Partly allowed

FPA-PMLA-1845/MUM/2017 of Manohar Krishna Madhavi v/s The Deputy Director Directorate of Enforcement, Mumbai

ATFP6 Aug 2019FPA-PMLA-1845/MUM/2017

Case brief

AI extract

What is this about?

In an appeal concerning provisional attachment under PMLA, the Tribunal held that despite a 7-year delay and lack of prosecution against the primary contractor, the case did not justify releasing attached properties. The order modified the impugned order to continue attachment but restrained the Enforcement Directorate from taking physical possession.

What did the court decide?

Attachment of properties continues, but the respondent is restrained from taking physical possession of the same.

FPA-PMLA-1845/MUM/2017 of Manohar Krishna Madhavi v/s The Deputy… — Money Laundering | ATFP (2019)

¶1

APPELLATE TRIBUNAL, PREVENTION OF MONEY LAUNDERING ACT AT NEW DELHI

¶2

Date of decision : 6^th August, 2019

¶3

MP-PMLA-3619/MUM/2017(Stay) & FPA-PMLA-1845/MUM/2017

¶4

Manohar Krishna Madhavi … Appellant/Applicant Versus The Deputy Director Directorate of Enforcement, Mumbai … Respondent

¶5

Advocates/Authorized Representatives who appeared

¶6

For the Appellant	:	Dr. Shamsuddin Shams, Advocate
		Mr. Saifuddin Shams, Advocate
		Mr. Ashwani Malhotra, Advocate
For the Respondent	:	Mr. Neeraj Atri, Advocate
		Mr. S. Paul, Investigating Officer
CORAM JUSTICE MANMOHAN SINGH	:	CHAIRMAN

¶7

JUDGEMENT FPA-PMLA-1845/MUM/2017

¶8

By this order, this Tribunal proposes to decide the abovementioned appeal which is filed against the Order dated 31.05.2017 passed in OC-688/2017.

¶9

The brief facts are that the CBD Belapur Police Station, Navi Mumbai had registered an FIR No. 73/2009 on 17.05.2009 invoking sections 420, 465, 467, 468, 471, 218, 409, 34 and 120B of the Indian Penal Code (IPC), 1860 against various persons.

¶10

2.1 ln the FIR, it was alleged that the accused had increased the number of workers, their man-hours, number of vehicles used etc.

¶11

FPA-PMLA-1845/MUM/2017

¶12

Page 1 of 38

¶13

in the challan which was used for the approval for the payment of the demolition of unauthorized structure in the jurisdiction of Navi Mumbai Municipal Corporation (NMMC) thereby had cheated NMMC for obtaining excess amount of Rs. 2,69,12,282/- from them.

¶14

2.2 It is disclosed that the Encroachment Department of NMMC had invited tender/bids to carryy out demolition work of unauthorized structures, transportation of laborers and machinery required for demolition purpose and the contract for the same was granted to M/s. H. B. Bhise & Company which was owned by Shri H. B. Bhise. Company submitted the bills to NMMC for the work done by them, but during the audit, it was transpired that M/s H.B. Bhise & Company had cheated NMMC by overcharging the bills, manipulating bills, tempering/ overwriting/inflating the bills after submissions.

¶15

a) During the preliminary examination by the Deputy Commissioner (Encroachment), NMMC, it was mentioned that the challan after obtaining the signature of ward officer has been overwrite and the numbers of vehicles, labour and working hours has been increased.

¶16

b) During the preliminary investigation, it was revealed that M/s H.B. Bhise and Co. after signing the challan of ward officer has increased the numbers of vehicles, labour, machinery and cheated the Municipal Corporation for his personal gain/ greed. M/s. H. B. Bhise & Company submitted the bills to NMMC for the work done by them but during the audit, it was transpired that M/s. H. B. Bhise & Company had cheated

¶17

FPA-PMLA-1845/MUM/2017

¶18

Page 2 of 38

¶19

NMMC by overcharging the bill wherein they had increased number of workers, their man-hours, number of vehicles used vehicles etc., thereby presented those inflated bills for the excess amount of Rs. 2,69,12,292/- as true bills for the work done.

¶20

c) During the investigation by the police authorities, it was revealed that the said contractor has cheated the NMMC to the tune of Rs. 2,69,12,200/- during the period from 27.03.2003 to 31.03.2009.

¶21

In the FIR dated 17.05.2009, registered under section 420/465/467/468/471 IPC, the Appellant has not been named, even in the Charge-sheet dated 25.08.2009. However, the name of the Appellant was added in the supplementary charge-sheet 25.09.2009 filed.

¶22

Police authorities of CBD Belapur, Navi Mumbai as per Charge Sheet No. 1-79/09 dated 25.08.2009 invoked sections 420, 465, 467, 468, 471, 120B and 34 of Indian Panel Code (IPC) against (i) Manohar Krishna Madhavi (ii) Hanumantrao Baurao Bhise (iii) Dhanaji Kashinath Mhatre (iv) Ajay Mhatre and others. Subsequently, Supplementary Charge Sheet Nos. I 78-A/09 dated 25.09.2009, I 79-B/09 dated 19.04.2011 and 79-C/09 dated 20.07.2012 was also filed.

¶23

As the offence under Section 120B, 420, 467, 471 of IPC, 1860 falls under scheduled offences covered in PART A of Paragraph-1 of the schedule to the PMLA, 2002, the Directorate of Enforcement, Mumbai Zonal Office, recorded an ECIR bearing No. 92/MZO/2009 dated 06.11.2009 against the appellant, Shri Manohar Madhavi and S/Shri Rajesh Patil, Ajay Mhatre, Praveen Bavdane, Prem Mhatre, Shailesh FPA-PMLA-1845/MUM/2017 Page 3 of 38

¶24

Patil, Hanumantrao Bhise, Dhanaji Mhatre, Ambrish Patnigire, Divakar Samel, Jaivant Dalvi, Namdev Alhat and Prakash Kamble under the provisions of PMLA, 2002). After investigation and recording the statement of the witnesses, the provisional attachment order was passed. Thereafter, by the impugned order, the attachment order was confirmed. The appellant has challenged the said order on filing of present appeal.

¶25

In the present case, this Tribunal is only concerned as to whether the impugned order is sustainable in law or not and the properties attached are acquired from proceed of crime or not. This Tribunal does not wish to express any opinion on the basis of allegations made in the charge-sheet nor the allegations made in the prosecution complaint under Section 45 of PMLA.

¶26

About the appellant, he is engaged in the business of construction and supply of machinery and transport like JCB, dumper, labour and has also supplied the same to various parties including M/s H.B. Bhise & Co. It is the case of the appellant that the appellant provided the said services to M/s H.B. Bhise & Co. in 2001-2002 for various projects and in lieu thereof, the appellant received the payments in and around 2002-2003.

¶27

It is not in dispute that M/s H.B. Bhise & Co. got the contract from NMMC for demolition of unauthorized structure and made a request to the appellant for providing the services of JCB, poplan, labour services etc. and in lieu thereof payments were made by M/s H.B. Bhise & Co. to the Appellant over a period of time. A copy of Agreement between the Appellant and M/s H.B. Bhise & Co. is already filed with the Appeal.

¶28

FPA-PMLA-1845/MUM/2017

¶29

Page 4 of 38

¶30

It is not denied by the respondent that M/s H.B. Bhise & Co. submitted bills to NMMC for the work carried out, but during the audit, it was transpired that they have cheated NMMC by overcharging, tampering and inflating the bills. The only allegation against the Appellant is that the Appellant was the beneficiary of the amount defrauded in the case and on the basis of which the Adjudicating Authority vide Order dated 31.05.2017 passed an order of attaching the properties of the Appellant.

¶31

The respondent has admitted that the appellant has no contract with NMMC, nor any bill and invoices were raised by him. He has received the payment from the said firm H.B. Bhise & Co.

¶32

The FIR was actually registered on the basis of complaint mainly against M/s. H.B. Bhiso and Company.

