Dismissed

FPA-PMLA-2168/MUM/2018 of Ms. Prem Kothari w/o Sh. Narender Kothari v. The Deputy Director, Directorate of Enforcement, Mumbai

ATFP2 Apr 2024FPA-PMLA-2168/MUM/2018

Case brief

AI extract

What is this about?

Appellants challenged attachment of properties purchased by them from a company linked to money laundering proceedings of their son who absconded. The court held the funds were proceeds of crime and dismissed the appeals, upholding the impugned order.

What did the court decide?

Appeals dismissed and the impugned order confirming attachment of properties upheld.

FPA-PMLA-2168/MUM/2018 of Ms. Prem Kothari w/o Sh. Narender… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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I. FPA-PMLA-2168/MUM/2018

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Ms. Prem Kothari w/o Sh. Narender Kothari …. Appellant

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Versus

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The Deputy Director, Directorate of Enforcement, Mumbai …. Respondent

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II. FPA-PMLA-2169/MUM/2018

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Sh. Narender Kothari …. Appellant

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Versus

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The Deputy Director, Directorate of Enforcement, Mumbai …. Respondent

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Advocates/Authorized Representatives who argued For the Appellant : Mr. R.K. Rawal, A.R. For the Respondent : Ms. Nattasha Garg, Advocate

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CORAM: SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER 02.04.2024

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Present appealsare filed against the impugned order dated 04.12.2017 passed by the Adjudicating Authority in Original Complaint No. 792/2017 whereby it confirmed the PAO No.07/2017 dated 16.06.2017 and thereby confirming the following propertiesof the appellants for attachment:

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Sr.No	Descriptionofproperty	Remarks
1	Khasra No. 863, measuring 94.90 sq. feet	Purchased by Prem
	Shastri Nagar, Baral, Bijainagar, Ajmer	Kothari on 04.08.2009 for Rs. 75,000/-.

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FPA-PMLA-2168& 2169/MUM/2018

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2	Khasra No. 863, measuring 94.90 sq. feet Shastri Nagar, Baral, Bijaynagar, Ajmer	Purchased by Prem Kothari on 04.08.2009 for Rs. 6,00,000/-.
3	Khasra No. 981/1, measuring 427.50 sq. yard Shastri Nagar, Baral, Bijainagar, Ajmer	Purchased by Narender Kothari on 21.03.2014 for Rs. 3,00,000/-.
4	Khasra No. 981/1, measuring 5451 sq. yard Shastri Nagar, Baral, Bijainagar, Ajmer	Purchased by Narender Kothari on 21.03.2014 for Rs.4,70,000/-.
5	Khasra No. 981/2, measuring 2000 sq. mtr. Shastri Nagar, Baral, Bijainagar, Ajmer	Purchased by Narender Kothari on 21.03.2014 for Rs.40,00,000/-.
6	Khasra No. 1058 & 1059, 1061 & 1062 and 1144 measuring 177.55 sq. yard Mahavir Nagar,Baral,Bijainagar,Ajmer	Purchased by Narender Kothari on 02.05.2014 for Rs.1,48,000/-.

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As per the facts of the case, Indusland Bank, Mumbai lodged FIRNo.365/2015 dated 24.12.2015 at PS D.B. Marg against M/s Yogeshwar Diamonds Pvt. Ltd., M/s Shree Charbhuja Diamonds Pvt. Ltd., M/s Kanika Gems Pvt. Ltd. and their directors namely Shri Anil Kumar Moolchand Toshniwal, Shri Sunil Kumar Chokhara and Shri Anil Chokhara for commission of offence U/s 120B/420/465/467/468 of IPC. As per the complaint, the accused persons had illegally remitted Indian Currency to the tune of Rs.304,35,77,609/- (US$4,90,11,147.07) to foreign based country in the form of import advance and by submitting forged Bills of Entry to the Indusland Bank Ltd branches of Opera House & Fort in respect of post import remittances. The case was subsequently transferred to the Economic Offence Wing, Unit-I Mumbai Police which has registered vide C.R. No.93/2015 for investigation. The said offences are covered under Part A of Paragraph 1 of the schedule of offence under the provisions of Prevention of Money Laundering Act, 2002 (for short `PMLA,2002’), as amended. Accordingly, the Directorate of Enforcement, MZO,

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FPA-PMLA-2168& 2169/MUM/2018

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registered a case, vide ECIR/05/MZO/2016 dated 11.05.2016 under the provisions of PMLA, 2002 against M/s Yogeshwar Diamonds Pvt. Ltd., M/s Shree Charbhuja Diamonds Pvt. Ltd., M/s Kanika Gems Pvt. Ltd and their directors namely S/Sh. Anil Kumar Moolchand Toshniwal, Sunil Kumar Chokhara and Anil Chokhara. The amount of Rs.304,35,77,609/(US$4,90,11,147.07) computed in the above FIR was remitted abroad as a result of criminal conspiracy, cheating, preparing &sing forged documents in the guise of post import and the same is nothing but proceeds of crime as defined under Section 2(1)(u) of the PMLA, 2002. On the basis of material placed before the complainant such as copy of FIR No. 365/2015 dated 24.12.2015 registered by the D.B. Marg Police Station, Mumbai, information and documents collected from Induslnd Bank Ltd., Mumbai, statements recorded under Section 50(2) of the PMLA, 2002, and documents gathered by the Directorate of Enforcement in case no. ECIR/05/MZO/2016, the complainant issued the PAO No.07/2017 dated 16.06.2017 against the defendants. Consequently, Original Complaint No. 792/2017 was filed before the Hon’ble Adjudicating Authority for adjudicating and confirming the same.

