Appellants challenged proceeds of crime attachment orders against properties mortgaged to banks. The Tribunal held non-charge-sheeting is not a ground for release and upheld attachment despite Schedule amendments and bank liens under PMLA.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
Versus
The Deputy Director, Directorate of Enforcement, Lucknow
Respondent
Advocates/Authorized Representatives who Argued
For Appellants : Shri Anuuj Tandon, Advocate,
For Respondent: Shri Arjun Sawhney, Advocate,along with
Ms. MansiSrivastava, Advocate.
CORAM
SHRI G.C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER
FINAL ORDER
07.06.2024
Dictated By Rajesh Malhotra:
Present appeals are filed against the impugned order dated 08.08.2012 passed by the Adjudicating Authority in Original Complaint No. 136 of 2012. As per the facts of the case, M/s. S.R.S Investment Co. having its office at 7/92, Tilak Nagar, Kanpur
Rajesh Malhotra Member
G.C. Mishra
Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
2
through its partner Hinish Ram Chandani committed fraud with State Bank of India, Main Branch, Kanpur to the extent of Rs.46.42 crores during the period from June, 2008 to July, 2009 in collusion with certain officers of the bank the abusing its overdraft facilities in two Current A/Cs No. 30415528914 & 30660528479. They indulged in the kite flying transactions to commit the fraud. On the basis of complaint CBI, Banks Securities & FraudCell, New Delhi, conducted investigation in case FIR No. RC.BD1/2009/F/0014 dated 20.08.2009, and thereafter, filed charge-sheet on 25.03.2011 before learned Special Judge, CBI Court, Lucknow against M/s. S.R.S Investment Co., its partner Hinish Ram Chandani certain officers of State Bank of India, Main Branch, Kanpur, for commission of offences under Section 120B IPC r/w 420 IPC and also r/w Section 7,11,12 & 13(2) r/w 13(1) (d) of Prevention of Corruption Act, 1988 and substantive offences thereunder.
Respondent-ED registered ECIR/01/PMLA/LZO/2009/AD(NKD)/EO(SK) and conducted investigation with respect to commission of offence under PMLA, 2002. Respondent-ED attached the properties of the defendants (herein appellants) vide Provisional Attachment Order No. 01/2012 dated 31.03.2012 and thereafter, filed Original Complaint No.136/2012 before the Adjudicating Authority for confirmation of the properties. The details of said properties is mentioned as under:
Table ‘A’
DETAILS OF THE PROPERTIES IN WHICH THE PROCEEDS OF CRIME HAS BEEN FOUND TO BE INVESTED BY M/s. SRS INVESTMENT CO.
| S.N . |
Details of properties | Name of the purchaser |
Date of purchase |
Amount involved |
Stamp duty paid(in Rs.) |
Total amount involved(in Rs.) |
|---|---|---|---|---|---|---|
| 1. | 113/24, Ambe Bhawan Swaroop Nagar,Kanpur |
M/s. SRS Developers |
29.05.09 | Rs. 2.40 Crores |
20,65,000/- | 2,60,65,000/- |
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
3
| 2. | 112/354, Swaroop Nagar,Kanpur |
-do- | 28.05.09 | Rs. 1.30 Crores |
9,10,000/- | 1,39,10,000/- |