¶33

The appellants counsel has referred the statement recorded as well as documents already filed

¶34

a) The statement of Shri Suresh Ramu Patil, who had lodgded the complaint with Belapur Police Station was recorded on 16.02.2016 under the provisions of the Section 50 (2) and 50 (3) of the PMLA, 2002 wherein he inter alia stated, that he was presently posted as Deputy Commissioner, Zone-II, Navi Mumbai Municipal Corporation; that as per the directions of the then Commissioner of Navi Mumbai Municipal Corporation he had lodged Complaint with Belapur Police Station against M/s. H B Bhise & Co. for inflated demolition bill scam on 16.05.2009 and accordingly Belapur Police had registered FIR on 17.05.2009; that the NMMC had called for tender for demolition work contract and after due official procedure, the said contract was

¶35

FPA-PMLA-1845/MUM/2017

¶36

Page 5 of 38

¶37

granted to M/s. H B Bhise & Co. on 27.02.2003; that on receipt of the bill from the Contractor, the Encroachment Department verified the challans and bills and further submitted to the Office Superintendent who after verification further submitted to the Asstt. Commissioner (Encroachment); that the Asstt. Commissioner (Encroachment) after quoting his remark further submitted to the Deputy Commissioner for further approval of the accounts Department and Commissioner's approval; that the said contract for demolition was exclusively allotted to M/s. H B Bhise 8s Co.; that the Encroachment Department had quantified; j56 the exact amount of inflated demolition bill for the period from 27.02.2003 to 2008-09 as Rs. 2,69,12,292/-; that the Deputy Commissioner (Encroachment), NMMC in the meeting held on 12.05.2009 with the ward officer had terminated the work allotted to M/s. H B Bhise & Co. and ordered to conduct preliminary audit for the period April' 2007 to Sept' 2007 and based on the same he was directed to file complaint in the subject case.

¶38

b) The statement of Shri Hanumantrao Bhise, Proprietor of Contractor firm M/s H B Bhise & Company was recorded on 17.09.2014 and 14.03.2018 under the provisions of the Section 50 (2) and 50 (3) of the PMLA, 2002, wherein he inter-alia stated that he was Civil Contractor having PWD's registration which was valid till 2007; that civil work job was carried out under the name of his firm M/s. H. B. Bhise & Company; that Shri Manohar Krishna Madhavi was the Corporator of NMMC; that during 2002, he (Shri Manohar Krishna Madhavi) had called him in his office and informed him that, he (Shri Manohar Krishna Madhavi) was not entitled to take the contract of NMMC; that he

¶39

FPA-PMLA-1845/MUM/2017

¶40

Page 6 of 38

¶41

(Shri Manohar Krishna Madhavi) would obtain civil contract of demolition of unauthorized structures carried out by Navi Mumbai Municipal Corporation using his (Shri H. B. Bhise) firm's contract license and carried out the allotted work in his own capacity; that the contract awarded to Shri Manohar Krishna Madhavi through his firm was directly obtained by him (Shri Madhavi) from NMMC; that he (Shri Manohar Krishna Madhavi) used his firms letter Head, rubber stamps and submitted challans, bills putting-his (Shri H. B. Bhise) forged signature thereon without his (Shri H. B. Bhise) consent; that he (Shri Manohar Krishna Madhavi) handed over him cheques received for the said work from NMMC to be deposited in his firm's current bank account No. 100006100720 in DMK Jaoli Sahakari Bank Ltd., Vashi Branch, Navi Mumbai, and subsequently he issued cheques of almost similar amount to Shri Manohar Madhavi's firms viz. M/s M. K. Constructions, M/s M. K. Transport, M/s Aditya Constructions, M/s Aditya Transport and M/s D.A. Transport etc.; that due to his criminal antecedents and political clout and frequent life threats to him, he (Shri H B Bhise) did not lodge any complaints with the Police and NMMC against Shri Manohar Krishna Madhavi; that he was aware that his bill/ challan books were misused by Shri Manohar Krishna Madhavi and the bills so raised to NMMC were forged and inflated; that the bills amounts received against contract was obtained by Shri Manohar Krishna Madhavi on his (Shri H. B. Bhise) firm's name were deposited in his firm M/s. H. B. Bhise company's current account No. 100006100720 in DMK Jaoli Sahakari Bank Ltd., Vashi Branch, Navi Mumbai; that he had received total amount of Rs. 4,81,78,959 from NMMC and had issued cheque for the total amount of Rs. 4,77,91,389 to

¶42

FPA-PMLA-1845/MUM/2017

¶43

Page 7 of 38

¶44

Shri Manohar Krishna Madhavi and his companies; that the balance of Rs. 3,87,570/- purportedly lying in the account of his company M/s. H. B. Bhise and company had already been withdrawn in tranches and paid back to Shri Madhavi as per his requirement; that some amount was used by him for the payment of Income Tax chargeable on the receipt of money from NMMC and therefore, in fact no money was remaining balance on this account either with him or with his company; that Shri Madhavi or Shri Ajay Mhatre used came personally to handover him the cheque received from NMMC to be deposited, in his firms account and subsequently he was directed by Shri Madhavi (either telephonically or personally) to issue cheques of almost similar amount in firms name viz. M/s. M. K. Constructions, M/s. M. K. Transport, M/s. D.A. Transport, M/s. Aditya Transport & M/s. Aditya Constructions which was owned by Shri Manohar Madhavi the works copy and the said cheques were collected personally from him either by Shri Ajay Mhatre or by Shri Manohar Madhavi.

¶45

c) The statement of Shri Manohar Krishna Madhavi was recorded under Section 50 of PMLA, 2002 on 30.09.2014 and 26.09.2016 wherein he inter-alia stated that, since 1982, he was engaged in the business of construction, supply of construction related material, infrastructure etc. and was having firm's viz. M/s. M. K. Construction, M/s. M. K. Transport, M/s. Mukkabika Enterprises; that since last 15 years, he is a Corporator of Navi Mumbai Municipal Corporation; that Shri H. B. Bhise was a Government approved contractor and as such involved in business of Civil Work.; that he (Shri H.B. Bhise) was doing such work under the name and style as M/s. H. B. Bhise and Company; that he procures Municipal Corporation's various work through Tenders

¶46

FPA-PMLA-1845/MUM/2017

¶47

Page 8 of 38

¶48

such as Civil work, Water Pipe Line Installation, encroachment etc.; that during the year 2000, when he was elected as Corporator of Navi Mumbai Municipal Corporation, he (Shri H. B. Bhise) was doing civil work in Airoli, Koparkhairane area, where he was Corporator of Navi Mumbai Municipal Corporation; that Shri Bhise was involved Construction related business, but, he was not having his own equipment required for civil works; that since he (Shri Manohar Krishana Madhavi) was engaged in the business of supply of construction related material, equipment etc., Shri H B Bhise approached him and requested to supply him the various equipment which was required by him (Shri Bhise) from time to time to perform his (Shri Bhise) civil work.; that his firm viz. M/s. M.K. Construction entered into the agreement dated 10.03.2003 with M/s. H.B. Bhise and Company, for arranging and supplying of construction material, dumper, JCB, Poklan, Breaker, Compressor, Gas Cutter etc. by giving two months credit for payment and submitted the copy of the said agreement that his firm viz. M/s. M. K. Construction had supplied the above mentioned civil work related goods and equipment viz. dumper, JCB, Poklan, Breaker, Compressor, Gas Cutter etc.; that the payment received since 2003 from M/s. H. B. Bhise and company was exclusively for supply of above-mentioned material as per agreed terms; that he had only supplied the various equipments to Shri. H B Bhise during the completion of the said work as per their agreement dated 10.03.2003 entered with M/s. H. B. Bhise and Company; that the payment received from M/s. H. B. Bhise and Company were deposited in his firm viz. M/s. M. K. Construction's Account No.023/2549 and Account No.023/3442 of M/s. M. K. Transport maintained with Gopinath Patil Parsik Janta Sahakar Bank Ltd.

¶49

FPA-PMLA-1845/MUM/2017

¶50

Page 9 of 38

¶51

Airoli, Sector-5 Branch; that he didn't have documentary evidences of material/labour supplied to M/s H B Bhise and Company; that utilization of the funds received from M/s H B Bhise and Company was for the payment of Labour charges, Security Charges, Diesel, Maintenance/ Supply of ConstructionEquipments and other machines i.e Pokhalan, Doser, Electrical hamber, JCB, trucks, Dumper, Gas cutter etc; that the invoices, receipts raised against Labour charges, Security Charges, Diesel, Maintenance/Supply of Construction- Equipments and other machines i.e Pokhalan, Doser, Electrical hamber, JCB, trucks, Dumper, Gas cutter were not readily available with him; that while recording transaction of Cash payments in Cash Book, they had not mentioned receiver's name/details.

