M/S. Alpha Avenue Pvt. Ltd. & Ors vs Deputy Director Directorate Of Enforcement, Delhi

,,,

FPA-PMLA-751 to 755, 673, 747, 672, 670, 671, 668/DLI/2014& FPA-PMLA-2202/HYD/2018",,,

By this order, this Tribunal proposesto decide above-mentioned twelve appeals. These appeals were earlier heard, however, before rendering order,",,,

the Honâ€ble Member resigned from this Tribunal. Left with no option, but to rehear the appeals. The appeals were again heard and reserved for",,,

orders.,,,

Two sets of appellants have filed appeals against Order dated 19.08.2014 by Adjudicating Authority made in Original Complaint No. 276 of 2014,,,

confirming the attachments made vide Provisional Attachment Order No. 01/2014 dated 04.03.2014 (PAO) in ECIR/09/HZO/2011. PAO passed,,,

corresponding to CC No. 14 of 2012 before The Special Judge for CBI Cases, Hyderabad (CBI Case).",,,

Three appeals have been filed by Y.S. Jagan Mohan Reddy & Group, i.e.",,,

i) Appeal Nos. 668 â€" Mr. Y.S. Jagan Mohan Reddy,,,

ii) Appeal Nos. 670 â€" M/s. Jagati Publications Pvt. Ltd.,,,

iii) Appeal Nos. 671 - M/s. Carmel Asia Holdings Ltd.,,,

Nine appeals have been filed by Nimmagadda Prasad & Group/ Investors, i.e. :",,,

i) Appeal No. 672 â€" Vinpic Ports Pvt. Ltd.,,,

ii) Appeal No. 673 â€" Mr. Nimmagadda Prasad Pvt. Ltd.,,,

iii) Appeal No. 747 â€" VANPIC Projects Pvt. Ltd.,,,

iv) Appeal No. 751 â€" Alpha Avenue Pvt. Ltd.,,,

v) Appeal No. 752 â€" G2 Corporate Services Pvt. Ltd.,,,

vi) Appeal No. 753 â€" Gilchrist Investments Pvt. Ltd.,,,

vii) Appeal No. 754 â€" Alpha Villas Pvt. Ltd.,,,

viii) Appeal No. 755 â€" Suguni Constructions Pvt. Ltd.,,,

ix) Appeal No.2202 â€" Vanpic Ports Pvt. Ltd.,,,

Relevant dates and events before passing the Provisional Attachment,,,

Order are mentioned below -,,,

a) In 2011, the Honâ€ble Andhra Pradesh High Court vide its Order dated 10.08.2011 in W.P. No. 794 of 2011 directed investigation by Central",,,

Bureau of Investigation into allegations of investments, in the nature of bribes, into the Companies allegedly controlled by Mr. Y. S. Jaganmohan",,,

Reddy, son of Late Dr. Y. S. Rajshekhar Reddy, the then Chief Minister of Andhra Pradesh. The Honâ€ble High Court specifically directed the CBI",,,

and the ED to segregate genuine investors in the companies owned by the Shri Y.S. Jaganmohan Reddy.,,,

b) Pursuant to the said Order dated 10.08.2011, the CBI registered FIR No. RC No. 19(A)/2011-CBI-Hyd. dated 17th August 2011, under Ss.120-B,",,,

409, 420, & 477-A of the IPC & U/Ss. 13(2) R/W. 13(1) (c) & (d) PCA, 1988 (hereinafter the “FIRâ€​).",,,

c) The primary allegation in the FIR was that the Government of Andhra Pradesh under the leadership of the then Chief Minister Late Dr. Y. S.,,,

Rajshekhar Reddy granted favours/benefits/concessions to certain private individuals/companies as a quid-pro-quo for investments made by the said,,,

private individuals and corporations in companies promoted by Mr. Y.S. Jagan Mohan Reddy.,,,

d) Subsequently, the Respondent registered the present ECIR No.09/HZO/2011 dated 30.08.2011.",,,

e) Several Charge-sheets have been filed in pursuance of the FIR in respect of each instance of an alleged quid pro quo. The present case i.e. set of,,,

11 appeals, pertains to the VANPIC Project (Vodarevu and Nizampatnam Ports and Industrial Corridor), in respect of which the CBI filed a Charge",,,

Sheet dated 13.08.2012 (hereinafter the “CBIChargesheetâ€), wherein, Vanpic Projects Pvt. Ltd., one of the Appellants hereto, was arraigned as",,,

Accused No.10 for commission of offences under section 120B r/w 409, 420, 467, 468, 471 and 477-A of IPC. Vanpic Ports Pvt. Ltd. has not been",,,

arraigned as an accused in the Charge-sheet. Charges are yet to be framed, therefore, the trial has not evenbegan.",,,

On the basis of the CBI Charge-sheet, the Respondent, passed the Provisional Attachment Order No. 01 of 2014 dated 4th March 2014",,,

(hereinafter the “FirstPAOâ€), whereby, 1416.91 acres of lands that form part of the VANPIC Project which were provisionally attached by the",,,

Respondent after recording the statement of many witnesses under Section-50 of the Act.,,,

In view thereof, the Respondent filed Original Complaint No. 276 of 2014 dated 27.03.2014 (hereinafter the “First OCâ€). The reply was filed",,,

by the Appellants. The Adjudicating Authority confirmed the First PAO, vide Order dated 19.08.2014. The said order was challenged by above",,,

mentioned two groups which are the subject of eleven appeals.,,,

When appeals were being heard before Tribunal, the respondent passed another Provisional Attachment Order No. 6 of 2017 dated 28.07.2017",,,

(hereinafter the “Second PAOâ€) attaching the balance 11804.78 acres of lands that form part of the VANPIC Project, in addition to first",,,

attachment. It is the case of the appellants that these lands were available with the Appellants even at the time of passing the First PAO and the,,,

material relied upon by the Respondent for passing the Second PAO was even available at the time of the first PAO.,,,

The allegations relating to allotment of VANPIC Project and other favours are that -,,,

i) Government of Andhra Pradesh (GoAP) at the behest of Dr. Y.S. Rajashekara Reddy (the then Chief Minister of erstwhile combined State of,,,

Andhra Pradesh) conducted a series of steps to award Vadarevu Port and Nizampatnam Port Projects to Mr. Nimmagadda Prasad and his affiliate,,,

companies.,,,

ii) GoAP under the pretext of entering into a Government-to-Government (G2G) contract with Ras-Al-Khaima Government (RAK) entered into,,,

private negotiations/agreement for awarding the said Ports to a joint venture entity of Mr. Nimmagadda Prasad and RAK called VANPIC.,,,

iii) Apart from awarding Ports to such entity (by incorrectly representing the arrangement to be identical with earlier port contracts awarded in relation,,,

to Krishnapatnam Port) the cabinet of GoAP was misled to agree for granting of concession on more favourable terms.,,,

iv) Apart from the Ports Projects, GoAP (and its cabinet) were misled into also accepting the proposal for having attached industrial corridor and",,,

Airport which were completely owned by VANPIC.,,,

v) GoAP facilitated acquisition of large extent of nearly 11,000 Acs for industrial corridor including by enabling the transfer of government and",,,

assigned land apart from acquiring private land.,,,

vi) GoAP issued a series of orders exempting various charges like land ceiling and conversion charges on 19,329 Acs of land alienated to VANPIC",,,

Projects as well as seigniorage fee, stamp duty and registration charges to VANPIC Ports.",,,

First of all, I shall deal with the rival submissions of the parties in relation to VANPIC Project, which is main issue.",,,

10.1 In 1994, as per its port policy, Government of Andhra Pradesh (Hereinafter “GoAPâ€), issued advertisements for privatization of 11 minor",,,

ports, which also included Vadarevu and Nizampatnam ports. In 1996, GoAP issued notifications for declaration of port limits for inter aliaVadarevu",,,

and Nizampatnam ports.,,,

10.2 In 1999-2000, GoAP awarded the project for setting up of a port-cum-ship breaking unit in Vadarevu to M/s Andhra Seaports Limited on MoU",,,

basis, but it was not materialised. The idea was abandoned due to public resistance and environmental concerns.",,,

10.3 After post-liberalization of the economic policy of India, in 2001, GoAP enacted the Andhra Pradesh Infrastructure Development Enabling Act,",,,

2001 (“APIDEAâ€) i for regulating and encouraging private sector participation in infrastructure projects in the State so as to provide for rapid,,,

development of both physical and social infrastructure.,,,

10.4 In 2005, Infrastructure Corporation of Andhra Pradesh Ltd. (“INCAPâ€) was set up under the aegis of Infrastructure and Investment",,,

Department of Andhra Pradesh (“I &I Dept.â€​) with a specific mandate to facilitate setting up of Public-Private Partnership Projects (“PPPâ€​),,,

and make policy for the same. INCAP, in its public policy documents ii contemplates Infrastructure Development by way of Government-to-",,,

Government (“G2Gâ€​) initiatives involving foreign Governments.,,,

10.5 In January 2006, discussions were held between the Prime Minister of Czech Republic and Late Dr. Y. S. Rajashekhara Reddy, accordingly a",,,

Memorandum of Understanding dated 10.04.2006iii was entered between SKODA Export Co. Ltd. (Government Company of Czech Republic) and,,,

INCAP for development of an integrated Nizampatnam Industrial Port City Complex and a multi product Special Economic Zone (“NIPCCâ€) on,,,

Government to Government basis.,,,

10.6 GoAP terminated the said MoU dated 10.04.2006 in July 2007 as there was no progress in the implementation of the project and SKODA Export,,,

did not even set up the Special Purpose Vehicle under the Agreement.,,,

GoAPâ€​s prior relationship with Government of Ras al Khaimah and its entry into the VANPIC Project thereafter-,,,

It has come on record, prior to earlier efforts in the year 2001 and 2006, the then Honâ€ble Chief Minister, Sri N. Chandra Babu Naidu visited UAE",,,

for attracting investments to Andhra Pradesh. In response, Government of Ras al Khaimah (Hereinafter the “GoRAKâ€), one of the seven",,,

emirates of UAE, set up a ceramic unit in Samalkot, East Godavari District under its Global arm RAK Ceramics, which is the Worldâ€s No. 1",,,

ceramics manufacturing company.,,,

11.1 In 2005, during his visit to UAE, the then Honâ€ble Chief Minister Late Dr. Y. S. Rajashekhara Reddy invited the GoRAK to explore possibilities",,,

of investing further in infrastructure projects in Andhra Pradesh.,,,

11.2 GoRAK wanted to invest in development of a Port on the east coast of India, as they had coal-mines in Indonesia. Therefore, in January 2008,",,,

vide a letter dated 10.01.2008, the then Crown Prince & Deputy Ruler Ras al Khaimah, who is now the Supreme Council Member of UAE & Ruler",,,

of Ras al Khaimah, expressed an interest to participate in the development of Nizampatnam Port SEZ on G2G basis with the GoAP. Relevant extracts",,,

of the said letter are extracted below for ease of reference:,,,

“With reference to the above subject the Government if Ras Al Khaimah and the RAK Investment Authority (along with RAK Port) wishes,,,

to convey its expression of interest to undertake and participate in the Nizampatnam Port SEZ.,,,

We would anticipate taking up this port and its related activities, in collaboration with our partners, on G2G basis with the Government of",,,

Andhra Pradesh. This expression of interest is subject to detailed due diligence including consideration of investment requirements, pre-",,,

feasibility studies including financial viability to be established after a detailed project report is completedâ€​,,,

[Emphasis supplied],,,

11.3 Subsequently, this was followed up by a letter dated 12.02.2008 by the then advisor to the GoRAK, which stated as under:",,,

“This has reference to letter dated 10th January 2008, addressed by His Highness Shaikh Saud Saqr Al Qassimi, Crown Prince and",,,

Deputy Ruler, Ras Al Khaimah to your government, expressing interest in participating in the Nizampatnam Port SEZ. With reference to the",,,

above subject the Government of Ras Al Khaimah and RAK Investment Authority wishes to convey its preliminary expression of Interest to,,,

undertake and participate in the Nizampatnam &Vadarevu Port Project at an outlay of around US $ 4.35 billionâ€​,,,

[Emphasis supplied],,,

The CBI, and now the Respondent No.1, has failed to consider the letter dated 10.01.2008 sent by the Ruler of Ras al Khaimah, presumably since",,,

the same would demonstrate beyond doubt the Government-to-Government nature of the VANPIC Project as alleged by the appellant who state that,,,

it was suppressed in the charge-sheet and was not part and parcel of investigation.,,,

Thereafter, GoRAK and GoAP entered into a memorandum of understanding on 11th March 2008 for development of Vadarevu and",,,

Nizampatnam Ports and Industrial Corridor Project, wherein, GoRAK agreed to invest and develop VANPIC Project “along with its local Indian",,,

partner or any other international partner†through Special Purpose Vehicles.Pursuant thereto, Matrix Enport Holdings Pvt. Ltd., promoted by Mr.",,,

Nimmagadda Prasadwas, appointed by GoRAK as its local Indian partner, vide its letter dated 29.03.2014.Therefore, it is stated by appellants that the",,,

allegation that the VANPIC Project was conceived as a G2G project to avoid competitive bidding and that it was awarded to Mr. Nimmagadda,,,

Prasad, is a blatantly false statementas is demonstrated hereinabove.",,,

CBI in its charge-sheet has alleged that the concerned minister (Accused No.4 in the Charge Sheet) with conspiracy with Dr. Y.S. Rajashekara,,,

Reddy has sent the file for post facto approval. The case of appellants is that the decisions relating to the huge projects like VANPIC have been taken,,,

by the Cabinet/bureaucracy and the officials after following the due procedure. The said decision has been declared as tainted by CBI/ED by using,,,

the words like malafide. It is stated by the appellants that both agencies have made wrong allegations that the said induction of Matrix Enport Holding,,,

Pvt Ltd (entity of Sri Nimmagadda Prasad) is a conspiracy to acquire VANPIC project under deception without regard to the fact that the concept of,,,

Indian partner was as a part of the initial MOU. It is also alleged by CBI that criminality in regard to the share-distribution pattern between RAIKIA,,,

and Matrix, in reply it is alleged on behalf of appellants that there is no bar in MoU entered with Go AP. MoU stipulates a condition that RAKIA shall",,,

contribute money not less than 51% of the GoAP approved project cost but it does not stipulate any condition on the share distribution patterns with,,,

regard the sharing between Indian partner and RAKIA. It also deals with number of directors to be appointed and who will have the control over the,,,

Board and day to day affairs and therefore concessions given to SPV in regard to duty exemption and other relaxations as being vitiated by,,,

conspiracy. Such concessions are enabled under the Industrial Policy of the State at the relevant point in time for backward areas and have been,,,

accorded to all similar projects.,,,

The observations of the Honâ€ble Supreme Court of India in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir,inwhich it was held that",,,

with approval by the constitutional bench in the Presidential Reference No. 1 of 2012, relating to Allocation of Natural Resources, which reiterates the",,,

settled position of law that auctions are not the only constitutional mandate and further held that Government has the power to negotiate directly with,,,

private proponents. The relevant paragraphs fromKasturi Lal Lakshmi Reddy (supra) are extracted and reproduced below:,,,

“22. Now the 2nd respondents had made an offer for putting up a modern plant for manufacture of rosin, turpentine oil and other",,,

derivatives within the State provided they were assured a definite supply of resin every year. But having regard to the commitments already,,,

made by it, it was not possible for the State to make any definite allocation of resin to the 2nd respondents and a proposal was therefore",,,

mooted that 11,85,414 blazes in inaccessible areas of Reasi, Ramban and Poonch Divisions could be allocated to the 2nd respondents for",,,

tapping on certain terms and conditions, so that the 2nd respondents could tap these blazes and out of the resin extracted, obtain for",,,

themselves an assured supply for running the factory to be set up by them and make the balance quantity available to the State for its own,,,

purpose. The 2nd respondents were agreeable to this proposal and they accordingly put forward an alternative proposal on these lines for,,,

the consideration of the State and eventually, the impugned Order came to be made in favour of the 2nd respondents. We have already",,,

discussed the terms of the impugned Order and it is clear from what we have said that the impugned Order was unquestionable and without,,,

doubt, in the interest of the State and even with a microscopic examination we fail to see anything in it which could possibly incur the",,,

reproach of being condemned as arbitrary or irrational. It is true that no advertisements were issued by the State inviting tenders for award,,,

of tapping contract in respect of these blazes or stating that tapping contract would be given to any party who is prepared to put up a,,,

factory for manufacture of rosin, turpentine oil and other derivatives within the State, but it must be remembered that it was not a tapping",,,

contract simpliciter which was being given by the State. The tapping contract was being given by way of allocation of raw material for,,,

feeding the factory to be set up by the 2nd respondents. The predominant purpose of the transaction was to ensure setting up of a factory,,,

by the 2nd respondents as part of the process of industrialisation of the State and since the 2nd respondents wanted assurance of a definite,,,

supply of resin as a condition of putting up the factory, the State awarded the tapping contract to the 2nd respondents for that purpose.If",,,

the State were giving tapping contract simpliciter there can be no doubt that the State would have to auction or invite tenders for securing,,,

the highest price, subject, of course, to any other relevant overriding considerations of public weal or interest, but in a case like this where",,,

the State is allocating resources such as water, power, raw materials etc. for the purpose of encouraging setting up of industries within the",,,

State, we do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and",,,

invite those interested to come up with proposals for the purpose.The State may choose to do so, if it thinks fit and in a given situation, it",,,

may even turn out to be advantageous for the State to do so, but if any private party comes before the State and offers to set up an industry,",,,

the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide,,,

resources and other facilities for the purpose of setting up the industry. The State is not obliged to tell such party: “Please wait I will first,,,

advertise, see whether any other offers are forthcoming and then after considering all offers, decide whether I should let you set up the",,,

industry.†It would be most unrealistic to insist on such a procedure, particularly in an area like Jammu and Kashmir which on account of",,,

historical, political and other reasons, is not yet industrially developed and where entrepreneurs have to be offered attractive terms in order",,,

to persuade them to set up an industry.The State must be free in such a case to negotiate with a private entrepreneur with a view to inducing,,,

him to set up an industry within the State and if the State enters into a contract with such entrepreneur for providing resources and other,,,

facilities for setting up an industry, the contract cannot be assailed as invalid so long as the State has acted bona fide, reasonably and in",,,

public interest. If the terms and conditions of the contract or the surrounding circumstances show that the State has acted mala fide or out,,,

of improper or corrupt motive or in order to promote the private interests of someone at the cost of the State, the court will undoubtedly",,,

interfere and strike down State action as arbitrary, unreasonable or contrary to public interest. But so long as the State action is bona fide",,,

and reasonable, the court will not interfere merely on the ground that no advertisement was given or publicity made or tenders invited.",,,

Here, the 2nd respondents approached the State for the purpose of setting up a modern factory for manufacture of rosin, turpentine oil and",,,

other derivatives and asked for allocation of resin and the State, with a view to offering an incentive to the 2nd respondents to set up the",,,

factory, made the impugned Order awarding the tapping contract in respect of these blazes to the 2nd respondents as a part of a package",,,

deal. We have already pointed out and we need not repeat again, that the impugned Order was reasonable and in the interest of the State",,,

and in the circumstances, we are clearly of the view that it cannot be assailed as invalid merely because no advertisements were issued",,,

inviting offers for setting up a factory and taking the tapping contract as an integral part of the transaction.â€​,,,

[Emphasis supplied],,,

The case of Nimmagadda Prasad and its group companies pertaining to the project is that â€" VANPIC stands for Vodarevu and Nizampatnam,,,

Ports and Industrial Corridor. VANPIC Project is slated to come up in the districts of Prakasam and Guntur in the State of Andhra Pradesh in a,,,

backward region which currently has little industrial activity.The vision behind the VANPIC Project is “to develop a world class port -based,,,

integrated industrial corridor and trade zone to fuel economic growth and generate employmentâ€. In particular, it is stated objective as per the",,,

Concession Agreement dated 11.07.2008:,,,

“Whilst liberalisation and deregulation have opened up the economy in India in the last decade, there has been change in the scenario of",,,

cargo traffic at ports and the significance of ports has increased manifold; the Andhra Pradesh coast will have a very large requirement of,,,

port facilities to meet the increasing traffic demand due to major developments in special economic zones, power sector, industrial sector,",,,

agricultural activities, fisheries, mineral exploitation etc. Recognising this, GoAP desires to implement various port projects in the state with",,,

private sector participation and one of the key priorities of GoAP is the development of the VANPIC Project (as defined below)â€​,,,

[Emphasis supplied],,,

16.1 VANPIC Project consists of several project components which are as under:,,,

Ports at Vadarevu and Nizampatnam:,,,

• All-weather, deep-water, fully-mechanized ports at Vadarevu (Motupalli) and Nizampatnam. The ports will act as a hub for the entire cluster and",,,

will form the backbone for VANPIC.,,,

Shipyard:,,,

• A state of the art shipbuilding and ship repair facility is integrated into the Vadarevu Port. The proposed development of shipyard adjacent to the,,,

Port will optimize the resource utilization by way of common infrastructure such as breakwaters and navigational channel.,,,

Industrial corridor:,,,

• Primary hinterland where the VANPIC Project is situated in an area which has nominal industrial activity and is primarily dependent on,,,

agricultural and allied activities. Therefore, it is essential to develop certain industrial parks for generation of cargo for the Ports in an area which",,,

principally consists of dry wasteland that is not suitable for agricultural cultivation.,,,

