Dismissed

FPA-PMLA-3069/CHN/2019 of M/s Velugu Power Solutions Pvt. Ltd. v. The Deputy Director, Directorate of Enforcement, Chennai

ATFP14 May 2024FPA-PMLA-3069/CHN/2019

Case brief

AI extract

What is this about?

A single bench of the Appellate Tribunal dismissed appeals challenging an order staying the release of seized currency and documents. The Tribunal refused release as documents were part of the filed prosecution complaint and appellants failed to show illegality. An appeal by a non-owner was also dismissed for lack of interest.

What did the court decide?

No release ordered for retained currency and documents; appeal by non-owner dismissed.

FPA-PMLA-3069/CHN/2019 of M/s Velugu Power Solutions Pvt. Ltd… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. MP-PMLA-6053/CHN/2019 Exem. MP-PMLA-6054/CHN/2019 Stay FPA-PMLA-3047/CHN/2019 Shri KakulamarriKalyan Srinivas Rao … Appellant 2. MP-PMLA-6112/CHN/2019 Exem. FPA-PMLA-3069/CHN/2019 M/s Velugu Power Solutions Pvt. Ltd. … Appellant Versus The Deputy Director, Directorate of Enforcement, Chennai … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants : Mr.Ayush P Shah, Mr. NishanthPatil, Advocates For the Respondent : Mr. PriyankKhattar, Advocate CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI BALESH KUMAR : MEMBER

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FINAL ORDER 14.05.2024

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FPA-PMLA-3047/CHN/2019

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The appeal has been preferred under section 26 of the

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Prevention of Money Laundering Act, 2002 to challenge the order

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dated 19.03.2019 passed by the Adjudicating Authority confirming

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FPA-PMLA-3047, 3069/CHN/2019

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Page 1 of 8

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the retention of the currency of Rs. 20 lakhs and the documents

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apart from the gadgets.

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2. The details of which are as under:-

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SI. No. Details of property

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Indian Currency of Rs. 20,00,000

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One Apple Laptop Model A146 Serial C01MXFVKG086

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Urban Infrastructure Opportunities Fund

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Deccan Aqua Limited

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Urban Infrastructure Venture Capital

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Share Purchase Agreement dated 17.07.2015

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Urban Infrastructure Trustee Pvt. Ltd.

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Sale deed 10327/2002 dated 23.11.2002

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Sale deed No. 6564/2012 dated 05.10.2012

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Agreement for sale 8436 dated 06.04.2018

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Guarantee Deed 45434/04.08.2003

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Bank Statement of A/C No. 3095687829 held in the name of M/s Best & Crompton Engineering Project

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Best & Memorandum & Articles of Association

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Sale deed 9329 dated 13.02.2004

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Agreement of Sale 8055 dated 27.02.2003

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Agreement of Sale 3007 dated 19.09.2002

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Sale deed 1442/2002 dated 25.01.2002

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SBI Life insurance policy No. 44051095208 in the name of K. Srinivas Kalyan Rao

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SBI Life insurance policy No. 44051098203 in the name of K. V. Sharmila Rao

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Max Life insurance policy No. 712919992 in the name of K. VenkataSharmila Rao

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Max Life insurance Policy No. 712897933 in the name of K.

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FPA-PMLA-3047, 3069/CHN/2019

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Page 2 of 8

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Srinivas Kalyan Rao

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Income Tax Returns for the year 2009-2010, 2011-2012 of K. Srinivas Rao

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Sale deed 2274/1996 dated 17.04.1996

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Agreement of sale 9148 dated 19.10.2001

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CDSL Instruction slip for Delivery/Receipt

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Best & Crompton engineering Projects Itd., Annual Reports 2011 to 2012

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Letter of Guarantee dated 16.10.2002

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Share Purchase Agreement No. 112363 dated 14.11.2006

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Loose papers containing Investments

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Loose papers containing Bank Account details & others

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Loose Papers

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Blue Box file containing various documents

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The allegation against the accused is for laundering of money worth Rs. 364 crores. The mainallegation exist against appellant Company apart from others.

