Allowed

FPA-PMLA-1718/RNC/2017 of M/s. Jharkhand Ispat Pvt. Ltd. v/s The Joint Director Directorate of Enforcement, Ranchi

ATFP6 Sept 2019FPA-PMLA-1718/RNC/2017

Case brief

AI extract

What is this about?

The ATFOR set aside the Provisional Attachment Order regarding a company and its functionaries involved in coal block allocation controversies. The Tribunal held that investments made by third parties were voluntary and unrelated to alleged criminal proceeds, as no mining activity occurred and investors were not blackmailed.

What did the court decide?

The tribunal set aside the impugned order confirming the Provisional Attachment Order dated 02.03.2017 and the Show Cause Notice dated 20.10.2016.

FPA-PMLA-1718/RNC/2017 of M/s. Jharkhand Ispat… — 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: 6thSeptember, 2019

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(1) MP-PMLA-3387/RNC/2017 (Stay) MP-PMLA-3388/RNC/2017 (Misc.) & FPA-PMLA-1753/RNC/2017
Shri Ram Chandra Rungta	…	Appellant
Versus
The Joint Director Directorate of Enforcement, Ranchi	…	Respondent
(2) MP-PMLA-3389/RNC/2017 (Stay) MP-PMLA-3390/RNC/2017 (Misc.) &
FPA-PMLA-1754/RNC/2017
Shri Ram SwaroopRungta	…	Appellant
Versus
The Joint Director
Directorate of Enforcement, Ranchi	…	Respondent
(3) MP-PMLA-3391/RNC/2017 (Stay)
MP-PMLA-3392/RNC/2017 (Misc.) & FPA-PMLA-1755/RNC/2017
Shri R.K. Chouraria	…	Appellant
Versus
The Joint Director Directorate of Enforcement, Ranchi	…	Respondent
(4) MP-PMLA-4174/RNC/2017 (Stay) MP-PMLA-3334/RNC/2017 (Stay) &
FPA-PMLA-1718/RNC/2017
M/s. Jharkhand IspatPvt. Ltd.	… Appe	llant
Versus
The Joint Director
Directorate of Enforcement, Ranchi	…	Respondent

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Advocates/Authorized Representatives who appeared

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For the appellants	:	Mr. Dayan Krishnan, Sr. Advocate With Mr.Arshdeep Singh, Mr. Manish Jha, Ms.Sanjeevi& Mr.AyushAgarwal, Advocates
For the respondent	:	Mr. S.K. Sharma, Advocate
CORAM
JUSTICE MANMOHAN SINGH	:	CHAIRMAN
SHRI G.C. MISHRA	:	MEMBER

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FPA-PMLA-1753-1755 & 1718/RNC/2017

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By this order, we propose to decide the above-mentioned appeals under Section 26 of the Prevention of Money-Laundering Act, 2002 (hereinafter referred to as “PMLA” ) against the Order dated 02.03.2017 in Original Complaint No. 644 of 2016 (hereinafter referred to as the “ Impugned Order ”) passed by the Adjudicating Authority.

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Facts

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On the basis of a reference from the Central Vigilance Commission, New Delhi vide its letter bearing number 012/COL/020/1716 dated 13.04.2012, it appears that the Central Bureau of Investigation ( “CBI” ) initiated a Preliminary Enquiry, which culminated in the registration of an FIR bearing number RC219-2013-E-0002 dated 08.03.2013 under section 120B read with Section 420, IPC against (i) M/s Jharkhand IspatPvt. Ltd., (ii) Shri R.S. Rungta; (iii) Shri R.C. Rungta and (iv) other Directors of M/s Jharkhand IspatPvt. Ltd., with CBI/EO-I/New Delhi (hereinafter referred to as the “said FIR” ).

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On the completion of the investigation conducted pursuant to the said FIR, the CBI filed a Final Report under section 173, Cr.P.C., bearing number 06/2014 dated 12.11.2014 under section 120B read with sections 420, 467, 468 & 471 of the Indian Penal Code before the Ld. Special Judge (PC Act) (CBI)-

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7, New Delhi District, Patiala House Courts, New Delhi (hereinafter referred to as the “said Charge-sheet”), arraigning (i) M/s Jharkhand IspatPvt. Ltd., (ii) Shri R.S. Rungta (iii) Sri R.C. Rungta, (iv) ShriRamabatarKedia and (v) ShriNareshMahto as Accused. The appeal against the said order is pending in the High Court.

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3.1 It was alleged in the said Charge-sheet that a company under the name and style of „M/s Rewa Retreads Pvt. Ltd.‟ was incorporated under the Companies Act, 1956 on 12.03.1991, with the Registrar of Companies, Kanpur, engaged in the business of, inter alia, manufacturing and selling of spare parts and other commodities. That, on 29.04.2003 the name of the said company was changed to “M/s JharkandIspat Pvt. Ltd.”, (i.e., the Appellant herein).

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3.2 It was further alleged in the said Charge-sheet that the Ministry of Coal (hereinafter referred to as the “MoC” ) had issued two advertisements in the year 2005 inviting private sector companies from the Power, Steel and Cement Sector to apply for allocation of coal block for captive coal mining purposes. That, certain Guidelines were issued by inter alia the MoC in relation to the aforesaid proposed allocation of coal-blocks. These Guidelines included a set of parameters for evaluating the claims of the applicant companies and determining their inter-se priority. These Guidelines were made available to the general public/applicant companies and were uploaded to website of the MoC.

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3.3 It was also alleged in the said Charge-sheet that the Appellant herein vide its Application dated 23.02.2004 applied for allocation of the coal block “PakriBarwadih Coal Block” or “Gondal Para Coal Block” (hereinafter referred to as the “Coal-block Application” ). Alongwith the Coal-block Application, as required by the Guidelines, various information was also provided in the prescribed format. Further, a

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presentation was also made before the relevant Screening Committee, which was an inter-ministerial body constituted to process the applications from applicant companies and to make recommendations to the final decision-making authority. Thereafter, various rounds of scrutiny, evaluation and meetings, the Allocation Letter No. 13016/31/2005-CA-1 dated 13.01.2006 was issued jointly to four allottee companies, including the Appellant herein.

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3.4 It was further alleged in the said Charge-sheet that, due to the surfacing of allegations of wrongdoing and arbitrariness by various parties involved in the coal allocation process, another InterMinisterial Group was formed and in the 11^th Meeting of this InterMinisterial Group held on 20.09.2012, it was recommended that the Coal Block allocated to the Appellant herein be de-allocated. That, on 14.02.2014 the Coal Block allocated to the Appellant herein (i.e., the “North Dhadu Coal Block”) was de-allocated with effect from 22.11.2012.

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3.5 It was alleged in the said Charge-sheet that the Appellant had misrepresented on a number of aspects before the MoC and the 27^th Screening Committee so as to inflate its claim and to thereby induce the Screening Committee and the MoC to allocate a Coal-Block to them.

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Consequent to the said Charge-sheet and the trial conducted by the Special Judge (PC Act) (CBI)-7, New Delhi District, Patiala House Courts, New Delhi, vide Final Order and Judgment dated 28.03.2016, the Appellant along with Shri R.C. Rungta and Shri R.S. Rungta were held guilty of the offences under sections 120B read with 420, IPC; and were acquitted in respect of charges under section 467, 468 and 471, IPC.

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The above Judgment dated 28.03.2016 has been challenged by the Appellant before the Hon‟ble Delhi High Court, being Criminal Appeal No. 714/2016. The said Appeal has been admitted vide Order dated 01.08.2016 passed by the Hon‟ble Delhi High Court.

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It appears that during the pendency of the aforesaid proceedings by the CBI, the Complainant, i.e., the Respondent No. 1 registered the ECIR bearing number ECIR/02/RSZO/2014 dated 29.04.2014 (hereinafter referred to as the “ said ECIR ”) in the present case alleging the commission of the offence of Money Laundering under Section-3, PMLA. The said ECIR under Column 2 – “Act Scheduled to PML Act” states “Indian Penal Code, 1860” and “Scheduled Offences under the PML Act” states “Section(s) under 120B r/w 420”.

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The said ECIR under Column 7, alleges as under –

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“ a. Perusal of the copy of FIR No.RC221/2014/E002 dated 07.01.2014 registered by the Central Bureau of Investigation, E.O-I, New Delhi, revealed that a Preliminary Enquiry No. 219 2012 E 002 was initiated by the CBI on the basis of directions from the Central Vigilance Commission vide their letter dated 13.04.2012.

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b. The enquiry has revealed that an application seeking allocation of coal blocks for captive mining in Hazaribagh, Jharkhand was submitted by M/s Jharkhand Ispat Pvt. Ltd., on 23.02.2004.

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c. It was revealed that North Dhadu Coal Block, Jharkhand, under CCL command area was a non-coking coal block, which was jointly allocated to M/s Jharkhand Ispat Pvt. Ltd. along with certain other companies, for captive mining of coal for its sponge iron plant at Distt. Hazaribagh, Jharkhand for purported existing production capacity of 96,000 MTPA of sponge iron and proposed capacity of 4,32,000 MTPA of the same and 35 MW of captive power plant.

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d. During the course of enquiry it was found that the Company was not fulfilling the desired criteria for the allocation and it had misrepresented the facts on both, the criteria, i.e., Possession of Land and Existing Capacity for

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End Use to seek the Coal Block. Thus the Company and its functionaries named above were found to have indulged in commission of offences for criminal conspiracy and cheating for illegal gains , which would be the proceeds of crime as defined under the PML Act.