• Apart from generating cargo for the Ports, the industrial corridor, if developed, can boost the economic activity in the region and contribute to the",,,

development of surrounding districts in the long run. The development of port based industrial activity in Mundra (Gujarat) is one such example.,,,

• Additionally, there is the need for a port between Krishnapatnam and Visakhapatnam at present and there are several land-locked districts",,,

relatively close to Vadarevu and Nizampatnam areas and therefore, Ports in these two locations will be viable in the long run provided that some port-",,,

based industries are also developed in the immediate hinterland.,,,

• Industrial parks planned include Pharma park, Agro & Marine Park, Automotive Park, Information, Communications and Technology (ICT) Park",,,

and Textiles & Apparel Park.,,,

Airport:,,,

• By virtue of Industrial development, it was foreseen that there would be captive cargo as well as passenger demand arising from VANPIC",,,

Project for Air Traffic and therefore, proposed that a regional Airport be also developed.",,,

16.2 The development of VANPIC Project was targeted to speed up the economic development of Prakasam, Guntur and adjacent land-locked",,,

districts with potential for large-scale employment.,,,

16.3 Indicus Analytics, an economic research and data analysis firm consisting of prominent economists such as Professor Bibek Debroy, Dr. Subir",,,

Gokarn, Professor ShubhashisGangopadhyay, Dr. Ashok Desai, Dr. S L Rao, and Professor D.B. Gupta have concluded that the VANPIC Project",,,

would have a multiplier effect on the economic development of Prakasam& Guntur Districts, with benefits arising in terms of a) increment in GSDP",,,

b) increment in Tax revenues of AP and c) increase in employment opportunities.,,,

16.4 It brought out a reportivon the VANPIC Project in the year 2011 observing that the economic impact of VANPIC Project would be as under;,,,

• The estimated incremental effect of VANPIC investments on the Gross State Domestic Product (GSDP) of Andhra Pradesh in FY 2017-18, on",,,

the assumption that the projected investments are completed by FY 2016-17 starting from FY 2012-13 was expected to be in the region of Rs.168,,,

billion to Rs. 199 billion.,,,

• This represents an incremental effect of 2.61% to 3.10% on GSDP of AP in FY 2017-18 based on the VANPIC Project investment projections,,,

& economic trends observed in AP over 2001-02 to 2011- 12.,,,

• The impact of VANPIC investments on the Secondary Sector GSDP (secondary sector of the economy consists of manufacturing, construction,",,,

electricity, gas and water supply etc.) of Andhra Pradesh in FY 2017-18 was estimated to be Rs 41.88 billion. The incremental impact will be 2.8% of",,,

Secondary sector GSDP in FY 2017-18. -,,,

• The own tax revenue of AP was expected to increase by 2.11% to 2.50% as against a situation of no VANPIC Project.,,,

• The estimated direct employment potential of the VANPIC project over the 201213 to 2017-18 period was likely to be in the range of 48000 to,,,

64000.,,,

• Indirect employment potential is to the tune of 500,000.",,,

16.5 It is submitted that the total investment originally contemplated for development of VANPIC Project was to the tune of Rs.17,000 Crores",,,

(including Debt) with participation of several stake-holders like the Developers, financial institutions, multi-lateral agencies, Public-Private participation,",,,

and strategic investors. Consequently, the benefits from the Project when completed would accrue to all the above stake-holders in proportion to their",,,

contribution whether in the form of capital or debt.,,,

16.6 Therefore, the allegation that Mr. Nimmagadda Prasad was awarded “a project worth Rs.17,000 Crores†apart from being factually",,,

incorrect.,,,

It is stated on behalf of Nimmagadda Prasad and its group of companies that the Adjudicating Authority issued its Impugned Order without,,,

application of mind who has come to the conclusion. The same is as under:,,,

“Shri N. Prasad group was defactoawarded 17 thousand crore worth ofVenpic [sic] Projects through RAK though this project was,,,

supposed to be on Government to Government basis. Shri N. Prasad and his group companies defacto usurped this projects in connivance,,,

with politicians, bureaucrats of A.P. Government and RAKâ€​",,,

The appellants have abled to show comparison of MOU dated 11.03.2008 and concession agreement dated 11.07.2008.,,,

17.1 It is submitted that the assertion of the Respondent No.1 that GoRAK was required to have 51% equity in the VANPIC SPVs as per the MoU,,,

dated 11.03.2008 is a complete falsehood and is contrary to the express terms of the MoU. It is submitted that as per Article 1 Clause 2 (b) of the,,,

MoU, GoRAK was required to contribute “51% of the GoAP approved project costâ€. There is no reference to any equity participation on behalf",,,

GoRAK leave alone a reference to “51% equityâ€​ in the MoU.,,,

17.2 MoU dated 11.03.2008, by its very nature, is a mere understanding between GoAP and GoRAK laying down terms for future discussions and",,,

steps to be taken for development of VANPIC Project.,,,

17.3 The MoU, as stated, is only preliminary in nature and non binding and subject to further due diligence,technical and financial viability, and stands",,,

terminated on entering into Concession Agreement and State Support Agreement.,,,

17.4 The MoU merely outlines the intent of the main parties to the VANPIC Project and steps to be taken for evolving a definitive framework.,,,

Therefore, it appears that both agencies i.e. CBI and Enforcement Directorate try to step into the shoes of a policy maker and suggest that the",,,

Government does not have the ability to deviate from a preliminary document such as a Memorandum of Understanding and the investigating agencies,,,

encroaching are entitled to decide the same and not the domain of Governmental policy making and ought not to be entertained.,,,

17.5 VANPIC Project was outlined in the MOU dated 11.03.2008, which has evolved and acquired a definitive framework with the execution of the",,,

Concession Agreement dated 11.07.2008.,,,

17.6 In respect of a Government Nominee on the Boards of VANPIC SPVs, it is submitted that the CEO of Vanpic Ports Pvt. Ltd. made a request",,,

vide letter dated 07.06.2008 to GoAP for non-inclusion of Government Nominee on the board of VANPIC SPVs since there would be no equity,,,

contribution by GoAP, which aspect was specifically placed before the Cabinet for approval in the Cabinet Memorandum dated 28.06.2008and the",,,

same was acceded to.,,,

17.7 It is submitted that imputation of motives to a decision taken by GoAP on reasonable grounds is wrong and ought not to be permitted especially,,,

when the MoU dated 11.03.2008 was a preliminary document executed as an expression of interest with the understanding that it would be,,,

superseded by a “Concession Agreementâ€​, as has happened in the present case.",,,

Therefore, the MoU dated 11.03.2008 has been adhered to in spirit. The deviations, if any, cannot give rise to presumption of illegality in such a big",,,

project between country to country, the chances of small deviation and discrepancies bound to happen in view of discussion of project from time to",,,

time and change of circumstances.,,,

It is submitted that Nimmagadda Prasad did not mislead the Cabinet and there are no deviations between the Draft Concession Agreement,,,

approved by the Cabinet and the Concession Agreement dated 11.07.2008, becauseâ€"",,,

a) In terms of Clause 2(d) of Article 1 of the MoU dated 11.03.2008, v the Vanpic Ports Pvt. Ltd. prepared a Draft Concession Agreement with",,,

State Support Schedule (“DCAâ€) which contained details of Project related concessions, exemptions and assistance required from GoAP",,,

including assistance for acquisition of land, and submitted the same to the I&I department on 11.06.2008 for review and approval.",,,

b) After several rounds of discussions held between 11th and 25th June 2008, wherein the then Secretary, I&I was present, several substantial",,,

changes were made to the DCA and some concessions sought by the Vanpic Ports Pvt. Ltd. were either reduced or deleted entirely, as alleged.",,,

c) Thereafter, the DCA internally finalized after consultations with several departments of GoAP was finally circulated to the Council of Ministers, for",,,

consideration in its meeting on 30.06.2008, under the cover of a Cabinet Memorandum prepared by Mr. Manmohan Singh, the then Secretary, I&I",,,

Department.,,,

d) The DCA so circulated was approved by the Cabinet vide Council Resolution No. 231/2008 dated 30.06.2008.,,,

e) On 11.07.2008, the DCA as approved by the Cabinet was executed as the Concession Agreement between VANPIC Ports Pvt. Ltd. and GoAP.",,,

It is submitted that there is no difference between the Concession Agreement dated 11.07.2008 and the DCA that was approved by the Cabinet vide,,,

Council Resolution No. 231/2008 dated 30.06.2008. This fact has been subsequently verified by the Principal Secretary, I&I Department and in a file",,,

noting endorsed by him on 14.04.2010, he has observed that “There are no variations between the Draft Concession Agreement approved by the",,,

Cabinet and the agreement finally signed between Government and Concessionaire.†This document is also part of the Charge-sheet filed by the,,,

CBI, which has been mala fide, as alleged by the appellants intent suppressed by the Complaint for oblique purposes. The impugned Order and the",,,

underlying attachment ought to be set aside for this reason alone as alleged.,,,

f) The appellants also referred the Cabinet Resolution No.231/2008 dated 30.06.2008, which reads as under;",,,

“Agenda Item No.18,,,

Infrastructure & Investment Dept â€" Development of Minor Ports in the State â€" Development of Nizampatnam and Vadarevu Sea Ports,,,

and Industrial Corridor â€" MoU signed â€" Proposal for Award of the Project and approval of the Draft Concession Agreement â€" Reg.,,,

Council Resolution No.231/2008,,,

Approved. Second time exception of Stamp Duty and Registration Fee from original SPV (Vanpic Ports Private Ltd.) to other SPVs to be,,,

formed for different components of VANPIC Project would be subject to condition that the SPVs and their activities are related to Cargo to,,,

be handled by the proposed ports.â€​,,,

[Emphasis supplied],,,

The condition that the stamp duty exemption is subject to activities related to cargo does not find mention either in the Cabinet Memorandum or the,,,

Draft Concession Agreement. Therefore, it would be reasonable to infer that the Council of Ministers had independently applied their mind to the",,,

Cabinet Memorandum as well as the Draft Concession Agreement particularly since the very fact that limitations were being placed on grant of,,,

benefits to VANPIC demonstrates that the matter was obviously discussed extensively and rather than favours being doled out, a careful",,,

consideration of thematter had been undertaken by the Council of Ministers.,,,

g) It is explained that the case of the Respondent No.1 that “as a part of conspiracy many crucial issues were not mentioned in the cabinet,,,

memorandum†which are detrimental to the interests of GoAP is incorrect and without any basis. The list of the “crucial issues†that are,,,

allegedly not mentioned in the Cabinet Memorandum are enumerated by the Respondent No.1 at Paragraph 10.3 vi of the Provisional Attachment,,,

Order and they are reproduced herein for ready reference:,,,

“A. Ports, power plants and industrial corridors are proposed to be developed by different SPVs.",,,

B. Only two ports are to be developed on BOOT model by the SPV M/s Vanpic Ports Pvt. Ltd.,,,

C. Power plants are proposed to be developed by GenexxEnpower Corporation Pvt. Ltd.,,,

D. Industrial corridor is to be developed by Matrix Enport Holdings Pvt. Ltd., a private company exclusively owned by Shri Nimmagadda",,,

Prasad.,,,

E. Requirement of about 27,257.33 acres of land proposed for the entire project as the Initial master Plan;",,,

F. Cost of port lands to be initially borne by the company and would be later adjusted against concession fee payable to Government.â€​,,,

[Emphasis supplied],,,

h) It is submitted that the above is a deliberate misstatement by the Respondent No.1.The Respondent No.1 has deliberately not forwarded a copy of,,,

the said Cabinet Memorandum to the Adjudicating Authority, which would have demonstrated the falsity of the allegations being made by the",,,

Respondent No.1. The Appellants have placed on record of the Adjudicating Authority, the Cabinet Memorandum, contents of which have been",,,

completely ignored by the Authority.,,,

i) In respect of “crucial issue A†purportedly not mentioned in the Cabinet Memorandum, it is relevant to reproduce the extract of Cabinet",,,

Memorandum in this regard, which will demonstrate the oblique motives of the Respondent No.1;",,,

“The Developer has requested for granting of exemption of Stamp Duty and Registration Fee of land in second time transaction also.,,,

Submitted that in respect of other port projects, these exemptions are granted by GoAP for the first transfer of lands, as part of State",,,

Support. However, in the present case, the request has been made as VANPIC project has several components such as Sea Ports, Ship Yard,",,,

Power Plants, Specialized Industrial Parks etc.Each of these components require setting up of separate SPVs to attract and facilitate",,,

participation by strategic partners of International repute. In order to save on project time lines, the Developer has commenced the land",,,

acquisition process and it may so happen that the land registered in one special Purpose Company may have to be transferred to other,,,

Special Purpose Company on the basis of outcome of Master Plan and Zoning Studies.T his would entail double registration of the same,,,

land, if the zoning changes are, if any, changes in the approved Master Plan.",,,

By virtue of the reasons explained, the request of the Developer may be considered for approval.â€​",,,

[Emphasis supplied],,,

j) Similarly, in respect of crucial issue F, the Respondent No.1 has deliberately made a false statement in as much as the Cabinet Memorandum",,,

Specifically adverts to the fact that “the cost of private land [for the ports] if acquired will be initially borne by the Concessionaire and would be,,,

later adjusted against the lease payable to the Government.â€. It is submitted that the Respondent No.1 has further mislead the Adjudicating Authority,,,

by falsely stating that the cost of land would be adjusted against the concession fee.,,,

k) In respect of “crucial issue Dâ€, it is submitted that the Vanpic Projects Pvt. Ltd. (Formerly known as Matrix Enport Holdings Pvt. Ltd.), which",,,

is a duly notified Special Purpose Vehicle, is not exclusively owned by Mr. NimmagaddaPrasadas is falsely sought to be made out by the Respondent",,,

No.1. It is submitted that GoRak holds 30% of the stake in the Vanpic Projects Pvt. Ltd., which is to the knowledge of the Respondent No.1.",,,

It is refuted on behalf of appellants that the allegation of the Respondent No.1 that the Cabinet was misled by not mentioning crucial issues in the,,,

Cabinet Memorandum does not stand scrutiny of logic and it would be absurd to expect the Cabinet Memorandum, which is effectively aconcise note,",,,

to contain the impact of each and every term of the Concession Agreement. The allegation of “misleading of the cabinet†cannot stand so long as,,,

the Draft Concession Agreement was placed before the Cabinet for its perusal and there are no differences between the Concession Agreement,,,

eventually executed and the Draft Concession Agreement. And more particularly so when the entire Cabinet is not accused of any wrongdoing which,,,

should have been the case if the allegations were, in fact, taken to be correct.",,,

In respect of the failure to mention in the Cabinet Memorandum, the clear extent of land required for Industrial Corridor, it is submitted that the same",,,

has no consequence in reality in as much as the State Support states that GoAP is required to facilitate acquisition of lands by the “Developer†on,,,

outright purchase basis. Furthermore, as per Andhra Pradesh Alienation of State Lands and Land Revenue Rules, 1975 r/w Board Standing Order 24,",,,

land in excess of 10 acres or land with market value beyond 10 lakhs cannot be alienated to any private party without the prior approval of the Council,,,

of Ministers. As such, no govt. land/assigned land has been alienated to Vanpic Project without the approval of the Cabinet and in the present case",,,

were in fact approved by the cabinet. The allegation that the Council of Ministers were misled in respect of the extent of allocation of land is baseless,,,

and contrary to the record. Therefore, every subsequent alienation of land for VANPIC Project was subject to obtaining cabinet approval afresh and",,,

non-mentioning of the extent of land has no bearing in reality.,,,

It is also submitted on behalf of the appellants that there is no illegality owing to deviations between Krishnapatnam & Gangavaram Concession,,,

Agreement for VANPIC Project on the following reasons:-,,,

i) As per the cabinet resolution dated 30.06.2008, the Council of Ministers approved the Draft Concession Agreement placed before it. Admittedly,",,,

there are no deviations between the Draft Concession Agreement as approved by the Cabinet and the Concession Agreement signed and executed on,,,

11.07.2008.,,,

ii) This being the case, it is completely incorrect and illogical to allege mala fide motives merely because the provisions of the Concession Agreement",,,

for Vanpic Project are not identical to Concession Agreements for Gangavaram and Krishnapatnam Ports.,,,

iii) Firstly, if the submission of the Respondent No.1 is to be accepted, all Concession Agreements entered into by a State Government must",,,

necessarily be identical. Secondly, Article 1, Clause 2 (d) of the MOU pursuant to which the Developer is required to “prepare draft State Support",,,

Agreement and Concession Agreement†would have no meaning whatsoever. Pertinently, the entire case of the Respondent No.1 hinges on the",,,

assertion that the MOU ought to have been strictly followed.,,,

iv) The Appellants submit that there are bound to be differences between the Concession Agreement for Vanpic Project and,,,

Gangavaram&Krishnapatnam Ports, in as much as, all these are very large and complex infrastructure projects which are completely different in",,,

nature due to various factors and each of which are the subject of hard-nosed negotiations between private parties and the State authorities. The,,,

conditions on which each project is awarded must necessarily be different or at the very least contain certain differences which would be based on a,,,

variety of factors including, inter alia, the quantum of investment to be made by the private party, the duration of such investment, the location and",,,

other benefits to investor, the state and the region.",,,

For example, the cost of construction of ports at Vadarevu and Nizampatnam Ports is far in excess of the cost of construction of Gangavaram and",,,

Krishnapatnam Ports due to certain natural site conditions.,,,

v) It is submitted that the Respondent No.1 and the CBI selectively highlight the advantages given to the Vanpic Project, they conveniently suppress",,,

the areas where Gangavaram and Krishnapatnam Ports have been granted additional concessions and they also suppress the fact that the land for,,,

Krishnapatnam SEZ was granted on outright purchase basis and not on “BOOT†basis. The comparison between various projects is therefore,",,,

not only entirely misconceived and deliberately misleading but also beyond the competence of the Respondent No.1.,,,

vi) It is mentioned that the Vanpic Project is being developed in a backward area with no industrial hinterland while the Gangavaram Port is in a,,,

developed area with rich industrial hinterland. GoAP is not incurring any cost for land acquisition and no government land is being given free of cost or,,,

at a concessional rate for Vanpic Project. However, GoAP has provided 2800 Acres of Land acquired at their cost to Gangavaram Port Ltd. out of",,,

which 1,800 Acres were given in lieu of equity at Rs. 2.86 Lakhs per Acre for GoAP, when the prevailing market rates were much higher, and",,,

balance 1,000 Acres on Lease basis.",,,

vii) If Vanpic Project has to be compared with that of Gangavaram Port then it must also be noted that land acquisition has been done on consensus,,,

with the farmers in VANPIC Project, while the land acquisition for Gangavaram Port was subject to large-scale public protests, which even resulted",,,

in the death of one person owing to police firing in 2006.,,,

It is alleged that despite all prior efforts of the GoAP to develop ports at Vodarevu and Nizampatnam have failed, and VANPIC Project is being",,,

implemented in a backward area with very little or no industrial hinterland and on land which was, and is till date, classified as dry-waste land in the",,,

records of the State Government. In fact, the concessions or exemptions provided to VANPIC Project are in line with prevailing statutes and policies",,,

of GoAP. The allegation of the CBI that VANPIC Project has been granted undue favours and on the contrary, GoAP has not provided certain",,,

concessions to VANPIC Project such as financial support in the form of viability gap funding (“VGFâ€), advance development grant",,,

(“ADGâ€), interest free loan, providing land as Government equity, provision of special connecting infrastructure for infrastructure projects etc.",,,

which are normally provided to projects undertaken through public private partnerships with a view to make them commercially viable.,,,

It is submitted that the concessions provided to other projects are as under:-,,,

a) GoAP has given Hyderabad International Airport Ltd. benefits such as interest free loan of Rs 315 Crores and ADG of Rs.107 Crores and about,,,

5,000 Acres of Prime Land in Hyderabad city acquired at the Governments Cost provided on lease with exemption of lease rentals for first 8.5 years.",,,

b) GoAP has given Rs.1458 Crores as VGF to Hyderabad Metro Rail Project.,,,

c) GoAP has provided 2800 Acres of Land acquired at their cost to Gangavaram Port Ltd. out of which 1,800 Acres were given in lieu of equity at",,,

Rs. 2.86 Lakhs per Acre for GoAP, when the prevailing market rates were much higher, and balance 1,000 Acres on Lease basis.",,,

d) GoAP has proposed to provide Rs. 335 Crores as financial assistance and land of 5,324 Acres on lease basis to Machilipatnam port.",,,

e) GoAP has proposed to provide 5,800 Acres of land to Krishnapatnam Port on Lease basis out of which about 3,000 Acres has been handed over.",,,

VANPIC Project has not been provided with any financial assistance by GoAP,,,

It has come on record that the project is located in a backward area with no industrial development. GoAP has not provided any land free of cost,,,

or has not given any concession in respect of the same. Entire land for VANPIC Project has been acquired at the Developerâ€s cost at more than,,,

market price fixed by the Government.VANPIC is bearing the cost of acquisition of 6,200 acres (for two ports, shipyard and airport), the ownership of",,,

which will always vest with GoAP and the same will be leased back to VANPIC SPVs.Annual Lease rentals are fixed at 2% of the Market Value,,,

