Dismissed

FPA-PMLA-998/KOL/2015 of Orissa Millennium Education Trust v. The Deputy Director Directorate of Enforcement, Kolkata

ATFP6 Jun 2024FPA-PMLA-998/KOL/2015

Case brief

AI extract

What is this about?

The appellate tribunal dismissed the appeal filed by Orissa Millennium Education Trust against the confirmation of provisional attachment of its land under PMLA. The court rejected the claim that government joinder was necessary for leased property, also holding the 365-day prosecution complaint limit inapplicable as the complaint predated the amendment and that attachment was valid despite the tr

What the court decided

AI extract

FPA-PMLA-998/KOL/2015 of Orissa Millennium Education Trust Vs… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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MP-PMLA-11956/KOL/2023 (Misc.) MP-PMLA-5154/KOL/2019 (Misc.) MP-PMLA-2120/KOL/2015 (Stay) MP-PMLA-1943/KOL/2015 (Permission) FPA-PMLA-998/KOL/2015

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Orissa Millennium Education Trust … Appellant Versus The Deputy Director Directorate of Enforcement, Kolkata … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellant : Dr. Shamshuddin, Adv. Mr. Anup Kumar Pandey, Adv. For the Respondent : Mr. N. K. Matta, Adv. Mr. Mehul Prasad, Adv. CORAM SHRI G. C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER 06.06.2024

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Dictated by Shri G.C. Mishra, Member:

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The appeal was heard on 22.11.2023 and liberty was granted to both the sides to file additional submissions/documents, if any, within two weeks. Ld. Counsel for the Appellant Trust filed additional written submissions on 13.12.2023 and in addition Respondent has filed the copy of prosecution complaint dated 31.03.2016 and copy of cognizance order dated 16.11.2016 on 18.12.2023 along with judgments in support of their submissions. The same are taken on record. The appeal was heard on 08.04.2024.

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2. The present appeal has been preferred by the Appellant against the order dated 01.06.2015 passed by Ld. Adjudicating Authority under

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FPA-PMLA-998/KOL/2015

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Prevention of Money Laundering Act, 2002 (PMLA- 2002) in Original Complaint (OC) No.411/2015 seeking following reliefs:-

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i) The impugned order of the Adjudicating Authority passed against the Appellant on 01.06.2015 in Original Complaint No.411/2015 in ECIR No. 02/BSZO/2014 dated 09/01/2015 confirming the said PAO, be quashed and set aside as not maintainable on the facts and circumstances of the case, and

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ii) The immovable property of the Appellant as detailed Khata No. 68, Plot No. 4, Tahasil: Jatni, Village: Harapur, District – Khurda, Area: 20 Acres, Odisha be released from the provisional attachment.

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3. Brief facts of the case.

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The Enforcement Directorate provisionally attached 20 acres of land in Khata No. 68, Plot No. 4, Tahasil Jatni, Village: Harapur, District – Khurda and building thereon of Bhubaneshwar Institute of Technology (BIT). It is, inter alia , seen from the record that the Orissa Millennium Education Trust (OMET) i.e. the Appellant is a trust established on 20.03.2006 by way of a registered trust deed founded by Rabi N. Mahapatra (Founder/Author), Mrs. Sumita Panda, Mrs. Sarojini Tripathi, Mr. Hari Arjun Patro, Mr. Dhirendra Behera, Mr. Tapan Padhi, Mr. Loknath Patro & Mr. Niranjan Tripathi. The said trust was established with aims and objects as mentioned in the trust deed dated 20.03.2006 and, accordingly, it was endeavored to establish the Bhubaneshwar Institute of Technology at Harapur in District Khurda near Bhubaneswar, Odisha and for the aforesaid purpose the trust entered into lease deed with Governor of State of Odisha by way of lease deed dated 11.01.2007 for the parcel of land admeasuring 20 acres in the said village on lease for

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a period of 99 years upon the payment of premium of Rs.20,00,000/- as per the Industrial Policy Resolution, 2001 with annual rent of Rs.20,000/along with annual cess of Rs.15,000/- and the rent is subject to revision in every 25 years with conditions as provided in the said lease deed.

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4. It is also revealed from the pleadings of the Appellant Trust that it commenced the construction of the college building in the financial year 2007-2008. The book value of under construction of the college building was Rs.1,01,84,941/- at the end of the financial year 2007-2008 and that it was fully financed by the funds of the trust as it stood then which includes the contribution made by eight new trustees as well as a loan amount of Rs.48,55,129/- from founders of BIT. The new trustees were inducted, after the departure of six of the seven initial trustees.

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5. The BIT got AICTE Affiliation India, 2008 and the construction of college building continued in the financial year 2008-2009. By the end of the financial year 2008-2009, the book value of the under-construction college building was Rs.4,70,44,900/- (rupees four crores seventy lacs forty four thousand and nine hundred only) entirely financed by the Trust, which includes the contributions either from any of its initial or existing trustees or from Syndicate Bank (Rs.5,05,77,261/-) or from FroBITs until the end of financial year 2008-2009 and represent proceeds of crime and that a charge was created in favor of the Bank on the land of 20 Acres as well as building to be constructed thereon and that the Appellant Trust started generating revenues for the first time in the financial year 20092010.