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e. On the basis of the above enquiry, the CBI registered an FIR bearing no. RC 219/2013/E002 dated 08.03.2013 and initiated investigations against the company M/s Jharkhand Ispat Pvt. Ltd., Shri R. S. Rungta, Chairman, Shri R. C. Rungta, Managing Director, other Directors and unknown others under Sections 120-B r/w 420 of IPC, which are also among the Schedule Offences under the PML Act.” (Emphasis added)

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The said ECIR further alleges that based on the inputs received from the predicate agency, there appears a prima facie case of offence of Money Laundering as defined under s. 3 of the PMLA.After registration of the said ECIR, the Respondent No. 1 appears to have carried out investigation under the provisions of PMLA and recorded the submissions of various individuals and/or companies, which are part of Respondent No. 1‟s Relied Upon Documents.

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Thereafter on, 23.09.2016, the Appellant received the Provisional Attachment Order No. 01/2016 dated 15.09.2016 (hereinafter referred to as the “ said PAO ”) whereby the Complainant/Respondent No. 1 herein attached various immovable properties of the Appellants herein, as detailed in Annexure „A‟ to the said PAO.

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In the PAO, the Respondent has categorized the Share Application money („SAM‟) received by the Appellant herein from various individuals/companies/entities as the “Proceeds of Crime” generated from the Scheduled Offence of Sections 420 and 120B, IPC. It has been alleged that the Appellant herein received the „SAM‟ amounting to Rs.25,00,00,000/- (Rupees Twenty Five Crores Only), from the period 2004-05 to 2008-09, and that this

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has been received due to the coal block allotted to the Appellant herein and that such allotment was a result of the criminal activity relating to the Scheduled Offence.

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Thereafter, on 29.10.2016, the Appellant received a Notice to Show Cause dated 20.10.2016 (hereinafter referred to as the “said Show Cause Notice”) issued by the Registrar of the Adjudicating Authority, PMLA, stating that an Original Complaint bearing number O.C. No. 644/2016 dated 13.10.2016, instituted under Section 5(5) of the PMLA (hereinafter referred to as the “ said OC ”) has been filed by Respondent No. 1 herein. As per notice issued under Section 8(1), theAppellant was called upon to indicate the sources of its income, earning/assets out of which it had acquired the properties attached under section 5(1), PMLA and the evidence on which it relied and to show cause as to why all or any of the properties so attached should not be declared to be properties involved in money laundering and confiscated by the Central Government and why the attachment under the said PAO not be confirmed. These were the main reasons in the said notice.

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Being aggrieved by the said ECIR, said PAO, the said OC and the said Show-Cause Notice and all proceedings emanating therefrom, the Appellantsfiled a writ petition before the Hon‟ble High Court of Jharkhand on, inter alia, the grounds set out therein, which was numbered as W.P.(Crl.) 401/2016. The Respondent No. 1 herein has filed a Counter Affidavit dated 15.12.2016 to the same. The Writ Petition stands referred to a Division Bench of the Hon‟ble High Court of Ranchi and it has been withdrawn by the appellant in view of hearing conducted in the present appeal and after reserving the orders.

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In view of the said Show-Cause Notice, the Appellant appeared before the Adjudicating Authority and filed its Reply to Show-cause notice. Thereafter, Rejoinder to the Appellant‟s Reply was filed by the Respondent, arguments were heard by the Adjudicating Authority and Written Submissions were filed by the Appellant herein. The case was reserved for Orders on 08.02.2013 and the Impugned Order confirming the provisional attachment was passed on 02.03.2017.

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Aggrieved by the Impugned Order, the Appellant has approached this Tribunalto set-aside the Provisional Attachment and the Impugned Order.

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As far as schedule offence is concerned, the main allegations are that the appellant has misrepresented on a number of aspects before Ministry of Coal and 27^th Screening Committee as to inflate its claim. Therefore, the appellants were held guilty of the offence under Section 120B and 420 IPC. Against the conviction order, the appeal is pending for disposal.

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We do not wish to express any opinion on finding arrived with regard to schedule offence, if committed by the appellant. The said issue is sub-judice before the High Court, the same was passed on different issuesand the same has to be decided as per its own merit.Our only concern in these appeals is as to whether attachment order passed is sustainable in law or not and/or as to whether the investment is made from the public money or not. Further, as to whether merely investment in the company is proceed of crime or not, or it amounts to money laundering.

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PMLA proceedings

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ECIR bearing number „ECIR/02/RSZO/2014‟ registered by the ED on 29.04.2014 on the basis of registration of FIR on 8.3.2013. It is admitted position that the coal allocations including the allocation to the appellant cancelled by the Hon‟ble Supreme Court in W.P(C) No. 120/2012 passed on

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25.08.2014. Charge-sheet qua the Scheduled Offences filed by CBI on 12.11.2014.

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After registering ECIR, the statement of various witnesses were recorded and thereafter, the respondent issued Provisional Attachment Order No. 01/2016 for provisional attachment of properties totally valued at Rs.19,73,29,269.90/-( Rupees 19.73 Crores) on 15.09.2016.

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The main allegations against the Appellants were that they have received the Share Application money („ SAM ‟) amounting to Rs. 25 crores from the period 2004-05 to 2008-09, and the same has been received due to the coal block allotted to the Appellants, such allotment being result of the criminal activity relating to the Scheduled Offence.

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Original Complaint bearing number O.C. No. 644/2016 filed before the Adjudicating Authority on 13.10.2016. On the basis of allegations on generation of proceeds of crime, on 20.10.2016, show cause notice issued by the Adjudicating Authority under section 8(1) of the Act.

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Reply on behalf of the appellant was filed before the Adjudicating Authority along with supporting documents on 17.01.2017, denying all allegations. The respondent on 6.2.2017 filed the rejoinder before the Adjudicating Authority.

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After hearing, the impugned order confirming the provisional attachment order was passed on 2.3.2017, which was challenged before this Tribunal by filing an appeal u/s 26 PMLA.

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On 27.04.2017, notice was issued on the Appeal by this Tribunal. In respect of the Stay Application, ED was directed that Notice u/s 8(4) PMLA, if any, is issued to the Appellant for taking possession, a copy of the same also be sent to the Ld. Counsel for the Appellant who may press the interim order by moving Urgent Application.

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Notice u/s 8(4) of PMLA issued by the ED on 06.12.2017 to the Appellant. It is pertinent to mention that in the Notice, it is specifically stated that ED has taken “ constructive possession of the attached properties .” Further, the Appellant was directed to deposit the gross income and all other monetary benefits accrued therefrom in the account of ED. Thereafter, on 21.12.2017, this Tribunal directed that both parties shall maintain the status quo as at 2:30 pm. till the next date of hearing. The Appellant was directed in the meanwhile to deposit a sum of Rs. 2 crores by way of Bank Guarantee with the ED, and subject to the same it was directed that no coercive action shall be taken pursuant to Notice dated 06.12.2017. Appellant on 21.12.2017 furnished the above BG by way of speed post since the ED refused to accept the same by hand. The appellants were directed to file an affidavit, which was filed by the appellants before this Tribunal on 9.1.2018. The ED returned the Bank Guarantee under cover of letter dated 15.01.2018, on the ground that the main appeal is coming up for hearing on 17.01.2018. By order dated 17.01.2018, this Tribunal directed as under:-

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Parties to maintain status quo as on the last date of hearing i.e. 21.12.2017.

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Liberty was granted to ED to move Application in case it was agreeable to receive FDR of Rs. 2 Crores, without prejudice.

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Interim Order was directed to continue

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The main case of the respondent is that the appellants have received

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huge money on the basis of allocation of coal linkage. Since the allocation was

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obtained from Government by making misrepresentation, therefore, any investment made on the basis of impugned coal linkage amounts to proceed of crime. Therefore, the impugned order is sustainable in law.

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It is the ED‟s case that Appellant received „ SAM ‟ of Rs. 25 cr. (which it has categorized as „Proceeds of Crime‟) due to the allocation of the coal block. However, it is a matter of record that Appellant received „SAM‟ of Rs. 1.70 crores before 13.01.2006 i.e. the date of allocation. The investor companies invested in the shares of Appellant due to coal allocation is contradictory to the statement of officials of investor companies recorded u/s 50 of PMLA.

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27. The details of statements are as under: -

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Name of person	Company
AlokRungta	LupinCommodealPvt. Ltd.
	ToalasariyaVinyogPvt. Ltd.
	Nagina Exports &FinvestmentsPvt. Ltd.
	Escorts TradelinkPvt. Ltd.
AbhishekRungta	Mohanka Exports Pvt. Ltd.
Rajeev Kumar Agarwal	Jharkhand IspatPvt. Ltd.

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In the above statements under Section 50, PMLA, the various investors have stated that it was their independent decision to invest in the Appellant due to its growth potential/prospects and that they were not concerned with and/or did not take into consideration the coal allocation. The investors have stated that they were not even aware of the coal allocation atthe time of their investments.

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Statement dated 12.04.2016 recorded under Section 50,PMLA of AlokRungta, Director of M/s LupinCommodealPvt. Ltd.

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I, AlokRungta, son of Shri Ram Chandra Rungta aged about 33 years, Director of M/s LupinCommodealPvt. Ltd., Kolkata, presented myself before Assistant Director, Enforcement Directorate, Ranchi, Jharkahand for recording my statement in response to summon issued for appearance on 12.4.2016. I have been employed the provision related to summon and I have fully understood to same.

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i) What do you do and give details of your family along with their occupation and PAN details.

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Ans. I am businessman, I look after working of the companies I which I am director. My wife ShobhaRungta and son DarshRungta 1.5 years old. My wife is a house wife. PAN of my wife is AGPPA8129F.

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ii) Who are directors in M/s LupinCommodealPvt. Ltd and give their name and address.

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Ans. Myself and AshishRungta are directors in the company having same address.

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iii) When did you induct in Board of directors of M/s LupinCommodealPvt. Ltd. as a director.

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Ans. I was inducted director in M/s LupinCommodealPvt. Ltd. on dated 03.04.2010.

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iv) Who are chairperson and Managing Director of M/s LupinCommodealPvt. Ltd please give their name and address?

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Ans. LupinCommodeal Pvt Ltd does not have a chair person nor a Managing Director.

