Disposed

FPA-PMLA-523/LKW/2013 of Union Bank of India v. The Deputy Director Directorate of Enforcement, Lucknow

ATFP26 May 2025FPA-PMLA-523/LKW/2013

Case brief

AI extract

What is this about?

The Tribunal examined the efficacy of attaching mortgaged properties under PMLA when the bank is a secured creditor. It held that attachment should be limited to the surplus value, allowing banks to stake claims in the trial court to protect their interests.

What did the court decide?

Disposed of with liberty for the Bank to stake its claim before the Special Judge for auction of mortgaged properties, undertaking to deposit excess amount.

FPA-PMLA-523/LKW/2013 of Union Bank of India v. The Deputy… — Money Laundering | 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-523/LKW/2013 Union Bank of India … Appellant Versus The Deputy Director Directorate of Enforcement, Lucknow … Respondent Advocates/Authorized Representatives who Argued For the Appellant : Mr. Amitabh Gupta, Advocate For the Respondents : Ms. Ankita Gautam, Advocate

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FINAL ORDER 26.05.2025

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Present appeal under Section 26 of the Prevention of Money Laundering Act, 2002 is filed by the appellant bank against the order dated 27.08.2013 passed by the Adjudicating Authority in Original Complaint No. 181/2013, whereby the properties attached by ED vide Provisional Attachment Order (PAO) dated 28.02.2013 were confirmed. The details of the properties mortgaged with the appellant bank are as under:

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SI. No.	Description of the property	Purchaser	Seller date	and	Value of purchase as per agreement	Present Market Value
1.	Flat no. 101 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Universal Tradelinks Pvt Ltd	M/s Dweller 24.10.2	Vijay s 007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. 6 crores
2.	Flat no. 102 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Universal Tradelinks Pvt Ltd	M/s Dweller 24.10.2	Vijay s 007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. 6 crores
3.	Flat no. 201 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Universal Tradelinks Pvt Ltd	M/s Dweller 24.10.2	Vijay s 007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. 6 crores
4.	Flat no. 202 at Babylon Building, Matunga(E), Adenwala Road, Mumbai,	M/s Balaji Universal Tradelinks PvtLtd	M/s Dweller 24.10.2	Vijay s 007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total-94,82,850/-	Rs. 6 crores

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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5.	Flat no. 301 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. crores	6
6.	Flat no. 302 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. crores	6
7.	Flat no. 401 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. crores	6
8.	Flat no. 402 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 86,81,000/- Plus 8,02,850 (other expenses) Total Rs. 94,82,850/-	Rs. crores	6
9.	Flat no. 601 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 91,21,000/- Plus 8,02,850 (other expenses) Total Rs. 99,23,850/-	Rs. crores	6
10.	Flat no. 602 at Babylon Building, Matunga (E), Adenwala Road, Mumbai,	M/s Balaji Lifestyle Realtors Pvt Ltd	M/s Vijay Dwellers 24.10.2007	Rs. 91,21,000/- Plus 8,02,850 (other expenses) Total Rs. 99,23,850/-	Rs. crores	6
			Total	Rs. 9,57,10,500/-	Rs. 6 crores	0

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As per the facts of the case, Vigilance Police, Rachi registered an FIR No. 09/2009 dated 02.07.2009 against Sh. Madhu Koda and others for commission of offences punishable under Sections 120 B of IPC 409, 420, 423, 424, 465, and Section 7, 10, 11 & 13 of Prevention Corruption Act, 1988.

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After investigation Vigilance Department filed final report no. 05/2010 dated 28.01.2009 under Section 173 Cr.P.C, 1973 before the Hon’ble Special Judge, Rachi, against Sh. Madhu Koda, and others. As per the said final report it is revealed that Binod Singha, Sanjay Kumar Chaudhary and the others opened under of Companies to enable Sh.

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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Madhu Koda is investing his illegal income. He had amassed illegal assets far in excess of his income from legal sources by misusing his position in the Jharkhand Government. He acquired disproportionate assets of his known and legal sources of his income.

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In the meantime, the Hon’ble Jharkhand Hingh Court vide order dated 04.08.2010 transferred investigation of the case form Vigilance Department to CBI. Accordingly, the CBI registered the FIR No. RC5 (A)/ 2010/AHD/Ranchi dated 11.08.2010. CBI after conducting investigation filed charge sheet no. 06/2010 dated 12.10.2010 against S/Sh. Madhu Koda, Binod Sinha and Sanjay Kumar Chaudhary relating to specific instances of illegal gratification to the tune of Rs. 30 crores obtained by Binod Sinha and Sajay Kumar Chaudhary on behalf of Sh. Madhu Koda from M/s Core Group of Mumbai, for getting approval and allotment of Iron Ore Mines in Jharkhand.

