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Judgment
S. No.,Name,Amount (Rs.) and asset
1.,Shri Sandeep Tyagi,"1,41,62,473.77
2.,M/s. Mainak Agency Pvt. Ltd.,"2,41,94,487.69
Reliance Mutual Funds,403127549606 Mainak Agency Pvt. Ltd.,
Reliance Mutual Funds,403191057977 Mainak Agency Pvt. Ltd.,
Reliance Mutual Funds,401143468537 Mainak Agency Pvt. Ltd.,
Reliance Mutual Funds,499114249906 Mainak Agency Pvt. Ltd.,
Reliance Mutual Funds,40313226043 Sandeep Tyagi.,
Reliance Mahindra Mutual Funds,493143590403 Sanjeev Tyagi.,
An intimation to this effect may also be sent to the undersigned. Encls: As above,,
Sd/-,,
(Yogeshwar Sharma),,
Deputy Director,,
The factum of de-freezing the mutual funds by the Special Court as well as passing the stay order passed by the Honâ€ble High Court of Delhi has,,
not been mentioned by the respondent in its letter.,,
Thereafter, on 11th June,2019, on the basis of direction issued by ED, a letter has been issued by Reliance Nippon Life Asset Management Ltd.",,
and the same is reproduced below:-,,
Ref: RMF/June/2019/SR 58900156,,
June 11, 2019",,
RELIANCE NIPPON LIFE ASSET,,
MANAGEMENT LTD Company,,
Nippon Life,,
To,",,
Sanjeev Tyagi,,
91-E, Eastern Avenue",,
Sainik Farms,,
Near Ram Mandir Deoli South Delhi,,
Delhi-110062,,
Sub: Release of investments as per notice from Directorate of Enforcement,,
Dear Mr. Tyagi,",,
We are in receipt of a Notice in view of the powers conferred upon the Directorate of Enforcement in terms of Section 8(4) of PMLA, 2002",,
requesting us to hand over the possession of the investment lying (as on date), towards the investments held by you, in favour of their ED",,
bank account.,,
We would like to inform you that we have accordingly acted upon the said notice and followed the instructions as per the notice served on us.,,
We hereby enclose a copy of the Notice received from Directorate of Enforcement by us for your ready reference.,,
Thanking You,",,
Yours Sincerely,",,
For Reliance Capital Asset Management Ltd.,,
Sd/-,,
Ganesh Gawde,,
Senior Manager-Customer Service,,
Enclosures:,,
Exhibit 1: Copy of the Notice received from Directorate of Enforcement.,,
No notice had been issued to the appellants before taking such steps, nor any information given to Special Court, who has passed the de-freezing",,
order, nor any permission is taken from the Honâ€ble High Court of Delhi.",,
The contention of Mr. Manav Gupta, learned counsel appearing on behalf of the above-mentioned two appellants is that the respondent has",,
encashed the mutual funds despite of the appeal pending before the High Court by the CBI where the operation of the order of Special Court has,,
been stayed. It is stated by him that the act of respondent, who was aware about the said proceedings with utter disregarded the procedure",,
established by law as the same counsel who is appearing on behalf of ED has appeared before the Honâ€ble High Court on behalf of CBI in appeal,,
when the interim order was passed. It is argued by Mr. Manav Gupta that the respondent has even no power to sell or alter the assets of “person,,
concernedâ€, in this manner which is contrary to Sub-rule (4) of Rule-4 of PMLA, as the trial is yet to be conducted. It is stated by him that the",,
respondent has not waited the decision of the High Court in the appeal filed by the CBI. It is done by the respondent in order to redundant the order of,,
Special Court which is sub-judice before the High Court.,,
On the other hand, Mr. Vikas Garg, learned counsel appearing on behalf of the respondent states that the respondent is entitled to encash the",,
mutual funds once the confirmation order has been passed without waiting the result of appeal. However, it is not denied by him that in the charge-",,
sheet filed by the CBI in FIR being RC No. 217 2013 A 003, they are not named.",,
The Prevention of Money Laundering Act taking possession of attached or frozen properties confirmed by the Adjudicating Authority Rules 2013,",,
in particular, Rule 4(4) specifically provides that â€"",,
“Where the attached property confirmed by the Adjudicating Authority is in the form of shares, debentures, units of mutual fund or",,
instruments, the authorized officer shall cause to get such shares, debentures, units of Mutual Fund or instruments to be transferred in",,
favour of the Director of Enforcement.â€,,
It is evident that the respondent by encashing the mutual funds at the pre-mature stage is directly contrary to Sub-rule (4) of Rule-4 without expiry,,
of period of appeal.,,
It is stated by the learned counsel for the appellants that only in the 3rd supplementary complaint dated 17.07.2018, the Special Judge, CBI had",,
