Dismissed

FPA-PMLA-1908/DLI/2017 of Shri Ravi Aggarwal v. The Deputy Director, Ed Delhi

ATFP17 Mar 2025FPA-PMLA-1908/DLI/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed the appellant's appeal against an order retaining seized gold bars recovered from his possession under the PMLA. The court held that failure of the police to file a charge sheet does not entitle the appellant to release, and a prosecution complaint being filed makes the property case material.

What did the court decide?

The appeal was dismissed; appellant is given liberty to claim relied-upon material from the PMLA Special Judge in case of acquittal.

FPA-PMLA-1908/DLI/2017 of Shri Ravi Aggarwal Vs. The… — Writ and Judicial Review | ATFP (2025)

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

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FPA-PMLA-1908/DLI/2017 Shri Ravi Aggarwal … Appellant Versus The Deputy Director, ED Delhi … Respondent

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Advocates/Authorized Representatives who appeared For the Appellant : S/Sh. Naveen Malhotra, Advocate, For the Respondent : Sh. Kshitiz Aggarwal, Advocate.

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FINAL ORDER 17.03.2025

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Present appeal U/s 26 of Prevention of Money Laundering Act, 2002, is filed against the impugned order dated 14.06.2017 passed by the Adjudicating Authority, in Original Application no.78/2017 vide which respondent-ED was permitted to retain the documents and articles seized from the possession of appellant Ravi Aggarwal, detailed as under:

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20 pieces of gold weighing 998 gms valued at Rs.29,54,080/- .

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As per the facts of the case, F.I.R No.416/2016 dated 29.11.2016 was registered by the Delhi Police, into alleged case of fraudulently converting demonetized black money into Gold by way of depositing the same in the accounts of front companies having bank account with Axis Bank, Kashmere Gate, Delhi. The offence registered by Delhi Police being a Scheduled offence under PMLA, an ECIR/11/DLZO/2016 dated 30.11.2016 was registered by the ED and started investigation for money laundering.

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During investigation, it is revealed that as a result of demonetization of currency notes of 500/- & 1000/- denomination

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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announced by the Government of India on 08.11.2016, persons having large amount of such notes were looking for avenues to convert their unaccounted demonetized money into monetized form or into bullion/gold using the bank accounts of the front companies.

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One Nitin Gupta, Mohit Garg and others conceived the entire scheme and collected the cash from prospective buyers including Sh. Prateek Bansal, who was one of the prospective buyers, who has given Rs. 12 crores (approx.) to Sh. Nitin Gupta for purchasing gold. Sh. Prateek Bansal collected this money from various prospective-buyers, like Ravi Aggarwal (herein appellant), Anirudh Narain Aggarwal and others. For this purpose, Nitin Gupta got in touch with Mohit Garg, a person from whom he was taking RTGS in the past also. Mohit Garg got in touch with Rajeev Singh Kushwaha his friend and associate who had been facilitating his transactions in the past also. Both of them agreed to the proposal of Nitin Gupta for a commission @ 15% of total cash deposits. They further connived with the Branch Manager and Manager Operations of Axis Bank Kashmere Gate, Delhi and deposited huge amount of money into the accounts of three front companies controlled by Rajeev Singh Khushwaha namely M/s Sunrise Trading, M/s Himalaya International and M/s RD Traders. After the cash was deposited, RTGS were sent into the accounts of M/s Beagle Marketing another front company of Rajeev Singh and transferred the money to the accounts of importers/suppliers of gold namely, M/s Tusar Jewellers, M/s Aadi Traders, M/s Sidhhi

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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Vinayak, M/s Ganesh Traders and M/s Maa & Sons etc., who in turn showed sale of gold to M/s Beagle Marketing from which they had received RTGS at the prevailing rate. Such gold/diamond was received by Nitin Gupta, Mohit Garg & Prateek Bansal and was distributed to the persons including Sh. Ravi Agarwal and Sh. Anirudh Agarwal, who had provided cash to Prateek Bansal and gold bars were also given to bank official namely Sh. Shobhit Sinha, Operation Manager and Sh. Vineet Gupta, Branch Head, as commission.

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During investigation statement of various persons including Sh. Ravi Agarwal and Sh. Anirudh Narain Aggarwal were recorded under Section 50 of PMLA and on the basis of the revelations made by them, search was conducted on their residential premises on 17.02.2017 & 18.02.2017 respectively. Twenty pieces of gold weighing 998 grams was recovered from Ravi Agarwal andfive gold bar of 1 kg. each and five pieces of diamond were recovered from Anirudh Narain Agarwal and valuation was also done at the same time.