(With annual escalation of 6.5%), which will be adjusted against the cost of acquisition of land (excluding goodwill payments). However, such cost of",,,

acquisition does not include interest and opportunity cost borne by VANPIC for the capital, which is nearly 14% and 25% annually.",,,

The goodwill payments were made voluntarily during the course of acquisition in order to ensure expeditious, fair, and peaceful acquisition of land,",,,

unlike in the case of Gangavaram port where there was serious opposition to acquisition of land leading to police firing that resulted in deaths of,,,

farmers.,,,

The exemption from stamp duty and registration fees is provided for first transfer at the time of Land Acquisition and one further transfer amongst,,,

the SPVs notified for the purpose of the VANPIC Project. Total exemption of stamp duty and registration fees availed so far is only Rs. 1.17 Crores,",,,

which is miniscule when compared to the project cost incurred so far.,,,

It has come on record as per pleadings of the appellants that VANPIC SPVs have been constituted in accordance with the MOU dated,,,

11.03.2008 and the Concession Agreement dated 11.07.2008. It is submitted that there has been no deception of the Cabinet, as is being falsely",,,

alleged by the CBI and the Respondent No.1, in respect of the Companies incorporated as Special Purpose Vehicles for the purpose of Vanpic",,,

Project. As per Recital I of the Concession Agreement dated 11.07.2008, GoAP and Vanpic Ports Pvt. Ltd. had agreed that it would be necessary for",,,

the Developers to incorporate different SPVs for implementing different components of the project. This aspect was specifically brought to the,,,

knowledge of the Cabinet vide the Cabinet Memorandum, which the CBI suggests is a document more important than the Concession Agreement",,,

itself in as much as it forms the basis upon which the Concession Agreement was required to be entered into. Therefore, GoAP was duly notified that",,,

a particular company would be utilized as a Special Purpose Vehicles. Even as per the Respondent No.1, GoRAK has held a minimum of 26% equity",,,

in all of the Project SPVs at all points of time and it is submitted that the same is sufficient to maintain control over the said companies. GoRAK,,,

exercises complete control over the Vanpic Ports Pvt. Ltd. and Vanpic Projects Pvt. Ltd. by virtue of their articles of association of, whereby,",,,

significant matters are “reserved matters†wherein GoRAK has veto and no decision can be taken without their concurrence and approval. Some,,,

of the “reserved mattersâ€​ inter alia include;,,,

• Any transaction with any related party;,,,

• Appointment or removal of CEO/CFP;,,,

• Change of authorised signatory for bank accounts for transactions in excess of Rs. 20 lacs;,,,

• To change the auditor; etc.,,,

It is admitted position that the project is more than 10 years old. The rival Government in the State has ruled between 2015-2019. None of the,,,

agreements was cancelled.,,,

It has also come on record that Mr. Nimmagadda Prasad hails from a background from a lower middle class family. On completion of his Masters,,,

Degree in Physics from the University of Delhi, he started his career in 1984 as a Quality Chemist. While working, he also completed his MBA.",,,

i) In early 1990s, Mr. Nimmagadda Prasad worked as Sales Manager in the Pharma Sector and by the dint of his hard work, he rose through the",,,

ranks to eventually become the CEO and Managing Director of Vorin Labs, a subsidiary of Ranbaxy Laboratories. During his tenure as the head of",,,

Vorin Labs, from 1995 to 1999, he turned it around from a struggling enterprise to a profitable enterprise.",,,

ii) In early 2000, Mr. Nimmagadda Prasaddecided to become an entrepreneur and purchased an Active Pharmaceutical Ingredients (API)",,,

manufacturing facility in Hyderabad of Herren Drugs and Pharmaceuticals, a BSE-listed sick and bankrupt company with about 160 employees Within",,,

a span of 6 years, he turned around a sick industrial unit with 160 employees to one of the largest generics companies in India known as Matrix",,,

Laboratories Ltd. (Hereinafter referred to as the “Matrix Labsâ€) with 11 thousand employees and valued over USD 1 Billion. This earned Mr.,,,

Nimmagadda Prasad several awards including “Fastest Wealth Creator†award which was awarded to him consecutively for three years from,,,

2004 to 2006.,,,

iii) In 2006, Matrix Labs was acquired by Mylan Inc., a global generics behemoth, listed on New York Stock Exchange (NYSE), at a valuation of over",,,

Rs.4,500 Crores, which at the time, was the largest acquisition in the Indian pharmaceutical industry.",,,

iv) Mr. Nimmagadda Prasadexited Matrix Labs at the time of the said acquisition and sold his shareholding to Mylan Inc. in many tranches from 2004,,,

to 2009viiwhich earned him a total of Rs.915 Crores. He has paid the applicable income tax and for the Financial Year 2006-07, Mr. Nimmagadda",,,

Prasad was the highest personal tax payer in the erstwhile State of Andhra Pradesh.,,,

v) Constructive contribution to the society always remained the core of Mr.Nimmagadda Prasadâ€s entrepreneurial vision. During his time at Matrix,,,

Labs, Mr. Nimmagadda Prasadinitiated “Project Hope†for reducing the cost of manufacturing AIDS drugs. The new process developed by",,,

scientists at Matrix Labs managed to bring down the cost of AIDS medicine from $10,000 per patient per year to $150 per patient per year, which",,,

was key to providing affordable access to HIV drugs to patients in underdeveloped countries as a result of which nearly 45% of patients being treated,,,

for AIDS all over the world (including India) are being treated with the products developed by Matrix Labs.,,,

vi) In his endeavour to give back to the society, Mr. Nimmaggada Prasad has set up the Nimmagadda Foundation, which is involved philanthropic",,,

activities in healthcare, education, entrepreneurship development, employment generation and empowerment of the underprivileged in some of the",,,

most backward regions of our country. So far, the Nimmagadda Foundation has committed over Rs 130 Crores and, in fact, spent over Rs 80 Crores",,,

for several causes ranging from project for eradication of needless blindness in children in Andhra Pradesh by 2020 to setting up of a world class,,,

badminton training academy â€" The Gopichand Badminton Academy, Hyderabad.",,,

vii) The Gopichand Badminton Academy,has produced several talented players in India, including SainaNehwal, P.V Sindhu and K. Srikant. Similarly,",,,

Mr. Nimmaggada Prasadwas one of the Trustees of the Chennai Mathematical Academy which is a center for excellence in teachingand research,,,

for mathematical sciences and has been recognized as a University under Section 3 of the University Grants Commission Act, 1956.",,,

viii) Mr. Nimmagadda Prasad, along with his family and group investment arms, has contributed over Rs.193/- croresto the Government exchequer as",,,

Income Tax. Companies and businesses turned around by Mr. NimmagaddaPrasadhave directly and indirectly contributed over Rs.2000/- crores in,,,

various taxes and provide direct employment to over 25,000 persons.",,,

With regard to Vanpic Projects Pvt. Ltd., it is stated on behalf of appellants that it was originally incorporated as Matrix Enport Holdings Pvt. Ltd.",,,

by Mr. NimmagaddaPrasadand which had nothing to do with Vanpic Project. In fact as per the meeting of the Board of Directors on 19.01.2008, it",,,

was to even bid for the Hyderabad metro project as well. In terms of the provisions of the MoU dated 11.03.2008, GoRAK notified GoAP, vide letter",,,

dated 29.03.2008, that Matrix Enport Holdings Pvt. Ltd. led by Shri Nimmagadda Prasad, the Nimmagadda Prasad, would be its local Indian partner",,,

for the VANPIC Project, which was in terms of the provisions of the MoU dated 11.03.2008. In the Cabinet Memorandum, the Developer i.e., Matrix",,,

Enport Holdings Pvt. Ltd. had commenced acquisition of private/patta land in April 2008, prior to entering into the Concession Agreement dated",,,

11.07.2008, in the interest of speedy implementation of the Project and to offset the losses that would be caused due to escalation of the prices of the",,,

land, if the Project were to be eventually awarded. This was done completely at the risk of the Vanpic Projects Pvt. Ltd.Thereafter, it was decided",,,

that “Matrix Enport Holdings Ltd.†would instead be notified as a VANPIC SPV since it would cumbersome and involve higher cost to transfer,,,

the land already acquired to a freshly incorporated VANPIC SPV. Therefore, vide Letter dated 25.05.2008, which was also prior to execution of the",,,

Concession Agreement dated 11.07.2008, GoAP was specifically notified that “Matrix Enport Holdings Ltd.†planned to develop the Industrial",,,

Parks and requested for allocation of land for the same. Immediately thereafter, Dr. KhaterMassaad, the then CEO of Ras al Khaimah Investment",,,

Authority (“RAKIAâ€) was appointed as the Director of Matrix Enport Holdings Pvt. Ltd. on 25.06.2008 pursuant to a circular board resolution,",,,

which was subsequently approved vide board resolution dated 30.07.2008.The name of the above company was changed to “Vanpic Projects Pvt.,,,

Ltd.†pursuant to a board resolution dated 30.07.2008 so that it would be easily identifiable as a VANPIC SPV. Thereafter, the change in name",,,

came into effect on 05.08.2008 by virtue of the Fresh Certificate of Incorporation dated 05.08.2008 issued by the ROC and immediately on the very,,,

same day, GoAP was notified that VANPIC Projects Pvt. Ltd. as a VANPIC SPV, vide letter dated 05.08.2008. At this time, a nominee of GoRAK",,,

was already on its Board of Directors. Furthermore, GoRAK holds more than 26% shareholding in Vanpic Projects Pvt. Ltd. and satisfies the",,,

requirements of the Concession Agreement.,,,

In view of the above, it is evident that the allegation that Vanpic Projects Pvt. Ltd. is merely a “private company exclusively owned by Shri",,,

Nimmagadda Prasad is not a valid submission. The records would reveal otherwise.,,,

RAKâ€​S COMMITMENT TO THE PROJECT,,,

Both agencies have question the role of GoRAK in the VANPIC Project and consequently the nature of the Project being Government-to-,,,

Government. The GoRAK has invested approx. 121 million US Dollars vizRs. 535.82 crores (About 65% of the total investments made so far in the,,,

Vanpic Project). In fact, Dr. KhaterMassaad, the then CEO, RAKIA and Mr. A. J. Jagannathan, the then Advisor to GoRAK had been acting as",,,

Directors of the Vanpic SPVs as the nominees of GoRAK. After the commencement of the CBI investigation, His Highness Saud Bin Saqr Al",,,

Qasimi, Member of the UAE Supreme Council and Ruler of Ras al Khaimah had written to the Honâ€ble Prime Minister of India on 16th August",,,

2011 and reiterated that the VANPIC Project is a collaboration between GoAP and GoRAK and that Matrix Enport Holdings Pvt. Ltd. led by Mr. N.,,,

Prasad has been selected as the local partner. Relevant extracts of the said letter dated 16.08.2011 is extracted below for ready reference:,,,

“The Emirate of Ras Al Khaimah (RAK), United Arab Emirates (UAE) has made several investments in India through its investment arm",,,

RAK Investment Authority (RAKIA), and through other majority RAK government owned institutions. Investments include projects involved in",,,

aluminium smelting, vitrified and ceramic tile manufacture, real estate, and ports along with port based industrial development. We are also",,,

considering further investments that will be mutually beneficial to both theparties.,,,

One such investment in India, executed on Government-to-Government (G2G) basis, was the development of Vadarevu and Nizampatnam",,,

Ports and Industrial Corridor (VANPIC) Project in the state of Andhra Pradesh. Indeed, during the visit to RAK by the late Chief Minister of",,,

AP, his Excellency Late Mr. Y. S. Rajasekhara Reddy, we discussed the possibility of further investment in India, and eventually signed a",,,

Memorandum of Understanding (MOU) with GoAP for the development of VANPIC Project. Your Excellency may please note that this,,,

VANPIC Project was primarily conceived with the objective of bringing about Socio-Economic Transformation in the relatively backward,,,

Prakasham and Guntur districts in Andhra Pradesh.,,,

As per the terms of the MoU, RAKIA had selected Matrix Enport Private Limited led by Mr. Nimmagadda Prasad as our India partner after",,,

detailed perusal and based on his reputation for successful entrepreneurship and value creation. Mr. Prasad is an accomplished,,,

entrepreneur with rich professional background, and a success story of the new generation entrepreneurial spirit in India. What appealed",,,

to us is his ability to turn around sick companies into high value companiesand thus generating huge employment opportunities. One such,,,

example is Matrix Laboratories Limited, an India listed sick company, Mr. Prasad transformed it from a million dollar to a billion dollar",,,

market cap company in a short span of six years.,,,

We would like to bring to the notice of your esteemed Government that despite all our original intentions, this vital project on Indiaâ€s",,,

strategic East Coast has not been able to takeoff to our planned expectations, and now seems mired in various difficulties beyond the",,,

control of an principals to decision making viz. the State Government of Andhra Pradesh and the civil service in the state. We further bring,,,

to your kind notice that, already about USD 200 million has been invested into the project. Indeed, neither we, nor our Indian partner are",,,

able to make headway in spite of repeated efforts. Our greatest concern now is that this project is being delayed for myriad reasons, not all",,,

of which are clear to us, and our original investment is unable to generate returns, while relevant input costs for development are rising",,,

sharply.â€​,,,

[Emphasis supplied],,,

The Prime Minister of India vide his letter 7thOctober 2011acknowledged receipt of the letter and gave assurance of his highest consideration.,,,

It is a matter of record that GoRAK team visited Hyderabad in March, 2012 and met the Honâ€​ble Chief Minister of Andhra Pradesh and assured",,,

him of GoRAKâ€s commitment to the VANPIC Project and requested for expediting resolution of pending issues. CEO of RAKIA addressed a letter,,,

dated 3rd April 2012 to the Honâ€ble Chief Minister of Andhra Pradesh reiterating RAKâ€s commitment to VANPIC Project, highlighting the",,,

substantial progress made by the Project and sought an expeditious resolution of regulatory issues and hurdles. As a gesture of goodwill and to,,,

reinforce its participation in the VANPIC Project, GoRAK assured GoAP that it would restore the status quo ante in respect of its shareholding",,,

pattern, though they are in no manner obliged to so do under the Concession Agreement 11.07.2008.",,,

GoRAK through its General Legal Counsel, addressed another letter dated 25th June 2012 to the Honâ€ble Chief Minister requesting an appointment",,,

for discussing the future of the VANPIC Project to which GoRAK has committed.,,,

Prior to the arrest of Mr. NimmagaddaPrasadby the CBI and subsequent detention, the officers of the Respondent had asked Mr.",,,

NimmagaddaPrasadto arrange for meeting the representatives of GoRAK since it was a cumbersome and lengthy process to utilize diplomatic and,,,

official channels in view of the fact that they are the representatives of a foreign sovereign nation as alleged on behalf of the appellants.,,,

Pursuant to the above request, a letter bearing No. RC 19(A)/2011/CBI/HYD/T-6/421 dated 03.03.2012 was sent to the CEO, Vanpic Ports Pvt.",,,

Ltd. with a request for making arrangements for appearance of Dr. KhaterMassaad and Mr. A. J. Jagannathan for the purpose of their examination,,,

by the CBI.The necessary arrangements were made for appearance of the representatives of GoRAK before the CBI on 07.03.2012.,,,

Accordingly, as alleged, Dr. Khater Massaad and Mr. A. J. Jagannathan presented themselves before the officers of the CBI for questioning on",,,

07.03.2012 at Hotel Taj Krishna, Hyderabad. However, may be due to paucity of time, the examination could not be completed and the",,,

representatives of GoRAK were given written queries by the CBI.,,,

Thereafter, Dr. Khater Massaad forwarded his written answers to the queries raised by the CBI under the cover of his letter dated 05.08.2012, a",,,

copy of which was also faxed to the offices of the Appellants. However, charge-sheet filed on 17.08.2012 does not mention the said response dated",,,

05.08.2012sent by GoRAK. Itprima facie shows that VANPIC Project was initiated as a Government-to-Government Project, whereby the",,,

Government of Ras al Khaimah continues to be the principal stakeholder in the Project. The aforesaid responses itself would show that the VANPIC,,,

Project is not solely controlled by Mr. NimmagaddaPrasadand the Government of Ras al Khaimah is a front party at the behest of Mr. Nimmagadda,,,

Prasad.,,,

One is not sure as to whether the Respondent No.1 has recorded any statements of any of the representatives of GoRAK. If recorded, the same",,,

is not placed on record before the Adjudicating Authority. It is stated by the appellant that presumably knowingly fully well that examination of any,,,

representatives of Ras al Khaimah would disprove the case made by the CBI as well as the Respondent No.1. The Respondent No.1 has not,,,

disclosed the letter dated 10.01.2008 sent by the then Crown Prince & Deputy Ruler of Ras-al-Khaimah, the present Supreme Council Member of",,,

United Arab Emirates and Ruler of Ras-al-Khaimah expressing interest in developing the Nizampatnam Port SEZ which would demonstrate that the,,,

expression of interest was, in fact, of a foreign sovereign and nature of allegations levelled indirectly and about the involvement of GoRAK was, no",,,

doubt, diplomatic embarrassment for the Government of India as well as the State of AP.",,,

It has come on record that all lands were purchased/alienated for the Vanpic Project at the market rate fixed by the Government and in most,,,

cases Vanpic has paid the amount fixed by the Government with additional amount as Goodwill and documentary records in respect of this aspect,,,

were made available to the Respondent No.1.,,,

As per the Andhra Pradesh Alienation of State Lands and Land Revenue Rules, 1975 r/w Board Standing Order 24, land in excess of 10 acres or",,,

land with market value beyond 10 lakhs cannot be alienated to any private party without the prior approval of the Council of Ministers. As such, no",,,

govt. land/assigned land has been alienated to Vanpic Project without the approval of the Cabinet. Therefore, the allegation that the Council of",,,

Ministers was misled in respect of the extent of allocation of land is wholly baseless and contrary to the record. As per Board Standing Order 24,",,,

assigned land can be resumed by GoAP on behalf of a Private Company only for a public purpose on payment of compensation to the Assignees.,,,

Further, pursuant to the relevant GOs issued by GoAP for the Vanpic Project read with the Board Standing Order 24, all land, whether Govt. Land,",,,

assigned lands or patta land, to be purchased by or alienated to the Developer for VANPIC Project in terms of the Concession Agreement for the",,,

purpose of the Port based Industrial Corridor can only be used for the purpose of setting up of industries that generate cargo for the Ports and not for,,,

real estate development or any other purpose. In the event that the land is used for any other purpose, the Government has the right to resume the",,,

land. The said factual position is not denied by the respondent.,,,

It is also admitted position that GoAP has not provided any land free of cost or at a discount to VANPIC Project and all lands have been acquired,,,

at the cost of the Appellants 10 & 11 and other VANPIC SPVswith no financial contribution from the State Government and with the caveat that,,,

they would be used solely for the purpose of the VANPIC Project and for no other purpose.,,,

Thereafter, after following the necessary processes, each proposal for Land Acquisition/Alienation was placed before the Council of Ministers for",,,

approval. Only on obtaining the approval of the Council of Ministers, GoAP issued G.O.Ms. 1110 of 2008, 1115 of 2008, 233 of 2009, 270 of 2009, 35",,,

of 2009 and 36 of 2009 for acquisition of 22,990 acres (Government Lands =1094 acres, Assigned Lands = 18,638 acres and Patta Lands = 3258",,,

acres) for the VANPIC Project. Therefore, the allegation against the Cabinet are incorrect. No action was taken against any Cabinet Minister if any",,,

illegality is done in the meeting. Most of the lands earmarked for acquisition by GOs are categorized as “Dry Waste Landsâ€. It has come in,,,

record that after extensive field investigations and detailed technoâ€"environmental studies conducted by VANPIC, the total extent of land earmarked",,,

for acquisition has been reduced to 18,000 acres at the request of VANPIC.",,,

It is a matter of fact that out of the total 18,000 Acres, 2000 Acres are earmarked for Vadarevu Port, 2000 Acres for Nizapatnam Port, 700",,,

Acres for Shipyard and 1500 acres for Airport. These 6,200 Acres of lands are required to be acquired at the cost of VANPIC SPVs but would be",,,

owned by GoAP and leased back to VANPIC SPVs on payment of annual lease rentals. It was an onerous condition and is unusual, particularly, for",,,

development in a Backward Area with no industrial development, whereas the norm is to give large incentives and financial assistance.11,800 Acres is",,,

earmarked for the Industrial Corridor, to be acquired at the cost of VANPIC SPVs, have been conditionally assigned by GoAP. The lands provided",,,

under the conditions of BSO 24/Land Acquisition Act, 1894 are to be used only for the purpose of setting up industries that generate cargo for the",,,

Ports and NOT for real estate development. It was the pre-condition that if the land is not utilized for the purpose granted, then, GoAP has the power",,,

to resume the land.,,,

Thus,it is not correct to allege that there is no financial outgo from the Government exchequer for acquisition of land and “Government has",,,

been divested of its legitimate right to these lands†whenas per appellants, the lands belonging to the Government are about 1000 acres, which was to",,,

be alienated to VANPIC SPVs at its costs or are leased to VANPIC SPVs on payment of Lease Rental and are to be used strictly in accordance,,,

with the prescribed conditions and for the purpose of setting up industries that generate cargo. VANPIC has so far paid to GoAP, as per its case -",,,