|---|---|---|---|---|---|---|
| 3. | 7/182(2), Swaroop Nagar, Kanpur, Builtover free hold plot No. 39-A in block B Scheme No. VII,Gutaiya,Kanpur |
Sh. Hinish Ram Chandani |
14.07.09 | Rs. 70/- Lacs |
5,91,500/- | 75,91,500/- |
| 4. | Arazi No. 305, Khata No. 0022 satiated at Vill. Bhelamau, Tehsil, Pargana & Distt. Kanpur City |
-do- | 02.03.09 | Rs. 16 Lacs |
1,18,500/- | 17,18,500/- |
| 5. | Bunglow No. 18,7/33, Tilak Nagar,Kanpur |
M/s SRS Developers |
23.09.09 | Rs. 80/- Lacs Tota |
5,97,000/- l Rs. 5,78,8 |
85,97,000/- 2,000/- |
Table ‘B’
DETAILS OF DIFFERENT STOCKS/FUNDS, IN WHICH PROCEEDS OF CRIME INVESTED
| S.N . |
Details of Funds | Name of the Investor |
Date of Investment/period of trading as shown in Ledger A/c |
Amount Invested |
|---|---|---|---|---|
| 1. | M/s. India Inforline Ltd., Kanpur |
i)M/s. SRS Investment Co. ii) Smt. Nandini Ram Chandani |
03.10.2008 to 02.09.2009 01.02.2008 to 27.08.2009 |
Rs. 46 lacs were invested whose value as on 02.09.2009 is Rs. 42,24,148.82 Rs. 110 lacs were invested whose value as on 27.08.2000 Rs. 94,64,560.93 |
| 2. | M/s. Milestone Real Estate Fund, Mumbai |
M/s. SRS Investment Co. |
15.07.2008 14.01.2009 22.03.2010 |
Rs. 2.00 Lacs Rs. 3.00 Lacs Rs. 4.00 Lacs Rs. 9.00 Lacs |
| 3. | M/s Cinema Capital Venture Fund, Mumbai |
Sh. Hinish Ram Chandani |
30.04.2009 | Rs. 6.25 Lacs |
| Total Rs.1 | ,52,13,709.75 |
TABLE ‘C’
DETAILS OF THE BANK ACCOUNTS WITH BALANCE IN WHICH THE PROCEEDS OF CRIME HAS BEEN PARKED
| S.N. | Account No. | Name of the A/c holder |
Name & the Bank |
address of |
Closing Balance |
|---|---|---|---|---|---|
| 1. | 0041-A07320-050 | M/s SRS Investment Co. Kanpur |
Induslnd Swaroop Kanpur |
Bank, Nagar, |
Rs.19,19,500.80 As on 07.07.2011 |
| 2. | 0041-A07389-001 | Sh. Hinish Ram Chandani |
Induslnd Swaroop Kanpur |
Bank, Nagar, |
Rs. 5,47,185.40 As on 07.07.2011 |
| 3. | 0041-A07390-001 | Smt. Nandini Ram Chandani |
Induslnd Swaroop Kanpur |
Bank Nagar, |
Rs. 94,793.06 As on 07.07.2011 |
| 4. | 0041-A07965-060 | M/s SRS Developers, Kanpur |
Induslnd Swaroop Kanpur |
Bank Nagar, |
Rs.12,756.00 As on 07.07.2011 |
| 5. | 3094801010120851 | M/s SRS Investment Co. |
Union India, |
Bank of Swaroop |
Rs. 22,570.94 As on 08.07.2011 |
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
4
| Nagar,Ka | npur | ||||
|---|---|---|---|---|---|
| 6. | 008005000339 | -do- | ICICI Nakodar B |
Bank, ranch |
Rs. 6,08,670.96 As on 06.08.2009 |
| 7. | 008005000336 | Sh. Hinish RamChandani |
-do- | Rs. 23,096.28 As on07.08.2009 |
|
| 8. | 00OD00008201 | M/s SRS Developers, Kanpur |
Developm operative Ltd. Swaroop Kanpur |
ent Co- Bank 113/167, Nagar, |
Rs. 1,972.00 As on 03.05.2010 |
| 9. | 007390100001240 | Sh. Hinish Ram Chandani |
Yes Bank, | Kanpur | Rs. 60,719.46 As on 18.07.2011 |
| 10. | 007340400002854 | -do- | -do- | Rs. 5,02,396.00 As on 18.07.2011 |
|
| 11. | 133010100143387 | Smt. Nandini Ram Chandani |
Axis Bank | , Kanpur | Rs. 32,735.84 As on 04.06.2011 |
| 12. | 0041-A07782-001 | Smt. Preeti Sewani |
Induslnd Swaroop Kanpur |
