Disposed

FPA-PMLA-2506/DLI/2018 of M/s Chess Global Advisory Services (P) Ltd. v. The Assistant Director Directorate of Enforcement, Delhi

ATFP9 Apr 2025FPA-PMLA-2506/DLI/2018

Case brief

AI extract

What is this about?

The Appellate Tribunal disposed of an appeal seeking release of seized office files and digital evidence. It held that property can be attached even if the owner is not an accused, but directed the Respondent to release unrelied documents while retaining copies for investigation.

What did the court decide?

Direction to release unrelied seized documents to the appellant, permitting retention of copies by the agency for further investigation.

FPA-PMLA-2506/DLI/2018 of M/s Chess Global Advisory Services (P)… — Money Laundering | ATFP (2025)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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FPA-PMLA-2506/DLI/2018

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M/s Chess Global Advisory Services (P) Ltd.

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… Appellant

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Versus

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The Assistant Director Directorate of Enforcement, Delhi

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… Respondent

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Advocates/Authorized Representatives who argued

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For the Appellant	:	Mr. Akshat Gupta, Shrey Nautiyal, Advocates
For the Respondent	:	Mr. N.K. Matta, SPP,
		Mr. Aaditya Raj Sharma, Mr. Kartik Malhotra, Advocates
CORAM
SHRI G.C. MISHRA		: MEMBER
SHRI RAJESH MALHOTRA		: MEMBER

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FINAL ORDER 09.04.2025

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Dictated By: Rajesh Malhotra

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Present appeal under Section 26 of Prevention of Money Laundering Act, 2002 (PMLA) is filed by the appellant company against the order dated 20.06.2018 passed by the Adjudicating Authority in Original Application No. 174 of 2018, whereby it prayed for retention of the Four ABI office files containing documents/sheets, one CD wherefrom following details (digital evidence) printed on it were recovered (i) EMTEC, (ii) CD-R Recordable Enregistrable (iii) 80 Min/700 MB, seized vide Panchnamas dated 07.02.2018 recovered from the office premises of the appellant at 3-C, Eldorado, 112, Nungambakkam High Road, Chennai - 600034 which is annexed as Annexure A-2 of the present appeal.

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As per the facts of the case, ECIR/05/DZ/2012 dated 07.02.2012 is registered by the Enforcement Directorate and investigation under PMLA is continuing. The ECIR pertains to the scheduled offences i.e. 120-B of IPC, Section 7, 13(2) r.w. 13(1)(d) of PC Act. The ECIR is against Sh. Dayanidhi

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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Maran and others. A criminal prosecution is also registered against Dayanidhi Maran, Kalanidhi Maran, Ralf Marshall, T. Anandkrishnan, M/s Maxis Communications, Astro All Asia Networks PLC, M/s Sun Direct Pvt. Ltd. and other unknown officials / persons or commission of offence u/s 3 of PMLA, as was indicated in the ECIR dated 07.02.2012. On 13.01.2018, four ABI office files containing documents/sheets, one CD wherefrom following details (digital evidence) printed on it were recovered (i) EMTEC, (ii) CD-R Recordable Enregistrable (iii) 80 Min/700 MB, seized vide Panchnamas dated 07.02.2018 recovered from the office premises of the appellant at 3-C, Eldorado, 112, Nungambakkam High Road, Chennai – 600034.

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It is revealed that Advantage Strategic Consulting Pvt. Ltd. and Chess Management Services are the companies of Karti P. Chidambaram, wherein S. Bhaskararaman is also involved. It is also believed that the financial transactions by these two companies amounting to Rs. 26,00,444/- and Rs. 90.09 lakhs (Rs. 1.16 crore approx.) are not genuine and bonafide business transactions. Individuals involved in receiving the said suspected funds were S/Shri Karti P. Chidambara, Ravi Visvanathan, Mohanan Rajesh, CBN Reddy, S. Bhaskararaman and Ms. Padma Visvanathan. Sh. S. Bhaskararaman is a Chartered accountant and is looking after the financial matter of Sh. Karti P. Chidambaram (KPC) since the year 2005-06.

