FPA-PMLA-2095/CHD/2017 of M/s Keshav International v. The Deputy Director, Directorate of Enforcement, Chandigarh

ATFP12 Sept 2024FPA-PMLA-2095/CHD/2017

Case brief

AI extract

What is this about?

Appeals against impugned order allowing ED to freeze bank accounts. ED directed to defreeze accounts pending clear of loan liability and restraining bank from releasing more credit. Appeals dismissed without affecting prosecution merits.

What did the court decide?

ED directed to defreeze accounts; appellants may clear loan liability; bank restrained from releasing further credit; copies of relied-upon documents to be provided.

FPA-PMLA-2095/CHD/2017 of M/s Keshav International Vs. The Deputy… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. FPA-PMLA-2092/CHD/2017

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Vandana Johar … Appellant 2. FPA-PMLA-2095/CHD/2017 M/s Keshav International … Appellant Versus

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The Deputy Director, Directorate of Enforcement, Chandigarh

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… Respondent

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Advocates/Authorized Representatives who appeared For the Appellant : Mr. Saurabh Kapoor, Adv. Mr. Rishabh Kapoor, Adv. Ms. Madhvi Khandelwal, Adv. For the Respondent : Mr. Arjun Sawhney, Adv. Mr. Rohan Bhambri, Adv. CORAM SHRI G.C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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

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In the present appeals, Ld. Counsel for appellants submitted that appellant company is a Proprietorship concern of Smt. Vandana Johar and has been carrying out the business activities of manufacture and export of Ready-Made Garments.

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On the basis of the FIR No. RCBD No. 1/2016 filed by CBI, search and seizure was conducted on the appellants as under:

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FPA-PMLA-2092 & 2095/CHD/2017

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M/s Keshav International& Vandana Johar v. E.D., Chandigarh

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S.	Bank Name	Appellant	A/c No.	Amount
No.
1.	Indian Overseas	M/s Keshav	28402000012948	19,78,393.31
	Bank	International		(Debit)
2.	Indusland Bank	M/s Keshav International	20100079850	40464.0

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The appellant and its firm has been maintaining theiraccounts

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with the Indian Overseas Bank, Sector-7, Chandigarh since 2011. The appellants have also been availing credit facilities from the

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Indian Overseas Bank branch, Chandigarh as under:

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Secured Packing Credit Limit 375.00 lacs Foreign Bill Purchased/Discounting 175.00 lacs (Sub-limit) Total 375.00 lacs

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The same has been obtained by the appellants on various terms and conditions including collateral security by mortgaging the

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properties as under:

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Sl. Nature of Security No.

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1 Equitable mortgage of vacant land measuring 1383.00 sq. yards at k/k no. 822, 838/951, Khasra no. 27//18/2, Hadbast no. 278, Phoolwal, Ludhiana, Punjab in the name of Smt. Vandana Johar FMV- Rs. 622.35 lacs. FSV- Rs. 530.00 lacs. This property is also mortgaged in respect of credit facilities sanctioned by the bank to one M/s Omkara World Wide Traders Pvt. Ltd.

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2 Equitable mortgage of residential vacant plot no. 199 measuring 500.00 sq. yards, Parvela City Village Ayali Khurd, near J.K. Property Dealer, Humbran Road, Tehsil Distt. Ludhiana owned by Smt. Vandna Johar w/o. Mr. Ajay Johar. FMV-Rs. 75.00 lacs FSV- Rs. 60.00 lacs.

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He pointed out that Cash Credit Account of the company is frozen by respondent ED and hence, the said account could not be operated. He further submitted that there is negative balance in the cash credit account and thus, question of freezing this account does not arise.

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Prayer is accordingly made to allow the present appeal and thereby direct the respondent ED to release the above bank accounts.

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FPA-PMLA-2092 & 2095/CHD/2017

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M/s Keshav International& Vandana Johar v. E.D., Chandigarh 3

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On the other hand, Ld. Counsel for respondent ED submitted that during the course of investigation, 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. The 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 (BC) extended by them.

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The proprietor of the company 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 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. of various persons were seized.

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Ld. Counsel for the respondent also stated that the proprietor of the company committed the fraud along with his other associates and purchased many properties out of the proceeds of crime and the bank accounts of the appellants might have been used for money

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FPA-PMLA-2092 & 2095/CHD/2017

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M/s Keshav International& Vandana Johar v. E.D., Chandigarh 4

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laundering. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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After hearing the rival submissions, the respondent ED is hereby directed to defreeze these accounts and appellantsare at liberty to clear its outstanding loan liability, if any, with direction to not dispose of the properties on whose collateral the CC Accounts have been secured. Indian Overseas Bank is hereby restrained from releasing more credit into the said CC Account as outstanding on the date of freezing.

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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 appealsare 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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AppealsDismissed.

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

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(Rajesh Malhotra) (G.C. Mishra) Member Member ‘AB’

FPA-PMLA-2095/CHD/2017 of M/s Keshav International v. The Deputy Director, Directorate of Enforcement, Chandigarh

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FPA-PMLA-2095/CHD/2017 of M/s Keshav International v. The Deputy Director, Directorate of Enforcement, Chandigarh

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