶320

“9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes.”

¶321

iii) The Hon‟ble High Court has clearly stated that analysis of the provisions of PMLA by it in the Rama Raju judgment, has been

¶322

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¶323

confined to the narrow set of facts and circumstances of the cases on hand i.e. the judgment will not be a judgment in rem, and will not have precedential value in the facts of the present case as mentioned in paragraphs 13 and 14.

¶324

iv) A Special Leave Petition challenging the aforesaid judgment of the Hon‟ble Andhra Pradesh High Court is pending before the Hon‟ble Supreme Court. Therefore, the judgment of the Hon‟ble Andhra Pradesh High Court is yet to attain finality.

¶325

On the issue of the question of retrospectively effect and operation, the Maxwell on Interpretation of Statutes, Twelfth Edition, at page 215, under the headingRetrospective Operation of Statutes, writes .

¶326

“UPON the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. The statement of the law contained in the preceding paragraph has been “so frequently quoted with approval that it now itself enjoys almost judicial authority.”

¶327

63 . In Lauri v. Renad (1892) 3 Ch 402, by Lindley, L.J. that it is a fundamental rule of English Law that no „statute shall be construed so as to have a retrospective operation, unless its language is such as plainly to require such a construction. And the same rule involves another and subordinate rule, to the effect that a statute is not to be construed so as to have a greater retrospective operation than Us language renders necessary. It is stated that it is well recognized rule that statutes should be interpreted, if possible, so as to respect vested rights, but such a construction should never be adopted if the words are open to another construction. It is also stated that if a statute be ambiguous, the Court should lean to the interpretation which would support existing rights.

¶328

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¶329

In the Queen v. The Inhabitants of St. Mary, Whitechapel (1848) 12 QB 120, the Court pointed out that “The Statue which in its direct operation of prospective cannot be properly called a retrospective statute because a part of the requisites for that action is drawn from the time antecedent to its passing”.

¶330

The fundamental rule of interpretation of statutes. Following case laws are cited:-

¶331

a) Monnet Ispat and Energy Limited Versus Union of India and Others (2012) 11 SCC at page 90 paras 153 & 154 held that:

¶332

“153. Having carefully considered Section 17-A, I have no hesitation in holding that the said provision is prospective. There is no indication in Section 17-A or in terms of the amending Act that by insertion of Section 17-A Parliament intended to alter the pre-existing state of affairs. Parliament does not seem to have intended by bringing in Section 17-A to undo the reservation of any mining area made by the State Government earlier thereto for exploitation in public sector. Parliament has no doubt plenary power of legislation within the field assigned to it to legislate prospectively as well as retrospectively. As early as in 1951 this Court in Keshavan Madhava Menon v. State of Bombay [AIR 1951 SC 128 : (1951) 52 Cri LJ 860] had stated about a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. In Principles of Statutory Interpretation (7th Edn., 1999) by Justice G.P. Singh, the statement of Lord Blanesburg in Colonial Sugar Refining Co. v. Irving [1905 AC 369 : (1904-07) All ER Rep Ext 1620 (PC)] and the observations of Lopes, L.J. in Pulborough Parish School Board Election, In re, Bourke v. Nutt [(1894) 1 QB 725 : (1891-94) All ER Rep 831 (CA)] have been noted as follows: (QB p. 737)

¶333

“In the words of Lord Blanesburg, „provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment‟. „Every statute, it has been said‟,

¶334

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¶335

observed Lopes, L.J., „which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already past, must be presumed to be intended not to have a retrospective effect‟.”

¶336

154. Where an issue arises before the court whether a statute is prospective or retrospective, the court has to keep in mind presumption of prospectivity articulated in the legal maxim nova constitution futuris formam imponere debet non praeteritis i.e. “a new law ought to regulate what is to follow, not the past”. The presumption of prospectivity operates unless shown to the contrary by express provision in the statute or is otherwise discernible by necessary implication.”

¶337

b) Keshavan Madhava Menon Versus State of Bombay, AIR 1951 SC 128 – para 7 [7 Judge Bench of Hon‟ble Supreme Court]

¶338

“7. …………………………………………………………………. Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation. …………… …………………………………………………………………………………… ……………………………………..”

¶339

c) Mahadeolal Kanodia Versus Administrator, General of West Bengal, AIR 1960 SC 936 – para 8 [3 Judge Bench of Hon‟ble Supreme Court], held that:

¶340

“8. The principles that have to be applied for interpretation of statutory provisions of this nature are well-established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the legislature has made them retrospective; and the retrospective operation will be limited only to the extent to which it has been so made by express words, or necessary implication. The second rule is that the intention of the legislature has always to be gathered from the words used by it, giving to the words their plain, normal, grammatical meaning. The third rule is that if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so that it is capable of two meanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 46 of 74

¶341

should be adopted. The fourth rule is that if the strict grammatical interpretation gives rise to an absurdity or inconsistency such interpretation should be discarded and an interpretation which will give effect to the purpose the Legislature may reasonably be considered to have had will be put on the words, if necessary even by modification of the language used.”

¶342

d) K. C. Arora and Another Versus State of Haryana, 1984 (3) SCC 281, para 15 [3 Judge Bench of SC], held that:

¶343

“15. It may be pointed out at the very outset that the Parliament as also the State Legislature have plenary powers to legislate within the field of legislation committed to them and subject to certain constitutional restrictions they can legislate prospectively as well as retrospectively. It is, however, a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect ………………………………………..”

¶344

In M/s Punjab Iron Supply Co., Chandigarh V. Central Government, [1984]1SCR428, the exemption was granted by the Home Department Notification dated 31.01.1973, as modified notifications dated 24.09.1974 to those buildings which were given sewerage connection or electric connection or which are occupied, as the case may be, on or after January 31, 1973. It was held that the benefit of the notification cannot be extended to the buildings which were given the sewerage connection or electric connection or which were occupied, as the case may be, prior to January 31, 1973. Those buildings are governed by the provisions of the Act and any decrees passed in respect of them are governed by S. 13 of the East Punjab Urban Rent Restriction Act, 1949, as applicable to Union Territory of Chandigarh, Their Lordships, with regard to the rule of interpretation regarding retrospectively observed (at pages Sc 93 and 94, Air 1948)

¶345

“All laws which affect substantive rights general operate prospectively and there is a presumption against their retrospectivity if they affect vested rights and obligations unless the legislative intent is clear and compulsive. Such retrospective effect may be given where there are express words giving retrospective effect or where the language used necessarily implies that such retrospective operation is intended. Hence, the question whether a statutory provision has retrospective effect or not depends primarily on the language in

¶346

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¶347

which it is couched. If the language is clear and unambiguous effect will have to be given to the provision in question in accordance with its.

