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Judgment
FPA-PMLA-1878/BNG/2017
The appellant has filed this appeal under Section 26 of Prevention of Money Laundering Act, 2002 against the order in OC No. 693/2017 dated 20th
June, 2017 passed by the Adjudicating Authority.
The following Brief facts are as per appellant:-
a). The Appellant is the Chief Executive Officer of Karnataka State Board of AUQAF a Statutory Body constituted under the Wakf Act, 1995 [a
Central Enactment]. (for short KSBW)
b). The Appellant accepted the proposal which was put up on the files by the Accounts Department of the Board and the Chief Accounts Officer to
open a Fixed Deposit in the name of “CEO, Karnataka State Board of Wakf†for an amount of Rs.2,29,45,465/- [pertains to Khailfathul Rahman
Dargah, Gulbarga] and Rs.1,71,00,000/- [pertaining to Muzrai Funds] at Vijaya Bank, Chintamani Branch for a period of One year. The CEO
approved the proposal to keep the funds in FD based on the office note put up before him. The office note put up by Accounts Department was
approved by Accounts Superintendent stating that it may be approved. The file was put up before A/s F who also accepted opening of FD at Vijaya
Bank, Chintamani Branch. The file was further placed before Chief Accounts Officer who also marked the proposal to CEO. The CEO also accepted
at Sl.No.58 of the Note Sheet by affixing his signature.
c). The Karnataka State Board of AUQAF [hereinafter referred to as “Wakf Board†for short] executed two cheques. The first cheque was
drawn on “Vijaya Bank, Chintamani Br†dated 26.12.2016 for an amount of Rs.2,29,45,465/- which cheque was signed by the Chief Executive
Officer with an endorsement behind the cheque stating “FD in favour of CEO, KSBW. Unit Khalifathur Rehman Dargah, Gulbargaâ€.
d). The second cheque was also drawn on “Vijaya Bank, Chintamani Br†for an amount of Rs.1,71,00,000/- on 26.12.2016 and signed by Chief
Executive Officer. This cheque also had the following endorsement at the back of the Cheque which read “FD in the name of CEO, KSBW.
Bangalore Unit-Muzrai Fundâ€.
e). The said cheques which were drawn on the Chintamani Branch of Vijaya Bank was encashed and was credited to the account of the Branch.
f). On receipt of the credit to the Branch, the Branch has effected transfer of the total funds amounting to Rs.4,00,45,465/- to the credit of “M/s.
Ajay Sharma Trading Corporation†bearing account no.146500301000157 in the same Branch stating that they have received a letter from the Board
to transfer the amount to the account of M/s. Ajay Sharma Trading Corporation bearing account no.146500301000157.
g). The CEO of Wakf Board directed the Chief Accounts Officer to file a written complaint before Station House Office, Chintamani Town Police
Station alleging Fraud perpetrated by the officers of Vijaya Bank, Chintamani Branch and also on one of the employees of Wakf Board on 2nd
January, 2017 who had fraudulently transferred the amount lying to the credit of the Branch to third persons without proper authority and verification.
h). The Criminal Case was booked under section 120-B read with sections 420,467, 468 and 471 of IPC which is a scheduled offence under the
Prevention of Money Laundering Act, 2002.
The CEO of the Board was served with Provisional Attachment Order No.3/2017 in F.No.ECIR/BGZO/04/2017 dated 31st January, 2017
attaching an amount of Rs.2,72,74,444/- lying in the account bearing No. 146500301000157 in the name of Shri Vijay Pullijala, owner of M/s. Ajay
Sharma Trading Corporation [Defendant No.1] and an amount of Rs.1,10,00,000/- collected and credited to the account bearing no.50200017410128
with HDFC Bank Ltd, Dhanukar Regency, Ground Floor, Dhanukar Colony, Kothrud, Pune 411 029 in the name of M/s. Ghatge Motors Private
Limited.