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v) You have shareholding/ directorship in other companies of RC Rungta group of associates companies of JIPL?

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Ans. I am shareholder and director of Sri Durga Cement Co. Ltd. in which R.C Rungta is the director.

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vi) Please give details of source of fund used for purchase of shares of JIPL in the Feb 2009-2010 and provide the statement of accounts from which the payment were use to JIPL for purchase of shares?

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Ans. The above details has already been submitted to you through letter dated 21.3.2011.

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vii) Please state the reason of purchase of Jipl shares on such high premium of Rs.150/- during the period 2009-10.

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Ans. I think premium of Rs.150/- is not so high as the book value of a shares of JIPL which was amount Rs. 200, what I recall. In addition to this the track record of the company was increasing year by year. The further prospect was good in terms of expenses promoters. The market value of land also appreciated 3-4 times in year 2009-10.

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viii) Please furnish the name and address of the bankers of the company?

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Ans. The company is having banking with Kotak Mahindra Bank, Shyam Bank Kolkata HDFC Bank Ltd. Shree [ illegible] Kolkata.

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ix) Please give details of other investment made by you and your family members either in individual capacity or as director/ partner/ proprietor in movable or immovable assets after 1.1.2001. Sources of fund for the said investment may also be elaborated.

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Ans. I have no details of the investment made by myself or my wife at present. I can submit you the balance sheet and source of income done by myself and my wife as on 31.3.2015.

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x) Please give the copy of the above by today.

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Ans. OK, I will submit the same by today.

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xi) Why you have chosen JIPL to invest?

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Ans. In Jharkhand at the time of our investment it was a growing company among private sector enterprises. So we have invested in the company as the share premium was also very low.

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xii) What is the activity of your company?

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Ans. Our company is non banking Finance company (NBFC) registered with RBI. Hence the object of NBFC applies to us and we can invest in shares or loans.

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xiii) What is the source of funds for purchase the shares of JIPL?

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Ans. In answer to question 6 I have already written that it has been submitted by our letter dated 21.3.2010.

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xiv) The net worth of your Co. is more than the amount invested in JIPL or whether you have taken loan to invest in JIPL?

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Ans. The network of our company is more than the amount invested in JIPL. We have not taken any loan to invest in JIPL.

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xv) On what basis your shareholders have invested in your company at the time of your investment in JIPL?

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Ans. Ours is an NBFC company registered with RBI. This being an investment company people subscribe to share capital for increase in intend value of shares. As I have already written that JIPL was a continuous growing company showing profit in all yours. The book value of shares as of today is around 300 Rs. per share. Apart from this the value of land and building has been increased manifold.

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Hence, keeping in view the above points our shareholders has invested in our company for better future management.

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xvi) As per your letter dated 21.3.2016 [ illegible] 48 shares in your company as on [ illegible] 2005 which is twelve more than share has been of last year i.e. 36 shareholders 2007-2008. Please give details of directorate of companies and there address?

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Ans. Right now I don‟t have the ans. I will provide details later on.

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xvii) As per your letter dated 21.3.2012 M/s Escort Trademark Pvt. Ltd. is one of the shareholders of your company and it has also been taken from your letters that M/s Escort Trademark Pvt. Ltd. is constantly increased of your company since 2007/08. Please give details address of the company, name of the directors and its business activities?

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Ans. Address of the company is Diamond Prestige Building AJC Bose Road, Kolkata. Director are myself and AshishRungta. It is also an NBFC company listed with RBI during investment business.

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xviii) As per the answer of question No. 2 and 17 you and your brother AshishRungta both are the directors ofLupinCommodealPvt. Ltd. and Escort Trading Pvt. Ltd. as per the list of shareholders of JIPL LupinCommodealPvt. Ltd. and Escort TradelinkPvt. Ltd. both are the share holders of Jharkhand IspatPvt. Ltd. as on 31 March 2005 and M/s Escort Trademark Pvt. is the shareholders of LupinCommodealPvt. Ltd. as on 31 March 2005. Please give reasons why Escort TradelinkPvt. Ltd. has invested money in Lupin Commanded Pvt. Ltd. when LupinCommodealPvt. Ltd. itself has invested in JIPL?

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Ans. As per the provisions of companies act, time was no restriction in investment in group companies so as per the need the investment were made.

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xix) As per your reply of question No. 18 you have told that there is a need of investment in LupinCommodealPvt. Ltd. by Escort Trademark Pvt. Ltd. Please give specific details of money during 2008/09.

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Ans. Right now I do not have the ans. I will provide details later on.

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xx) What is the mode of payment by Escort TradelinkPvt. Ltd. to LupinCommodealPvt.Ltd.

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Ans. Right now I do not have the answer I will provide details later on.

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xxi) Except LupinCommodealPvt. Ltd. and Escort TradelinkPvt. Ltd., in how many companies are / were you director? Please give the name of companies, address of names of other director of those companies.

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Ans. At present I am director in the companies including lupin and escort apart from this. I had Directorship in Punjab [ illegible] Sponge Pvt. Ltd. from where I have registered in March 2010 and Jan 2012 respectively. The other details will be given later on. However, the name of companies in which I am director at present are as below:

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Sri Purge Cement Company Ltd.

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Palace Projects Pvt. Ltd.

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Escorts Tradelink Pvt. Ltd.

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TokaniyeViniyug Pvt. Ltd.

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Lupin Commanded Pvt. Ltd

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Nagina Expert and Finvest Pvt. Ltd.

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VikashFastern Pvt. Ltd.

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Rimzim Merchants Pvt. Ltd

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M/s Chamastika Cement of Ispat Pvt. Ltd.

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Araanye Mines pvt. Ltd.

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xxii) As per your reply of question No.11, you have told that the reason for investment by M/s LupinCommodealPvt. Ltd. in JIPL during 2008/09 is that JIPL was growing company at that time. Please elaborately explain the meaning of growing company in the context of JIPL .

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Ans. Growing means increase in production capacity, increase in revenue or income in profits in the context of a corporate entity. In the context of JIPL as revealed through its balance sheet till date of investment all the three parameters were positive hence, we invested in JIPL.

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xxiii) Please tell what is the profit for shares of JIPL during 2006/07, 2007/08, 2008/09?

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Ans. This being a question related to figures, I don‟t remember right now. This will be submitted later on.

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Above statement is true and correct and given voluntarily without any pressure. I shall appear again on 13^th April 2016 to continue my statement.

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Sd/A.K. Rungta 12.4.2016

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Statement dated 13.04.2016 under Section 50, PMLA of AlokRungta Director of M/s LupinCommodealPvt. Ltd.

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Further statement of AlokRungta, son of Shri Ram Chandra Rungta, residing at new PNB Building main Road RanjeshCantt Director of M/s LupinCommodealPvt. Ltd., Kolkata, recorded under section 50 of PMLA read with Section 183 and 228 of IPC on 13^th April 2016.

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I have gone through my earlier statements on 12.4.2016 under Section 50 of PMLA and I confirm that given statement recorded and based on the facts disclosed by me voluntarily.

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Q.1. In your previous statement 12.4.2016 you have asked to provide the details of all investment made by you and your family members either in individual capacity or as a director/ partner/ proprietor of such company in immovable and movable assets as or after 11/2001 of sources of funds for the said investment. In your reply of this question you have answered that I have no details of the investment made by myself or my wife at present. Please given the details of investment as asked in above today.

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Ans. First of all it has been wrongly asked as I have already given the details of immovable and movable property as appearing in balance sheet of 31.3.2015 along with source of fund as appeared in computation of income. I have submitted the papers with for myself and my spouse SudhaAgarwal.

¶141

Q.2. From your answer to question No. 2 it appears that either you have understood the question or you willingly not want the understand the question. In the question No.1 it has been asked you should please provide the year wise investment made by you or your family member or both. Either in individual company or as a director/ partners/ proprietor in such companies in immovable assets on or after 1.1.200 [ illegible] and sources of funds for said investment?

¶142

Ans. As per income tax law I am not supposed to keep the book of account as my account is not audited. However, I cannot submit you balance sheet

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and computation of income from the assessment year 2010-11, 2015-16 which is supported to be kept by us within one week.

¶145

Q.3. In your previous statement dated 12.4.2016, reply of question No. 19 you have said that you will provide details of such of investment in LupinCommondealPvt. Ltd. by Escorts Trade link Pvt. Ltd. Please give the details.

¶146

Ans. As lot of details want to be given to you as my summon on 12.4.2016 has

¶147

left after 8 pm and today I appear at 10.10 am. So whatever details was possible in such short span we provide to you however, I will be submitted in a week. The following direction is being submitted to you as asked in my previous statement.

¶148

mode of payment for Escort TradelinkPvt. Ltd to LupinCommodealPvt. Ltd., from 1.4.2007 to 31.3.2016.

¶149

Company name, Address, director, directors address in which I am director.

¶150

Production sales revenue, and PBT of JIPL from 20.3.2004 to 20140-15.

¶151

Details of change in shareholder of LupinCommodealPvt. Ltd. From 2007-08 to 2008-09 with name, address, name of director and address of director.

¶152

Q.4. As per your letter dated 21.3.2016 there were 48 shareholder in your company as on 31.3.2009 and 23 shareholders as on 31 March 2008 i.e. 12 more shareholders. However, cross click of the list of shareholder reveals that some old shareholder has not reflected in the list of shareholder as on 31.3.2003. Due to this 4 new shareholders have appeared in the lit of shareholder as on 31.3.2005. Please give the details of director of the companies.

¶153

Ans. The list of change of shareholders was [ illegible ] details of address, directors name and directors address is being submitted to you.

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However, as per my list of number is 23, where you have asked for 24. I will re-verify the same and inform you accordingly.

¶156

Q.5 Did your company M/s LupinCommodeal aware that M/s JIPL had been allotted North Dhadhu Coal Block before investment in JIPl?

