AI Structured Summary
Not yet generated for this judgment
Judgment
,
FPA-PMLA-2055/CHD/2017,
M/s. Geoxa Steels Private Limited through its Director, Shri Amanpreet Singh has filed the above-mentioned appeal under Section-26 of the",
Prevention of Money Laundering Act, 2002 against the Order dated 12.09.2017 passed by the Adjudicating Authority in O.A. No. 93/2017.",
The FIR was registered in Schedule Offence on 8.8.2018, appellant is not named, who is a independent legal entity. The same is the position of",
ECIR registered by respondent â€" ED on 19.9.2016.,
The searches and seizures conducted by Respondent â€" ED under Section 17, PMLA on 17.4.2017. The business premises of the appellant was",
searched. The letter was issued by respondent â€" ED to freeze the bank account of appellant on the presumption that the said account might be,
involved. Nothing specific is mentioned on this in the Original Application even after examination of account statement. In fact, the said bank account",
is cash-credit account, having debit balance on the date of freezing for more than eight years.",
The grievance of the appellant is that its loan account, being A/c. No. 034013100000618 maintained with Andhra Bank (having Debit Balance of",
Rs.8,02,387,841/-) which is unrelated to the scope of ongoing inquiry has been ordered to be frozen by the Respondent No.2 on 07.04.2017. The",
proceedings under Section 8 of the PML Act, 2002, which culminated with passing of the impugned order dated 12.09.2017 by the Respondent No. 1",
who has not recorded reasons for continuation of the freezing order.,
The Respondent No.2 had ordered to freeze the loan account on 07.04.2017 and after due inquiry, only 07 transactions reflected in the said account",
were put to the appellant. It is stated by the appellant that the appellant has explained the official of Enforcement Directorate and no further notice has,
been issued to the appellant in regard to the said inquiry. The limited prayer in the above appeal is that it may be allowed to operate its loan account.,
The order to freeze the loan account â€" cash credit account of appellant has caused immense prejudice as the appellant is unable to make,
transactions in the loan account with its customers and suppliers.,
During the pendency of appeal, it has been informed that the said accounts are declared as Non-Performing Asset (NPA) as per operation of RBI",
guidelines.,
The appellant is engaged in the manufacturing, buying and selling of steel and other metal products. In order to raise working capital, it availed a",
cash credit limit of Rs.8.00 Crores from Andhra Bank. The loan account number of appellant is 034013100000618 Andhra Bank, Ludhiana Main",
Branch. The ash credit-loan account no. 034013100000618, Andhra Bank, Main Branch, Ludhiana is required for day-to-day transactions and for",
smooth business operations of the appellant.,
The Respondent no. 2 on 05.05.2017 filed the O.A. No.93/2017 under Section 17(4) of the PML Act, 2002 and asked the Adjudicating Authority",
for continuation of order of freezing the loan account.,
The seizure of documents and freezing of any record or property are two distinct terms as used in the statute. Section 8 and Section 17 of the PML,
Act, 2002 is reproduced hereinafter as under:-",
“8. Adjudication.â€"(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",
1[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 2[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, afterâ€"",
(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 sub-section,
(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 3[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 shallâ€"",
(a) continue during the pendency of the proceedings relating to any 4[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]",
5[(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-,
section (2A) of section 60 by the 6[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 1[possession of the property attached under section 5,
or frozen under sub-section (1A) 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 (1A) of section 17, the order of confiscation",
shall have the same effect as if the property had been taken possession of.],
2[(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 offence of",
money-laundering after having regard to the material before it.],
3[(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.],
Search and seizure.-,
Where [the Director or any other officer not below the rank ofDeputy Director authorized by him for the purposes of this section], on the",
basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person-",
i. has committed any act which constitutes money-laundering, or",
ii. is in possession of any proceeds of crime involved in money-laundering, or",
iii. is in possession of any records relating to money-laundering,",
iv. is in possession of any property related to crime,",
then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to-",
a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime",
are kept;,
b) break open the lock of any door, box, locker, safe, salmirah or other receptacle for exercising the powers conferred by clause (a) where",
the keys thereof are not available;,
c) seize any record or property found as a result of such search;,
d) place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom;",
e) make a note or an inventory of such record or property;,
f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for",
the purposes of any investigation under this Act:,
Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under",
Section 157 of the Code of Criminal Procedure, 1973, (2 of 1974) or a complaint has been filed by a person, authorized to investigate the",
offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in",
cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an",
officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or,
equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by",
the Central Government, by notification, for this purpose].",
[(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze",
such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer",
making such order, and a copy of such order shall be served on the person concerned:",
Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A)",
of section 60, it becomes practical to seize a frozen property, the officer authorise under sub-section (1) may seize such property].",
The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons",
so recorded along with 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 reasons and material for such period, as may be prescribed.",
Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be",
concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is",
located and seize that evidence:,
Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section.,
[The authority, seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall,",
within a period of thirty days from such seizure of freezing, as the case may be, file an application, requesting for retention of such record",