¶52

d) The statement of Shri Dhanaji Mhatre was recorded on 18.01.2017 under Section 50 (2) and 50 (3) of PMLA, 2002 wherein he inter-alia stated that he was having the following Bank accounts in the name of his firms wherein he was the Proprietor:

¶53

Name of the Company	Name. of the Proprietor	Account No.	Name of the Bank and Branch
M/s Aditya Transport	Dhanaji Kashinath Mhatre	023/3057	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Branch
M/s Aditya Construction	Dhanaji Kashinath Mhatre	023/3562	Gopinath. Patil Parsik Janta Sahakari Bank Ltd. Airoli Branch
M/s D A Transport	Dhanaji Kashinath Mhatre	1674	Mahanagar Co operative Bank Ltd, Airoli Branch.

¶54

FPA-PMLA-1845/MUM/2017

¶55

Page 10 of 38

¶56

In the year 2006-07, his cousin brother Mr. Ajay J Mhatre, opened bank accounts in respect of the firms viz. M/s. Aditya Transport M/s. Aditya Construction and M/s. D A Transport mentioning that he was the Proprietor of those firm and for that purpose he (Shri Ajay Mhatre) had taken his PAN Card, Aadhar Card and Driving License and obtained his signature on the bank papers; that after opening of the bank account, the bank authorities issued him cheque book in respect of each account of his firm for withdrawal of the amount from the said accounts; that thereafter Shri Ajay J Mhatre informed him that he will take care of the bank account of the firms wherein he was shown as the Proprietor and for that purpose he (Shri Ajay J Mhatre) directed him to the handover the cheque book duly signed; that he (Shri Ajay J Mhatre) further informed him that he (Shri Ajay J Mhatre) will fill up the amount and the name of the person to whom the cheque will be issued; that trusting the words of his Cousin brother Shri Ajay Mhatre he handed over the blank cheque book duly signed by him to Shri Ajay Mhatre; that subsequently though the Power of Attorney was executed in favour of Shri Ajay J Mhatre in respect of his firms viz. M/s Aditya Transport, M/s Aditya Construction and M/s D A Transport but he (Shri Ajay J Mhatre) used to obtain the blank cheque books duly signed by him from time to time, that all transactions in respect of his firms including that of bank accounts were looked after by Shri Ajay Mhatre and therefore he did not have not any documents and Bank cheques/passbook in respect of M/s Aditya Construction, M/s Aditya Transport and M/s D A Transport and the same was available with Shri Ajay J Mhatre; that in the bank accounts of his firms viz. M/s Aditya Transport M/s Aditya Construction and M/s DA Transport there was receipt of funds from M/s. H B Bhise and Co. and subsequently the same was withdrawn in cash specifying 'Self, in majority cases.

¶57

FPA-PMLA-1845/MUM/2017

¶58

Page 11 of 38

¶59

e) The statement Shri Ajay Mhatre was recorded under Section 50 of PMLA, 2002 on 08.02.2017 he had opened one proprietorship firm viz. M/s M. K. Construction for doing the small construction work viz. construction of gutter, excavation etc.; that though M/s. M. K. Construction wherein he was the proprietor had shown the income but no documents were prepared in respect of the said transactions; that the said income was not reflected in the Return filed by him (being Proprietor of the firm) with the Income Tax Authorities; that there was no business transaction with his firm viz. M/s. M. K. Construction with Shri Manohar Madhavi and his firms/companies; that being cousin brother, Shri Manohar Madhavi used to help him whenever he was in need of money by giving cash; that for this receipt of cash from Shri Manohar Madhavi, no documents like loan agreement etc. were prepared.

¶60

Shri Ajay Mhatre had claimed that he was the proprietor of M/s. M. K. Construction having current account bearing number CA 1196 of M/s M K Construction with the Mahanagar Co-operative Bank Limited. Therefore on being asked to explain the details of the credit transaction of Rs. 15,28,840/- dated 27.07.2006 reflected in the said account statement and utilization thereof, he stated that he was not recalling the name of the remitter from whom he received the amount of Rs. 15,28,840/- in the account no. CA 1196 of M/s M K Constructions with the Mahanagar Co operative Bank Limited. Further, on being asked about the source documents (invoice, loan agreement, rent agreement etc) with regard to the said transaction of Rs. 15,28,840/-, he stated that no source documents (invoice, loan agreement, rent agreement etc) were prepared. As regards to the utilization of the amount of Rs. 15,28,840/-, he stated that he had withdrawn the cash FPA-PMLA-1845/MUM/2017 Page 12 of 38

¶61

of Rs. 8,00,000/- in three tranches viz. Rs. 500000 on 02/08/2006, Rs. 100000 on 30.08.2006 and Rs. 200000 on 20/10/2006 from the said account and he was not recalling the name of the persons / firms to whom he had given the said money in cash and that no documents with regards to the said transaction were prepared by him.

¶62

Further during recording of the statement, Shri Ajay Mhatre was shown the bank statement of current account number CA-100006100720 of M/s H B Bhise Co. with DMK Jaoli Sahkari Bank Ltd, Vashi Branch and after perusing the same, he confirmed that the payment of Rs. 15,28,840/- dated 27/07/2006 was received from the said account to the current account no. CA 1196 of M/s M K Constructions.

¶63

He further inter-alia stated that the address of his Firm M/s M.K. Construction was Blueheaven Bulding, Sector 5, Shop no. 35, behind Sweta Hotel, Airoli and in the said premises, Shri Manohar Madhvi was also operating his office; that Shri Manohar Madhavi is operating his office as on date.

¶64

On being asked about the account no.023/2549 of M/s M. K. Construction maintained with Gopinath Patil Parsik Janata Sahakari Bank Ltd he stated that M/s M K Construction having account no. 023/2549 with Gopinath Patil Parsik Janata Sahakari Bank Ltd and operative from ,Blueheaven Bulding, Sector 5, Airoli, does not belong to him but belonged to its proprietor Shri Manohar Madhavi.

¶65

He also confirmed the signature of 'Ajay Mhatre' as of his own as mentioned on the power of attorney with Shri Dhanaji Mhatre. As regards to the transactions from the bank accounts of the firms wherein Shri Dhanaji Mhatre was the proprietor, he stated that he was not aware of the transaction including the amount withdrawn in cash as ‘self’ from the bank accounts of the firms wherein Shri Dhanaji FPA-PMLA-1845/MUM/2017 Page 13 of 38

¶66

Mhatre was the proprietor. However, he confirmed that no documents with regards to the transactions including the amount withdrawn in cash as ‘self’ from the bank accounts of the firms wherein Shri Dhanaji Mhatre was the proprietor.

¶67

The appellant is the owner of the following immovable properties and had acquired the following immovable properties from 2003 onwards and the same were attached by the PAO which was confirmed in the impugned order:-

¶68

Sr. No.	Year of acquisition of the property	Description of the Immovable property	Area
1.	2009	Plot No. 110, Sector-25, Talawali Ghansoli,Navi Mumbai	100 meters	sq.
2.	2010	Flat No. 106, First floor, Plot No. 14, New Bombay Safalya Co- operative Housing society Ltd. Near PirSaiyad Sufi Sant Garden, Sector-7, Airoli, Navi Mumbai, Pin-400708	1250 sq (includi Terrace)	. ft. ng
3.	2011	Row House No. 01, Plot No. 30, Friends Co-operative Housing Society, Near Pratik Corner Society, Sector-7, Airoli, Navi Mumbai	1000 ft.(G+2 floor)	sq.
4.	2011	Flat No. 04, Ground Floor, Plot No. 18, Type AL-6, Panchwati Building No. 25, Near Omkareshwar Temple, Sector-5, Airoli,Navi Mumbai	67.48 meters	sq.
5.	2003	Plot No. 35,Near Good Will Residency,Sector-19, Airoli, Navi Mumbai along with the constructionerected thereon.	563.05 meters	sq.

