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Judgment
FPA-PMLA-2778/JP/2018 & FPA-PMLA-2779/JP/2018
By this order, we propose to decide the present appeal which was filed against the order dated 9th November, 2018 (hereinafter both appellants be
read as appellant).
Before issuance of notice under Section 8(1) of the Act, the Adjudicating Authority on 29.06.2018 have recorded the reason to believe, by referring
the Provisional Attachment Order no. 02/2018 dated 16.05.2018 issued by the Deputy Director, Enforcement Directorate, Jaipur; the Original
Complaint dated 13.06.2018 numbered as OC 984/2018 and its Annexure/RUD.
a) FIR dt. 07.03.2016 is registered for the offences under section 120 B, 420, 467, 468, 471, 472 and 474 of IPC and section 13(2) r/w 13(1) (d) of PC
Act by CBI, BS & FC New Delhi against Satish Kumar Goyal and others. Charge-Sheet dt. 07.03.2016 came to filed by CBI for the offences
punishable under section 120 B, 409, 420, 467, 468, 471 of IPC and section 13(2) r/w 13(1) (c) and 13(1) (d) of PC Act against Bharat Bomb, Shankar
Khadelwal, Vipul Kaushik, Santosh Kumar Gupta and Usha Gupta. Investigation against Satish Kumar, Sanjiv Kumar, Deshraj Meena, Adarsh
Manchanda, Awadesh Tiwari, Piyush Jain and Vineet Jain is shown to be pending. ECIR dt. 11.07.2016 came to be registered by the Enforcement
Director as the offences under section 120 B, 420, 467 and 471 of IPC and section 13(2) r/w 13(1) (d) of PC Act are the scheduled offences. The
Charge-Sheet reveals that without requisite KYC documentation, over 386 bank accounts were opened by the suspects in the said three branches of
Syndicate Bank at (i) Malviya Nagar branch, Jaipur, (ii) M.I. Road branch, Jaipur and (iii) Bapu Nagar Branch, Udaipur by using identification
documents of genuine account hodlers in other banks with the nexus of bank officials for diverting the bank funds to the tune of 1055.79 Cr. to various
destinations by adopting three different modus operandi i.e. (i) discounting of forged cheques, (ii) withdrawing money through over-draft facility using
forged life insurance policies (LIC policies) and (iii) discounting forged inland bills that were raised against letters of credit shown to have been issued
by another bank. This resutled in siphoning off of the public money causing loss to the bank to the tune of Rs.1055.79 Cr.
b) The evidence revealed Bank officials were in active connivance with Bharat Bomb and Shankar Khandelwal in the fraud. They misused their
power to discount bills, cheques and sanction of loans against forged LIC policy. Cheques of M/s. Temple Trust Board, Nathdwara, M/s. Dharm
Putra Sansthan, and M/s. Patanjali Yog Hospital etc. were discounted without due (legal) authority. Accounts of M/s. Mobile Associa tes (Naresh
Kanwarani), M/s. Everest Ashiana (Vineet Jain), M/s. Raj Minerals (Mahendra Meghwal), M/s. Padmawati Enterprises (Bhaskar Jain), M/s.
Rameshwaram (Pradeep Nimawat), M/s. Dharma Putra Sansthan (Vipul Kaushik), M/s. Arihant Financial (Piyush Jain) and M/s. Ranu Motors (Nitin
Parikh) were used for forged cheques discounting. Money was layered and transferred to different accounts of M/s. Guman Furniture & Services,
M/s. Guman Furniture & Electronics, M/s. Guman Jewellers, Shankar Khandelwal, Tikam Khandelwal and others.
c) The Deputy Director has analysed the details emerging from the subsequent FIRs filed. The investigation revealed that (1) Bharat Bomb,
Chartered Accountant of Udaipur, (2) Shankar Lal Khandelwal, Builder of Jaipur, (3) Vipul Kaushik, Key Associate of Bharat Bomb (4) Santosh
Kumar Gupta, then Bank Manager, Syndicate Bank, (5) Vineet Jain, (6) Piyush Jain and (7) Usha Gupta w/o Santosh Gupta are involved in criminal
activities relating to the scheduled offences under section 120 B, 420, 467, 471, 472 of the Indian Penal Code and Section 13(2) r/w 13(1) (d) of the
Prevention of Corruption Act, 1988.
d) The above named persons in association with other persons acquired huge amount of money by way of criminal activities related to aforesaid
scheduled offences, thus there is derivation of proceeds of crime. The tainted money earned by master mind Bharat Bomb in association with other
persons were either placed into various bank accounts, invested in large number of immovable properties in their name or name of associates or was
transferred to individuals/firms/companies including those of Shankar Khandelwal, his family members & his group of companies; Himanshu Verma &
his companies; Pavitra Kothari, family member & his companies for investment/loan purpose by way of complex maze of financial transactions.