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6. It is also pleaded by the Appellant Trust that one Shri Prasant Kumar Dash (Shri Dash) was inducted as a trustee in the Appellant Trust on 11.11.2009 by way of a nomination by the Founder Member and Chairman Ravi N. Mahapatra unaware of the fact that Shri Dash could be engaged in a criminal activity and that the trustees of the Appellant Trust became aware about the allegations of financial irregularities committed by Shri Dash in the month of July, 2012 when the matter was reported in the Media and then the trustees convened an emergency telephonic meeting on 20.07.2012 and passed resolutions to remove Shri Prashant Kumar Dash from the position as a trustee in the Appellant Trust.

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7. The Appellant Trust, in its pleading has admitted that between the period 2009-2012 Shri Prasant Kumar Dash had, in a phased manner contributed a sum totaling Rs.9,01,66,000/- to the corpus of the Appellant Trust and the founder/chairman of the trust asked Shri Dash to vacate the trust vide their letter dated 21.07.2012. However, construction of the college building continued during the period when Shri Dash was a trustee in the Appellant Trust and the construction of the college building was carried out by the contributions as stated above and there is no evidence on record to suggest that the contributions of Shri Dash were used towards the constructions of the building.

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8. It is also revealed from the pleadings of the Appellant Trust that the total loans drawn from the Syndicate Bank until the end of financial year 2012-2013 was Rs.6.8 Crores and the total loan drawn from FroBITs until the end of financial year financial year 2012-2013 was Rs.80,29,530/and that the total revenues generated by the Appellant Trust since 2009 till the end of financial year 2012-2013 were Rs.8,74,11,504/-. The

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Appellant Trust has referred to the audited balance sheet of the Appellant Trust until the aforesaid financial year and that the trust had requisite funds and sources of income to construct the College Building.

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9. In the memo of appeal, the Appellant Trust has stated about the registration of ECIR, FIR etc. It is stated, therein, that on 13.06.2014 the Sub-Zonal Office of the ED at Bhubaneswar registered ECIR bearing No.02/BBSR/2014 against Shri Prasant Kumar Dash & Ors. for initiating action under the PMLA, 2002 on the basis of FIR registered by the Economic Offence Wing (EOW) of the Crime Branch of Orissa Police and subsequent charge-sheet bearing No.9 dated 22.03.2014, which was filed u/s 173 of the CrPC in the Court of SDJM, Bhubaneswar and that the charges were made u/s 420, 467, 478, 471, 120-B/34 of IPC, which is a schedule offence under the provisions of PMLA, 2002. It is revealed from the pleadings that Shri Sanjay Kumar Mahapatra, Director in charge of the BIT was examined u/s 50, who disclosed that Shri Dash made a contribution of Rs.10,01,66,000/- out of which he had received back Rs.1 Crore resulting in his contribution of Rs.9,01,66,000/- to the Appellant Trust. Shri Mahapatra submitted a copy of the lease deed etc., details of land and building and its approximate costs and, thereafter, the ED has passed the Provisional Attachment Order on 09.01.2015. Thereafter, OC bearing No.411/2015 in ECIR/02/BSZO/2014 dated 09.01.2015 before the Adjudicating Authority for confirmation.

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10. The Appellant Trust after receiving of Show Cause Notice appeared before the Adjudicating Authority and contested the same by filing reply along with Annexures. Being not satisfied with the same, on 01.06.2015

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the Ld. Adjudicating Authority confirmed the PAO, against which the present appeal has been filed.

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11. Grounds of Appeal in brief.

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The Appellant Trust has, inter alia , taken the following grounds:

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A. The Adjudicating Authority acted contrary to and in excess of its power and jurisdiction and its order is also contrary to law;

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B. Principle of natural justice has not been followed by the Adjudicating Authority, wrongfully rejected the evidence submitted by the Appellant by drawing inferences contrary to the real facts;

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C. Shri Dash has made the offence and without the knowledge of the Appellant induced the proceeds of crime in the Appellant Trust;

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D. There was no allegation that any of the funds of the Appellant Trust until the end of the financial year 2008-09 represents proceeds of crime;

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E. The first charge of the college building vests with Syndicate Bank;

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F. The trustees were not aware of involvement of Shri Dash at the time of induction into the trust and that after they came to know about the financial irregularities resolution was passed asking Shri Dash to vacate the position as a trustee in the Trust;

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G. The Adjudicating Authority has failed to take the cognizance of audited balance sheet until the financial year 2012-13;

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H. The Syndicate Bank was not heard to prove that the property in question was not involved in money laundering;

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I. The future of the students has not been considered by the Adjudicating Authority;

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J. the Adjudicating Authority has erred in not considering the undertaking of the Appellant Trust in his reply that the Appellant Trust shall cooperate with the Enforcement Directorate for repayment of money received from Prashant Kumar Dash;

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Besides above there are repetition of the facts in the grounds. So, the same are not mentioned here.

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12. Grounds in the Reply to the Appeal.

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The Respondent ED submitted reply to the appeal in writing, inter alia , on following facts and grounds:

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A. That the contribution made by Shri Dash was aimed at and utilized for making payment to the trustees and phasing out them gradually as per the letter of intent and also for repayment of bank loan and that the money contributed by Shri Dash after his induction as trustee, the said payment made by him to the Institute was much higher than the loan outstanding and contributions of existing trustees. Hence, the sick institute got rebirth by way of infusion of money by Shri Dash. Thus, the property of the Institute is nothing but the proceeds of crime made by Shri Dash.