¶69

13. Extracts of documents collected and received during investigations under PMLA, 2002 :

¶70

FPA-PMLA-1845/MUM/2017

¶71

Page 14 of 38

¶72

Sr. No.	^Documents submission details	Description documents	Scrutiny analysis
1.	Document submitted by Shri Manohar Madhavi under his statement dated 30.09.2014	Copy of the agreement executed between M/s. M.K. Constructions and M/s. H.B. Bhise	This is the agreement between the firms of Shri Manohar Madhavi and M/s. H.B. Bhise for the
2	Copy of NMMC. letter dated 16.02.2016	NMMC by letter dated 16.03.2016 submitted the financial year-wise break-up of the amount totalling to Rs. 2,69,12,292/- for which NMMC was cheated	Confirmation by the NMMC authorities with regard to the amount i.e. proceeds of crime for which NMMC by cheated.
3	Documents submitted by Shri Dhanaji Mhatre under his statement dated 18.01.2017	a. Irrevocable Power of Attorney executed between Shri Dhanaji Mhatre Proprietor of M/s. Aditya Construction and Shri Ajay Mhatre. b. Irrevocable Power of Attorney executed between Shri Dhanaji Mhatre Proprietor of M/s. D.A. Transport and Shri Ajay Mhatre.	Scrutiny of the document confirmed that Shri Ajay Mhatre was looked after the transactions of the firms bank account of the firm including the bank accounts of the firms.
4	Documents submitted by Shri Manohar Madhavi	Income Tax Return filed by Shri Manohar Madhavi	Shri Manohar Madhavr is the proprietor of M/s. M. K. Construction operating from ‘Blue Heaven Society Sector-5 Airoli, Navi Mumbai'
5	Documents submitted by Shri Ajay Mhatre	Income Tax Return filed by Shri Ajay Mhatre	Shri Ajay Mhatre had not mentioned any business income other than salary and there was no mention of M/s. M K Construction as his Proprietorship firm.
6.	Document forwarded by the Navi Mumbai Police authorities	Affidavit filed by Shri Ramesh Mohite, Police inspector dated 31.07.2009 before Hon’ble Bombay High Court in Criminal Application 319 of 2009 filed by Shri Manohar Madhavi	The affidavit revealed that the criminal antecedent of Shri Manohar Madhavi.

¶73

FPA-PMLA-1845/MUM/2017

¶74

Page 15 of 38

¶75

7.	Documents submitted by Shri H.B. Bhise under his statement dated 14.03.2018	Affidavit filed Bhise before Court on 30.06	by Shri Hon’ble .2009.	H. B. Trial	The affidavit revealed that Shri Manohar Madhavi had obtained the contact from NMMC and the work of the contact was looked after by Shri Manohar Madhavi through Shri Ajay Mhate.

¶76

14. PMLA Investigation findings

¶77

The Encroachment Department of Navi Mumbai Municipal Corporation (NMMC) has invited tender/ bids to carry out demolition work of unauthorized structures, transportation of labourers and machinery required for demolition purpose and the contract for the same was granted to M/s. H. B. Bhise and Company owned by Shri H. B. Bhise. (ii) M/s. H. B. Bhise & Company submitted the bills to NMMC for the work done by them and amount of Rs. 4,81,78,959/-. was credited from the account of NMMC into the bank account of 100006100720 of M/s. H B Bhise and Company with DMK Jaoli Sahakari Bank Ltd. Vashi Branch, Mumbai

¶78

(ii) During the Audit by the NMMC authorities it was revealed that M/s. H B Bhise 8b Company had cheated NMMC by overcharging the bill, manipulating bills, tempering/overwriting/inflating the bills to the tune of Rs. 2,69,12,200/-during the period from 27.02.2003 to 31.03.2009.

¶79

(iii) In the charge-sheet filed by the police authorities it was alleged that Shri Manohar Krishna Madhavi, being elected Corporator, was not entitled to take the contract of NMMC and hence in order to avoid disqualification from being a Councilor as per the provision laid down under section 10 (1) (f) of the Bombay Provincial Municipal Corporation Act, 1949, he used Shri Hanumant Baurao Bhise's Contractor license

¶80

FPA-PMLA-1845/MUM/2017

¶81

Page 16 of 38

¶82

to obtain the NMMC demolition contract and the amount of Rs. 2,69,12,200/- was obtained by way of criminal activities of fraud and cheating. It was also alleged in the charge-sheet that Shri Manohar Krishna Madhavi, Airoli Corporator of NMMC was the main beneficiary of the amount defrauded in the case. The NMMC authorities by letter dated 16.02.2016 forwarded the financial year- wise break-up of the amount of Rs. 2,69,12,292/- for which NMMC was cheated by M/s. H B Bhise & Company which is enclosed as Annexure-G. Therefore, the amount of Rs. 2,69,12,200/- has been generated out of criminal activities related to scheduled offence and therefore was the ^roceeds of crime' (POC) in terms of the definition of Section 2 (1) (u) of the PMLA, 2002.

¶83

(iv) During the course of investigation, the bank statement of the current account bearing number 100006100720 of M/s. H B Bhise & Company with DMK Jaoli Sahakari Bank Ltd., Vashi Branch, Navi Mumbai along-with the details of the beneficiary from the said account was obtained. The scrutiny of the bank statement 100006100720 of M/s. H B Bhise & Company with DMK Jaoli Sahakari Bank Ltd. Vashi Branch, Mumbai had revealed that out of Rs. 4,81,78,959/- (inclusive of Rs. 2,69,12,200/-) received by M/s. H B Bhise & Company from NMMC, an amount of Rs. 4,77,91,389/- was transferred into the Bank Accounts of M/s. M. K. Constructions, M/s. M, K. Transport, M/s. Aditya Construction, M/s. Aditya Transport and M/s. D. A. Transport which is detailed below:

¶84

Sl. No.	Amount tran NMMC to Bhise's Ac	sferred from count	Amount transferre Manohar Krishna M	d from Bhise's adhavi and hi	account to Shri s associates
01.	Date of credit	Amount	Account Name	Date of credit	Amount in Rupees
02.	06.02.2004	Rs. 7,87,627/-	^{M K Construction}	10.02.2004	Rs. 7,82,627/-
03.	15.03.2004	Rs. 15,80,749/-	^{M K Construction}	17.03.2004	Rs. 15,55,000/-
04.	18.06.2004	Rs. 16,12,166/-	^{M K Construction}	19.06.2004	Rs. 15,96,166/-

¶85

FPA-PMLA-1845/MUM/2017

¶86

Page 17 of 38

¶87

05.	03.09.2004	Rs. 24,55,321/-	M K Construction	04.09.2004	Rs. 24,30.800/-
06.	14.02.2005	Rs. 24,51,800/-	M K Construction	15.02.2005	Rs. 24,27,282/-
07.	29.07.2005	Rs. 38,47,245/-	M K Construction	30.07.2005	Rs. 15,23,600/-
08.	14.10.2005	Rs. 15,14,248/-	M K Construction	17.10.2005	Rs. 4,49,731/-
			M K Transport	17.10.2005	Rs. 10,49373/-
09.	02.02.2006	Rs. 32,22,441/-	M K Construction	06.02.2006	Rs. 10,74,147/-
			M K Transport	04.02.2006	Rs. 10,74,147/-
			D A Transport	04.02.2006	Rs. 10,74,147/-
10.	07.04.2006	Rs. 44,95,641/-	M K Construction	08.04.2006	Rs. 6,95,641/-
			M K Transport	08.04.2006	Rs. 22,50,000/-
			D A Transport	08.04.2006	Rs. 15,50,000/-
11.	26.07.2006	Rs. 45,86,525/-	M K Construction	27,07.2006	Rs. 15,28,840/-
			D A Transport	27.07.2006	Rs. 15,28,840/-
			Aditya Transport	27.07.2006	-Rs. 15,28,840/-
12.	13.06.2007	Rs. 14,02,688/-	D A Transport	16.06.2007	Rs. 13,88,660/-
13.	02.11.2007	Rs. 35,78,602/-	Aditya Construction	05.11.2007	Rs. 35,42,815/-
14.	03.04.2008	Rs. 30,37,432/-	Aditya Construction	04.04.2008	Rs. 30,02,957/-
15.	17.05.2008	Rs. 47,63,191/-	Aditya Construction	22/05/2008	Rs. 47,09,224/-
16.	03.07.2008	Rs. 21,65,340/-	Aditya Construction	07.07.2008	Rs. 21,40,871/-
17.	03.09.2008	Rs. 36,25,969/-	Aditya Construction	05.09.2008	Rs. 35,84,886/-
18.	04.04.2009	Rs. 30,51,974/-	Aditya Construction	08.04.2009	Rs. 30,17,395/-
	Total	Rs. 4,81,78,959/-	Total		Rs. 4,77,91,389/-

¶88

From the above, it was seen that on receipt of payment from NMMC, every time almost full amount was transferred to bank account of business entities of Shri Manohar Krishna Madhavi on the same day or within 2-3 days leaving negligible amount in the account of M/s. H.B. Bhise & Company.

