Disposed

FPA-PMLA-2207/DLI/2018 of Mr. Balchand Choraria, through Legal Heirs v. The Deputy Director, Ed Delhi

ATFP1 Apr 2024FPA-PMLA-2207/DLI/2018

Case brief

AI extract

What is this about?

Adjudicating Authority permitted retention of seized documents and continuation of freezing orders on sixteen properties. Appealing the order, the Tribunal observed that since a prosecution complaint was filed, unrelied-upon documents should be returned while relied-upon materials and frozen assets remain reserved for trial and potential confiscation.

What did the court decide?

Unrelied-upon documents and digital records to be returned; cloned copies of relied-upon documents made available; freedom to claim release of frozen assets at appropriate stage per Section 8 PMLA.

FPA-PMLA-2207/DLI/2018 of Mr. Balchand Choraria, through Legal… — Money Laundering | ATFP (2024)

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BEFORE RAJESH MALHOTRA, MEMBER; SINGLE BENCH: APPELLATE TRIBUNAL UNDER SAFEMA; AT NEW DELHI.

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1. FPA-PMLA-2207/DLI/2018 Mr. Balchand Choraria, through Legal Heirs

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2. FPA-PMLA-2337/DLI/2018 Mrs. Mita Choraria

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3. FPA-PMLA-2338/DLI/2018 Ms. Nikita Choraria

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4. FPA-PMLA-2339/DLI/2018 Ms. Ankita Choraria

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5. FPA-PMLA-2211/DLI/2018 Surendra Kumar Choraria

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6. FPA-PMLA-2212/DLI/2018 Mrs. Ichu Devi Choraria

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7. FPA-PMLA-2213/DLI/2018 Ms. Babita Choraria

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8. FPA-PMLA-2214/DLI/2018 Rajendra Kumar Choraria

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… Appellants

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Versus

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The Deputy Director, ED Delhi … Respondent

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Advocates/Authorized Representatives who appeared For the Appellant : Mr. Rahul Gupta, Adv. Mr. Shubhankar Jha, Adv. For the Respondent : Mr. Mrinal Kumar, Adv.

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FINAL ORDER

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01.04.2024

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Present appealsU/s 26 of Prevention of Money Laundering Act, 2002, is filed against the impugned order dated 01.02.2018 passed by the Adjudicating Authority, in Original Application no.117/2017 vide which respondent-ED was permitted to retain the documents and articles seized from the possession of appellantsvide search on 10^th , 11^th , 14^th August, 2017 under Section 17 of PMLA and for continuation of the sixteen freezing

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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orders dated 06.09.2017 under Section 17 (1A) of PMLA, 2002, as

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per following details:-

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S. No	Premises searched	Description of cash & Valuable seized
. 1.	Ahmed Joo Rare Jewels and Objects d’ Art Pvt. Ltd. at 13 Ormiston Road, Apollo Bandar, Colaba, Mumbai	1. Diamond Jewellery-217.86 CTS- Valued at Rs.91,21,627/- 2. Gold Jewellery & Coins-8233,400 gms. (Net Wt)- Valued at Rs.206,08,396/- 3. Documents 4. Pendrive
2.	Mr. Surendra Kumar Choraria’s Office- 158/164, 6^th Floor, Laxmi Bhavan, Near Cotton Exchange, Kalbadevi Road, Kalbadevi, Mumbai	1. Diamond Jewellery -109.52 CTS-Valued at Rs.56,44,093/- 2. Gold Jewellery & Coins-1016.910 gms (Net Wt)- Valued at Rs.27,99,283/- 3. Silver-500 gms (Net wt)- Valued at Rs.19,500/- 4. Loose Diamonds-985.15 CTS-Valued at Rs.1,98,84,530/- 5. Cash-INR 1,09,500/- 6. Documents 7. Mobile Phone (01 No) 8. Computer HardDisk(01No)
3.	Mr. Surendra Kumar Choraria/Rajendra Kumar Choraria Residence- 7/19 Laxmi Kunj, Worli Sea Face, Worli Mumbai	1. Pure Gold-26 pcs-Net Wt-228 gms- Valued at Rs.67,7160/- 2. Pure Silver Bars-13 pcs- Net Wt.-7.6 Kg- Valued at Rs.292,600/- 3. INR 3,39,000/- 4. Foreign Currency US$-5079 Euro-200 Yuan-350 Malaysian Ringit-172 Pounds-3155 Hong Kong Dollar-13200 Thai Baht-25360 5. Documents 6. Mobile Phone (2Nos) 7. Computer Hard Disk (01No) 8. iPad (01 No)
4.	Mr. Balchand Choraria, Office-M/s Mitank Trading Company Pvt. Ltd., 402/403, Lotus House, Next to Liberty Cinema, Vithaldas Thakarsey Mag, New Marine LiMbi400020	1. Documents 2. Computer Hard Disk (2Nos) 3. Mobile Phone (01 No)
5.	nes, uma- Bank Locker No. 2229 in Standard Chartered Bank, Kemps Corner, Mumbai jointly in the names of Mr. Surendra Kumar Choraria, his wife Mrs. Babita Choraria & his mother Mrs. Ichu Devi Choraria	1. Necklace in white metal (old cutD)-16.75 CTS- Rs.8,37,500/- Necklace with Pearl + 1 pair earrings- 19.50 CTS- Rs.7,80,000/-