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B. That the Syndicate Bank is not a claimant of the property.

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C. That as per the ledger account of Shri Dash submitted by Shri Sanjay Kumar Mahapatra, Authorized Signatory of the Appellant,

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an amount of Rs.9,01,66,000/- has been paid by Shri Dash to OMET Account during the period 20.11.2009 to 13.03.2012.

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D. (i) That the Respondent ED has reproduced the contents of letter of intent signed between Shri Prasant Kumar Dash as Managing Trustee (MT) of the Appellant and Prof. Ravi Narayan Mahapatra, Chairman of the Appellant Institute, wherein in one of the Clause it is specified that the with financial inclusion from the Managing Trustee namely Shri Prasant Kumar Dash, the existing Trustees will be refunded, as soon as possible, their principal contribution to the trust and any dues approved by the Chairman, which they incurred for the trust activity or for the initiation or operation of the project including their interest, not later than fifteen days after initiation of the process of their departure and that the Managing Trustee understands such liabilities and, accordingly, he is willing to arrange these funds on priority basis.

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(ii) That further, both MT and Chairman will make sure that the departing trustees also get the bank clearance that they gave in the form of guarantee to secure the term loan for the trust to initiate the BIT Engineering College project. It is understood by the Chairman and the MT that the obligations of the trust towards the departing trustees are not completely over, until both the funds and the bank clearances are made available to them.

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(iii) That the MT will ensure sufficient funds are made available for BIT in the short term, defined as the term from now until September, 2010 and in the near term defined as the

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term from investments. He will support the academic growth plans as per the vision of BIT to become the best technical institute in the state in the next 5-6 years.

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(iv) That the MT will possess the power for the entire financial control of the project. He will review and approve the financial expenses planned for the project.

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(v) That any reinvestment plan for BIT and similar projects will be decided jointly by the MT and the Chairman.

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(vi) That the details of the timing, amount and the process of transaction for the payout of all dues to the existing trustees, the contribution to the trust by the MT and the overall understanding of the ownership of the trust and/or any restructuring thereof, will be mutually discussed and determined by the Chairman and the MT within 10 days from the time of signing this document.

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(vii) That, it should be noted that the MT has visited BIT (Bhubaneswar Institute of Technology), the first project taken up by OMET in Bhubaneshwar and have obtained a broader understanding of the land and infrastructure available and planned for future growth of the institute.

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E. That, in furtherance to above, the Respondent ED has disclosed the details of contribution made by the existing Trustees till 31^st March, 2009.

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F. That it is pleaded in the reply that though resolution has been passed to vacate Shri Dash, the money injected/inducted by Shri Dash still remains with the Appellant. Hence, the confirmation order of the Adjudicating Authority is just, proper and reasonable.

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G. That the Adjudicating Authority has passed the order after following the Principle of Natural Justice and that the Respondent ED has referred to Rule 5(5) & 5(6) of PMLA (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013.

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13. Pleadings in the Rejoinder to the Reply to the Appeal, filed by the Appellant.

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In addition to the grounds of appeal the Appellant has taken, inter alia , the followings grounds:

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A. That the Government of Odisha, from whom 20 Acres of land has been taken on lease by the Appellant, has not been served with a Show Cause Notice u/s 8(1) of PMLA, 2002 and most of the contention in the Rejoinder if confined to the non-issuing of Show Cause Notice to Government of Odisha and Syndicate Bank and that valuation of the property in question and repetition of that are stated in the grounds of appeal.

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14. During the course of hearing, the Appellant had filed Misc. Applications praying for release of the property involved in the appeal, in lieu of deposit of Rs.9,01,66,000/- within certain period of time, to which the Respondent filed reply on the grounds stated in the reply to reject the said Application being devoid of merit. Subsequently, the Appellant did not want to proceed with the said Application and argued on the appeal. So, the said Application for substitution of the property with payment of Rs.9,01,66,000/quantified as proceeds of crime is no more pressed and, accordingly, treated as disposed of.

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15. The Appellant has filed written submissions along with Annexures, on three occasions i.e. 16.01.2019, 24.07.2019 & 19.09.2023 and Additional Written Submissions dated 12.12 2023 in addition and relying on the grounds of appeal and Rejoinder.

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The averments of the Appellant made in the written submissions, in brief, are as below:

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A. There is no link or nexus between the attached property and the proceeds of crime.

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B. Increase in the total strength of the students.

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C. Recognition of OMET as a Charitable Institution by the Income Tax Department.

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D. Loan of Rs.6.80 Crores from Syndicate Bank by the Appellant on 09.06.2008 for the purpose of establishment of BIT and constructions of buildings etc.

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E. Donation received from Shri P.K. Dash during the period 2009 to 2012.

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F. There is no allegation against Shri P.K. Dash at the time of induction and ousting of Shri P.K. Dash after the knowledge of his criminal activity by the Appellant.

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G. Amount of donation has been received through banking channel. H. The Appellant was not named in the FIR, ECIR, Charge-sheet and prosecution complaint/supplementary prosecution complaint.

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I. Since no prosecution complaint has been filed against the Appellant till date. So, the attached property of the Appellant is liable to be released in view of the provision of Section 8(3)(a) of PMLA, 2002.

