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Judgment
MP-PMLA-1729/KOL/2015 (Ex-Parte Stay) & FPA-PMLA-915/KOL/2015
The appellant, United Mohun Bagan Football Team Pvt. Ltd ( Defendant No. 16 in the Original Complaint No. 380 of 2014 arising out of ECIR No.
01/KLZO/2013, UMBFT for short ) has preferred this appeal against the order dated 3.3.2015 passed in respect of the said O.C. by the Adjudicating
Authority confirming the order of Provisional Attachment Order (PAO) dated 29.10.2014 provisionally attaching the amount of Rs. 32,11,997/- lying in
Account No. 153010200032577 maintained by the appellant with Axis Bank Ltd, Mukti Chambers, Ground Floor, 4, Clive Row, Kolkata â€" 700001.
The facts in brief are as follows:-
2.1 M/s Saradha Group of companies under the chairmanship of Shri Sudipta Sen and controlled and managed by Sudipta Sen and his close aides, had
mobilized money from the common public under false promises of high returns and failed to return the invested money to the investors and thereby had
committed offences under Section 402 of IPC which is a scheduled offence under PMLA, 2002 and thereby a case of money laundering was initiated
against them.
2.2 The Proceeds of Crime were identified to be worth thousands of crores of rupees and this money had been utilized by Shri Sudipta Sen in funding
the various investments made by the Saradha Group of companies in immovable assets, movable assets, shares, Investments in various companies in
order to acquire the controls of the companies and so on, as detailed in the PAO no 377/2014 dated 13.02.2014 and PAO dated 04.04.2014.
2.3 The proceeds of crime were mobilized by four companies of the Group, namely, M/s Saradha Realty India Limited, Saradha Tours & Travels Pvt
ltd, Saradha Garden Resort & Hotels Pvt. Ltd and Saradha Housing Pvt. Ltd (hereinafter referred to as the said four companies).
2.4 During the scrutiny of bank accounts of Saradha Group of Companies, it was revealed that certain amount was paid by the said Sardha Group of
Companies to the appellant M/s United Mohun Bagan Football Team Pvt. Ltd as a financial contribution by Co-sponsor. On the issue of co-
sponsorship from Saradha Group, statement of Shri Debashish Dutta, Director, (UMBFT) was recorded on 19.09.2014.
2.5 From the statement of Shri Debashish Dutta, it appeared that UMBFT is a company incorporated under the Company Act, in which Shri
Debashish Dutta is having 12.50% shares and the other shareholders of the Company, as on 31.03.2013, were Gold Reef Investment Pvt. Ltd.
(49.99%), Swapan Sadhan Bose (12.50%), Anjan Kumar Mitra (12.50%) and Srinjay Bose (12.50%).
2.5.1 Shri Srinjay Bose introduced the company with Saradha Group for sponsorship. Shri Srinjay Bose was found to have been involved with Sangvad
Pratidin Television Pvt. Ltd, a company which had financial dealings with Bengal Media Pvt. Ltd, a company under the umbrella of Saradha Group of
Companies.
2.5.2 An MOU was signed between Shri Anjan Mitra, Managing Director of UNBFT and the Managing Director of Saradha Group on 20.09.2010,
according to which Saradha Group was to pay Rs. 2.0 Crore as sponsorship each year for the duration of the MOU viz. 2010-11, 2011-12 and 2012-
13 to the Club for using logo of Saradha Group. However, in total Rs. 1,94,50,000/- was paid by Saradha Group to M/s United Mohun Bagan Football
Team Pvt. Ltd during the FY 2010-11, 2011-12 & 2012-13.
2.6 Vide letter dated 25.09.2014, Axis Bank Ltd, Mukti Chambers, Ground Floor, 4, Clive Row, Kolkata â€" 700001 was requested by the respondent
to not allow debit from the account no. 153010200032577 maintained in the name of M/s United Mohun Bagan Football Team Pvt. Ltd. The balance
in the said account at the material time was Rs. 32,11,797/-. Since the said amount was involved in the activities of money laundering, it was
provisionally attached vide PAO dated 29.10.2014.
2.7 Accordingly, the Joint Director, Directorate of Enforcement Kolkata filed an original complaint no. 380/2014 under section 5(5) of the PMLA
against M/s Saradha Reality India Pvt. Ltd and Ors. with the appellant herein being arraigned as defendant no. 16 in the said O.C.
2.8 After issue of notice under Section 8(1) of the Act to the various defendants including the present appellant and on considering the replies
submitted by the defendants and the complainant and also giving the parties an opportunity for personal hearing, the Adjudicating Authority confirmed
the related attachment order. Being aggrieved with the same, the appellant has filed the present appeal qua the amount available in the appellantâ€s
Bank Account as on 25.09.2014 that was attached under the related PAO and confirmed in the impugned order.
3 In its appeal filed under Section 26 of the PMLA the appellants have contended that they are a company duly incorporated under the provisions of
the Companies Act, 1956 and is involved in promotion of football in India. It is closely and professionally associated with Mohun Bagan Athletic Club.
The appellant, like other professional outfits in the field of football has to keep and maintain a competitive Football Team comprising of professional
football players, coach and his support staff including the medical team. Besides, for the purpose of running its office, it also has to employ a number
of staff for diverse activities. In the circumstances, managing a professional football team also warranted huge expenses. For the said purpose, the
appellant is dependent on financial support through sponsorship from its main sponsor the United Spirit Limited and co-sponsorship from different other
entities against duly executed contracts. M/s Saradha Agro Development Limited, a unit of the Saradha Group was one of such co-sponsors.
3.1 By an agreement dated 20.09.2010 entered into by and between the applicant/ UMBFT and M/s Saradha Agro Development Ltd, a unit of
Saradha Group (herein after also refer to as co-sponsor for short), it was inter-alia stated as under:-
A. Saradha Group is engaged in various businesses of a diverse kind involving goods and services.
B (2) That Saradha Group shall co-sponsor the McDowell Mohun Bagan Football Team. UMBFT will put the Logo as provided by SARADHA
GROUP on the back of the practice jersey and match jersey (below the number).