passed the order dated 24.07.2018 and issued summons against the named persons in charge-sheet as well as to the appellants. It is stated that the,,
charges are yet to be framed. It is stated on behalf of appellants that under the schedule offence, the appellant â€" Sandeep Tyagi is not charge-",,
sheeted.,,
The argument of the learned counsel for the appellants says that since the conduct of the respondent is contrary to the rules, the status-quo ante",,
be passed on the date of passing the confirmation order directing the respondent to restore the mutual funds with the financial institutions till the,,
appeals are finally decided in the same manner as the respondent has not only followed the sub-rule (4) of rule-4, but also interfere with the judicial",,
process as the appeal pending in the Honâ€ble High Court filed by the CBI is yet to be decided.,,
Sub-rule (4) of Rule 4 mandates that at the best, the mutual funds can only be transferred in favour of Directorate of Enforcement. The rule does",,
not stipulates to change or alter the status of the property.,,
The mutual funds are the subject matter of the challenge of order dated 11.3.2019 passed by the CBI Court. In the present case, the impugned",,
order was passed on 30.5.2019, which was received by the appellant on 6.6.2019. As per statute, 45 days time is granted for filing the appeal against",,
the impugned order before this Tribunal. However, in the present case, it has been noticed that one day after the receipt of the impugned order on",,
7.6.2019, the respondent has encashed the mutual funds/securities.",,
It is correct that the respondent is an independent agency and once the order is confirmed, after serving the notice under Section 8(4) and subject",,
to filing of appeal and passing of an order, the respondent is entitled to take the possession. With regard to movable property, the sub-rule 4 of Rule 4",,
has to be complied very strictly. In case any breach of the said rule, the Appellate Tribunal has a power to interfere with.",,
The Honâ€ble Supreme Court of India in the matter of Kanhaiyalal V. Dr. D.R. banaji and others [1959 SCR 333] has held as under:-,,
“it is settled law that proceedings taken in respect of a property which is in the possession and management of the Receiver appointed by,,
Court under Order 40, rule 1 of the Code of Civil Procedure without leave of that court are illegal in the sense that the party proceeding",,
against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the proceedings",,
so held do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who, ultimately, may be",,
adjudged by the Court to be entitled to the same.â€,,
As far as merit of the case is concerned, I do not wish to express any opinion at this stage. However, prima facie, it appears that the IO in the",,
matter has encashed the mutual funds at the pre-mature stage which is contrary to rule and it would have been better if IO should have either,,
approached to the High Court to bring to the notice of Court before altering the property or he would have waited the decision of the High Court,,
where CBI has filed the appeal against the order passed by Special Court, CBI, who released the said property subject to certain conditions. At the",,
maximum, mutual funds could have been taken into its possession till the orders are passed by the Honâ€ble High Court of Delhi. No harm would have",,
caused as the attachment orders are already continuing redundant.,,
The IO ought to have informed the Honâ€ble High Court of Delhi at New Delhi in advance before taking any steps in respect of mutual funds,,
which are the subject matter of appeals filed by the CBI, in order to alter the status of movable property which was released by the Special Court in",,
relation to same subject matter of property.,,
Under these circumstances, prima facie, I am of the view that the mutual funds must be restored to the original position with the Reliance Nippon",,
Life Asset Management Ltd. If it is not possible, the IO shall prepare the FD for the same amount in the name of “Sandeep Tyagi†for the period",,
of one year and shall keep the same with the respondent. It is clarified that once the compliance is made, the status quo order shall continue. The",,
appellants shall not deal the said money or mutual funds after maturity in any manner.,,
In view of this order, the order passed on 11th July, 2019 for status quo is also modified and after compliance, both parties shall maintain status quo",,
in respect of mutual funds or the FD prepared.,,