Dismissed

FPA-PMLA-539/LKW/2013 of Nandani Ramchandani v. The Deputy Director, Directorate of Enforcement, Lucknow

ATFP7 Jun 2024FPA-PMLA-539/LKW/2013

Case brief

AI extract

What is this about?

The Appellate Tribunal under SAFAEMA dismissed appeals against an Adjudicating Authority order confirming property attachment. The Tribunal held that lack of a charge-sheet, retrospective amendments to the PMLA Schedule, and existing bank mortgages were no grounds to release the properties.

What did the court decide?

Appeals dismissed; confirmed attachment of properties valued at approximately Rs. 4.43 crores.

FPA-PMLA-539/LKW/2013 of Nandani Ramchandani 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-538/LKW/2013 Hinish Ramchandani

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(2)FPA-PMLA-539/LKW/2013 Nandani Ramchandani

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(3)FPA-PMLA-540/LKW/2013 Preeti Sewani … Appellants

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Versus

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The Deputy Director, Directorate of Enforcement, Lucknow … Respondent

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Advocates/Authorized Representatives who Argued

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For Appellants : Shri Anuuj Tandon, Advocate.

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For Respondent: Ms. Anubha Bharadwaj, Advocate.

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CORAM SHRI G.C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER

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07.06.2024

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Dictated By Rajesh Malhotra:

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Present appeals are filed against the impugned order dated 26.09.2013 passed by the Adjudicating Authority in Original Complaint No. 194/2013.

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As per the facts of the case, M/s. S.R.S Investment Co. having its office at 7/92, Tilak Nagar, Kanpur 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 by mis-using its overdraft facilities in two Current A/Cs No. 30415528914 & 30660528479. They indulged in the kite flying

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Rajesh Malhotra Member

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G.C. Mishra

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Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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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.

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Respondent-ED registered ECIR/01/PMLA/LZO/2009/AD(NKD)/EO(SK) and conducted investigation with respect to commission of offence under PMLA, 2002. It is pertinent to mention here that previously RespondentED attached the properties of the defendants, including the present 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. 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 in OC no. 136/2012, vide order dated 08.08.2012, worth Rs. 18.83 crores, out of Rs. 18.89 crores.

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After the passing of the previous confirmation order in OC 136/2012, respondent-ED conducted further investigation and passed second Provisional Order no. 01/LKZO/2013 dated 30.03.2013 for attachment of properties amounting to Rs. 9.44

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Rajesh Malhotra Member

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G.C. Mishra Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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crores. Out of the said total proceeds, sum of Rs. 3,96,55,307.40 were found directly invested and the remaining amount of Rs. 5,47,81,819.28 were found invested in the outgoing business concern of M/s Rajiv Filling Station, M/s Rajiv Motors, M/s Tejal Agencies & M/s SRS Laminators, owned and control by defendant No. 1to3.Accordingly, second Original Complaint No. 194/2013 was filed before the Adjudicating Authority for confirmation of the following additional properties: -

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Properties purchased directly from proceeds of crime

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Sl. No.	Particulars of proceeds of crime/properties	Total amount of POC involved (in Rs.)
1.	Plot/House No. 762. Q-Block, Scheme No.1, Kakadev Kanpur Measuring 400 Sq. Yard/ 334.44 Sq. Mtr.	5,00,000.00
2.	Entire ground floor of Premises No. 122/497, Shastri Nagar, Kanpur builtover freehold Plo No. 428 siluaied Block HSN Yojana First. Harihar Nath Shastri Nagar, Kanpur	40,00,000.00
3.	a) Premises No. 187, 'Q' Block Sharda Nagar, Kanpur, built over privately numbered Plot No. 2 (half portion and 3 Indrapuri Sharda Nagar, Kanpur forming part of Arazi No. 460, Sharda Nagar, Kanpur, admeasuring 300 Sq. Yd. 250.92 Sq. Mtr. b) Premises No. 117/Q/337, Indrapuri, Sharda Nagar, Kanpur built over privately numbered Plot No. 1 & 2 (Half Portion), Vinayakpur, Karpur, forming part of Arazi No. 460, Vinayakpur, Kanpur admeasuring 300 Sq. Yds. 250.92 Sq. Mtr. Liable for attachment limited to value of Rs.6 lakhs	6,00,000.00
4.	FDP. for Rs.2.02 Crores with Bank of India, Noida Branch, as detailed below:- i) FDR bearing account no 7114437110000114 for Rs.1.01 croresdated 11.02.2011, and ii) FDR bearing account no. 7114437110000115 for Rs.1.01 crores dated11.02.2011	2,02,00,000.00
5.	FDR for Rs.50,00,000/- With State Bank of Travancore, Tirupur (Tamil Nadu),as detailed below:- i) FDR bearing no. 0390519 (Account No. 67174354778) forRs.25 lakhsdated 19.02.12, and ii) FDR bearing no. 0390657 (Account No. 67186492515) forRs.25 lakhsdated 15.06.12.	50,00,000.00
6.	Vehicle No.UP78-CP-7900- SKODA FABIA	6,96,132.00
7.	Vehicle No.DL1TAJ-2250-BMW (5) CAR To the extent of proceeds of crime invested, subject to condition prescribed in summary of findings to Table- 'C'.	7,24,120.00