The Respondent Authority filed Original Complaint in OC No.693/17 before the Honâ€ble Chairperson; Adjudicating Authority dated 23rd
February, 2017.
The Complaint made the CEO of the Wakf Board as Defendant No.8 in the proceedings.
The following were the averments/allegations in the complaint before the Adjudicating Authority:
a. That on the basis of the material placed before the Respondent and under the reasonable belief that certain properties are derived out of
“proceeds of crime†the provisional attachment was issued on the properties mentioned therein,
b. That on the basis of complaint filed by the CEO of Wakf Board a Criminal Case was registered by Chintamani Town Police against a. Smt. A
Susheela, Bank Manager, b) Shri. Marukanappa, Assistant Branch Manager and c) Shri. Siraj Ahmed the First Division Assistant and Cashier of the
Wakf Board. The Criminal Case invokes the provisions of sections 120-B read with sections 420, 467, 468 and 471 of IPC which is a Scheduled
offence under Prevention of Money Laundering Act, 2002.
That a case was registered by the Respondent Authority in File No.ECIR/BGZO/04/2017 on 12.1.2017 to investigate the case. The allegations in
the FIR have been noted in the complaint. The same are that during the course of investigation, the following was revealed:
I. The Wakf Board received a proposal on 15.10.2016 for keeping FD of Rs.10 crores for one month by the Bank Manager of Vijaya Bank,
Chintamani Branch wherein an interest rate of 7.5% was promised.
II. There is no entry inward of the letter sent by the Bank in the inward register of Wakf Board and the proposal to deposit the money in FD with
Vijaya Bank, Chintamani was put up by the First Division Assistant and Cashier which was accepted by the Wakf Board and two cheques were
drawn to be presented to Vijaya Bank, Chintamani Branch. The proposal was put up on 26.11.2016 and was approved on the same day.
III. The question of depositing huge amount with a Bank which is located outside of Bangalore City was not answered and two officer orders and two
cheques were signed by the CEO on the same day.
IV. Shri. Miraj Ahmed, First Division Assistant and Cashier submitted two covering letters on 2.12.2016 which covering letter provided information of
the two cheques, one for Rs.1,71,00,000/- and the other for Rs.2,29,45,465/- which was made for investment in Fixed Deposit.
V. The two cheques were handed over to strangers with the covering letter and that the seal of Vijaya Bank, Chintamani Branch is appearing in the
letter.
VI. That no follow up action was found to be taken from the date of the cheques i.e., 26.11.2016 till 29.12.2016. That the cheques were enchased by
Vijaya Bank, Chitamani Branch.
VII. That the CEO of the Wakf Board enquired on the status of opening of FD on 29.12.2016 wherein the Bank informed the CEO that the amounts
were transferred to third party account in the name of M/s. Ajay Sharma Trading Corporation bearing account no.146500301000157 based on two
letters received by the Bank in No. KSBW/CASH/1/FD/WF/2009-10 dated 5.12.2016 signed by Chief Accounts Officer (CAO).
VIII. That on 30.12.2016 the Chief Executive Officer of the Wakf Board directed the officials viz., CAO and the First Division Assistant and the
Cashier to verify the letter purportedly sent by the Board to the Bank. The officials collected the copy of the letter from the Bank on 5.12.2016 and
reported that the Board has not issued such request and that the CAO disowned that he signed such letter.
IX. The Respondent Authority on investigation took Statement of the Branch Manager of Vijaya Bank, Chintamani Branch who stated that the
Branch has not solicited FD from the Wakf Board and that the cheques were eventually received and sent for collection and was credited to the
Account of the Branch on 21.12.2016. No FD form was filled by the Board and that the entry, collection and transfer of the funds were done by the
then AGM and then Branch Manager. There is no record to show who has received in the bank and no Banker seal for the letter received and the
transfer of complete amount of Rs.4,00,45,465/- was effected to third party M/s. Ajay Sharma Trading Corporation on 21.12.2016 itself.