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Accordingly, the Enforcement Directorate, Patna Zone, recorded the ECIR No. 02/PAT/2009 dated 08.10.2009 for inviting the investigation for the offences of money laundering under PMLA, against the defendant namely S/Sh. Madhu Koda, Binod Sinha, Vikash Sinha, Sunil Kumar Sinha, Sanjay Kumar Chaudhary, Dhananajay Kumar Chaudhary, Kamlesh Singh, Bhanu Pratap Shahi and Bandhu.

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It is pertinent to mention the following material facts:

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a) the Vigilance Police, Ranchi in its Final Report dealt with only the properties acquired by Sh. Madhu Koda in his name and in the name of his wife. It did not cover the acquisition of properties relatable to his associates and others, and

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b) the CBI Charge Sheet dealt with only the offence of demanding and obtaining of Rs.10 Cr. from Sanjeev Mansotra, owner of Core Group of Mumbai, through another company namely “Bermaco Industries” and

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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invested the same in the mall project at Jamshedpur through one Ashish Gosh of M/s Sharda Consultants.

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It is also worthwhile to give a brief account of the findings of the Income Tax Department during the course of their assessment for the FY 2009-10 in respect of Sh. Madhu Koda

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a) Sh. Madhu Koda had a very close nexus with persons like Binod Sinha, Vikas Sinha, Sanjay Kumar Chaudhary, Dhananjay Kumar Chaudhary, Manoj Kumar Punamiya, Arvind Vyas, Anil Bastawade and others.

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b) Manoj B. Puamiya, a known Hawala Operator of Mumbai had earlier served a jail term under COFEPOSA. He along with his own Balaji Group of Companies, was in the business of Gold and Bullion, Real Estate etc., and played an important role in managing the money earned by Binod Kumar Sinha, by changing the colour of money and investing the same in various projects in India and abroad.

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c) Before the FY 2006-07, Manoj Punamiya, Arvind Vyas and Lalit Jain were actually men of limited means and their rise coincided with the political rise of Sh. Madhu Koda.

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d) All the Group Companies of Manoj Punamiya came into existence only in the 2nd half of FY 2006-07. Some of them were acquired by Manoj Punamia as ongoing concerns. To illustrate a few, the following companies were incorporated/acquired by Manoj Punamia on the dates mentioned in bracket (i) Balaji Life Style Realtors (22-11-2006), (ii) Balaji Universal Trade Link Pvt. Ltd. (03/10/2006), (iii) Balaji Bullion Commodities (02/01/2007), (iv) Orbit Diamonds (07/08/2007), (v) Keyman Advisory Services Pvt. Ltd. (06/12/2007), (vi) Radha Gopal Financial Services Pvt. Ltd. (15/04/2008), (vii) Akruti Diamonds Pvt. Ltd. (07/08/2008), (viii) Adarsh Diamond Pvt. Ltd. (07/08/2008), (xi) Trinetra

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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Infra Con. Pvt. Ltd. (18.03.2008), (x) Kuber Diamonds (07/08/2008), and (xi) Incredible Exports Pvt. Ltd. (06/06/2008).

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e) This shows that only after Manoj Punamia and his cohorts came in contact with Sh. Madhu Koda and Binod Sinha, he started receiving undisclosed income of Sh. Madhu Koda and Binod Sinha. He started receiving undisclosed income of Sh. Madhu Koda since FY 2006-07. With that ill-gotten money, he set up large number of companies known as Balaji Group of Companies.

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f) The share-holding pattern of Balaji Life Style Realtors Pvt Ltd and Balaji Universal Trade Links reveals that Manoj Punamia, Lata M. Jain and Vishal Information Technologies were share-holders.

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g) List of shareholders, subsequent changes in the share holdings and the Directors show that either they were controlled directly by Manoj Punamia or through his cohorts. Moreover, the share-holding-pattern of these companies reveals that Binod Sinha and Sanjay Chaudhary, close aides of Sh. Madhu Koda were holding substantial shares in M/s Balaji Bullion and Commodities Pvt Ltd, etc. Thus, there was a clear cut and deep nexus between Manoj Punamia and his group Companies and Sh. Madhu Koda and his aides.

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h) Binod Sinha and Sanjay Chaudhary during the time when Sh. Madhu Koda was the Chief Minister, approached Manoj Punamia and associates for laundering funds generated illegally from Jharkhand. Manoj Punamia had allowed Binod Sinha and associates to be share-holders in Balaji Group of Companies.

