Dismissed

FPA-PMLA-2052/CHD/2017 of Brigadier (Retd.) M.S. Dullat v. The Deputy Director, Directorate of Enforcement, Chandigarh

ATFP12 Sept 2024FPA-PMLA-2052/CHD/2017

Case brief

AI extract

What is this about?

Appeal by accused persons challenging an interim order allowing the ED to retain/seize documents, digital records, bank accounts, and properties. The Tribunal dismissed the appeals as the Adjudicating Authority’s order was a necessary interim step pending trial and found no illegality, though the appellants are entitled to copies of relied-upon documents.

What did the court decide?

The appeals were dismissed; appellants are entitled to copies of relied-upon documents and may apply for release of un-relied documents.

FPA-PMLA-2052/CHD/2017 of Brigadier (Retd.) M.S. Dullat Vs. The… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. FPA-PMLA-2049/CHD/2017 Ashu Mehra … Appellant 2. FPA-PMLA-2050/CHD/2017 Mrs. Ranjit Kaur … Appellant 3. FPA-PMLA-2052/CHD/2017 Brigadier (Retd.) M.S. Dullat … Appellant 4. FPA-PMLA-2053/CHD/2017 Mrs. Tina Yashdeep Mehra … Appellant 5. FPA-PMLA-117/CHD/2024 M/s Global Trade Matrix Pvt. Ltd. (Through its Director Ashu Mehra) … Appellant 6. FPA-PMLA-118/CHD/2024 M/s Mehra & Sons HUF (Through its Karta Ashu Mehra)… Appellant Versus The Deputy Director, Directorate of Enforcement, Chandigarh … Respondent Advocates/Authorized Representatives who appeared For the Appellant : Mr. S.K. Nanda, Adv. Mr. Shivam Sharma, Adv. Mr. Aman Agarwal, Adv. Ms. Vanshika, Adv. For the Respondent : Mr. Arjun Sawhney, Adv. Mr. Rohan Bhambri, Adv. CORAM SHRI G.C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER FINAL ORDER 12.09.2024

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Dictated by: Rajesh Malhotra

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Present appeals u/s 26 of the Prevention of Money Laundering

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Act, 2002, is filed by the appellants against the impugned order dated 12.09.2017 passed by the Adjudicating Authority in Original Application No. 93/2017, whereby it allowed the respondent ED to retain/seize/freeze the documents, digital records, bank accounts

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FPA-PMLA-2049, 2050, 2052 & 2053/CHD/2017, 117 &119/CHD/2024Ashu Mehra, Mrs. Ranjit Kaur, Brigadier (Retd.) Sh. M.S. Dullat, Mrs. Tina Yashdeep Mehra,M/s Global Trade Matrix Pvt. Ltd. & M/s Mehra & Sons HUF v. E.D., Chandigarh

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etc., seized from the premises of various persons including the present appellant, during the search conducted on 07.04.2017.

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As per the facts of the case, on the basis of a complaint made

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by the Indian Overseas Bank, CBI, BS & FC, New Delhi had registered an FIR No. RCBD1/2016/E/0007 dated 08.08.2016 under Section 120B r/w 420 of IPC and Section 13(2) r/w 13(1) (d) of PC Act, 1988 against the accused Ashu Mehra, Mr. Nitish Negi, Mr. Gaurav Bhatia (all three Assistant Managers, Indian Overseas

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Bank, Chandigarh), Dinesh Kumar (Proprietor, M/s. Vision Procon), Mr. Aman Preet Singh Sodhi (Proprietor, M/s. Heights International), M/s. Sai Bhakti Impex Pvt. Ltd., Mr. Gaurav Kirpal, Mr. Aman Kirpal, M/s. Colour Wave (H K) Ltd. Hongkong, Brigadier (Retd.) M.S. Dullat and other unknown public servants & private persons on the following allegations:

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i) The accused Ashu Mehra had been working as an Assistant Manager, Forex Department, Indian Overseas Bank, Chandigarh Main Branch since 2010 and was also having the authority to make and check all swift messages of the Bank. Besides the accused Ashu Mehra, two more officers, namely, accused Nitish Negi and Gaurav Bhatia have been named by the bank in their complaint letter to have been working as Assistant Managers in the Bank and further informed to be also handling forex operations & were having the authority to make & check all swift messages of the Bank branch.