¶348

(32) It would appear from the case law considered above that the rule of construction or interpretation is very well settled and well established that laws generally are prospective in character more particularly, law affecting vested or substantive rights or laws creating new liabilities or imposing new disabilities, unless there are express words in the statute affecting the existing rights of unless there is clear manifestation of the intention of the Legislative on the basis of which it can be said that the law is retrospective in character, and even vested rights have been taken away or new liabilities have been created or new disabilities have been imposed. There are laws and law‟s and cases, the real question of application of the cardinal rule of construction which is propounded and considered above. It is also well established that there is a presumption against retrospectivity and this presumption can only be rebutted by express words in the Statute or by necessary intendment of the statute. It is also well established that only to what extent, retrospectivity may be considered of the provisions in the statute which necessary arises from the express words or from necessary intendment. Beyond that extent, retrospectivity should not be considered to have arisen.

¶349

In the recent judgement passed by the Division Bench of High Court of Judicature at Hyderabad for the state of Telangana and the State of Andhra Pradesh on 31.12.2018 in the case of „Satyam Computer Services Limited vs. Directorate of Enforcement, Government of India and Ors.‟ where the issue of retrospective effect has been dealt with. In paras 67 to 72, the same are read as under:-

¶350

“67. The fourth and last ground of attach to the impugned order of attachment is that Section 8(5) of the Prevention of Money Laundering Act, 2002, as amended in the year 2013 cannot be applied retrospectively and that therefore the impugned order is liable to be set aside.

¶351

68. In order to appreciate this contention, it is necessary to have a look at Section 8(5) of the PMLA, 2002, as it was before and as it is after amendment:

¶352

*Section 8(5) before amendment*	*Section 8(5) after amendment* *w.e.f. 15.02.2013*
*(5) Where on conclusion of a* *trial for any scheduled offence,* *the* *persons* *concerned* is *acquitted, the attachment of* *the property of the retention of* *the seized property or record* *under sub-section (3) and net* *income, if any, shall cease to*	*(5) Where on conclusion of a* *trial of an offence under this* *Act, the Special Court finds that* *the offence of money laundering* *has been committed, it shall* *order* *that* *such* *property* *involved* in *the* *money-* *laundering or which has been*

¶353

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¶354

*have effect.*	*used for commission of the*
	*offence* of *money-laundering*
	*shall stand confiscated to the*
	*Central Government.*

¶355

69. It may be seen from the above table that prior to the amendment, the attachment of a property will cease to have effect, the moment the persons concerned are acquitted on conclusion of trial for any scheduled offence. But after the amendment, the conviction of a person for a scheduled offence has no nexus to the confiscation of the property. What is now important is to see whether the Special Court finds the commission of an offence of money laundering or not.

¶356

70. The contention of Mr. S. Ravi, learned senior counsel for the petitioner is that the petitioner company was not even implicated as an accused in the criminal case. All the accused, who were individuals and who were at the helm of affairs of the petitioner company, were prosecuted and they were convicted by the Special Court by a judgement dated 09-04-2015. Since the charge sheets filed prior to the amendment and since the petitioner was not one of the accused, the amendment to Section 8(5) will not apply to the case of the petitioner. That vested rights cannot be taken away by retrospective application of the law (especially quasi criminal) is too well settled. A useful reference may be made in this regard to the judgements of the Supreme Court in STO v. Oriental Coal Corporation MANU/SC/0427/1988 : 1988 (Suppl) SCC 308 and in K.S. Paripoornan v. State of Kerala MANU/SC/0200/1995 : (1994) 5 SCC 593. In Oriental Coal Corporation the Supreme Court pointed out that where there is no hint of retrospectivity, in the statute itself, it is not possible to read retrospectivity. Similarly, in K.S. Paripoornan, the Supreme Court indicated the distinction between a statute dealing with substantive rights and a statute, which relates to procedure or evidence or is declaratory in nature. A statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect. On the contrary, a statute concerned mainly with matters of procedure, or evidence or which is declaratory in nature has to be construed as retrospective, unless there is clear indication to the contrary.

¶357

71. The PMLA is not a statute dealing merely with matters of procedure or evidence or which is declaratory in nature. It is a statute which affects substantive rights of parties. Therefore, by the test indicated in K.S. Parpoornan, it cannot have retrospective effect.

¶358

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¶359

72. In fact, the PMLA ,2002 underwent several amendments from the year 2005 onwards. Even the expression “proceeds of crime” defined in Section 2(1)(u) underwent an amendment by Act 2 of 2013 and later by Finance Act, 2016. Today, the definition includes any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. Therefore, even the property in the hands of third parties can be attached and confiscated, if it is shown that they represent proceeds of crime. Hence, by its very nature, the provisions of the Act cannot have retrospective effect.

¶360

Thus, prima facie, there is a force in the submissions of the appellants that t he said provisions could not be applied as the allegation of proceed of crime and money laundering were much prior in time. However, in the nature of facts and allegation made in the charge-sheet filed by the CBI, this Tribunal chooses to decide the matter on merit.

¶361

This Tribunal has also noticed that there are many issues raised by the appellants either to have been ignored or not decided as per law by the adjudicating authority.

¶362

70. Total Alleged Proceeds of Crime:

¶363

The transactions labelled as alleged proceeds of crime according to the

¶364

Provisional Attachment Order dated 29.06.2016 and O.C. No.618 of 2016 are as follows:

¶365

416.20 Crs	Monies realized by Mr. Y.S. Jagan Mohan Reddy from selling of shares to M/s. PARFICIM SAS at Rs. 671.20 per share.
23.80 Crs	Shares held by Mr. Y.S. Jagan Mohan Reddy in BCCL (From the monies received from Mr. Nimmagadda Prasad)
15.00 Crs	Shares held by Silicon Builders in BCCL (From the monies invested by Mr. Nimmagadda Prasad)
81.25 Crs	Dividend received by Mr. Y.S. Jagan Mohan Reddy on 2,38,06,435 shares of BCCL

¶366

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¶367

51.20 Crs Dividend received by Silicon Builderson 1,50,00,000shares of BCCL

¶368

152.84 Crs Value of limestone extracted by BCCL 19.50 Crs Salaries of Mrs. Y.S. Bharathi Reddy 7.18Crs Salaries of Mr. JellaJagan Mohan Reddy ------------- 766.97 Crs Total quantification of PoC Total value of properties attached as „Proceeds of Crime‟ @ Pg. 52 of PA Order dated 29.06.2016 is Rs. 748.95 Crs.