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The Appellant has relied on the judgment passed by this Tribunal in the matters of (1) Arvind Gupta V. Deputy Director of Enforcement, Delhi; (2) Serajuddin & Co. V. Joint Director ED, Bhubaneshwar; (3) Ashok Kumar & Ors. V. ED, Jaipur; (4) R.B. Prajapati V. The Joint Director, Directorate of Enforcement, Delhi and also in the matters of (1) Sima Garg V. Deputy Director, Directorate of Enforcement; (2) Vijay Madanlal Chaudhary V. Union of India.

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J. The Appellant has contended that the Appellant is neither been named in the scheduled offence nor in the prosecution sought release of the property of the Appellant attached herein. In this regard the Appellant has relied on the following judgments (1) Prakash Industries Ltd. V. Directorate of Enforcement, 2022 SCC Online Del 2087; (2) Vijay Madanlal Chaudhary V. Union of India 2022 SCC Online SC 929, Para 467 (v)(d).

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K. The Appellant has also taken a legal plea that the Adjudicating Authority has failed to meet the statutory requirement to pass an order u/s 8(2) of PMLA while adjudicating OC against the Appellant. In this regard he has relied on the judgment passed by Hon‟ble Supreme Court in the matter of State of Odisha V. Mamta Mohanty (2011) 3 SCC 436.

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L. There is no reason to believe justifying the confirmation of the PAO and nor making the reason to believe available to the Appellant at the stage of Section 8. Reliance has been placed on following judgments:

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(i) Shri Ashish Kumar v. Deputy Director, Directorate of Enforcement, Delhi FPA-PMLA-1955/DLI/2017 decided on 23.08.2019, Para 15;

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(ii) P.P. Abdulla v. Competent Authority (2007) 2 SCC 510,

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Para 7;

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(iii) Mohammad Aslam Merchant v. Competent Authority (2008) 14 SCC 186, Para 40, 41, 42 & 61;

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(iv) Dr. V.M. Ganesan v. The Joint Director, Directorate of Enforcement , 2014 SCC OnLine Mad 10702, Paras 45 & 46; and

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(v) Joti Parshad v. State of Haryana 1993 Supp (2) SCC 497, Para 5.

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M. In addition to above it is also pleaded the Impugned Order is null & void being flagrant violation of statutory provisions of PMLA as the Adjudicating Authority has not followed the prescribed procedure to be followed in a particular manner. In this regard he has relied on the following judgments:

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(i) OPTO Circuits (India) Ltd. v. Axis Bank (2021) 6 SCC 707, Para 14 (decided by the Constitution Bench);

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(ii) State of Rajasthan v. Mohnuddin Jamal Alvi (2016) 12 SCC 502, Para 61; and

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(iii) Dipak Babaria & Anr. v. State of Gujarat & Ors. 2014 3 SCC 502, Para 61; and

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(iv) Seema Garg v. Deputy Director, Directorate of Enforcement 2020 SCC OnLine P&H 738, Para 45.

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Besides above, the Ld. Counsel for the Appellant also argued the appeal orally reiterating that are stated in the Memo of Appeal, Rejoinder and Written Submission.

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On the basis of above, the Ld. Counsel for the Appellant prayed for quashing and setting aside of the Impugned Order and

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release/return of the attached properties to the Appellant forthwith.

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16. The written submission filed on behalf of the Respondent Enforcement Directorate.

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The Respondent ED has filed their written submission on two different occasions i.e. on 29.11.2019 and again in the month of December, 2023. In the said written submissions they have referred to their replies dated 05.01.2016, 02.03.2016, 26.11.2018 & 19.09.2023, the prosecution complaint dated 31.03.2016 and supplementary prosecution complaint dated 28.03.2017, inter alia , contended that:

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A. The proceeds of crime is still in possession of the Appellant and the Provisional Attachment Order was issued on 09.01.2015 as it satisfies the rigors of Section 5(1) of PMLA, 2002. The Respondent ED has referred to Section 2(1)(u) and to 2(1)(v), which are the definitions of “Proceeds of Crime” and “Property” under PMLA.

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B. The Respondent ED has relied on the judgments passed by Hon‟ble Supreme Court in the matter of following:

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i. Manoharlal Sharma v. Principal Secretary (2014) 9 SCC 516;

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ii. Vijay Madanlal Chaudhary V. UOI & Ors. 2022 SCC OnLine SC 929 Paras 250, 252, 269, 270 & 280;

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C. The Ld. Counsel for the ED has distinguished the judgment passed by Hon‟ble High Court, Delhi in both the cases of Prakash Industries Ltd. V. Directorate of Enforcement, 2022 SCC Online Del 2087, Himanchal Emta Pvt. Ltd. v. UOI & Ors. in WP (c) No.5537 of 2018 and relied on the judgment passed by Hon‟ble Bombay High Court in the matter of Radha Mohan Lakhotia v.

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The Deputy Director. The Enforcement Directorate also tried to distinguish the judgement passed in the matter of Seema Garg V. Directorate of Enforcement by relying on the judgments of Hon‟ble Supreme Court in the following cases (1) PGI and ME, Chandigarh V. Raj Kumar, (2001) 2 SCC 54; (2) Indian Oil Corporation Ltd. v. State of Bihar & Anr. (1986) 4 SCC 146 (Paragraph 6 – 8).

