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Judgment
FPA-PMLA-1863/BNG/2017
By order dated 30.05.2018 after hearing of both parties we have already allowed the appeal. We have given the reasons for the same.
The present appeal was filed against the order dated 01.06.2017 whereby Adjudicating Authority had confirmed the Provisional Attachment Order.
The appellant was defendant no. 6 before the Adjudicating Authority. We are only concerned with the case of appellant herein who has challenged
Impugned Order as well as Provisional Attachment Order in relation to property no. 2 described in the schedule of Property of the impugned order.
We are not concerned with the case of other defendant no. 1 to 5 before the adjudicating authority. If they would challenge the orders, their case
would be decided as per its own merit.
The facts of the case are that under the reasonable belief that certain properties derived out of “Proceeds of Crime, as defined under section 2
(1)(u) of the Act, are required to be attached, the complainant/respondent herein, issued Provisional Attachment Order No. 20/2017 dated 03.01.2017
in ECIR/02/BGZO/2015 dated 12.01.2015, for provisional attachment of the property of the appellant as mentioned below.
All the piece and parcel of land appertaining to Revenue Plot No. 1288 (P) Revenue Khata No.420 corresponding to IDCO plot No. E/44/2
in Revenue Mouza, Pathargadia comprising an area of Acre 4.000 in IDCO’s Info City IT SEZ Industrial Estate at Chandaka within
village limits at Chandrashekharpur PS Infocity Tahasil, Bhubaneswar in the District of Khurda in Orissa in the name of M/s IGNIS
Technology solutions Private Limited valuing Rs. 1 Croreâ€.
It is the admitted position on the records that on the recommendation of Odisha Computer Application Centre (OCAC)
dated 16/02/2009, IDCO Plot No. E/44/2 measuring an area of Acre 4 at Infocity IT SEZ was allotted in favour of M/s Ignis Technology Solution Pvt.
Ltd. on leasehold basis for establishment of a Software Development Centre vide allotment letter No. 8728 dated 18.05.2009 of IDCO. Sri Nihar
Ranjan Samantaray and Sri Prahalad Agarwal were the Directors of aforesaid company.
As per the Provisional Attachment Order of the respondent M/s Ignis Technology Solutions Pvt. Ltd. i.e., a software company, requested United
Bank of India Southern Regional Office, Chennai for sanction of a  loan for a sum of Rs. 30 Crores. The loan application was filed on 08.04.2010.
The loan was sanctioned in the month of September, 2010. It is the case of the respondent that the sanction of the loan amount was on the basis of
criminal conspiracy and cheating which are scheduled offences under the PMLA Act, 2002 and the property in question was acquired out of the
proceeds of crime obtained by way of said bank loan. However, the admitted facts are the contrary.
On the basis of the recommendation of Odisha Computer Application Centre (OCAC) dated 16.02.2009, IDCO Plot No.
E/44/2 measuring an area of Acre 4 at Infocity IT SEZ was allotted in favour of M/s Ignis technologies Solution Pvt. Ltd. on lease for establishment
of a Software Development Centre vide allotment letter No. 8728 dated 18.05.09 of IDCO.
The cost of the above plot was Rs. 1.00 Crore. The company paid the entire amount of Rs. 1 Crore on 24.12.2009 i.e. well before the date of
sanction of loan by UBI in the year 2010.
Even the physical possession of the land was handed over to the company well before the disbursement of the loan by United Bank of India i.e. on
17.08.2010. The factual position is also admitted in the impugned order in the discussion on property no. 2 which is not denied by the counsel for the
respondent No.1
Therefore, the entire amount of Rs. 1 Crore having been paid in the year 2009 to IDCO and the land being allotted on lease in the year 2009 the
said amount of Rs. 1 Crore could not have been the proceeds of crime which came into only existence in the year 2010.
In the present appeal the question involved relates to whether the property of appellant IDCO i.e. property no. 2 in the schedule of properties
attached has been derived out of the “proceeds of crime†as defined under Section 2(1)(u) of the PMLA Act, 2002 or not? The said section for
convenience is quoted as under:-
“(u) “Proceeds of crime†means any property derived or obtained, directly or indirectly, by any person as a result of criminal
activity relating to a scheduled offence or the value of any such property;â€
In the impugned order dated 01.06.2017 has been passed mechanically without even discussing the admitted facts of the case.