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Directorate of Enforcement has examined under PMLA that the then authorities of the FIPB viz. Secretary, Additional Secretary, Deputy Secretary and Under Secretary and it is revealed that as per Government Policy and FIPB guidelines as applicable in 2006, where the total foreign inflow is Rs. 600 crore and above, the Competent Authority was CCEA to give approval for foreign investment. For the total foreign inflow below Rs. 600 crore, the Finance Minister is the competent authority to give approval for foreign investment.

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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Investigation has revealed that Maxis Berhad Malaysia disclosed in the application filed before FIPB, the total foreign inflow was USD 800 Million (Rs. 3520 crore approx.). In the case of Aircel Ltd. total inflow of Rs. 3520 was exhibited as Rs. 180 crore as the amount involved in the proposal for consideration. Whereas, Rs. 180 crore was only the par value of the 18 crore equity shares for sale to Maxis, Bhd., Malaysia. Thus, the FIPB approval was given by FM while CCEA was competent and not the FM.

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It is suspected that KPC has received funds in and outside India connected with the FIPB approval given to Aircel Maxis on 20.03.2006, in addition to Rs. 1.16 crores as stated above. It is found that the overseas assets have been heavily altered/ transferred by KPC out of India with the assistance of various persons. Some of the bank accounts were opened and now are being closed by Karti P. Chidambaram in U.K.

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It is also suspected that holding company of Aircel Ltd. i.e. Aircel Televenture Ltd. of Mr. Sivasankaran and the associate companies of Maxis Malaysia in India namely, Apollo Group of Companies viz. Sindiya Securities Investments Pvt. Ltd. and others might have paid funds to the companies of KPC in India, in connection with the FIPB approval given to Aircel – Maxis Deal.

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Records reveal further that a number of companies had paid funds to the companies of KPC, namely, Advantage Strategic Consulting Pvt. Ltd. and Chess Management Services Pvt. Ltd. under the colour of consultancy fee which is not a fact. Such companies have paid funds not only in India but in foreign countries also in which either CBN Reddy or S. Bhaskararaman or some foreign national or Advantage companies in Singapore, Spain etc.

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Shri S. Bhaskararaman is CA and is looking after the financial matters of KPC since the year 2005-06. He is engaged in the execution of the

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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directors of KPC and holding the assets on his behalf in and outside India. He is also instrumental incorporating companies of KPC and enter into financial transactions with the companies based in and outside India for the purpose of receiving funds under the colour of consultancy fee. He is doing these activities with the assistance of other associates of KPC. He is the main person instrumental in the receiving of funds for KPC and deployment thereof in various financial transactions i.e. transforming the illicit assets into untainted funds by declaring them under legitimate financial deals which are not fact.

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Upon receipt of the OA dated 02.02.2018, this Authority entertained the reasonable belief in terms of Section 8(1) and ordered on 12.02.2018 issuance of the show cause notice inter-alia to show cause as to why the Four ABI office files containing documents/sheets, one CD wherefrom following details (digital evidence) printed on it were recovered (i) EMTEC, (ii) CD-R Recordable Enregistrable (iii) 80 Min/700 MB, seized vide Panchnamas dated 07.02.2018 recovered from the office premises of the appellant at 3-C, Eldorado, 112, Nungambakkam High Road, Chennai – 600034 be not permitted to be retained in terms of Section 17(4) of the PMLA.

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The Adjudicating Authority being satisfied with the allegations made in the OA coupled with the relied upon documents, formed the reasonable belief and thereby issued the Show Cause Notice to the defendant (herein appellant). After receiving the replies and hearing the rival submissions, the Adjudicating Authority allowed the retention vide its order dated 20.06.2018.

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Being aggrieved by the said order appellant company filed the present appeal.

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During the arguments Ld. Counsel for the appellant company submitted that for the lack of sanction to prosecute the officials named in

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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the FIR, the Special Court has not taken cognizance of the complaint filed by the CBI in the Aircel Maxis case relating to the circumstances leading to grant of FIPB approval to M/s Global Communications Holdings Services Ltd., Mauritius for investment in Aircel Ltd. Moreover, Respondent ED has already attached the sum of Rs. 26,00,444/- and Rs. 90.09 lakhs on 23.09.2017, on the premise that they are proceeds of crime, which are separate proceedings before this Appellate Tribunal.

