Allowed

FPA-PMLA-979/LKW/2015 of Vicky Batra v/s The Joint Director, Directorate of Enforcement, Lucknow

ATFP24 Apr 2019FPA-PMLA-979/LKW/2015

Case brief

AI extract

What is this about?

The Tribunal allowed the appellant Waps, Orem, and Kspa. The bench set aside the Adjudicating Authority's order attaching property under PMLA Section 5(1) by relying on Supreme Court precedent that attachment proceedings cannot continue if the accused dies before conviction, as attachment requires a valid conviction or surviving charge against the person.

What did the court decide?

The impugned order of attachment was set aside, the provisional attachment order was quashed, and the attachment of the flat was lifted.

FPA-PMLA-979/LKW/2015 of Vicky Batra v/s The Joint Director… — Money Laundering | 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: 24^th April, 2019

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MP-PMLA-1834/LKW/2015 (Stay) &

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FPA-PMLA-979/LKW/2015

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Vicky Batra

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… Appellant /applicant

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Versus

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The Joint Director, Directorate of Enforcement, Lucknow

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… Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant	:	Shri Rajiv Mohan, Advocate Shri Abhishek Srivastav, Advocate
For the Respondent	:	Shri Vikas Garg, Advocate
CORAM
JUSTICE MANMOHAN SINGH	:	CHAIRMAN
SHRI G.C. MISHRA	:	MEMBER

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JUDGEMENT

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FPA-PMLA-979/LKW/2015 & MP-PMLA-1834/LKW/2015 (Stay)

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In the present appeal, the appellant has challenged both order dated 15.1.2015 (PAO) and its confirmation order. The Provisional Attachment Order in the present matter was passed by the Adjudicating Authority on 15.01.2015 under Section 5(1) of the Prevention of Money Laundering Act, 2002.

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FPA-PMLA-979/LKW/2015

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Page 1 of 10

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The same was confirmed by the impugned order under the instant appeal is dated 01.06.2015 passed by the Adjudicating Authority.

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The Appellant is an Engineer by Profession (Bachelor of Engineering) and on the date of filing of an appeal, he was Specialist in an MNC of repute M/s S.T. Micro electronics Pvt. Ltd. on an annual package of Rs. 22,92,220/- (Rupees Twenty Two Lakhs Ninety Two Thousand Two Hundred and Twenty Only).

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It is stated by the appellant that in the year 2004, the Appellant started his regular employment career as an Associate Design Engineer in M/s S.T. Microelectronics Pvt. Ltd. on an annual package of Rs. 4,35,895/- and the appellant has also been investing in various schemes from his savings and he is a regular income tax payee.

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Admitted fact is that Applicant is not an accused for any of predicate offence. However, his property bearing number no. A-226 ATS Township Noida i.e. Flat No. 31401 which has been allegedly purchased from his savings at ATS Townships Private Limited, at Noida was attached.

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In the impugned order the said property was not ordered to be released to him despite making payment of 60,90,000/- out of 68,57,0500 till 30.06.2010 to the builder as the Authorities under the Prevention of Money Laundering Act vide letter dated 18.02.2015, instructed ATS Township Private Limited at Noida. The builder has not given the possession of the said flat to the Applicant (despite making major part of payment by him) as the respondent has issued communication to the builder.

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FPA-PMLA-979/LKW/2015

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Page 2 of 10

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It is the case of the appellant that the property purchased by the Appellant does not fall in the category of “Proceed of Crime” as defined under Section 2(1)(u) of the PMLA Act and from any outcome of criminal activity under any offence.

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As per the charge sheet filed in case R.C. No. 1(A)/2012/CBI/SCB/LKO the transaction investigated by the CBI were of the period of 2009 to 2010.

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8.1 The father of the appellant Late Shri G.K. Batra was the Managing Director of M/s Shreeton India Ltd, a company under the U.P. Government.