¶89

(v) The bank statement of M/s. M. K. Constructions, M/s. M. K. Transport, M/s. Aditya Construction, M/s. Aditya Transport and M/s. D. A. Transport were also obtained from the respective bank authorities and it was revealed that an amount of Rs. 4,77,91,389/- was transferred into the following Bank Accounts:

¶90

Sr. Name of the Account Bank Name and Branch Amount No Firm Number Transferred (Rs)

¶91

FPA-PMLA-1845/MUM/2017

¶92

Page 18 of 38

¶93

1.	M/s M K Construction	CA/1196	Mahanagar Co-operative Bank Ltd. Airoli Branch.	Rs. 15,28,840/-
2.	M/s. MK Construction	023/2549	Parsik Janta Sahakari Bank	Rs. 1,25,34,994/-
3.	M/s.MK Transport	CA/01811 01000009 85	Punjab and Maharashtra Co operative Bank Ltd. Airoli Branch.	Rs. 66,58,920/-
4.	M/s Aditya Construction	CA/3562	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	Rs. 1,99,98,148/-
5.	M/s Aditya Transport	CA/3057	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	Rs. 15,28,840/-
6.	M/s D A Transport	CA/1674	Mahanagar Co-operative Bank Ltd. Airoli Branch.	Rs. 55,41,647/-
			Total	Rs. 4,77,91,389/-

¶94

(vi) Accordingly, the following bank account statements of M/s. M.K. Constructions, M/s.M.K. Transport, M/s. Aditya Construction, M/s. Aditya Transport and M/s. D.A. Transport were obtained from the respective bank.

¶95

Sr. No.	Name of the Firm	Account Number	Bank Name and Branch	Remark
1.	M/s. M K Construction	CA/1196	Mahanagar Co-operative Bank Ltd. Airoli Branch.	Enclosed as Exhibit-XX
2.	M/s. M K Construction	023/2549	Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	Enclosed as Exhibit-XXI
3.	M/s. M K Transport	CA/0181 loidooo 0985	Punjab and Maharashtra Co-operative Bank Ltd. Airoli Branch.	Enclosed as Exhibit-XXII
4;	M/s. Aditya Construction	CA/3562	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	Enclosed as Exhibit-XXIII
5.	M/s. Aditya Transport	CA/3057	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	Enclosed as Exhibit-XXIV
6.	M/s. D A Transport	CA/1674	Mahanagar Co-operative Bank Ltd. Airoli Branch.	Enclosed as Exhibit-XXV

¶96

(vii) All the above named firms wherein the amount was transferred from M/s. H B Bhise & Company were proprietorship firms which was admitted by Shri Manohar madhavi and Shri Dhanani Mhatre in their statement recorded under Section 50 of the PMLA, 2002.

¶97

FPA-PMLA-1845/MUM/2017

¶98

Page 19 of 38

¶99

Sr. No.	Name of the Firm	Name of the Proprietor Shri
1	M. K. Construction	Manohar Madhavi
2	M. K. Transport	Manohar Madhavi
3	Aditya Construction	Dhanaji Mhatre
4	Aditya Transport	Dhanaji Mhatre
5	D A Transport	Dhanatf Mhatre

¶100

(viii) Further, Shri Ajay Mahtre had claimed that he was the proprietor of M/s. M.K. Construction having bank account CA 1196 of M/s. M.K. Construction with the Mahanagar Co-operative Bank Limited. The scrutiny of the account opening form in respect of the said M/s. M. K. Construction (enclosed with the bank statement as Exhibit-XX) had revealed that the name of the account holder of M/s. M. K.. Construction had mentioned as Shri Ajay Mhatre but the signature on behalf of M/s. M. K. Construction on the declaration form attached to the account opening form of the saidaccount appears to that of Shri Manohar Madhavi. Further the claim of the Shri Ajay Mhatre that he was the Proprietor of M/s. M K Construction was found to be incorrect in view of the following grounds:

¶101

(a) Shri Ajay Mhatre had filed his Income Tax Return as the income from the salary. He had not mentioned any income other than salary and there was no mentioned of M/s. M K Construction of whatsoever.

¶102

(b) Shri Manohar Madhavi in his statement recorded under Section 50 of the PMLA, 2002 had admitted that he is the Proprietor of M/s. M. K. Construction and the claim of Shri Manohar Madhavi was found to be correct as in the Income tax return filed, Shri Manohar Madhavi had declared the income in respect of M/s. M. K. Construction. Also in the bank account CA 1196 the address of M/s. M. K. Construction is declared as Blue Heaven Society Sector-5 Airoli, Navi Mumbaf which is the same

¶103

FPA-PMLA-1845/MUM/2017

¶104

Page 20 of 38

¶105

address declared by Shri Manohar Madhavi in respect of M/s. M. K. Construction owned by him.

¶106

(c) Shri Ajay Mhatre had not produced any documentary evidence in support of his claim that he was operating any Construction or any other firm whatsoever.

¶107

Therefore, in view of the above it can concluded that the amount withdrawn in cash as 'self’ from the account CA 1196 was withdrawn by Shri Manohar Madhavi only being Proprietor of M/s. M. K. Construction and he is the ultimate beneficiary of the amount withdrawn in cash. Also the same modus operandi was adopted by Shri Manohar Madhavi in respect of other firms as discussed in the following para.

¶108

(ix). As regard to the firms wherein Shri Dhanaji Mhatre is shown as the Proprietor it was seen that Shri Dhanaji Mhatre had executed the Power of Attorney executed in favour of Shri Ajay Mhatre by Shri dhanaji to look after, manage and deal with the business activities of the firms of Shri Dhanaji Mhatre including the bank accounts of the firms. Shri Ajay Mhatre had also admitted the execution of the Power of Attorney in his favour in respect of the firms wherein Shri Dhanaji Mhatre was shown as Proprietor. Shri Ajay Mhatre had also admitted that no documents including the amount withdrawn in cash as 'self from the bank accounts of ^the firms wherein Shri Dhanaji Mhatre was the Proprietor was prepared. Also it was seen that the address of D A Transport is shown as Blue Heaven Society Sector-5 Airoli, Navi Mumbai which is the same address declared by Shri Manohar Madhavi in respect of M/s. M. K. Construction owned by him. Further it was seen that the bank account 1674 of M/s. D A Transport (wherein Shri Dhanaji Mhatre was shown as the Proprietor) with Mahanagar Cooperative Bank Ltd, Airoli Branch was opened based on the

¶109

FPA-PMLA-1845/MUM/2017

¶110

Page 21 of 38

¶111

introduction by Shri Ajay Mhatre account holder of M/s. M K Construction holder of Current Account No. 1196, with Mahanagar Cooperative Bank Ltd, Airoli Branch. As discussed in the preceding para that the ultimate beneficial owner of the transactions in the Current Account No. 1196 of M/s. M K Construction with Mahanagar Cooperative Bank Ltd, Airoli Branch was Shri Manohar Madhavi. Therefore, it can be inferred that the bank Accounts of M/s Aditya Construction, Aditya Transport and M/s D A Transport Accounts were used by Shri Manohar Krishna Madhavi through Shri Ajay Mhatre to conceal the trail of the misappropriated funds (POC) towards Shri Manohar Krishna Madhavi. Therefore, Shri Manohar Madhavi is the ultimate beneficial owner of the transactions in respect of the firms of Shri Dhanaji Mhatre viz. M/s. Aditya Construction, M/s. Aditya Transport and M/s. D A Transport.

¶112

(x) Further the Hon’ble Bombay High Court by order dated 03.08.2009 rejected the Anticipatory Bail Application 3159 of 2009 filed by Shri Manohar – Madhavi. It was seen from the order dated 03.08.2009 of the Hon'ble Bombay High Court in respect of the Anticipatory Bail Application 3159 of 2009 and the Criminal Application 359 of 2009 in the Anticipatory Bail Application 3159 of 2009 that the Hon'ble Bombay High Court had taken on record the Affidavit filed by Shri Ramesh Mohite, Police inspector dated 31.07.2009 before Hon'ble Bombay High Court in Criminal Application 319 of 2009 filed by Shri Manohar Madhavi and Affidavit filed by Shri H. B. Bhise before Hon'ble Trial Court on 30.06.2009.