¶157

Ans. Yes, I was aware that company JIPL was alloted a coal mine. However, the name of same was not known to me.

¶158

Q.6. As per your reply to question No.5, before investment by your company M/s LupinCommodealPvt. Ltd., it was known to M/s LupinCommodeal that M/ JIPL had been allotted a coal block. Had M/s LupinCommodeal taken consideration of allotment of Coal Blok to JIPL before investment by your company in JIPL?

¶159

Ans. We have invested in JIPL after studying the balance sheet of the company and visited the plant. We have already written that we have invested the money keeping production, revenue and profit in mind. We have not considered the coal block as we know that starting coal block is a very tough job in India.

¶160

Q.7 In your previous statement dated 12.4.2016 you have said that before making investment by your company in JIPL, you have considered increase in production increase in revenue and increase in profit of JIPL. Whereas in reply to today‟s question No. 6 that you have made investment in JIPL without considering allocation of coal block to JIPL. Please clarify it.

¶161

Ans. We have already said that we have not at all considered the allotment of coal block to JIPL. JIPL was running smoothly without captive mines of iron ore and coal both. And it is evident from the chart given to you today that prior to the allocation or after the allocation there was no such impact on its profit or sales. While many other companies have suffered losses and their share prices have decreased to a great extent, while in

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JIPL after de-allocation of mines its production and revenue have grown to a sufficient level.

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Q.8. As provided by you the comparative chart of sales/profit before tax production of JIPL, going through the chart it shows that profit before tax of the company has increased in 2008-09 and thereafter it has decreased. Whereas you have replied in question No. 7 that the profit of JIPL has not affected due to allocation of coal block. Please explain.

¶165

Ans. A company can ultilise its resources for production. The production of the company has increased. Regarding profit, the sale value of any product depends upon market forces, we have to sell the product as per the market which can be up and down.

¶166

Q.9. When had M/s LupinCommodeal applied for share of JIPL and when were the shares of JIPL allotted to M/s Lupin?

¶167

Ans.The company had invested the money in 2008-09, the shares were allotted in April 2009.

¶168

Q.10. Please give the details of investment made by your company from 200506 to 2009-10.

¶169

Ans. The details are not with me right now. I will submit it in a week. The above statement is true and correct and given voluntarily without any pressure. I shall appear again as on call for.

¶170

Sd/A.K. Rungta 13.4.2016

¶171

Statement dated 12.04.2016 under Section 50, PMLA of AlokRungta, Director of M/s ToalasariyaVinyogPvt. Ltd.

¶172

I, AlokRungta, son of Shri Ram Chandra Rungta, aged about 33

¶173

years, Director of M/s ToalasariyaVinyogPvt. Ltd. Kolkata, presently

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Jharkhand for recording my statement in response to summon issued for appearance on 12.4.2016. I have been explained the provision related to summon and I have fully understood to same.

¶176

a. What do you do and give statements of your family along with their occupation and PAN details.

¶177

Ans I am businessman, look after working of the companies I what I am director. My wife ShobhaRungta and son DarshRungta 1.5 years old my wife is a house wife. PAN of my wife is AGPPA8129F.

¶178

b. Who are directors in M/s ToalasariyaVinyogPvt. Ltd and give their name and address.

¶179

Ans. Myself and AshishRungta directors in the company having same address.

¶180

c. Where were you inducted in Board of directors of M/s ToalasariyaVinyogPvt. Ltd. as a director?

¶181

Ans. I was inducted director in ToalasariyaVinyugPvt. Ld. dated 3.4.2010.

¶182

d. Who are chairperson and Managing Director of M/s TolasariyaVinyogPvt. Ltd. please give their name and residential address?

¶183

Ans. M/s ToalasariyaVinyogPvt. Ltd. do not have a chair person and nor Managing Director.

¶184

e. You have shareholding/directorship in other companies of RC Rungta Group associates companies of JIPL?

¶185

Ans. I am shareholder and director of Sri Durga Cement Co. Ltd. in which R.C Rungta is the director

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f. Please give details of source of fund used for purchase of shares of JIPL in the Feb 2009-10 and provide the statement of account from which the payment were use to JIPL for purchase of shares?

¶188

Ans. The above details has already been submitted to you through letter dated 21.3.2011.

¶189

g. Please state the reason of purchase of Jipl shares on such high premium of Rs.150/- during the period 2009-10.

¶190

Ans. I think premium of Rs.150/- is not so high as the book value of a shares of JIPL which was amount 200, what I recall. In addition to this the track record of the company was increasing year by year. The further prospect was good in terms of experienced promoters. The market value of land of the company also appreciated 3-4 times in year 2009-10.

¶191

h. Please furnish the name and address of the bankers of the company.

¶192

Ans. The company is having banking with Kotak Mahindra Bank, Shyam Bank Kolkata HDFC Bank Ltd. Shree Arcade Kolkata.

¶193

i. Please give details of other investment made by you and your family members either in individual company or as a director/ partner/ proprietor of such company in immovable or movable assets on or after 1.1.2006. Sources of fund for the said investment may also be elaborated.

¶194

Ans. I have no details of the investment made by myself or my wife at present. I can submit the balance sheet and source of income done by myself and my wife as on 31.5.2015.

¶195

j. Please give the copy of the above by today.

¶196

Ans. OK, I will submit the same by today.

¶197

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k. Why you have chosen JIPL to invest.

¶199

Ans. In Jharkhand at the time of our investment it was a growing company among private sector enterprises. So we have invested in the company as the share premium was also very low.

¶200

l. What is the activity of your company?

¶201

Ans. Our company is non banking Finance company (NBFC) registered with RBI. Hence the object of NBFC applies to us and we can invest in shares or loans.

¶202

m. What is the source of funds for purchase the shares of JIPL?

¶203

Ans. In answer to question 6 I have already written that it has been submitted by our letter dated 21.3.2011.

¶204

n. Is the net worth of your Co. more than the amount invested in JIPL or whether you have taken loan to invest in JIPL?

¶205

Ans. The network of our company is more than the amount invested in JIPL. We have not taken any loan to invest in JIPL.

¶206

o. On what basis your shareholders have invested in your company at the time of your investment in JIPL?

¶207

Ans. Our is a NBFC company registered with RBI. This being an investment company people subordinate to share capital for increase in intend value of shares. As I have already written that JIPL was a continuous growing company showing profit in all years. The book value of shares as of today is around 300 Rs. Per shares. Apart from this the value of land and building has been increased manifold. Hence keeping in view the above points our shareholders has invested in our company for better future management.

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p. In how many companies are / were you directors please also state the name, address of directors of those companies?

¶210

Ans. I am director at present are as below:

¶211

Sri Purge Cement Company Ltd.

¶212

Palace Projects Pvt. Ltd.

¶213

Escorts Tradelink Pvt. Ltd.

¶214

TolasariyeViniyug Pvt. Ltd.

¶215

Lupin Commanded Pvt. Ltd

¶216

Nagina Expert and Finvest Pvt. Ltd.

¶217

VikashFastern Pvt. Ltd.

¶218

Rimzim Merchants Pvt. Ltd

¶219

M/s Chamastika Cement of Ispat Pvt. Ltd.

¶220

Araanye Mines Pvt. Ltd.

¶221

Rest of details will be provided later on.

¶222

q. As per your reply of question No.11, you have told that the reason for investment by M/s TolosariyaViniyogPvt. Ltd. In JIPL during 2008/09 is that JIPL was growing company at that time. Please elaborately explain the meaning of growing company in the context of JIPL.

¶223

Ans. Growing means increase in production capacity, income in revenue as income profits in the context of a corporate entity. In the context of JIPL as revealed through its balance sheet till the date of allotment all the three parameter were positive hence, we invested in JIPL.

¶224

r. Please tell what is the profit per shares of JIPL during 2006/07, 2007/08, 2008/09?

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¶226

Ans. This being a question related to figures, I do not remember right

¶227

now. This will be submit later on.

¶228

Above statement is true and correct and given voluntarily without any pressure. I shall appear again as on called for.

¶229

Sd/A.K. Rungta 12.4.2016

¶230

Statement dated 23.05.2016 under Section 50, PMLA of AlokRungta, Director of M/s ToalasariyaViniyogPvt. Ltd.

¶231

I, AlokRungta, S/o Shri Ram ChanderRungta aged 33 years, director of M/s ToalasariyaVinyogPvt. Ltd . Kolkata presently myself before Assistant Director Enforcement Directorate Ranchi, Jharkhand for recording my statement in response to summon issued to me for appearance on 10.5.2016, but due to some reason, I was unable to attend so I am recording my statement today on 23.5.2016 .

¶232

In continuation of my statement on 13.4.2016

¶233

Q.1. Did your company M/s TalasoriyeVinayogPvt. Ltd. Kolkata known that M/s JIPL had been allotted north Dhadhu coal block before investment in JIPL.

¶234

Ans Yes, I was knowing that a coal block was allotted to JIPL, but I was not knowing the name of coal block.

¶235

Q.2. Had ToalasariyaVinyogPvt. Ltd. taken consideration of allotment of North Dhadhu Coal block to JIPL before investment in JIPL?

¶236

Ans. We have not considered the allotment coal block before investment in JIPL.

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Q.3 When had TalasoriyeVinayogPvt. Ltd. applied for shares of JIPL and when where the shares of JIPL allotted to TalasoriyeVinayogPvt. Ltd?

¶239

Ans. Our company had applied shares from the period May 2007- July 2008 and the shares were allotted to us in April 2009.

¶240

Q.4. What were the authorized capital, reserves net worth, NAV of ToalasariyaVinyogPvt. Ltd . for the financial year 2008-09?

¶241

Ans. Authorized capital was 2.90 crore, reserve 14.02 Crore Net worth 16.61 Crore and NAV Rs.64 per shares as on 31^st March 2009.

¶242

Q.5. Please give details of investment made by ToalasariyaVinyogPvt. Ltd . since 2008-09.