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The said jewelrywas apparentlybought out of proceeds of crime received by them.Accordingly, Original Application No. 78/2017 was filed before the Adjudicating Authority for permission to retain the said articles under Section 17 (4) of the PMLA, 2002.

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On notice by the Adjudicating Authority, present appellantfiled reply raising the objections for retention on the various grounds as mentioned therein(which is at page 105 to 115

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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of the appeal paper book), only on the legal issues, without denying the fact of recovery, nor giving any explanation of the same. After hearing the rival submissions,Ld. Adjudicating Authority vide order dated 14.06.2017, permitted respondent-ED to retain the Jewelry etc. and OA No. 78/2017 was allowed accordingly.

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Aggrieved by the said order, present appeal is filed by the appellant.

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During the arguments, Ld. Counsel for the appellant submitted that appellant is not named in the F.I.R. registered by the police. He pointed out that till date, no charge sheet is filled by the police against any of the accused persons. He further pointed out that search & seizure was conducted by respondent-ED on 17.02.2017, and thereafter, Original Application No. 78/2017 was filed before the Adjudicating Authority for permission to retain the 20 pieces of gold weighing 998 gms., only on 20.03.2017 i.e. beyond the mandatory period of 30 days i.e. on 31^st day. He contended that Adjudicating Authority granted the permission to retain the said articles vide impugned order dated 14.06.2017, without appreciating the factual position. He pointed out that even prosecution complaint under PMLA is filed by respondent-ED on 30.06.2018 i.e. with delay of 406 days from the date of seizure. He further argued that the said seized gold from the possession of the appellant cannot be termed as laundered money from any proceeds of crime, in absence of any incriminating evidence in this regard. He further stressed that no reason to believe were ever

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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communicated to the appellant under Section 5, 8 or 17 of PMLA, 2002. No order was passed by the Adjudicating Authority under Section 20 (4) of PMLA, 2002. Prayer is accordingly, made to allow the present appeal, and thereby direct respondent ED to release the seized 20 gold pieces infavour of the appellant.

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On the other hand, Ld. Counsel for the respondent-ED submitted that as per F.I.R 416/2016 dated 29.04.2016 were registered on the specific information that three persons namely Devendra Kumar Jha, Mohit Garg and, Raj Kumar Sharma travelling in white colored Honda City Car No. DL-2FV-0036 were intercepted and search of the car was taken. After search, four bags containing old denomination notes of Rs.1000/- totaling to Rs.3.70 Cr. were recovered. On interrogation by the police, the said persons failed to produce any proof of the ownership and disclosed that they are doing the business of exchange of old demonetized currency into new currency with the conspiracy and collusion of the Bank officials (Vineet Gupta and Shobhit Sinha). Since the aforesaid offences committed by the accused persons are among the Schedule offences under Schedule appended to the PMLA, 2002, and thus, on the basis of the aforesaid information/documents, a prima facie case for commission of an offence of Money Laundering under section 3 of the Prevention of Money Laundering Act, punishable under Section 4 of the said Act, appears to have been made out against the above named suspected accused persons. Accordingly, an ECIR No. 11/2016 was recorded in ED on 30.11.2016 and investigation was undertaken against the

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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said persons. An investigation was initiated in terms of PMLA, 2002 with a view to identify the accused involved in the offence of Money Laundering and properties/assets derived from the offence of Money Laundering including proceeds of crime, as defined under Section 2(1) (u) of PMLA, 2002. The demonetization policy was announced by Government of India on 08.11.2016. At that time, there was a great anxiety among the people, who had unaccounted money in the form of old currency notes Rs.500/- & Rs.1000/which was no more legal tender. There was a surge in the number of people wanting to convert old currency notes into gold/legal tender, but Bullion Traders wanted payments in RTGS/transfer of money through banking channel for the gold sale.Some people who knew Mohit Garg, an Entry Operator, contacted him for this purpose. Mohit Garg was working as an Entry Operator with assistance of Rajeev Singh Kushwaha, who had various fictitious companies namely M/s Himalaya International, M/s RD Trader, M/s Beagle Marketing and M/s Sunrise Trading. Mohit Garg discussed with his friends Rajeev Singh Khushwaha& others to take illegal advantage of demonetization policy. They all agreed to convert unaccounted demonetized currency into monetized form by way of depositing in front company/firm of Rajeev Singh Khushwaha for this they have charged 15% of total deposit. Rajeev Singh Khushwaha and Mohit Garg were known to Vineet Gupta, Branch Manager and Shobhit Sinha, Operation Manager of Axis Bank, Kashmere Gate Branch. They contacted bank official in Axis Bank to get special facilities/assistance to put those money which