Bharat Bomb through the accounts of his associates, and his fictitious firms transferred about Rs.231.20 Cr. in accounts of Shankar Lal Khandelwal
of Guman Group, his family members and his companies out of the Proceeds of Crime generated from Syndicate Bank Fraud and out of the above
fund about Rs.103.07 Cr. has been repaid by Shankar Lal Khandelwal of Guman Group, his family members, his companies and more than
Rs.128,13,64,438/- is still outstanding. Further, Shankar Lal Khandelwal committed fraud aggregating to Rs.58,22,00,000/- by availing fraudulent
housing loans in the name of his associates, employees, family members by showing illicit booking of flats in various projects of Guman Group. That in
aggregate Shankar Lal Khandelwal of Guman Group, his family members and his companies are beneficiary of more than Rs.1,86,35,64,438/- which
are Proceeds of Crime generated out of Syndicate Bank fraud. Further, Pavitra Kothari, his father Daulat Raj Kothari and his company M/s. G.S.
Build Estate Pvt. Ltd. Are beneficiary of Proceeds of Crime to the tune of Rs.14.28 Cr. Himanshu Verma is beneficiary of Proceeds of Crime to the
tune of Rs.58.72 Cr. bank officials viz. Santosh Kumar Gupta and Deshraj Meena, their spouses are also beneficiary of Proceeds of Crime. The
amount lying in bank accounts, property purchased, property owned by Bharat Bomb and his associates; Shankar Lal Khandelwal, his family
members, associates, companies; Himanshu Verma & his companies, Pavitra Kothari & his family members; bank officials viz. Santosh Kumar
Gupta, Deshraj Meena and their spouses are proceeds of crime or value thereof being derived or obtained as result of criminal activity relating to a
schedule offence.
e) The Deputy Director has elaborated in Para 11 of the OC the facts concerning the attached movable and immovable assets under separate
captions (i) Land at village Champapura, Patwar â€" Sarna Chaud, Teh.- Kalwar, Dist. Jaipur registered in the name of M/s. Charlie Tradelink Pvt.
Ltd. (ii) Farm House at Khasra No. 204, 205, 206, 207 admeasuring 9600 Sq. Mtrs. At Village-Thikriya, Tehsil-Sanganer, Main Ajmer Road, Jaipur
(iii) Unsold stock at projects Guman Eternity Block A and Guman Eternity Block-B of companies M/s. Shreenth Ji Business Venture Pvt. Ltd. And
M/s. Sanwariaji Business Venture Pvt. Ltd. Respectively at Shastri Nagar, Subhash Nagar, Jaipur; (iv) Unsold stock at Guman Height, Plot No. 204,
Krishna Sagar Colony, Jaipur, Rajasthan (v) Plot No. GH-1 Gokul Nagar, Gokulpura, Kalwar Road Jaipur (vi) Land and Building of Hotel Palak
Paradise at Kalwar Road, Delhi Ajmer Express Highway, Jaipur (vii) Various immovable assets of Guman Group led by Shankar Lal Khandelwal (ix)
Office of Fourth Floor, Solaris Building D of Urmi Corporate Park, Plot No. C.T.S. No.988(Part), 98C, S.No.46(PT) & 47(PT) of Village Tungwa,
Saki Vihar Road, Andheri(E), Mumbai-72 registered in the name of M/s. Sanwariyaji Business Ventures Pvt. Ltd. (x) Land at Village â€
Parasrampura, Sargot, Ringhas, Tehsil-Shrimandhopur, District â€" Sikar, Rajasthan (Total Area 1.99 acres) registered in the name of M/s. Shrikripa
Steel Industries LLP (xi) Land at Village-Parasrampura, Sargot, Righas, Tehsil-Shrimadhopur, District â€" Sikar, Rajasthan registered in the name of
M/s. Shrikripa Rolling Mills LLP; (xii) Movable & Immovable properties registered in the name of Santosh Kumar Gupta, Chief Manager, Syndicate
Bank (Retired) and his family members (xiii) Movable & Immovable properties registered in the name of Deshraj Meena, Chief Manager
(Suspended), Syndicate Bank and his family members (xiv) Immovable properties of Himanshu Verma and his companies; (xv) Immovable properties