¶113

As per respondent, the proceeds of crime is -

¶114

15.1 The NMMC authorities by letter dated 16.02.2016 forwarded the financial year-wise break-up of the amount of Rs. 2,69,12,292/-

¶115

FPA-PMLA-1845/MUM/2017

¶116

Page 22 of 38

¶117

for which NMMC was cheated by M/s. H B Bhise & Company. Therefore, the amount of Rs. 2,69,12,292/- was generated out of criminal activities related to scheduled offence and therefore was the proceeds of crime' (POC) in terms of the definition of Section 2 (1) (u) of the PMLA, 2002

¶118

15.2 As discussed in the foregoing para out of Rs. 4,81,78,959/(inclusive of Rs. 2,69,12,292/-) received by M/s. H B Bhise and Company from NMMC, an amount of Rs. 4,77,91,389/- was transferred into was transferred into the following Bank Accounts:

¶119

Sr No	Name of the Firm	Account Number	Bank Name and Branch	Amount Transferred (in Rs)
1.	M/sMK Construction	CA/1196	Mahanagar Co-operative Bank Ltd. Airoli Branch.	15,28,840/-
2.	M/sMK Construction	023/2549	Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	1,25,34,994/-
3.	M/sMK Transport	CA/01811 01000009 85	Punjab and Maharashtra Co-operative Bank Ltd. Airoli Branch.	66,58,920/-
4.	M/s Aditya Construction	CA/3562	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	1,99,98,148/-
5.	M/s Aditya Transport	CA/3057	Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch.	15,28,840/-
6.	M/s. D.A.Transport	CA/1674	Mahanagar Co-operative Bank Ltd. Airoli Branch	55,41,647/-
			Total	4,77,91,389/-

¶120

15.3 The analysis of the bank statement of M/s. M.K. Construction bearing number CA/1196 with Mahanagar Co-operative Bank Ltd. Airoli Branch, had revealed that out of Rs. 15,28,840/- received from

¶121

FPA-PMLA-1845/MUM/2017

¶122

Page 23 of 38

¶123

M/s. H B Bhise & Company, an amount of Rs. 8,00,000/- was withdrawn in cash under the head 'SELF' by M/s M K Construction.

¶124

15.4 The analysis of the bank statement of M/s. M. K. Construction bearing number 023/2549 with Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch, had revealed that out of Rs. 1,25,34,994/- received from M/s. H B Bhise & Company, an amount of Rs. 65,97,000/- was withdrawn in cash under the head 'SELF' by the account holder i.e. Shri Manohar Krishna Madhavi.

¶125

15.5 The analysis of the account statement o fM/s. M. K. Transport bearing number CA/018110100000985 with Punjab and Maharashtra Co-operative Bank Ltd. Airoli Branch, had revealed that out of Rs. 66,58,920/- received from M/s. H B Bhise & Company, an amount of Rs. 27,00,000/- was withdrawn in cash under the head 'SELF' by the account holder i.e. Shri Manohar Krishna Madhavi.

¶126

15.6 The analysis of the account statement of M/s. Aditya Construction bearing number CA/3562 with Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch, had revealed that out of an amount of Rs. 1,99,98,148/- received from M/s H B Bhise and Company, an amount of Rs. 1,29,97,800/- was withdrawn in cash under the head 'SELF' by M/s. Aditya Construction.

¶127

15.7 The analysis of the account statement of M/s. Aditya Transport bearing number 023/3057 with Gopinath Patil Parsik Janta Sahakari Bank Ltd. Airoli Sector-5 Branch, had revealed that out of an amount of Rs.15,28,840/-received from M/s H B Bhise & Company, ah amount of Rs. 13,00,000/- was withdrawn in cash under the head 'SELF' by M/s. Aditya Transport.

¶128

FPA-PMLA-1845/MUM/2017

¶129

Page 24 of 38

¶130

15.8 The analysis of the account statement of M/s. D A Transport bearing number CA/1674 with Mahanagar Co-operative Bank Ltd. Airoli Branch, had revealed that out of an amount of Rs. 55,41,647/- received from M/s. H B Bhise & Company, an amount of Rs. 31,00,000/- was withdrawn in cash under the head 'SELF' by M/s. D. A transport.

¶131

15.9 Therefore, out of an amount of Rs. 4,77,91,389/- which was transferred from the account of M/s. H B Bhise & Company in the accounts of the above firms an amount of Rs. 2,74,94,800/- was withdrawn in cash which is summarized as under:

¶132

Sr. No.	Name of the Firm M/s.	Amount received from M/s H B Bhise & Company	Amount withdrawn in cash
1	M K Construction	Rs. 15,28,840/-	Rs. 8,00,000/-
2	M. K. Construction	Rs. 1,25,34,994/-	Rs. 65,97,000/-
3	M. K. Transport	Rs. 66,58,920/-	Rs. 27,00,000/-
4	Aditya Construction	Rs. 1,99,98,148/-	Rs. 1,29,97,800/-
5	Aditya Transport	Rs. 15,28,840/-	Rs. 13,00,000/-
6	D A Transport	Rs. 55,41,647/-	Rs. 31,00,000/-
	Total	Rs. 4,77,91,389/-	Rs. 2,74,94,800/-

¶133

The summarized money trail of the POC is as under

¶134

Money Trail of POC

¶135

From NMMC

¶136

M/s. HB Bhise & Co. A/c No. 10000100720,
Rs. 4,81,78,959/- (includes POC of Rs. 2,69,12,200/-)
M/s. Aditya M /s. D A
M/s. M K M/s. M K
Transport, A/c Transport, A/c
M/s. M K Construction, Transport A/c
No. 3057, No. 1674,
Construction A/c No. No. 1101/985,
Rs. 15,28,840/- Rs. 55,41,647 /-
A/c No. 1196, 023/2549, Rs. 66,58,920/-
Rs. 15,28,840/- Rs. 1,25,34,994/-
M/s. Aditya
Construction,
A/c No. 3562,
Rs. 1,99,98,148
Withdrawn in Withdrawn in Withdrawn in Withdrawn in Cash, Withdrawn in
Cash, Cash, Cash, Rs. 13,00,000/- Cash, Rs.
Rs. 8,00,000/- Rs. 65,97,000/- Rs. 27,00,000/- 31,00,000/-
Withdrawn in Cash,
Rs. 1,29,97,800/-

¶137

FPA-PMLA-1845/MUM/2017

¶138

Page 25 of 38

¶139

As discussed in the foregoing paras, Shri Manohar Madhavi is the ultimate beneficiary of the entire POC. Further the entire POC amount was utilized by Shri Manohar Madhavi and hence the same was not available for attachment. Therefore, being ultimate beneficiary of the POC the following properties acquired/held by Shri Manohar Madhavi were attached under the Provisional Attachment Order 01/2017 dated 27.01.2017 as value of any such property in terms of Section 2(l)(u) of the Act. The Adjudicating Authority (PMLA) by order dated 31.05.2017 confirmed the provisional attachment order 01/2017 dated 27.01.2017 being the properties involved in the money laundering.

¶140

Counsel for the appellant submits that the doctrine of privity of contract clearly provides that a contract cannot confer rights or impose obligations arising under it on any person or agent, except the parties to the contract. The Appellant never had any jural relationship with the NMMC and cannot be held answerable for the act of M/s Bhise & Co., a primary contractor of NMMC. In this regard, reliance is placed on the following judgement:

¶141

(i ) Ircon International Ltd. v. Vinay Heavy Equipments ,

¶142

(2015) 13 SCC 680 wherein the following observations

¶143

have been made by the Apex Court:

¶144

“9. Insofar as the question of primary liability therein is concerned, the law on subcontracts and employer liability is amply clear. In the absence of covenant in the main contract to the contrary, the rules in relation to privity of contract will mean that the jural relationship between the employer and the main contractor on the one hand and between the sub-contractor and the main

¶145

FPA-PMLA-1845/MUM/2017

¶146

Page 26 of 38

¶147

contractor on the other will be quite distinct and separate.”………That subletting was provided for by the main contract, and indeed occurred, has been found by the Arbitrator (in both Arbitrations) and affirmed by the Courts below. This however, is quite distinct from concluding that SIPCOT contractually (in the main agreement) assumed primary liability for the Subcontractor-Respondent's payment claims in respect of agreements made with the Appellant.”

¶148

(ii) In Essar oil limited v. Hindustan shipyard limited, [(2015)

¶149

10 SCC 642], the Hon’ble Supreme Court held as under:

¶150

“27. …In our opinion, the High Court had committed an error by not considering the above facts and by observing that the Appellant will have to take legal action against the ONGC for recovery of the amount payable to it. If one looks at the relationship between the Appellant and the Respondent, it is very clear that the Respondent had given a sub-contract to the Appellant and in the said agreement of sub-contract, the ONGC was not a party and there was no liability on the part of the ONGC to make any payment to the Appellant. Moreover, we could not find any correspondence establishing contractual relationship between the ONGC and the Appellant. In the circumstances, the ONGC cannot be made legally liable to make any payment to the Appellant….