Bank, Nagar, |
Rs. 50,394.94 As on 07.07.2011 |
| 13. | 099801503024 | -do- | ICICI Swaroop Kanpur |
Bank, Nagar, |
Rs. 18,157.00 As on 18.07.2011 |
| 14. | 099801503025 | Smt. Nandini Ram Chandani |
-do- | Rs. 5,775.00 As on 11.07.2011 |
|
| 15. | 099801501520 | Sh. Hinish Ram Chandani |
-do- | Rs. 6,374.99 As on21.07.2011 |
| Total Rs. 39,07,098.67 |
|---|
TABLE ‘D’
DETAILS OF THE PROCEEDS OF CRIME INVESTED IN THE M/s. SRS LAMINATORS, 101-A, DADA NAGAR, KANPUR
| S.N. | Property Details |
Proceeds of Crime Invested |
|---|---|---|
| 1. | Fixed Assets of M/s. SRS Laminators, 101-A, Dada Nagar, Kanpur |
Fixed assets amounting to Rs. 2,01,98,916.04 pertaining to M/s SRS Laminators, Kanpur have been attached, as the same were acquired out of proceeds of crime amounting to Rs. 2,18,81,844.45, invested by Smt. Preeti Sewani and Sh. |
| Hinish Ramchandani as partner’s capital in this company | ||
| during the Financial Year 2009-10 as reflected in the | ||
| balance sheet for the A.Y. 2010-11. |
TABLE ‘E’
DETAILS OF PROCEEDS OF CRIME INVESTED IN THE IMMOVABLE PROPERTIES BY M/s. SRS INVESTMENT COMPANY, KANPUR AND ITS PARTNER SH. HINISH RAMCHANDANI
| S.N. | Details of Properties/Builder | Date of Booking/A llotment |
Proceeds of crime invested |
Name of the Allottee/Purc haser |
|---|---|---|---|---|
| 1. | Flat No. N-17/1804, Jaypee Aman, Sector 151, Noida |
20.03.10 | Rs. 5.54 Lacs |
Sh. Hinish Ramchandan |
| **Builder-**M/s Jaypee Infra Tech | i | |||
| Ltd.,, Sector-128, Noida-201304 |
Rajesh Malhotra Member
G.C. Mishra
Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
5
| 2. | (UP). Plot No. 142, Sector-5, Mega Polish Project. **Builder-**Ansal Hi-tech Township, Greater Noida M/s Ansal Hi-Tech Township Ltd. Head Office at 115, Ansal Bhavan, 16-Kasturba Gandhi Marg, New Delhi-110001 |
17.07.08 | Rs. 14.68 Lacs |
M/s. SRS Investment Company, Kanpur |
|---|---|---|---|---|
| 3. | Plot No. 271, Sector-5, Mega Polish Project, Ansal Hi-tech Township, Greater Noida **Builder-**Ansal Hi-Tech Township, Greater Nodida M/s. Ansal Hi Tech Township Ltd., Head Office at 115, Ansal Bhavan, 16-Kasturba Gandhi Marg, New Delhi-110001 |
17.07.08 | Rs. 11.52 Lacs |
-do- |
| 4. | Plot No. 272, Sector-5, Mega Polish Project, Ansal Hi-Tech Township, Greater Noida **Builder-**Ansal Hi Tech Township, Greater Noida M/s Ansal Hi-Tech Township Ltd. Head Office at 115, Ansal Bahavan, 16-Kasturba Gandhi Marg, New Delhi-110001 |
17.07.08 | Rs. 11.52 Lacs |
-do- |
| 5. | Plot No. 43, Sector 3-C, Mega Polish Project, Ansal Hi-Tech Township, Greater Noida **Builder-**Ansal Hi-Tech Township Greater Noida M/s. Ansal Hi-Tech Township Ltd. Head Office at 115, Ansal Bhavan, 16-Kasturba Gandhi Marg, New Delhi-110001 |
12.07.08 | Rs. 14.46 Lacs |
-do- |
| Total | Rs. 57.72 Lacs |
Table ‘F’
DETAILS OF THE PROCEEDS OF CRIME INVESTED WITH M/S TASTY DAIRY SPECIAL TILES LTD., KANPUR AND ITS MANAGING DIRECTOR SHRI ATUL MEHRA
| S.N. | Details of property | Amount of Proceeds of Crime invested therein |
|---|---|---|