of Pavitra Kothari, Daulatraj Kothari, Priya Kothari (xvi) Vill No. 40, Pafrth City Kalwar Road, Jaipur registered in the name of Mahendra Meghwal
and cash of Rs.66,88,400/- seized by CBI from Mahendra Meghwal (xvii) Plot No. A-5, Airport Enclave (Airport Plaze Extension) Tonk Road, Jaipur
admeasuring 7276.40 Sq. Mtrs in the name of M/s. A. Gangwal Real Estate LLP (xviii) Proceeds of Crime available in various bank accounts of
different firms/persons whose accounts were used by Bharat Bomb in defrauding Syndicate Bank (xix) Proceeds of Crime available in various bank
accounts of different firms/persons controlled by Shankar Lal Khandelwal.
f) It is evident that prime facie the Defendants are in possession of the proceeds of crime and/or have committed the offence of money laundering
punishable under section 4 of PMLA.
g) The Defendants 1 to 127 named in the OC are required to be heard and called upon to indicate the sources of their income, earning or assets out of
which or by means of which he has acquired the property attached under section 5(1) of PMLA.
The Appellant has nothing to do and has no connection with the allegation of crime committed by the defendants/respondent no. 2 Bharat Bomb and
other persons concerned involved for the offences of money-laundering. The Appellant is not holdings any funds of any of the defendant/respondent.
The mortgage properties are admittedly not derived from criminal activities or proceed of crime. The scope of the PMLA is to punishing the accused
person and not to punish the innocent person who is not involved in the crime within the meaning of Section 2 (v) read with Section 3 of the Act. The
appellant is not charge sheeted nor any prosecution complaint has been filed against the appellant. The appellants have also no objection if the
borrowers properties which were acquired from proceed of crime be dealt by the respondent in any manner.
There is no nexus whatsoever, between the alleged crime and the appellant who is mortgagee of the properties and is a victim of the fraud and is
innocent party. The definition of proceed of crime as per Section (u) of the Act comprises of the property which is derived or obtained as a result of
criminal activities. The mortgaged properties are not acquired from proceed of crime.
The facts relating to present appeal are that on M/s A. Gangwal Real Estate LLP was a successful bidder in the auction conducted by Jaipur
Development Authority (for short JDA) for a plot situated at A-5, Airport Enclave, Airport Plaza Extension, Tonk Road, Jaipur on 23.09.2014
admeasuring 7276.40 sq mtrs for a total consideration of Rs. 79,16,72,320/- (Rs. 79.17 Crores). A copy of letter of JDA of confirmation dated
13.10.2014 of auction in favour of M/s A. Gangwal Real Estate LLP is filed.
It has come on record that in order to make payment for the aforesaid land, M/s A. Gangwal Real Estate LLP approached the Appellant â€
Rajasthan State Industrial Development and Investment Corporation ( for short â€" RIICO) seeking term loan and offered the aforesaid land as
principal security against the loan. As the land was purchased from JDA and there was no dispute about the title, RIICO after due diligence
sanctioned the loan of Rs. 40 Crores to M/s A. Gangwal Real Estate LLP vide its Letter of Intent No. ID.D.1 (2205) dated November 09, 2015.
The security for the said loan the aforesaid Plot No. A-5, Airport Enclave, Airport Plaza Extension, Tonk Road, Jaipur was kept as principal
Mortgage. Additional Security in the form of Group Housing Plots measuring 11502 and 9822 sq yards in Parth City, Phase I, Kalwar Road, Jaipur
was kept as mortgaged with RIICO which were owned by M/s Shri Govind Kripa Buildcon Pvt Limited being Respondent No. 85.