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Rajesh Malhotra Member

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had no legal tender into the banking system to make it a legal tender, through their fictitious company having current accounts in Axis Bank, Kashmere Gate Branch. The scrutiny of bank account statements of the companies’ firms namely M/s Sunrise Trading Company, M/s Himalaya International, M/s RD Traders and M/s Beagle Marketing Pvt Ltd. revealed that during the period of 10.11.2016 to 21.11.2016 demonetized currency up-to the tune of Rs. 39.26 crore has been deposited by Rajeev Singh Khushwaha and his associates with the active collusion of Sh. Vineet Gupta,Branch Head, Axis Bank, Kashmere Gate. It is revealed that Imran Khan (Driver of Rajeev Singh Kushwaha), Ram Charan (Casual Labourer) and Anil (Peon of Rajeev Singh Khushwaha) were made director/proprietor/authorized signatory of the firm/company run by Rajeev Singh Khushwaha. Vineet Gupta and Shobhit Sinha, had given Mohit Garg/Rajeev Singh, special privilege for depositing the amount in account of fictitious firm. Nitin Gupta, Prateek Bansal and others collected unaccounted demonetized cash from prospective buyers like Ravi Agrawal, Anirudh Agarwal and others. These amounts were given to Mohit Garg and his associates for arrangement of RTGS. For the above arrangement/assistance of transfer/RTGS of demonetized money through banking channels, Mohit Garg and Rajeev Singh Khushwaha charged a commission @ 15% of total cash deposits from Nitin Gupta.Rajeev Singh Khushwaha and his associates deposited huge amount of money into the accounts of three front companies controlled by Rajeev Singh Khushwaha namely M/s

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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Sunrise Trading, M/s Himalaya International and M/s RD Traders. Further for layering, money was sent into the accounts of importers/suppliers of Gold who in-turn reflected sale of Gold to M/s Beagle Marketing from which they had received RTGS at the prevailing rate.Such Gold was received by Nitin Gupta, Prateek Bansal & other middleman and was sold at premium rate to the persons like Anirudh Agrawal and others, who had provided unaccounted demonetized cash. From the above modus operandi applicant has bought 20pieces of Gold against old demonetized currency which is proceed of crime and liable to attachment under Section 5 or AdjudicationU/s 8 of PMLA.

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Ld. Counsel for the respondent further argued that during Investigation it is revealed that Shri. Anirudh Agarwal had given Rs. 7.47 Crore demonetized currency to Prateek Bansal for the sole purpose to convert these demonetized currencies in monetized form. These demonetized currencies were deposited in the fictitious firm’s bank account at Axis Bank, Kashmere Gate with the active connivance of Rajeev Singh Khushwaha, Mohit Garg and bank officials Vineet Gupta and Shobhit Sinha. Finally, that amount transferred to Bullion Traders account and gold & diamond procured against that demonetized currency by Prateek Bansal and handed over to the purchasers including Ravi Aggarwal.On the basis of statement recorded under Section 50 of PMLA and information gathered from various source residential premises of Shri Ravi Aggarwal and Sh. Anirudh Agarwal were searched under Section 17 of PMLA on 17.02.2017 and 18.02.2017 and thereafter,

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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the recovered gold and jewellery were seized which fall squarely under the definition of proceeds of crime as defined under Section 2(1) (u) of the PMLA.

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Section 2 (u) in the Prevention of Money Laundering Act, 2002

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“Proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property”

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For the purpose of investigation, OA No. 78/2017 was filed before Hon’ble Adjudicating Authority for retention of seized valuables under Section 17(4) of PMLA and vide order dated 14.06.2017 aforesaid OA was confirmed by Adjudicating Authority, PMLA.Provisional Attachment Order 01/17 dated 27.01.2017 under second proviso of Section 5(1) of PMLA has been issued attaching properties worth Rs. 3.40 crores that were involved in money laundering. The same has been confirmed by the Adjudicating Authority vide order dated 31.05.2017. Another Attachment Order No. 11/2017 dated 06.10.2017 for attaching property worth Rs. 8.47 Crore was issued for adjudication.