(3) Saradha Group will pay UMBFT a sum of Rs.2,00,00,000/- (Rupees Two Crores only) for each of the three football seasons which shall be paid in
instalments on the dates as mentioned below, subject to deduction of applicable income tax at source.
(4) All payments shall be made by A/c. Payee Cheque only in favour of United Mohun Bagan Football Team Pvt. Ltd.
3.2 It was further contended that a bare perusal of the aforesaid agreement dated 20.09.2010, would show that neither the said co-sponsor disclosed
their specific business' activities nor the specific activities of the Saradha Group, of which the said co-sponsor claimed itself to be a Unit, was defined
or clarified. Further, the terms of payment towards co-sponsorship for football seasons 2010-11, 2011- 12 & 2012-13 for an amount of
Rs.2,00,00,000/- (Rupees Two Crore) per year were also mentioned in detail therein.
3.3 However, the co-sponsor turned out to be a habitual defaulter. After a few cheques issued by the co-sponsor were encashed, at the regular
requests of the co-sponsor, other cheques could not be presented before the Bank for insufficient funds. Two cheques for a total sum of Rs.
60,00,000/- were returned by the appellant to the said co-sponsor on account of having been rejected by the bank. The appellant out of frustration
decided to terminate the contract beyond the football season 2010-11. The co-sponsor when communicated about the displeasure of the club, by a
letter dated 02.06.2010, on their own informed the Secretary of the club that owing to financial stringency, they were unable to keep their contractual
commitment beyond the football season 2010-11. However, the appellant being in dire financial straits, persuaded the co-sponsor to make payment of
the unpaid amounts contained in the dishonoured cheques and the said co-sponsor from time to time kept paying in piecemeal, making thereby a total
payment of Rs. 1,94,50,000/- to the answering defendant, all however by A/c. Payee cheques.
3.4 The appellant further submitted that on its part, the appellant, at all material times, made payment of the dues of the players and other professional
personnel attached to the Football team and the Club. All such payments were made by A/c. Payee cheques and also duly disclosed to the Income
Tax and/or other relevant authorities. Applicable TDS against all payments was also deducted and paid to the Income Tax authorities. Neither the
appellant ever intended nor required to possess or hold back any amount out of the sponsorship and co-sponsorship payment it received nor to conceal
the same before any Authority, as alleged or at all.
3.5 Vide the instant complaint, the authorities purported to seek confirmation of the attachment of amount of Rs. 32,11,997/- lying in Bank A/c. No.
153010200032577 maintained by the appellant/defendant No.16 with Axis Bank Ltd., Mukti Chambers, Ground floor, 4 Clive Row, Kolkata-700001
which was provisionally attached in this case. With the attachment of the said bank account, the appellant, being involved in maintaining and managing
the Football team of Mohun Bagan with no profit making intent had been exposed to untold prejudice as players' payments were often deferred much
to the inconvenience of all concerned.
3.6 It was further submitted that the complaint in the subject O.C. No. 380/2014 appeared to have been made against sixteen other defendants too.
The allegations as far as the answering defendant /appellant is concerned, as given in the body of the complaint are reproduced as under;
“During the scrutiny of bank accounts of Saradha Group of Companies, it was revealed that certain amount was, paid to United Mohun Bagan
Football Team Pvt. Ltd. On the issue of co-sponsorship from Saradha Group. Statement of Shri Debashish Dutta, Director, United Mohun Bagan
Football Team Pvt. Ltd. was recorded on 19.09.2014.
From the statement of Shri Debashish Dutta, Director UMBFT it appeared that Mohun Bagan Football Team Pvt. Ltd. is a company incorporated
under Company's Act, in which Shri Debashish Dutta is having 12.50% shares and the other shareholders of the Company, as on 31.3.2013 are Gold
Reef Investment Pvt. Ltd. (49.99%), Swapan Sadhan Bose (12.50%), Anjan Kumar Mitra (12.5%) and Srinjay Bose (12.5%).
He further stated that Shri Srinjay Bose introduced the company with Saradha Group for sponsorship. Shri Srinjay Bose was found to have been
involved with Sangvad Pratidin Television Pvt. Ltd., a company which had financial dealings with Bengal Media Pvt., Ltd., a company under umbrella
of Saradha Group of Companies.
Accordingly, an MOU was signed between Shri Anjan Mitra, Managing Director of United Mohun Bagan Football Team Pvt. Ltd. and the Managing
Director of Saradha Group on 20.9.2010, according to which Saradha Group was to pay Rs.2.0 Crore as sponsorship to the Club for using logo of
Saradha Group. However, in total Rs. 1,94,50,000/- was paid by Saradha Group to M/s. United Mohun Bagan Football Team Pvt. Ltd. during the F.Y.
2010-11, 11-12, 2012-13.
Therefore, Vide letter dated 25.9.2014, Axis Bank Ltd., Mukti Chambers, Ground Floor-4, Clive Row, Kolkata- 700001 was requested to not allow
debit from the Account No. 153010200032577 maintained in the name of M/s. United Mohun Bagan Football Team Pvt. Ltd. The present Balance in
the said account is Rs.32,11,797/-. Since the said amount is involved in the activities of money laundering, it is liable for provisional attachment.
3.7 It was submitted that from the allegations made in the body of the complaint no case was made out against the appellant company under Section
420 of I.P.C., the Scheduled Offence in this case. Further, even assuming the aforesaid allegations to be true without admitting them, under no stretch
of imagination, the appellant could be alleged to have committed an offence of money laundering defined U/s.3 of the Prevention of Money
Laundering Act, 2002, (said Act/PMLA, for short) and punishable U/s.4 and therefore, the bank account of the appellant company is not liable to be
attached, provisionally or otherwise, under Section 5(1) of the said Act.