¶369

71. Relating to Mrs. Y.S. Bharati Reddy (Appeal No. 1574 of 2016):

¶370

Salaries received by Mrs. Y.S. Bharathi Reddy

¶371

Mrs. Y.S. Bharathi Reddy was appointed Director of BCCL, which is a company incorporated and is subject to regulations framed under the Companies Act, 1956. The allegation leveled against Mrs. Y.S. Bharathi Reddy that she is continuing to be a Director of BCCL, which shows the wrongful tacit relation between Mr. Y.S. Jagan Mohan Reddy and BCCL is without any substances as the appointment of Mrs. Y.S. Bharathi Reddy as a Director has been done in a legal manner and is in accordance with the provisions of the Companies Act. The appointment and the remunerations paid to Mrs. Y.S. Bharathi Reddy are in consonance with the relevant provisions and regulations of the Companies Act.

¶372

No allegations of any such appointment and remuneration paid to Mrs. Y.S. Bharathi Reddy being wrongful have therefore been raised either by the CBI in their investigation nor has been the subject matter of any issue in the enquiry/proceedings under the IT Act initiated by Income Tax Department, which have been substantially relied upon by the CBI and the respondents herein.

¶373

Income derived by a person working in a post can never be, therefore, termed as proceeds of crime. Mrs. Y.S. Bharathi Reddy has been serving the company as FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 51 of 74

¶374

its Director and Chairperson and the company has been generating surplus and profits to the satisfaction of the shareholders. The said fact is not denied on behalf of respondent.

¶375

It is correctly alleged that BCCL is a professionally managed and run company, held in majority by VICAT which is one of largest Cement manufacturer in the world having its facilities in over eleven (11) countries. The balance sheets and the financial result of BCCL are subjected to audit processes and are published each year. Various mechanisms for the purpose of enquiring into any irregular functioning of any company are provided both in the private and public realm of the Companies Act. Such steps also include appropriate investigations by specified agencies. The fact that the investments made into BCCL by the foreign shareholder and the manner of functioning of BCCL has not been the subject of any enquiry would disclose that there can be no criminality imputed to the functioning of Mrs. Y.S. Bharati Reddy as Chairperson and being paid remuneration therefor.

¶376

The allegations of the salaries being improperly drawn also stand contradicted by the admitted circumstance that BCCL is now controlled in majority by PARFICIM SAS, France, a multi-national company. As neither Mr. Y.S. Jagan Mohan Reddy nor his associated shareholders have a majority stake, the insinuation that the salary amounts are dictated by collateral considerations would be impermissible.

¶377

a) The flow of investments from Silicon Builders into BCCL is in regular course of business and the transaction in itself is completely legal and stands test to standards of the Companies Act. Therefore, Mrs. Y.S. Bharathi Reddy, only by being in virtue of the director of Silicon Builders at the time of such investment, cannot be faulted with.

¶378

Rs. 15.5 Crs. received from Y.S. Jagan Mohan Reddy is accrued from genuine business transaction.

¶379

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¶380

a) Mrs. Y.S. Bharathi Reddy received Rs. 1.5 Crs and Rs. 14 Crs from her husband, Mr. Y.S. Jagan Mohan Reddy on 14.06.2010 and 01.10.2010 respectively from the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares of BCCL to PARFICIM SAS, France. It is submitted that the sale of 62,00,972 shares to PARFICIM SAS, France by Mr. Y.S. Jagan Mohan Reddy for Rs. 416.20 Crs is a genuine business transaction.

¶381

b) As the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions, the Rs. 1.5 Crs and Rs. 14 Crs received by Mrs. Y.S. Bharathi Reddy cannot be termed, much less be attached as proceeds of crime.

¶382

PML Act does not empower the respondents to attach the legitimate earnings made by Mrs. Y.S. Bharathi Reddy for rendering her services connected with legitimate activity of a company. Further, attachment of past earnings of an alleged proceeds of crime is beyond the power of the respondents under Section 5 of the PML Act.

¶383

Thus, the salaries amount received by Mrs. Y.S. Bharati Reddy and remuneration received by Jella Mohan Reddy are not proceed of crime. The appeal is accordingly allowed.

¶384

Thus, the appeal filed by her is allowed as it was not proceed of crime. The attachment order was wrongly passed.

¶385

With regard to remuneration received by Mr. Jella Jagan Mohan Reddy, the appeal filed by him is allowed by passing separate order.

¶386

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¶387

The only premise of contending that the share application money paid by Sandur Power to Classic Realty be treated as proceeds of crime is on a corresponding allegation made that Mr. Y.S. Jagan Mohan Reddy had acquired various shares from Sandur Power for a value of Rs.80.27 Crs.

¶388

With regard to monies received by M/s. Classic Realty Pvt. Ltd. and merged entities (Appeal No. 1575 of 2016), the respondent merely on assumption is pressing that the share application money received by Classic Realty is proceeds of crime. Such a finding would work against the provisions of the Companies Act and the accounting standards specified by the Regulatory Agencies in relation to the affairs of the Company and the status of such share application money. Share application money is to be treated as an advance lying with Classic Realty and the attachment, if any, that can be resorted to by the respondents is permissible to the extent of receivables or entitlement of the share applicants where is the question of money laundering. The attachment is wrongly done. The appeal is allowed accordingly.

¶389

It is rightly alleged that the said shares acquired by Mr. Y.S. Jagan Mohan Reddy from Sandur Power have been separately attached and there is no allegation that the said shares were overvalued for the purpose of acquisition. Therefore, as the value in relation to alleged proceeds of crime in the hands of Mr. Y.S. Jagan Mohan Reddy is attached (in form of shares), the money in the hands of Sandur Power cannot be called as proceeds of crime as it would amount to execution of double attachment and for twice the value which is contrary to the scheme of PML Act.

¶390

Therefore, as the monies received by Sandur Power (which have been separately attached at the hands of Sadur Power) which have further been paid to Classic Realty as share application money cannot be attached as the same would

¶391

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¶392

amount to triple attachment of property. The said practise cannot be allowed. The proceed of crime amount has to be finally identified, otherwise, there would be no end.

¶393

Relating to amalgamated entities viz, M/s. Nivish Infrastructure Pvt. Ltd (Defendant No. 9), M/s. Shalom Infrastructure Pvt. Ltd (Defendant No. 10), M/s. Marvel Infrastructure Pvt. Ltd (Defendant No. 14) and M/s. Inspire Hotels Pvt. Ltd (Defendant No. 17)

¶394

a) The Hon‟ble High Court of Karnataka, vide Orders dated 11.03.2016 in C.A. 346 of 2015 ordered amalgamation of:

¶395

Nivish Infrastructure Pvt. Ltd.

¶396

Shalom Infrastructure Pvt. Ltd.

¶397

Marvel Infrastructure Pvt. Ltd.

¶398

Inspire Hotels Pvt. Ltd.