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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The Continuation of 16 (Sixteen) freezing, all dated

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06.06.2017 qua the following properties:-

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(i) Property 158/168, Laxmi Bhawan, Kalbadevi Road, Kalbadevi, Mumbai- 40000 to the extent of 87.68% of the total property share of Mr. Surendra Kumar Choraria & Ms. Babita Choraria,

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(ii) Property Gat No. 758, Village Awas, Tal. Alibag, Dist. Raigad, Maharashtra in the name of Ms. Babita Choraria,

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(iii) Property - Plot No. F 268 Growth Centre Industrial Area of RICCO, Jhalawar, Rajasthan in the name of Ms. Mita Choraria,

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(iv) Property Plot No. G-39 Industrial Area, Baran, Rajasthan in the name of Ms. Mita Choraria,

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(v) Property Plot No. G1-157 Industrial Area IID Centre Baran, Rajasthan in the name of Ms. Mita Choraria,

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(vi) Property-G No. 75, Plot No. 13A Mahagaon, Maval, Dist: Pune along with constructed structure in the name of Ms. Mita Choraria, (vii) Property - Flat No. 304, Shiv Residency, Bani Park, Jaipur, Rajasthan in the name of Ms. Mita Choraria,

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(viii) Property- Plot No. G-87 Balaji Sarovar, Near BC Sikar Road, Jaipur in the name of Ms. Ankita Choraria,

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(ix) Property Plot No. A0300, Ansals Anand Lok, Kalwar Road, Jaipur in the name of Ms. Nikita Choraria,

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(x) Fidelity Tax Advantage Fund under Folio No. 525512/05 with M/s Fideity Business Services India Pvt. Ltd of Mr. Balchand Choraria jointly with Mr Jaisingh Choraria,

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(xi) Life insurance policies with policy no. 902368624 with LIC of India of Mr. Balchand Choraria,

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(xii) Long Term Infrastructure Bonds with Folio No. INC0103306 with IFCI Limited of Mr. Balchand Choraria,

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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(xiii) Account No. C/D-115 in Central Bank of India, Brabourne Road, Kolkata of Mr. Balchand Choraria,

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(xiv) Account nos. 10194647064 and 10194747002 (PPF) in State Bank of India, Nepean Sea Road Branch, Mumbai of Mr. Balchand Choraria,

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(xv) Account no. 00601000205416 in HDFC Bank, FortNanik Motwani Marg, Mumbai of Mr. Balchand Choraria,

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(xvi) Shares, securities & Mutual funds under Client ID-10842202 with NSDL of Mr. Surendra Kumar Choraria,

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which were seized/frozen were permitted to be continued frozen in terms of Section 17(4) of the PMLA, 2002.