X. The statement was also taken from the CEO of Wakf Board who had narrated the complete facts.
XI. The complainant has also, on investigation reveals how other defendants colluded in committing such fraudulent transaction.
XII. There is a clear conclusion drawn by the Respondent at para 34 of the Complaint on investigation that even though Board has indicated its
intention for fixed deposit through the covering letter through an entry to that effect on the back of the cheque the Bank Manager and Assistant
Manager of Vijaya Bank has effected transfer of funds without verifying the veracity of the letter dated 5.12.2016 stated to have issued by the Board.
XIII. It is also averred that amount received by Vijaya Bank were misused and not paid back, it is a loss to the Wakf Board, Banglaore.
XIV. That the Defendant No.1, 2, 3, 4 and 10 is arrayed to have received proceeds of crime which was provisionally attached and the complaint is
preferred on such persons seeking confirmation of provisional attachment.
Despite of admissions made in the complaint that it is loss to Wakf Board, Bangalore the Respondent Authority arrayed CEO of Wakf Board as
Defendant No.8 in the proceedings. The Appellant has submitted its reply before the Adjudicating Authority that as there were no allegations on the
Appellant and only observations in the nature of having not followed up with the staff for securing the Fixed Deposit for a period of one month. The
Respondent Authority has also filed a rejoinder to the reply filed by the Appellant to the Complaint. The appellant was heard by the Adjudicating
Authority and the appellant was also directed to provide synopsis of the arguments advanced which was also submitted to the Adjudicating Authority.
However, on receipt of the order, it was found that Adjudicating Authority prima facie has come to the conclusion that the Defendants have
committed the scheduled offence, generated proceeds of crime and laundered them. So, the Appellant had no option but to challenge the order of the
Adjudicating Authority, by filing the present appeal.
The confirmation order was passed despite of submissions of the counsel for the appellant that his client has already initiated the appropriate
proceedings against the main accused who cheated the appellant for recovery of cheating amount as the appellant is innocent party and actually victim
to crime committed by the accused.
There is no denial that the Appellant had originally issued cheques for an amount of Rs. 2,29,45,465/- and Rs. 1,71,00,000/- in favour of M/s.
Vijaya Bank, Chintamani Branch with a specific direction to open a fixed deposit with the Branch of the bank in their names. The said fact is not
denied by the counsel for the respondent. The said fact is also supported with material available on record.
It is also admitted position that the said amount which was credited to the bank account of the Chintamani Branch was fraudulently transferred by
the Branch staff in connivance with the lower level officer of the Appellant organization who had no authority to give any instruction to the Bank. In
the compliant, it was accepted that the Board was the loser in this fraud perpetrated. The bank did not take any concurrence with the signatory of the
cheque who is the originator of the instrument before effecting such fraudulent transfer which is also grossly opposed to RBI guidelines.
It is also a matter of fact that it was the CEO of the Wakf Board coming to know of the fraud perpetrated, direct his officers to file a complaint
which was filed on 2nd January, 2017. The bank was able to recover back an amount which was re-credited to Vijaya Bank on 30.12.2016 from an
account maintained with HDFC Bank, Edapally Branch, Kochi to which it was directed to be transferred by the main accused Mr. Vijay Pullijalla of
M/s Ajay Sharma Trading Corporation.
The main accused /defendants in the Complaint who had committed the fraud have never deposed before the Adjudicating Authority nor have
they filed the appeal against the order of the Adjudicating Authority nor have staked any claim on the money lying with M/s Vijaya Bank, Chintamani.
The Enforcement Directorate has provisionally attached an amount of Rs. 2,72,74,444/- lying in Account No. 1465000001000157 in the name of
Shri Vijay Pullijala owner of M/s Ajay Sharma Trading Corporation. The provisional attachment has been confirmed by the Adjudicating Authority. It
is the money belonging to the appellants which is now appropriated by the Respondent Authority. In appeal, it is prayed that the same be released in
favour of the Applicant alongwith the interest as the money purely belongs to the Wakf Board. There is no denial that the Board while transferring the
amount with specific direction to keep it in fixed deposit in the Chief Executive Officer, KSBW to that effect there is an endorsement on the back side
of the cheque leaves.