• Rs. 14 Crores as administrative charges for Assigned Lands;,,,

• Rs. 2.6 Crores for 173 Acres of Government Lands at market value.,,,

• Whereas, only Rs. 1.17 Crores, has been availed as stamp duty exemption so far.",,,

For acquisition of about 13,000 acres from the landholders as per its case, VANPIC has incurred -",,,

• Rs. 50.95 Crores for about 1,416 acres of patta land;",,,

• Approx. Rs. 400 Crores for the rest, which are assigned lands.",,,

It is stated that the challans for administrative charges and ex-gratia payment receipts to the district Revenue Authorities, and has received possession",,,

of only 6,418 acres of Assigned Lands till date. Therefore, it is difficult to presume that there has been no undue benefit/gain to the Vanpic Ports Pvt.",,,

Ltd. and Vanpic Projects Pvt. Ltd. for acquisition of land and there is no loss to the Government exchequer on account of land acquisition for the,,,

VANPIC Project.,,,

The allegation that “some of the lands disposed of at a very high rate and thereby made illegal profits†is denied by the appellants as alleged,,,

on behalf of Respondent No.1 as the same is contrary to the records filed with the Chargesheet, which would show:-",,,

i) All lands acquired/alienated for the purposes of Vanpic Project are dry wasteland.,,,

ii) Till date no lands have been disposed ofnor can they be disposed of as alleged. At the best, they can be leased out to third parties for use strictly in",,,

consonance with the VANPIC Project.,,,

iii) In fact, in furtherance of the requirements of the VANPIC Project, a VANPIC SPV viz., Vanpic Projects Pvt. Ltd., entered into a Memorandum",,,

of Understanding dated 16.08.2010 &02.09.2010 have been entered into by with two Companies viz. SEW Thermal Corporation Ltd. and Coastal,,,

Sirohi Ltd. which would have provided power to industries that were to be set up as a part of the Project. However, the said transactions could not",,,

materialise in view of proceedings by the CBI and subsequently by the ED. The advance received was refunded to these companies after cancellation,,,

of agreements, as alleged by the appellants.",,,

It is deniedby Mr. NimmagaddaPrasadthat he had diverted funds of RAKIA/VANPIC belonging to GoRAK. It is stated by him that the payments,,,

made to the farmers have been documented as receipts have been obtained by farmers for payments made.,,,

It is submitted by him that the exemption granted to the Petitioner under Urban Land Ceiling Act has no relation to the Vanpic Project and is not even,,,

the subject matter of the present case. Exemptions, if any, granted to Mr. NimmagaddaPrasador Matrix Labs were in accordance with extant policy",,,

in 2007 pursuant to G.O.Ms. 615 of 2008, wherein, more than 1400 other persons were also granted the same exemption in the period 2008 â€" 2012.",,,

During one of the oral arguments, the counsel for the Enforcement Directorate made the following two submissions:",,,

a) Firstly,Vanpic Ports Pvt. Ltd. was the concessionaire under the Concession Agreement dated 11.07.2008 and therefore, allotment of land to Vanpic",,,

Projects Pvt. Ltd. (Which was formerly Matrix Enport Holdings Pvt. Ltd.), is illegal and contrary to the Concession Agreement dated 11.07.2008.",,,

Additionally, that there is no communication to the then Government of Andhra Pradesh (“GoAPâ€​) that Vanpic Projects Pvt. Ltd. is an SPV; and",,,

b) Secondly, the investment made by Mr. Nimmagadda Prasad in Bharathi Cement Corporation Ltd. is a bribe since Mr. Y.S. Jagan Mohan Reddy",,,

was allotted shares at par i.e., Rs.10 per share, whereas, Mr. Nimmagadda Prasad was allotted at a higher premium. The submissions in this regard is",,,

encapsulated in “Additional Submissions in OC 276/2014 & 618/2016â€​ filed by the Enforcement Directorate on 09.01.2019,,,

The main submissions of the Respondent was that the name of Matrix Enport Holdings Pvt. Ltd. was changed to Vanpic Projects Pvt. Ltd.,,,

without any involvement of Government of Ras al Khaimah (“GoRAKâ€), which was based on the board resolution dated 30.06.2008 . Counsel for",,,

the Respondent only showed the first page of the resolution which showed change of name. However, he omitted to show the second page of the",,,

board resolution which shows that on the very same day Mr. KhaterMassad, CEO of Ras Al Khaimah Investment Authority (“RAKIAâ€) was",,,

appointed to the Board of Directors. Even as per the Enforcement Directorate,GoRAK owns 30% of the shareholding in Vanpic Projects Pvt. Ltd.",,,

Few clauses of the Concession Agreement dated 11.07.2008, which the Respondent conveniently failed to show this Tribunal:",,,

i. Clause 1.20 states:“ “Developer†means Government of Ras-Al-Khaimah represented by RAK Investment Authority (by itself or,,,

through its subsidiary) and/or Matrix Enport (as defined below)â€​,,,

ii. Clause 1.14 states:““Concession†means the exclusive right and authority granted by GoAP to Concessionaire for designing,",,,

financing, building, maintaining, operating and transferring green-field, all-weather, deep water, multi-purpose ports at Vadarevu and",,,

Nizampatnam together with a right to levy, collect and retain appropriate charges for Port Services rendered to Port users during the",,,

Concession Periodâ€​,,,

iii. Clause 1.2 of Schedule A â€" State Support states: “Developer may on its own or together with strategic partners or other persons,,,

develop an industrial corridor consisting of Port based or other industries/industrial parks and power plants as part of the Industrial,,,

Corridor in order to develop the immediate hinterland for the Vadarevu and Nizampatnam ports. To assist in timely completion,,,

thereof,GoAP shall extend its support to make available land as requested by the Developer on outright purchase basis and transfer shall",,,

take place at the Fair Market Value as determined either by the District Collector, Guntur or the District Collector, Prakasam as the case",,,

may be. The cost towards the transfer of the lands shall be borne by the Developer or its Affiliates, Associates, subsidiaries or nominees.",,,

The lands to be acquired for this purpose are more particularly described in Schedule [E]. All such lands shall absolutely vest in the special,,,

purpose vehicles for the development and implementation of the VANPIC Project as the Concessionaire/Developer may specify in its,,,

discretion without any restriction on usage or on dealing with such lands.â€​,,,

It is thus clear from above that the ports were to be developed by the Concessionaire i.e., Vanpic Ports Pvt. Ltd., whereas, the Industrial Corridor",,,

was to be developed by RAKIA and/or Matrix Enport Holdings Pvt. Ltd. and/or their strategic partners. For this purpose,GoAP was to facilitate land",,,

acquisition at fair market value. Therefore, as per the Concession Agreement, vide letter dated 06.08.2008, it was communicated that Vanpic Ports",,,

Pvt. Ltd. would have to be allotted the lands for ports and Vanpic Projects Pvt. Ltd. (Formerly Matrix Enport Holdings Pvt. Ltd.) and to be allotted,,,

the lands for the industrial corridor. After detailed examination and with the approval of the Council of Ministers, lands were allotted to both Vanpic",,,

Ports Pvt. Ltd. and Vanpic Projects Pvt. Ltd. as per requirement. It was a Government to Government agreement, it is difficult to hold that it was all",,,

manipulation on the basis of material available on record. There might be few discrepancies, but it does not mean that there were no talksand",,,

discussions with the Government of Andhra Pradeshwith the parties before execution of concession agreement. The main concern it appears from the,,,

case of the ED is that the investment was bribe money in order to get the project and the purchase of shares were just eye wash, those were waste of",,,

papers, even these were purchased on higher market price in order to oblige the Chief Minister and ultimately has given the favour to the appellants.",,,

Unless and otherwise established in evidence, prima facie, it appears to this Tribunal that the said shares were sold to French Company on higher",,,

price. Those were not waste of papers. No material so far filed by the respondent no. 1 is available to establish that the purchase of shares or,,,

investment thereof is wholly bribe money and the same investment is done in order to get the project.,,,

From the entire gamut of the matter and material placed on record, prima facie, it appears that subject to the other allegations with regard to",,,

proceed of crime amount, the same will be considered and discussed at the later part of my order, prima facie, the MOU/agreement cannot be treated",,,

as sham documents. As far as enforcement about concession agreement is concerned, this Tribunal doesnot wish to make any comment or to give",,,

any finding in this regard as the Tribunal is having limited jurisdiction. It is for the State Government to take the decision. It is also a matter of record,,,

thatfor the last about 10 years, the same has not been cancelled or any proceedings are pending in this regard in any court of law, even at the time",,,

when the opposition party was ruling in the Andhra Pradesh Government. Admittedly, the MoU dated 11.03.2008, with a view to implement the",,,

Projects, Patta Lands were acquired for VANPIC Project even prior to the execution of the Concession Agreement dated 11.07.2008. The said fact",,,

was specifically brought to the attention of the Council of Ministers in the Cabinet Memorandum when the Draft Concession Agreement was placed,,,

before it for approval and there is no denial by the respondent. It is stated by the appellant that none of seller of that land has filed any objection or,,,

initiated the civil and criminal proceedings against the appellants. The appellants have acquired the land without putting any pressure. The land was,,,

purchased much higher price. The said land acquisition policy for VANPIC was first considered by GoAP on 29.06.2008 at a meeting chaired by then,,,

Chief Minister of Andhra Pradesh. Acquisition of a total of 28,000 acres of land was initially envisaged for the VANPIC project. It is also a matter of",,,

fact that prior to MOU and agreement, Government of Andhra Pradesh earlier pointed out several times had made many efforts to venture various",,,

projects of similar nature but it was not materialised. It is wholly the choice of Government to implement or not. In the light of above, it is clarified that",,,

this Tribunal is not inclined to pass any order for enforcement of MOU and agreement.,,,

These are only prima facie opinion of this Tribunal, subject to final outcome of the charge-sheet filed by the CBI before the Special Court or in the",,,

quashing proceedings, if pending in any Court.",,,

Now coming to the issue with regard to Provisional Attachment Order (PAO) No. 01/2014 dated 04.03.2014 and confirmation thereto by the,,,

impugned order.,,,

The attachments effected in O.C. 276 of 2014 totalling to Rs. 863.33 Crs. which was confirmed by the impugned order. The details of attachment,,,

of properties are given as under:-,,,

a) Mr. Y. S. Jagan Mohan Reddy & Group â€" Rs. 538.31 Crs,,,

i) Rs. 68.31 Crs - Mr. Y.S. Jagan Mohan Reddy (Shares in Sandur Power for Rs. 54.94 Crs and immovable properties for Rs. 13.35 Crs),,,

ii) Rs. 450.00 Crs - M/s. Jagati Publications Ltd. (FDs worth 4.14 Crs; Shares in Indira Television for 172.46 Crs and Plant and Machinery for Rs.,,,

273.39 Crs - @ Pg. 5 of Impugned Order),,,

iii) Rs. 20.00 Crs - M/s. Carmel Asia Holdings Pvt. Ltd. (Shares in Jagati Publications),,,

b) Mr. Nimmagadda Prasad & Group/ Investors - Rs. 325.02 Crs.,,,

i)Rs. 37.83 Crs - Mr. Nimmagadda Prasad (Immovable property worth Rs. 1.7 Crs, Shares in Sandur Power for Rs. 35 Crs and in G2 Trade Centre",,,

for 1.13 Crs - @ Pg. 7 of Impugned Order),,,

ii) Rs. 97.82 Crs - M/s. Alpha Avenues Pvt. Ltd. (Shares in Jagati Publication),,,

iii) Rs. 35.90 Crs -M/s. Alpha Villas Pvt. Ltd. (Shares in Jagati Publication),,,

iv) Rs. 45.85 Crs - M/s. Gilchrist Investments Pvt. Ltd. (Shares in Jagati Publication for Rs 44.78 Crs and immovable properties for 1.07 Crs),,,

v) Rs. 49.98 Crs - M/s. G2 Corporate Services Ltd. (immovable property of 6 Crs, 43.08 Crs for shares of various companies and receivable loan of",,,

0.9 Crs),,,

vii) Rs. 7.00 Crs - M/s. Suguni Constructions Pvt. Ltd. (receivable loans),,,

vii) Rs. 23.23 Crs - M/s. VANPIC Ports Pvt. Ltd. (561.1996 Acs of Land in Prakasham Dist.),,,

viii) Rs. 27.72 Crs - M/s. VANPIC Projects Pvt. Ltd. (855.7130 Acrs of Land in Prakasham and Guntur Dist).,,,

If the main case of respondent against them is that on account of large scale benefit conferred upon Mr. Nimmagadda Prasad and VANPIC,M r.",,,

Nimmagadda Prasad, through his controlled companies, invested in various companies promoted by Y.S. Jagan Mohan Reddy which is bribe money as",,,

per respondent, in the following manner:",,,

Rs. 20 Crs - invested into Carmel Asia on 14.12.2006 and 03.01.2007 by Beta Avenue as equity participation and purchased Rs. 20 Crs worth shares,,,

in Carmel Asia.,,,

Rs. 35 Crs - Mr. Nimmagadda Prasad purchased shares of Sandur Power from YSJ for a value of Rs. 35 Crs on 17.01.2007 and 27.07.2007,,,

Rs. 450 Crs - Invested into Jagati Publications as equity participation by Alpha Avenues, Alpha Villas, Gilchirst Investment and Beta Avenues.",,,

Rs. 285.5 Crs - Worth of Shares of BCCL were purchased including Rs. 33 Crs paid to YSJ as secondary purchase by Mr. Nimmagadda Prasadand,,,

his group companies.,,,

(These were later sold to PARFICIM SAS, France for Rs. 560.45 Crs enjoying a profit of Rs. 274.95 Crs)",,,

Rs. 57 Crs - G2 and Suguni Constructions invested Rs. 50 Crs and Rs 7 Crs respectively as equity participation between Jan-May, 2008.",,,

Rs. 7 Crs - Donation to YSR Foundation by Mr. Nimmagadda Prasad.,,,

As per allegation made by the respondent, the total investment in various companies promoted by Y.S. Jagan Mohan Reddy was Rs.854.5 Crores",,,

by Mr. Nimmagadda Prasad. The rival submission on behalf of both parties would be discussed. Actually the issue of investment has arisen once the,,,

VANPIC project agreement was executed. The case of ED is that the investment is a bribe amount/quid pro quo in order to get the VANPIC project,",,,

on the other hand, the case of Y.S. Jagan Mohan Reddy and Mr. Nimmagadda Prasad is that it was a genuine investment between two private parties",,,

against the value of the shares allotted.,,,

The main allegations against Mr. Nimmagadda Prasad are that, he through his investment, invested moneys in the companies controlled by Shri Y.",,,

S. Jagan Mohan Reddy as a “bribeâ€/quid pro quo for allotment of the Vadarevu and Nizampatnam Ports and Industrial Corridor Project,,,

(hereinafter “Vanpic Projectâ€) and other benefits from the State Government of Andhra Pradesh. The allegation is that the investments made by,,,

Shri Nimmagadda Prasad were at a very high premium and more than the market valuation of the companies. Therefore, it was to be examined as to",,,

whether the said investment was genuine or it is bribe/quid pro quo.,,,

In the provisional attachment of the properties, paragraphs13.10 to 13.13 of the PAO are reproduced, as under:",,,

“13.10 Investigation under PMLA has revealed that M/s Classic Realty is another group company of Shri Jagan Mohan Reddy. Thus the,,,

proceeds of crime amounting to Rs. 57 crore lying in M/s Silicon Builders Pvt. Ltd. as shareholders money has been received back by the,,,

said two companies of Shri N. Prasad from M/s Classic Realty. Thus Rs. 57 crore now lying in possession of the said companies of Mr. N.,,,

Prasad is the proceeds of crime because, as a result of change in the shareholders and receipt of the amount back since March 2010, is the",,,

amount given under quid pro quo as illegal gratification. This amount of illegal gratification under quid-pro-quo is proceeds of crime in,,,

terms of Section 2(1)(u) and (zb) of PMLA, being the property derived indirectly by the companies of Shri. N. Prasad related as result of",,,

S.

No.","Name of the Company of Shri N.

Prasad","Amount invested in

M/s JPPL",

1.,M/s Alpha Avenues Pvt. Ltd.,Rs. 84.00 Crore,

2.,M/s Alpha Villas Pvt. Ltd.,Rs. 75.00 Crore,

3.,M/s Beta Avenues Pvt. Ltd.,Rs. 70.92 Crore,

4.,M/s Gilchrist Investments Pvt. Ltd.,Rs. 120.08 Crore,

,TOTAL,Rs. 350 Crore,

i. Sale of Sandur Power Shares to Mr. Nimmagadda Prasad by Mr. Y.S. Jagan Mohan Reddy:,,,

a) The allegation that Mr. Y.S. Jagan Mohan Reddy has received Rs. 35 Crs as quid pro quo for VANPIC Projects is false and based as the sale of,,,

Sandur Power shares to Mr. Nimmagadda Prasad was consummated a whole year before the conceptualization of VANPIC Project in January 2008.,,,

A brief list of dated evidencing the same is as follows:,,,

22.01.2007: Y. S. Jagan Mohan Reddy received Rs. 30 Crs by way of cheque No.686670 from Mr. Nimmagadda Prasad as sale consideration for,,,

21,42,869 shares of Sandur Power held by him.",,,

19.02.2007: Share Transfer Form in form No.7B authenticated by Assistant Registrar of Companies, Bangalore bearing stamp and date.",,,

22.02.2007: Mr. Y.S. Jagan Mohan Reddy had signed the said Share Transfer Form for a consideration of Rs. 30 Crs. The same is also attested.,,,

31.07.2007: Capital gains tax of Rs. 6.69 Crs paid by Mr. Y.S. Jagan Mohan Reddy on sale consideration of Rs. 30 Crs from Mr. Niammagadda,,,

Prasad.Shares of Sandur Power were split into 3 blocks and were transferred to Mr. Nimmagadda Prasad.,,,

b) The concept of VANPIC Project was conceived only in January, 2008 and hence, the question of payment of illegal gratification in January, 2007",,,

cannot sustain. The I.T. returns filed on 31.07.2007 evidences the genuine transaction of sale of shares.,,,

c) The sale of Sandur Power shares is a genuine transaction and is evidenced by the fact that Mr. Nimmagadda Prasad is an entrepreneur with a,,,

proven track record of being a successful serial investor (like in Matrix Labs and Maa Television) and only after mutual deliberations, Mr. Y.S. Jagan",,,

Mohan Reddy agreed to sell Sandur Power shares held by him to Mr. Nimmagadda Prasad in two trences for Rs. 35 Crs at Rs. 140 per Share.,,,

d) CBI has made no allegations against the establishment or functioning of Sandur Power after a full-fledged investigation.,,,

e) Sandur Power is a successful running company established in 1999 and taken over by Mr. Y.S. Jagan Mohan Reddy in the year 2001. Sandur,,,

Power acquired M/s. Classic Realty Pvt. Ltd. (Classic Realty), an industrial park in Bangalore from internal revenue generated by sale of power",,,

generated and sold to State Electricity Board of Karnataka (MESCOM) and by availing a bank loan of Rs. 117 Crs doubling the profitability of Sandur,,,

Power. The hydro plant owned by Sandur Power continues to have one of the best PLF in all of Karnataka.,,,

Apart from the above, the net worth of Sandur Power at the time of the above transaction was over Rs. 250 Crs and therefore the purchase of",,,

Sandur Power shares by Mr. Nimmagadda Prasad was a genuine transaction with commercial interest.,,,

Therefore, the allegation of respondent are not sustainable in view of facts as stated.",,,

With regard to sale of shares of M/s. Bharathi Cements Company Limited (BCCL to Mr. Nimmagadda Prasadâ€s group Company; Alpha Villas by,,,

Mr. Y.S. Jagan Mohan Reddy, the appellants have denied all the allegations on the following reasons:-",,,

a) Sale of shares of BCCL held by Mr. Y.S. Jagan Mohan Reddy to Mr. Nimmagadda Prasadâ€s group company, Alpha Villas is a genuine business",,,

transaction and after mutual deliberation, Mr. Y.S. Jagan Mohan Reddy agreed to sell the same at Rs. 1450 per share.",,,

b) BCCL is a profit making company and has been acquired by M/s. PARFICIM SAS, France for a total of Rs. 2711 Crs in April 2010.",,,

c) Mr. Nimmagadda Prasad and his group companies have invested about Rs.285.50 Crs in BCCL by purchasing shares at various prices and have,,,

made huge profits to the tune of Rs. 560.45 Crs after selling their shares to M/s. PARFICIM SAS, France for Rs. 671 per share.",,,

Therefore, it is evident that investments made by Mr Nimmagadda Prasad and his group companies into BCCL has earned profits of almost 96%",,,

would show that such investments were in business prudence with commercial interests.,,,

The allegations against M/s. Jagati Publications Ltd. (Appeal No. 670 of 2014) are that -,,,

i) M/s. Jagati Publications Ltd. is company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and has attracted payments as quid pro quo from,,,

Mr. Nimmagadda Prasad and his group companies, who have derived undue benefits from the then Government of Andhra Pradesh including",,,