3.7.1 In support of the above arguments, appellant has placed reliance on the judgment of the Honâ€ble Madras High Court in M. Saraswathy & Anr.
Vs. The Registrar, Adjudicating Authority and Anr. - 2013-1 L.W. (Crl.) 54, in which while dealing with the scope of Section 5(1) of the PMLA, it
was held that in terms of the provisions of Section 5(1) of the Act, five conditions are pre-requisite for attaching the proceeds of crime provisionally
without issuing notice prior to the attachment. These five conditions are-
i) The Director, or any other officer, who provisionally attaches any property, shall have reasons to believe on the basis of materials in his possession;
ii) The person, against whom proceedings under P.M.L.A. 2002 has been initiated, must be in possession of any proceeds of crime.
iii) Such person must be charged of having committed any scheduled offence;
iv) Such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, and
v) If the provisional attachment is not ordered immediately such concealmentor transfer of such proceeds of crime may result in frustrating the
proceedings relating to confiscation of such proceeds of crime.
3.7.2 It was further submitted that keeping in view the ratio of the above judgment and in the facts and circumstances of the present case, the
provisions of Section 5(1) of the said Act were not attracted, inter-alia, on account of the following reasons
(i) Admittedly, the appellant company had no occasion to know the businessactivities of the said M/s. Saradha Agro Development Limited at the time
of execution of the contract.
(a) In the agreement, M/s.Saradha Agro Development Limited did not specify the precise nature of their business.
(b) Mohun Bagan is a club run on the love and passion of its supporters.
The source of income of the club is uncertain. Depending on availability of sponsors and co-sponsors and the extent of their financial support, the
annual budget of the football team is arrived at. Financial contributions therefore are not just welcome but the same is the life blood for running the
club. Football loving corporate contributors in India being few and far between, it was not possible for the appellant company or any of their
professional peers to embark on a roving enquiry, reject contributors on mere suspicion and accept financial contribution only upon foolproof screening
of the nature of business of the contributors.
(c) Moreover, the said M/s.Saradha Agro Development Limited has not been made an accused/defendant in the.present case. It being a distinct
corporate personality and distinguishable from any other corporate person with the prefix of Saradha or otherwise, from the allegations made in the
complaint, it was not clear even at this stage whether the co-sponsor has particularly been involved in the offence of Money Laundering.
(d) Therefore, the allegations made in the complaint in general and those made against the appellant company in particular did not suggest far less
substantiate that the money received by the answering defendant from the co-sponsor were proceeds of illegally laundered money.
(e) Moreover, no allegation was made in the complaint about M/s Sangvad Pratidin Television Pvt. Ltd or M/s Bengal Media Pvt. Ltd. It was argued
that the order of provisional attachment of the bank account of the appellant company and to investigate and prosecute it for economic offence under
the said Act for having indirect and benign association with certain corporate entities not even made accused in the present case and were illegal per
se.
(ii) The appellant company at no time whatsoever was in possession of the money received from the co-sponsor or, from any other sponsor or other
co-sponsor. The said money received from M/s.Saradha Agro Development Limited were instantaneously paid and passed on to the players and other
professionals attached to the Football team.
(iii) If only by reason of admitted receipt of the contracted amount by cheques, the appellant company is alleged of or held guilty for the offence of
money laundering, then the numerous agents of the Defendant Nos 1-3 who were all paid hefty commissions upfront were liable to be investigated and
prosecuted against in the present case for being involved in money laundering.
(iv) Similarly, the countless clubs, societies and associations who took money from the Defendant Nos. 1-3 on account of advertisement, holding
parties etc. were also liable to be made accused and their bank accounts attached in connection with the present case.
(v) It was submitted that the Directorate in general and the complainant in particular have acted rightly in not investigating/prosecuting against the
entities mentioned in paragraphs (iii) and (iv) above, for the same would border on absurdity and lead the investigation to disarray. It is submitted that
for similar reasons, the ongoing investigation and impending prosecution against the answering defendant should be put a stop to and the order of
provisional attachment of the bank account of the answering defendant should be recalled.
(vi) There being no criminal conspiracy alleged between the appellant company and Defendant Nos. l to 9 in the O.C., the complaint did not even
remotely suggest as to how the answering defendant could have been involved in the commission of cheating within the four corners of the Scheduled
offence, Section 420 of I.P.C.
(vii) It is inconceivable and has not been alleged whom has the answering defendant cheated or even intended to cheat.
(viii) There being otherwise no proceeds of crime and in the face of the most transparent disclosure of the books of account by the answering
defendant to the Income Tax and other authorities, the factum of concealment or transfer of the money received for further laundering could be safely
ruled out.
3.8 The definition of the offence of money laundering in Section 3 of the Prevention of Money Laundering Act, 2002 is as under:-
Offence of money-laundering - Whosoever directly or indirectly attempts to indulge or knowingly assists 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 shall be guilty of
offence of money laundering.
3.8.1 In the light of the above definition of Money Laundering under the PMLA the judgment of the Hon'ble Supreme Court in the case ofK oppula
Venkat Rao vs. State of A.P. (2004) 3 SCC 602 (Para 10), was referred in which while interpreting an attempt to commit an offence' it was held
inter-alia held as under:-
An attempt to commit an offence is an act, or a series of acts, which leads inevitably to the commission of the offence, unless,
something, which the doer of the act neither foresaw nor intended, happens to prevent this. An attempt may be described to be an act done
in part-execution of a criminal design, amounting to more than mere preparation, but falling short of actual consummation, and, possessing,
except for failure to consummate, all the elements of the substantive crime.
It is submitted in the facts and circumstances of the present case, the appellant could on no reasoning be said to have attempted to indulge in any
process or activity connected with the proceeds of crime.