¶243

Ans. The relevant balance sheet for the period has already been given, continuing details of investment.

¶244

Above statement is true and correct and given voluntarily without any pressure.

¶245

Sd/A.K. Rungta 23.5.2016.

¶246

Statement dated 12.04.2016 under Section 50, PMLA, of AlokRungta, Director of M/s Nagina Exports &FinvestmentsPvt. Ltd.

¶247

I, AlokRungta son of Shri Ram Chandra Rungta aged about 33 years, Director of M/s Nagina Exports and FinvestmentsPvt. Ltd. Kolkata, presently myself before superintendent, Enforcement Directorate Ranchi Jharkhand for recording my statement in response to summon issued for appearance on 12.4.2016. I have been explained the provision related to summon and I have fully understood to same.

¶248

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¶249

i. What do you do and give details of your family along with their occupation and PAN details?

¶250

Ans I am businessman and Director of Companies and I look after their working. My wife ShobhaRungta and son DarshRungta 1.5 years old my wife is a house wife. PAN of my wife is AGPPA8129F.

¶251

ii. Who are directors in M/s Nagina Exports and FinvestmentsPvt. Ltd. and give this name and address?

¶252

Ans. Myself and AshishRungta are directors in the company having same address.

¶253

iii. When did you induct in Board of directors of M/s Nagina Exports and Finvest Ltd. As a director?

¶254

Ans. I was inducted director in M/s Nagina Exports and FinvestmentsPvt. Ltd. dated 3.4.2010.

¶255

iv. Who are chairperson and Managing Director of M/s Nagina Exports and FinvestLtd. Please give their name and residential address?

¶256

Ans. M/s Nagina Exports and Finvest Ltd. do not have a chairperson and nor Managing Director.

¶257

v. You have shareholding/ directorship in other companies of RC Rungta and associates companies of JIPL?

¶258

Ans. I am shareholder and director of Sri Durga Cement Co. Ltd. In which R.C Rungta is the director.

¶259

vi. Please give details of source of fund used for purchase of shares of JIPL in the Feb 2009-10 and provide the statement of account

¶260

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from which the payment were made to JIPL for purchase of shares?

¶262

Ans. The above details has already been submitted to you through letter dated 21.3.2011.

¶263

vii. Please state the reason of purchase of shares in JIPL shares on such high price of Rs.150/- during the period 2009-10?

¶264

Ans. In my opinion premium of Rs.150/- is not so high as the book value of a shares of JIPL which was amount 200, what I recall. In addition to this the track record of the company was increasing year by year. The further prospect was good in terms of expenses promoters. The market value of land of the company was appreciated 3-4 times in year 2009-10.

¶265

viii. Please furnish the name and address of the bankers of the company?

¶266

Ans. The company is having banking with Kotak Mahindra Bank, Shyam Bank Kolkata HDFC Bank Ltd. Shree Arcade Kolkata.

¶267

ix. Please give details of other investment made by you and your family members either in individual company or as director/ partner/ proprietor of such companies of movable or immovable assets on or after 1.1.2001. Sources of fund for the said investment may also be elaborated.

¶268

Ans. I have no details of the investment made by myself or my wife at present. I can submit you the balance sheet and source of income done by myself and my wife as on 31.3.2015.

¶269

x. Please give the copy of the above by today.

¶270

Ans. OK, I will submit the same by today.

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xi. Why you have chosen JIPL to invest.

¶273

Ans. In Jharkahnd at the time of our investment it was a growing company among private sector enterprises. So we have invested in the company as the share premium was also very low.

¶274

xii. What is the activity of your company?

¶275

Ans. Our company is non banking Finance company (NBFC) registered with RBI. Hence the object of NBFC applies to us and we can invest in shares or loans.

¶276

xiii. What is the source of funds for purchase the shares of JIPL. Ans. In answer to question 6 I have already written that it has been submitted by our letter dated 21.3.2016.

¶277

xiv. Is the net worth of your Co. more than the amount invested in JIPL or whether you have taken loan to invest in JIPL.

¶278

Ans. The network of our company is more than the amount invested in JIPL. We have not taken any loan to invest in JIPL.

¶279

xv. On what basis your shareholders have invested in your company at the time of your investment in JIPL.

¶280

Ans. Our is a NBFC company registered with RBI. This being an investment company people subscribe to share capital for increase in intend value of shares. As I have already written that JIPL was a continuous growing company showing profit in all yours. The book value of shares as of today is around 300 Rs. per shares. Apart from this the value of land and building has been increased manifold. Hence keeping in view the above points our shareholders has invested in our company for better fund management.

¶281

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xvi. In how many companies are / were you directors please also state the name, address of directors of those companies?

¶283

Ans. I am director at present are as below:

¶284

Sri Purge Cement Company Ltd.

¶285

Palace Projects Pvt. Ltd.

¶286

Escorts Tradelink Pvt. Ltd.

¶287

TolosariyeViniyug Pvt. Ltd.

¶288

Lupin Commanded Pvt. Ltd 6. Nagina Expert and Finvest Pvt. Ltd. 7. VikashFastern Pvt. Ltd.

¶289

Rimzim Merchants Pvt. Ltd

¶290

M/s Chamastika Cement of Ispat Pvt. Ltd. 10. Araanye Mines pvt. Ltd.

¶291

Rest of details will be provided later on.

¶292

xvii. As per your reply of question No.1, you have told that the reason for investment by M/s Nagina Exports and Finvest Ltd. In Jipl during 2008/09 is that Jipl was growing company at that time. Please elaborately explain the money of growing company in the context of JIPL.

¶293

Ans. Growing means increase in production capacity, income in revenue or increase in profits in the context of a corporate entity. In the context of JIPL as revealed through its balance sheet till the date of allotment all the three parameters were positive hence, we invested in JIPL.

¶294

xviii. Please tell what is the profit for shares of JIPL during 2006/07, 2007/08, 2008/09?

¶295

Ans. This being a question related to figures, I am remember right now. This will be submit later on.

¶296

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¶297

Above statement is true and correct and given voluntarily without

¶298

any pressure. I shall appear again as and when called for.

¶299

Statement dated 23.05.2015 under Section 50, PMLA of AlokRungta, Director of M/s Nagina Exports &FinvestmentsPvt. Ltd.

¶300

I , AlokRungta, S/o Shri Ram ChanderRunga aged 33 years,

¶301

director of M/s Nagina Exports &FinvestmentsPvt. Ltd.Kolkata presently myself before Assistant Director Enforcement Directorate Ranchi, Jharkhand for recording my statement in response to summon issued to me for appearance on 10.5.2016, but due to some reason, I was unable to attend so I am recording my statement today on 23.5.2016.

¶302

In continuation of my statement on 13.4.2016

¶303

Q.1. Did your company M/s Nagina Exports &FinvestmentsPvt. Ltd. Kolkata know that M/s JIPL had been allotted north Dhadhu coal block before investment in JIPL.

¶304

Ans Yes, I was knowing that a coal block was allotted to JIPL, but I did not know the name of coal block.

¶305

Q.2. Had M/s Nagina Exports &FinvestmentsPvt. Ltd. taken consideration of allotment of North Dhadhu Coal block to Jipl before investment in JIPL?

¶306

Ans. We have not considered the allotment coal block before investment in JIPL.

¶307

Q.3 When had M/s Nagina Export and FinvestPvt. applied for shares of JIPL and when where the shares of Jipl allotted to Nagina Export and Finvest.

¶308

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¶309

Ans. Our company had applied Shares from the period May 2007- July 2008 and the shares we allotted to us in April 2009.

¶310

Q.4. What were the authorized Capital, reserves, net worth, NAV of M/s Nagina Exports &FinvestmentsPvt. Ltd. for the financial year 200809?

¶311

Ans. Authorized capital was 2.3 crore, reserve 17.18 Cr Network 19.45 and NAV Rs.85 per shares as on 31^st March 2009.

¶312

Q.5. Please give details of investment made by M/s Nagina Exports &FinvestmentsPvt. Ltd. since 2008?

¶313

Ans. The relevant balance sheet for the period has already been given,

¶314

continuing details of investment.

¶315

Above statement is true and correct and given voluntarily without any pressure.

¶316

Sd/A.K. Rungta 23.5.2016.

¶317

35 . Statement dated 12.04.2016 under Section 50, PMLA, of AlokRungta, Director of M/s Escorts TradelinkPvt. Ltd.

¶318

I, AlokRungta son of Shri Ram Chandra Rungta aged about 33 years, Director of M/s Escorts TradelinkPvt. Ltd., Kolkata, presently Jharkhand for recording my statement in response to summon issued for appearance on 12.4.2016. I have been explained the provision related to summon and I have fully understood to same.

¶319

a. What do you do and give details of your family along with their occupation and PAN details?

¶320

Ans I am businessman, look after working of the companies in which I am director. My wife ShobhaRungta and son DarshRungta 1.5 years old my wife is a house wife. PAN of my wife is AGPPA8129F.

¶321

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¶322

b. Who are directors in M/s Escorts TradelinkPvt. Ltd and give this name and address?

¶323

Ans. Myself and AshishRungta directors in the company having same address.

¶324

c. Where did you induct in Board of directors of M/s Escorts TradelinkPvt. Ltd. as a director?

¶325

Ans. I was inducted director on dated 3.4.2010 M/s Escorts TradelinkPvt. Ltd.

¶326

d. Who are chairperson and Managing Director of M/s Escorts TradelinkPvt. Ltd? Please give their name and address.

¶327

Ans. M/s Escorts TradelinkPvt. Ltd. do not have a chair person nor Managing Director.

¶328

e. You have shareholding/ directorship in other companies of RC Rungta and associates companies of JIPL?

¶329

Ans. I am shareholder and director of Sri Durga Cement Co. Ltd in which R.C Rungta is the director.