VANPIC projects and large scale concessions from the Government, in guise of investments/ financial transactions by way of equity participation.",,,

ii) M/s. Jagati Publications Ltd.â€​s shares were inflated to Rs. 360 per share without any basis mainly to solicit bribes as investments.,,,

iii) Accordingly, Mr. Nimmagadda Prasadâ€​s group of companies (Alpha Avenues, Alpha Villas, Beta Avenues and Gilchrist Investments) had initially",,,

invested Rs. 100 Crs through equity participation in 2007.,,,

iv) Thereafter, another Rs. 350 Crs where invested by Mr. Nimmagadda Prasadâ€​s group of companies (Alpha Avenues, Alpha Villas, Beta Avenues",,,

and Gilchrist Investments) on 29.04.2009 from the Rs. 560.45 Crs Mr. Nimmagadda Prasadâ€s group of companies had realized from the sale of its,,,

shares held in BCCL to PARFICIM SAS, France.",,,

v) Therefore, the Respondent seeks to attach a total amount of Rs. 450 Crs as “Proceeds of Crimeâ€​ at the hands of M/s. Jagati Publications Ltd.",,,

Reply to monies received by M/s. Jagati Publications Ltd. (Jagati Publications - Appeal No. 670 of 2014),,,

a) Jagati Publications was incorporated on 14.11.2006 as private limited company and subsequently became a public limited company from,,,

12.01.2009.,,,

b) All the investments made in Jagati Publications are genuine business transactions by the investors and they hold all rights upon such investment,,,

being held in form of share.,,,

c) The valuation of Jagati Publications†shares were arrived after taking the entire enterprise valuation of Sakshi News Paper Project with “size,,,

and circulation†into effect. Sakshi regional newspaper was launched with a circulation of about 12 lakh copies with 23 printing centers,,,

simultaneously in States of Andhra Pradesh, Telangana, New Delhi, Karnataka, Tamil Nadu and Maharashtra.",,,

d) The valuation of Jagati Publications†shares is based on Discounted Cash Flow Method (DCF, which has been approved by the Reserve Bank of",,,

India under Foreign Exchange Management Act Notification number FEMA 205/2010 issued on 07.04.2010) which is a futuristic valuation technique,,,

for valuing a company even before the commencement of its operations.,,,

e) It is pertinent to note that a total of 60 investors (including Mr. Nimagadda Prasad and his group companies) had purchased Appellantâ€s shares at,,,

Rs. 360 per share with a premium of Rs. 350 per share. Therefore, singling out one certain business transaction/ investment only to accuse the same",,,

as quid pro quo without any basis would be arbitrary and illegal.,,,

f) Further, the various investors have contributed for the monies used by Jagati Publications to acquire shares of Indira Television which are now",,,

attached by the Respondent. Seeking to attach properties in a roving fashion would not only effect the functioning of Jagati Publications but would also,,,

be in violation of other investorsâ€​ rights.,,,

g) The attachments at the hands of Jagati Publications are wholly unnecessary as the Orders of the Honâ€ble High Court at Hyderabad,,,

dated 23.05.2012 made in CrLP No. 4523 of 2012 restrain the alienation of any assets of the company while taking into account that,,,

Jagati Publications is a media house employing numerous persons.,,,

The main allegations against M/s. Carmel Asia Holdings Ltd. (Appeal No. 671 of 2014) are that -,,,

i) M/s. Carmel Asia Holdings Ltd. is company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and has attracted payments of Rs. 20 Crs as,,,

quid pro quo from Mr.Nimmagadda Prasadâ€s group of company; M/s. Beta Avenues Pvt. Ltd. through equity participation on,,,

30.12.2006and31.01.2007.,,,

ii) Therefore, the Respondent seeks to attach a total amount of Rs. 20 Crs as “Proceeds of Crimeâ€​ at the hands of the Appellant.",,,

Replyrelating to monies received by M/s. Carmel Asia Holdings Pvt. Ltd. (Carmel Asia -Appeal No. 671 of 2014) :,,,

• Carmel Asia is an investment company incorporated on 30.11.2005.,,,

Carmel Asia had allotted its shares to Mr. Nimmagadda Prasadâ€s group company M/s. Beta Avenues Pvt. Ltd at Rs. 262 per share for a total,,,

amount of Rs. 5 Crs on 30.12.2006 and Rs. 15 Crs on 31.01.2007.,,,

• It is Carmel Asiaâ€​a prerogative to decide on having a premium of Rs. 252 per share based on the prospect and projections of the company.,,,

• The concept of VANPIC Project was conceived only in January, 2008 and hence, the question of payment of illegal gratification in December",,,

2006 and January, 2007 cannot sustain.",,,

• The sale of Carmel Asiaâ€s shares is a genuine transaction and is evidenced by the fact that Mr. Nimmagadda Prasad is an entrepreneur with a,,,

proven track record of being a successful serial investor (like in Matrix Labs and Maa Television) and only after mutual deliberations, had agreed to",,,

purchase Carmel Asiaâ€​s shares.,,,

• Despite attaching the properties of Carmel Asiaâ€s shares in Jagati Publications worth Rs. 20 Crs in OC 276 of 2014, the",,,

respondents seek to make further attachments of shares worth face value of Rs. 15 Crs (and recognised market value of much higher),,,

of BCCL held by M/s. Silicon Builders Pvt. Ltd. and Rs. 51.20 Crs of dividends thereon in OC 618 of 2016 (BCCL Attachment) on the,,,

contention that M/s. Silicon Builders Pvt. Ltd. received monies from Carmel Asia and had used the same amounts to purchase BCCL,,,

shares.,,,

Before going to the merit of the case with regard to investment, let this Tribunal may deal with the legal issues involved as argued by the parties.",,,

Section 5 of PMLA, 2002 reads as under:-",,,

“5. Attachment of property involved in money Laundering.-,,,

(1) Where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purposes of this section,",,,

has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-",,,

(a) any person is in possession of any proceeds of crime;,,,

and,,,

(b) such 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 of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such",,,

property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed:",,,

Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a",,,

Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to",,,

investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case",,,

may be, or a similar report or complaint has been made or filed under the corresponding law of any other country:",,,

Provided further that, notwithstanding anything contained in first proviso, any property of any person may be attached under this section if",,,

the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to,,,

believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in",,,

money laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding",,,

under this Act:,,,

[Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under",,,

this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation",,,

of such stay order shall be counted],,,

(2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1),",,,

forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a",,,

sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period",,,

as may be prescribed.,,,

(3) Every order of attachment made under subsection (1) shall cease to have effect after the expiry of the period specified in that sub-section,,,

or on the date of an order made under sub-section (3) of section 8, whichever is earlier.",,,

(4) Nothing in this section shall prevent the “person interested,†in the enjoyment of the immovable property attached under sub-section",,,

(1) from such enjoyment.,,,

Explanation.- For the purposes of this sub-section, “person interestedâ€, in relation to any immovable property, includes all persons",,,

claiming or entitled to claim any interest in the property.,,,

(5) The Director or any other officer who provisionally attaches any property under sub-section (1), shall, within a period of thirty days from",,,

such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority.",,,

Section 5 of the PMLA mandates that the concerned authority, before passing the Provisional Attachment Order, has reasons to believe and the",,,

reasons for such belief to be recorded in writing, i.e. “ (i) any person is in possession of proceed of crime and (ii) such proceed of the crime are",,,

likely to be concealed, transferred or dealt with in any manner which may result in frustrating the proceedings…..â€​",,,

Section 5(1) imposes a stringent duty upon the officer concerned that, before passing the provisional attachment order and depriving a person of",,,

his property, which is a constitutional right envisaged under Article 300-A of the Constitution of India, cogent and coherent reasons are required to be",,,

given and those reasons are to be recorded in writing.,,,

Therefore, the language of Sec. 5(1) PMLA is clear that before passing the Provisional Attachment Order, the authority has to fulfill the twin",,,

conditions as mentioned therein. The words mentioned after clause (a) and (b) “……he may, by order in writing provisionally attach such",,,

property….†is very essential which the Legislature put the condition that, before passing the attachment order, the conditions mentioned in (a) and",,,

(b) has to be fulfilled and if the provisional attachment order was passed without prior satisfaction as per the requirement of Sec. 5(1) PMLA. On,,,

behalf of appellant, it was argued that the respondent passed the provisional attachment order without following the mandate of Sec. 5(1).",,,

In the case of C.B. Gautam vs. Union of India (1993(1) SCC 78),a Constitution Bench of the Hon'ble Supreme Court of India held that the",,,

reasons to be recorded in writing shall not only be incorporated in the order but also shall be communicated to the affected parties.,,,

Therelevant extract from the judgement is as under:,,,

“Sec. 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purchase of the property for",,,

reasons to be recorded in writingâ€. Sec. 269UD(2) casts an obligation on the authority that it ""shall cause a copy of its order under sub-s.",,,

(1) in respect of any immovable property to be served on the transferor"". It is, therefore, inconceivable that the order which is required to",,,

be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or,,,

is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an,,,

incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party.,,,

Reasons for the order must be communicated to the affected party.â€​,,,

This decision has been followed in various judgments by various Courts, including the Hon'ble Supreme Court of India.",,,

In Kranti Associates v. Masood Ahmed Khan (2010) 9 SCC 496, the legal position was summarized as under:",,,

a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone",,,

prejudicially.,,,

b. A quasi-judicial authority must record reasons in support of its conclusions.,,,

c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to,,,

be done as well.,,,

d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even,,,

administrative power.,,,

e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous,,,

considerations.,,,

f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by,,,

judicial, quasi-judicial and even by administrative bodies.",,,

g. Reasons facilitate the process of judicial review by superior Courts.,,,

h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions,,,

based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice. i.,,,

Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions,,,

serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important,,,

for sustaining the litigants' faith in the justice delivery system.,,,

j. Insistence on reason is a requirement for both judicial accountability and transparency.,,,

k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether,,,

the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.,,,

l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated",,,

with a valid decision making process.,,,

m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not,,,

only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in,,,

Defence of Judicial Candor (1987) 100 Harvard Law Review 731-737).,,,

n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now",,,

virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and",,,

Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights",,,

which requires, ""adequate and intelligent reasons must be given for judicial decisions"".",,,

o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law,",,,

requirement of giving reasons for the decision is of the essence and is virtually a part of ""Due Process"".",,,

b) In Income Tax Officer v. Lakhmani Mewaldas 1976 (3) SCR 956, the Supreme Court held that there should be a live link or close nexusâ€",,,

between the material before the ITO and the formation of his belief that income had escaped assessment. More recently, in Aslam Mohd Merchant v.",,,

Competent Authority (2008) 14 SCC 186, the entire legal position has been explained elaborately by the Supreme Court as under:",,,

It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperative before",,,

a show cause notice is issued. Section 68-H of the Act provides for two statutory requirements on the part of the authority viz: (i) he has to,,,

form an opinion in regard to his `reason to believe'; and (ii) he must record reasons therefor. Both the statutory elements, namely, `reason",,,

to believe' and `recording of reasons' must be premised on the materials produced before him. Such materials must have been gathered,,,

during the investigation carried out in terms of Section 68-E or otherwise. Indisputably therefore, he must have some materials before him.",,,

If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show cause notice on his own ipse dixit.",,,

A roving enquiry is not contemplated under the said Act as properties sought to be forfeited must have a direct nexus with the properties,,,

illegally acquired.,,,

It is now a trite law that whenever a statute provides for `reason to believe', either the reasons should appear on the face of the notice",,,

or they must be available on the materials which had been placed before him. We have noticed hereinbefore that when the authority was,,,

called upon to disclose the reasons, it was stated that all the reasons were contained in the show cause notices themselves. They, however,",,,

in our opinion, do not contain any reason so as to satisfy the requirements of sub-section (1) of Section 68H of the Act.",,,

c) In Joti Parshad Vs. State of Haryana [1993 Supp (2) SCC 497], the Honâ€ble Supreme Court observed that “suspicion†and “reason to",,,

believe†are not the same thing. “Reason to believe†is a higher level of state of mind and there must exist reason to believe. The following,,,

observations are relevant in this regard-,,,

“5. …We are now concerned with the expressions “knowledge†and “reason to believeâ€. “Knowledge†is an awareness on,,,

the part of the person concerned indicating his state of mind. “Reason to believe†is another facet of the state of mind. “Reason to,,,

believe†is not the same thing as “suspicion†or “doubt†and mere seeing also cannot be equated to believing. “Reason to,,,

believe†is a higher level of state of mind. Likewise, “knowledge†will be slightly on a higher plane than “reason to believeâ€. A",,,

person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has,,,

sufficient cause to believe the same. Section 26 IPC explains the meaning of the words “reason to believeâ€​ thus:,,,

Reason to believe â€" A person is said to have “reason to believe†a thing, if he has sufficient cause to believe that thing and not",,,

otherwise.â€​,,,

The Original Complaint is to be derived from what is set out in the Provisional Attachment Order and must only state “the facts of such,,,

attachmentâ€​, as prescribed by Section 5(5) of the PMLA.",,,

The purported basis for the instant provisional attachment is set out in Paragraph 35 of the Complaint, which is set out hereunder for ready",,,

reference;,,,

“35. It is humbly submitted that the investigation in this case is still in progress. At present there is adequate material on record as,,,

aforesaid, to draw a reasonable belief that the properties provisionally attached and as mentioned in para 2 of the complaint (to the tune of",,,

Rs. 863.71 crore as mentioned in the provisional attachment order no. 01/2014 dated 04.03.2014) are the proceeds of crime in terms of,,,

section 2 (1)(u) of PMLA and is liable for confirmation.â€​,,,

[Emphasis supplied],,,

In Radha Mohan Lakhotia v Deputy Director PMLA, which is relied upon by the Respondent No.1, the Honâ€ble Bombay High Court therein",,,

reiterated the mandatory nature of S. 5(1) (c) of PMLA, 2002, as under:",,,

“11. …Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the,,,

purposes of the said section to resort to action of ""attachment of property"" if he has reason to believe and the reason of such belief has",,,

been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which",,,

property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such",,,

property until the criminal action for the scheduled offence is taken to its logical end against the accused named therein. The proceeds of,,,

crime means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible",,,

and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located - which has been derived or",,,

obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence or the value of such property. The proceeds of",,,

crime may be or can be in possession of ""any person"". Be it a person charged of having committed a scheduled offence ""or otherwise"". In",,,

the case of any other person in possession of crime, if it is also found that he has directly or indirectly attempted to indulge or knowingly",,,

assisted or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as,,,

untainted property, he shall be liable to be prosecuted for offence under section 3 read with section 4 of the Act of 2002 - in addition to",,,

suffering the action of attachment of the proceeds of crime in his possession. Attachment of proceeds of crime in possession of any person,,,

(other than the person charged of having committed a scheduled offence) will, therefore, be legitimate within the sweep of Section 5 of the",,,

Act of 2002. In our opinion, the thurst of section 5 is to attach every property involved in money-laundering irrespective of whether it is in",,,

possession of the person charged of having committed a scheduled offence or any other person- provided however it must be shown to be,,,

proceeds of crime and further, that 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 of such proceeds of crime under the Act.â€​,,,

[Emphasis supplied],,,

From the Provisional Attachment Order in the present appeals, it is evident that the Respondent No.1, i.e. the Joint Director, Directorate of",,,

Enforcement, has not recorded valid “reason to believeâ€as required. The mandatory pre-requisite for provisional attachment required by Section",,,

5(1) is missing in the present case. It is submitted on behalf of appellant that in the above thereof the Adjudicating Authority ought not to have even,,,

issued notice under S. 8(1) of the Act, leave alone confirm the Provisional Attachment Order. The relevant para-21 of Provisional Attachment Order",,,

is reproduced hereunder:,,,

“21. NOW THEREFORE, on the basis of material in my possession as per Annexure - R and in exercise of the powers conferred upon me",,,

under section 5(1) of “the PMLA, 2002†(15 of 2003), the authority vested in me by the Authorization dated 07.02.2007 and its",,,

addendum dated 12.10.2011 issued by the Director of Enforcement in exercise of his powers under sub-section (1) of section 5 of “the,,,

PMLA, 2002â€(15 of 2003), I hereby order for provisional attachment of the properties as per Annexure â€" “A†and further order",,,

that the same shall not be transferred, disposed, parted with or otherwise dealt with in any manner, whatsoever, by the holders having",,,

ownership and/or possession until and unless specifically permitted to do so by the undersigned.â€​viii,,,

[Emphasis supplied],,,

The Provisional Attachment Order shows that mere the language of section has been mentioned in the “reason to believe†after recording the,,,

facts and statement under section 50 of the Act, though the officer concerned has to be satisfied as per requirements of Sections 5(1)(a) of the",,,

PMLA by referring the details of investigation about the attachment of properties and proceed of crime for each head, a merely formality does not",,,

amount to valid reason to belief.,,,

Section 8 of the PMLA provides for procedure for adjudication by the Adjudicating Authority. The relevant extract of Section 8 of the PMLA is,,,

set out below:-,,,

“8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section",,,

17 or under sub-section (10) of Section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence",,,

under Section 3 or is in possession of proceeds of crime, it may serve a notice of not less than thirty days on such person calling upon him to",,,

indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-",,,

section (1) of Section 5, or, seized or frozen under Section 17 or Section 18, the evidence on which he relies and other relevant information",,,

and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-",,,

laundering and confiscated by the Central Government:,,,

Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of",,,

such notice shall also be served upon such other person:,,,

Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such",,,

property.,,,

(2) The Adjudicating Authority shall, after-",,,

(a) considering the reply, if any, to the notice issued under sub-section (1);",,,

(b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and,,,

(c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties",,,

referred to in the notice issued under sub-section (1) are involved in money-laundering:,,,

Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given",,,

an opportunity of being heard to prove that the property is not involved in money laundering.,,,

(3) Where the Adjudicating Authority decides under subsection (2) that any property is involved in money-laundering, he shall, by an order",,,

in writing, confirm the attachment of the property made under sub-section (1) of Section 5 or retention of property or record seized or frozen",,,

under Section 17 or Section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or",,,

frozen property or record shall-,,,

(a) continue during investigation for a period not exceeding ninety days or the pendency of the proceedings relating to any offence under,,,

this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India,",,,

as the case may be; and,,,

(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 or Section 58-B or sub-section,,,

(2-A) of section 60 by the Special Court.,,,

(4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the",,,

Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under Section 5 or,,,

frozen under sub-section (lA) of Section 17, in such manner as may be prescribed:",,,

Provided that if it is not practicable to take possession of a property frozen under sub-section (lA) of section 17, the order of confiscation",,,

shall have the same effect as if the property had been taken possession of.,,,

(5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been",,,

committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of",,,

money laundering shall stand confiscated to the Central Government.,,,

(6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the",,,

property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it.",,,

(7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed,,,

offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the",,,

Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of,,,

Section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offences of money",,,

laundering after having regard to the material before it.,,,

(8) where a property stands confiscated to the Central Government under sub-section 5, the Special Court, in such manner as may be",,,

prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate",,,

interest in the property, who may have suffered a quantifiable loss as a result of the offence of money-laundering:",,,

Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered,,,

the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:,,,

Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such",,,

properties during the trial of the case in such manner as may be prescribed.,,,

In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or",,,

an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe",,,

that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to serve a notice of not less",,,

than thirty days on such person calling upon him to indicate the sources of his income, earning or assets or the means with which he has acquired the",,,

property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA.,,,

The mandate of Section 8(2) (c) cast a stringent duty upon the Respondent No. 1 which is as under ,“…taking into account all the relevant",,,

materials placed on record before him, by an order record a finding whether all or any of the properties referred to in the notice under sub section 1",,,

are involved in money laundering…â€​.,,,

After passing the provisional attachment orders ,all relevant papers are sent to the Adjudicating Authority for further action within the meaning of",,,

Section 8(1) of the Act. The said Section 8(1) stipulates that before issuing notice the duty is also cast upon the Authority to take the an independent,,,

view/ reason to believe that the party has committed an offense under Section 3 or is in possession of proceeds of crime or not. If the answer is,,,

positive, then notice may be issued. The Adjudicating Authority chooses not to record the reasons to believe in writing, then as per the language of the",,,

provision, at least reasons are to be indicated/mentioned in the notice itself so that party should know the allegations.",,,

The said satisfaction is mandated in order to reassess the entire matter by the independent Authority due to seriousness of the action whereby the,,,

possession of the properties is sought by ED before the final decision of complaint under schedule offense and complaint under this Act, despite it is",,,

guaranteed under article 300 A of constitution of India.,,,

In Aslam Mohammed Merchant vs. Competent Authority, where the Honâ€​ble Supreme Court of India held as under:",,,

“30. Before, however, the actual order of forfeiture of such illegally acquired property is passed, issuance of a notice to show cause is",,,

essential so as to fulfil the requirements of natural justice. Such a notice is to be issued by the authority having regard to:,,,

(i) the value of the property held by the person concerned,",,,

(ii) his known source of income, earning or assets,",,,

(iii) any other information or material made available as a result of a report from any officer making an investigation under Section 68-E of,,,

the Act or otherwise.,,,

When the aforementioned conditions are satisfied, the competent authority would be entitled to issue a show-cause notice, if he has reason to",,,

believe, wherefor reasons are to be recorded in writing that the properties are illegally acquired properties.",,,

Once the notice to show cause is found to be satisfying the statutory requirements which are condition precedent therefor, a valid",,,

proceeding can be said to have been initiated for forfeiture of the property. Only in a case where a valid proceeding has been initiated, the",,,

burden of proof that any property specified in the notice is not illegally acquired property, would be on the “personâ€​ affected.",,,