There is no specific allegation on the CEO in the Complaint. The Complaint accepts that the Board is a victim of the irregularities committed by
the officers of the Bank. These allegations are not made in the complaint as it is accepted that the CEO of the Board has issued a Cheque favoring
the Chintamani Branch of Vijaya Bank for opening an FD in their name. This instruction would override all the illegal acts done by the Bank by
illegally transferring the funds to a third party, which is grossly against the Banking Norms and Banking Practice.
There are no restrictions placed on the CEO not to open a fixed deposit at a place other than Bangalore. It is the discretion of the CEO to deposit
the money in Fixed Deposits to earn interest on the excess funds available with the Board. The CEO had no reason to disbelieve the request sent by
the Bank seeking deposits. The CEO has followed the normal practice adopted by the Board in opening innumerable FDs which was by issuing a
Cheque with a clear endorsement behind the cheque citing the purpose for which a cheque is issued in favour of the Bank. The CEO being an
authorized signatory for cheques, no instructions issued by any other person can be considered by the Bank in undertaking a transaction to transfer the
funds illegally to third parties. This practice is disallowed by the RBI. The Bank has committed a fraud on the Board and the CEO. The CEO has
exercised caution by clearly endorsing the cheque for the stated purpose and the instrument could not have been used for no purpose other than
opening an FD. These allegations are an afterthought by the Respondent without any evidence led or an allegation made in the Complaint. No amount
of precaution could have averted the fraud committed by the Bank.
The fact being the CEO of the Board having issued a Cheque drawn on “Vijaya Bank, Chintamani Branch†by endorsing the Cheque as
issued “towards opening of FDâ€, it would be immaterial as to who takes the cheques as the banking procedure requires that the cheque should be
deposited only with Chintamani Branch of Vijaya Bank and that the Bank should issue an FD in favour of the Board. There cannot be any other use
of the negotiable instrument.
The Bank has not also consulted the CEO of the Board before making such a transfer on the basis of the letter by an unauthorized person. It is
also accepted that the cheques were realized by the Bank only on 21.12.2016 and has committed a fraudulent act on 21.12.2016 itself. The CEO after
enquiry of the status with the Bank on 29.12.2016 found out the fraud perpetrated on the Board and has immediately filed a Complaint to Chintamani
Town Police Station on 02.1.2017 and FIR No.00002/02-01-2017 was filed by the Police.
It is also stated in the Complaint at para 30 that “No authorisation to transfer the amount to M/s. Ajay Sharma trading corporation was given by
the Boardâ€. There being clear averment of the admitted facts, the submission of the Respondent is therefore grossly opposed to the facts admitted in
the Complaint.
Admitted facts need not be proved as at Para 34 of the Complaint which reads thus:
“34. Thus, it is clear from the statement and the documents possessed in this Directorate, the a forged letter was given to Karnataka State Board
of WAKFs, Bangalore by and it was placed and processed by Sri.SyedMiraj Ahmed, and kept the signed cheque with him from 26-11-2016 to 07-12-
2016. The bank Manager and Assistant bank Manager of Vijaya bank between 26-11-2016 to 23-12-2016 have the knowledge of the transactions
failed to verify the veracity of the letter dated 05-12-2016 purportedly issued by the Board, even though Board has clearly indicated its intention for
fixed deposit through the covering letter dated 02-12-2016 and through an entry to that effect on the back of the chequeâ€
So far as the attachment proceedings initiated against the Appellant concerned it is opposed to section 3 of the Prevention of Money Laundering
Act, 2002 as there is no evidence of complicity which are alleged in the complaint and the Appellant being a victim of the fraud perpetrated cannot be
proceeded against.