3.9 Similarly, no allegation of the answering defendant being involved in any activity connected with the proceeds of crime can be conceived in the
fact situation of the present case. In this regard, reliance was placed on the Honâ€ble Supreme Courtâ€s Judgments in Addl. Commissioner of Income
Tax, Gujarat vs. Surat Art Silk Cloth Manufacturers Association - (1980) 2 SCC 31, in which case a five Judge Constitution Bench of the Hon'ble
Supreme Court interpreted the scope and purport of an activity for profit. It was held inter-alia that an activity for profit is one in which profit making
must be the end to which the activity must be directed or in other words, the predominant object of the activity must be making a profit.
3.9.1 From the facts of the case discussed and that admittedly, there being no motive of making profit out of contributions received from sponsors and
co-sponsors and the answering defendant/appellant being never aware of the contributions of co-sponsorship being proceeds of crime, its normal and
regular activity for the promotion of football in general and running the Mohun Bagan Football Club in particular cannot be construed as an activity
linked with the proceeds of crime.
3.10 It was further contended that the appellant made no secret of its income and expenditure before the Income Tax Authority and other authorities
and even otherwise, no allegation of concealment of any fact or any amount illegally laundered could be levelled against the answering defendant
having regard to the decision of the Hon'ble Madras High Court in Commissioner of Income Tax, Madras vs. J.K.A. Subramania Chettiar - (1977)
110 ITR 602.
3.11 Since the appellant herein, even going by the prosecution case, did not have and never demonstrated any intention of participating in, possessing
or further transferring laundered money being the proceeds of crime, even constructively and in law, they could not be alleged to have been possessing
the proceeds of crime. In this regard, reliance was placed on in J.A. Pye (Oxford) Ltd. & Anr. Vs. Graham and Anr. - (2002) 3 WLR 221, Their
Lordships of the House of Lords held inter-alia that what is crucial to understand is that without the requisite intention, in law there can be no
possession.
3.12 On the basis of the aforesaid judgments and arguments, it was submitted that the answering defendant cannot be alleged to have perpetrated the
offence of money laundering as defined in Section 3 of the said Act.
3.13 It is further argued that merely by introduction of the Saradha Agro Production Pvt. Ltd, a unit of Saradha Group to the appellant as a co-sponsor
by Shri Sanjay Bose who has not been consciously made an accused/defendant in the present case and who as on the date of the alleged introduction
was not even a member of the Board of Directors of the answering defendant would make the answering defendant guilty of money laundering as
defined in Section 3 and punishable under Section 4 of the said Act. They also submitted a copy of Form-32 with the Registrar of Companies (RoC)
Kolkata vide SRN: B27820901 dated 21.12.2011, signifying re-structuring of its Board of Directors and from which it was evident that Shri Sanjay
Bose was inducted as a Director in the Board of the Defendant No.16 only on 21.11.2011.
3.14 On the basis of the above arguments, it has been contended that the impugned order dated 03.03.2015 is unsustainable and may be set aside.
During the oral hearing, the learned counsel for the appellant reiterated the arguments made in the appeal. It was mainly contended that the
appellant was involved in the promotion of Football in India and was closely and professionally associated to Mohun Bagan Athletic Club. As part of
its activities, it was required to keep and maintain a competitive football team comprising of professional football players, coach and support staff
including medical team. Maintaining a professional football team required huge expenses and for meeting its financial requirements, the club was
dependent on financial support through sponsorship from its main sponsor M/s United Sprits Ltd. and co-sponsorship from different other entities
against duly executed contracts. One such co-sponsorship agreement dated 20.09.2010 had been entered with M/s Saradha Agro Development Ltd.,
(SADL or “the said co-sponsorâ€, for short), a unit of Saradha Group. In terms of the said agreement, the appellant was to receive an amount of
Rs. 2,00,00,000/- (Two Crore only) for each of the Football Seasons 2010-11, 2011-12 and 2012-13 viz. during the 31 month period from September
2010 to March, 2013. However, the appellant actually received a total of Rs. 1,94,50,000/- (which was spread over the period September 2010 to
October 2012) from the said co-sponsor against the amount of Rs. 2,00,00,000/- due for the football season 2010-11 and the agreement for the
remaining two football seasons was terminated on account of financial stringency of the said co-sponsor.
4.1 It was contended that the entire amount received by the appellant from SADL, alongwith amounts received from the main sponsor and other co-
sponsors, was utilized for making the payments of the dues of the players and other professional personnel attached to the Football team and the Club.
All such payments were made by A/c payee cheques and were duly disclosed to the Income Tax and/or other relevant Authorities. Applicable tax
deduction at source (TDS) against these payments was made by the appellant and also paid to the Income Tax Authority. No amount from the
amounts received as sponsorship/co-sponsorship payment was ever intended or required to be or actually possessed or held back by the appellant. All
income and expenditure were duly disclosed before the Income Tax Authority. In these circumstances, the amount of Rs. 32,11,797/- lying in its Bank
Account as on 25.09.2014, the day on which it was attached, could not be said to be an amount involved in Money Laundering and therefore the
attachment of the same and its confirmation vide the impugned order was un-sustainable, not being as per the provisions of the PMLA, and was
required to be set aside.
4.2 The learned counsel for the appellant also referred to the additional affidavit dated 11.08.2015 filed by the appellant wherein the copies of the
tabular chart showing the monthly receipt, payments and balance in the Bank Account No. 153010200032577 maintained by the appellant with Axis
Bank Ltd., Dalhousie Branch, Kolkatta (the said Bank A/c, for short), during the period September, 2010 to March 2013 was filed alongwith the
yearly Audited Accounts of the company/appellant for the FYs 2010-11, 2011-12, 2012-13 and the Bank Statement for the said Bank Account for the
period 1st April 2014 to 30th September, 2014. As per the details in the tabular chart, the opening balance in the said Bank Account in the month of
September, 2010 was Rs. 94,32,837.81/- and the closing balance as on 31st March, 2013 was Rs. 15,97,254.45/-. During this period, in addition to the
amount of Rs. 1,94,50,000/- received from SADL, the appellant received a sum of Rs. 27,99,75,389/- from the main sponsor and other co-sponsors
and other streams of income eg. sale of tickets etc. Thus the total income of the appellant during the said 31 month period came to Rs. 29,94,25,389/-.