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i) On verification of the Books of Accounts of various concerns of Balaji Group, it was noticed that there was large scale fund move movements every day and also purchase and sale of gold from each other.

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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j) Memoranda of Associations and Articles of Associations of number of these concerns found in their respective premises revealed that they were controlled by Manoj Punmia and Directors. The share holders as listed were all dummies. The share – holding pattern of all these concerns was undergoing continuous charge to suit the needs of Manoj Punamia and Binod Sinha.

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k) Manoj Punamia and his associates like Arvind Vyas, Muknaram Vishnoi, Sanjay Ram Tolrami, Pritam Doshi and others had also floated number of concerns in foreign countries such as UAE, Singapore, Hong Kong and Indonesia for carrying out money laundering operations. Al Qudra General Trading LLC, Dubai; Rolling Stone FZE, Dubai; and Global Trade Commodities LLC, Dubai, are three of the 46 companies based in Dubai Singapore, Indonesia, Hong Kong and other countries, with whom Balaji Group Concerns had business and investment transactions. These concerns are controlled by Manoj Punamia.

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l) Number of papers that were seized during the course of search and survey operations showed that all the properties were being controlled by Manoj Punamia and his aides. It was also seen that most of the sales and purchase transactions of these concerns were with M/s. Suryam Gems and Jewellery LLC, M/s Balaji Universal Tradelinks Pvt Ltd and Balaji Bullion & Commodities Pvt. Ltd, the flag ship concerns of Manoj Punamiya. Manoj Punamiya was using this conduit to transfer money to Dubai, to be used for investment in real estate as well as acquisition of companies.

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m) With regard to M/s. KGN Gems and Jewellery LLC based in Dubai, the papers that were seized and impounded revealed that all the bills, vouchers and communication letters have been signed either by Muknaram Vishnoi or Hemendra Bhai Patodia. Both these individuals

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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are trusted lieutenants of Manoj Punamiya, and thus, it appears that the modus operandi in the case M/s KGN Gems and Jewellery was similar to that of M/s Suryam Gems and Jewellery LLC.

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n) The charts seized during the course of the search u/s 132 of the IT Act 1961 also showed that the main person/authorized signatory of the major importers and exporters of M/s Balaji Universal Tradelink Pvt. Ltd. and M/s Balaji Bullion and Commodities Pvt. Ltd. was Manoj Punamiya. This further strengthened the contention that all these companies were floated by Manoj Punamiya or his hawala operations.

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o) In addition to these, Manoj Punamiya and Balaji Group of companies along with Arvind Vyas, Binod Sinha, Sanjay Chaudhary, Dhananjay Chaudhary and Anil Bastawade had substantial investment abroad such as Dubai, Indonesia, Thailand and other parts of the world through associates and others. The sources of these investments were the monies received owing to their proximity with the then Chief Minister Sh. Madhu Koda in lieu of the favours granted or promised by the assessee.

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p) In their statements Manoj Punamiya and Arvind Vyas have admitted their relationship with Sh. Madhu Koda, Binod Sinha, Sanjay Chaudhary, Vikas Sinha, Anil Bastawade and others.

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Accordingly, ED concluded that the "proceeds of crime" acquired by Sh. Madhu Koda and invested through and in the name of his associates are, prima facie, involved in money laundering. Therefore, they are liable for attachment under section 5(1) of PMLA. Hence, ED recorded ECIR/02/PAT/2009 dated 08.10.2009 for initiating the investigation for the offence of money laundering under PMLA, 2002, against the suspects/accused persons i.e. Sh. Madhu Koda and eight others. The investigation conducted by ED revealed that it was Sh. Madhu Koda, who

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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was the nucleus, or power center for granting favour to various groups, individuals and companies. Around him, there was an imperious layer, which was penetrable only thorough Binod Sinha, who enjoyed considerable clout and say in finalizing various deals such as mining leases, electrification contracts etc. in lieu of hefty illegal money/bribes received on behalf of Sh. Madhu Koda. ED also recorded the statements of the suspects & others under Section 50 of PMLA and also collected the documents from various sources. On the basis of material on record, ED attached the properties vide Provisional Attachment Order no.01/2013 dated 28.02.2013, and thereafter, filed the Original Complaint No. 181/2013 before the Adjudicating Authority for that the confirmation of the PAO.