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D. It is also contended in the written submission that the J. Sekhar matter has been stayed by Hon‟ble Supreme Court of India and the same is still pending. The Respondent ED has relied on S. Narayanappa V. CIT, AIR 1967 Supreme Court 523 and the judgment passed by Division Bench of Hon‟ble High Court, Bombay in the matter of Brizo Reality Co. V. Aditya Birla Finance Ltd., Mumbai (2014) 4 Mh.L.J. 849.

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E. Finally, the Respondent ED has relied upon following three judgments on the point that the Section 71 of PMLA, 2002 having overriding effect on any other law for the time being in force:

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i. Raman sharma and Anr. V. Director, Directorate of Enforcement, Crl.Rev.P 1033/2019;

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ii. Fairdeal Supplies Limited and Ors. V. Union of India and Ors. (23.04.2021 – CALHC): MANU/WB/0326/2021; and

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iii. P. Chadambaram Vs. Directorate of Enforcement (CRL APPEAL No.1340/2019)

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Respondent ED has referred & relied on to relevant paras of following judgments:

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a. Vijay Madanlal Chaudhary V. UOI & Ors. 2022 SCC OnLine SC 929 Paras 250, 252, 269, 270, 280, 295, 301, 303, 313 & 314.

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b. P. Rajendran vs. Directorate of Enforcement – Criminal Original Petition No.19880/2022 Para9 & 10

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c. Radha Mohan Lakhotia v. The Deputy Director, 2010 Para 13 & 19

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d. J. Sekhar vs. Union of India & Ors. 2018 SCC OnLine Del 6523 Para 50

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e. Shiv shakti Coop. Housing Society v. Swaraj Developers, (2003); Para 19

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f. Nav Nirman Builders & Developers Pvt. Ltd. Vs Union of India Cr.M.P. No.3608 of 2020 Para 32 & 33

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g. Yogender Chandolia Vs. voishesh Ravi & Ors. (2021) Para 43

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h. Biswanath Bhattacharys Vs. Union of India and Ors. Civil Appeal No.772-73 of 2014 Para 39, 40, 41 & 42

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i. Munish Munir Khan Vs. The Deputy Director, PMLA Directorate of Enforcement Para 89

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j. Manohar Lal Sharma v. Principal Secretary (2014) 9 SCC 516 Para 65, 68, 73, 74 & 75.

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k. Y. Balaji Vs. Karthik Desari & Anr., 2023 Para 102, 103, 104 & 105

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l. Khandelwal Buildcon Pvt. Ltd. V. Directorate of Enforcement Para 42 to 48

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m. The Deputy Director, Directorate of Enforcement V. Axis Bank & Ors. 259 (2019) DLT 500 Para 106, 107, 169 & 171 (xvii)

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n. Ahmed Mohamed Hasanfatta Vs. Deputy Director, Directorate of Enforcement, Ahmedabad, 2019 SCC OnLine, ATPMLA37 Para 8

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o. M.V. Swaminathan V. The Deputy Director, Directorate of Enforcement, Chennai judgment dated 04.07.2023.

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On the basis of aforesaid pleadings & judgments referred above the Respondent ED has prayed for dismissal of the Appeal.

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17. Discussions and findings.

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We have heard the arguments of the Ld. Counsel from both sides and also perused the materials available on record. It is an admitted fact that the land and the building there have been attached in the present proceedings by the Respondent ED. It is also an admitted fact that the land has been taken on lease by the Appellant from Government of Odisha and that Shri Prasant Kr. Dash (Shri Dash) made a contribution of Rs.10,01,66,000/- to the Appellant Trust and that Rs.1,00,00,000/- out of the aforesaid amount was received back by Shri Dash from the Appellant Trust resulting in keeping back a sum of Rs.9,01,66,000/- with the trust and that Shri Prasant Kr. Dash was inducted as a trustee in the Appellant Trust on 11.11.2009 by way of a nomination by the Founder Member and Chairman Ravi M. Mahapatra and that Shri Dash was appointed as Managing Trustee of the Appellant Trust. It is admitted by the Appellant Trust in their written submission dated 16.01.2019 that during the year 2009-2010 Shri Dash donated a sum of Rs.2.75 Crores which was utilized in constructing a computer center cum hostel for SC/ST Student, providing free food to the students, purchasing bus, organizing seminars and cultural events among other things as provided in Annexure-2 filed by Appellant Trust. It is also admitted by the Appellant Trust in the said

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written submission that during the year 2010-2011 a sum of Rs.2.71 Crores donated by Shri Dash was utilized in furthering the construction of computer center cum hostel for SC/ST Student, paying salary to the staff providing free food to the students, purchasing bus, buying furniture and various other things as detailed in Annexure-2. It is further admitted by the Appellant Trust in the said written submission that during the year 2011-2012 a sum of Rs.3.55 Crores was received as donation from Shri Dash and was utilized by the Appellant Trust for running Bhubaneshwar Institute of Technology and for its day-to-day expenses as well as for completing the remaining construction of Dr. B. R. Ambedkar Study Center from hostel for SC/ST students. The Appellant Trust has cited the audited receipts and payments account for the year ending 31^st March, 2012 which is annexed as A-6. It is also an admitted fact that there is no donation during the financial year 2012-2013 made by Shri Dash it is also come to light that the trust came to know about the criminal activity of Shri Dash from media and that a resolution was adopted by the trustees to ask Shri Dash to vacate the institute from the post of trustee on 20.07.2012.

