Disposed

FPA-PMLA-2987/NGP/2019 of Asset Care & Reconstruction Enterprise Ltd. v. The Deputy Director Directorate of Enforcement & Ors., Nagpur

ATFP8 May 2025FPA-PMLA-2987/NGP/2019

Case brief

AI extract

What is this about?

The Appellate Tribunal disposed of the appeal filed by the assignee of a secured mortgagee against the confirmation of Property Attachment Order by ED. The court directed the appellant to stake its claim before the Special Judge, PMLA Court for auction of the properties with an undertaking to deposit excess proceeds.

What did the court decide?

Appeal disposed with liberty for appellant to stake claim before Special Judge PMLA Court for auction of properties and deposit excess to ED via FDRs.

FPA-PMLA-2987/NGP/2019 of Asset Care & Reconstruction… — Company and Corporate | ATFP (2025)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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MP-PMLA-1419/NGP/2025 FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. … Appellant

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Versus

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The Deputy Director Directorate of Enforcement & Ors., Nagpur

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… Respondent

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Advocates/Authorized Representatives who Argued

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For the Appellant : Mr. Dharam Dev, Adv. For the Respondent : Mr. Aditya Singla, & Mr. Sahil Parashar, Adv.

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Coram

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SHRI G.C. MISHRA SHRI RAJESH MALHOTRA

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: MEMBER : MEMBER

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FINAL ORDER 08.05.2025

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Dictated by: Rajesh Malhotra

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Present appeal u/s 26 of Prevention of Money Laundering Act is filed by the Appellant against the impugned order dated 04.12.2018 passed by the Adjudicating Authority whereby it confirmed the PAO No. 02/2018 dated 12.06.2018 passed by ED. Out of the attached properties, the following properties are claimed by present Appellant, Asset Care & Reconstruction Enterprise Ltd. being the assignee of mortgagee for consortium of Bank,

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Immovable properties in the name of M/s Growth Infinite:-

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Sl. No.	Sale No.	Deed	Particular	Amount Rs.
1.	05832/ 2011 02.12.2	dated 011	All the Piece and Parcel of land bearing Nazul Leasehold Plot No. 9-B, (NINE-B), Nazul Sheet No. 17-C, Containing by admeasurement 759.20 Sq. Mtrs. Of Mouza-Dhantoli, bearing Corporation, House Nos. 9/A, 9/H, 9/G, 9/F, 9/E, 9/D, 9/C and 9/B, City Survey No. 128 and Sheet No. 793, situated at Wardha Road, Dhantoli, Nagpur, within the limits of the Nagpur Municipal Corporation Ward No.4 in Tahsil and District-Nagpur	10,00,00,000

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Movable properties in the name of M/s Jas Infrastructure & Power Ltd., Nagpur:-

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Sl.	Particulars	Valuation as on 03.09.2012 made by Shri
No.		PravinG.Zadgaonkar,Nagpur,Valuer
1.	The Plant (including structural	The Approximate Market value of Plant
	work) & Machinery of M/s Jas	(including structural work) & Machinery
	Infrastructure and Power Ltd, Nagpur situated at Banka,Bihar	as on 03.09.2012 is Rs. 2,52,90,00,000/-

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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Immovable property in the name of M/s Jas Infrastructure and Power Ltd., Nagpur:-

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Sl. No.	Sale Deed No. and Date	Description of the Property	Amount
1.	478/2012 dated 25.01.2012	All that piece and parcel of non-agricultural land bearing Plot No. 19 total admeasuring 158.21 Sq. Mtrs. out of the sanctioned layout of Khasra/field Survey No. 121/2/14 of Mouza BELA, Tehsil Saza No. 10, Thak No. 148, within the limits of Grampanchayat Bela, Panchayat Samiti & Zilla Parishad Bhandara, TehsilandDistrictBhandara.	Rs. 3,55,000/-