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As per the facts of the case,an ECIR dated 24.01.2017 was recorded against Sh. Hassan Ali Khan & Others on the basis of FIR dated 19.09.2016 registered by CBI against Hassan Ali Khan & Others. The perusal of FIR revealed that Sh. Hassan Ali Khan was maintaining bank accounts in Switzerland and Singapore since long time and had relations with lot of hawala dealers. It was further revealed that Hassan Ali Khan had filed a notarized statement with UBS in which he had explained full history of his bank accounts. It was suspected that Sh. Khan was working as middleman forsome unknown public servants and the funds held by Sh. Khan were nothing, but proceeds of crime, concealed in bank accounts held under his control in UBS Bank, Zurich and some other banks. FIR revealed that bank accounts of Sh. Hassan Ali Khan had huge funds to the tune of approx. Rs.36000 crores. FIR also indicated that Sh. Khan was dealing illegally in Antiques and Antiquities. FIR disclosed the generation of huge amounts of proceeds of crime in connivance with public servants, bank officials

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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and other persons in the shape of payment of bribes and layering of funds through various bank accounts and deliberately and knowingly dealing with the proceeds of crime with the assistance of large number of associates.

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It was found that Mr. Balchand Choraria, Mr. Surendra Kumar Choraria, Mr. Rajendra Kumar Choraria and Mr. Mohammad Hussain are associates of Mr. Hassan Ali Khan. Investigations revealed that US$ 300,000 & US$ 600,000 were transferred from Hassan Ali Khan's Credit Suisse account no. 899786-72 in the name of Black Prince, in account no. 84606699 of M/s S.K. Financial Services with Barclays Bank, London and US$ 199,970.44, 299,988.49, 699,988.51 & 299,988.48 were transferred/got transferred in November 2006 by Mr. Hassan Ali Khan from Sarasin Bank, Switzerland in account no. 84606699 of M/s S.K. Financial Services with Barclays Bank, London.

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Close examination of evidence [Facts recorded in the intercepted conversations] between Mr. Balchand Choraria and Mr. Hassan Ali Khan suggests Mr. Khan was receiving money illegally from abroad through Mr. Balchand Choraria, who is reportedly running a company in Mumbai through his son in the name of M/s Mitank Trading Company Pvt. Ltd, and also sending money out of India illegally through Mr. Balchand Choraria, who made arrangements through his contacts in London (M/s S.K. financial Services, UK) for moving money there. It appears that Mr. Balchand Choraria functioned as Private bank for Mr. Khan and

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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was keeping account of the debit/credit entries in terms of rupees as well as US dollars.

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Investigations revealed certain financial transactions were being handled by Hassan Ali with the help of Mr. Mohammad Hussian, who was operating a jewelry firm in London in the name of M/s Dianoor Jewels Ltd along with his brother-in-law Mr. Iqbal Mubarak. It is further revealed from investigation that Mohammad Hussain's relative i.e. Mr. Iqbal Mubarak, is running a shop in the name of Ahmed Joo, 13 Ormiston Road, Apollo Bandar, Colaba, Mumbai. Investigations revealed that Mohammad Hussain was in regular touch with Hassan Ali Khan and was privy to unlawful dealings of Hassan Ali Khan and also used to visit Ahmed Joo.

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Mr. Balchand Choraria, Mr. Surendra Kumar Choraria, Mr. Rajendra Kumar Choraria & Mr. Mohammad Husain/Mr. Iqbal Mubarak appeared to be knowingly assisted Mr. Hassan Ali Khan in laundering of his illegal money from India and abroad, and the documents/information relating to the same were not likely to be submitted by them in normal course of investigations & there was all likelihood of the related documents, electronic evidence etc. being secreted at their respective premises which may be useful for investigations in this case. Accordingly, searches were conducted under Section 17 of PMLA, 2002 at their premises and documents and articles were seized as mentioned in para no.1 above.

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During investigation statement of Rajendra Kumar Choraria and Surender Kumar Choraria were recorded to explain the source

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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of purchase of properties, cash, valuables etc., but they couldn’t satisfactorily explain the same and gave evasive replies.

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Shri Balchand Choraria also failed to appear to explain the purchase of immovable properties in the name of his daughter inlaw Mrs. Mita Choraria and his granddaughters. Mita Choraria during examination appeared that she was inactive Director in eight companies. She stated that to the properties were purchased in her name, but she was financially assisted in purchasing the said properties from the funds of her account, whose source were not known to her, as they were handle by her father in-law Shri Balchand Choraria and her husband Shri Jaisingh Choraria. She stated that two properties purchased in her name from her share of sale properties jointly and held with brothers and sisters were later-on gifted to her daughters Ms. Ankita Choraria & Ms. Nikita Choraria. Accordingly, freezing order was also passed qua the sixteen movable and immovable properties as mentioned in para no.1 above.