¶151

28. The learned Counsel appearing for the Appellant failed to show any document in the nature of a contract entered into between the Appellant and the ONGC whereby the ONGC had made itself liable to make payment to the Appellant. Even when the payment had been made by the ONGC, it was very clear that the payments were made on behalf of the Respondent as the ONGC was debiting the account of the Respondent by the amount paid to the Appellant. It is important that the payment was made to the Appellant only upon certification of work done by the Respondent. The ONGC had given a contract to the Respondent. The ONGC had never entered into any contract with the Appellant and therefore, it did not rely upon any certification or any statement made by the Appellant in relation to quantum of work done by the Appellant.”

¶152

FPA-PMLA-1845/MUM/2017

¶153

Page 27 of 38

¶154

It is submitted on behalf of appellant that the statements dated 30.09.2014 and 26.09.2016 of the Appellant were recorded in English language. The appellant being a non-metric is neither conversant or affluent with English nor was he allowed to take the assistance of a translator along with him. As such, the said statements recorded under section 50 of PMLA cannot be relied upon.

¶155

It is correct that on 27.02.2003, an Agreement between Navi Municipal Corporation and H.B. Bhise & Co. was executed for the demolition work. H.B. Bhise & Co. got the contract from NMMC for demolition of unauthorized structure and accordingly it requested the appellant for providing the services of JCB, Poclain, labour and materials etc. for the said project.

¶156

On 10.03.2003, almost two week later, an Agreement between H.B. Bhise & Co., a proprietary firm of Mr. H.B. Bhise and M/s. M.K. Construction, a proprietary firm of Mr. M.K. Madhavi was executed to provide the aforesaid services. Para 3(vi) of the said Agreement is reproduced as under:-

¶157

“3. The proprietors of the First Party and Second Party are known to each other since last many years. The First Party even though is involved in above said business, due to lack of funds, is not in a position to own its own vehicles, required for performing the terms of various contracts pertaining to civil work. In the same way, First Party requires from time to time various civil material. The terms of Government contract are usually that unless the contract is completed, or stipulated work is done, the Bills are not raised. However, for completion of such work and that too within the stipulated period many a times, a huge amount is required to be

¶158

FPA-PMLA-1845/MUM/2017

¶159

Page 28 of 38

¶160

invested for purchasing of materials and/or for arranging various such vehicles for execution of contract work. Due to lack of funds, many a times it becomes difficult for the First Party to arrange these things in time bound schedule. The First Party, therefore, approached the Second Party and requested the Second Party that as and when required by the First Party, Second Party should arrange for supply of building material and/or should arrange for the requisite vehicles such as JCBs, Dumpers, Twin-van and other Transport Vehicles etc. by giving two months credit for payment. The First Party assured the Second Party that after assured the Second Party that after release of the bills against the said contracts, it shall immediately pay the amount payable to the Second Party against about stated supply and/or arrangements. The Second Party in view of relation agreed to help out the First Party by making all such supply and/or arrangement on credit. However, with a view to record in writing the agreed terms of said supply and or arrangement, parties are executing this Agreement, the terms and conditions whereof are as under:

¶161

NOW THIS AGREEMENT WITNESSETH AS UNDER: vi) NOTWITHSTANDING anything contained hereinabove, it is specifically agreed by and between the parties herein that by virtue of this agreement, no share or interest in any such contracts which the First Party gets or acquires in its name from Government Agencies, Local Bodies, Corporations, CIDCO, Private Parties etc. is created of the Second Party. This agreement shall also not be construed as a partnership by and between the parties herein pertaining to any such contracts. The Second Party specifically assures the First Party not to claim any such share or interest in any such contracts any time herein after.”

¶162

As para 3(vi) of the Agreement dated 10.03.2003 is non-obstante para stating that no interest or partnership is created between the parties. Since the appellant has no relationship/privity of contract with NMMC and thus not at all responsible to NMMC. On the other hand, it is M/s. H.B. Bhise & Co. which is solely responsible for the same.

¶163

FPA-PMLA-1845/MUM/2017

¶164

Page 29 of 38

¶165

It is also correct that on 16.05.2009, a complaint was lodged against M/s. H.B. Bhise & Co. by Mr. Suresh Ramu Patil, the then Dy. Commissioner (Zone-II), NMMC on the instruction of the then Commissioner of NMMC. Neither the appellant nor his firms namely M/s. M.K. Construction and M/s. M.K. Transport are named in the said complaint which is also evident from the complainant’s statement dated 16.02.2016 recorded under section 50 of PMLA.

¶166

On 23.06.2014, while disposing of the bail application of the ^ ^< Appellant, the learned Judicial Magistrate First Class, Vashi, inter alia, observed that-

¶167

"...neither in the FIR nor in the statements of witnesses u/s Section 161. It is alleged that the forged bills were submitted by the applicant. Moreover, from the Notorized Agreement dated 10/03/2003 it is seen that the accused H.B. Bhise had entered into contract with the applicant M.K. Madhavi who used to supply JCB's, Dumpers etc. to the accused Bhise. That the agreement was executed way back in 2003, which is even prior to the period of the offence i.e. Financial Year 20072008. So prima-facie it appears that the Notorized Agreement that the accused Bhise had entered into contract with applicant Madhavi.

¶168

The payments for the services provided to M/s Bhise & Co. pertain to the period 06.02.2004 to 08.04.2006. The provisions of Prevention of Money-Laundering Act, 2002 (PMLA) came into force only w.e.f. 01.07.2005. The offences u/s 420 & 120B IPC have been inserted as scheduled offences w.e.f. 01.06.2009 and, therefore, the same cannot be given retrospective effect under PMLA being a Statute of penal nature.

¶169

FPA-PMLA-1845/MUM/2017

¶170

Page 30 of 38

¶171

Discussion and finding

¶172

The facts remains that the payments made for the services provided to the M/s KB. Bhise & Co. during 2004 to 2006 were actually received between 06.02.2004 to 08.04.2006 whereas the properties attached by the Respondent were purchased during 2003, 2009, 2010 and 2011. It is stated on behalf of appellant that the properties in question were not purchased during the period of 2004-2006. Hence, the attached property can be construed as 'proceeds of crime' u/s 2(1 )(u) of PMLA. It is stated by the appellant that the source of acquisition of all these properties are duly disclosed to the Income Tax Department and the ITRs for the relevant period were duly furnished to the Respondents during the course of investigation and also placed on record before the Tribunal with prior service to Counsel for ED.

¶173

On 16.02.2016, Statement of the Complainant, Mr. Suresh u Patil, the then, Dy. Commissioner (Zone-II), NMMC, was recorded under section 50 of PMLA wherein he clearly stated about the involvement of M/s H.B. Bhise & Co. and also disclosed the fact that the Appellant has not been named therein. The following extracts of the Complainant's statement dated 16.02.2016 recorded under section 50 of PMLA are reproduced below:

¶174

Q 2 Whether NMMC had filed complaint with Belapur

¶175

police against M/s. H.B. Bhise & Co.?

¶176

A:- As per the direction of the then Commissioner, NMMC I had lodged complaint with Belapur Police Station against M/s. H.B. Bhise & Co. for inflated demolition bill scam on 16.05.2009, accordingly Belapur Police has registered FIR on 17.05.2009.

¶177

FPA-PMLA-1845/MUM/2017

¶178

Page 31 of 38

¶179

Q3 Whether NMMC has allotted demolition work contract to M/s. H.B. Bhise & Co.?

¶180

A:- Yes, NMMC has called for tender for demolition work contract, after due official procedure the said contract granted to Ms. H.B. Bhise & Co. on 27.02.2003.

¶181

Q5 Whether the contract in question exclusively allotted to M/s. H.B. Bhishe & Co.?

¶182

A:- Yes, the contract in question exclusively allotted to M/s. H.B. Bhise & Co. further on being asked there is no provision of sub-contract in such cases.

¶183

Q 6 Whether NMMC has allotted any demolition work

¶184

contract to ManoharK. Madhavi or his firm/company?

¶185

A:- No, NMMC. has not allotted any contract to Manohar K. Madhavi or his firm and company.

¶186

Q 7 Whether the demolition contract allotted to M/s. H.B. Bhise & Co. was actually carried out by Manohar K. Madhavi?

¶187

A:- No, I have no such idea, on being further asked, it is to state that, as per the NMMC's rule/criteria no such contract allotted to any sub-contractor.