However, during the same period, the appellant incurred expenditure to the tune of Rs. 30,72,60,972/- towards payments of football players, coaches
and other administrative expenses etc. resulting in loss for the three financial years which was also reflected in the yearly audited accounts.
4.2.1 The Tabular Chart also shows that the amount of Rs. 1,94,50,000/- from the co-sponsor M/s Saradha Agro Development Ltd. (SADL) was
received vide forty cheques spread over the period September, 2010 to October 2012 and no amount was received by the appellant from SADL
and/or any other units of the Saradha Group thereafter.
4.2.2 The appellants have contended that the source of the sum of money of Rs. 32,11,797/-from the Bank A/c of the appellant as on 25.09.2014
which has been provisionally attached /confirmed in this case is from the funds received by the appellant from its main sponsors and co-sponsors
(other than SADL on Saradha Group of Companies) during the period April, 2014 to September 2014. As per the details furnished in the affidavit,
during the said period April, 2014 to September, 2014, the appellant received a sum of Rs. 3,91,99,994/- from M/s United Spirit, “Rs. 98,00,000/-
from M/s Ripley and Company and Handling Pvt. Ltd, Rs. 16,66,000/- from Ripley and Company Ltd., 1,75,500/- from M/s Tata Teleservices Pvt.
Ltd., Rs. 17,48,096/- from All India Football Federation, Rs. 26,00,500/- from different advertisers and lastly Rs. 19,780/- from sale of match tickets
aggregating to Rs. 552.095 lakhs. Pertinently, there are no payments/amounts received from SADL during this period. Based on the above, it is
contended that the attached amount of Rs 32,11,797/-was not out of the amounts received by the appellant from M/s Saradha Agro Development or
any other unit of the Saradha Group which were received only during September 2010 to October 2012 and were also utilized towards meeting the
appellants day to day expenses near about the time when it was received. It has been argued that for the said reason also, the charge of money
laundering could not be made against the appellant qua the attached amount
The learned counsel also referred to the various judgments as mentioned in the appeal in support of his submissions.
Responding to the arguments of the learned counsel for the appellant Shri S.A. Saud, Advocate learned counsel for the respondent submitted that
the scope of the present proceeding is limited to safe keep the properties of either the accused person or the ones to whom the trail of proceeds of
crime leads to for the duration of the trial under the Act. Since this Honâ€ble Appellate Tribunal cannot pass an order charging, convicting or
discharging/accusing the defendant from the offence of money laundering, hence, the merits of the matter i.e. the criminal case is not required to be
looked into at this stage from that angle. At this stage the existence of prima facie case against the defendant for either having generated proceeds of
crime or being in receipt of the same is to be seen and the appellantâ€s challenge to the Adjudicating Authorityâ€s order is required to be rejected or
allowed in the background of the above. It was submitted that admittedly the appellant had received financial contribution from the Saradha Group of
Companies who are accused of having committed the scheduled offence of cheating under Section 420 of the IPC. Therefore, the submissions made
on behalf of the appellant regarding the ingredients necessary for attachment of properties in terms of Section 5(1) of the Act and the judicial
pronouncements relied upon by the appellant in that regard are of no help to the appellant in the present appeal.
5.1 As regards the appellantâ€s contention of their having no nexus with the Saradha Group of Companies, he argued that admittedly the appellant
was introduced to the Saradha Group of Companies for sponsorship by one Shri Sanjay Bose who was one of the Directors of the appellantâ€s
Company and who was found to be involved with the Sangbad Pratidin Television Pvt. Ltd, a company which had financial dealings with Bengal
Media Pvt. Ltd., a company under the umbrella of Saradha Group of Companies. Further, the Saradha Group of Companies under the Chairmanship
of Shri Sudripta Sen and controlled and managed by Sudripta Sen and his close aides had mobilised large sums of money from the common public on
the promise of high returns and failed to return the invested money to the investor and thereby committed offence under Section 420 of IPC which is a
scheduled offence under PMLA 2002 and thereby case of money laundering had been initiated against them. A part of the proceeds of crime
aggregating to Rs. 1,94,50,000/- was received by the appellant from the Saradha Group of companies during the FY- 2010-11, 2011-12, and 2012-13.
He further stated that the investigation had shown than there was intermixing and intermingling of funds between the various Saradha Group of
Companies. Moreover the agreement in terms of which the amounts were said to have been paid by the Saradha Group of Companies to the appellant
was an un-registered agreement. Further doubt with regard to the authenticity of the said agreement dated 20.09.2010 is created due to the non-
production of the original copy of the letter dated 02.06.2010 from M/s Saradha Agro Development ltd, to the appellant terminating the said agreement
dated 20.09.2010. The contribution by Saradha Group of Companies to the appellant was detected during the course of examination of the accounts of
the Saradha Group of Companies and therefore, there was a clear trail of movement of the proceeds of crime to the appellant.
5.2 The learned counsel for the respondent sought to distinguish the judgment of the Honâ€ble Madras High Court in the case of M. Saraswathy &
Ors. on the ground that the issue decided in the said case was limited to the extent whether provisional attachment, order could be confirmed without
issuing notice prior to attachment which is not the issue is the present case.