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8.2 It is alleged in the charge sheet filed by C.B.I on 15.07.2009, the purchase order for 851 pieces of computers and peripherals was put to M/s Shreeton India Ltd. for a total amount of rupees 9,94,19,389/- and out of this amount an advance of rupees 8,11,27,000/- was released to Shreeton India Ltd.

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8.3 It is alleged that three companies M/s Radhey Shyam Enterprises, M/s Axis Marketing Pvt. Ltd and M/s HCL Pvt. Ltd. Bidded for the supply of the computer and finally on 08.08.2009 order was placed to M/s HCL being the lowest bidder.

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8.4 It is also alleged that M/s HCL informed that M/s Radhey Shyam Enterprises and M/s Axis Marketing Pvt. Ltd. will be the partner of 50% each with M/s HCL.

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FPA-PMLA-979/LKW/2015

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Page 3 of 10

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8.5 All the transactions of making payment and supply of computers and peripherals were investigated and the outcome of the investigation revealed that an amount of Rs. 2.94 crores as paid in excess of the value of the computers and peripherals supplied.

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On conclusion of investigation, charge sheet was filed by CBI for the offences under Section 120 B/409/420 of the Indian Penal Code and 13(1)(d) and 13(2) of the PC Act on 04.04.2012 against G.K. Batra, Neeraj Upadhyay and Virender Goyal. The said fact has not been disputed on behalf of the appellant.

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The allegation against the Appellant is that he was the recipient of some money by way of transfer in his bank account which was part of the alleged embezzled funds by his father. The Appellant had used this money to acquire a flat No. 03141 ATS Township Pvt. Ltd., Sector no. 104, Noida, therefore, flat is being alleged to be acquired out of proceeds of crime and is ordered to be attached by the Adjudicating Authority vide order dated 01.06.2015.

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On behalf of appellant, it is denied the stand of the respondent. It is alleged that the property bearing number 43.5 Ashok Nagar was purchased in the year 2002 and at the time of sale of two floors of the said property the valuation of both these floors as per Government Approved Valuer was about Rs. 45,20,000/- and Rs. 44,30,000/-. The above sale transaction has been confirmed by the purchasers of the property and the consideration amount received for the Sale of Second and Third Floor of the above property was invested in a flat No. 03141 ATS Township Pvt.

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FPA-PMLA-979/LKW/2015

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Page 4 of 10

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Ltd., Sector no. 104, Noida for approximately Rs. 65.90 lakhs in the year 2010. Copies of all relevant documents are filed.

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It is not the case of respondent that the Appellant was not the owner of building at 43/5, Ashok Nagar, New Delhi. The second floor of the said building was sold to Shri Virendra Goel, Proprietor M/s Axis Marketing for a consideration amount of Rs. 40 lakhs. The amount of consideration was received in the bank account. The sale was affected by way of registered Sale Deed No. 15787 dated 22.09.2009.

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Similarly, the third floor of the said building was sold to Shri Neeraj Upadhyay, Proprietor M/s Radhey Shyam Enterprises for a consideration amount of Rs. 48 lakhs. The amount of consideration was received in the bank account. The sale was affected by way of registered Sale Deed No. 15669 dated 17.09.2009.

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The Adjudicating Authority under the PMLA Act while passing the impugned order heavily relied upon the statements recorded by CBI under Section 164 of the Cr. P.C. of both Virender Goyal and Neeraj Upadhyay. The statements recorded under Section 164 Cr.PC cannot be read as these do not qualify the criteria of Section 164 in light of the judgment passed by the Hon‟ble Supreme Court India Jwinglee Ariel V. State of Madhya Pradesh AIR 1954 SC 15 as these was not corroborated evidence to show that these properties were not sold by the appellant. Both the above named persons did not support of the case of E.D when examined under Section 50 PMLA. He father of the Appellant i.e. Shri G.K. Batra was

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FPA-PMLA-979/LKW/2015

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Page 5 of 10

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released on bail vide order dated 25.05.2012. During the proceedings before framing of the charge Shri G.K. Batra expired on 16.08.2012.