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Rajesh Malhotra Member

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G.C. Mishra

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Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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8.	Vehicle No.DL1TAJ-6677-AUDI CAR	10,27,413.00
	To the extent of proceeds of crime invested, subject to condition prescribed in summary of findings to Table- 'C'.
9.	Life Insurance Policies	66,82,642.40
10.	Apartment No. AMN 0071208 at Aman Jaypee Green	2,25,000.00
	To the extent of proceeds of crime invested.
	Total	3,96,55,307.40

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Properties attached as value thereof of proceeds of crime

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S. N.	Details of Properties	Name of the Owner	Date of Purchase/ acquisition	Purchase price (in Rs.)	Market price at the time of purchase (in Rs.)
1.	Building of Mis Rajiv Filling Station Pvt. Ltd. situated at7/92, Tilak Nagar,Kanpur	M/s Rajiv Filling Station Pvt. Ltd., Kanpur	Value taken as on 31/3/10 in the Balance Sheet	1,03,53,386.62	1.03.53.386.62
2.	Land at 7/92, Tilak Nagar, Kanpur. measuring 1265.86 Sq. Mtrs.	M/s Rajiv Filing Station Pvt Ltd., Kanpur	14.02.2007	35.00,000.00	3,13,30.035.00
3.	Flat No.-103, 7/105A, The Villa-II, Swaroop Nagar, Kanpur, measuring 1870 Sq. Ft.	Sh. Hinish Ramchandani, after the death of his father Late Vasudev Ramchandani	27.09.1996	7,00,000.00	8,66,946.00
4.	Basement at 7/105A, The Villa-II, Swaroop Nagar, Kanpur measuring 2700 Sq. Ft,	Sh. Hinish Ramchandani, after the death of his father Late Vasudev Ramchandani	28.05.1999	8,00,000.00	13,35,139.00
5.	Land measuring 1200 Sq. Yds. i.e. 1005 Sq. Mtrs. at 101-A, Nagar, wherein Dada Kanpur, the Factory of M/s SRS Laminator has been constructed and operating.	M/s Tasty Dairy Specialties Ltd., C/1, Udyog Kunj Industrial Area, Panki Site-5, Kanpur.	April 2009	1,01,00,000.00	1,01.00,000.00
			Total	2,54,53,386.62	5,39,35,506.62

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Rajesh Malhotra Member

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G.C. Mishra Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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After hearing all the parties, the Adjudicating Authority confirmed the attachment of the properties of the appellants vide order dated 26.09.2013.

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Aggrieved by the said order dated 26.09.2013, the appellantsfiled the present appeals.

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During the arguments Ld. Counsel for the appellants pointed out that the ECIR was registered on the basis of letter dated 18.11.2009 from Deputy General Manager (Vigilance), State Bank of India. He pointed out that CBI has not filed charge-sheet against the present appellants before Trial Court of Ld. Special Judge, CBI, Court, Lucknow, and accordingly, they are not liable for commission of offence for money laundering under PMLA, 2002, in absence of any charge for commission of any predicate/schedule offence. He further argued that the attachment was confirmed by the Adjudicating Authority only on the basis of statements recorded under Section 50 of the PMLA without any corroborative evidence.

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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, 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.

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Rajesh Malhotra Member

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G.C. Mishra Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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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.

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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 Recovery Certificates 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 attached by 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.

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On the other hand, learned counsel for the respondent-ED strongly opposed the submissions on the ground that commission of offence under PMLA is a continuing offence and the property generated out of proceeds of crime and/or in absence of same the other properties of the appellants can also be attached as value

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Rajesh Malhotra Member

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G.C. Mishra Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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thereof. He further argued that issue of retrospective application of the amended provisions of Schedule is already settled by Hon’ble Supreme Court of India in catena of the judgments.

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He contended that even the mortgaged 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.

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After hearing the rival submissions, we have given our thoughtful consideration to the same. Admittedly, the most of the properties of present appellants are already mortgaged with the bank. The value of the attached properties is quite less than the quantum of fraud committed by the appellants for availing the credit facilities and then siphoning of the funds. This Appellate Tribunal has no inherent jurisdiction to scrutinize and evaluate the quality of evidence collected by the Central Bureau of Investigation and to verify the prima facie case for commission of schedule offences by the appellants.

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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

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Rajesh Malhotra Member

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G.C. Mishra

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Member

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FPA-PMLA-538/LKW/2013 Hinish Ram Chandani v. ED, Lucknow Alongwithtwo connected appeals 539 & 540 of 2013.

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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.

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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 also no ground to release the properties. The said amendments empower respondent-ED to attach the properties, even if the said properties are acquired prior to the said amendments, irrespective of the period of offence.

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In sequel to our above discussion, the present appeals are hereby dismissed being devoid of any merits. The pending applications, if any are also stands disposed of.

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APPEALS DISMISSED .

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Pronounced on this 07^th Day of June, 2024.

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Rajesh Malhotra Member

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G.C. Mishra Member

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‘PS’

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Rajesh Malhotra Member

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G.C. Mishra Member

FPA-PMLA-539/LKW/2013 of Nandani Ramchandani v. The Deputy Director, Directorate of Enforcement, Lucknow

Case brief

What is this about?

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FPA-PMLA-539/LKW/2013 of Nandani Ramchandani v. The Deputy Director, Directorate of Enforcement, Lucknow

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