Responding to the argument from the respondent side that the letter dated 26.06.2010 terminating the co-sponsorship agreement dated 20.09.2010
beyond the Football Season 2010-11 could not be taken cognisance of as the date of the letter (viz. 20.06.2010) was prior to the date of the agreement
(20.09.2010) sought to be terminated by it, the learned advocate for the appellant submitted that this was obviously a typographical error. The said
letter only terminated the agreement dated 20.09.2010 beyond the Football Season 2010-11 and stated that they (SADL) would not be paying any
amount for the new Football Season 2011-12 onwards. It was contended that in any case, it is not even the case of the respondent that any amount
over the amount of Rs. 1,94,50,000/- was received by the appellant from SADL or any other units of the Saradha Group, which is less than the
amount of Rs. 2 Crores required to be paid by SADL to the appellant for the football season 2010-11 in terms of the referred agreement dated
20.09.2010 and beyond which the agreement was terminated. Based on the above facts, it was argued that non production of the original copy of the
letter dated 20.06.2010 during the course of these proceedings or for it having in-advertently mentioned the date of the letter as 02.06.2010 is of no
material consequence.
The pleas and contentions raised by both sides, and also the material and the various documents on record have been carefully considered. It is
observed that it is the admitted case of both sides that an amount of Rs. 1,94,50,000/- was received by the appellant by way of Co-sponsorship
payment from M/s Saradha Agro Development Ltd (SADL), a unit of the Saradha Group in terms of the agreement dated 20.09.2010 between the
appellant and M/s Saradha Agro Development Ltd (SADL). As per the said agreement, the appellant was to receive an amount of Rs. 2,00,00,000/-
(Two Crores) for each of three Football Seasons 2010-11, 2011-12 and 2012-13 from the Saradha Group. However, in actual fact, a sum of Rs.
1,94,50,000/- only was paid by such units to the appellant during the period September, 2010 to October, 2012 against the amount of Rs. Two Crores
due for the football season 2010-11. According to the appellant, the agreement for the remaining two Football Seasons 2011-12 and 2012-13 was
terminated by the co-sponsor (SADL) by the letter dated 02.06.2010 on account of financial difficulties. The respondent have however, argued that
the said letter dated 02.06.2010 could not be accepted on its face value as the original copy of this letter was not produced at any stage of the
proceeding and the date of the letter (viz. 02.06.2010) preceded the date of the agreement (viz. 20.09.2010). This aspect will be reverted to later in the
order. Suffice to say for the present that it is neither partyâ€s case that any amount over the said amount of Rs. 1,94,50,000/- was received by the
appellant from SADL.
The amount of Rs. 1,94,50,000/- received by the appellant from SADL was received vide forty different cheques during the period from September,
2010 to October 2012 . All these payments, along with payments received from other co-sponsors and main sponsors were deposited by the appellant
in the said Bank Account viz. A/c No. 153010200032577 maintained by the appellant with Axis Bank Ltd., Mukti Chamber, Ground floor, Clive Row,
Kolkata-700001. The amount attached in the present case qua the subject appellant is the sum of Rs. 32,11,797/- as available in the said Bank
Account as on 25.09.2014. It is the case of the respondent that the Saradha Group of Companies had mobilized vast sums of money from the common
public under false promises of high return and failed to return the invested money to the investors and therefore had committed offence under Section
402 of I.P.C. which is a scheduled offence under PMLA 2002. As there was intermingling and intermixing of funds between different
companies/units of the Saradha Group, the amount received by the appellant from SADL was part of proceeds of crime and therefore the amount
outstanding in the said Bank Account as on 25.09.2014 when such inquiry was undertaken in respect of the appellant was also part of the proceeds of
crime and therefore, liable for attachment and confirmation under the PMLA.
On examining the referred co-sponsorship agreement dated 20.09.2010 entered into by the appellant with M/s Saradha Agro Development Ltd
(SADL), it is observed that the same provides for the payment of Rs. 2,00,00,000/- for each of the football seasons 2010-11, 2011-12 and 2012-13 by
the latter(SADL) to the appellant as sponsorship fee in lieu of participation of the appellantâ€s players etc in the promotional activities pertaining to the
Saradha Group of Companies. There is merit in the appellantâ€s contention that the subject agreement was a normal co-sponsorship agreement
entered into by the appellant with corporates/organizations who were willing to co-sponsor the clientâ€s professional football team. As per the terms
of such agreement, the concerned co-sponsor was required to make agreed payments to the appellant for the agreed period and the appellant on its
part was required to perform certain activities viz. display of the co-sponsors logâ€o on the back of the practice jersey and match jersey of the
players, display of co-sponsorâ€s bill boards in the club premises during the home matches, press conferences and other promotional works for the
group. Such agreements had been entered into by the appellant with several other corporate/co-sponsors from whom they also received such
payments. The appellants have provided details of similar amounts received by them for several other co-sponsors/organizations and therefore their
contention that the amount was received by the appellant from SADL in the normal course of business for sponsoring of their professional football
team merits acceptance. Moreover, the amount received by the appellant was also utilized by them in the normal course of its business and day to day
activities viz. towards the payment of amounts to the players, coaches and administrative expenses etc. of the club. All the payments were made by
cheque and with payment of appropriate TDS and declaration to the concerned authorities. These contentions of the appellant are not rebutted by the
respondent in any manner. No evidence has been brought on the record by the respondent to show that any of the amounts received by the appellant
from SADL or other units of the Saradha Group were held back or utilized for any other purposes other than as above.
The appellant have contended that they had no occasion to know the business activities of Saradha Agro Development ltd. at the time of entering
into the agreement. In the agreement, the Saradha Group of companies stated themselves to be engaged in various businesses of goods and services.
The appellant being dependent on financial contributions from sponsors/co-sponsors for its activities and such sponsors/co-sponsors being limited in
number, it could not have embarked on a roving inquiry to ascertain the business of the co-sponsor or reject some co-sponsors on mere suspicion.