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The appellant is son of Late Shri G.K. Batra. It is alleged that G.K. Batra took commission of Rs. 88 lakhs out of 2.94 crores through cheques which were deposited them in the account of the appellant. The case of the appellant is that the said amount of Rupees 88 Lakhs is the amount which was the sale proceeds from the sale two floors of property bearing 43/5 Ashok Nagar and the cheques received thereof are duly reflected in the Sale Deeds Registered at the office of Sub Registrar which are executed in favour of Virender Goyal and Neeraj Upadhyay. There is nothing available on record to show that this amount of Rs. 88 lakhs is part of commission of 2.94 crore benefit as alleged by the CBI. It was mere allegation against the appellant. It is not the case of the respondent that two properties were not sold. As a matter of fact, sale is duly registered. The payment was received by cheques. The details are mentioned in the sale deed.

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It is undisputed fact that Shri G.K. Batra who was charge sheeted expired on 16.08.2012. He was the father of the appellant. Now the issue is to whether any proceedings against the appellant survived once his father was not convicted under any offence. It is not denied by the respondent that his father expired before competition of trial and final order. He was not convicted accused when expired.

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Similar issue has been decided by the Hon‟ble Supreme Court in the matter of U. Subhadramma & Ors. Vs. State of Andhra Pradesh, Crl. FPA-PMLA-979/LKW/2015

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Page 6 of 10

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Appeal No. 1596 of 2011 decided on July 4, 2016. The paras from 6 to 12 reads as under:

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The Learned Senior counsel for the appellants submitted that the scheme of the Criminal Law Amendment Ordinance, 1944 does not permit the District Judge to confirm any attachment of the property though the criminal court has not validly convicted and found the accused or the person whose property is sought to be attached as guilty. The Learned counsel submitted that in this case, it was not possible for the criminal court to have convicted or found Ramachandraiah guilty since he expired in 1991 during the trial. In fact, according to the appellants, no application for attachment could have been made under these circumstances. The Learned counsel for the respondents strongly opposed the prayer and submitted that the appellants may not to be allowed to retain property obtained by ill-gotten means and it was legal for the learned District Judge to have passed the order of attachment in respect of such property which was admittedly the subject matter of the charge-sheet. It has, therefore, become necessary for us to examine whether the property of a person which was merely case of an offence of misappropriation but who died during the pendency of the criminal trial can be attached in the hands of his legal representatives under the provisions of Criminal Law Amendment Ordinance, 1944.

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7. As far as making the application for attachment, we find that the law authorises the State Government to make such an application even though proceedings against the person may not yet have resulted in a conviction. This is by virtue of Section 3[2] which empowers the Government to authorise making of such an application to the District Judge where it has reason to believe that any person has committed any scheduled offence. But, however Section 3 requires the Government to make such an application to the District Judge within the local limits of whose jurisdiction the said person ordinarily resides or carries on business; thus clearly requiring the existence of such a person. It excludes the possibility of proceedings against a dead person. Section 4 of the act empowers the District Judge to pass an order of ad interim attachment on prima facie grounds for believing that the person in respect of whom the application is made has committed any scheduled offence or has procured any money or property thereby. Sub- Section (2) requires the District Judge to issue a notice, presumably at the address where the person ordinarily resides or carries on business (vide Section 3) along with copies of the order and the application etc. Section 5 provides for an

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FPA-PMLA-979/LKW/2015

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Page 7 of 10

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investigation of objections to the attachment who have been served with notices under Section 4. Sub-Section (3) empowers the District Judge to pass an order making the ad interim order of attachment absolute or varying it by releasing a portion of the property or withdrawing the order.