¶399

b) Nivish Infrastructure: Classic Realty had purchased shares in Nivish Infrastructure against a consideration of Rs. 8.20 Crs from the monies it had received from Mr. Y.S. Jagan Mohan Reddy. As the monies realized by Mr. Y.S. Jagan Mohan Reddy are from a genuine business transaction, monies at the hands of Nivish Infrastructure cannot be termed or attached as proceeds of crime.

¶400

c) Shalom Infrastructure: No allegations have been leveled against Shalom, other than a bare allegation that Shalom Infrastructure received Rs. 33 Crs from Silicon Builders (which are totally distinct and irrelevant to the instant complaint). ED has sought to attach properties worth more than Rs. 43.70 Crs without any justification and has claimed the same to be part proceeds of crime and part equivalent to the value of proceeds of crime without distinguishing the quantum of the same.

¶401

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¶402

d) Marvel Infrastructure: Classic Realty invested an amount of Rs. 30 Lakhs into Marvel Infrastructure. Disproportionally, respondents sought to attach Rs. 1.53 Crs as value equivalent to Proceeds of Crime. As the monies realized by Mr. Y.S. Jagan Mohan Reddy are from a genuine business transaction, monies at the hands of Marvel Infrastructure cannot be termed or attached as proceeds of crime. The property attached has been transferred from Marvel to Utopia Infrastructure (also an appellant) which is a step-down subsidiary (through Silicon Builders) of Classic Realty.

¶403

e) Inspire Hotels: No allegations have been leveled against Inspire Hotels other than a bare allegation that Inspire Hotels had received Rs. 5.90 Crs as sale consideration from Silicon Builders for allotment of 59,00,000 shares (which are totally distinct and irrelevant to the instant complaint). ED has sought to attach properties worth more than Rs. 6.46 Crs without any justification and has claimed the same to be Proceeds of Crime.

¶404

It is submitted on behalf of appellants that the monies invested by Silicon Builders into BCCL are from Sandur Power‟s power generation monies. Prejudice to the contention that Beta Avenue‟s investments into Carmel Asia are genuine investments made in regular course of business, the respondents have wrongly assumed that Silicon Builders‟ stake in BCCL is only due to monies received from Carmel Asia. Silicon Builders had invested Rs. 15 Crs into BCCL from the funds received by it from Sandur Power as under:

¶405

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¶406

Amount	Cheque No.	Remarks
Rs.3,00,00,000/-	120848	Investment from M/s Sandur Power
Rs.2,50,00,000/-	761124	Investment from M/s Sandur Power
Rs.1,10,00,000/-	761133	Investment from M/s Sandur Power
Rs.5,00,00,000/-	120856	Investment from M/s Sandur Power
Rs. 5,00,00,000/-	130812	Investment from Carmel Asia Holdings Pvt. Ltd. Subsequently requested to be
		treated as investment by Investment
		from M/s Sandur Power leading to refund of said advance back to Carmel Asia HoldingsPvt. Ltd.
(Rs.1,60,00,000/-)	108366	Returned back to M/s Sandur Power
Rs.5,00,00,000/-	120866	Investment from M/s Sandur Power
(Rs. 5,00,00,000/-)	224277	Returned back to Carmel Asia Pvt. Holdings as per request jointly made by Carmel Asia Holdings Pvt. Ltd. and Sandur Power
Rs.15,00,00,000/-		Total Received by Silicon Builders

¶407

It is alleged that the above amounts were initially invested into the

¶408

Silicon Builders as Share Application Money by Sandur Power. However, on account of internal understanding and adjustments between Sandur Power

¶409

and Classic Realty, Silicon Builders was requested to issue the shares favouring Classic Realty. Accordingly, the shares were issued by Silicon Builders in favour of Classic Realty, which continues to be the share-holder in Silicon Builders.

¶410

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¶411

It has come on record that Sandur Power is a successful profit making business entity engaged in the business of production and distribution of electricity. Sandur Power continues to have one of the best plant load factors (PLF) in Karnataka. In the course of its business and from internal accruals generated from the sale of power generated by it, Sandur Power inter alia had also acquired shares in various other companies. It is contended by the appellants that prior to 13.12.2006, Carmel Asia did not receive any monies from Mr. Nimmagadda Prasad or his group companies. Therefore, Rs.5.5 Crs which was received by Silicon Builders from Sandur Power on 30.10.2006 and 2.11.2006 prior to December, 2006 cannot be termed as proceeds of crime. The respondent ‟s case that the amounts received from Carmel Asia into Silicon Builders are from that of Mr. Nimmagadda Prasad‟s Group Companies is misconceived. Thus, the investment of Silicon Builders into BCCL is a genuine business transaction, the dividends accrued by Silicon Builders amounting to Rs. 51.20 Crs cannot be termed or treated as proceeds of crime. Thus, the attachment is set-aside by allowing the appeal.

¶412

A pictorial depiction of an error in respondent‟s contentions is as follows:

¶413

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¶414

Investments from M/s. Beta Avenues (Mr. Nimmagadda Prasad‟s group company) into M/s. Carmel Asia Holdings Pvt. Ltd.

¶415

M/s. Beta Avenues (Beta Avenues) invested into M/s. Carmel Asia Holdings Pvt. Ltd. (Carmel Asia) as equity participation and transferred Rs. 5 Crs on 14.12.2006 and Rs. 15 Crs on 03.01.2007. The above Rs. 20 Crs is the only investment received by Carmel Asia from Beta Avenues.

¶416

Allegations and attachments in VANPIC Attachment.

¶417

Allegations and attachments in BCCL Attachment

¶418

Beta Avenues Beta Avenues
14.12.2006 - 5 Crs 14.12.2006 - 5 Crs
03.01.2007 - 15 Crs 03.01.2007 - 15 Crs
Carmel Asia
(09.01.2007 – 5 Crs – Returned
Carmel Asia back as per joint request of (27.12.2006 - 5 Crs -
eventually returned)
(29.12.2006 – 20 Crs) Carmel and Sandur Power)
(23.01.2007 – 20 Crs)
Silicon BuildersSandur Power
(16.6 Crs invested – 1.6 Crs returned)
Jagati Publications 15 Crs towards purchase
of 1.5 Crs shares
 ED contends that the Rs. 20 Crs received by Carmel Asia from Beta
Avenues is Proceeds of Crime and therefore seeks to attach Carmel Asia‟s

¶419

ED contends that the Rs. 20 Crs received by Carmel Asia from Beta Avenues is Proceeds of Crime and therefore seeks to attach Carmel Asia‟s shares of Rs. 20 Crs in Jagati Publications.

¶420

BCCL

¶421

Dividends of Rs. 51.20 Crs accrued by Silicon Builders are attached in BCCL Attachment.

¶422

Shares held by Silicon Builders in BCCL worth market value of about 1006 Crs. are attached.