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Therefore, respondent ED vide Original Application no.117/2017 before Adjudicating Authority for retention of seized documents and articles and for continuation of the frozen movable and immovable assets and the same was allowed vide impugned order dated 01.02.2018.

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Accordingly, being aggrieved by the said order, the appellants filed the present appeals.

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During the arguments Ld. Counsels for the appellants submitted that the bare perusal of Original Application reveals that

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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respondent ED, alleged various acts of assistance committed by the appellants to the accused Hassan Ali. She pointed out that the only basis for imputing such allegations against the appellants seems to be some intercepted conversations by the ED were never provided to the appellants to check out the authenticity of the same and to lead defence.

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They argued that ED has conveniently alleged some sought of an imaginary link between M/s SK Financial Services, UK and Balchand Choraria to somehow establish an association of some sort between Balchand Choraria and Hassan Ali, so as to cover the legitimate source of funds belonging to the appellants as tainted money solely to attract the provisions of PMLA under the guise of proceeds of crime. They stressed that there is no nexus between the source of funds utilizedto purchase the said properties with the alleged crime committed by Hassan Ali and his proceeds of crime, if any. It is submitted that Ld. Adjudicating Authority ignored the submissions made by the appellants in their respective replies filed before the Adjudicating Authority. They stressed that the whole case of respondent ED is based on the alleged statement of Mita Choraria and Annand Vishwakarma and others recorded under Section 50 of PMLA, without appreciating the fact that there is no corroborative evidence for the same and the said statements were falsely recorded by ED to strengthen its case.

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It is further submitted that no efforts were made by respondent ED to interact Mr. Balchand Choraria at his house, as he was bed ridden and suffering from various ailments due to old

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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age. Thereby on account of his non-appearance had taken adverse view against him and his family members, though Mr. Balchand Choraria gave the specific replies to all the queries during investigation by ED. They argued that Ms. Mita Choraria has imply justified to purchase the properties by bringing on record the bank statements, various letters and documents to proof their legitimate source of income for acquiring the said properties. Some properties were acquired by Mita Choraria by way of gifts given by her father which is her Stridhan. Similarly, Nikita Choraria, Ankita Choraria explained the source of acquisition of properties in their respective replies.

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They further contended that even Jaisingh Choraria and Balchand Choraria have provided ample justification on record to identify the sources of income and funds by which they have obtained their respective immovable properties, which were wrongly seized/frozen. They further stressed that as per Section 20(4) of PMLA, the Adjudicating Authority ought to have satisfied himself that the properties are prima facie involved in money laundering. They further argued that further investigation is not a ground for continued retention of the seized/frozen documents, articles and properties. They further pointed out that the present appellants are not implicated in the prosecution complaint filed before Ld. Special Judge, PMLA Court, in Mumbai, and hence, the documents and articles seized from their respective possession and their frozen properties needs to be released. It is further pointed out that main accused Hassan Ali Khan has already expired and the proceedings against him stand abated, and hence, the

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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impugned order needs to be set aside on this ground. Prayer is accordingly made to allow all the appeals.

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On the other hand, Ld. Counsel for the respondent ED submitted that Mr. Balchand Choraria was an associate of accused Mr. Hassan Ali Khan.He submitted that as per investigation conducted by CBI, Mr. Khan was receiving money illegally from abroad through Mr. Balchand Choraria and also sending money out of India through illegal channels. Mr. Balchand Choraria was part & parcel of conspiracy for commission of crime at the instance of Hasan Ali Khan, and thereby, he generated proceeds of crime, which were utilized to purchase the immovable &moveable assetsin the name of his family members.He contended that during investigation statement of Mita Choraria was recorded on 05.09.2017; Shri Jaisingh Choraria on 29.09.2017; Ms. Ankita Choraria & Nikita Choraria 28.09.2017; and Annand Raghunath Vishvakarma, Accountant of M/s Mitank Trading Company on 01.09.2017; which also substantiate the result of investigation conducted by ED. Accordingly, after the searches and recording of the statements all the 16 properties were frozen with proper reason to believe and due application of mind. The investigation revealed that Mita Choraria was Director of all the companies looked by her husband Jaisingh Choraria and father in-law Balchand Choraria and failed to give any explanation of source of funds for purchasing of the said properties in her name. Ms. Ankita and Nikita Choraria admitted that they are students at the time of purchase and they have no source of income and all the income shown in their name and the loans shown given by them are from the funds raised by