It is evident that the fraud is perpetrated on the Wakf Board by the Bank by transferring the funds credited to its account for the purpose of
securing a Fixed Deposit in the name of CEO, Wakf Board. The funds credited to the account of Vijaya Bank, Chintamani Branch could not have
been transferred by the Branch based on a letter stated to have been signed by the Chief Accounts Officer when the Cheque issued by the CEO has
an endorsement that the amount is credited to the Branch for opening of Fixed Deposit in his name.
The instruction purported to have been given by the Chief Accounts Officer in a letter is not by the authority who has signed the cheque. The
instruction which is stated to have been issued to the Bank was not also verified by the Branch Officials and have been acted upon fraudulently.
The bank has not also recorded the receipt of the letter seeking transfer of the funds in its inward register. The bank has fraudulently transferred
the money credited to its account to third parties which is also in gross violation of the directions issued by the Reserve Bank of India. Counsel for the
appellants submits that if any employee is mixed with the main accused, the appellants are not responsible. Counsel for the respondent has admitted
that there is no evidence against the appellant in order to show that the appellants have link or nexus with the main accused nor there is any evidence
that the money was not owned by the appellants.
As per record, it is clear that the CEO of the Wakf Board having signed the cheques for the purpose of securing Fixed Deposit from Chintamani
Branch has also specifically endorsed on the cheque that the instrument is drawn on Vijaya Bank, Chintamani Branch as towards Fixed Deposit to be
issued in favour of CEO, KSBW. The transfer of the amount credited to third parties was without the authority of law and therefore there arise no
obligation on the part of the CEO to comply as there could not have been any other outcome but to secure the Fixed Deposit in the name of CEO,
Wakf Board. These arguments specifically addressed by the Appellant has not been considered nor has there been any specific finding on the
averments of the Appellant. The order has been passed summarily and confirmed against all the Defendants without discussing the case of appellants
property once the Appellant specifically placed reliance on the instructions issued by the Reserve Bank of India in RBI./2005-06/282
DBOD.BP.BC.No.56/21.01.001/2005-06 dated January 23, 2006 wherein the instruction was titled “Collection of account payee cheques-
Prohibition on crediting proceeds to third party accountâ€. The instructions issued by the RBI is as follows:
“As banks are aware an account payee cheque is required to be collected for the payee constituent.
As regards, account payee cheques drawn in favour of banks, it had been indicated, vide circular DBOD.NO.BC.23/21.01.001/92 dated September 9,
1992, that banks which credit cheques drawn in their favour by other banks marked “A/c. payee†to the accounts of constituents who are not
named payees therein, without proper mandate of the drawer do so at their own risk and will be responsible for the unauthorized payment.â€
It is the normal law and practice that the instrument presented before the Bank with a clear endorsement to secure Fixed Deposit was in itself
impossible of any misappropriation as the direction was to the Bank specifically to open a FD in the name of the Wakf Board. The Bank has not
shown any statutory provision which could enable it to undertake a transaction based on a letter which is not a banking instrument and that the letter
stated to have been issued by the Chief Accounts Officer cannot invalidate the instruction issued by the person signing the cheque. The question of
therefore arraying the CEO of the Wakf Board without leading any evidence of his knowledge is therefore unsustainable in law. The requirement of
mens rea is embedded in the statutory provision. The burden lies on the Respondent authority to do the proper investigation in order to establish that
there is an evidence on such knowledge to the appellants otherwise such an inference without any evidence amounts to harsh and unjust.
The investigating authority has not recorded any finding on the fraud perpetrated by the Bank exceeding its authority and by also transferring huge
sums of money without even verifying the veracity of the letter which is not a banking document to transfer funds to third parties. These transactions
are effected by the Bank exceeding the direction provided to the Bank.