¶423

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¶424

Monies invested by Beta Avenues into Carmel Asia are already attached at the hands of Carmel Asia in O.C. No. 276 of 2014 (VANPIC Attachment). Beta Avenues invested into Carmel Asia as equity participation and transferred Rs. 5 Crs on 14.12.2006 and Rs. 15 Crs on 03.01.2007. The said Rs. 20 Crs is the only investment received by Carmel Asia from Beta Avenues. The respondent alleges in O.C. No. 276 of 2014 that Rs. 20 Crs received by Carmel Asia from Beta Avenues were utilised for purchasing shares in M/s. Jagati Publication Ltd. and thereafter proceed to attach Jagati Publication‟s Shares held by Carmel Asia. The respondent now seek to make further attachments of shares worth face value of Rs. 15 Crs (and recognised market value of much higher) of BCCL held by Silicon Builders and Rs. 51.20 Crs of dividends thereon in the instant Complaint i.e, O.C. No. 618 of 2016 on the contention that Silicon Builders received monies from Carmel Asia and had used the same amounts to purchase BCCL shares. Therefore, the attachment of 1,50,00,000 shares held by Silicon Builders in BCCL and the Rs. 51.20 Crs of dividend received by Silicon Builders ought to be released from any attachment.

¶425

89 . Relating to M/s. Capstone Infrastructure Pvt. Ltd. (Appeal No. 1583 of 2016):

¶426

It is the case of appellants that the investments received by Capstone Infrastructure from Classic Realty are share subscription amounts in lieu of allotment of 1,53,00,000 shares of Capstone Infrastructure to Classic Realty. The said transaction is a genuine business transaction and therefore, investment of monies into Capstone Infrastructure cannot be faulted with and be termed as „proceeds of crime‟. Investments received by Capstone Infrastructure from Classic Realty are monies which were in turn invested into Classic Realty by Mr. Y.S. Jagan Mohan Reddy from the monies accrued after sale of his shares in BCCL to PARFICIM SAS, France. As the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares in BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions. Therefore, investments received

¶427

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¶428

by Capstone Infrastructure from Classic Realty cannot be termed as proceeds of crime. Thus, the same is released by allowing the appeal.

¶429

90. With regard to M/s. Revan Infrastructure Pvt. Ltd. (Appeal No. 1584 of 2016):

¶430

It is the case of the appellants that investments received by Revan Infrastructure from Classic Realty are share subscription amounts in lieu of allotment of 20,00,000 shares of Revan Infrastructure to Classic Realty. The said transaction is a genuine business transaction and therefore, investment of monies into Revan Infrastructure cannot be faulted with and be termed as „proceeds of crime‟. Investments received by Revan Infrastructure from Classic Realty are monies which were in turn invested into Classic Realty by Mr. Y.S. Jagan Mohan Reddy from the monies accrued after sale of his shares in BCCL to PARFICIM SAS, France. Since the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of his shares in BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions. Therefore, investments received by Revan Infrastructure from Classic Realty cannot be termed as proceeds of crime. The appeal is allowed.

¶431

91 . M/s. Saraswati Power and Industries Pvt. Ltd. (Appeal No. 1587 of 2016):

¶432

(i) Rs. 8 Crs received from Mr. Y.S. Jagan Mohan Reddy.

¶433

Saraswati Power received Rs. 8 Crs from Mr. Y.S. Jagan Mohan Reddy from the monies accrued from the sale of his shares of BCCL to PARFICIM SAS, France. It is submitted that the sale of 62,00,972 shares to PARFICIM SAS, France by Mr. Y.S. Jagan Mohan Reddy for Rs. 416.20 Crs is a genuine business transaction. The monies accrued by Mr. Y.S. Jagan Mohan Reddy are from the sale of his shares in BCCL are earnings. The said shares were acquired with the monies generated from genuine business transactions, investments received by Saraswati Power cannot be termed as proceeds of crime. Thus, the appeal is allowed.

¶434

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¶435

Attachment of Rs. 15 Crs received from Sandur Power amounts to triple attachment:

¶436

The investments of Rs. 15 Crs from Sandur Power into Saraswati Power made as share subscription monies against allotment of 1,50,00,000 Shares in Saraswati Power are monies received by Sandur Power from Mr. Y.S. Jagan Mohan Reddy as consideration against sale of shares of various companies held by it.

¶437

Mr. Y.S Jagan Mohan Reddy had accrued such monies from the sale of his shares in BCCL to PARFICIM SAS, France, which is a genuine business transaction. Against him, no action is pending. Counsel for the respondent has admitted that amount paid by French Company against the shares is the clean money. The profit earned by the group companies cannot be treated as proceed of crime once the original purchase of shares are done under business transaction.

¶438

It is therefore submitted that as the monies accrued by Mr. Y.S. Jagan Mohan Reddy from the sale of shares of BCCL are legitimate earnings, in light of the fact that the said shares were acquired with the monies generated from genuine business transactions, the Rs. 15 Crs received by Saraswati Power through Sandur Power cannot be termed, much less be attached as proceeds of crime.

¶439

It is alleged by the respondent that the share subscription monies received by Saraswati Power from Sandur Power be treated as proceeds of crime is on a corresponding allegation made that Mr. Y.S. Jagan Mohan Reddy had acquired various shares from Sandur Power for a value of Rs.80.27 Crs. The said shares acquired by Mr. Y.S. Jagan Mohan Reddy from Sandur Powerhave been separately attached. It is pertinent to note that there is no allegation that the said shares were overvalued for the purpose of acquisition by Mr. Y.S. Jagan FPA-PMLA-1573 – 1577, 1579, 1582 – 1588 & 1619/HYD/2016 Page 62 of 74

¶440

Mohan Reddy from Sandur Power. Even if Mr. Y.S. Jagan Mohan Reddy is alleged to have generated Rs.80.27 Crs of proceeds of crime (out of the total of Rs.416.20 Crores derived from sale of shares of PARFICIM SAS, France), Mr.Y.S. Jagan Mohan Reddy has used Rs. 80.27 Crs to acquire valuable securities and shares for the said value of Rs.80.27 Crs from Sandur Power. The said shares have already been attached separately. Therefore, once the value in relation to proceeds of crime in the hands of Mr. Y. S. Jagan Mohan Reddy (pertains to the investments made to Sandur Power) are attached, the money in the hands of Saraswati Power, on the pretext that it had received monies from Sandur Power, cannot be called as proceeds of crime as it would amount to execution of triple attachment and for twice the value which is contrary to the scheme of PML Act. The said act on the part of respondent is not permissible in law. The findings in this regard are set-aside.