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The Appellant Trust has raised the following issues in their pleadings through appeal and the written submissions filed on different dates

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a. The appeal is bad for non-joinder of Government of Odisha as a necessary party as the land belongs to Government of Odisha which is given on lease to the Appellant Trust.

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b. The essential ingredients of attachment of property u/s 5(1) of PMLA are not at all satisfied. No findings have been recorded to form an opinion that the said properties/buildings are involved in money laundering.

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c. There is no reason to believe that the said properties are involved in money laundering.

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d. The Appellant Trust is a bona fide receiver and had no knowledge of the alleged offence.

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e. The attachment is liable to be set aside as no prosecution complaint has been filed against the Appellant Trust within 365 days as stipulated u/s 8(3)(a) of PMLA.

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f. The Appellant Trust was neither named in FIR or in ECIR and not an accused in the scheduled offence or in the prosecution complaint.

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g. Whether the Ld. Adjudicating Authority has followed the statutory requirement as required u/s 8(1) & 8(2) of PMLA, 2002.

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h. There is no nexus or link between the attached property and the criminal activity relating to the alleged scheduled offence

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In support of the aforesaid legal issues the Appellant has relied on several judgments as reflected at page Nos. 11 to 13 of this order. The aforesaid judgments are perused vis a vis the legal issues raised by the Appellant Trust.

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18. The Appellant Trust has raised the legal issue that the appeal is bad for non-joinder of Government of Odisha as a party. It is pleaded and also argued that the land which has been attached herein is the land owned by the Government of Odisha and that the said land has been given on lease to the Appellant Trust by way of a registered lease deed on dated 11.01.2017 for establishment of Bhubaneswar Institute of Technology and that the said land and the buildings constructed thereon are not proceeds

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of crime. That being so, the impugned order is liable to be quashed and set aside on the aforesaid ground.

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On the other hand, the Ld. counsel appearing for the Respondent submitted that the word „property‟ had been defined u/s 2(1)(v) of the PMLA, 2002 and that it includes the leased property also which can be attached and that there is no necessity of making Government of Odisha as a party either in the appeal or in the Original Complaint. Therefore, the contention of the Appellant Trust has no merit and as such liable to be rejected.

¶171

It is necessary to consider the definition of the word „property‟ as defined u/s 2(1)(v) of the PMLA, 2002. The provision is reproduced below:

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“Property‟” means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to or interest in, such property or assets, wherever located;

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[ Explanation :- for the removal of doubts, it is hereby clarified that the term “property” includes property of any kind used in the commission of an offence under this Act or any of the Scheduled offences;]

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On perusal of the aforesaid provision, it appears that it is an inclusive definition. It includes any property or assets of every description i.e. corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to or interest in, such property or assets. It means and includes the leased property also. Now, whether the attachment of the land is bad for non-joinder of Government of Odisha as a party. It is an admitted fact that the land has been transferred to the Appellant Trust by the Government of Odisha under a lease deed with certain rights and liabilities but the title of the land has

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not been passed over to the Appellant Trust. The lease is for 99 years with effect from 11.01.2007 for a premium of Rs. 20 Lakhs at the rate of Rs. 1 lakh per acre with yearly rent of Rs. 20 thousand and cess of Rs. 15 thousand at the rate of 75 percent of the annual rent or as admissible from time to time besides the cost of trees standing on the demised land. The Appellant Trust has taken a plea that the Government of Odisha was neither made a party to the proceedings initiated before the Ld. Adjudicating Authority nor a show cause notice was served upon it by the Ld. Adjudicating Authority u/s 8(1) of the PMLA, 2002.

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In our view, there is no necessity of making Government of Odisha as a party by the Respondent ED as the title of the government land cannot be transferred in favor of the Central Government as absolute owner in the event of confiscation of the land, if the Respondent ED succeeds in the criminal trial of prosecution complaint under the PMLA. Whatever rights and liabilities are transferred to the Appellant Trust under the lease deed can only be passed on to the Respondent ED, as the Central Government and the subsequent lessee will step into the shoes of the Appellant Trust for the remaining lease period. The right, title and interest of Government of Odisha over the land in question is not any way effected. Even otherwise, in spite of its claim that Government of Odisha is a necessary party, the Appellant Trust has not filed any application in the Appellate Tribunal to implead the Government of Odisha as a party, in the appeal nor any material has been placed on record that Appellant Trust has intimated the Government of Odisha about the attachment of the land and pendency of the present proceedings including the proceeding before the Ld. Special Judge under PMLA, 2002. In the light of aforesaid discussions, we are of the considered view that the confirmation of the PAO by the Ld. Adjudicating Authority sans Government of Odisha is not

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bad in law. This issue is accordingly answered against the Appellant Trust.

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19. The next legal issue raised by the Appellant Trust is that the essential ingredients of attachment of property as provided in section 5(1) PMLA,2002 read with the second proviso to section 5(1)(b) PMLA, 2002, has not been satisfied.