The CEO of the Board even otherwise had no other responsibility to perform as he had secured the transaction by clearly instructing the bank and
its branch that the amount credited to their account was towards opening of Fixed Deposit. There was also no requirement to take any other
precautions or steps as there was a clear direction to open a Fixed Deposit in the name of CEO of the Board.
Admittedly there is no specific allegation in the Complaint against the CEO of Wakf Board to array the office of the CEO as one of the
defendants in the complaint filed by the Respondent Authority. The respondent authority only states that the CEO of the Board accepts placing the
money in Fixed Deposit with a Bank on the same day the proposal was mooted by the First Division Assistant, which was verified by the Chief
Accounts Officer and the file was forwarded to the CEO who accepted to opening of Fixed Deposit at Vijaya Bank (which is a Nationalised Bank),
Chintamani Branch.
In the complaint it is also stated that the CEO has not followed up with the staff for securing the FD receipts during the period from 26.11.2016 till
29.12.2016. These are the only two observations by the investigating authority which has not resulted in any manner abetting the commissioning of the
fraud as it was not shown by the investigating authority that the CEO also had to oversee or follow up with the office staff for securing the Fixed
Deposit Receipt when his functions in the Board is to take policy decisions and not to follow up with day to day work of the Board.
In the complaint it is clearly stated that the Cheque was cleared on 21.12.2016 and therefore the CEO has acted within few days of the cheque being
cleared. There cannot be any allegation that the CEO has not taken steps. There is no allegation also on the CEO in the complaint and there being no
allegation, the order holding that the Appellant has committed a scheduled offence, generated proceeds of crime and laundered them is therefore
without an iota of evidence as such and the attachment proceedings are unsustainable on this ground alone.
A more pursuant to completion of investigation by the Complainant it is recorded in the complaint that the Defendant No.8 neither had been
alleged to have committed any offence which is a scheduled offence under the Prevention of Money Laundering Act, 2002 nor is the Defendant No.8
is in possession of any proceeds of crime to array him as one of the defendants in the proceedings. The proceedings against the CEO are unnecessary
under the provisions of section 5 of the PMLA, 2002.
There is no allegation of any scheduled offence being committed by the Appellant and therefore there cannot be any proceedings initiated on the
Appellant as defendant in the proceedings without providing any specific charge. The averment at para 34 of the Complaint shows that a forged letter
was given to the Karnataka State Board of WAKFs seeking deposits, which was found out on due investigation to be forged. The CEO has only
accepted to the proposal which has come through the Accounts Section and also seconded by the Chief Accounts Officer to deposit the money in an
FD.
It is averred in the complaint that even though Board has clearly indicated its intention for fixed deposit through the covering letter dated 2.12.2016 and
through an entry to that effect on the back of the cheque, the fraud is still committed by the employees of the Bank.
The CEO who was representing the Board prima facie has no knowledge to the crime committed by the Bank in connivance with certain
individuals. The question of therefore arraying the CEO as defendant in the proceedings was argued to be is unsustainable in law.
Admittedly the Chief Executive Officer, Karnataka State WAKF, Bangalore initiated the criminal proceedings against the Manager of Vijaya
Bank, Assistant Branch Manager, Vijaya Bank, Chintamani Branch and also Shri Siraj Ahmed the First Division Assistant and Cashier of Karnataka
State Board of WAKFs, Bangalore. There being no allegation by the investigating authority on the Chief Executive Officer representing Karnataka
State Board of WAKF who had to secure the deposit from the Bank, the question of therefore arraying him as a Defendant in the proceedings was
unnecessary.
The CEO of the Karnataka State Board of WAKFs not being a person in possession of any proceeds of crime and not being proceeded against
for provisionally attaching any property under sub-section (1), question of filing a complaint under the Act for attachment on such person is therefore
without any valid reason. The impugned order has not recorded any finding on the averments made by the Appellants. Further the complaint at para
39 has also recognised that the funds belonging to Karnataka State Board of WAKF was misused and not paid back and that it was a loss to the
Board.
