Dismissed

Deputy Director Directorate of Enforcement Government of India v. M/S. Biotor Industries Ltd.

Gujarat HC9 Jul 2021FA/4914/2018

Case brief

AI extract

What is this about?

High Court twice (HCJA) dismissed First Appeals and disposed of connected Civil Applications filed by the Deputy Director, Enforcement, challenging an interim attachment order. The court held the appeal was frivolous as government rights were already protected, warning of exemplary costs for future unfounded appeals.

What did the court decide?

First Appeal No. 164 of 2021 and No. 4914 of 2018 dismissed; Connected Civil Applications disposed of. Nothing ordered as regards to the remanded matter in First Appeal No. 4908 of 2018 other than con

Deputy Director Directorate of Enforcement Government of… — Money Laundering | Gujarat HC (2021)

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/FIRST APPEAL NO. 164 of 2021 With

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CIVIL APPLICATION (FOR STAY) NO. 1 of 2021 In R/FIRST APPEAL NO. 164 of 2021 With CIVIL APPLICATION (FOR ORDERS) NO. 2 of 2021 In R/FIRST APPEAL NO. 164 of 2021 With R/FIRST APPEAL NO. 4908 of 2018 With R/FIRST APPEAL NO. 4914 of 2018

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========================================================== DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA

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Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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==========================================================

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Appearance:

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MR DEVANG VYAS(2794) for the Appellant(s) No. 1 for the Defendant(s) No. 1,2,5

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MR AFTABHUSEN ANSARI(5320) for the Defendant(s) No. 3,4

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==========================================================

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CORAM: HONOURABLE DR. JUSTICE VINEET KOTHARI and HONOURABLE MR. JUSTICE B.N. KARIA

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Date : 09/07/2021

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ORAL ORDER

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(PER : HONOURABLE DR. JUSTICE VINEET KOTHARI)

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ORDER IN FIRST APPEAL NO. 164 OF 2021 AND FIRST APPEAL NO. 4914 OF 2018:

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These both the Appeals have been preferred by the Deputy Director, Directorate of Enforcement Government of India against M/s. Jayant Oil Products Private Limited, M/s. Biotor Industries

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Limited and its Directors, et c. Arising out of the Interlocutory Order dated 28.08.2017 passed by the Appellate Tribunal, Prevention of

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Page 1 of 8

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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Money Laundering Act, 2002, Coram: (Mr. Justice Manmohan Singh, J. Chairman of Tribunal). The said Interim Order adequately protected the rights of the Union of India, which was by attachment of the Property and Respondents had clearly undertaken before the learned Tribunal that till the Appeal is decided by the said Tribunal, they will not alienate the suit property mentioned in the said order situated at Mumbai. A relevant portion of the impugned order of learned Chairman of the Tribunal is quoted below for ready reference:

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“The learned counsel for the appellant is pressing for interim order in view of the notice under Section 8(4) of the Act. The provisional attachment order was passed on 9^th February 2017 which was confirmed by the impugned order dated 12^th July 2017 of the two properties of the appellant namely-

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“(a) Survey No. 55 and 56(pt) New Survey, Datta mandir Road, Near Samarth Garden Building, Off. Bhandup Village Road, Mumbai having area 10197.52 sqr meter.

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(b) Flat No. 201, 20^th Floor, Kshitij building, he Nepean Sea Road Prag Prem Premises Cooperative Society Ltd, 47, L Jagmohandas Marg, Near Consulate General of Russia, Nepean Sea Road, Mumbai-400036 having area 1413 sqr ft”

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The appellant state that none of the directors is charged with the proceeds of crime even neither prosecution complaint is pending

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Page 2 of 8

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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against the appellant nor the PMLA proceedings. In addition, the statement is also made for the first property is purchased on 4^th March 1972 and the second one is 22^nd December 1975 . The said two properties were attached in lieu of value thereof. He submits that two of the directors (Shri Bharat M. Kapadia and Shri Rajesh M. Kapadia) who were earlier director of the M/s. Biotor Industries Ltd. had already resigned on 25^th September, 2008 in 1978 before filing the FIR. He undertakes on behalf of the appellant, despite of that shall not be disposed of directly or indirectly till the appeal is finally decided. Thus, prima facie case is made out for grant of interim protection. The other objections raised by Shri Vikas Garg, the learned counsel for the respondent will be considered on the next date of hearing. Reply be filed within six weeks with an advance copy to the counsel for the appellant who may file the rejoinder within four weeks thereafter.

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Subject to the undertaking not to disposed of or create any third party right or interest and no coercive action shall be taken by the respondent in view of notice issued u/s 8(4) of PMLA, 2002 by the respondent.”

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Having heard the learned Counsels for the respective parties, we are of the clear opinion that the present Appeal filed by the Union of India is absolutely frivolous and misconceived, despite the interest of the Government adequately protected before the Tribunal. Merely

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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because of the filing of the present First Appeal in this Court, it appears that the Tribunal has not been able to decide the pending Appeal before it so far for last Four years, as informed by learned Counsels for both the sides, the said Appeal is still pending. We believe that this might have not been decided merely because the present Appeal is filed against the Interim Order of the learned Tribunal in this Court without any rhyme or reasons.