¶441

94 . M/s. Silicon Infrastructre Pvt. Ltd. (Appeal No. 1582 of 2016) , M/s. Bhagavathi Sannidhi Pvt. Ltd. (Appeal No. 1585 of 2016), M/s. Utopia Infrastructure Pvt. Ltd. (Appeal No. 1586 of 2016) and M/s. Harish Infrastructure Pvt. Ltd. (Appeal No. 1588 of 2016)

¶442

In the Complaint, there is no reference or allegation regarding investment of monies into the above mentioned appellants. The respondents have alleged the concept of “beneficial ownership” for causing attachments in the hands of the above appellants. Section 5 of PML Act does not sanction employment of concept of „beneficial ownership‟ for the purpose of attachment of properties. A company is an independent juristic entity that has been incorporated under the provisions of the Companies Act. A Company bears an identity that is entirely distinct from its equity holders. The purported attachments caused to be made even beyond the wrongful terming of proceeds of crime in the hands of various companies on a premise that they are being beneficially owned by Mr. Y.S. Jagan Mohan Reddy would be legally impermissible as any such extension of liability cannot be fastened onto an independent juristic entity like a Company. Under the PMLA inter alia it is a mandatory prerequisite that a person/entity is

¶443

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¶444

in possession of proceeds of crime for issuance of an attachment order. Such powers cannot be extended beyond the scope of PML Act by adding the new concepts which is alien to the provisions of the PML Act.

¶445

The concept of beneficial ownership cannot be attributable under Sec. 2(fa) of the PML Act is not attracted in the facts of the case. Mr. Y.S. Jagan Mohan Reddy has no equity in most of the companies directly and does not control the said juridical entity and in the absence of such finding. The appeals are accordingly allowed by set-aside the impugned order.

¶446

Errors in computation of „Proceeds of Crime‟ and attachment of the same:

¶447

(i) Non-computation of Taxes paid:

¶448

a) Capital Tax paid by Mr. Y.S. Jagan Mohan Reddy: The respondents allege that Rs. 416.20 Crs was realized by Mr. Y.S. Jagan Mohan Reddy from sale of his shares in BCCL to PARFICIM SAS, France and the same is proceeds of crime. The respondents also record the factum that of the Rs. 416.20 Crs, an amount of Rs. 84 Crs paid as Capital Gains Tax to the IT Department. Thus, the proceeds of crime available for attachment after the said payment of Capital Gains Tax, is only Rs. 332 Crs (Rs. 416.20 Crs – Rs. 84 Crs). The value of the crime proceeds allegedly in the hands of Mr. Y.S. Jagan Mohan Reddy are such monies which remain after factoring the monies paid towards tax, and to the extent of the amounts paid towards tax, there is reduction in the quantum of the proceeds of crime in the hands of Mr. Y.S. Jagan Mohan Reddy. Disregarding such payments and the effect of such payments on the quantified crime proceeds, by reasoning perverse in law, the respondents proceeded to attach the entire money of Rs. 416.20 Crs. against the law and can be permitted as the French Company is charge-sheeted. It is admitted that the

¶449

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¶450

amount by the said company was untained money. Even profit made from selling the shares cannot be treated as proceed of crime unless the original investment was a bribe amount.

¶451

b) Income Tax paid by Mrs. Y.S. Bharathi Reddy: In respect of remunerations paid to Mrs. Y.S. Bharathi Reddy which can, by no stretch of imagination, be called as proceeds of crime, the respondents deliberately chose not to exclude the income tax paid thereon, amounting to Rs. Rs.6.37 Crs for computing any net amount as „Proceeds of Crime‟ for the purpose of causing of attachment. The respondents failed to notice that it is only in the cases of indirect taxes that the value of the property gets accretion to the extent of such indirect taxes. However, in the case of direct taxes, such as Income Tax, the value of the property, gets reduced to the extent of the IT paid and therefore, ought to have been subtracted from the overall alleged proceeds of crime, for the purpose of attachment. The reasoning to the contrary by the authority is not correct.

¶452

97. Under-valuation of shares of BCCL held by Mr. Y.S. Jagan Mohan Reddy.

¶453

Undisputedly, the respondent despite acknowledging that Mr. Y.S. Jagan Mohan Reddy had paid out of the total sale proceeds of Rs.416.20 Crs, an amount of Rs. 12.41 Crores towards purchase of shares of BCCL held by Sandur Power, while quantifying the value for the purpose of attachment, the shares were undervalued at Rs. 18,50,000/- rather than the consideration value of Rs. 12.41 Crores paid by Mr. Y.S. Jagan Mohan Reddy as noted by the respondents in the Complaint itself.

¶454

98. Double Attachments:

¶455

a) At the hands of Sandur Power, Classic Realty and Saraswati Power: As detailed above, the attachments at the hands of Sandur Power for sale of shares owned by it in various companies to Mr. Y.S. Jagan Mohan Reddy would constitute double attachment. Further attachments at the hands of Classic Realty and Saraswati Power on the pretext of receiving monies from Sandur Power constitutes triple

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¶457

attachment at the hands of Classic Realty and Saraswati Power respectively.

¶458

b) Equivalent value of Rs. 30 Crs already attached in VANPIC Attachment: Further, an amount of Rs. 30 Crs was received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and group, which has already been attached in O.C 276 of 2014. Again, the attachments in the present proceedings to the tune of Rs. 416.20 Crs arise from sale of shares worth Rs. 6.2 Crs out of the same Rs 30 Crs. Therefore, as Rs. 30 Crs of equivalent value is already attached as being investments from Mr. Nimmagadda Prasad and group companies, Rs. 30 Crs ought to be deducted here.

¶459

c) Rs. 15 Crs received by Carmel Asia from Beta Avenues already attached: Carmel Asia had received Rs. 20 Crs in total from Beta Avenues. The said Rs. 20 Crs are alleged to have been utilized by Carmel Asia in purchasing shares in Jagati Publications Ltd. and therefore, Rs. 20 Crs worth of shares in Jagati Publication held by Carmel Asia are already attached in VANPIC Attachment. The respondents again seek to attach shares of BCCL with face value of Rs. 15 Crs held by Silicon Builders on the contention that Silicon Builders received Rs. 15 Crs from Carmel Asia from the same Rs. 20 Crs that Beta Avenues has invested.

¶460

99. Undervaluation of immovable assets attached as equivalent to proceeds of crime.

¶461

a) Even while ostensibly claiming to cause an attachment of various properties as „value‟ in relation of proceeds of crime, respondents have resorted to an arbitrary and perverse undervaluation of assets to maximize the attachment effect and for crippling the appellants.

¶462

b) Section 2 (1) (u) defines proceeds of crime as:

¶463

“any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country”.

¶464

(Emphasis supplied)

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¶466

If any such property contended to be derived/ obtained from proceeds of crimes not capable of being attached, then, any other property bearing the monetary value equivalent to such property derived/obtained from proceeds of crime is permissible for attachment.