Further, no concrete evidence has been brought on record by the respondent to show the direct or indirect involvement of the appellant in any activity
connected to money laundering, of their having nexus with the Saradha Group of Companies or of their being aware of the appellant company having
been engaged in the committing of the alleged scheduled offence. The only allegation in this regard is that the appellant was introduced with the
Sardha Group of companies by Dr. Srinjay Bose, a Director of the company who was also involved with Sangvad Pratidin Television Ltd., a company
which had financial dealings with Bengal Media Pvt. Ltd, a company under the umbrella of Saradha Group of Companies This contention however,
does not stand to scrutiny as on the date of the agreement viz. 20.09.2010, Shri Srinjay Bose was not a Director in the appellantâ€s company and in
actual fact, he became a Director of the said company at a much later date viz. 21.09.2011. Necessary evidence in this regard viz. form 32 giving
details of his appointment as Director has been produced by the Company/Appellant. Further, there is no allegation, much less any corroborating
evidence to show the involvement of the appellant in the alleged illegal activities of the Saradha Group. Thus, this contention viz. about the agreement
into SADL having been enabled by Shri Srinjay Bose who was associated with a company which had some financial dealings with a company under
the umbrella of the Sardha group of companies in itself cannot be taken as satisfactory evidence to even, prima facie, show that there was nexus
between the appellant and SADL and other companies of the Saradha Group in the conduct of the alleged illegal activities of the Saradha Group or
that the appellant was aware of the illegal nature of the business of Saradha Group of Companies in committing of the scheduled offence.
The respondents have contended that as the original copy of the letter dated 02.06.2010 from M/s Saradha Agro Development Ltd to the appellant
terminating the said agreement dated 20.09.2010 was not produced at any stage of the proceedings and the date of the letter (viz. 02.06.2010) being
prior to the date of the agreement (20.09.2010), cognizance of the said letter terminating the agreement could not be taken. The appellant has
contended that mentioning the date of the letter as 02.06.2010 was an obvious typographical error. The contention appears acceptable. Moreover, it is
the admitted case of both sides that the total amount received by the appellant from M/s Saradha Agro Development Ltd or other Saradha Group of
Companies was Rs. 1,94,50,000/-only. Considering that there is no evidence produced by the respondent to show that any amount over the amount of
Rs. 1,94,50,000/- was received by the appellant from the M/s Saradha Agro Development Ltd. or other Saradha Group of Companies in terms of the
said agreement dated 20.09.2010, which is also the case of the appellant, the non-production of the original copy of the said letter or the alleged
discrepancy regarding the date of the letter (02.06.2010) being prior to the date of the agreement (20.09.2010) is of no material consequence.
In this regard, reference is also made to the Judgment dated 4.3.2011 of the Honâ€ble High Court of Andhra Pradesh at Hyderabad in the case of
B. Rama Raju S/o B. Ramalinga Raju Vs. Union of India (UOI), in Writ Petition Nos. 10765, 10769 and 23166 of 2010. In this case, the petitioner had
challenged the vires of certain provisions of PMLA. Challenging section 2(1)(u) of PMLA it was contended that the expression ""Proceeds of Crime
as defined/understood/interpreted by the Enforcement Director is likely to target bonafide purchasers/ transferees of the property who have no
knowledge/nexus/participation in any criminality associated with a property. It was also contended that while a property in the domain, custody or
possession of any person who knowingly assists or participates in the criminal activity of a person accused of a scheduled offence would constitute
proceeds of crime but property in the domain, custody or possession of a person who is a bonafide purchaser/transferee of such property without
knowledge of or participation in the malfeasance cannot constitute proceeds of crime. Upholding the vires of the provisions of section 2(1)(u) of the
PMLA, 2002 and allaying the apprehensions of the petitioner that property of bona fide purchasers may be subjected to attachment and confiscations,
the Honâ€ble High Court observed as follows:
“37. Section 8(1) clearly postulates affording of an opportunity to a person in possession of proceeds of crime to indicate the sources of
his income, earnings or assets; out of which or by means of which he has acquired the property attached, under Section 5(1) or seized
under Sections 17 or 18 the evidence on which he relies and other relevant information and particulars. It is therefore clear that where a
property is provisionally attached under Section 5, the person in possession of such property may avail the opportunity under Section 8 to
indicate/establish that he has acquired the property attached (prima facie the proceeds of crime) out of his lawful earnings or assets, that he
has the means to do so, and that his acquisition is therefore legitimate, bona fide and at fair market value of such property; and that the
value paid for acquisition of the property and not the property in his possession that constitutes proceeds of crime, if at all. On such showing,
to the satisfaction of the adjudicating authority, it would perhaps be not the property in possession of a person but the fair value for which he
has acquired the property and paid to the transferor that constitutes proceeds of crime and the authorities may have to proceed against the
property or value in the hands of the transferorâ€.
(emphasis supplied)
In the present case, the appellant had received payments amounting to Rs. 1,94,50,000/- spread over the period Sept. 2010 to October, 2012 from
SADL and other units of the Saradha Group in terms of the co-sponsorship agreement dated 20.09.2010 entered into between the two. On its part and
as consideration for the said payments, the appellant provided various promotional services to the SADL and the Saradha Group of Companies from
time to time. The payment received by the appellant from M/s SADL, along with that received from the main sponsor and other co-sponsors was
utilized towards meeting its day to day expenditure including payments to players, coaches, medical staff etc. There is no allegation against the
appellant that such payments or part thereof were held back by the appellant, diverted for other use etc. Accordingly, going by the ratio of the above
decision/discussion, even if it was to be assumed that the payments made by the co-sponsor (SADL) to the appellant were part of proceeds of crime
in the hands of the co-sponsor, considering that these payments were received in terms of a bona-fide agreement between the parties and in
consideration of promotional services of good value provided by the appellant to SADL and the Saradha Group of Companies and there is no
allegation, much less any evidence to show the involvement of the appellant in the alleged illegal activities of the Saradha group of companies, such
payment in the hands of the appellant would not constitute the proceeds of crime and only the promotional services received by SADL and the
Saradha Group of Companies could be so considered. In other words, the amount lying in the Bank Account of the appellant as on 25.09.2014 that
was attached in the case would not constitute proceeds of crime in the hands of the appellant. Pertinently, it is not the case of the respondent that the
amount attached in this case is towards the value of the proceeds of crime.