The said mortgage was by way of deposit of Title Deeds and on 18.11.2015, the borrower deposited Original Title Documents of A-5, Airport
Enclave, Airport Plaza Extension, Tonk Road, Jaipur with the Appellant which are filed at Page 780 â€" Vol III. Similarly the borrower also deposited
original title documents of Group Housing Plots measuring 11502 and 9822 sq yards in Parth City, Phase I, Kalwar Road, Jaipur to the Appellant on
20.11.2015 filed at Page 737 â€" Vol III. It is claim of the Appellant that the Appellant therefore had the exclusive charge over the said properties
against the principal loan amount of Rs. 40 Crs.
The Provisional Attachment Order dated 16.5.2018 the Enforcement Directorate has attached the following properties mortgaged with the
Appellant RIICO:
(i) A-5, Airport Enclave, Airport Plaza Extension, Tonk Road, Jaipur admeasuring 7276.40 sq mtrs
(ii) Group Housing Plots measuring 11502 sq yards in Parth City, Phase I, Kalwar Road, Jaipur; and
In the provisional attachment order dated 16.5.2018 itself its has been specifically stated that the attachment of the property at A-5, Airport
Enclave, Airport Plaza Extension is only to the extent of Rs. 7.37 Crores. Para 13(O)(v) at PAGE 878 of the Provisional attachment order reads as
under:
“Therefore above land of M/s A. Gangwal Real Estate LLP is liable for attachment to the extent of Rs. 7.37 in terms of definition of Proceed of
Crime under Section 21(u) of PMLA being any property which is derived or obtained directly or indirectly by any person as a result of criminal activity
relating to schedule offence or the value of any such property.â€
The Original Complaint No. 984 / 2018 filed by the Directorate of Enforcement before the Adjudicating Authority stated as under (Para 11.17(v)
at Page 1078) :
“Therefore, M/s A. Gangwal Real Estate LLP is beneficiary of Proceeds of Crime to the tune of Rs. 7.37 Cr generated out of Syndicate Bank
Fraud. Therefore the above land is liable for attachment to the extent of Rs. 7.37 Cr...â€
It is argued on behalf of the appellant that the present case is squarely covered by the recent judgment of the Honâ€ble Delhi High Court in
Directorate of Enforcement vs. Axis Bank & Ors. reported in 2019 SCC Delhi 7854 dated 2.4.2019 , wherein, it has been observed as under:
“163. Having regard to the above scheme of the law in PMLA, it is clear that if a bonafide third party claimant had acquired interest in
the property which is being subjected to attachment at a time anterior to the commission of the criminal activity, the product whereof is
suspected as proceeds of crime, the acquisition of such interest in such property (otherwise assumably untainted) by such third party cannot
conceivably be on account of intent to defeat or frustrate this law. In this view, it can be concluded that the date or period of the
commission of criminal activity which is the basis of such action under PMLA can be safely treated as the cut-off. From this, it naturally
follows that an interest in the property of an accused, vesting in a third party acting bona fide, for lawful and adequate consideration,
acquired prior to the commission of the proscribed offence evincing illicit pecuniary benefit to the former, cannot be defeated or frustrated
by attachment of such property to such extent by enforcement authority in exercise of its power under Section 8 PMLA.
Situation may also arise, as seems to be the factual matrix of some of the cases at hand, wherein a secured creditor, it being a bonafide
third party claimant vis-a-vis the alternative attachable property (or deemed tainted property) has initiated action in accordance with law
for enforcement of such interest prior to the order of attachment under PMLA, the initiation of the latter action unwittingly having the effect
of frustrating the former. Since both actions are in accord with law, in order to co-exist and be in harmony with each other, following the
preceding prescription, it would be appropriate that the PMLA attachment, though remaining valid and operative, takes a back-seat
allowing the secured creditor bonafide third party claimant to enforce its claim by disposal of the subject property, the remainder of its
value, if any, thereafter to be made available for purposes of PMLA.â€
The Honâ€ble High Court of Delhi has held that the interest of a third party in the property of an accused, acquired prior to the commission of the
proscribed offence cannot be defeated or frustrated by attachment of such property U/s 8 of the Act. The Honâ€ble High Court further recognized
the right of such third party to proceed with enforcement of its interest in accordance with law such that while the order of attachment under the Act
would not be rendered irrelevant, yet it would take a backseat such that the State action would be restricted to such part of the value of the property
as exceeds the claim of the third party, if any.