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As per the facts of the case, CBI, New Delhi, registered FIR No. RC 219/12 dated 03.09.2012 against M/s Jas Infrastructure Capital Pvt. Ltd., Shri Manoj Kumar Jayaswal, Shri Abhishek Jayaswal, Shri Anand Jayaswal and under unknown officials of Ministry of Coal, Government of India and other unknown persons, for commission of offence u/s 120B IPC read with 420 of IPC, 1860 and also read with 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. As per the allegation, Ministry of Coal, Government of India, New Delhi, vide an advertisement dated 13.11.2006 invited application for the allocation of Coal Block in the State of Jharkhand. In response to the said advertisement application from 34 different companies were received. The 35^th Screening Committee concluded its deliberation on 13.09.2007 and recommended allocation of Mahuagarhi Coal Block jointly to Kolkata Electricity supply Company Ltd. (CESC) and M/s Jas Infrastructure Capital Pvt. Ltd. for their proposed Power plant in the State of Jharkhand and West Bengal respectively. The letter of allocation for the Mahuagarhi Coal Block having Geological Reserve of 220 million MT was issued vide No. 38011/1/2007-CA-1 on 09.01.2008. The Ministry of Power had recommended for allocation of this block to M/s Maithan Power Ltd. However, M/s Jas Infrastructure Capital Pvt. Ltd had recommendation of the Ministry of Power for allocation of Patal East Block. The Government of Jharkhand had not

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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recommended M/s Jas Infrastructure Capital Pvt. Ltd. for allocation of any coal block. In the said FIR, it is alleged that M/s Jas Infrastructure Capital Pvt. Ltd. had misrepresented/concealed facts in the application form in order to qualify and obtain wrongful gains/undue benefits in connivance with unknown public servants.

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The Net worth of the applicant company and its group companies was an important factor to determine the financial strength of the applicant to judge its capacity to successfully implement the project and develop the Coal Block. M/s Jas Infrastructure Capital Pvt. Ltd, in order to embellish its claim for allocation of coal block, fraudulently claimed in its application that M/s Jas Infrastructure Capital Pvt. Ltd. was a Special Purpose Vehicle (SPV) managed by M/s. Inertia Iron and Steel Industries Pvt. Ltd. and IL&FS Group and claimed net worth of Rs. 812.03 crores of M/s IL&FS Group and Rs. 206.48 crores of M/s Inertia Iron and Steel Industries Pvt. Ltd. in its support. The Central Electricity Authority (CEA) on whose analysis the Ministry of Power made its recommendation to the Ministry of Coal had kept a minimum net worth of Rs. 0.5 Crore per Mega Watt of the maximum capacity of the proposed Power Plant as a pre-qualification criteria for the applicant companies. The company M/s Jas infrastructure Capital Pvt. Ltd, with a proposed capacity of 1,200 Mega Watt would not have pre-qualified for the recommendation of the Ministry of Power, but got allocation on account of this deception. In the application form, the applicant companies were required to disclose any previous allocation of coal blocks to them or their group/ associate companies and the progress in developing such coal blocks. The group companies of M/s Jas Infrastructure Capital Pvt. Ltd had previously been allocated 07 coal blocks between, 1999 to 2005.

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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However, the company fraudulently and wilfully concealed the fact of previous allocations to the Group companies with an object to avoid scrutiny on this account which would have weakened its claim. The Official of Ministry of Coal, in pursuance of criminal conspiracy, wilfully & purposefully, did not scrutinize the documents regarding the false claims/concealments of facts by M/s Jas Infrastructure Capital Pvt. Ltd., and thus, thereby facilitated M/s Jas Infrastructure Capital Pvt. Ltd. in getting undue advantage in allocation of the Mahugarhi Coal Block.

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On the basis of said FIR, Directorate of Enforcement, Sub-Zonal Office Nagpur recorded Enforcement Case Information Report (ECIR) dated 26.12.2013 for initiating investigation for the commission of offence of money laundering against the said suspects/accused persons and others.

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It is pertinent to mention here that on 15.04.2014 CBI filed closure report in the said FIR and revised final report on 13.10.2014/ 14.10.2014. The said closure report was not accepted by Ld. Special Judge CBI Court vide its detailed order dated 20.11.2014. It is held that MOC officers and the Screening Committee have prima facie committed offence of criminal breach of trust and of criminal misconduct, which is punishable u/s 409 IPC and Section 13(1)(c) and 13(1)(d) of PC Act, 1988.

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During investigation ED recorded the statement of suspects/ accused persons and others u/s 50 of PMLA and also collected the document from the investigation agency and other sources. On the basis of said investigation, it was concluded that the net worth of M/s JIPL during F.Y. 2004-05 and 2005-06 was ₹ -339787 & ₹ -336886.80

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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respectively. However, the Net Worth of the company during F.Y. 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 were ₹5044739.27, ₹16467502, ₹19058593, ₹99604532, ₹137686750, ₹7202335850 & ₹7495775750 respectively.