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Ld. Counsel for the appellant company submitted that in case CBI FIR No. RC DAI 2011 A 0022 in the Aircel – Maxis Case, dated 09.10.2011 u/s 120-B of the IPC, and Sections 7, 12 and 13(2) r.w. 13(1)(d) of the PC Act. The accused were Mr. Dayanidhi Maran, Mr. Kalanidhi Maran and others. The name of appellant company does not figure in the above FIR. Also, in Chargesheet in RC 22(A)-2011-DLI dated 29.08.2014 was filed by ED in the Aircel Maxis case. The name of the appellant company does not figure in the above chargesheet.

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By order dated 02.02.2017 in CC No. 01/14, Ld. Special Judge in the Aircel – Maxis case discharged Mr. Kalanidhi Maran, Mr. Dayanidhi Maran and other accused persons in the case relating to the chargesheet stood discharged. Further, vide a separate order of the same date i.e. 02.02.2017 in Complaint Case No. 01/2016, the Special Judge passed order on the complaint filed by ED in ECIR/05/DZ/2012 dated 07.02.2012 held that the case of the Enforcement Directorate is groundless. Thereafter, the ED did not seek leave of the Special Court to conduct further investigation in the case relating to the FIPB approval.

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Ld. Counsel for the appellant company submitted that the respondent ED did not record the “reason to believe” in terms of Section 17(1) of PMLA, on the basis of material in its possession, that the appellant company, whose

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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premises is searched, was in possession of any records relating to money laundering. The application filed before the Adjudicating Authority and the seizure memo (inventory of items) containing the details of the records seized from the premises of the appellants, are the only materials which were filed by the Respondent before the Adjudicating Authority. Ld. Counsel for the appellant company submitted that there was no material before the Adjudicating Authority for forming reason to believe that the appellant company has committed an offence of money laundering u/s 3 of PMLA or the appellant company is in proceeds of crime. Even according to the Adjudicating Authority, the investigation is still going on. Therefore, the statutory requirement for having reason to believe u/s 8(1) of the PMLA are not satisfied.

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Ld. Counsel in this regard relied upon the judgment of Hon’ble Delhi High Court in case J. Sekar & Ors. V. Union of India, W.P. (C) 5320/2017 decided on 11.01.2018.

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Ld. Counsel for the appellant company submitted that Respondent ED has no jurisdiction to conduct any investigation into the commission of a scheduled offence. It is only the prosecuting agency registering, an FIR in relation to the scheduled offence and proceeds of crime are identified by the prosecuting agency that the Respondent ED will get the jurisdiction to conduct investigation under PMLA to identify the recipient of the proceeds of crime. Prayer is accordingly made to allow the present appeal and release the aforementioned properties which have been mortgaged with the appellant bank.

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On the other hand, Ld. Counsel for Respondent ED strongly controverted the submissions made by Ld. Counsel for the appellant. He pointed out the incriminating material against the appellants stating that on

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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16.12.010, the Hon’ble Supreme Court of India in CPIL v. Union of India reported at (2011) 1 SCC 560 , directed CBI to register FIR in the context of irregularities committed in the grant of licenses during the period 2001 to 2006-07 and directed the respondent to investigate the same. The respondent also filed a Prosecution Complaint on 08.01.2016 before the Ld. Special Court. The Respondent agency also continued with the further investigation.

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In regard to the judgment vide order dated 02.02.2017, discharging all the accused persons of the said CBI chargesheet at the stage of framing of charges, CBI has filed criminal revision petition before Hon’ble High Court of Delhi against the said order of discharge, which is still pending.

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Furthermore, the Respondent has also preferred a Criminal Revision Petition Cr. Rev. P. No. 370 of 2017 before the Hon’ble High Court of Delhi against the said order of discharge dated 02.02.2017, discharging all the accused persons, which is also pending.