The property of the appellant mentioned as item no.2 in the schedule of the property properties i.e. an area of land
admeasuring 4 Acres in IDOCâ€s Info City would not have in any manner connected with the proceeds of crime†which could attract the provisions
of the PMLA Act, 2002.
It is also undisputed position that the entire payment for the land to be given on lease by the appellant (IDCO) to defendant no. 1 i.e. M/s Ignis
Technology Solutions Pvt. Ltd. had been paid in the year 2009. The agreed consideration of Rs. 1,00,00,000/- (Rupees One Crore Only) was satisfied
by December 24, 2009.
M/s Ignis Technology Solutions Pvt. Ltd. had filed the application for sanction of loan only on 08.04.2010 i.e. much after the payment of Rs.
1,00,00,000/- (Rupees One Crore Only) The Transfer of title and handing over the possession of the property in Infocity IT SEZ land was completed
in the month of August, 2010 and the disbursement of the amount of the loan sanctioned by the United Bank of India appears to be much after the
said date.
Under these circumstances the amount of Rs. 1,00,00,000/- (Rupees One Crore Only) paid for the land cannot be in any manner
out of the “proceeds of crime†nor it could be treated as “tainted†money. Thus, the attachment of property no. 2 was bad on the face of it.
Neither the Dy. Director Bangalore (The complainant) while attaching the property in question, nor the Adjudicating Authority while conforming
the attachment has recorded any reasons in writing on the basis of material in their possession that the property was obtained from the proceeds of
crime. As a matter of fact there was no material at all qua the property in question that it was obtained from the proceeds of crime. Even the
Adjudicating Authority has not recorded any reasons as to how the present property of IDCO was obtained by Defendant no. 1 from the proceeds of
crime as defined in Section 2(1)(u) of the PMLA Act, 2002. In case before passing the provisional attachment order had the authority gone through
the facts or by recording the valid reasons to believe, the position would have been different. The property would not have been attached, if there was
application of mind.
The mandatory ingredients of Section 5 and 8 of the PMLA Act, 2002 were not even prima facie satisfied. Even otherwise also there is no
satisfaction recorded that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any
proceedings relating to confiscation. In the facts of the present case the property in question was granted on lease by IDCO, a 100% public sector
undertaking of the State of Odisha to Defendant No. 1 and had reverted back to the corporation on account of non-compliance by M/s Ignis
Technology Solutions Pvt. Ltd. of the conditions of allotment.
The adjudicating authority did not appreciate that even in the rejoinder filed to the reply of defendant No. 1. There was no
denial of the fact that the present property mentioned at serial no. 2 of the schedule of property was the property of IDCO and the payment of Rs.
1,00,00,000/-(Rupees One Crore only) was made much before the disbursement of the first installment of loan by United Bank of India and hence, the
amount of Rs. 1,00,00,000/- ( Rupees One Crore only) was not out of the “proceeds of crimeâ€.
In the impugned order there is nothing to show or suggest as to how the provisional allotment dated May, 18, 2009 for Rs. 1,00,00,000/-( Rupees
One Crore only) and its payment on 24.12.2009 which is even much before the application for loan made by M/s Ignis Technology Solution Pvt. Ltd.
to the Bank could be the outcome of proceeds of crime justifying provisional attachment and confirmation.
The reasoning of the adjudicating authority is perverse and contrary to law and reads as follows; “However, the properties
in the name of D-1 in whose name loan has been sanctioned and subsequently misusedâ€. However, the payment being made out of loan provided to
Ignis which has been misutilised is tainted property and cannot be treated as a clean assetâ€.
Thus, in view of aforesaid facts and circumstances, both i.e. provisional attachment order as well as confirmation /impugned order dated
01.06.2017 are set-aside with regard to present appellant only in relation to Property No. 2 attached.
As far as the properties attached of the borrowers are concerned, we do not wish to observe anything on merit. Their case would be decided as
per its own merit.
The present appeal is allowed.
No costs.