In this context it is noted that the entire amount of Rs. 1,94,50,000/- from SADL and others units of the Saradha Group was received during the
period Sept. 2010 to October, 2012. Apart from these funds, the appellant also received contributions from the main sponsor and other co. sponsor.
From the audited accounts of the appellant as well as the submissions in the additional affidavit dated 11.08.2015, it is seen that amount received by
the appellants from SADL and other Group companies during each of the FYâ€s 2010-11, 2011-12 and 2012-13, the appellant made financial losses
and there was no carryover of funds from one financial year to another. Thus, the amount of Rs. 1,94,50,000/- which was received by the appellant
from SADL and other copies of the Sardha Group up to October, 2012 was utilized during the adjoining period thereafter.
13.1 The appellants have contended that the source of the sum of Money of Rs. 32,11,797/-from the Bank A/c of the appellant which has been
provisionally attached /confiscated in this case as on 25.09.2014 is from the funds received by the appellant from its main sponsors and co-sponsors
(other than SADL on Saradha Group of Companies) during the period April, 2014 to September 2014. As per the details furnished in the affidavit, the
appellant received a sum of Rs. 3,91,99,994/- from M/s United Spirit, “Rs. 98,00,000/- from M/s Ripley and Company and Handling Pvt. Ltd, Rs.
16,66,000/- from Ripley and Company Ltd., 1,75,500/- from M/s Tata Teleservices Pvt. Ltd., Rs. 17,48,096/- from All India Football Federation, Rs.
26,00,500/- from different advertisers and lastly Rs. 19,780/- from sale of match tickets during the said period. Pertinently, there are no
payments/amounts received from SADL during this period. It has already been noted herein before that the entire amount received by the appellant
from SADL and other companies of Saradha Group was received during the period September, 2010 â€" October, 2012. Therefore, the amount of Rs.
32,11,797/-lying in the bank account of the appellant as on 25.09.2014, which was provisionally attached was not out of the amount received by the
appellant from SADL and other units of Saradha Groups.
In the circumstances, the attached amounts of Rs. 32,11,797/- in the hands of the appellant cannot be said to be part of proceeds of crime or
having been involved in Money Laundering within the meaning of these terms as per the PMLA. Further, it is not the case of the respondent at any
stage that the amount has been attached towards value of proceeds of crime.
In coming to the above conclusion, reliance is placed on the decision dated 18.05.2010 of this Tribunal the case of Jitender Kumar Lalwani v Dy
Director, PMLA in FPA-PMLA-37/AHD/2009. In said case, the appellant( Jitender Kumar Lalwani) had purchased shares of IDFC from a person
(Sh. Parag P. Jhaveri) who was accused of commission of scheduled offence under PMLA and it was alleged that shares of IDFC were proceeds of
crime as the allotment of shares in questoin was obtained by the said person by committing the alleged schedule offence. It was also alleged that the
appellant therein (Jitender Kumar Lalwani) provided funds to the said Mr. Jhaveri for subscribing IDFC shares and he knew of the offence being
committed by (that person) as well as criminality attached to IDFC shares. The appellant claimed that he was a bona fide purchaser as he did not
know Mr. Jhaveri prior to purchase of IDFC shares, he had not provided any funds for subscribing IDFC shares, he did not know about the offence
committed by Mr. Jhaveri or the criminality attached to the allotted IDFC shares, he purchased shares in good faith for valuable consideration and
explained the source of purchase. After careful consideration of the facts and circumstances of the case, this Tribunal held that the appellant was a
bona fide purchaser of shares of IDFC in good faith for consideration and any gain from such shares would not be proceeds of crime in the hands of
appellant. The ratio of the aforesaid decision of this Tribunal is applicable to the present case as the appellant is seen to be a bona-fide receiver of the
co-sponsorship payments from SADL and Saradha Group of Companies against valuable services provided by it to the co-sponsor in consideration of
such payments.
To similar affect is the ratio of the decision dated 03.11.2015 in the case of Sh. Sanjeev Kumar Vs Directorate of Enforcement, FPA-PMLA-
158/CHD/2011. In the said case, residential house belonging to the appellant was provisionally attached and confirmed by the Adjudicating Authority,
on an analysis of the material or record in that case, it was held that the appellant did not have any nexus with the accused in that case, that he did not
know about the criminality attached to the subject property and that the appellant was a bona fide purchaser of the subject property in good faith for
consideration and therefore the property attached in that case in the hands of appellant is not proceeds of crime and therefore, not liable to provisions
of attachment and confiscation under PMLA.
Considering the facts and circumstances as discussed above and following the principles enunciated by the Honâ€ble High Court of Andhra
Pradesh in the case of B. Rama Raju, supra and following the ratio of the judgment of this Tribunal in the case of Jitender Kumar Lalwani , supra and
Sanjeev Kumar supra, this Tribunal is of the view that the appellant did not have any nexus with the accused Saradha Group of Companies, that they
did not know about the criminality attached to the subject payments received in terms of the co-sponsorship agreement between the parties and that
the appellant is a bona fide receiver of the payments in good faith and for valuable consideration provided. It is accordingly held that the subject
property in the hands of the appellant i.e amount of Rs. 32,11,797/- lying in the appellants Bank Account as on 25.09.2014, which was attached in this
case and confirmed under the impugned order is not the proceeds of crime and is therefore, not liable to provisions of attachment and confirmation
under PMLA. Consequently, the appeal is allowed and provisional attachment order dated 29.10.2014 to the extent of provisional attachment of
subject property and the impugned order dated 03.03.2015 to the extent of confirming the attachment of the said amount are set aside with
consequential relief to the appellant.
No order as to cost.