…,,,

Both the statutory elements, namely, “reason to believe†and “recording of reasons†must be premised on the materials",,,

produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise.,,,

Indisputably, therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a",,,

proceeding. He cannot issue a show-cause notice on his own ipse dixit. A roving enquiry is not contemplated under the said Act as,,,

properties sought to be forfeited must have a direct nexus with the properties illegally acquired.,,,

…,,,

It is now a trite law that whenever a statute provides for “reason to believeâ€, either the reasons should appear on the face of the",,,

notice or they must be available on the materials which had been placed before him.,,,

We have noticed hereinbefore that when the authority was called upon to disclose the reasons, it was stated that all the reasons were",,,

contained in the show-cause notices themselves. They, however, in our opinion, do not contain any reason so as to satisfy the requirements",,,

of sub-section (1) of Section 68-H of the Act.,,,

…,,,

Non-application of mind,,,

Applying these tests, it is evident that the statutory requirements have not been fulfilled in the present case.",,,

Non-application of mind on the part of the competent officer would also be evident from the fact that a property named “Rose Villaâ€,,,

which was the subject-matter of the decision of this Court in Fatima Amin [(2003) 7 SCC 436 : 2003 SCC (Cri) 1661] was also included,,,

herein. Once the show-cause notice is found to be illegal, the same would vitiate all subsequent proceedings.",,,

Recording of reasons,,,

Submission of Mr Singh that the appellants have not been able to discharge the burden of proof which was on them from the impugned,,,

orders, it would appear that they have utterly failed to prove their own independent income; they being close relatives of the detenu, as in",,,

terms of the statutory requirements, it was for them to show that they had sufficient income from those properties.",,,

Had the show-cause notice been valid, Mr B.B. Singh might have been right, but if the proceedings themselves were not initiated validly,",,,

the competent authority did not derive any jurisdiction to enter into the merit of the matter.,,,

The legality and/or validity of the notice had been questioned at several stages of the proceedings. Despite their asking, no reason was",,,

disclosed by the authority to the appellants. They had asked for additional reasons, if any, which were not reflected in the show-cause",,,

notices. None was disclosed.,,,

It is also relevant to notice that the High Court opined that there had been a proper application of mind on the part of the competent,,,

authority and the Appellate Tribunal as they had released some items of properties. Application of mind on the part of the competent,,,

authority and the Appellate Tribunal at the subsequent stage was not in question; what was in question was non-application of mind on the,,,

part of the authority prior to issuance of the notice.,,,

Conclusion,,,

We are not unmindful of the purport and object of the Act. Dealing in narcotics is a social evil that must be curtailed or prohibited at,,,

any cost. Chapter V-A seeks to achieve a salutary purpose. But, it must also be borne in mind that right to hold property, although no longer",,,

a fundamental right, is still a constitutional right. It is a human right.",,,

The provisions of the Act must be interpreted in a manner so that its constitutionality is upheld. The validity of the provisions might have,,,

received constitutional protection, but when stringent laws become applicable as a result whereof some persons are to be deprived of",,,

his/her right in a property, scrupulous compliance with the statutory requirements is imperative.â€​",,,

[Emphasis supplied],,,

In the present case, it is submitted on behalf of appellants that the Provisional Attachment Order has been issued on 04.03.2014 in relation to an",,,

FIR registered on 17.08.2011 and a Final Report dated 13.08.2012 under S. 173(8) of the Cr.P.C., which indicates that there was absolutely no",,,

justifiable apprehension and/or basis for concluding that the alleged “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 of such proceedings of crimeâ€​.,,,

Being an independent agency, it is the duty of the authorised officer to go to each and every document/material before framing any opinion against",,,

the person concerned. The same is the object of the Act which is a Special Act where no different meaning can be given. It is evident that mandatory,,,

requirements of Section-5 and 8 have not been complied with. No copy of reason to believe were served to the appellants even upto the stage of,,,

hearing of appeals despite of specific objection.,,,

In the present set of appeals, it is a matter of fact that only Mr.Nimmagadda Prasad has been charged with committing a scheduled offence. The",,,

rest of the Appellants which are the group companies are not accused in the Charge-sheet. Therefore, in this regard, the Second Proviso of the Act",,,

becomes relevant. The second proviso of Section 5(1) states â€" “Provided further that, notwithstanding anything contained in clause (b), any",,,

property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by,,,

him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his",,,

possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is",,,

likely to frustrate any proceeding under this Act.â€​,,,

The cumulative effect of the above is that an attachment under S. 5 of PMLA would only be sustainable in law if recourse to such remedy was,,,

required to be taken in case of emergency situation, then only “immediately†action is required to be taken by the concerned officer and he must",,,

be assigned to reasons in writing.,,,

As per Rule 3 of “The Prevention of Money-Laundering (the manner of Forwarding a Copy of the Order of Provisional Attachment of,,,

Property along with the Material, and Copy of the Reasons along with the Material in Respect of Survey, to the Adjudicating Authority and Period of",,,

Retention) Rules, 2005â€, “The Director or the authorised officer, as the case may be, shall prepare an index of a copy of the order, and the",,,

material and sign each page of such index, order and the material and shall also write a letter while forwarding such index, order and the material to",,,

the Adjudicating Authority in a sealed envelopeâ€. However, the copy of the Provisional Attachment Order supplied to the Appellants does not",,,

contain the signatures of the Respondent No.1 as stipulated under Rule 3.,,,

The Adjudicating Authority did not notice the said fact or ignored the same to the effect that the Provisional Attachment Order suffered from,,,

serious infirmity including, inter alia, for failing to comply with the mandatory preconditions under Section 5 (1) (b) of the PMLA. Under the",,,

circumstances, the following observations in the Impugned Order are completely shocking:",,,

“But it is seen these case laws do not apply to the provisions of the PMLA. As per the provisions of Section 5 of the PMLA reasons are,,,

required to be recorded in writing by the Respondent No.1 but these are not required to be conveyed as it is to the defendants. It is further,,,

seen that while framing the PAO and O.C., these have been conveyed in the PAO and O.C. and that meets the ends of Justice in as much as",,,

defendants know what is case against them.â€​,,,

[Emphasis supplied],,,

The said observations are contrary to law laid down by the Honâ€ble Supreme Court of India wherein it was held that recording of reasons “is,,,

a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not,,,

communicated.â€​ [Emphasis supplied],,,

It is contented on behalf of appellants that the Provisional Attachment Order is based on allegations by the CBI in its Chargesheet dated,,,

13.08.2012 filed before the Principal Special Judge for CBI Cases, Hyderabad (being Chargesheet No. 09 in FIR No. RC.19(A) 2011-CBI-HYD).",,,

Even the Adjudicating Authority has accepted the allegations made in thechargesheet to be the gospel truth and there has been no valid independent,,,

and valid investigation and application of mind on the part of either Adjudicating Authority or the Respondent No.1.,,,

The Adjudicating Authority has ignored the fact that Trial Court in the CBI Proceedings has not even framed charges against any of the persons,,,

accused in the said Chargesheet dated 13.08.2012 and a prima facie opinion on the commission of a scheduled offence cannot be formed opinion, the",,,

concerned officer was duty bound while passing the Provisional Attachment Order to satisfy himself which is the mandatory requirement prescribed,,,

under S. 5(1)(b) of the Act. Secondly, the respondent no. 1 has enhanced the amount of proceed of crime other than the amount mentioned in the",,,

charge-sheet. For the said independent solid investigation is required which is missing and relevant materials thereof are not mentioned in the,,,

Provisional Attachment Order and in the impugned order.,,,

Section 5(1)(b) is not fully satisfied, as neither the material on record, nor the factual narration contained in the Provisional Attachment Order,",,,

provides a rationale as to why “such 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 of such proceedings of crime†under Ch. II of the PMLA. The said mandatory provision ought to,,,

have been examined as well as the material by the Adjudicating Authority before issuing notice under section 8(1) of the Act, but it has not happened.",,,

89 The Original Complaint No. 276/2014was filed by the Respondent No.1 under Section 5(5) of the PMLA after passing PAO alleging that,,,

“proceeds of crime†to the tune of Rs. 267.45 Cr. are in possession of the Appellants. It is evident from the PAO which indicates that the,,,

properties have not been attached as “proceeds of crime†but to secure the “value†thereof. Thus, it appears that even EDâ€s case was that",,,

the properties are not per se involved in money laundering but have been attached merely to secure the value of the alleged “proceeds of crimeâ€​.,,,

It is stated on behalf of the appellants that the material appended to the Provisional Attachment Order is insufficient as it does not contain a,,,

number of documents adverted to in the Respondent No.1 and the Provisional Attachment Order, on the basis of which the Respondent No.1 has",,,

purportedly formed an opinion that the Appellants are allegedly in possession of “proceeds of crimeâ€​.,,,

It is submitted that the main allegation of the CBI, which has now been relied upon by the Respondent No.1 without application of mind, except it",,,

was alleged of furtherance of a criminal conspiracy between the public servants and Shri Nimmagadda Prasadrelating to the Vanpic Project were not,,,

“incorporated in the cabinet memorandum†that has been placed before the Council of Ministers while obtaining approval for the Concession,,,

Agreement dated 11.07.2008. However, a copy of the said “cabinet memorandum†is not to be found amongst the material forwarded to the",,,

Adjudicating Authority,thereby, demonstrating that the aforesaid conclusion arrived at by the Respondent No.1 is without any independent application",,,

of mind and is solely based upon the allegations made by the CBI. Being an independent agency, it is the duty of the authorised officer to go to each",,,

and every document/material before framing any opinion against the person concerned. The same is the object of the Act which is a Special Act,,,

where no different meaning can be given.,,,

It is submitted that the calculation of “proceeds of crimeâ€, which forms the very basis of the provisional attachment, contains material",,,

discrepancies. Paragraph 26 of the Original Complaint at Page 87 calculated the proceeds of crime in the hands of “Shri N. Prasad & Companyâ€,,,

as amounting to Rs. 267.45 Cr. However, on careful calculation, it emerges that the amounts actually attached provisionally are valued collectively at",,,

Rs. 274,45,68,826. The difference, therefore, between the purported “proceeds of crime†and the quantum of property attached is approximately",,,

Rs. 7 Cr.,,,

The only explanation for this seems to be contained in the Provisional Attachment Order, where it is stated that, in addition to “proceeds of",,,

crime†amounting to Rs. 267.45 Cr., “the amount of Rs. 7 crore given to YSR Foundation is attachable from Shri N. Prasad.â€No such statement",,,

regarding the attachment of the donation has been made in the Complaint. Nowhere has the donation of Rs. 7 Cr. to the YSR Foundation been,,,

identified as a bribe and no aspersions have been cast against any activities of YSR Foundation, either by the CBI or the Respondent No.1 herein.",,,

Even if the said amount of Rs. 7 Cr. is bribe money, it must be attached in the hands of the person who currently possesses it and not in the hands of",,,

the Appellants. It is rightly alleged on behalf of appellantsthat these facts would show non-application of mind, therefore, the attachment of the sum of",,,

Rs. 7 Cr. ought not to be confirmed.,,,

The properties sought to be attached, valued by the Respondent No.1 at Rs.267.45Cr (actual attachment being equivalent to Rs. 274.45 Cr",,,

approx.) obtained from the sale of shares in Bharati Cement Corporation Ltd. And Silicon Builders Pvt. Ltd., Rs. 33.74 Cr.The same has admittedly",,,

been transferred to the Government of India by the Appellants by way of Advance Tax. An additional amount of Rs.21.69 Crores was paid to the,,,

Government of India towards the total liability of income tax of Rs.55.43 Crores on capital gains accrued from the said transactions. The same has not,,,

been accounted for by the Respondent No.1, who ought to have deducted the quantum of tax paid from the value of purported “proceeds of",,,

crimeâ€, because the said quantum of the purported “proceeds of crime†are no longer in possession of the Appellants and already vests with the",,,

Central Government.,,,

With regard to the question of tax, the Adjudicating Authority finds as under:",,,

“35. The issue has been raised by the defendants that the amount of income tax paid out of earning from the proceeds of crime should be,,,

reduced to arrive at net proceeds of crime for attachment purpose. In this context the law required attachment with reference to the,,,

proceeds of crime and this attachment is ultimately a confiscatory in nature after the decision of the Trial Court. Payment of income tax is,,,

not confiscatory in nature and apparently should not be reduced from the gross proceeds of crime. Such a interpretation will also have to be,,,

considered in view of facts that where ultimately trial court decides the money to be paid back to the victims in peculiar set of facts, victims",,,

will have to be paid 100% and not 70% of their claim on the ground that 30% has been paid as income tax to the Government. For both these,,,

reasons only Gross proceeds of crime available will have to be considered.â€​ix,,,

[Emphasis supplied],,,

The finding of the Adjudicating Authority was not correct as provisional attachment under Section 5 of the PMLA is “possession of proceeds,,,

of crimeâ€​.,,,

Therefore, the tax paid can never be said to be in possession of the Appellant and the same could be attached. The attachment as per the Respondent",,,

No.1 is the “refund of illegal gratification with some additions.†The tax paid cannotbe treated as an “addition†as the Appellants are not,,,

deriving any benefit to that extent. Therefore, attachment of an amount to that extent would be unnecessary as the same cannot be appropriated by",,,

the Central Government twice over.,,,

The term “proceeds of crime†is defined in Section 2(1)(u) as “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.†While property that is “indirectly†derived or,,,

obtained falls within this definition, the relationship between the properties identified as proceeds of crime and the scheduled offences in themselves",,,

cannot be tenuous as the provision itself shows that there must, necessarily, be a causal link, as such proceeds must arise as a “result of criminal",,,

activityrelatingtoa scheduled offence.†In short, the expressions “result†and “relating to†in this provision mandates the existence of a",,,

causal nexus.,,,

The main allegation is that the Government of Andhra Pradesh led by the then Chief Minister late Dr. Y. S. Rajasekhara Reddy extended undue,,,

favours to Mr.Nimmagadda Prasad, inter alia, in the form of allotment of VANPIC Project. This was, allegedly, a quid pro quo for investments made",,,

by Mr. Nimmagadda Prasad through his group companies to the tune of Rs.854.50 Crores in the companies controlled by the Y. S. Jagan Mohan,,,

Reddy (the son of Dr. Y.S. Rajashekhara Reddy), which allegedly is the bribe paid for award for allotment of the VANPIC Project. The issue of",,,

VANPIC has already been discussed in earlier part of my order.,,,

It is rightly submitted by the appellants that if the phrase “proceeds of crime†is characterized as has been done by the Respondent No.1 in,,,

this case, without reference to any causal nexus with the scheduled offences in question, it would lead to a situation where any revenues generated by",,,

persons accused of a scheduled offence would be attached, regardless of whether there is a causal link with criminal activities or not. Clearly, this",,,

would be contrary to the scheme and object of the PMLA. One is also failed to understand that on the one hand respondent no. 1 submits that it was a,,,

bribe amount and proceed of crime, the issuance of shares are just eyewash and waste of papers and on the other hand, when the shares are sold on",,,

higher price to the company who has not been charge-sheeted and its money is admittedly to be the clean money, then how two stands of the",,,

respondent no. 1 have any valid argument. Thus, in view of peculiar nature of the facts and circumstances in the present case, price facie, this",,,

Tribunal is of the view that the profit earned from the shares sold to the French Company cannot be considered as proceed of crime when it has come,,,

on record that original purchase of shares was a genuine transaction, otherwise why the French Company, who is a third party, would purchase the",,,

same very shares at the higher price who is admittedly not charged either by the CBI or ED.,,,

The main allegations made by the CBI against Mr. Nimmagadda Prasad, have been confirmed by the Respondent No.1 stating that Mr.",,,

Nimmagadda Prasad, through his group companies, paid illegal gratification to the tune of Rs.854.50 Crores to the companies controlled by Y. S.",,,

Jagan Mohan Reddy, which is a bribe paid for grant of several undue favours to Mr. Nimmagadda Prasad by the Government of Andhra Pradesh led",,,

by late Dr. Y. S. Rajasekhara Reddy, the then Chief Minister.Mr.Nimmagadda Prasad was allotted the VANPIC Project worth Rs.17,000 Crores",,,

under the guise of Government-to-Government Project by introducing Government of Ras-al-Khaimah into picture as a front. The Concession,,,

Agreement dated 11.07.2008 is in violation of the Memorandum of Understanding dated 11.03.2008 inter alia since the Government of Ras al,,,

Khaimah is not obligated to hold 51% equity in the SPVs of the VANPIC Project under the Concession Agreement and a nominee of the Government,,,

of Andhra Pradesh. Mr. Nimmagadda Prasad deceived the Council of Ministers while obtaining approval to the Concession Agreement dated,,,

11.07.2008. There are deviations between the Cabinet Approval and the Concession Agreement which are detrimental to the interests of Government,,,

of Andhra Pradesh. There are crucial deviations between the provisions of the Concession Agreement dated 11.07.2008 entered into and the,,,

provisions of the concession agreements entered into by the Government of Andhra Pradesh in respect of ports at Krishnapatnam and Gangavaram,,,

ports, and that such deviations are advantageous to the concessionaire while being detrimental to the interest of GoAP. The lands for the development",,,

of Industrial Corridor of the VANPIC Project were illegally acquired by the Vanpic Projects Pvt. Ltd., a private company allegedly exclusively owned",,,

by the Mr. Nimmagadda Prasad. Mr. Nimmagadda Prasad misappropriated and diverted monies invested by the Government of Ras al Khaimah in,,,

the Vanpic Project. Mr. Nimmagadda Prasad/Matrix Laboratories Ltd. were granted exemptions under the Urban Land Ceiling Act.,,,

It is submitted on behalf of appellants that the said allegations are contrary to the records. It is submitted that there is no “reason to believeâ€,,,

that the Appellants are in possession of “proceeds of crimesâ€​ or that the properties attached are “proceeds of crimeâ€​.,,,

It has come on record that after disinvestment in Matrix Labs, Mr. Nimmagadda Prasadidentified five sectors with excellent growth prospects in",,,

the long run for the purpose of Investments, viz.",,,

a) Core infrastructure,,,

b) Power,,,

c) Healthcare,,,

d) Entertainment & Media,,,

e) Hospitality,,,

His investments were made taking into consideration the following factors which would ensure returns on his investments;,,,

a) Identifying the investment opportunity (company),,,

b) Evaluating the project,,,

c) Company strength,,,

d) Promotersâ€​ passion for the project,,,

e) Promotersâ€​ competency,,,

f) Social impact of the project,,,

g) Mode of investment â€" one time / creeping,,,

h) Gestation period,,,

i) Exit option,,,

Sl.

No.",Investment (Company or business entity),Sector,

1.,Care Hospitals,Healthcare,

2.,Asian Institute of Gastroenterology,Healthcare,

3.,"Mylan Inc.,",Healthcare,

4.,Relysis Medical Devices,Healthcare,

5.,Metronomix,Healthcare,

6.,Indigen,Healthcare,

7.,Pacific Healthcare,Healthcare,

8.,MAA Television,"Media &

Entertainment",

9.,Annapurna Studios,"Media &

Entertainment",

10.,Jagati Publications (Sakshi),"Media &

Entertainment",

11.,Object One,"Media &

Entertainment",

12.,Bharati Cements,Core Infrastructure,

13.,Indu Projects,Core Infrastructure,

14.,VANPIC Project,Core Infrastructure,

Sl.

No.",Company Name,"Share Price (Rs.