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8. Section 13 requires the Government to inform the District Judge about the status of the criminal proceedings. It requires the Government to furnish the District Judge with a copy of the judgment or order of the trial court and with copies of the judgment or orders, if any, of the appellate or revisional court thereon. Sub-section 2 mandates that the District Judge shall forthwith withdraw any orders of attachment of property made in connection with the offence if (a) cognizance of alleged scheduled offence has not been taken or (b) where the final judgment and orders of the criminal court is one of acquittal. While, this clause is clear that the orders of attachment must be withdrawn if cognizance of the offence has not been taken or there has been an acquittal; the clause is silent as to the effect of abatement of prosecution. It is due to this silence that it is contended by the State Government in this case that the orders of attachment could not only have been continued but could also have been confirmed. It is not possible for us to accept the submission. If the law requires that the orders of attachment should be withdrawn upon acquittal it stands to reason that such orders must be withdrawn when the prosecution abates or cannot result in a conviction due to the death of the accused, whose property is attached. Concept of abatement of a trial could be subsumed in the clause where the final judgment and order of the Criminal Court is one of acquittal. In this context, the presumption of innocence of an accused till he is convicted must be borne in mind and there is no reason to consider this presumption to have vaporized upon the death of an accused. It may be noted that this Court has time and again reiterated the presumption of innocence of an accused till he is convicted.

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9. As far as the circumstances of this case are concerned, we find that there has been a gross miscarriage of justice at several steps. In the first place, the finding of the trial court that Ramachandraiah was alone responsible for the offences is completely vitiated as null and void since Ramachandraiah had admittedly died on the date this finding was rendered. It is too well settled that a prosecution cannot continue against a dead person. A fortiori a criminal court cannot continue proceedings against a dead person and find him guilty. Such proceedings and the findings are contrary to the very foundation of criminal jurisprudence. In such a case the accused does not

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FPA-PMLA-979/LKW/2015

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Page 8 of 10

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exist and cannot be convicted. Consequently, the learned District Judge committed a gross error of law in acting upon such a finding and treating Ramachandraiah as guilty of such offences while making the order of attachment and while confirming the said order of attachment of properties.

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10. In such circumstance, the courts below erred in recording the finding that Appellant No.1 had committed the offence as alleged by the prosecution. Further, finding recorded by the learned Single Judge of the High Court that Appellant No.1 alone had committed the offence and nor Appellant No.2, must be taken to have misappropriated the said amount is perverse:

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“A criminal trial is not like a fairy tale wherein one is free to give flight to one’s imagination and phantasy. It concerns itself with the question as to whether the accused arraigned at the trial is guilty of the crime with which he is charged. In arriving at the conclusion about the guilt of the accused charged with the commission of a crime, the court has to judge the evidence by the yardstick of probabilities, its intrinsic worthy and the animus of witness.

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11. The facts involved herein did not warrant presumption of commission of offence by Appellant No.1 and thus the findings recorded by the courts below are not tenable.

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12. In fact, we find that the learned District Judge could not have proceeded with the attachment proceedings at all since the attachment proceedings were initiated by the State against Ramachandraiah under Section 3 of the Criminal Law Amendment Ordinance, 1944, who was actually dead. Section 3 contemplates that such an application must be made to the District Judge within the local limits of whose jurisdiction the said person ordinarily resides or carries on business, in respect of property which the State Government believes the said person to have procured by means of the offences. It is incomprehensible, therefore, that such an application could have been made in regard to a dead person who obviously cannot be said to be ordinarily resident or carrying on business anywhere. There is no legal provision which enables continuance of prosecution upon death of the accused. We must record that the proceedings and the decisions of the courts below are disturbing, to say the least. In the first place, though the accused had died, the trial court proceeded with the trial and recorded a conviction two years after his death. Then, this null and void conviction was used as a basis for making an attachment of his properties

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FPA-PMLA-979/LKW/2015

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Page 9 of 10

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before the Sessions Court. Astonishingly, all applications succeeded, the attachment was made absolute and over and above all, the High Court upheld the attachment.

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In the present case, there was no FIR against the appellant. No charge-sheet was filed against the appellant. He was not charged. He had purchased the property after selling two properties owned by him. The Supreme Court judgment is directly on the issue in hand.

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In the light of above, the impugned order passed by the Adjudicating Authority is set-aside by allowing the appeal. The provisional attachment order is also quashed.

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