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Therefore, the Net Worth of M/s JIPL increased due to subscription of shares whose number were increased from 10,000 in FY 2006-07 to 77,47,59,670 in F.Y. 2012-13. Thus, out of 77,47,49,670 number of shares (774759670 shares -10000 shares), 72,16,27,500 number of shares were subscribed at the face value of Rs. 10/- per share, 10,70,170 number of shares were subscribed at a premium of Rs.65/- and face value of Rs.10/- per share and the residual 5,20,52,000 number of shares were subscribed as partly paid as on date.

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Therefore, the number of shares of M/s JIPL was increased from 10,000 to 77,47,59,670 shares from F.Y.2006-07 to F.Y.2012-13. Therefore, there is an increase of number of shares i.e. 77,47,59,67010,000= 77,47,49,670.

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The profit of M/s JIPL from F.Y. 2006-07 to F.Y. 2012-13 is attributed to mainly from the Dividend Income, Profit on sale on current investment and profit on sale of future trading etc.

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On scrutiny letter of the IDBI Bank, Nagpur, it is seen that Shri Manoj Jayaswal, Authorised Signatory issued cheque bearing No. 055041 dated 20.05.2010 for the amount of Rs. 22,80,000/- and Cheque bearing No. 055040 dated 20.05.2010 for the amount of Rs. 22,80,000/ in favour of M/s Hanurang Project Ltd., and M/s Ricon Infrastrucute Ltd, Kolkata respectively towards transfer of 30,000

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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shares each of M/s JIPL @ Rs. 76 per share having face value of Rs. 10/- per share to M/s Abhijeet Power Ltd, Nagpur.

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M/s Ricon Infrastructure Ltd (presently known as M/s Arrisan Infrastructure Pvt. Ltd.) subscribed 30,000 shares of M/s JIPL from Shri Abhishek Jayaswal's against payment of Rs.3,00,000/Subsequently M/s Ricon Infrastructure Ltd. (presently known as M/s Arrisan Infrastructure Pvt. Ltd.) transferred the said 30,000 shares of M/s JIPL to M/s Abhijeet Power Ltd., Nagpur, against receipt of Rs.22,80,000/-. Thus, M/s Abhijeet Power Ltd. purchased 30,000 shares at premium of Rs.19,80,000/-.

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M/s Hanurang Projects Pvt. Ltd. purchased 30,000 shares of M/s JIPL from Shri Abhishek Jayaswal’s against payment of Rs. 3,00,000/-. Subsequently M/s Hanurang Projects Pvt. Ltd. transferred the said 30,000 shares of M/s JIPL to M/s Abhijeet Power Ltd., Nagpur against the receipt of Rs. 22,80,000/-. Thus M/s Abhijeet Power Ltd. purchased 30,000 shares at premium of Rs. 19,80,000/-

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M/s IL&FS Infrastructure Development Corporation Ltd. & M/s IL&FS IIDC Fund, Mumbai was holding 23,660 shares of M/s JIIPL which was transferred to M/s Abhijeet Power Ltd. against receipt of Rs. 3,90,00,000/-. Thus, M/s Abhijeet Power Ltd. purchased 23,660 shares at premium of Rs. 3,87,63,400/-

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Therefore, it is seen that Rs. 19,80,000 + Rs 19,80,000/- + Rs. 3,87,63,400/- = Rs 4,27,23,400/- are in possession of M/s Ricon Infrastructure Ltd. (presently known as M/s Arrisan Infrastructure Pvt. Ltd.), M/s Hanurang Projects Pvt. Ltd. and M/s IL&FS Infrastructure Development Corporation Ltd. & M/s IL&FS IIDC FUND, Mumbai.

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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On the basis of the investigation conducted by ED, it was concluded that defendants are in possession of proceeds of crime on account of commission of fraud to the extent of Rs. 746,15,37,750/-, and accordingly, ED attached the properties vide PAO No. 02/2018 dated 12.06.2018 thereafter it filed Original Complaint No. 995/2018 before the Adjudicating Authority for confirmation of PAO.