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We strongly deprecate such frivolous litigation on the part of the Union of India. We would have imposed Exemplary Costs on the Appellant Officials who sanctioned and signed the First Appeal filed in this Court, but at the request of the learned Counsel Mr. Devang Vyas for the Union of India, we are not doing so for the present with a clear warning to the Appellant-Union of India and its Officials that in case any such further appeal is found to be filed against the Interlocutory Orders of the Tribunal below without any valid rhymes or reasons, the exemplary Costs will be imposed upon the Officials to be recovered from their personal resources.

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With these observations, First Appeal No. 164 of 2021 and First Appeal No. 4914 of 2021 are dismissed. No costs.

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(DR. VINEET KOTHARI,J)

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(B.N. KARIA, J)

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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ORDER IN CIVIL APPLICATION (FOR STAY) NO. 1 OF 2021 AS WELL AS CIVIL APPLICATION (FOR ORDERS) NO. 2 OF 2021 IN R/FIRST APPEAL NO. 164 OF 2021:

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In view of the dismissal of First Appeal No. 164 of 2021, Civil Application (For Stay) No. 1 of 2021 as well as Civil Application (For Orders) No. 2 of 2021 in R/First Appeal No. 164 of 2021 are disposed of.

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(DR. VINEET KOTHARI,J)

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(B.N. KARIA, J)

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ORDER IN FIRST APPEAL NO. 4908 of 2018.

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We have dismissed the connected Two First Appeals i.e., First Appeal No. 164 of 2021 and First Appeal No. 4914 of 2018 directing against the I nterlocutory Order dated 28.08.2017 passed by the Appellate Tribunal, Prevention of Money Laundering Act, 2002, Coram: (Mr. Justice Manmohan Singh, J. Chairman of Tribunal). Later on learned Appellate Tribunal, Prevention of Money Laundering Act, 2002, on 13.12.2017, had allowed the Appeal of the Company M/s. Biotor Industries Limited on the ground that sufficient notice was not given to the concerned parties and the

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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matter, thus was remanded back to the Adjudicating Authority for for re-hearing after issuing the notice to all Banks and shall consider and discuss the reply filed by the Appellant and to be filed by the Banks. Relevant Paras of the impugned order dated 13.12.2017 are quoted below for read reference:

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“21. Admittedly, no notice was issued nor any opportunity was granted to the banks of being heard. Thus, the impugned order is liable to be set-aside. Had any notice been issued to all the banks and opportunity was granted for hearing, the banks could have made their claim and argued that the properties in question were not involved in the money laundering.

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It is evident that ED as well as AD failed to considered the reply filed by the appellant contrary to 8(2) of the Act. The issue of mortgage of properties was already available with ED while recording the statement of appellant under Section 50 of the Act. Even, the Adjudicating Authority failed to considered the reply filed by the appellant where the full details were disclosed. However, both ED and Adjudicating Authority chose not to discuss the main issue. 22. The impugned order is completely silent and has been passed without even considering the documents and explanation provided by the appellants by way of reply and compilation as filed before the Adjudicating Authority.

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Prima facie, the provisional attachment order as well as the impugned order is an arbitrary order passed by the Adjudicating Authority whereby five (5) properties of the appellants have been attached, without any cogent reason or any basis.

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It is a matter of fact that on default of repayment by the appellant-Company, the Banks had already on 25.10.2010 called upon appellant No.1 -Company to repay the due amount which the appellant No.1-Company failed to pay and thereby the banks

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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became entitled to enforce the security interest i.e. the immovable properties of appellant -Company in terms of Section 13(4) of SARFAESI Act. The banks have already taken the necessary steps. 25. Counsel for the respondent gave the suggestion that this appellate tribunal may implead the all banks as parties and their concerns may be considered. We are of the view that the said suggestion of the respondent cannot be accepted as there were no pleading of any nature either before Adjudicating Authority or before us, as admittedly, neither any notice was issued nor any opportunity of hearing was granted to the banks.

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In view of the above, the appeal is allowed the impugned order is set aside. The matter is remanded back to the Adjudicating Authority for re-hearing after issuing the notice to all banks and shall consider and discuss the reply filed by the appellant and to be filed by the banks before passing the order on merit . Since, it is an important matter, the final order be passed without 180 days from today.

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It is clarified that as far as the merit of the case is concerned, we have not expressed any opinion. The fresh final order be passed by the Adjudicating Authority after discussing all legal issues raised by the parties.

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No costs.

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Sd/(Anand Kishor) Member New Delhi

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13^th December 2017.”

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In view of the matter thus being remanded to the Adjudicating Authority, who is still seized of the matter, we direct that the

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C/FA/164/2021 ORDER DATED: 09/07/2021 DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT GOVERNMENT OF INDIA Versus M/S. JAYANT OIL PRODUCTS PVT. LTD.

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Undertaking given by the parties in the connected Appeals to maintain the Status-quo about the property shall continue till the Adjudicating Authority decides the matter again in pursuance of the said remand directions in the order dated 13.12.2017 passed by the learned Tribunal.

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With these observations, First Appeal No. 4908 of 2018 is accordingly disposed of.

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(DR. VINEET KOTHARI,J)

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(B.N. KARIA, J)

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K. S. DARJI

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Deputy Director Directorate of Enforcement Government of India v. M/S. Biotor Industries Ltd.

Case brief

What is this about?

What did the court decide?

Deputy Director Directorate of Enforcement Government of India v. M/S. Biotor Industries Ltd.

Case brief

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