| 1. | Three Confirmation of Deposits Receipts (FDRs) for a) Rs. 2.60 Crores dated 27.06.2011 (A/c No. 074600GM00000023) |
Rs. 4,52,11,000/- |
| b) For Rs. 1.91 Crores dt. 29.06.2011 (A/c No. 074600GM00000032) & |
||
| c) For Rs. 1.11 lacs dt. 29.06.2011 (A/c No. 074600GM00000037) being the interest amount earned out of the funds received from M/s SRS Investments. |
||
| All issued by Punjab National Bank, Pandu Nagar Branch, Kanpur favoring Tasty Dairy Specialties |
||
| Ltd., C-1 to C-5, Udyog Kunj, Panki Site-V, Kanpur, Uttar Pradesh. |
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
6
Table ‘G’
DETAILS OF THE PROCEEDS OF CRIME IN POSSESSION OF M/s. GOVERDHAN HOMEBUILDER PVT. LTD. 55/63, KAHOOD KOTHI, KANPUR & OTHERS
| S.N. | Details of property | Amount of proceeds of crime invested therin |
|---|---|---|
| 1. | Two Term Deposit Receipt Nos. 31854477005 & 31854478270 both dated 26.07.2011 for Rs. 90/- Lacs & Rs. 60/- Lacs issued from State Bank of India, Halsey Road Branch, Kanpur, favoring M/s. Goverdhan Homebuilder Pvt. Ltd.,Kanpur, at 55/63,KahooKothi,Kanpur respectively. |
Rs. 1.50 Crores |
| 2. | TDR No. 31854476114 dated 26.07.2011 for Rs. 65/- Lacs & TDR No.31856095705 dated 27.07.2011 for Rs. 55/- Lacs, both issued from State Bank of India, Halsey Road Branch, Kanpur favoring M/s. Goverdhan Home Property Pvt. Ltd. havingat 55/63,Kahoo Kothi,Kanpur. |
Rs. 1.20 Crores |
| 3. | TDR Nos. 31858138068 & 31858139764 both dated 28.07.2011 Rs. 65/- Lacs & Rs. 35/- Lacs, both issued from State Bank of India, Halsey Road Branch, Kanpur favoring Shri Goverdhan Khatri,55/63,Kahoo Kothi,Kanpur. |
Rs. 1.00 Crore |
| 4. | TDR No. 31854474729 for Rs. 4/- Lacs favoring Smt. Simi Khatri, TDR No. 31854471003 for Rs. 4/- Lacs favoring Smt. Maya devi, TDR No. 31854475371 for Rs. 4/- Lacs favoring Smt. Milli Khatri, TDR No. 31854471897 for Rs. 15/- Lacs favoring Smt. Rashmi Khatri & TDR No. 31854480198 for Rs. 11/- Lacs favoring Smt. Mohini Devi all dated 26.07.2011 and issued from State Bank of India, HalseyRoad Branch,Kanpur |
Rs. 38/- Lacs |
Total. 4.08 Crores
After receiving the complaint Adjudicating Authority issued the notice to all the persons and after going through the material on record it confirmed the attachment of the properties referred therein, (reproduced in the above tables) except the followingproperty:-
Investment of Rs. 6.25 lacs in M/s. Cinema Capital Venture Fund (Item No.3 of Table B of the Complaint) (in respect of Defendant No. 21, i.e. M/s. Cinema Capital Advisory Pvt. Ltd.)
The Adjudicating Authority also restricted the attachment to
the extent of Rs.554500/- with respect of following property:-
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
7
Flat No. 17/1804, Jaypee Aman, Sector-151, Noida (Item No. 1 of Table E of the Complaint) in respect of Defendant No. 22 i.e. M/s Jaypee Infratech.
Whereas, all other properties were confirmed for attachment.
Aggrieved by the said order dated 08.08.2012,the
appellantshave filed the present appeals.