In view of the above the Board is not in possession of any proceeds of crime under section 5 of the Prevention of Money Laundering Act, 2002 as
the office of the Board has taken immediate action and recovery steps by filing an FIR in the Jurisdictional Police Station. The CEO of the Board has
noted on the file that the money was not intended for any other person or for transferring it to any other account. The cheques were also endorsed on
the back to state that the intention was to open an FD with the Bank. The fraud perpetrated on the Board was not known to the CEO of the Board as
nothing contrary has come on record.
The instruction given to the Manager of Vijaya Bank, Chintamani Branch in No. KSBW/CASH/1/FD/WF/2009-10 dated 5-12-2016 is an unusual
transaction as when any amount is to be paid to the current account of any person, a cheque can be issued directly to such person and there was no
need to issue a Bankerâ€s Cheque to be secured and then deposited to the account of some other person, if such payment was to be made to M/s.
Ajay Sharma Trading Corporation for the administrative project. The said instruction cannot be treated as instructions with regard to preparating fixed
deposit accept. In the present transaction in hand Cheque having been signed by CEO of the Karnataka State Board of Wakf, the instruction cannot
be given by the Chief Accounts Officer to credit the amount to some other person and the Bank has with the connivance of the Accounts Officer
broken all norms and directions issued by the CEO of the Board to transfer the funds fraudulently. There is also no finding on this ground that the
Board has no role and the amount credited to the Bank has been wrongly dispersed by the Bank to which they have not shown any authority or
instruction from the Board. Arraying the CEO of the Board as a defendant in the proceedings is therefore without jurisdiction and unsustainable in
law.
The Bank vide its communication in Ref:ROB(S):RM/INS/2016 dated 29th December, 2016 has communicated to HDFC Bank, Ernakumal stating
that there was wrong credit to one of the account held in the name of M/s. Varkeys Realtics Pvt. Ltd from Vijaya Bank, Chintamani Branch. It
shows that the transaction was undertaken by the Bank without taking proper instructions from Karnataka State Board of Wakf, Bangalore.
The provisions of section 2(u) defines the expression “proceeds of crime†to mean any property derived or obtained, directly or indirectly, by
any person as a result of criminal activity relating to scheduled offence or the value of any such property.
The provisions of section 5(1)(a) applies only when such person is in possession of proceeds of crime and there is an impending and imminent
danger that such proceeds of crimes are likely to be concealed, transferred, or dealt with in any manner which may result in frustrating any proceeds
relating to confiscation of such proceeds of crime. The Bank having recovered an amount of Rs.2,72,24,926.21/- which was accepted by the Bank
that it was wrongly transferred by them to the Beneficiary, the question of alleged violators possessing such “proceeds of crime†is therefore a
wrong presumption. The Defendant No.6 could not have effected a transaction of transfer of funds to third parties on the basis of a letter (which is
stated in the Complaint as forged) as a banking transaction cannot be effected based on a letter as the signature of the issuer could not be verified by
Defendant No.6 to effect transfer of funds. The instruction on the cheque to keep the money in FD could not have been disobeyed/disregarded by the
Defendant No.6 without proper verification with Defendant No.8.
The Appellant had also placed reliance on the decision of the Madras High Court in the case of M/s. Indian Bank v. Joint Director of
Enforcement., reported in 2012-TIOL-538-HC-MAD-PMLA wherein it was held that section 8 and 9 cannot be used by the Respondents to inflict
injury upon the victims of the crime and the provisional order of attachment as well as the order of confirmation was set aside on such persons. The
money is belonging to the Board having been wrongly transferred to the account of another person without a proper document and any direction by
the person issuing the cheque, would not enable the Respondent to proceed against the Board when their own money is mis-appropriated. The
appellant is not involved in money laundering.
In the light of the above the impugned order dated 20.06.2017 is set aside qua the appellant. Consequently PAO is also quashed against the
appellant who is not involved in money laundering in any manner nor the appellant in its hand any proceed of crime.