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On perusal of records, it is revealed that Shri Dash had infused Rs. 9,01, 66,000/- with the Appellant Trust during the period 2009-2012 which was allegedly generated out of criminal activities by Shri Dash and that this amount was utilized for the purpose of construction of buildings, payment of salary of staffs of the Appellant Trust etc. It is also revealed from the record that some of the amount has also been utilized for the return of money to then existing trustees as per Letter of Intent. The trustees came to know about the alleged criminal activities of Shri Dash and donation of the aforesaid amount allegedly generated through criminal activities, through media in the year 2012 and that Shri Dash was asked to vacate the trusteeship from the Appellant Trust. But the trust did not return the money to Shri Dash. In other words, when the Provisional Attachment Order (PAO) was passed, the alleged proceeds of crime were still with the Appellant Trust and at that point of time there appears to have no intention on the part of the Appellant Trust to return the donation. It is also seen from the record that the Appellant Trust had mortgaged this land and building of the trust with the Syndicate Bank which was settled subsequently and the loan amount was liquidated. As it appears from the PAO that there is a subjective satisfaction of the Respondent ED that the property in question is liable to be attached, the essential ingredients of section 5 (1) read with second proviso to section 5

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(1)(b) of PMLA, 2002 are satisfied on the plain reading of the PAO. There is reason to believe which is recorded in writing in the PAO, so there is due compliance of the aforesaid section and proviso thereto in issuing the PAO. The very intention of issuing the attachment order and confirmation of the same are only to protect the property in question, till the conclusion of trial. It also appears that the Respondent ED has not taken possession of the property, nor ousted the Appellant Trust from the property.

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In the light of above, the answer to this issue is decided against the Appellant Trust.

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20. The next issue raised by the Appellant Trust is that there is no reason to believe that the questioned properties are involved in money laundering.

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In this regard, it is seen from the record that a sum of Rs. 9,01,66,000/- has been infused by Shri Dash during the period 20092012 which alleged to have generated from criminal activities. During this period, Shri Dash was overall in-charge and control of the trust and it is an admitted fact that the aforesaid amount has been used for different purposes as stated in earlier paragraphs and that the trust came to know about the fact in the year 2012, then they asked Shri Dash to vacate the post of trusteeship, but the alleged proceeds of crime generated out of criminal activities was not returned to Shri Dash. All these facts are recorded in the PAO as well as in the impugned order which are prima facie sufficient reasons to believe for attachment of the property in question. In view of the above discussion, we do not find any merit in this issue raised and accordingly, this issue is answered against the Appellant Trust.

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21. The claim of prosecution that the Appellant Trust is a bona fide receiver is not correct in view of the fact that Shri Dash himself was aware of the fact that the amount he was infusing is proceeds of crime generated out of criminal activity and that the said amount was utilized for the purpose of various developmental work etc. of the Appellant Trust during his tenure as a trustee of the Appellant Trust when he was in control of that Appellant Trust. In view of the above the claim of the Appellant Trust that it is a bona fide receiver has no legs to stand.

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22. The Appellant Trust has raised the issue that the attachment is liable to be set aside as no prosecution complaint has been filed against the Appellant Trust within 365 days as stipulated u/s 8(3)(a) of PMLA, 2002.

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In this regard, it is seen from the record that the Appellant Trust has pleaded and argued that the PAO is confirmed on 01.06.2015 and till date no prosecution complaint/supplementary prosecution complaint for commission of offence u/s 3 punishable u/s 4 of the PMLA, 2002 has been filed against the Appellant Trust within 90/365 days in any Court of law. The Appellant Trust has relied upon the judgment passed in (1) Arvind Gupta V. Deputy Director of Enforcement, Delhi; (2) Serajuddin & Co. V. Joint Director ED, Bhubaneshwar; (3) Ashok Kumar & Ors. V. ED, Jaipur; (4) R.B. Prajapati V. The Joint Director, Directorate of Enforcement, Delhi and also in the matters of (1) Sima Garg V. Deputy Director, Directorate of Enforcement; (2) Vijay Madanlal Chaudhary V. Union of India. The first four judgments are the judgments passed by this Appellate Tribunal, in some of the said judgments one of us i.e. (G.C.Mishra, Member) was part of the said Bench.

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On the other hand, it is contended by the Ld. counsel for the Respondent that the prosecution complaint under PMLA,2002 has already been filed on 31.03.2016 wherein the property attached in the present appeal is already part of the said prosecution complaint and that cognizance has already been taken by the Ld. Special Judge, PMLA court, and that in the circumstances the prayer of the Appellant Trust‟s for quashing and setting aside of the impugned order on this ground is liable to be rejected.

¶198

Section 8(3) of PMLA, 2002 provides that „Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money -laundering, he shall, by an order in writing, confirm the attachment of the property made under subsection (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18 and record a finding to that effect, where upon such attachment or retention or freezing of the seized or frozen property or record shall –

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(a) Continue during investigation for a period not exceeding 365 days or the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case maybe; and

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(b) ……………..

¶201

The most important factor to decide the present legal issue is that section 8(3) & 8(3)(a) says about property not of person as defined u/s 2(1)(s) of PMLA, 2002. There is no dispute that the Appellant Trust is a registered trust and covered by the definition of “Person” u/s 2(1)(s) of PMLA, 2002. Secondly, the prosecution complaint was filed on

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31.03.2016 with the prayer to pass orders confiscating the attached property. In other words, the property attached in the present proceedings are already part of the prosecution complaint. In the present appeal, the property has already been a part of the prosecution complaint in the year 2016, when there was no limitation provided u/s 8(3)(a) for continuation of the conformation of attached property either during the investigation or the pendency of the proceedings in related to any offence under this Act before a court. For the first time the limitation of 90 days was inserted in the PMLA, 2002 on dated 19.04.2018 and subsequently 90 days was substituted by 365 days on dated 20.03.2019. In other words, when the prosecution complaint was filed on 31.03.2016 there was no such limitation. The aforesaid provision of law does not speak about continuation of any investigation or criminal proceedings in any court of law against any person, but it states about the property.