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ii) The accused Ashu Mehra in collusion with certain customers of the Bank, namely M/s. Vision Procon (through its Proprietor Mr. Dinesh Kumar, Accused), M/s. Heights International (through its Proprietor Mr.

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Amanpreet Singh Sodhi, Accused), and M/s. Saibhakti Impex Pvt. Ltd., Accused (through its Directors Mr. Aman Kirpal- Accused and Mr. Gaurav Kirpal- Accused) have been alleged by IOB to have caused loss to the bank to the tune of USD 47.86 Million equivalent to approximate Indian Rs. 321 crores (Calculated @ Rs. 67 per USD) as on date.

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iii) IOB has further informed that accused company M/s. Colour Wave (H K) Ltd., having office address at G/F, CAR, PO, Commercial Building, 18-20, Lyndhurst Terrace Central Hong Kong (Also at 4/E, Flat D-E, Wah Factory Building, 50-60, Wong Chuk Hang Road, Aberdeen) is the beneficiary of all the fraudulent swift messages sent.

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iv) Further, accused Brigadier (Retd.) M.S. Dullat, is the father in-law of Accused No.1 and is Director in M/s Vyapar Agrotech Ltd. in which the Accused No. 5 Mr. Amanpreet Singh Sodhi is another Director.

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v) The Indian Overseas Bank (IOB in short) has informed that the Accused No.1 (Ashu Mehra), the master mind, was indulging in issuing Letters of Comfort (LOC)/ Letters of Undertaking (LOUs) through swift messages fraudulently in collusion with others to cheat the Bank. Further, the overseas banks had provided Buyers Credit to their customers on the basis of the LOUs issued by the IOB, Chandigarh and hence the said overseas banks were demanding IOB to remit the said amount to them. It has been further informed by the IOB that on verification of their records, it was found that no such request for LOU to the Buyers Credit was authorized by the Branch Manager and LOUs were issued fraudulently through swift messages by Ashu Mehra and other bank staff (Accused Nos. 2 & 3) by abusing their official position.

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vi) Ashu Mehra of IOB, in collusion with other staff members, by indulging in aforesaid modus-operandi, had created liability against the bank to the tune of Rs. 321 crores (calculated at the exchange rate of Rs.67/per USD) which was due for payment between 01.07.2016 to 28.01.2017 that further it was alleged that there was no movement of goods & services or underlying commercial transactions behind these fraudulent transfers of funds.

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vii) On the basis of the fraudulent LOUs issued by Sh. Ashu Mehra, the foreign banks have credited the accounts of the beneficiary i.e. M/s. Colour Wave (HK) Ltd. The bank had also informed that from their preliminary investigations, it was found that the accused Mr. Amanpreet Singh Sodhi, Proprietor of M/s. Heights International is also Director in M/s. Colour Wave (HK) Ltd., Hong Kong, which is beneficiary for all the buyers credit Further, Mr. Dinesh Kumar, Proprietor of M/s. Vision Procon, had been an authorized signatory for the operations in the account of M/s. Heights International and there are also inter-account transactions between these three entities.

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Sections 420 & 120B of the Indian Penal Code, 1860 and Section 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988 are the Scheduled Offences (relating to cheating, criminal conspiracy and criminal misconduct/abuse of official position) under Part A, paragraph 1 & 8 respectively to the Schedule to the Prevention of Money Laundering Act, 2002 as also defined under Section 2 (1) (y) of the said Act. This being a case of suspected offence of Money Laundering, a case was registered by the Directorate of Enforcement, Chandigarh Zonal Office vide ECIR

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dated 19.09.2016. A copy of the ECIR No. CDZO/06/2016 dated 19.09.2016 against Ashu Mehra and other co-accused persons.