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The Adjudicating Authority being satisfied with the allegations mentioned in the Original Complaint, coupled with relied upon documents and statements under Section 50 of PMLA, issued Show Cause Notice to the defendants. After receiving their respective replies and hearing the rival submissions, it confirmed the PAO vide its order dated 27.08.2013.

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Aggrieved by the said order, the appellant Bank filed the present appeal, qua the properties mortgaged with the Bank, as mentioned in para no.1 above.

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During the arguments, Ld. Counsel for the appellant submitted that ED wrongly attached the mortgaged property without appreciating the fact that the said properties/flats are mortgaged against the loan facilities availed by the mortgagor namely M/s Balaji Universal Tradelinks Pvt. Ltd. through Director Sh. Manoj Babulal Punamiya and M/s Balaji Lifestyle Realtors Pvt. Ltd. through Director Sh. Anil Adinath Bastawade stood as one of the guarantor for the said loan. He pointed out vide Sanction letter

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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dated 24.04.2008 loan of Rs.20 crores was given under AFDBC Limit and Rs. 5 crore under Cash Credit Limit. The said loan facility was enhanced to Rs.30 crores under AFDBC facility vide sanction letter dated 27.02.2009. He argued that being the mortgaged properties, ED is not empowered to attach the said mortgaged properties as it will seriously prejudice the interest of present Appellant Bank. He argued that instead of tracing the trail of proceeds of crime, the ED has adopted the short cut method to attach the mortgaged property without realising the fact that the Appellant Bank is a secured creditor qua the said properties and will have right to claim the balance outstanding loan, if not cleared by the mortgagor. He stressed that only the remainder amount after the auction sale, can be attached by ED. He further pointed out on account of nonpayment of dues appellant Bank filed Original Application no. 198 of 2011 before the Hon’ble DRT-II, Mumbai for recovery of outstanding dues. He pointed out that vide order dated 24.09.2012, DRT-II, Mumbai passed the final order for recovery of Rs. 27,84,50,000/- along with interest at the rate of 10% per annum with monthly rest from 14.03.2010 till full realization. It is also declared that the said decretal amount is secured against the six flats (as mentioned in para no.1 above) and one plot of the mortgagor and guarantor. Recovery certificate was also issue accordingly. He pointed out that the said flats could not be auctioned by the Bank for realizing its dues, on account of PAO dated 28.02.2013. Prayer is accordingly made to protect the right of the present Appellant Bank qua the said mortgaged properties/flats.

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Learned counsel for Respondent ED strongly controverted the submissions made by learned counsel for Appellant Bank on the ground that even the mortgaged property can be attached, if the mortgagor fails to explain the initial part payment and the EMI for repaying the loan

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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amount. He further argued that Appellant Bank, being a secured creditor, may file its claim before learned Special Judge at appropriate stage. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

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I have considered the rival submissions and given my thoughtful consideration to the same. I 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 properties at the time of conclusion of trial, after considering claim of the creditors and objectors. I also agree with the contention of the Ld. Counsel for the appellant Bank that respondent ED instead of tracing out the trail of proceeds of crime miserably failed to take any action and instead of the same adopted a shortcut method to attach the mortgaged properties. I am of the considered view that attachment of the mortgaged properties does not satisfy the interest of all the creditors, whether secured and/or unsecured. In fact, attachment of the mortgaged property in case it is a genuine mortgage is only to the extent of the remainder value of the mortgaged properties after deduction of the outstanding dues. Therefore, I am of considered view that this practice of attaching the mortgaged properties needs to be deprecated and efforts be made for tracing out the actual trail of proceeds of crime, which is the real essence of investigation. Even otherwise, the attachment of the mortgaged properties should be confined to the remainder value to watch the interest of the Banks and the financial institutions, who are mortgagee of the said properties, instead of victimising them by debarring to auction the mortgaged properties to realise its dues, in the garb of attachment proceedings under PMLA. Standard policy needs to be formulated in this regard.

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FPA-PMLA-523/LKW/2013 Union Bank of India v. ED Lucknow

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However, being a secured mortgagee of the aforementioned properties/flats, the Appellant Bank 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 (if any) with ED by way of FDRs. The said FDRs will be disposed of by Ld. Special Judge, PMLA Court after the conclusion of trial, as per law.

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In sequel to my 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 26^th Day of May, 2025.

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(Rajesh Malhotra) Member

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‘Him’

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‘DU’

FPA-PMLA-523/LKW/2013 of Union Bank of India v. The Deputy Director Directorate of Enforcement, Lucknow

Case brief

What is this about?

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FPA-PMLA-523/LKW/2013 of Union Bank of India v. The Deputy Director Directorate of Enforcement, Lucknow

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