¶188

Q 8 Whether the Prop. Mr. Bhise of M/s. H.B. Bhise & Co has submitted the Bills/Challan to NMMC?

¶189

A:- As per the official procedure Contractor has to submit the bills to the Enforcement Deptt.

¶190

Q9 Whether NMMC has filed any complaint/FIR against M.K Madhavi or his firm/company for inflated demolition bill?

¶191

A:- No, NMMC has not filed any complaint against M.K. Madhavi for inflation of demolition bills, as NMMC has not allotted any contract, to M.K Madhavi or his firm and company?

¶192

FPA-PMLA-1845/MUM/2017

¶193

Page 32 of 38

¶194

In above statement, the Complainant deposed that NMMC has not allotted any demolition work contract to the Appellant or his firms but only to M/s H.B. Bhise & Co. alone. It is further clarified that NMMC has not even filed any complaint against the Appellant for inflation of demolition bills.

¶195

26. Role of the accused person as per respondent in the offence of money laundering:

¶196

The Complainant submits that Shri Manohar Krishna Madhavi, being elected Corporator, was not entitled to take the contract for carrying out demolition work of unauthorized structures from the NMMC. Therefore in order to avoid disqualification from being a Councilor, Shri Manohar Madhavi used Shri Hanumant Baurao Bhise's Contractor license to obtain the NMMC demolition contract. The NMMC authorities on submission of bills disbursed the amount in the bank accounts of M/s. H. B. Bhise & Co. After receipt of the amount in the bank accounts M/s. H B Bhise 8b Co., Shri H.B. Bhise, under the instructions of Shri Manohar Madhavi transferred the , amount either in the bank accounts of the firms owned controlled by Shri Manohar Madhavi or in the firms controlled by Shri Manohar Madhavi through Shri Ajay Mhatre. After receipt of the POC in the bank accounts of the firms owned controlled by Shri Manohar Madhavi, the entire POC was withdrawn in cash as 'Self from the bank accounts of the firms owned/ controlled by Shri Manohar Madhavi. Therefore Shri Manohar Madhavi is the ultimate beneficiary of the entire POC. Shri Manohar Madhavi had projected the withdrawl of the said amount as untainted by projecting its utilization in the business activity of the firms owned/controlled by Shri Manohar Madhavi, but no documentary evidence such as Vouchers for payment in cash to Labourer, Invoices for the supply of the Material/ Machine etc. was submitted by Shri Manohar Madhavi. In fact Shri

¶197

FPA-PMLA-1845/MUM/2017

¶198

Page 33 of 38

¶199

Manohar Madhavi intentionally withdrawn the entire POC in cash to disguise the further trail of POC and he is the ultimate beneficiary of the entire POC. Therefore Shri Manohar Madhavi is involved in the activity of the concealment, possession, acquisition related to proceeds of crime and projected the same as untainted property, thereby had committed the offence of money laundering as defined under Section 3 of the PMLA,2002 which is punishable under Section 4 of the PMLA, 2002.

¶200

The Complainant submits that Shri Manohar Krishna Madhavi was ultimate beneficiary of the entire POC by way of withdrawal of cash owned and controlled by Shri Manohar Madhavi. Further in order to conceal the tainted origin of the POC, Shri Ajay Mhatre had knowingly assisted Shri Manohar Madhavi by projected himself as the Proprietor of M/s. M. K. Construction (which is Proprietorship firm of Shri Manohar Madhavi). Also in order to conceal the tainted origin of the POC, Shri Ajay Mhatre had knowingly assisted Shri Manohar Madhavi by:

¶201

(i) opening the bank accounts in the name of the firms viz. M/s. Aditya Construction, M/s. Aditya Transport and M/s. D. A. Transport specifying that those firms were proprietorship of his brother Shri Dhanaji Mhatre said firms;

¶202

(ii) obtaining the Power of Attorney from his brother Shri Dhanaji Mhatre to operate the firms including its bank accounts and withdrew the POC in cash from the bank accounts of the above mentioned firms projected as untainted.

¶203

Therefore, this act of Shri Ajay Mhatre Madhavi is involved in assisting Shri Manohar Madhavi in respect of the concealment,

¶204

FPA-PMLA-1845/MUM/2017

¶205

Page 34 of 38

¶206

possession, acquisition related to proceeds of crime and projected the same as untainted property, thereby had committed the offence of money laundering as defined under Section 3 of the PMLA, 2002, which is punishable under Section 4 of the PMLA, 2002.

¶207

In the statement dated 16.02.2015, Suresh Ramu Patil, Deputy Commissioner, Navi Mumbai Municipal Corporation (NMMC), it was stated that NMMC has not allotted any demolition work contract to the Appellant or his firm and the contract in question was exclusively allotted to M/s H. B. Bhise & Co. It was further clarified that NMMC has not even filed any complaint against the appellant for inflation of bills etc. since no such contract was allotted to the appellant. However, in his statement, he has also mentioned about the role of the appellant.

¶208

It is also a matter of record that as per complaint, the contractor has cheated the NMMC to the tune of Rs.2,69,12,282/- during the period from 27.03.2003 to 31.3.2009. It has also come on record that the appellant who was dealing with the contractor has purchased the property from the year 2003 onwards till 2011. There may not be any conclusive evidence produced by the respondent as to whether the said properties were purchased from the tainted amount received by the appellant from the contractor, but the fact of the matter is that in PMLA investigation, the role of the appellant has been discussed. The same are reproduced herebelow:

¶209

“The Complainant submits that Shri Manohar Krishna Madhavi was ultimate beneficiary of the entire POC by way of withdrawal of cash owned and controlled by Shri Manohar Madhavi. Further in order to conceal the tainted origin of the POC, Shri Ajay Mhatre had knowingly assisted Shri Manohar Madhavi by projected himself as the Proprietor of M/s. M. K. Construction (which is Proprietorship firm of Shri Manohar Madhavi). Also in order to conceal the tainted origin of the POC, Shri Ajay Mhatre had knowingly assisted Shri Manohar

¶210

FPA-PMLA-1845/MUM/2017

Page 35 of 38

Madhavi by:

After having considering the entire gamut of the matter, this Tribunal is of the view that in view of material placed on record, it is not fit case to release the attachment though there has been an inordinate delay of 7 years between the filing of the FIR and passing of the Provisional Attachment Order. Their balance is to be strike in light of facts involved in the matter in view of non-action by the ED against M/s. H.B. Bhise and Company.

¶216

In the present case is that the specific complaint of NMMC is against M/s. H.B. Bhise and Company, who had submitted the forged bill. The appellant firm has received the amount from H.B. Bhise and Company who has allegedly committed the fraud and other schedule offence, however, no action was taken by the ED against the said company. The ED has not attached the property of M/s. H.B. Bhise and Company, nor any prosecution complaint has been filed. When this situation is confronted to the learned counsel and IO appearing on behalf of respondent, there was very vague answer. Firstly, it was admitted that no action under PMLA was taken against him. Secondly, it was mentioned that he may become approver. One is failed to understand that as per complaint, the FIR was registered and thereafter, on the basis of averment made in the complaint of NMMC, the charge-

¶217

FPA-PMLA-1845/MUM/2017

¶218

Page 36 of 38

¶219

sheet was filed against him also, how he can become approver as per allegation made against him. Only ED is aware why no action was taken if any case is made out on the basis of complaint and charge-sheet.

¶220

As far as the role of appellant is concerned, no doubt, the PMLA investigation is also against the appellant. However, the said allegations are to be established in trial of schedule offence and PMLA charge-sheet. All the allegations of both authorities are to be tested as per law. It is a matter of fact that no valid explanation is given by the respondent, why the provisional attachment was passed after the gap of seven years and at the same time, the benefit is given to M/s. H.B. Bhise and Company by not attaching its property and why no prosecution complaint has been filed as per allegations available on record.

¶221

Considering the overall facts and circumstances of the case, I am of the view that at this stage, no case is made out to release the property although there are certain issues raised by the appellant have some force.

¶222

Under these circumstances, the appeal is disposed of by modifying the impugned order. It is directed that as far as attachment of properties are concerned, the same shall continue, however, the respondent is restrained to take the physical possession.

¶223

It is also clarified that no opinion is expressed on the basis of allegations made in the FIR or in the charge-sheet under PMLA. Both the complaints shall be decided as per its own merit and without any influence of this order.

¶224

FPA-PMLA-1845/MUM/2017

¶225

Page 37 of 38

¶226