¶467

c) The respondents are seeking to wrongfully refer to and use the „value at the date of acquisition‟ as the value to be reckoned even in respect of alternate property. By adopting such erroneous method, the respondents have resorted to causing the attachment of a maximum number of properties by taking the value at the date of acquisition and not the market value which is much higher. Even the guideline value, adopted by the Registration Department is also much higher (though it does not correctly denote the current market value as such guideline values are historical and were notified much earlier). This is wholly unsustainable in the eyes of law.

¶468

d) The following chart depicts the result of such wrongful approach adopted by the respondent:

¶469

No.	Appellant	Property Attached	Classi- fied as	Attache d Value	Guideli ne Value
1.	M/s Utopia Infrastructu re Private Limited	Tangible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company‟s asset at Plot No.7,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet)Golconda Mandal, Hyderabad	Equivale nt to Proceeds of Crime	58.40	64.30
	M/s Marvel Infrastructu re Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14
	M/s Capstone Infrastructu re Pvt Ltd	Tangible Fixed Assets as detailed in the Standalone Financial Statement for 2014- 15 (includes Company‟s asset at Plot No.3,4&6, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet)Golconda Mandal, Hyderabad.
	M/s Harish Infrastructu re Pvt Ltd	Tangible Fixed Assets as detailed in the Standalone Financial Statement 1for 2014-15 (includes Company‟s asset at Plot No.8, HUDA Heights, TS No.5(P), Block-J, Ward No.12 and TS No.14(P) Block-A, Ward No.12 of Hakimpet Village (Shaikpet)Golconda Mandal, Hyderabad.
2.	M/s Revan Infra Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company‟s asset 9 acres of land situated in Nallur Village, ChannarayanaptnaHobli, Devanahalli	Equivale nt to Proceeds of Crime	6.79	13.50
		Taluk, Bangalore Rural District, Karnataka)

¶470

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¶471

67 of 74

¶472

3.	Saraswati Power & Industries Pvt. Ltd	903-28 acre of land situated at Guntur District	Equivale nt to Proceeds of Crime	31.84	31.84
4.	M/s Silicon Infrastructu re Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14. (Building at Koramangala, Bangalore rented out to AmityCollege)	Equivale nt to Proceeds of Crime	6.54	13.88
5.	M/s Shalom Infrastructu re Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company‟s asset Sakshi Towers, Road No.1, Banjara Hills, Hyderabad)	Part Equivale nt to Proceeds of Crime and Part Proceeds of Crime	43.70	43.70
6.	M/s Silicon Builders Pvt. Ltd.	Tangible Fixed Assets of M/s Silicon Builders Private Limited as detailed in the audited balance sheet for 2013-14 (include Company‟s assets – Land & Building constructed at Sy No.195 Corporation No.34, PID No.99-1-34, 2^nd Main Road, Sadashiva Nagar, Nagalore& 1 acre 30 guntas land at Sy No.13/2, Harohalli, Yelhanka, Bangalore, Karnataka)	Equivale nt to Proceeds of Crime	9.06	24.41
7.	Smt YS Bharathi Reddy	2500.69 square yards of land in Sy No.79/P & 80/2 at Raidurg Pan Maktha village, Serilingampally Mandal, Ranga Reddy District, Telangana (Registered vide sale deed No.20521/2005 dated 22.12.2005 at DRO/Ranga Reddy)	Equivale nt to Proceeds of Crime	1.36	7.50
8.	Bhagavath Sannidhi Estates Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2014-15 (includes company‟s asset 59,070 Sft of land in Sy No.55/1, situated at Devarabeesanahalli Village, VarthurHobli, Bangalore East Taluk, Bangalore)	Equivale nt to Proceeds of Crime	2.64	35.80
9.	Sandur Power Company Pvt Ltd	Tangible Fixed Assets as detailed in the Audited Balance Sheet for 2013-14. (plant and machinery)	Equivale nt to Proceeds of Crime	118.49	118.49
10.	M/s Classic Reality Private Limited	Tangible Fixed Assets as detailed in Note 8 of the Audited Balance Sheet for 2013- 14 (Includes company‟s asset – Building named Commerce @ Mantri, Bannerghatta Road, Bangalore) TOTAL	Equivale nt to Proceeds of Crime	49.45 328.27	181.62 535.04

¶473

It is alleged that the Rs. 416.20 Crs received by Mr. Y.S. Jagan Mohan Reddy was utilized for various purposes including purchasing of shares of other companies, investment in form of Share Application Money, clearing of bank loans, donation and payment of taxes. As far as above-mentioned amount

¶474

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¶475

received by him by selling of shares to M/s. Parficim SAS, France at the rate of Rs.671.20 is concerned, it is admitted by the respondent that the said money paid by French Company is not the tainted amount. The said company is not charge-sheeted in any case being innocent party as admitted in the impugned order.

¶476

101. Errors in computing “Proceeds of Crime” which ought to be excluded

¶477

84.00 Crs Monies paid by Mr. Y.S. Jagan Mohan Reddy as Capital Gains Tax from the Rs. 416.20 Crs. received from sale of BCCL shares to PARFICIM SAS, France. 6.37 Crs Income Tax paid by Mrs. Y.S. Bharathi Reddy from Rs. 19.50 Crs. received as remuneration. 12.22 Crs Deliberate undervaluation of BCCL Shares purchased by Mr. Y.S. Jagan Mohan Reddy from Sandur Power Company Pvt. Ltd. at Rs. 671 per share amounting to Rs. 12.41 Crs; but attaching the same at Rs. 10 per share amounting to Rs. 18,50,000/-. -------------102.59 Crs

¶478

Further errors in computing quantum of Proceeds of Crime

¶479

30.00 Crs Equivalent value already attached in VANPIC Attachment i.e., O.C. No. 276 of 2014 as being investments from Mr. Nimmagadda Prasad and group Companies. An amount of Rs. 30 Crs. was received by Mr. Y.S. Jagan Mohan Reddy from Mr. Nimmagadda Prasad and group, which has already been attached in O.C. 276 of 2014. Again, the attachments in the present proceedings arise from sale of shares worth Rs. 6.2 Crs out of the same Rs. 30 Crs. 15.00 Crs Equivalent value already attached in VANPIC Attachment i.e., O.C. No. 276 of 2014 as being investments from Mr. Nimmagadda Prasad and group Companies. Therefore, attachment of Silicon Builders‟ shares is unsustainable. The

¶480

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¶481

said s attachment is sought to be done on an entirely wrong factual premise of Nimmagadda Prasad‟s investment through Beta Avenues in Carmel Asia being used to fund Silicon Builders. The said amounts have been accepted by ED itself as monies used by Carmel Asia to acquire Jagati Publication shares and which shares are attached.