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Ld. Counsel for the Respondent ED submitted that CBI had continued with further investigation and filed a supplementary chargesheet on 19.07.2018 before the Ld. Special Court, wherein CBI has been granted sanction by the competent authority to prosecute the accused public servants. Thereafter, Respondent filed a Prosecution Complaint dated 13.06.2018 in Complaint Case No. 18/2019 against the accused persons. The Special Court, PMLA has taken cognizance of the above two mentioned Prosecution Complaints on 27.11.2011 and has issued summons. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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After hearing the rival submissions, we have given our thoughtful consideration to the same. The Ld. Counsel for the appellant has contended that the accused were Mr. Dayanidhi Maran, Mr. Kalanidhi Maran and

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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others. The name of appellant does not figure in the above FIR. Also, in Chargesheet in RC 22(A)-2011-DLI dated 29.08.2014 filed by ED in the Aircel Maxis case, the name of the appellant does not figure in the above chargesheet. However, we are of the view that that the person whose properties have been attached need not be an accused person. The law on this issue now stands settled by the landmark judgment of the Hon’ble Supreme Court in the case of V ijay Madanlal Choudhary and Ors. vs. Union of India (UOI) and Ors. (27.07.2022) MANU/SC/0924/2022 . The relevant text from the judgment is quoted hereunder:

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“65……... The sweep of Section 5(1) is not limited to the Accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being Accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. Such a person besides facing the consequence of provisional attachment order, may end up in being named as Accused in the complaint to be filed by the authorised officer concerning offence Under Section 3 of the 2002 Act.

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69. We find force in the stand taken by the Union of India that the objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering. The second proviso, therefore, addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever's name they are kept or by whosoever they are held .” [Emphasis supplied]

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Therefore, the property (including seized/frozen documents and articles) in the hands of any person in possession of proceeds of crime can be attached even if he is not an accused of the offence of money-laundering. This argument of the Appellant is accordingly, rejected.

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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Secondly, the Ld. counsel for the appellant has contended that the respondent ED did not record the “reason to believe” in terms of Section 17(1) of PMLA, on the basis of material in its possession, that the appellant, whose premises is searched, was in possession of any records relating to money laundering. However, there exists ample incriminating material against the appellant as mentioned in para 4 by the Ld. counsel for the Respondent.

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Lastly, Ld. counsel for the appellant contended that Respondent ED has no jurisdiction to conduct any investigation into the commission of a scheduled offence. We are of the view that the police/CBI has to conduct the investigation for the commission of the predicate/schedule offence and ED is not empowered to re-investigate the same. It has to see only the following points during its investigation for money laundering:-

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i) Whether there is any prima facie incriminating evidence against the culprits for commission of schedule offence; ii) Whether any proceeds of crime were generated by commission of crime/predicate offence; iii) Whether the said proceeds of crime are laundered, or likely to be laundered;

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iv) If proceeds of crime are laundered, then the mode of layering of the same, or the trail of POC;

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v) If proceeds of crime are already dissipated, then the other properties of the culprits which can be attached, in absence of direct/ indirect POC; vi) Whether the claimants of attached properties are genuine, or part & parcel of conspiracy.

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Thus, this contention is decided against the appellants and in favour of ED.

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Now, without going into the merits of the case, Respondent ED is hereby directed to release all the un-relied documents/seized material to the appellant, if not relied upon by any investigating agency till date. However, Respondent ED is at liberty to retain the copies of the same for the purpose

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FPA-PMLA-2506/DLI/2018 M/s Chess Global Advisory Services (P) Ltd. v. E.D., Delhi

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of further investigation, if so required. Respondent ED is also at liberty to take endorsement of the appellant on the photocopies regarding authenticity of the photocopies of the originals returned to the appellant, which will be returned to them. It is made clear that, if any document/seized material is already relied upon in any criminal case, or chargesheet or prosecution complaint, the same cannot be returned till the conclusion of the case. Appellant is hereby directed to give an undertaking by way of affidavit that he will not challenge the authenticity of the photocopies.

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In sequel to our discussion in the preceding paras, the present appeal is hereby disposed of with direction. This Order be complied within six months after the expiry of period of limitation for filing appeal in the Hon’ble High Court.

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Appeal Disposed of with Direction.

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Pronounced on this 9^th day of April, 2025.

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(Rajesh Malhotra) (G.C. Mishra) Member Member

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‘AB’

FPA-PMLA-2506/DLI/2018 of M/s Chess Global Advisory Services (P) Ltd. v. The Assistant Director Directorate of Enforcement, Delhi

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FPA-PMLA-2506/DLI/2018 of M/s Chess Global Advisory Services (P) Ltd. v. The Assistant Director Directorate of Enforcement, Delhi

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