He further argued that Section 420 IPC was added for the first time in the schedule to the PMLA Act with effect from 01.06.2009 and Section 13 of PC Act was added by way of amendment in the schedule with effect from 15.02.2013, whereas,
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
8
in the present case the alleged offences were committed before the said amendments, and hence, appellant cannot be prosecuted under Section3 r/w 4 of PMLA, 2002, as appellants cannot be made liable for the acts committed prior to amendments. The said amendment cannot be made applicable retrospectively.
He further argued that CBI failed to appreciate the facts that the present case is not a case punishable under Section 420 of IPC, but it is a case of availing the genuine loan facility for the purpose of business, which unfortunately resulted in the business losses. The appellants have not committed the offence of fraud at any stage while availing loan facilities.
He further pointed out that all the properties of the appellants furnished to the bank for availing credit facilities are already taken over by the concerned banks. Many RecoveryCertificates are already issued by Debt Recovery Tribunal at Allahabad against the appellants and the Recovery Officers of DRT are unable to auction the properties,as the same are already attachedby respondent ED in the present case. He submitted that appellants have no objection if the said properties are taken over by the bank for auction of the same, as appellants are incurring losses on account of accumulating interest on the decretal amount,as mentioned in the Recovery Certificates issued by DRT. He argued that the excess amount after auction be ordered to be returned to the respective appellants, as there is no other claimant for the same, except the bank.Prayer is accordingly made to allow the present appeals and thereby, set aside the impugned order so that properties can be auctioned by the bank for realizing its debts.
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
9
He contended that even the mortgage property with the banks cannot be released at this stage as provisions of PMLA will prevail over the DRT Act and SARFAESI Act. He submitted that after the conclusion of criminal trial, only Ld. Special Judge, PMLA Court, is empowered to deal with the property as per Section 8(5) to 8(8) of PMLA, 2002. Accordingly, he prayed that present appeals be dismissed, being devoid of any merits.
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
10
The fact that some of the appellants are not charge sheeted
by CBI is no ground to release the attached properties in their favor, as respondent-ED during investigation has to see whether the proceeds of crime were layered among different persons by diverting the credit facilities. The person whosoever is found in possession of the proceeds of crime whether directly or indirectly and whether intentionally or unintentionally, he is liable for confiscation of his properties as direct proceeds of crime, or value thereof, in absence of proceeds of crime. The fact that most of the properties are mortgaged with the bank and Recovery Certificates are already issued in favor of the banks is no ground to release the said mortgaged properties, as the said bank is at liberty to stake its claim before learned Special Judge, PMLA Court, appropriate stage, as per the provisions of Section 8 of PMLA.
The fact that Section 420 IPC was inserted in the schedule of PMLA with effect from 01.06.2009 and provisions of Section 13 of Provision of Corruption Act, 1988 was also inserted with effect from 01.06.2009 and the properties are acquired or offence is committed prior to the said amendments in the Schedule, the same is alsono ground to release the properties. The said amendmentsempower respondent-ED to attach the properties, even if the said properties are acquired prior to the said amendment, irrespective of the period of offence.
APPEALS DISMISSED .
Rajesh Malhotra Member
G.C. Mishra Member
FPA-PMLA-392/LKW/2012 Hinish Ram Chandani v. ED, Lucknow Alongwithsix connected appeals No. 393 to 397 & 404 of 2012.
11
Pronounced on this 07th Dayof June, 2024.
Rajesh Malhotra Member
G.C. Mishra Member
‘PS’
Rajesh Malhotra Member
G.C. Mishra Member
3 issues framed by the court
Whether non-charge-sheeting by CBI is ground to release attached properties under PMLA.
Whether retrospective application of amended Schedule offences (post-2009) invalidates attachment of properties acquired prior to amendments.
Whether mortgage interests of banks under DRT/SARFAESI Act prevail over attachment provisions of PMLA.
Colour shows how this judgement treated each authority
Hon'ble Supreme Court of India in catena of the judgmentsReferred¶97
4 provisions across 3 enactments
Hinish Ram Chandani
Smt. Nandini Ram Chandani
M/s SRS Developers
Shri Ashish Sewani
Smt. Preeti Sewani
M/s SRS Investment Co.
G.C. MISHRA
RAJESH MALHOTRA
As recorded by the court registry
14 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