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The learned counsel for the appellant submitted that the prosecution complaint has already been filed and if the documents retained apart from the gadgets are part of the prosecution complaint, no reason remains to retain those documents and gadgets. Accordingly, it may be released apart from release of a sum of Rs. 20 lakhs.

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FPA-PMLA-3047, 3069/CHN/2019

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Page 3 of 8

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The prayer has been opposed by the respondents. It is submitted that appellant was Managing Director of M/s Best and Crompton Engineering Project Limited and the ECIR refers to the predicate offence.

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It is submitted that on 09.08.2010, a request for sanctionof working capital facilities of Rs. 300 crore was made to Central Bank of India. The application was signed by Shri BellariMurali and on it, Central bank of India sanctioned FB limit of 40 Crores and NFBlimit of 80 Crores. After the sanction of loan, the appellant joined the Company and thereupon the loan amount was not repaid rather account was declared to be NPA. On 22.10.2014, the account of the Company was declared „fraud‟ and accordingly FIRwas registered by CBI, Bangalore against the appellant and others. The ECIR was thereupon recorded on 27.04.2016.

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The only plea raised by the appellant was his joining the Company subsequent of the sanction of loan. It is however a fact that pursuant to the investigation, the prosecution complaint has

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been filed where the seized documents are part of PC. Therefore no reasons reveals to release the documents or the gadget which now

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FPA-PMLA-3047, 3069/CHN/2019

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Page 4 of 8

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forms part of the PC. The amount of Rs. 20,00,00 has been retained as the allegation for commission of the scheduled offence is of Rs.

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364crores against the accused and the allegation of abetment exist against the appellant as well. The prayer is to dismiss the appeal as no substance remains after filing of the PC where the seized documents are part of it. The copy of which would be available with the appellant.

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We have considered the submission and find that the FIR was

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registered by the Central Bank when the account of the Company was declared fraud. It is after declaring account to be “Non

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Performing Assets.”

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The appellant KakulamarriKalyan has failed to give sourcefor

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the possession ofa sum of Rs. 20lakhs seized at the time of search and seizure and otherwise prosecution complaint has already been filed containing the documents. We find no reason to order for release of the documents and the currency. The appellant could not show any illegality in the order other than to state that

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appellant joined the Company after sanction of loan ignoring the

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fact that the default was committed in repayment and the account

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FPA-PMLA-3047, 3069/CHN/2019

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Page 5 of 8

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was declared to be fraud while the appellant was the Managing Director.

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In the background aforesaid and taking into consideration the

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subsequent development, we do not find any reason to cause interference in the order and accordingly appeal fails and dismissed.

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FPA-PMLA-3069/CHN/2019

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The appeal is directed against the order dated 19.03.2019 passed by the Adjudicating Authority pursuant to the original application number (OA No. 263/2018) filed under section 17 of Prevention of Money Laundering Act, 2002.

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The impugned order was passed by the Adjudicating Authority

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on the application sent to it for confirmation under section 17 (4) of the Act of 2002. The Indian currency worth Rs. 20 lakhs apart from (63) other documents were retained out of search and seizure.

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FPA-PMLA-3047, 3069/CHN/2019

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The appeal against the order has been filed and during the

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course of argument, the counsel for the appellant was asked to refer to the documents or any material retained under section 17 of the Act of 2002 with its confirmation by the Adjudicating Authority belongs to the appellant. Since it was made party followed by the order, the appeal was filed. Though till date, none of the rights of the appellant are affected. The seized documents and currency belongs to others.

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In the light of the aforesaid, the prayer was made to dispose of the appeal.

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We have considered the submission and could not find reason

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for the appellant to file the appeal who is not affected by the outcome of the order. It is admitted that none of the documents and even the currencynotes does not belong to the appellant Company and it is not even an accused.

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