or property seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating",
Authority.,
In compliance of the notice dated 11.05.2017, the Appellant appeared before the Adjudicating Authority and filed reply dated 05.07.2017 in which",
two letters dated 02.05.2017 and 23.06.2017 were referred where the request was made to de-freeze the bank account.,
As the request of the appellant was not accepted, the Appellant filed CWP Number 14163 of 2017 in the Honâ€ble Punjab & Haryana High",
Court.,
During the pendency of the writ petition, the Respondent No.1 passed the impugned order dated 12.09.2017. The impugned order dated",
12.09.2017 was taken on record by the Honâ€ble Punjab and Haryana High Court and following observation was made by the High Court in the said,
order:-,
“We find that the aforesaid order shows total non-application of mind where the submissions of the petitioners have not been adverted,
to. Accordingly, we direct the Adjudicating Authority to remain present in Court on the next date of hearing to explain the tenor of the order",
before this Court.â€,
On 11.10.2017, the counsel appearing for Union of India pressed for statutory right of appeal available to the appellant and accordingly, the writ",
petition was disposed off vide Order dated 11.10.2017.,
Admittedly, the Appellantâ€s bank account was frozen on the following sole basis as mentioned in para-14 of the order, the same is reproduced",
below:-,
“14. Besides, certain bank accounts of the Accused and their associates were also identified which might have been used for money-",
laundering.â€,
Not a single transaction has been pointed out to justify its freezing, even though it is alleged by the ED that the account statement of such bank",
account were examined.,
It appears from para-14 of the order that on the basis of presumptions and perception, the same were freezed that those might have been used for",
money laundering.,
It appears as per respondent no. 1, inspite of examining the account statement, and presumably, not finding anything incriminatory, the",
Appellantâ€s bank account was kept frozen. It is also that, inspite of the Appellant addressing two Letters to the ED wherein the Appellant stated that",
the bank account in question is a “cash-credit account†and that it did not have any foreign inward remittance and that it did not have any nexus,
with the Accused entities; yet, the ED did not bother to apply its mind to the same and continued to keep the account frozen. The mindless freeing by",
the ED has resulted in the said bank account becoming “NPA†as per RBI regulations.,
The contents of two letters dated 2.5.2017 and 23.6.2017 are reproduced hereunder:-,
GEOXA STEELS PRIVATE LIMITED,
Manufacturers of Stainless Steels, Tubes & Pipes",
Regd. Office: Village Kuba, Tehsil Samrala, Distt. Ludhiana â€" 141418(Punjab) INDIA",
E-mail: [email protected] URL: www.geoxasteels.com Tel: +91-1628-267018, 267218",
02.05.2017,
Mr. Roopesh Kumar,",
The Assistant Joint Director,",
PMLA,",
Enforcement Directorate,
Chandigarh,
Reg: - Request for issue of NOC for operations in account No. 034013100000618 in the name of Geoxa Steels Private Limited.,
Sir,",
With reference to above, we came to know that you have also stop operations in our above cited account number in the reference of case of",
M/s. Heights International/Amanpreet Singh Sodhi.,
We hereby submit that the above cited account is a Cash Credit Limit account of our company namely Geoxa Steels Private Limited. Due to,
stoppage of operations in account we are unable to do any transaction in the account due to which there is likely chances that our account,
will be slipped to NPA category.,
We hereby also submit that our, this company has no foreign inward remittances and there is no relation with M/s. Heights International",
except common promoters.,
Further due to stoppage of operation in the above account we are unable to do the business smoothly.,
Keeping in view the above and our account will not slip into NPA category, we hereby humbly request your goodself to please allow us",
operations in the above cited account.,
Thanking you,",
Yours Truly,",
For Geoxa Steels Private Limited,
Sd/-,
Director,
GEOXA STEELS PRIVATE LIMITED,
Manufacturers of Stainless Steels, Tubes & Pipes",
Regd. Office: Village Kuba, Tehsil Samrala, Distt. Ludhiana â€" 141418(Punjab) INDIA",
E-mail: [email protected] URL: www.geoxasteels.com Tel: +91-1628-267018, 267218",
The Special Director,
Directorate of Enforcement,
Chandigarh,
Sir,",
Sub:- Account No. 034013100000618 in the name of Geoxa Steels Pvt.Ltd. maintained with Andhra Bank Ltd.,
Please refer to our letter dated 2.5.2017 on the above subject ( copy enclosed).,
In this connection it is submitted that :-,
1) That there is no credit balance in the captioned account.,
2) That the nature of the account is Cash Credit Limit account.,
3) That non operation of the account will turn the account into NPA account.,
4) That non operation of the account has resulted into uncalled for and unnecessary liability of interest towards bank.,
5) That the work of the company has effected by non operation of the account.,
6) That no foreign exchange transaction has taken place through the said account.,
7) That no useful purpose will be served by disallowing the operation of the bank.,
It is therefore prayed that directions may please be issued to the bank to allow the operation of the account.,
Dated: 23.06.2017,
Yours faithfully,",
For Geoxa Steels Private Limited,
Sd/-,
Director,
When it was pointed out to the learned counsel for the respondent, he stated that there are other cases pending against the companies owned by",
the Amandeep Singh, who is one of the Director of this Company. He admits that the name of the appellant company is not charged in the schedule",
offence. He admits that in the account, in question, there were debit entries and the appellant is to pay more than 9 crores to the bank as the appellant",
has failed to pay the same and the bank has declared the account of the appellant as NPA.,
Admittedly, neither the Appellant nor the frozen bank account are even named in the FIR and the ECIR. There are no allegations, whatsoever,",
against the Appellant or the frozen bank account. There are no specific allegations in the OA against the frozen Bank account.,
As far as passing the order to delete the entry of declaration of NPA, the said question does not arise as this Tribunal has no jurisdiction. Counsel",
for the appellant, however, states that the appellant intents to pay the amount by virtue of settlement so that business may continue. He referred the",
letter dated 26.10.2018 issued by the Bank. The same is reproduced as under:,
 ANDHRA BANK,
From:
Chief Manager
Andhra Bank Millerganj, G T Road Branch
Ludhiana","To,
Mr. Amanpreet Singh Sodhi, Director
M/s. Geoxa Steels Pvt.Ltd,
Village Kubba, Tehsil Samrala, Dist. Ludhiana
141 418
Lt No. 0340/52/18-19/240,Dated â€" 26.10.2018