Ps.)","Market

Capitalization

in Rs. Crores

1,TCS,1864.20,"699,520

2,Infosys,726.55,"317,404

3,Wipro,330.95,"149,757

4,HCL Tech,947.05,"131,889

5,Tech Mahindra,707.30,"69,404

6,Oracle Financial,3670.00,"31,472

7,L&T Infotech,1733.80,"30,067

8,Mphasis,873.00,"16,246

9,Mindtree,858.00,"14,090

10,Hexaware Tech,319.70,"9,497

11,NIIT Tech,1185.00,"7,311

Further, recent IRS data shows that Sakshi is the only newspaper that has been growing quarter-on-quarter except the last year, when circulation",,,

marginally fell in print media across the board in the country Sakshi TV attained No. 4 position in 2011 and No. 2nd or 3rd position in 2012. Mr.,,,

Nimmagadda Prasad and his Companies have so far invested about Rs. 505 Crores in Sakshi Print and Broadcast, out of which Rs. 125 Crores was",,,

invested prior to Mr. Nimmagadda Prasadâ€s group company (Matrix Enport Holdings Private Limited) joined the VANPIC Project as a local,,,

partner. As much as Rs. 350 Crores was invested post the death of Mr. Y. S. Rajashekhara Reddy, which is inconsistent with the allegation that the",,,

moneys were invested by him as a quid pro quo for favours doled out by Mr. Y.S. Rajashekhara Reddy. It is relevant to mention that as on date Mr.,,,

Nimmagadda Prasadâ€s net investment in the companies controlled by Mr. Y. S. Jaganmohan Reddy is Rs.230 Cr. after taking into account sale,,,

proceeds from sale of shares in Raghuram Cements and Silicon Builders Pvt. Ltd.,,,

It is the case of the appellants that the Appellants investment in Companies controlled by Y. S. Jagan Mohan Reddy were for purely for,,,

commercial reasons and not for other reasons, as alleged by the CBI and the Respondent No.1.In any event, the aforesaid facts demonstrate that the",,,

investments had no nexus whatsoever with the alleged “undue favoursâ€​ viz., the VANPIC project.",,,

The essential facet of natural justice is “procedural fairness†and fair opportunity of hearing, which includes the right to know the opposing",,,

case. It would, therefore, be relevant to refer to the observations of Lord Denning in this regard:",,,

“If the right to be heard is to be real right which is worth anything, it must carry with it a right in the accused man to know the case",,,

which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he,,,

must be given a fair opportunity to correct or contradict them.â€​xiii,,,

[Emphasis supplied],,,

It is the case of the appellants that the Adjudicating Authorityhad declined to direct the Respondent No.1 to serve advance copies of the,,,

rejoinders to the Appellants. Under the circumstances, the counsel for the Appellants prayed that the request for a copy of the rejoinder be recorded",,,

and be rejected in writing in the daily order, to seek appropriate remedy against the same. This request, too, was declined orally. In view of the above,",,,

the counsel for the Appellants addressed a letter dated 09.07.2014, scanned copy of which was also sent via email dated 10.07.2014, to the counsel",,,

for the Respondent No.1 requesting for advance copies of the rejoinders.,,,

The rejoinders were filed by the Respondent No.1 without furnishing a copy to the Appellants.Therefore, the counsel for the Appellants was",,,

constrained to file another application (drawn in court during the hearing and filed on 31.07.2014) seeking copies of the rejoinders, and the unusual",,,

method and illegal procedure adopted by the Authority were recorded in detail in the said application.,,,

It is submitted on behalf of the appellants that non-supply of copies of the rejoinders vitiates the entire proceedings and the Impugned Order ought,,,

to be set aside on this ground alone, particularly in view of the fact the contents of the rejoinders have been extensively relied on by the Adjudicating",,,

Authority in the Impugned Order. Certain findings of the Adjudicating Authority, example of which is reproduced below, are based on the contentions",,,

made by the Respondent No.1 in its rejoinder and the Appellants were completely precluded from answering the same.,,,

“Both RAK and Sh. N. Prasad group have power to veto any proposal. Infact such power should have been available either with the,,,

Government of Andhra Pradesh or with the Government of RAK only. This shows total surrender of public interest to private parties. After,,,

death of Sh. Y.S. Reddy, then Chief Minister, the new Government of Andhra Pradesh observed serious deviations and ordered to be matter",,,

looked and reconsidered after consultation with various departments. Both the complainant and defendants have drawn attention to the,,,

letter dated 19.11.2011 of Principle (sic) Secretary of I &I Department, Government of Andhra Pradesh written to the Advocate General of",,,

Andhra Pradesh seeking comments on various aspect of deviations. This letter appears at page 2073 of volume VII of reply submitted by,,,

defendant 3, 5 to 9. Complainant has covered that aspect at point no. 6 (1 to 6) in his rejoinder to submissions of defendant no. 3, 5 to",,,

9.Howeverdefendant has stated that matter is pending at level of Advocate General of Andhra Pradesh who is yet to respond.â€​xiv,,,

[Emphasis supplied],,,

It is submitted that the Appellants were never afforded an opportunity to respond to the allegations in the Rejoinder that constitute an entirely new,,,

case which is entirely impermissible. Therefore, the above finding is crucial finding by the Authority which forms the basis of confirmation of the",,,

Provisional Attachment Order was in violation of law.,,,

The Adjudicating Authority has dealt with the objection of the Appellants for non-provision of the copy of the Rejoinder in the Impugned Order as,,,

under:,,,

“ …As per practice after filing the complaint by the complainant one opportunity is allowed to the defendants to file their detailed,,,

written submissions with evidence and on such written submissions one opportunity is allowed to the complainant side to file and present,,,

their detailed counter reply or rejoinder. Thereafter both sides present their argument which they did on 6 days as indicated above. There is,,,

no practice of rejoinder on rejoinder or reply on reply. Thereafter opportunities were allowed to hear the cases. It is not possible to permit,,,

reply on reply and rejoinder on rejoinder in each case due to paucity of time available with the Adjudicating Authority.,,,

…,,,

Keeping all these aspects in view defendants were explained that repeated reply on reply and rejoinder on rejoinder is not practicable and,,,

permissible in the proceedings before Adjudicating Authority who has to dispose of the matter within 180 days from date of P.A.O. and,,,

major time has already been consumed by the defendant and complainant who have been allowed 6 opportunity. The request of supply of,,,

copy of rejoinder to file rejoinder on rejoinder is accordingly turned down. Further we are dealing with Provisional Attachment Order and,,,

as such things are to be looked into from prima facie angle and charge is not to be proved to the hilt which is to be done by the trial court,,,

while passing final order of confiscation under Section 8 of the PMLA. Defendants were requested to meet the arguments of their complaint,,,

after presentation of the case by them in the Court as the copy of the complaint has already been given to them and complaints have,,,

confined themselves to the O.C./accompanying documents and reply made by the defendants.â€​xv,,,

[Emphasis supplied],,,

Thus, it is clear the Adjudicating Authority is contrary to the record without considering applications made by the Appellants as per law and has",,,

wrongly come to the conclusion that a sur-rejoinder/reply to the rejoinder as sought can be allowed in the impugned order. It shows that the authority,,,

has acted in the present case without following the law and applying the principle of natural justice.,,,

The Honâ€ble Supreme Court in paragraph 18 of Nibran Chandra Bag vs. MahendraNathGhughu, AIR 1963 SC 189,5 which is extracted below",,,

for ease of reference:,,,

“18. Before concluding, it is necessary to deal with one matter which has also been adverted to by the learned Judges of the High Court.",,,

It concerns the method adopted by the Assistant Settlement Officer in the conduct of this enquiry. From his order it would appear that the,,,

two parties before him adduced oral evidence by examining witnesses. He however made no record of this evidence, so that one is not in a",,,

position to ascertain with exactness what each witness deposed â€" except insofar as any reference is made to it in the order. The learned,,,

Judges animadverted on this feature and we concur with them that this is far from satisfactory. Learned Counsel for the respondent drew to,,,

our attention the rules which have been framed under Section 59 of the Act which lay down the procedure to be followed by Revenue,,,

Officers conducting these enquiries, Rule 30(2) read with Rule 17(2) and pointed out that these rules did not require any record being kept",,,

of the evidence adduced and that in the absence of any such statutory provision there was no need for these tribunals to follow the procedure,,,

adopted by regular courts and that it could not be said that any principle of natural justice was violated by such a record not being kept. We,,,

agree that the maintenance of a record of the oral evidence adduced is not the requirement of any specific rule. It should not however be,,,

forgotten that the order passed in an enquiry into an objection filed under Section 44(1) of the Act is subject to an appeal under Section,,,

44(3) to a prescribed Tribunal as authority. That appeal lies both on the facts as well as on any legal questions which might arise and be,,,

decided and is not confined to any particular grounds. It is therefore manifest that the appeal is intended to be a real remedy, affording full",,,

relief to the party aggrieved. For such an appeal to be effective, the party aggrieved must be in a position to canvass the propriety and",,,

correctness of the reasoning of the tribunal of first instance before the Appellate Authority and it would be obvious that it could not be done,,,

satisfactorily unless the party is in possession of the materials on which the conclusions of the first tribunal are based and reasons are,,,

recorded for the order. In fact the order of the tribunal cannot normally be successfully impugned unless the materials on which that order,,,

is based is placed before the Appellate Authority. It is therefore apparent that a record of the evidence would be as necessary as a reasoned,,,

order â€" for a statutory right of appeal to be of any real value. We therefore consider that it is implicit in the provision granting an appeal,,,

from the order of the revenue officer that even if the rules do not so provide, he should so conduct it that the right of appeal granted by the",,,

statute is not nullified. In saying this, we should not be understood to mean that he is bound to follow the procedure prescribed for civil courts",,,

for the recording of evidence. Only he should maintain some record from which the Appellate Authority would be able to gather the,,,

materials which the officer had before him in arriving at the decision which is the subject of the appeal.â€​,,,

[Emphasis supplied],,,

In view of the above, it is clear that the Impugned Order also suffers from violation of principles of natural justice.",,,

The Notice to Show Cause dated 04.04.2014 under section 8(1) of the Act (hereinafter the “Show Cause Noticeâ€​) issued by the Registrar of,,,

this Adjudicating Authority to the Appellantswas contrary to Section 8 (1) of the PMLA, for the reason that a Notice to Show Cause, under Section 8",,,

(1) of the Act, can only be issued (following receipt of a Complaint under Section 5 (5) of the Act) after the Adjudicating Authority forms a",,,

“reason to believe that any person has committed an offence under Section 3 or is in possession of proceeds of crimeâ€​.,,,

A bare perusal of the Show Cause Notice would show that the Learned Registrar has issued the same in a mechanical manner without even,,,

affording an opportunity to the Adjudicating Authority to apply its mind. No valid reasons are mentioned on the notice itself or any separate order is,,,

passed before issuance of notice which is requirement as per settled law.,,,

The Impugned Order is consisting of 206 pages. In first 192 pages, there is a reproduction of the OC, Reply filed by the Appellants and the",,,

Rejoinder of the Respondent No.1 and in 13 pages, “discussions†was taken place. The “discussions†of the Authority demonstrates that",,,

almost the same stand is taken as per charge-sheet filed by the CBI. The Authority has not applied its mind to the Common Reply filed by the,,,

Appellants and has even failed consider and deal with majority of the submissions made by the Appellants.,,,

In paragraph 23 at internal page 89 of the Impugned Order,the Adjudicating Authority that “M/s Classic Realty Pvt. Ltd. is however in",,,

possession of proceeds of crime†is not wholly contrary to the record but even contrary to the Respondent No.1â€s observation which reads as,,,

under:,,,

“25. The investigation under PMLA has so far revealed that Shri N. Prasad and his companies had indirectly derived proceeds of crime,,,

amounting to Rs. 617.45 crores as a result of criminal activities as established in the chargesheet filed by the CBI because-,,,

The new shareholders (French company and M/s Classic Realty) are not found in any criminal activity as per chargesheet filed by CBI and,,,

have not derived or obtained any property directly or indirectly as a result of criminal activity relating to the scheduled offence.â€​,,,

[Emphasis supplied],,,

There was novalid reason of this finding of the Authority as M/s Classic Realty Pvt. Ltd. is not even a Defendant in the proceedings before the,,,

Authority and none of its properties have been provisionally attached.,,,

The other non-application of mind by the Adjudicating Authority evident from its following finding in paragraph 12 at internal page 197 of the,,,

Impugned Order:,,,

“It has been conveyed that all these investments were pure business investments made by SH, N. Prasad and group. It has been pointed",,,

out that in 2010 the shares of M/s Bharathi Cement Corporation Pvt. Ltd. have been sold to the M/s Paraficim, French Company for Rs.",,,

650.50 crore against the purchase price of Rs. 285.50 crore. It is seen that the apparent reasons stated from this transaction was that the,,,

French Company wanted to take over the M/s Bharathi Cement Corporation Pvt. Ltd. M/s Bharathi Cement Corporation Pvt. Ltd. is a Pvt.,,,

Ltd. company.,,,

As per Section 3(1)(c) if (sic) the Company Act outsider cannot invest in shares/debentures of Pvt. Ltd. Company. It is strange that French,,,

company had desired the transaction to be at market price and wanted to have the market value of shares. According to valuer share value,,,

it was Rs. 68.13 on Net Asset Value (NAV), Rs. 221 on profit earning capacity value of Rs. 455 on EPS valuation and Rs. 438 per share as",,,

EBITDA method. Though none of these valuation are on sound principle but are only self serving as is emerging from valuers report itself,,,

which says that these are based in submission of defendants. All the companies were in initial stage with no experience and no commercial,,,

production and running in huge losses. Push in the balance sheet was only due to huge premium. But the shares were sold in 2010 to the,,,

French company and 671 per share which was much in excess any share valuation report even though such report was and only self,,,

serving. It looks so illogical that when French Company wanted transaction at market value, how this transaction has taken place at such",,,

high rate of Rs. 671 per share and why French Company did nor object.â€​,,,

[Emphasis supplied],,,

It is admitted position that Respondent No.1 never questioned the investment by M/s Paraficim, the French company and in fact, treated it as",,,

genuine investments. The aforementioned findings by the Adjudicating Authority are therefore completely out of record/pleadings before it and finds,,,

place for the first time in the Impugned Order. M/s. Paraficim which is French company is not accused either in the schedule offence nor in the,,,

prosecution complaint.,,,

The said finding shows complete non-application of mind by the Respondent No.1 in as much as there was no Section 3 (1) (c) in the Companies,,,

Act, 1956 and Section 3 (1) (c) of the Companies Act, 2013 (which is not applicable to the transactions in the instant case) pertains to One Member",,,

Companies. This is not only absurd but reeks of a desperate attempt to justify the predetermined outcome of the proceedings before the Authority.,,,

Mr. Y. S. Jagan Mohan Reddy was the promoter of Bharathi Cements and in control of the same. It may not be unusual for a promoter to invest,,,

in his own company at par, whereas, the outside investors invest at a higher premium. The investment decisions are not solely based on whether a",,,

company is making profits or losses. If that be the case then no one would be investing in Eenadu, Flipkart, Amazon, Uber etc. Mr. Nimmagadda",,,

Prasad in his statements explains the rationale for investment in Bharathi Cements:,,,

“I state that I have personally worked out the viable and profitable fields of business and it was Healthcare, Hospitality, Media",,,

&Entertainment, Core Infrastructure, Core Industries (Cement, Steel, Power). Accordingly, I venture in these lines in and outside India. As",,,

regards the investment in Raghuram Cements is concerned I state that the parameters for a growing cement factory are capacity, credibility",,,

& Access to Markets leaving aside the other features which are considered before investments in the other fields.I noticed that Raghuram,,,

Cement at the time of my investment planned 2.5 MTPA (scalable to 5 MTPA with marginal cost). Focus on quality (Robotic Technologies) &,,,

access to Markets such as Andhra/Tamil Nadu/ Karnataka & Kerala.â€​,,,

…,,,

“As a part of my preferred and identified sector of Investment I came to know from Mumbai investment circles of an opportunity to invest,,,

in M/s Raghuram Cements. I knew, based on my study that valuation of valuation of Cement Company is depending on Capacity, Credibility,",,,

lime deposits and access to Markets. Balance sheet is not important if the Promoters are satisfactory. I had an offer to invest around Rs.,,,

300 crores for 15% stake. Initially, I invested Rs.67.00 crores in January 2007 at the rate of Rs.104/share. And as the project was",,,

progressing with the plant Construction I have invested in different tranches. Initially it was planned for 2.25 mt capacity/annum but in,,,

2008/09 it was decided to scale up the plant to 5 mtpa, with only marginal investment cost. At this time I invested 20.00 cr at Rs.1450/share.",,,

The plant was commissioned around sep. 2009. At that time I invested Rs.190 Crores at 1450/share. In total I invested around Rs.285 crores,,,

for around 14.50% equity at an average price of Rs.341/share. It is within the original plan of Rs.300 crores for 15% stake. Itis to be noted,,,

that my investment was done on commercial basis after due diligence.â€​,,,

No contrary arguments are addressed on behalf of respondent no. 1, rather it was admitted that the Pacifism SAS, French Company has bona-",,,

fide purchaser of shares. They are not involved for any offence. The said company is not even party to any criminal proceedings included prosecution,,,

complaint and their money was the clean money. Once the said admission is made by the respondent no. 1, subsequent investment by Nimmagadda",,,

Prasad and his group company cannot be treated as tainted money. There is no force in the arguments of the respondent no. 1 that investment is just,,,

eyewash and useless papers. Rather it proves that the investment may be genuine.,,,

It is the case of the appellants quantification of Proceeds of Crime and Attachment in various heads amounts to double attachment:,,,

Double Attachment:,,,

Rs. 178.5 Crs worth of shares purchased by Mr. Nimmagadda Prasadâ€s group companies (Alpha Avenues, Alpha Villas, Gilchirst Investment) in",,,

Jagati Publications have been attached at their hands. The respondents further sought to attach the monies received by Jagati Publications for sale of,,,

its shares by attaching the plant and machinery and also shares held by it in Indira Television.,,,

Rs. 35 Crs was received by Mr. Y.S. Jagan Mohan Reddy as sale consideration for sale of his shares held in Sandur Power to Mr. Nimmagadda,,,

Prasad. These Rs 35 Crs worth of Sandur Power shares are attached at the hands of Mr. Nimmagadda Prasad and the same Rs. 35 Crs are attached,,,

at the hands of Mr. Y.S. Jagan Mohan Reddy. The investment by Mr. Nimmagadda Prasad is a genuine business transaction and in exchange for a,,,

valid consideration.,,,

Non-computation of taxes paid:,,,

Mr. Y.S. Jagan Mohan Reddy had paid an amount of Rs 7.23 Crs as Capital Gains Tax on the sale consideration of Rs. 35 Crs received in exchange,,,

of sale of shares of Sandur Power to Mr. Nimmagadda Prasad. Similarly, an amount of Rs. 6.74 Crs was paid as Capital Gains Tax on the sale",,,

consideration of Rs. 33 Crs received in exchange of sale of shares of BCCL to Mr. Nimmagadda Prasad.,,,

Without prejudice, it is also argued on behalf of appelalnts that the share transfer transactions are genuine business transactions, it is submitted that the",,,

respondents ought to have deducted Rs. 13.97 Crs (Rs. 7.23 Crs on sale of Sandur Power shares for Rs. 35 Crs and Rs. 6.74 Crs on sale of BCCL,,,

shares for Rs 33 Crs) paid by Mr. Y.S. Jagan Mohan Reddy as Capital Gains Tax on the Rs. 68 Crs received by him for the purpose of attachment.,,,

Therefore, it is submitted that the respondents at the best ought to have computed only Rs. 54.03 as proceeds of crime at the hands of Mr. Y.S.Jagan",,,

Mohan Reddy after deduction of taxes paid.,,,

Undervaluation of assets for the purpose of Attachment:,,,

All the above properties attached at the hands of Mr. Y.S. Jagan Mohan Reddy can only be attached as “value equivalent to the alleged Proceeds,,,

of Crime†as the properties (immovable) are ancestral/family properties and were not purchased from the Rs. 68 Crs received from Mr.,,,

Nimmagadda Prasad or his group company.,,,

The respondents while attaching the properties had sought to take the acquisition value of the property and not even the current guideline value issued,,,

by the concerned Registration Departments, which in itself is lower to the prevalent market value. By adopting such erroneous method, the",,,

respondents have resorted to causing the attachment of a maximum number of properties.,,,

S.No.,Property,Value (in Crs),"Guidance Value

(in Crs)

1,"42.44 Acs of Agricultural Land at Vempally

Mandal, Idupulapaya, Kadapa Dist.",0.06,0.54

2,"10.36 Acs of land, Pulivendula Mandal,

Bakarapuram Village, Kadapa Dist.",0.01,6.51

3,"6.65 Acs of land, Pulivendula Mandal,

Bakarapuram Village, Kadapa Dist.

And 32186 Sq Ft Building thereon.",4.49,6.39

4,"Land â€" 398 Sq Yards, Plot No. 98 of Sagar

Society, Rd. No. 2, Banjara Hills, Hyderabad and

473 Sq Yards Building thereon",0.62,2.78

5,"Commercial Property Land - 1815 Sq yards, Sy.