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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their father Shri Jaisingh Choraria and grandfather Balchand Choraria. He pointed out that investigation revealed financial dealings with the SK Financial Services UK and Hassan Ali Khan. The seized documents revealed the unlawful arrangements of money laundering in India, as well as in London by Balchand Choraria and SK Financial Services, which were confirmed by Jaisingh Choraria, in his statement recorded on 29.09.2017. Shri Annand Raghunath Vishwakarma, Accountant of M/s Mitank Trading Company while recording his statements was confronted with number of documents containing details of foreign entities, as well as Indian entities that were seized from the office premises of M/s Mitank Trading Company. Shri Anand Raghunath Vishwakarma admitted that the said documents retrieved from the computer were typed by him on the instructions of Balchand Choraria, or downloaded from E-mail of Jaisingh Choraria. Mita Choraria was Director of M/s Mitank Trading Company; M/s Nakshtra Investment& Trading Company Ltd.; M/s Shivshankar Poles Pvt. Ltd. and M/s Omkara Poles Ltd.; but she was Director fornamesake only, as all the business was looked after by her husband Jaisingh Choraria and father in-law Balchand Choraria. Shri Anand Raghunath also stated that Hassan Ali Khan needs to call Balchand Choraria on his landline number.He stressed that appellants were given proper opportunity of hearing as per procedure, but they failed to clarify the sources of funds for purchasing the said properties/assets. The properties were frozen being involved in money laundering and continuation of the freezing order was required in further investigation, and

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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accordingly, Original Application was allowed by Ld. Adjudicating Authority. He accordingly prayed 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 to the same. The documents were seized after search on various premises in August, 2017, and thereafter,after recording the statements of the suspects/present appellants and other persons, 17 properties were frozen under Section 17(1A) of PMLA, vide freezing orders dated 06.09.2017. The details of all the seizure documents and articles and the details of frozen properties are mentioned in para no.1 above. The same were permitted to be retained by the Adjudicating Authority vide order dated 01.02.2018 passed by the Adjudicating Authority, in Original Application no.117/2017.

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In the present case after completion of investigation prosecution complaint is already stated to be filed by respondent ED. During arguments, Ld. Counsel for both the parties failed to file the details of the seized documents & articles and frozen assets, which are relied upon by respondent ED in the prosecution complaint filed before Ld. Special Judge under PMLA, which were required for trial of the prosecution complaint and/or proposed for confiscation, in case of conviction of the accused persons, under Section 3 of the PMLA, 2002. As per contention of Ld. Counsel for the respondent ED, prosecution complaint is already filed and most of the seized are relied upon in the said prosecution complaint and

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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frozen assets are poposed for confiscation. Accordingly, I am of the view that-

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i). All the un-relied upon documents and digital records, if any, be returned to the appellant, if the same is neither required for the purpose of any further investigation, nor during the trial of the prosecution complaint.

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ii). Appellant is entitled to obtain copies of relied upon documents and cloned copies of digital records cited in the prosecution complaint u/s 208 Cr.P.C., and hence, prayer for releasing such relied upon material/records is hereby declined.

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iii). If respondent ED is also relying upon any retrieved documents or material from the digital record, then the said digital record cannot be permitted to be returned to the appellant, as the same may be required at the time of prosecution evidence, being primary evidence, unless the said retrieved documents are admitted by the appellants U/s 294 Cr.P.C..

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iv). The frozen assets proposed for confiscation, in case of conviction of the accused persons, cannot be released at this stage. Hwever, the appellants are at liberty to claim the same, at appropriate stage as per section 8(6) to 8(8) of PMLA, 2002.

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In the light of my observations in the preceding para, the present appealsarehereby disposed of with the aforesaid direction. It is made clear that nothing expressed herein will affect the defence of the appellants in criminal trials in any manner.

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AppealsDisposed of.

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Pronounced on this 01^st Day of April, 2024.

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Rajesh Malhotra Member

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FPA-PMLA-2207,2337-2339,2211-2214/DLI/2018 Balchand Choraria & Ors. v.ED, Delhi

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Rajesh Malhotra, Member.

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