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The Adjudicating Authority going through the allegation made in the complaint, couple with relied upon document and statements u/s 50 of PMLA, issued the Show Cause Notice of all the defendants. After receiving the respective replies and hearing the rival submissions confirmed the PAO vide order dated 04.12.2018.

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Aggrieved by the said order, appellant filed the present appeal being the assignee for the mortgaged properties.

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During the arguments, Ld. Counsel for the Appellant submitted that its assignor i.e. Axis Bank Ltd. was one of the consortium members who sanctioned credit facilities to the extent of 2308.58 crore to the mortgager/borrower against the equitable mortgage of properties (as mentioned in Para No. 1 above), as well as by way of first charge over the movable properties, tangible assets including plant and machinery fixture etc. The said borrowers and his creditors failed to repay the loan amount and account was declared as NPA by consortium of banks. Banks filed OA before the Debt Recovery Tribunal and also initiated action under SARFAESI Act, 2002. The properties were put to auction sale, but the same could not be sold on account of attachment by ED. He argued that in Section 26E of SARFAESI Act, it is mentioned that notwithstanding anything contained in any other law for the time being in force, after the

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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registration of security interest, the debt due to any secured creditors, shall be paid in priority over the other debt and or revenue, taxes, cesses and other rates payable to the Central Government or State Government or Local Authorities. He pointed out that the entities who had purchased the shares have not lodged any complaint against the accused companies (borrowers/mortgagors) for commission of any fraud by selling the shares on premium.

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He argued that during the pendency of this Appeal, action for Corporate Insolvency Process under Insolvency and Bankruptcy Code, 2016 is also initiated against the mortgagor companies and the said companies went into liquidation vide order dated 17.07.2020. Prayer is accordingly made to permit the appellant to auction the hypothecated and the mortgaged assets of the said mortgagor companies (in liquidation), to realize its dues being the assignee of the mortgagee/consortium of banks.

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On the other hand, Ld. Counsel for the Respondent ED strongly opposed the contention of the Ld. Counsel for the appellant assignee mortgagee/consortium of banks and submitted that the properties were mortgaged during the period of commission of offence and the Respondent ED is entitled to attach the same. Ld. Counsel for the respondent ED submitted that the FIR was registered in the year 2012, when the loan was sanctioned by the appellant bank. Ld. Counsel for the respondent opposed the contention of the appellant ARC that SARFAESI provisions will get precedence over provisions of PMLA as alleged, is not correct, as PMLA is a special Act and proceedings under PMLA will get precedence over other Acts in terms of Section 71 of the Act. He also pointed out that the quantum of fraud is to the extent of about ₹746.15 crores, whereas the attached properties is only quite

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FPA-PMLA-2987/NGP/2019 Asset Care & Reconstruction Enterprise Ltd. v. E.D., Nagpur

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nominal. He further stressed that only Ld. Special Judge, PMLA Court can dispose of the mortgaged properties after the conclusion of the trial, as per law. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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We have considered the rival submissions and given our thoughtful consideration to the same. We agree with the contention of learned counsel for Respondent ED that after the filing of prosecution complaint it is the prerogative of the Ld. Special Judge, PMLA Court, to release/dispose of the attached mortgaged property at the time of conclusion of trial, after inviting claim of the creditors. However, being an assignee of the secured mortgagee of the aforementioned properties, the appellant is at liberty to stake its claim before learned Special Judge, PMLA Court, even before the conclusion of trial u/s 8(7) of the PMLA, 2002, for auction of mortgaged properties, with an undertaking to deposit the excess amount with ED by way of FDRs.

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In sequel to our discussion in the preceding para, the present appeal is hereby disposed of with liberty as aforesaid. It is made clear that nothing expressed herein will affect the right of either party in the criminal trials.

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Appeal Disposed of with direction.

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Pronounced on this 08^th Day of May, 2025.

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(Rajesh Malhotra) Member

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(G.C. Mishra) Member

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‘AB’

FPA-PMLA-2987/NGP/2019 of Asset Care & Reconstruction Enterprise Ltd. v. The Deputy Director Directorate of Enforcement & Ors., Nagpur

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FPA-PMLA-2987/NGP/2019 of Asset Care & Reconstruction Enterprise Ltd. v. The Deputy Director Directorate of Enforcement & Ors., Nagpur

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