¶482

51.20 Crs

¶483

Consequently, on the contentions on Rs. 15 Crs. above, the dividends received by Silicon Builders from the shares held by it in BCCL.

¶484

Many issues already dealt with in order being passed separately in OC 276/2014 in favour of appellants.

¶485

By the impugned order dated November 23, 2016, the PAO dated June 29, 2016 was confirmed by the Adjudicating Authority, and the provisional attachment of 11 (eleven) fixed deposits of the Appellant bearing Nos. FD916040019493653, FD916040019494643, FD916040019033374, FD916040019032627, FD916040019033154, FD916040019793652, FD916040019796172, FD916040028197351, FD916040022370240, FD916040025115772, and FD916040034051975 (only partial attachment) aggregating to INR 152,84,61,315 (Rupees One Hundred and Fifty Two Crores, Eighty Four Lakhs Sixty One Thousand Three Hundred and Fifteen) held in Axis Bank, Srinagar Colony, Hyderabad, stood confirmed as purported „proceeds of crime‟ within the meaning of Section 5 (1) of the PMLA.

¶486

It is an admitted position by the Respondent that the Appellant has paid royalty and cess on the limestone extracted. It is submitted that the OC and the PAO itself detail out the royalties and cess paid by the Appellant for the limestone extracted by it from commencement of operations in 2009-2010 and till 2015-16, which totals to INR 122,77,05. The said royalty is paid as per fixed per tonne rates prescribed by the Government by notifications issued on a year on year basis, and is not variable from person to person. Therefore, irrespective

¶487

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¶488

of whether the Appellant was granted the mining lease or any other entity was granted the same, the rate at which the royalty would be paid would be the same without any adverse impact to the exchequer.

¶489

The Respondent has, in passing, raised certain allegations as regards the valuation of the shares of the Appellant, which issue is already the subject matter in a separate OC No. 424 of 2015 out of which an appeal FPA-PMLA1035/HYD/2015 titled M/s Bharathi Cement Corporation Private Limited Vs. Joint Director, Directorate of Enforcement has also been filed. It is the admitted fact that the investment made by the various entities/ companies was a bona fide investment in the Appellant Company. Upon transfer of the shares of the various companies/ entities to PARFICIM, France, they made a substantial gain on investment by way of a bona fide, unchallenged and arm‟s length sale of shares to a third party, viz., PARFICIM, France, against which no allegations of any nature have been made. There was a substantial profit to each of the investors, which profit was based on a third party purchase, which transaction has clearly passed the scrutiny of the Respondent itself and the Reserve Bank of India without any shadow of doubt.

¶490

There are no findings against the majority shareholder of the Appellant concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI. In fact, in the order dated August 19, 2014 passed by the Adjudication Authority in OC No. 276 of 2015, it is unequivocally stated at Page 89, para 23(1) that there is no illegality on the part of PARFICIM, France and it is an “ innocent investor” who “is not found in any criminal activity ”.

¶491

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¶492

No doubt, when the lease was granted, the interim order was operating in the Revision petition filed by Gujarat Ambuja. No doubt the said petition was later on dismissed as withdrawn. It is not correct to allege that the process was not completed within a day. When the lease was issued, the same was granted subject to the final outcome of revision which was ultimately dismissed as withdrawn and for allotment, no interest was shown by Gujarat Ambuja by filing of fresh application for grant of lease nor after grant of lease to BCCL, the said order was not challenged in any court of law.

¶493

The respondent‟s allegations are also that 21.11.2005 notification issued under MMDR Act was not issued for Mining Lease is unfounded as Rule 59)1)(ii) of the Mineral Concession Rules, 1960 does not distinguish between as notification for grant of Prospecting License and notification for grant of Mining Lease. Therefore, the attempt of the respondent to restrict one of the notified areas as that „for mining‟ and one for „Prospecting License‟ is an attempt to give the notification as untenable interpretation. The respondents‟ allegation that the mining lease was granted to BCCL without prior prospecting of the area is evidence of a criminal conspiracy and information. The BCCL has used the information and data of Ambuja Cement without its permission. The lease was granted while the interim order was operated, though it was granted subject to the decision of Review Petition. These are the main issues raised. The same are to be decided as to whether it is done deliberately or the act of appellants was bonafide or these are technical discrepancies. These aspects have to be considered by the Special Act on the basis of evidence. However, at present, it is difficult to conclude that due process has not been followed at all. These issues are either decided in quashing proceedings if initiated or after trial by the Special Court.

¶494

The Supreme Court held that the question of any undue haste in taking an administrative decision is a question of fact. It is held by the Supreme Court that the States had devolved a policy of single window system with a view to get

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rid of red tapism generally prevailing in the bureaucracy. In the present case, it also appears there are elements which would show the decision is taken after deliberations and upon due application of mind cannot be held to be suffering from malice. Charges are yet to be framed in the matter.

¶497

It is also a matter of fact that despite of change of various Governments in the State by rival political parties, the lease has not been cancelled, rather licensing fee has been accepted without any protest. There are also no allegations that some advantage is taken by BCCL by which the State Government has lost revenue. In the impugned order, replies filed by all the appellants have not been discussed and dealt with. The Adjudicating Authority is duty bound to deal with each and every plea raised by the aggrieved party legally. The same cannot be ignored, otherwise, the order is not sustainable and liable to be set-aside.

¶498

In view of allegations in the charge-sheet filed by CBI and observation made in preceding paras, this Tribunal is of the view that it is appropriate to strike the balance at present, in order to secure the said amount by way of furnishing the Bank Guarantee instead of appropriating FDs.

¶499

In the light of above and the nature of business involved in the matter, the huge amount cannot be stalled in the facts and circumstances of the present case, hence, the impugned order is modified about the attachment of Rs.192 crores, instead of releasing the said amount to the appellants. Therefore, it is directed that ED to release the said amount to the appellants, but subject to the condition that the appellants shall furnish the Bank Guarantee (BG) of Nationalised Bank for a sum of Rs.192/- crores in favour of the respondent to its satisfaction till the time final orders are passed in the matter within the period of four weeks. Once the BG is furnished, the respondent without any delay shall release the said amount. The said condition is imposed without

¶500

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¶501

prejudice and without expressing any final opinion. It was merely a prima facie view.

¶502

Rest of all attachments are released by modifying the impugned order and provisional attachment order.

¶503

As far as allegations of CBI are concerned, this Tribunal does not wish to express any opinion on merit and the same have to be considered as per law. The present order has been passed only for the purpose of attachment of properties and confirmation thereof.

¶504

It is clarified that this order shall have no bearing in any other proceedings in pending matters against the appellants. This order has been passed as per its own merit with regard to attachment of properties.

¶505