¶330

f. Please give details of source of fund used for purchase of shares of JIPL in the Feb 2009-10 and provide the statement of accounts from which the payment was made to Jipl for purchase of shares?

¶331

Ans. The details has already been submitted to you through letter dated 21.3.2011.

¶332

g. Please state the reason of purchase of JIPL shares on such high price of Rs.150/- during the period 2009-10.

¶333

Ans. In my opinion premium of Rs.150/- is not so high as the book value of a shares of JIPL which was amount 200, what I recall. In addition to this the track record of the company was increasing year by year. The further prospect was good in terms of expenses

¶334

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¶335

promoters. The market value of land was appreciated 3-4 times in year 2009-10.

¶336

h. Please furnish the name and address of the bankers of the company?

¶337

Ans. The company is having banking with Kotak Mahindra Bank, Shyam Bank Kolkata HDFC Bank Ltd. Shree Arcade Kolkata.

¶338

i. Please give details of other investment made by you and your family members either in individual capacity or as a director/ partner/ proprietor of such companies in immovable and movable assets on or after 1.1.2001. Sources of fund for the said investment may also be elaborated.

¶339

Ans. I have no details of the investment made by myself or my wife at present. I can submit you the balance sheet and source of income done by myself and my wife as on 31.5.2015.

¶340

j. Please give the copy of the above by today.

¶341

Ans. OK, I will submit the same by today.

¶342

k. Why you have chosen JIPL to invest?

¶343

Ans. In Jharkahnd at the time of our investment it was a growing company among private sector enterprises. So we have invested in the company as the share premium was also very low.

¶344

l. What is the activity of your company?

¶345

Ans. Our company is non banking Finance company (NBFC) registered with RBI. Hence the object of NBFC applies to us and we can invest in shares or loans.

¶346

m. What is the source of funds for purchase the shares of JIPL?

¶347

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¶348

Ans. In answer to question 6 I have already written that it has been submitted by our letter dated 21.3.2010.

¶349

n. Is the net worth of your Co. is more the amount invested in JIPL or whether you have taken loan to invest in JIPL.

¶350

Ans. The network of our company is more than the amount invested in JIPL. We have not taken any loan to invest in JIPL.

¶351

o. On what basis your shareholders have invested in your company at the time of your investment in JIPL.

¶352

Ans. Ours is an NBFC company registered with RBI. This being an investment company people subordinate to share capital for increase in intend value of shares. As I have already written that JIPL was a continuous growing company showing profit in all years. The book value of shares as of today is around 300 Rs. per shares. Apart from this the value of land and building has been increased manifold. Hence keeping in view the above points our shareholders has invested in our company for better fund management.

¶353

p. In how many companies are / were you directors please also state the name, address of directors of those companies?

¶354

Ans. I am director at present are as below:

¶355

Sri Purge Cement Company Ltd. 2. Palace Projects Pvt. Ltd.

¶356

Escorts Tridulik Pvt. Ltd.

¶357

TolosariyaViniyug Pvt. Ltd.

¶358

Lupin Commanded Pvt. Ltd

¶359

Nagina Expert and Finvest Pvt. Ltd. 7. VikushFastern Pvt. Ltd.

¶360

Rimzim Merchants Pvt. Ltd

¶361

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¶362

M/s Chamastika Cement of Ispat Pvt. Ltd.

¶363

Araanye Mines pvt. Ltd.

¶364

Rest of details will be provide later on.

¶365

q. As per your reply of question No.11, you have told that the reason for investment by M/s Escorts TradelinkPvt. Ltd. In JIPL during 2008/09 is that JIPL was growing company at that time. Please elaborately explain the money of growing company in the context of JIPL.

¶366

Ans. Growing means increase in production capacity, increase in revenue as income profits in the context of a corporate entity. In the context of JIPL as revealed through its balance sheet till the date of allotment all the three parameter were positive hence, we invested in JIPL.

¶367

r. Please tell what is the profit for shares of JIPL during 2006/07, 2007/08, 2008/09?

¶368

Ans.This being a question related to figures, I cant remember right now. This will be submitted later on.

¶369

Above statement is true and correct and given voluntarily without any pressure. I shall appear again as and when called for.

¶370

Sd/A.K. Rungta 12.4.2016

¶371

36. Statement dated 23.05.2016 under Section of AlokRungta, Director of M/s Escorts TradelinkPvt. Ltd.

¶372

I, AlokRungta, S/o Shri Ram ChanderRungta aged 33 years, director of M/s Escort TradelinkPvt. Ltd., Kolkata presently myself before Assistant Director Enforcement Directorate Ranchi,

¶373

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¶374

Jharkhand for recording my statement in response to summon issued to me for appearance on 10.5.2016, but due to some reason, I was unable to attend so I am recording my statement today on 23.5.2016.

¶375

In continuation of my statement on 13.4.2016

¶376

Q.1. Did your company M/s Escorts TradelinkPvt. Ltd. Kolkata known that M/s JIPL had been allotted north Dhadhu coal block before investment in JIPL?

¶377

Ans Yes, I was knowing that a coal block was allotted to JIPL, but I was not knowing the name of coal block.

¶378

Q.2. Had M/s Escort TradelinkPvt. Ltd., taken consideration of allotment of North Dhadhu Coal block to JIPL before investment in JIPL?

¶379

Ans. We have not considered the allotment coal block before investment in JIPL.

¶380

Q.3 When had Escorts TradelinkPvt. Ltd. applied for shares of JIPL and when were the shares of JIPL allotted to M/s Nagina Export and Finvestments Pvt Ltd?

¶381

Ans. Our company had applied shares from the period May 2007- July 2008 and the shares were allotted to us in April 2009.

¶382

Q.4. What were the authorized capital, reserve net worth, NAV of Escorts TradelinkPvt. Ltd. for the financial year 2008-09?

¶383

Ans. Authorized capital was 2.5 crore, reserve 13.83 Crore, Net worth 16.28 Crore and NAV Rs.66 per shares as on 31^st March 2009.

¶384

Q.5. Please give details of investment made by Nagina Export and FinvestmentsPvt. Ltd. Since 2008-09.

¶385

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¶386

Ans. The relevant balance sheet for the period has already been given, continuing details of investment.

¶387

Above statement is true and correct and given voluntarily without any pressure.

¶388

Sd/A.K. Rungta 23.5.2016.

¶389

37. Statement dated 23.05.2016 under Section 50, PMLA, of AbhishekRungta, Director of M/s Mohanka Exports Pvt. Ltd.

¶390

I, AbhishekRungta, son of Shri Ram Chandra Rungta, aged about 34 years, Director of M/s Mohanka Exports Pvt. Ltd. Kolkata, am presenting myself before Asst. Director, Enforcement Directorate, Ranchi, Jharkhand for recording my statement in response to summon issued for appearance on 23.5.2016. I have been explained the provision related to summon and I have fully understood to same.

¶391

a. What do you do and give statements of your family along with their occupation and PAN details?

¶392

Ans I do business and I am director of 8-9 companies and look after the workings of some of these companies. My family includes my wife and my daughter. My wife NehaRungta is a house wife PAN of NehaRungta is AGN PR01434. My daughter is about 3 years.

¶393

b. Who are directors in M/s Mohanka Exports Pvt. Ltd. and give their name and address?

¶394

Ans. Apart from myself my younger brother AshishRungta is also a director in the company having same address.

¶395

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¶396

c. When did you induct in Board of directors of M/s Mohanka Exports Pvt. Ltd. as a director?

¶397

Ans. I was inducted director in M/s Mohanka Exports Pvt. Ltd. on dated 24.4.2009.

¶398

d. Who are chairperson and Managing Director of M/s Mohanka Exports Pvt. Ltd please give their name and address?

¶399

Ans. Mohanka Exports Pvt. Ltd does not have a chair person and nor Managing Director.

¶400

e. Do you have shareholding/ directorship in other companies of RC Rungta and associates companies of JIPL?

¶401

Ans. I am shareholder as well as director of Sri Durga Cement Co. Ltd., in which R.C Rungta is the director.

¶402

f. Please give details of fund used for purchase of shares of JIPL in the Feb 2009 and provide the statement of account from which the payment were use to JIPL for purchase of shares?

¶403

Ans. The above details has already been submitted to you through letter dated 21.3.2011.

¶404

g. Please state the reason of purchase of JIPL shares on such high premium of Rs.150/- per share during the period 2009-10.

¶405

Ans. I do not think that the premium of Rs 150/- per share was high keeping in mind the book value of the shares of JIPL which was around Rs 190-200, as per my memory. Apart from this the company was growing day by day and was run by experienced promoters.

¶406

h. Please furnish the name and address of the bankers of the company?

¶407

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¶408

Ans. The company is having banking with Kotak Mahindra Bank, Shyam Bank Kolkata HDFC Bank Ltd. Shree [ illegible] Kolkata.

¶409

i. Please give details of all the investment made by you and your family members either in individual capacity or as a director/ partner/ proprietor of such company/ firm in immovable and movable assets as on after 1.1.2006. Sources of the said investment may also be elaborated.

¶410

Ans. Right now I have no details of the investment made by myself and my wife. However, if you insist, I can submit you a xerox copy of the balance sheet containing details of investment done by myself and wife as on 31.3.2015. I may also submit a copy of computation of income source of and funds.

¶411

j. Please give the copy of the above by today.

¶412

Ans. I will submit the same by today itself.

¶413

k. Why have you chosen JIPL to invest?

¶414

Ans. JIPL is a growing company in terms of production, capacity, revenue and profitability. Right from the year 2003 up to the date of investment the company was performing very well, so we have invested in the company.

¶415

l. What is the source of fund to purchase the shares of the company? Ans. Please refer to our letter in response to your letter No. ECIR/ 02/ RSZO/ 2WJ/ 373 dated 4.2.2016, this reply has already been given to you.

¶416

m. The net worth of your Co. is more the amount invested in JIPL or whether you have taken loan to invest in JIPL?