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Further a prosecution complaint dated 01.02.2017 under Section 44 read with 45 of PMLA has been filed in the Special PMLA Court, Delhi against Rajeev Singh Khushwaha, Vineet Gupta and Shobhit Sinha for the offence of money laundering under Section 3 and punishable under Section 4 of PMLA. Ld. Special Judge, of PMLA Court vide its order dated 25.02.2017 has taken

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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cognizance of the complaint and the trial is in progress. He further contended that order dated 14.06.2017 for retention of valuables passed by Adjudication Authority in the matter of OA No. 78/2017 accordance with the law and due consideration of all the facts and circumstances. During Investigation it is established that appellant had given demonetized currency to Prateek Bansal for procurement of Gold. Gold seized from applicant was part of proceeds of crime generated through depositing demonetized currency in the bank account of fictitious firms. It is well established not only statement recorded under Section 50 of Prevention of Money Laundering Act, but also corroborated by bank account statement, CDR and CCTV footage. While passing the said retention order, Adjudicating Authority has given due consideration to all the facts, circumstances and evidence. Therefore, the said retention order is both legal and proper.This is false submission of the appellant hence denied. It is submitted that during investigation appellant failed to produce any invoice or other supporting document which show the genuiness of gold and diamond purchased by him. In fact, appellant himself stated that he has purchased gold from Prateek Bansal without any invoice. He contended that gold seized from applicant was procured from Prateek Bansal use in fake bank account for which he has given commission, it is also revealed that this gold was bought by him in at premium rate @Rs. 55,00,000 per Kg. which real value as per Government approved valuer was Rs. 1,01,53,000/- this shows dishonest intention at the part of

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Rajesh Malhotra Member

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applicant. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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After hearing the rival submissions, I have given my thoughtful consideration to the same. The fact that if no charge sheet is filed by the police against any person after the registration of FIR, as submitted Ld. Counsel for appellant, even then, the appellant is not entitled to any relief, till the filling and acceptance of the closure report. In case any closure report is accepted, then certainly the consequences will follow, in prosecution complaint case under PMLA. This Appellate Tribunal cannot release the property on this ground at this stage.

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There is nothing to doubt the allegation of respondent ED that the many persons including the appellant agreed to give RTGS entry to the Jewellers at the instance of main accused persons, as mentioned in para no. 2 above. The defense of appellant cannot be entertained by this Appellate Tribunal and the appellant has to prove the same during the criminal trials. The delivery of jewellery after demonetization declared on 08.11.2016 clearly points out that accommodation entries were given tofacilitate the main accused persons to convert the demonetize currency notes of the denomination of Rs. 500/- and Rs. 1000/-, in lieu of commission in pursuance to conspiracy. This fact is apparent on record. Under these circumstances there is no reasonable ground to allow the present appeal. The fact that search was conducted on 17.02.2017 and application for retention was filed on 31^st day is no ground to

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Rajesh Malhotra Member

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set aside the order of retention, seeing the fact that the 30^th day was Sunday and accordingly, OA was filed on Monday i.e., 20.03.2017. In the OA impugned order for retention was passed on 14.06.2017, but complaint was filed on 30.06.2018 is also no ground to allow the present appeal, after the filling of prosecution complaint under PMLA, as all the relied upon articles and documents become the case property of the said case. Therefore, this Appellate Court cannot allow the appeal on this ground. Further, where perusal of provisions of the PMLA, as mentioned in Section 5, 8 or 17 of PMLA, 2002, shows that no reason to believe are required to be communicated to the effected party.I fortify my view in this regard in the light of judgment of the Hon’ble Madras High Court, in G. Gopalakrishnan Vs. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019). However, if the seized gold from the possession of the present appellant is not relied upon in the prosecution complaint PMLA for the purpose of confiscation, then certainly appellant is entitled to move application before Ld. Special Judge, for release of the seized gold, otherwise not.

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In the light of my discussion in the preceding para, the present appeal is hereby dismissed, with liberty to claim the relied upon and seized material/articles from Ld. Special Judge PMLA Court, in case of acquittal of the appellant, otherwise the consequences will follow. It is made clear that nothing expressed herein will affect the right of the either party.

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Rajesh Malhotra Member

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FPA-PMLA-1908/DLI/2017 Ravi Agarwal v. The Deputy Director, ED, Delhi

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Appeal dismissed.

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Pronounced on this 17^th day of March, 2025.

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(Rajesh Malhotra) Member

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