From the facts of the present, it is evident that legal issues of the Appellant case are similar to the judgement rendered by Honâ€ble Delhi High
Court as (a) The Appellant is not an accused and is bona fide third party to the transactions complained of by the ED; (b) The Appellant disbursed a
loan in accordance with law to the Respondents Accused and created a mortgage over the Secured Property prior to the commission of the Scheduled
Offence in respect of the Secured Property; and (c) The Appellant commenced the proceedings under SARFAESI Act against the Secured Property
prior to its provisional attachment. (d) The said property was not acquired from the proceed of crime.
The appellant is always at liberty to approach the Special Court to initiate the proceeding for disposal of mortgaged property, if so desired, who is
agreeable to deposit the excess amount if such situation will arise. Counsel for appellants after taking the instructions from his clients stated that his
clients are duty bound to deposit the excess amount with the respondent.
The Appellant has already initiated recovery proceedings under the SARFAESI and RDDBFI Act and insolvency proceedings under the I&B
Code for enforcement of its interest. S. 13 SARFAESI allows secured creditors to enforce security.
Pertaining to jurisdiction of this appellate tribunal, it is clear that in terms with the statutory safeguards incorporated in the Act, any party aggrieved
by the confirmation of the Provisional Attachment Order by the Adjudicating Authority may challenge such confirmation in an appeal to this Honâ€ble
Tribunal U/s 26 of the Act and then before the Honâ€ble High Court U/s 42 of the Act against the order of this Tribunal. Accordingly, under the
legislative and statutory scheme of the Act, unless a party has exhausted its remedies in appeal right up to the Honâ€ble High Court, an order
confirming the attachment cannot be said to have attained finality. This Tribunal is only concerned with the validity of the impugned order and
provisional attachment order which has been confirmed.
Therefore, this Tribunal possesses the requisite jurisdiction in terms with the Act as the court of first appeal, to adjudicate upon the pleas of the
Appellant and determine the bonafides and legitimacy of its claims as well as the legality of the Provisional Attachment Order. Upon an argument
being raised by the Enforcement Directorate that claims of third parties are to be solely adjudicated by the Special Court before whom trial is pending,
the Honâ€ble High Court of Delhi in the Axis Bank Decision has held that the claim of a party asserting a bonafide and legitimate claim would be
inquired into by the Special Court only if the order confirming the attachment “has attained finalityâ€. An order cannot be said to have attained
finality until and unless all the remedies under the Act have been exhausted. No doubt, the bank and financial institutions are always at liberty to
approach the Special Court (if so desired) in order to invoke the amended provision of sub section 8 of Section 8, however, it is wrong to suggest that
the bank and financial institutions are not entitled to challenged the order of attachment because this tribunal is only exclusively having jurisdiction to
examine the validity of attachment and to decide the same under section 26 of the Act as to whether attachment was valid or not. The bank and
financial institution are entitled to take the remedy before the Special Court after the decision of appeal or during the pendency of appeals.
This tribunal does not agree with the argument of the respondent on this issue as the bank and financial institution cannot be asked to be a mute
spectator to the confirmation of attachment of mortgaged properties at this stage without availing statutory remedy under this Act and await the
conclusion of trial U/s 3, 4 of the Act to agitate and pursue its rightful legal claim over such mortgaged properties. Till the trial is over (which may take
number of years). It would be futile to deny the Appellants claim over the mortgaged properties at the stage of confirmation of the PAO itself. If the
mortgaged properties are not acquired from the proceed of crime. The legislative intent for relief at this stage can be borne out from the fact that
under the proviso to sub clause 1 and 2 of section 8 of the Act, prior to the confirmation of the PAO, the Adjudicating Authority is required to
adjudicate over the claim of an innocent party who seeks claim over the attached property, apart from the person to whom notice had been issued.
Therefore, the Adjudicating Authority by the Impugned Judgment has erred in failing to recognise the legitimate claim of the Appellant at the stage of
confirmation of the PAO itself. Actually the borrowers always happy if their mortgaged properties stand attached so that they may not pay the loan
amount and their property shall remain in safe heaven. The Adjudicating Authority has dealt with the legal issue raised by the appellant.