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During investigation under PMLA, 2002, statement of various persons was recorded under Section 50 of the said Act. The present appellants are parents of main accused Vijay Kothari who absconded during the proceedings and failed to file any reply to the show cause notice. Appellant Narendra Kothari u/s 50 of PMLA stated that he has no knowledge about the whereabouts of his son

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FPA-PMLA-2168& 2169/MUM/2018

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Vijay Kothari. He took the defence that he purchased the properties after taking loans of Rs. 54,00,000/- from M/s Mangal Murti Diamonds Pvt. Ltd. as he was known to its director Shri Manish Lodha. He had already returned Rs. 25,00,000/- to M/s Mangal Murti Diamonds Pvt. Ltd.

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After hearing both the parties, the learned Adjudicating Authority confirmed the provisional Attachment Order and allowed the Original Complaint filed by the Directorate vide its order dated 04.12.2017 qua the properties of defendants including the present appellants as mentioned in Para No.1.

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Aggrieved by the same, appellantsMs. Prem Kothariand Narender Kothari filed the present appeals.

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Ld. Counsel for the appellant submitted that Ld. Adjudicating Authority failed to appreciate the fact that the attached properties were purchased by the appellants from the legitimate income. They are income-tax assessee and disclosed the properties in their income tax returns. He further contended that the appellants have no concern with the alleged transactions referred in the complaint. He submitted that their son Vijay Kothari is residing in Dubai and just because he is their son and absconding from the proceedings, there is no ground to attach their properties purchased from the legitimate source. Appellants are neither named in the FIR nor any chargesheet is filed against them. He further argued that appellants are not arrayed as the accused persons in complaint case under PMLA. He further contended that prosecution

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FPA-PMLA-2168& 2169/MUM/2018

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complaint is not filed against the appellants even after 365 days as mandated in section 8(3)(a) of PMLA, 2002. Even no complaint is filed against M/s Mangal Murti Diamond for giving loan to the appellants. He pointed out that sum of Rs. 25,00,000/- is already returned by them to M/s Mangal Murti. Accordingly, it is submitted that their properties are not proceeds of crime and as they are not involved in crime, their properties cannot be attached even as value thereof. Prayer was accordingly made to allow the appeal.

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On the other hand, learned counsel for the respondent-ED has submitted that M/s Mangal Murti Diamond Pvt Ltd. is one of the associated companies found involved in the act of Money Laundering by way of sending remittances to overseas companies. Appellants are parents of main accused, Vijay Kothari, and apparently, they purchased the above-mentioned six properties out of the proceeds of crime of their son Vijay Kothari. She pointed out investigation revealed Vijay Kothari has formed various shell companies for routing of funds and has generated huge funds and also used to manage various bank accounts with the intention of landing of funds through dubious companies. The bank accounts of the said companies were used to be controlled by him. Appellants’ son Vijay Kothari absconded during the proceedings. To explain the said transactions. She pointed out the flow chart of proceeds of crime from the accused companies to M/s Mangal Murti Diamond Pvt. Ltd. and rotation of funds as mentioned at page no.43 of the impugned order. Accordingly, she submitted that

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FPA-PMLA-2168& 2169/MUM/2018

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transfer of funds from M/s Mangal Murti Diamond Pvt. Ltd to the account of Narendra Kothari for purchasing the attached properties was a modusoperandi to escape from the attachment. She argued that simply because appellants are not charge-sheeted or arrayed as accused persons in the complaint case is no ground to release the said properties, when there is clear trail of proceeds of crime as mentioned above. Prayer was accordingly made to dismiss the present appeals being devoid of any merits.

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After hearing the rival submissions, I have given my thoughtful consideration with the same. The accused persons namely Shri Anil Kumar Moolchand Toshniwal, Shri Sunil Kumar Chokhara and Shri Anil Chokhara floated many companies viz. M/s Yogeshwar Diamonds Pvt. Ltd., M/s Shree Charbhuja Diamonds Pvt. Ltd., M/s Kanika Gems Pvt. Ltd. As per allegation in the FIR and Original Complaint, from May 2013 to January 2014, sum of USD $14482593.79 (equivalent to Rs.166,93,59,003) was remitted to Hongkong based companies by tendering bogus invoices and forged Bills of Entry.

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As per the contention of appellants, they have purchased the properties after taking loan of Rs. 54,00,000/- from M/s Mangal Murti Diamond Pvt. Ltd. The flow chart pointed out by Ld. Counsel for Respondent reflects that the various shell companies of Vijay Kothari son of the present appellants transferred the funds to many companies including M/s Mangal Murti Diamonds Pvt. Ltd., either directly or through M/s Khushi Gems Pvt. Ltd. Therefore, the amount of Rs. 54,00,000/- transferred to the account of

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FPA-PMLA-2168& 2169/MUM/2018

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appellant Narendera Kothari father of accused Vijay Kothari was in fact the part of proceeds of crime. The defence taken by the appellants regarding their income is not corroborated by any documentary evidence except the self-serving statement. Since the money was remitted abroad, any property that apparently belongs to accused Vijay Kothari or purchased by his friends whether acquired from legitimate source or not are liable to attachment by invoking third limb of the definition of proceeds of crime u/s 2(1)(u). In this regard, I fortify my view as per the judgment of Hon’ble High Court of Delhi in case Abdullah Ali Balsharaf & Anr Vs Directorate of Enforcement & Ors (2019) 3 RCR (Cri) 798 (Para 106 to 108). Accordingly, the properties purchased by the appellants being the parents of accused Vijay Kothari can be attached as direct proceeds of crime as well as value thereof, in absence of the remaining proceeds of crime. Appellants are not entitled for any relief in the present appeals simply because no chargesheet is filed against them in police case and they are not arrayed as accused persons in complaint case under PMLA. Hence, their contentions are devoid of any merits.

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