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The complainant bank, IOB, further informed that on verification of swift messages, it was observed that five fraudulent swift messages were also sent earlier in February and March, 2015 as LOUs, but on due date or on demand from the Overseas Bank, the due amount equivalent to USD 6.345 Million was paid by debiting account of M/s. Heights International and amount equivalent to USD 9.879 Million was paid by debiting account of M/s. Vision Procon. Therefore, total amount of USD 16.224 Million (Rs.108.70 crores) was paid from the accounts of M/s. Heights International and M/s. Vision Procon. In view of the above, this amount was not due for payment, the amounts having been paid before due date. The investigation revealed that in a similar fashion Buyers Credit was sanctioned on the basis of illegally issued swift messages by accused Ashu Mehra since 2012. It was noticed that the payments in respect of all the Buyers Credit, except for those mentioned in Table No.1, were made back to the banks in time before due date. The investigation has revealed that Ashu Mehra by way of issuance of illegal swift messages, vide which Buyers Credit facilities were granted to the Indian importers and payments thereof, were made to M/s. Colour Wave (H K) Ltd., Hong Kong, had created a liability of Rs. 321 crores on the Indian Overseas Bank, Branch at Sector 7, Chandigarh. This amount of Rs. 321 crores are still outstanding on IOB.

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In order to unearth/trace the proceeds of crime under PMLA on 07.04.2017 searches u/s 17 of PMLA were conducted on various places/premises. Thereafter, many bank accounts, lockers and properties were frozen.

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Thereafter, Original Application being OA No. 93 of 2017 (OA) in ECIR No. CDZO/06/2016 was filed by the respondent under section 17(4) of the PMLA, 2002, in May 2017 seeking for directions to retain certain articles/vehicles/ documents seized and properties & the bank accounts frozen by the respondent, as listed in the aforesaid OA No. 93 of 2017.

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The said OA No. 93 of 2017 was allowed vide order dated 12.09.2017.

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Aggrieved by the said order, appellants filed the present appeals. 3. In the present appeal, Ld. Counsel for appellants submitted that on the basis of the FIR No. RCBD No. 1/2016 filed by CBI, search and seizure was conducted on the premises of the appellants. Furthermore, the following properties were also seized by

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the respondent ED which are as under:

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Sr. No.	Property	Owned by
1.	H. No. 3348, Sector-35 D, Chandigarh	M/s Mehra & Sons(HUF)
2.	Freehold residential House No. 191, Green Avenue Amritsar admeasuring 327 Sq. Yards bearing Khasra No. 1250/505-506 situated at Tungbala Urban Green Avenue,Amritsar	M/s Mehra & Sons (HUF)
3.	H. No. 26, Sector 10A, Chandigarh (Area 809.08 sq. yards) in the name of M/s Global Trade Matrix Pvt. Ltd. (Through its Director Brig. Malkiat Singh Dullat)	M/s Global Trade Matrix Pvt. Ltd.

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Furthermore, after the search proceedings, the intimation was

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sent to the concerned bank for freezing the accounts as under:

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S.	Bank Name	Appellant	A/c No.	Amount
No.

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1.	Karnataka Bank	M/s Mehra & Sons	1462000100117301	3563.48
2.	Karnataka Bank	Ashu Mehra	1462500101158101	20817.50
3.	Karnataka Bank	M/s Mehra & Sons HUF	1462500101103801	2240.00
4.	RBL Bank	Ashu Mehra	0005415385050053886	0.00 Account suspended
5.	Yes Bank Ltd	Ashu Mehra	027250900000074	11075.95
6.	Indian Overseas Bank	Tina Yashdeep Mehra	208301000012949	9047.75 + Lien Amount 3,741
7.	HDFC Bank	Tina Yashdeep Mehra	501000018282269	145762.00
8.	Induslnd Bank	M/s Global Trade Matrix Pvt. Ltd	200999956788	32476.88
9.	Central Bank of India	M/s Global Trade Matrix Pvt.Ltd	3466901130	0.00
10.	Indian Overseas Bank	Ranjit Kaur Dullat & Tina Yashdeep Mehra	208301000000709	242.39
11.	HDFC Bank	Mrs. Ranjit Kaur	50100043909370	3997.00

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Furthermore, during the search proceedings at the residential

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premises of Brigadier (Retd.) M.S. Dullat, House No. 1563, Sector 34D, Chandigarh, the following items were recovered and seized as under:

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i. Passbook of the Bank Account No. 65003006165 maintained at State Bank of Patiala, Sector- 7C, Chandigarh, in the name of Sh. M.S. Dullat

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ii. Passbook of the Bank Account No. 18320100010098 maintained at UCO Bank, Army Training Command, Shimla in the name of Sh. M.S. Dullat.