¶205

In the peculiar fact and circumstances of the case, the judgements and orders passed by this tribunal and relied upon by the Appellant Trust are not applicable to the present fact and circumstances of the appeal.

¶206

The Appellant Trust has also relied on the judgement passed by the Hon‟ble High court of Punjab and Haryana in the matter of Seema Garg v. Deputy Director of Enforcement, so also the judgment of Hon‟ble Supreme Court in the matter of Vijay Madan Lal Chaudhary v. Union of India reported in 2022 SCC Online SC 929, para 467 (v)(d) have no application to the present fact and circumstances of the case.

¶207

The present legal issue is considered on the basis of the submissions made by both the parties. In the light of discussions made above, the present legal issue is answered against the Appellant.

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23. The next issue raised by the Appellant Trust is that the Trust is neither named in the FIR nor in the ECIR and not an accused in the scheduled offence or in the prosecution complaint.

¶211

In this regard, it is a fact that the Respondent ED has not produced any record that the Appellant Trust has been named either in the FIR or in the ECIR or has been erred as an accused in scheduled offence or in the prosecution complaint. But it is a fact that the property in question in the appeal is part of the prosecution complaint filed on date 31.03.2016 which has not been denied by the Appellant Trust. The appeal cannot be allowed merely on the aforesaid ground that the Appellant Trust has not been named either in FIR or in ECIR or accused in scheduled offence or in prosecution complaint under PMLA, 2002. The proceeding before this tribunal is with regards to attachment of the tainted property derived/obtained directly or indirectly by any person as a result of criminal activity. In the present case, it is Shri Prashant Kumar Dash who is allegedly indulged in criminal activity and generated proceeds of crime and thereafter the said proceeds of crime was utilized for the development of the building of the Appellant Trust, payment of salary to the staff etc. while he was the Managing Trustee of Appellant Trust. In the aforesaid fact and circumstances, we do not find any merit in the contention of the Appellant Trust that the attachment is bad in law on the ground that the Appellant Trust has not been proceeded against either in scheduled offence or in the prosecution complaint. Therefore, this issue is answered against the Appellant Trust.

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24. The next issue raised by the Appellant Trust is whether the Ld. Adjudicating Authority has followed the statutory requirements as required u/s 8(1) & 8(2) of PMLA, 2002. In this regard, the impugned

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order passed by the Ld. Adjudicating Authority is examined. The Ld. Adjudicating Authority has clearly examined factual as well as legal issues in the present case. The facts have been discussed in the impugned order. In the said order, the submissions made by the Appellant Trust admitting the receipt of the aforesaid amount. It is also observed in the impugned order that no bank has approached the authority claiming the property and also held that there is no requirement of supplying the recorded reasons to the defendants and that the PAO/OC sufficiently conveys what they have to meet as observed by the Hon‟ble High Court, Bombay in the case of Brizo Reality (P) Ltd. The detailed discussions are made at pg. from 51- 56 of the impugned order.

¶216

In view of the discussions made above, we are of the considered view that the Appellant Trust has no merit so far as this issue is concerned. Hence, this issue is answered against the Appellant Trust.

¶217

25. During the course of argument, the Ld. Counsel for the Appellant Trust submitted that there is no nexus or link between the attached property and the criminal activity relating to the alleged scheduled offence. We are unable to accept this argument because it has been admitted that a sum of Rs. 9,01,66,000/- which was generated allegedly from the criminal activity by Shri Dash has been infused into the Trust and that the same amount was utilized by the Appellant Trust in various construction work as well as payment of salary to staff, return of amount to the existing trustees invested by them etc. this was done when the Appellant Trust was managed by Shri Dash during the period 2009-2012 and that the said amount was not returned to him after his vacation from the Trust. These facts go to the root of the case that there is a nexus between the alleged proceeds of crime with the property in question

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attached herein. So, this argument of the Appellant Trust has no merit. Therefore, we are of the considered view that this issue is also answered against the Appellant Trust.

¶221

We have gone through the materials available on record. Considered the oral submissions made by both the parties and also gone through the judgements cited by both the parties. The judgement cited by the Appellant Trust are not applicable to the peculiar facts and circumstances of the case in hand particularly the admission of the fact that the alleged proceeds of crime are infused into the Appellate Trust which was utilized for the various purpose including development of the buildings etc. during the period when Shri Dash was the trustee of the Appellant Trust and that the alleged proceeds of crime was not returned to Shri Dash on his vacation from the trusteeship. There are sufficient reasons recorded not only in the PAO but also in the impugned order.

¶222

In the light of the entire discussions made above, it is concluded that the appeal has no merit. There is no illegality or irregularity in the impugned order. Hence, the appeal is dismissed. Accordingly, the pending applications, if any, are disposed of.

¶223

Appeal dismissed.

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Pronounced on this 6th day of June, 2024.

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(Rajesh Malhotra) Member

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(G. C. Mishra) Member

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„ST‟

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