The main findings of the Honâ€ble High Court of Delhi in which the exceptions are created, are as follows:-
(i) Date of Commission of offence of Money Laundering under PMLA is the “cut off†date and if the Bank has mortgage / charge over the
properties prior to the commission of offence under PMLA then it is a Bonafide Claimant and its Statutory rights canâ€t be defeated under Section 8
of PMLA, 2002.
(ii) Priority of Bonafide Claimants / Secured Creditors will have their dues realized first from the sale of such attached immovable assets and if any
balance is left out then the balance amount shall go to the ED on the premise that the said properties will continue to remain attached with the ED
under PMLA on the ground of value thereof.
(iii) Prior mortgage charge of secured creditors must be registered qua the mortgaged immovable properties only then Bankâ€s statutory rights under
Section 13 of the SARFAESI, Act are protected and protected.
(iv) SARFAESI, action initiated prior to the commission of offence of Money Laundering under PMLA would remain valid and interest of secured
creditors will remain protected.
The Appellant has nothing to do and has no connection with the allegation of crime committed by the borrowers. Bank is not involved for the
offences of money-laundering. The mortgage properties are admittedly not derived from criminal activities or proceed of crime. The scope of the
PMLA is to punish the accused person and not to punish a innocent person who is not involved in the crime within the meaning of Section 2 (u) read
with Section 3 of the Act. The appellants are not charge sheeted nor any prosecution complaint has been filed against the appellants.
There is no nexus whatsoever, between the alleged crime and the appellants who are mortgagee of the properties and is a victim of the fraud and
is innocent party. The definition of proceed of crime as per Section (u) of the Act comprises of the property which is derived or obtained as a result of
criminal activities. The mortgaged properties are not acquired from proceed of crime.
If paras 167 to 169 of Honâ€ble High Courtâ€s Judgment are read co-jointly with para-163 and 165, it is clear from the same that if the
attachment has attained finality or if order of confiscation has been passed, the claim and legitimate interest will have to be inquired by the Special
Court. The said findings are correct if the situation as in the present case appears are the same. In the present case, attachment has not attained
finality or any confiscation has been passed or any trial has commenced under the Section-4 of PMLA against the appellants. In fact, appellants are
innocent parties. They are victim. The trial against accused parties may take number of years. Their case is squarely covered under para-163 and 165
of the judgement.
It is therefore clear that the said property situated at A-5, Airport Enclave, has been attached only to the extent of Rs. 7.37 Crores whereas the
valuation of the property was Rs. 79.16 Crores in year 2014. As a result of this attachment, the Appellant has been unable to liquidate the same and
satisfy its dues.
It is submitted on behalf of appellant that merely because out of total consideration, a small amount of money which is alleged Proceeds of Crime
Is used to purchase a property, the entire property cannot be attached under Section 8(3) of the Act. It is stated that as on 15.4.2019 the outstanding
term loan dues of RIICO against Respondent No. 34 are Rs. 37,95,76,329.00 (Rs. 37.96 Crores). The demand of Enforcement Directorate against
said respondent is Rs. 7.37 Crores.
It is also a matter of fact that another property situated at Parth City, Phase I, Kalwar Road, Jaipur being Group Housing Plot measuring 11502 sq
yards has been mortgaged with the Appellant to the extent of Rs 10.25 Crores by the ED whereas the Circle Rate / DLC rate of the said property is
Rs. 15.72 Crores.
It is stated on behalf of appellant that the attachment may therefore be vacated over the property situated at A-5, Airport Enclave, Airport Plaza
Extension, Tonk Road, Jaipur admeasuring 7276.40 sq mtrs and RIICO may be permitted to auction/ sell this property to realise its due amount in
aforesaid terms as the alleged proceed of crime amount is secured by attaching the second property.
The Appellant is a Government Company and attachment of these properties would deprive the Appellant from recovering the due amount, which
in turn would be a loss of public money. In the appeal filed by Gangwal Real Estate LLP, he said party through its counsel has made the statement to
deposit the entire alleged proceed of crime i.e. Rs. 7.37 crores with the respondent without prejudice.
In the light of above, the impugned order is set-aside with regard to attachment of properties mortgaged with the appellant. The rest of the
attachment shall continue.
No costs.