¶417

Ans. The net worth of our company is more than the amount invested in JIPL. We have not taken any loan to invest in JIPL.

¶418

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¶419

n. In how many companies are you a director?

¶420

Ans. I am submitting the list of companies in which I am a director.

¶421

Sri Purge Cement Company Ltd.

¶422

MR Casting Pvt. Ltd.

¶423

MR Sponge Pvt. Ltd.

¶424

Alok Steel Industries pvt. Ltd.

¶425

VikashFestners Private Ltd.

¶426

Rim Zim Merchants Pvt. Ltd.

¶427

Bhutania Electrical Pvt. Ltd.

¶428

MR Intradev Private Ltd.

¶429

Ananaya Mines Pvt. Lt. 10. M R Realcon Pvt. Ltd

¶430

Rungta Enterprises Pvt. Ltd.

¶431

Mr. International Pvt. Ltd.

¶432

o. Did your company M/s Mohanka Exports Pvt Ltd. know that M/s JIPL had been allotted North Dhadhu Coal block before investment in JIPL?

¶433

Ans. I was aware that company was allotted a coal mine, however the name of the mine was not known to me.

¶434

p. Has M/s Mohanka Exports Pvt. Ltd. taken into consideration of allotment of north Dhadu coal block to JIPL before investment in JIPL?

¶435

Ans. We had not taken into any consideration of any coalmine before investment in JIPL.

¶436

Sd/A.K. Rungta 23.5.2016.

¶437

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¶438

Statement dated 13.05.2016 under Section 50, PMLA, of Rajeev Kr. Agarwal, director of M/s Jharkhand IspatPvt. Ltd.

¶439

I, Rajeev Kr. Agarwal, S/o Sri Durga Prasad Agarwal aged about 42 years, director of M/s Jharkhand IspatPvt. Ltd. presenting myself before Superintendent, Enforcement Director Ranchi Jharkhand for recording my statement in response to summon issued for appearance on 9.5.2016 vide file No. ESIR02/RS20/ 20145/ 497 dated 4.5.2016, but as my wife is ill and under treatment at Kolkata so I have requested to attend on dated 13.5.2016 which was considered by your honour. I have been explained the provision related to summon under PMLA Act and I have fully understood the same.

¶440

Q.1. Please explain about yourself and your family members? Ans. I am an employee Director in Jharkhand IspatPvt. Ltd. I look after day to day production and [ illegible] of Jharkhand IspatPvt. Ltd. In my family apart from me my wife and two sons. Wife, NishaAgarwal is house wife and both sons are of ages 12 years and 7 years. My salary from JIPL is Rs. 30,000/- per month.

¶441

Who are the other directors in M/s JIPL?

¶442

Ans. Apart from myself Sri R.C. Rungta is director in M/s JIPL.

¶443

Who are the chairperson and managing director of M/s JIPL? Please give their name and address?

¶444

Ans. M/s JIPL does not have Chairperson or Managing Director. However, Sri R.C. Rungta controls the offices of JIPL. The address of Sri R.C. Rungta is near PNB Bank Main road Ramgarh.

¶445

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¶446

When did you induct as a director in M/s JIPL?

¶447

Ans. I am inducted director in M/s JIPl since inception.

¶448

Do you have share holding/ directorship in other companies of RC.Rungta and group or associated Co. of JIPL?

¶449

Ans. I am not a share holder or director of any co. of R.C Rungta Group or associate company of JIPL.

¶450

What do you know about allocation of north dhadhu coal block in M/s JIPL?

¶451

Ans. I am not so much aware of the coal block as Shri R.C. Rungta and Sri R.C. Rungta looking after the matter of coal block. However, this coal Block was allotted to JIPL in 2006 and later on in 2012 it was cancelled.

¶452

Q.7. Was there any production of coal from the mines?

¶453

Ans. We have not extracted any coal from the mines.

¶454

Q8. Has your company benefited from allotment of north Dhadhu coal block?

¶455

Ans. We have not at all benefitted from coal mines. Actually we have incurred heavy expenditure of 3-4 crores as development of this mines and got nothing.

¶456

Q.9. M/s JIPL has allotted 10 lakhs shares of Rs.100 each as on a premium of Rs.150/- per shares. Do you know about this allotment?

¶457

Ans. Yes the above shares were issued in April 2009 to various companies apart from this I do not know any thing about this allotment.

¶458

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¶459

Q.10. What basis the companies paid a premium of Rs 150 per share for investment in JIPL?

¶460

Ans: M/s JIPL was running from the year 2003. Every year the Co. was making profit and growing by production, sales etc. The book value of shares was Rs.200 at that time. Apart from this the value of land was increased very much. So I do not think that the premium of Rs.150 was higher for the investor.

¶461

Q.11.How can you say that the premium received by your company is not due to allotment of north Dhadu coal block?

¶462

Ans.The Co. was running since 2003 and making growth by all means since 2003 to up to date. The allocation was made in 2006 and was de-allocated in 2012 but in spite of that the growth of the Co. was regular. The allotment had no effect on the co, because no extraction of coal was made from the mines. The co. derived coal for its production through market sources since beginning.

¶463

Q12. In the financial year 2009-10 the net worth of your company suddenly increased by 73%. Please explain and also explain reasons of shares application money received from the year [ illegible ] to 2008-09 was allotted in April 2009?

¶464

Ans. In April 2009 10 lakhs shares of 100 each were issued @ 250 per share. This resulted to increase of 25 crore in share capital and reserve and surplus. That was the main reason for sudden increase of net worth.

¶465

There was dispute of family partition from the year 2004.

¶466

The internal understanding between the family was not to allot new shares. But during operation of the Co. has taken loan from SBI. Under the pressure of loan from SBI and their revenue the company allot share in 2009.

¶467

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¶468

The above statement form page 1 to Page 5 given by me voluntarily without any force, threat or coercion. I undertake that I will appear for further statement if needed by the department.

¶469

Sd/Rakesh Kumar Agarwal, 13.5.2016

¶470

On reading of the aforesaid Statements, it appears that the investors have invested in the shares of the Appellant company due to the coal allocation and coal linkage (allocation). Adjudicating Authority‟s reading of the aforesaid Statements has gone behind the said Statements and amounts to disbelieving the same, without any factual basis or material to the contrary.

¶471

The aforesaid statements recorded under section 50 of the PMLA have been duly signed and affirmed by the persons giving the statement. The proceedings under Section 50 PMLA are deemed to be judicial proceedings within the meaning of Section 193 and Section 298 of the IPC. The aforesaid Statements have not been disputed by the ED who even has relied upon documents in support of the said OC as well as in Show Cause Notice. The Adjudicating Authority cannot disbelieve the statements of the investors or to interpret them its own matter. The same is not permissible in law. Overall view of all the statements are to be read together and then one has to come to the conclusion the finding. Therefore, the Adjudicating Authority has gone beyond the material before it to arrive at the finding that the Appellant and/or the other Defendants in the said OC invited investors/public to invest in the Appellant company using the allurement of the allocation of the coal block or its possible allocation, and that therefore, derivation of benefit from such investment would constitute proceeds of crime. At the same, even otherwise, it is a matter of fact, no investment was made by public which is not denied on behalf of respondent. In commercial, business allurement cannot be treated as money laundering unless money laundering actual happens.

¶472

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¶473

The findingin the impugned order was based on materials beyond the record of the present case because there is nothing on record to show that the investors invested in the shares of the Appellant company on being invited by it or by any of the officers of the Appellant company and the allocation or the possibility of allocation of coal block was used as allurement to such investors.

¶474

The reliance is placed on behalf of appellants on the recent judgement of the Hon‟ble Delhi High Court in M/s Himachal Emta Power Ltd. Vs UOI, Order dated 23.08.2018, W.P. (C) No. 5537/2018 , ( paras 19 and 20). In this case, also arising from coal allocation, and where no mining activity took place, the Hon‟ble High Court, set aside the provisional attachment by holding inter alia, as under:

¶475

“19. However, it is not disputed that mining of the coal from the block has not commenced, therefore, HEPL did not derive or obtain any benefit from the coal block. The ED has also not indicated any reason, which could lead one to believe that HEPL had derived any other benefit from the allocation of the coal block in question.

¶476

20. In view of the above, the petition is allowed and the impugned order is set aside…..”

¶477

(emphasis supplied)

¶478

In the present case also, no benefit was derived or obtained from the

¶479

public in the name of coal block.

¶480

The Appellant has been a running concern since 2003 which is much prior to coal allocation in 2006. Copies of the balance-sheet for the year 200304 till 2013-14 have been filed.

¶481

Balance Sheet of 2003-04

¶482

Balance Sheet of 2004-05  Balance Sheet of 2005-06  Balance Sheet of 2006-07

¶483

Balance Sheet of 2007-08

¶484

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¶485

Balance Sheet of 2008-09

¶486

Balance Sheet of 2009-10

¶487

Balance Sheet of 2010-11

¶488

Balance Sheet of 2011-12

¶489

Balance Sheet of 2012-13

¶490

Balance Sheet of 2013-14

¶491

It is the case of the appellants that despite of absence of any mining activity or coal extraction, the production and Profit before Taxes of Appellant have been constantly increasing on a year-to-year basis. Even without the mining activity, the production of Appellant increased since it had a Coal Linkage till 2012 and also purchased coal from the open market.The above shows that the coal allocation had no relevance for Appellant/Defendant No. 1 and even without the same it continued to run its business and make profits.The Appellant applied for coal linkage on 27.05.2003 and was granted the same on 19.09.2006. The Letter of Assurance from Central Coalfields Limited was issued on 15.09.2008. In case the respondent is to be believed, then Appellant should have collapsed after the de-allocation. However, even after de-allocation, Appellant continued to make profits and carry out its manufacturing activities.