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(i) Certain documents, viz. Annexure I (loose sheets Page 1 – 195), Annexure II (Property documents Pages 1 to 115), Annexure III (Bank detail and Property details of Amanpreet Singh Page 1), Annexure IV (Copies of Stock Register, Balance Sheet, ITR, Trial Balance) were seized during the searches at residential premises of Ashu Mehra situated at H. No. 267, Sector 10A, Chandigarh.

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As regards the properties above, it is stated by the Ld. Counsel for the appellant that the said land/properties have been purchased much before the period of scheduled offence and the said properties/assets/bank accounts cannot be seized by the respondent solely on the ground that the main accused Ashu Mehra is the Karta of the HUF. Prayer is accordingly made to allow the present appeal and thereby direct the respondent ED to release the above bank accounts and properties attached.

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On the other hand, Ld. Counsel for respondent ED submitted that certain bank accounts were identified belonging to the accused and their associate companies as a result of information and also as a result of searches conducted by the respondent ED. Mr. Ashu Mehra along with other bank officials of Indian Overseas Bank main branch Chandigarh fraudulently intercepted messages and issued letter of conformity/letter of undertaking to the foreign banks for the Buyers Credit extended by them.

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The present appellants along with others issued 24 Line of Credit (LOC) fraudulently through SWIFT messages to provide buyers credit facility which was to supposed to export goods but the same was granted to the aforesaid company through fraud. But as per the bank, there was no movement of goods & services or underlying commercial transaction between these fund transfers. The amount due on account of Buyers Credit was not paid to the bank before the due date resulting in liability of 321 crores. This was done in collusion with the accused companies and their

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directors/proprietors and have caused loss to the bank to the tune of USD 47.86 million equivalent to approximately Indian Rs. 321 crores. In view of the above, various documents, properties, bank account, cash and lockers including foreign currency etc. were seized.

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Ld. Counsel for the respondent also stated that the appellantspurchased many properties out of the proceeds of crime and the same are hereby attached. Regarding bank accounts, Ld. Counsel for the respondent ED submitted that the bank accounts of the appellants might have been used for money laundering. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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After hearing the rival submissions, we have given our thoughtful consideration to the same. After the completion of investigation, prosecution complaint is already filed by respondent ED, wherein present appellants along with other family members of Ashu Mehraare arrayed as accused persons. Even otherwise, the aforesaid properties are stated to be mentioned in the list of properties for the purpose of confiscation in case of conviction, in prosecution complaint case under PMLA. Therefore, the impugned order passed by Ld. Adjudicating Authority was just an interim order/step to protect the same, till the conclusion of trial. We do not find any illegality in the impugned order. Therefore, we are not satisfied with the Ld. Counsel for the appellants and hence, the present appealsare liable to be dismissed being devoid of any merits.

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However, seeing the fact that prosecution complaint is already filed, the present appellantsare entitled to the copies of all relied upon documents/seized material and he has right to apply for release of all un-relied documents (if any), if the same are not required for any further investigation.

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In sequel to our observation in the preceding para, the present appeals are hereby dismissed. Pending applications, if any, stands disposed of accordingly. It is made clear that nothing expressed herein will affect the merits of prosecution case under Prevention of Money Laundering Act, 2002.

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Appeals Dismissed.

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Pronounced on this 12^th Day of September, 2024.

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(Rajesh Malhotra) (G.C. Mishra) Member Member

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‘AB’

FPA-PMLA-2052/CHD/2017 of Brigadier (Retd.) M.S. Dullat v. The Deputy Director, Directorate of Enforcement, Chandigarh

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FPA-PMLA-2052/CHD/2017 of Brigadier (Retd.) M.S. Dullat v. The Deputy Director, Directorate of Enforcement, Chandigarh

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