No. 403/1, No. 8-2-269/4/B, Rd. No. 2, Banjara

Hills And 37415 Sq ft Building thereon.",8.17,14.46

TOTAL,,13.35,26.05

by Mr. Y.S. Jagan Mohan Reddy in the year 2001. Sandur Power is acquired M/s. Classic Realty Pvt. Ltd., an industrial park in Bangalore from",,,

internal revenue generated by sale of power generated and sold to State Electricity Board of Karnataka (MESCOM) and by availing a bank loan of,,,

Rs. 117 Crs doubling the profitability of Sandur Power. The hydro plant owned by Sandur Power continues to be successful in Karnataka. The net,,,

worth of Sandur Power at the time of the above transaction was over Rs. 250 Crs and, therefore, prima facie, it appears that the purchase of Sandur",,,

Power shares by Mr. Nimmagadda Prasad was a transaction with commercial interest, unless it is proved by CBI, as per its allegation, but ED merely",,,

on the basis of allegation cannot allege that it has been prima facie established. Independence evidence was bound to be conducted, no reason to",,,

believe indicated and discussed. Therefore, the attachment on this head is also released.",,,

The allegationsare about the sale of M/s. Bharathi Cements Company Limited (BCCL) shares to Mr. Nimmagadda Prasadâ€s group company.,,,

Nothing contrary has come on record that the sale of shares of BCCL held by Mr. Y.S. Jagan Mohan Reddy to Mr. Nimmagadda Prasadâ€s group,,,

company, Alpha Villas is not a genuine business transaction. Mr. Y.S. Jagan Mohan Reddy agreed to sell on higher price per share. The justification",,,

given on behalf of the appellants is that it was the agreement between the parties after mutual understanding and deliberation. The said allegation of,,,

CBI is yet to be decided, so far no charges are framed in the matter. It is not denied that BCCL is a profit making company and has been acquired by",,,

M/s. PARFICIM SAS, France for a total of Rs. 2711 Crs in April 2010. Mr. Nimmagadda Prasad and his group companies have invested about Rs.",,,

285.50 Crs. in BCCL by purchasing shares at various prices and have made huge profits to the tune of Rs. 560.45 Crs after selling their shares to,,,

M/s. PARFICIM SAS, France for Rs. 671 per share. Therefore, it is evident that investments made by Mr Nimmagadda Prasad and his group",,,

companies into BCCL has earned profits of almost 96% which would show that such investments were in business prudence with commercial,,,

interests. Therefore, the argument of the counsel appearing on behalf of respondent that these shares were just waste of papers, has no substance as",,,

counsel on the other hand, has admitted that PARFICISM SAS, French Company is an innocent party and was not charge-sheeted and amount paid",,,

was clean money.,,,

With regard to allegation that M/s. Jagati Publications Ltd. is company owned and controlled by Mr. Y.S. Jagan Mohan Reddy and has attracted,,,

payments as quid pro quo from Mr. Nimmagadda Prasad and his group companies, who have derived undue benefits from the then Government of",,,

Andhra Pradesh including VANPIC projects and large scale concessions from the Government, in guise of investments/ financial transactions by way",,,

of equity participation and M/s. Jagati Publications Ltd.â€s shares were inflated to Rs. 360 per share without any basis mainly to solicit bribes as,,,

investments. Mr. Nimmagadda Prasadâ€s group of companies (Alpha Avenues, Alpha Villas, Beta Avenues and Gilchrist Investments) had initially",,,

invested Rs. 100 Crs through equity participation in 2007 and thereafter, another Rs. 350 Crs where invested by Mr. Nimmagadda Prasadâ€s group of",,,

companies (Alpha Avenues, Alpha Villas, Beta Avenues and Gilchrist Investments) on 29.04.2009 from the Rs. 560.45 Crs Mr. Nimmagadda",,,

Prasadâ€​s group of companies had realized from the sale of its shares held in BCCL to PARFICIM SAS, France.",,,

155.1 TheRespondentalso seeks to attach a total amount of Rs. 450 Crs as “Proceeds of Crimeâ€​ at the hands of M/s. Jagati Publications Ltd. The,,,

valuation of Jagati Publications†shares were arrived after taking the entire enterprise valuation of Sakshi News Paper Project with “size and,,,

circulation†into effect. Sakshi regional newspaper was launched with a circulation of about 12 lakh copies with 23 printing centers simultaneously in,,,

States of Andhra Pradesh, Telangana, New Delhi, Karnataka, Tamil Nadu and Maharashtra.",,,

The valuation of Jagati Publications†shares is based on Discounted Cash Flow Method (DCF, which has been approved by the Reserve Bank",,,

of India under Foreign Exchange Management Act Notification number FEMA 205/2010 issued on 07.04.2010) which is a futuristic valuation,,,

technique for valuing a company even before the commencement of its operations.,,,

Pertaining to other remaining attachments, the main allegation against M/s. Carmel Asia Holdings Ltd. isthat companyis owned and controlled by",,,

Mr. Y.S. Jagan Mohan Reddy and has attracted payments of Rs. 20 Crs as quid pro quo from Mr.Nimmagadda Prasadâ€s group of company; M/s.,,,

Beta Avenues Pvt. Ltd. through equity participation on 30.12.2006and31.01.2007.Despite attaching the properties of Carmel Asiaâ€s shares in Jagati,,,

Publications worth Rs. 20 Crs in OC 276 of 2014, the respondents seek to make further attachments of shares worth face value of Rs. 15 Crs (and",,,

recognised market value of much higher) of BCCL held by M/s. Silicon Builders Pvt. Ltd. and Rs. 51.20 Crs of dividends thereon in OC 618 of 2016,,,

(BCCL Attachment) on the contention that M/s. Silicon Builders Pvt. Ltd. received monies from Carmel Asia and had used the same amounts to,,,

purchase BCCL shares. Carmel Asia had allotted its shares to Mr. Nimmagadda Prasadâ€s group company M/s. Beta Avenues Pvt. Ltd at Rs. 262,,,

per share for a total amount of Rs. 5 Crs on 30.12.2006 and Rs. 15 Crs on 31.01.2007.,,,

The concept of VANPIC Project was conceived only in January, 2008, therefore, it cannot be accepted the argument of the respondent that the",,,

payment of illegal gratification in December 2006 and January, 2007 was made against the VANPIC Project. Even no contrary evidence is available",,,

on record. Therefore, the attachment is released forthwith. All the appeals filed by this group are partly allowed by modifying the impugned order as",,,

well as the provisional attachment order.,,,

Mr. Nimmagadda Prasad & Group/ Investors - Rs. 325.02 Crs.,,,

i) Rs. 37.83 Crs - Mr. Nimmagadda Prasad (Immovable property worth Rs. 1.7 Crs, Shares in Sandur Power for Rs. 35 Crs and in G2 Trade Centre",,,

for 1.13 Crs),,,

ii) Rs. 97.82 Crs - M/s. Alpha Avenues Pvt. Ltd. (Shares in Jagati Publication),,,

iii) Rs.35.90Crs-M/s. Alpha Villas Pvt. Ltd. (Shares in Jagati Publication),,,

iv) Rs. 45.85 Crs - M/s. Gilchrist Investments Pvt. Ltd. (Shares in Jagati Publication for Rs 44.78 Crs and immovable properties for 1.07 Crs),,,

v) Rs. 49.98 Crs - M/s. G2 Corporate Services Ltd. (immovable property of 6 Crs, 43.08 Crs for shares of various companies and receivable loan of",,,

0.9 Crs),,,

vi) Rs. 7.00 Crs - M/s. Suguni Constructions Pvt. Ltd. (receivable loans),,,

vii) Rs. 23.23 Crs - M/s. VANPIC Ports Pvt. Ltd. (561.1996 Acs of Land in Prakasham Dist.),,,

viii) Rs. 27.72 Crs - M/s. VANPIC Projects Pvt. Ltd. (855.7130 Acrs of Land in Prakasham and Guntur Dist).,,,

ix) 148.08 Crs. - Vanpic Ports Pvt. Ltd (11804.78 acres),,,

As far as attachment as per details mentioned in preceding paras of head vii) and viii) with regard to attachment of Rs.23.23 crores of VANPIC,,,

Port Pvt. Ltd. i.e. about 561 acres land and Rs.27.72 crores spent by VANPIC Project Pvt. Ltd i.e. about 855 acres of land is concerned, it is vacant",,,

land and the land area 11804.78 acres to the tune of Rs.148.08 crores. The possession is not with the appellants who being a partner with RAK has,,,

spent huge amount. MOU and agreement have already been executed with regard to VANPIC Project. The said project was in the interest of public.,,,

Government of Andhra Pradesh is not the party in the present appeals. This Tribunal is not aware about the stand of the Andhra Pradesh Government,,,

as to whether it is still interested in the said project as the same was prime facie between Government to Government. It is also not aware as to,,,

whether Government is now agreeable to Nimmagadda Prasad and its group as a partner with RAK or not. Therefore, it is not proper to give any",,,

findings in this regard, otherwise it would amount to enforcement of MOU and agreement. However, prima facie, this Tribunal is of the opinion that no",,,

purpose would be served to continue the attachment as the said project was originallymeant for public welfare of Hyderabad. The said project has,,,

already been delayed for more than ten years. The trial, if conducted if charges are framed, may take number of years. Therefore, the State",,,

Government has to take the stand about the said project. If necessary, the State Government may obtain the advice from Central Government, but the",,,

Chief Minister should not involve himself in said process directly or indirectly.,,,

The amended provision of Section 8(8) of PMLA along with two proviso are reproduced hereunder:-,,,

“[Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be",,,

prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate",,,

interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering:",,,

Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered,,,

the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:],,,

[Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such",,,

properties during the trial of the case in such manner as may be prescribed.],,,

In view of peculiar facts and circumstances, the appellants are granted liberty to approach the Special Court on this issue. It is directed that",,,

Government of Andhra Pradesh may also appear before the Special Court and raise its specific stand so that the appropriate order be passed by the,,,

Special Court. Till that time, the attachment shall continue.",,,

As far as other heads i) to vi) are concerned, the total attachment of these heads is Rs.274.38 crores i.e. net profit on an investment of Rs.342",,,

crores in Silicon Builders Pvt. Ltd and Bharati Cement Corporation Ltd. It appears that no cogent evidence is available on record to show that the said,,,

investment at the first instance was the bribe or not. On the one hand, the stand of the respondent is that the shares against investment in the said",,,

companies were just eye-wash and waste of papers, but on the other hand, it has been established on record that said shares got 96% profits. The said",,,

appellants prima facie placed the material on record that there are sources of funds available for the purpose of investment.,,,

The allegation of the respondent no. 1 as well as in the impugned order that Mr. Y.S. Jagan Mohan Reddy has received Rs.35 crores as quid pro,,,

quo for VANPIC Projects, prima facie,there is a material on record that Y.S. Jagan Mohan Reddy received Rs.30 crores on 22.1.2007 by way of",,,

cheque no. 686670 from Mr. Nimmagada Prasad as sale consideration for 21,42,869 shares of Sandur Power held by him and on 19.2.2007 Share",,,

Transfer Form in form No.7B authenticated by Assistant Registrar of Companies, Bangalore bearing stamp and date. Mr. Y.S. Jagan Mohan Reddy",,,

had signed the said Share Transfer Form for a consideration of Rs.30 crores on 22.2.2007. Capital Gain Tax of Rs.6.69 crores paid by Mr. Y.S. Jagan,,,

Mohan Reddy on sale consideration of Rs.30 Crores from Mr. Nimmagadda Prasad on 31.7.2007.,,,

From the impugned order as well as provisional attachment order and from the stand of respondent no. 1, it appears that the submissions are not",,,

correct as the allotment of the VANPIC Project was not to Mr. Nimmagadda Prasad, but, to Ras Al Khaimah, the sovereign Emirate of United Arab",,,

Emirates, which had engaged Mr. NimmagaddaPrasad as its Local Partner under the MOU and Concession Agreement, the rationale for identifying a",,,

sum of Rs. 267.45 Cr. (instead of which Rs. 274.45 Cr. approx. has been actually attached) is found at pages 82-87 of the Complaint. As per,,,

appellants, two sets of investments made and a donation by the Appellants have been wrongly identified as “illegal gratification†paid to Y. S.",,,

Jagan Mohan Reddy. The details of the same are given as under:-,,,

i. The investment of Rs. 285.50 Cr., for shares in Raghuram Cement Ltd. (which has been subsequently renamed as Bharati Cement Corporation",,,

Ltd.);,,,

ii. An investment of Rs. 57 Cr., for shares in Silicon Builders Pvt. Ltd., in which G2 Corporate Services Pvt. Ltd. invested Rs. 50 Cr.and Suguni",,,

Constructions Pvt. Ltd. invested Rs.7 Crores; and,,,

iii. Rs. 7 Crores donated by to the YSR Foundation, which is a registered public charitable trust.",,,

It is a matter of fact that the donation made to YSR Foundation continues to remain with it and has not been returned to the Appellants, despite which",,,

the Complaint seeks to attach it in the hands of the Appellants.,,,

165.1 The said shares were admittedly sold in 2010, as follows: -",,,

i. The shares in Bharati Cement Corporation Ltd. were sold to a French corporation, known as PARFICIM SAS (French Company) for Rs. 560.45",,,

Cr. The Complaint itself identifies PARCIFIM as an “innocent investor†who is “not found in any criminal activity†and as not having,,,

proceeds of crime in its possession as admitted in paagraph 25(1) of the Complaint.,,,

ii. The shares in Silicon Builders Pvt. Ltd. were sold to M/s Classic Realty Pvt. Ltd. who is also described as “not found in any criminal activityâ€,,,

and as not having proceeds of crime in its possession, for a consideration of Rs. 57 Crores, as mentioned in Paragraph 25(1) of the Complaint. The",,,

CBI has filed a Memo on 23.09.2013 in RC 19(A)/2011-CBI-HYD wherein they have specifically stated that no quid pro quo could be established in,,,

relation to the said Company viz Classic Realty Pvt. Ltd. As such, there is no question of any amounts earned from transactions with M/s Classic",,,

Realty Pvt. Ltd. being proceeds of crime. The Respondent No.1, despite observation by the CBI in its charge-sheet ,has taken the different view.",,,

165.2 The total amount arising from the sale of shares referred to hereinabove is Rs. 617.45 Cr. The said amount received from Parficim is not the,,,

proceeds of crime, nor it was/ is tainted amount as admitted by the respondent. The said amount is clean money and it has no nexus whatsoever with",,,

any alleged quid pro quo transaction mentioned in paragraph 24 the Complaint. The only stand of the respondent that shares were purchased earlier,,,

was proceed of crime and these shares were sold on higher price to French Company (who is not accused) but the amount received amounts to,,,

proceed of crime.,,,

165.3 Out of said amount, Rs. 350 Cr. was subsequently invested in M/s Jagati Publications Ltd. has been attached in its hands. The remaining 267.45",,,

Cr. has been treated as “proceeds of crimeâ€​ in the hands of the appellants. The main reasons are given as under:-,,,

i) In the Original Complaint, the amount of Rs. 560.45 Cr. received from PARCIFIM (admittedly an innocent party) has been described as follows â€"",,,

“Rs. 560. 45 Cr. was received from the new shareholder (French company) by earlier share holders i.e. Shri N. Prasad and companies. As a,,,

result by the change in the shareholdership, the proceeds of crime lying in the company M/s Raghuram Cements Ltd. as shareholders money has been",,,

received back by Shri N. Prasad and his companies along with the additions thereon.â€​,,,

ii) The sum of Rs. 57 Cr. received from Classic Realty (also an innocent party) has been described as follows â€" “Investigation under PMLA has,,,

revealed that M/s Classic Realty is another group company of Shri Jagan Mohan Reddy. However, in the complaint, it is mentioned as the proceeds of",,,

crime amounting to Rs. 57 Cr. lying in M/s Silicon Builders Pvt. Ltd. as shareholders†money has been received back by the said two companies of,,,

Shri N. Prasad from M/s Classic Realty.â€​,,,

iii) In the Complaint, at Para 25(2), these sums have been referred to as follows â€" “The payments made by the new shareholders to Sh. N.",,,

Prasad and his companies (who paid illegal gratification under quid-pro-quo)have in fact resulted in the refund of illegal gratification with some,,,

additions to Sh. N. Prasad and his companies.â€​,,,

165.4 It is rightly explained on behalf of appellants that this logic of Respondent No.1 is incorrect:-,,,

i) Firstly, the returns which were generated from investments in M/s Silicon Builders Pvt. Ltd. and Bharati Cement Corporation Ltd. may be business",,,

transactions as at present, it is merely an allegation. It has been ignored by the Adjudicating Authority. It is alleged on behalf of appellants that the",,,

mere fact that the shares in M/s Silicon Builders Pvt. Ltd., were sold at cost fails to appreciate that the same was an indirect stake in Bharti Cement",,,

Corporation and under the circumstances it was a strategic call taken by Mr. Nimmagadda Prasad in as much as his investment in M/s Silicon,,,

Builders Pvt. Ltd. and Bharati Cement Corporation Ltd., had returned a net profit of Rs. 274.95 Cr. on an investment of Rs. 342 Cr. which was sold",,,

for Rs.617.45 Crs. with an IRR of 31%. These numbers would reveal that the investments could not be said to be a bribe under any circumstances.,,,

ii) Secondly, if the amount paid for purchasing the shares in the two said companies was illegal gratification, there would be no “refundâ€. No",,,

criminal statute in India recognizes this idea of “refund†of gratification, the assumption being that illegal gratification is retained by the person it is",,,

paid to. The Respondent No.1 has failed to demonstrate how this concept of “refund†has any causal nexus with the ingredients of any of the,,,

scheduled offences involved in this case.,,,

iii) Thirdly, if both PARCIFIM and M/s Classic Realty Pvt. Ltd. are innocent parties (as set out in the Complaint), the purchase of shares by them is",,,

clearly untainted. Therefore, monies received from transactions entered into with such innocent parties may be untainted.",,,

iv) The monies generated from the sale of shares has no nexus whatsoever to any of the purported “favors†extended to Mr. Nimmaggada,,,

Prasad and his group companies, as set out in the Chargesheet, because other investors have also shareholding to the said French Company.",,,

v) The monies paid by the Appellants for the purchase of shares remains within the investee companies in question as share capital. If the same is to,,,

be characterized as “illegal gratificationâ€, it can, at best, be attached in the hands of the said companies. Revenue generated by the Appellants",,,

from a separate, untainted, secondary purchase by third parties who are admittedly innocent, paid for by them from untainted monies cannot be",,,

characterized as “proceeds of crimeâ€​.,,,

Section 35 of PMLA provides the Procedure and powers of the Appellant Tribunal which says that Tribunal shall not be bound by the procedure,,,

laid down by Code of Civil Procedure but shall be guided by the principles of natural justice and subject to the other provisions of this Act and,,,

Appellant Tribunal shall have powers to regulate its own procedure.One of the main objects and reasons of this Act is to confiscate of proceeds of,,,

crime apart to the criminal liability if the accused has committed under the provisions of this Act and schedule offense. Till the time final order is,,,

passed by the Special Courts, if a valid case is made by ED, the proceeds of crime must be preserved so that after final order it should be confiscated",,,

for the benefit of State.,,,

Before this Act came into existence, it has been noticed that accused person used to dispose of proceeds of crime till the time final orders are",,,

passed under the Schedule Offense. Therefore in order to secure the proceeds of crime, some directions are required to be passed in appropriate",,,

appeals to preserve the proceeds of crime.,,,

In case Order XXXVIII of code of Civil Procedural are read meaning manner it appears that the objects and reasons of Pmla to preserve the,,,

proceeds of crime to somehow similar.Order XXXVIIII provides the remedy of arrest and attachment before judgment.,,,

Sub-section (1) of the said provision mandates that any stage if the defendant has absconded or left the local limit of the jurisdiction or is about to,,,

abscond or leave and has disposed of his property or part thereof in order to obstruct the execution of decree against him, the court under those",,,

circumstances may issue warrant to arrest to bring him before court and ask him to furnish security for his appearance. if the defendant fails to,,,

furnish security under sub section 4, under sub section 5, the court if satisfies may direct the defendant for furnish security for production of property",,,

in order not to allow the defendant to obstruct the decree.,,,

The provisions of Section 5 and 8 of PMLA are not exactly similar but principles and intend to incorporate the said provision to some are the,,,

guiding factors.,,,

Therefore, in the present situation, in view of peculiar fact and circumstances, the balance can be strike as admittedly the investment in BCCL",,,

had got net profit of Rs.274.95 crores on an investment of Rs. 342 crores which was sold for Rs.617.45 crores with an IRR of 30% to the French,,,

Company, who is admittedly not charge-sheeted and its money was clean money as admitted by the respondent no. 1. However, in view of allegations",,,

by CBI, in order to strike balance, certain directions are necessary to be passed, unless the same are disposed or set-aside.",,,

The Adjudicating Authority in the impugned order has not discussed all the pleas raised by the appellants. The impugned order has been passed,,,

by taking very casual approach rather deciding the matter as per pleadings and law.,,,

In the light of above mentioned reasons, the Appeal of Nimmagadda Prasad and group are partly allowed, subject to the condition that the said",,,

group of appellants shall furnish the Indemnity Bond for a sum of Rs.274.95 crores with the respondent within four weeks from today as surety,,,

amount with an undertaking that in case the final order is passed by the final Court under PMLA against the said appellants, they shall secure the said",,,

amount with the respondent. The said Indemnity Bond shall be furnished without prejudice. The rest of attachment of Nimmagadda Prasad and group,,,

are set-aside and properties are released.,,,

Admittedly, the attachments at the hands of Jagati Publications are wholly unnecessary as per Orders of the Honâ€ble High Court at Hyderabad",,,

dated 23.05.2012 made in Cr.LP No. 4523 of 2012 restrain the alienation of any assets of the company Jagati Publications who is a media house,,,

employing numerous persons. In view of allegations by CBI and interim order already granted by the Honâ€ble High Court at Hyderabad on 23rd,,,

May, 2012 passed in Cr.LP No. 45234/2012, the attachment against the said properties i.e. plant and machinery for Rs.273.39 Crores is not to be",,,

required to continue because of the reason that it is not denied by the counsel for the respondent that there was total of 60 investors (including Mr.,,,

Nimagadda Prasad and his group companies) had purchased Appellantâ€s shares at Rs. 360 per share with a premium of Rs. 350 per share. No,,,

action against 45 investors was taken. Therefore, singling out few parties who are in business transaction/ investment andto accuse the same as quid",,,

pro quo creates doubt in the mind of this Tribunal, why pick and choose policy adopted in the matter. However, this Tribunal does not wish to express",,,

any opinion about the allegation of CBI on head no. ii) as mentioned in para-149. Attachment on this head is quashed accordingly,,,

The impugned orders dated 19.08.2014 in PAO no.1/2014 and dated 28.07.2017 in PAO no. 6/2017 are modified accordingly, so as both PAOs.",,,

The twelve appeals are partly allowed and the same are disposed of along with all pending MPs.,,,

It is clarified here that as far as the allegations made by CBI are concerned, the same be decided by Special Court without any influence of the",,,

order. The present order has been passed only in relation to attachment of properties of the appellants and confirmation thereof.,,,

No costs.,,,