¶492

Public investment is not involved in the matter. We have been informed that no investor has protested or has filed the civil suit for recovery of investment amount after cancelling the block by the Supreme Court. Even, no contrary evidence is available on record to show that the investment money was/is the tainted money. All have invested the money as per its own for many years also.There is no complaint of any nature against the appellants for allotment in order to receive the investment amount. Therefore, there is no force in the argument on behalf of the respondent that the excess amount of coal allotment was the wrongful benefit to Appellant. Even if this case is to be believed, no attempt has been made by therespondent to value this excess amount of coal allocation. The coal allocation to Appellant has been deallocated on 14.02.14 w.e.f. 22.11.2012 . The coal allocation has also been

¶493

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¶494

cancelled by the Hon‟ble Supreme Court vide Order dated 25.08.2014 in W.P.(Cr) 120/2012.Therefore, the coal allocation (which at best could be the proceeds of crime) was not in existence on the date of the ECIR, i.e., 29.04.2014.In any event, neither did any mining activity take place nor was any coal extracted from the mine. The Appellant did not derive or obtain any benefit from the coal block.It may be that during the process of getting the approval for coal block, the appellants might have placed the material which may amount to misrepresentation, but we do not express any opinion in this respect as the appeal is sub-judice before the Hon‟ble High Court as the subject matter of the present appeal is distinct.

¶495

Till the date of order dated 19.09.2006 by the Ministry of Coal for linkage

¶496

to the appellants, the relevant dates and events are given as under:-

¶497

Sl.	Date	Particulars
No.
a.	29.04.2003	Name of “M/s RewaRetreadsPvt. Ltd.”, a company incorporated on 12.03.1991, was changed to “M/s Jharkhand IspatPvt. Ltd.”, the Appellant herein.
b.	27.05.2003	Appellant‟s Application for Coal Linkage from Central Coalfields Limited for Sponge Iron unit.
c.	23.02.2004	Application to Ministry of Coal by the Appellant for allocation of North Dadu coal block.
d.	2004-05	Share Application Money amounting to Rs. 1,31,00,000/- received in the Appellant Company
e.	2005-06	Share Application Money amounting to Rs. 39,00,000/- received in the Appellant Company
f.	13.01.2006	Letter of Allocation of coal block to the Appellant issued by the Ministry of Coal jointly in favour of four
g.	19.09.2006	Order of Ministry of Coal, Government of India granting coal linkage to the Appellants

¶498

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¶499

The Scheduled Offence in this case, i.e., Section 420/120B IPC, was made Scheduled Offences on 01.06.2009.In the instant case, the alleged offence of Section 420/120B IPC stood concluded on 13.01.2006 i.e. on the date of allocation of coal block.Even the acts set out hereunder, which allegedly form part of the offence of money laundering, stood completed before 01.06.2009. Share Application Money („SAM‟) was received by Defendant No. 1 from 2004-05 to 2008-09 i.e. by 31.03.2009. Shares in lieu of SAM stood allotted on 29.04.2009. Even the act of creation of assets stood completed by 02.05.2006.

¶500

It is submitted on behalf of appellants that prior to the amendment to S. 3 in 2013 vide Amendment Act dated 03.01.2013, the words “concealment, possession, acquisition or use” were not part of S. 3 PMLA, even as per Standing Committee Report on “Prevention of Money Laundering Amendment Bill, 2011. As such, use, possession, concealment or acquisition of alleged POC, prior to 03.01.2013 cannot be considered to determine commission of an offence u/s 3 of PMLA. Any other interpretation would be violation of Art. 20(1) of the Constitution.

¶501

It is stated on behalf of appellants that these proceedings are civil in nature, the provisions contained in PMLA. The same cannot be applied retrospectively in the absence of an express provision making it retrospectively applicable. Irrespective of above, since we are dealing with the appeal on merit, thus, this issue may not be necessary to deal with.

¶502

The Complainant has provisionally attached the assets on the basis of its allegation that these assets have been created out of „SAM‟.In this regard, Complainant has relied upon statement dated 23.01.2015 of Defendant No. 3, R.C. Rungta . It is submitted that no such statement has been made by

¶503

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¶504

R.C.Rungta in this statement dated 23.01.2015.The Complainant has also relied upon letter dated 28.06.2016. In this letter, too, no such statement has been made.

¶505

It is stated on behalf of appellants that appellants had already completed its expansion and started commercial production by 02.05.2006. By the aforementioned date only Rs.1.70 crores of total „SAM‟ had been received, which amounts to only 6.8 % of the total„SAM‟ of Rs. 25 crores.The invoices pertaining to assets which have been attached are available from Pgs. 845 - 913, Vol 5 & 6. More than 90% of such invoices are of dates prior to 02.05.2006, by which date only 1.70 crores had been received. The assets, which have been provisionally attached, were created and purchased prior to Rs. 23.30 crores of the SAM being received. It therefore cannot be contended by the Complainant, under any circumstances, that the SAM (which was received later) was used to create assets purchased prior in time.

¶506

Since we are dealing with the appeal on merit, we are not concerned with these issues concerning the interpretation of provisions of “value of any such property‟.

¶507

Show-Cause Notice dated 20.10.2016 is vague and not clear and it does not satisfy the mandatory statutory requirements of Section 8(1), PMLA. The said Show Cause Notice states“As the Adjudicating Authority has reason to believe that you have committed an offence under section 3 of the PMLA or are in possession of proceeds of crime, […]”

¶508

Use of “or” in the Show-Cause Notice shows that the neither the Adjudicating Authority nor the ED had formed a definitive opinion/belief as to whether the Appellant had committed an offence under section 3, PMLA or

¶509

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¶510

whether the Appellant was in possession of the proceeds of crime or whether the Appellant was being prosecuted for both the aforesaid acts. The ShowCause Notice is a mere reproduction of the text of Section 8, PMLA. It shows non-application of judicial mind.

¶511

There is no conduct, act or omission on the part of the Appellant that has been shown which would lead the ED to believe that the alleged proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding under Chapter 2 of PMLA.On the contrary, the following facts would show that the Appellant has been a running concern since the year 2003 and has paid taxes amounting to Rs. 231 crores from FY 2003-04 to FY 2016-17 (upto December 2016).

¶512

The transactions pertaining to receipt of „SAM‟ from various other companies are duly documented, above-board and legal transactions.The proceedings related to the CBI Charge-sheet and the proceedings under the PMLA have been widely reported and publicized in the media, as such, no prudent person would be willing to deal or transact with Defendant No.1 concerning the attached assets.

¶513

The Adjudicating Authority again travelled beyond the materials before it to arrive at the finding that the mandatory requirement of section 5(1)(b) are satisfied in the present case. In order to justify the presumptions of the ED in this regard and the lack of reasons in writing as to the ED‟s belief in respect of Section 5(1)(b), PMLA, the Adjudicating Authority has raised further presumptionsagainst the Appellant without any reasonable or factual basis and without any reference to the material on record and without any reference to any act or omission of the part of the Appellant.

¶514

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¶515

The Adjudicating Authority has furnished completely new reasons and has erroneously held that there is no restriction for disposal of the entire running unit by the Appellant or its business, partially or fully and that very few formalities are required to be fulfilled, if the Appellant wished to alienate/transfer/sell the entire running unit. It is submitted that such a finding goes beyond the material before the Adjudicating Authority, especially since even the above-stated reason (assuming it to be justified and reasonable) was not recorded in writing by the ED in the said PAO or the said OC.

¶516

Additionally, in this regard, Adjudicating Authority has also presumed that it cannot be ruled out that the current Directors of the Appellant would be interested in disposing/transferring of the business of the Appellant. This above-said reasoning has appeared for the first time in the Impugned Order and does not find mention in the said PAO or the said OC; and as such, the Adjudicating Authority has stepped into the shoes of the ED and has provided the reasons for the ED‟s belief, while no such reasons have ever been expressed by the ED.

¶517

Therefore, no reasonable person could have formed an opinion that the properties which have been provisionally attached could be transferred or dealt in any manner which could result in frustrating any proceedings under the PMLA, and hence, the requirements under S. 5(1)(b), PMLA are not satisfied.

¶518

At time of issuance of the said PAO, the said OC and the said Show Cause Notice, as recorded therein, the ED‟s case against the Appellant, was that various, different investor companies, having no relation to the Appellant were allured to invest in the shares of the Appellant Company on the basis of the coal allocation.

¶519

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¶520

It is stated on behalf of appellants that at the stage of rebuttal arguments, for the first time, it was orally argued by the ED that the aforesaid investor companies are actually group companies of the Appellant and the persons who had given statements under Section 50, PMLA, on behalf of such investor companies were related/interested persons and therefore, their statements recorded under Section 50 PMLA are not reliable and liable to be disbelieved. Though ED submitted and not in writing, it was argued by taking new stand just opposite to that put up by it in the said PAO and said OC. It is stated on behalf of appellant that the ED never put this new case in writing and the Appellant was thus never put to notice of this new case or the material, which the ED purportedly relied upon in support thereof. It is apparent from the material on record that the ED also investigated into this aspect and obtained details of shareholding and source of funds of such investor companies. After having so investigated, the ED did not conclude that these companies were group companies of the Appellant Company at the time of investment in the shares of the Appellant Company or that the Appellant had any relation to the source of funds of these investor companies. It is submitted on behalf of appellants that the Adjudicating Authority, however, not only allowed the ED to do so, but also took it into consideration and, a perusal of the Impugned Order shows at Pages 114-116 accepted it as the primary ground for confirming the said PAO. While accepting the aforesaid new case put forth by the ED, the Adjudicating Authority has failed to provide any reason for the same or disclose the material which it has relied upon to arrive at the above findings.

¶521

We are of the view that if this new case is accepted for the sake of arguments and the investor companies are presumed to be related or group companies, then the money invested by them also has to be relatable to the Appellants, and as such, there can be no question of profiteering or benefitting from the coal allocation and thus, no question of any proceeds of crime.

¶522

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¶523