Andhra Pradesh High Court - Amravati
Agri Gold Farm Estates India Pvt Ltd vs Union Of India on 11 March, 2024
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W.P.Nos.4043, 4044 of 2019, 7987, 9441 & 16770 of 2021 & 2899 , 5183 of 2022 & 11520 of 2023
1
HON'BLE SRI JUSTICE RAVI CHEEMALAPATI
WRIT PETITION Nos.4043, 4044 of 2019, 7987, 9441 & 16770 of
2021 & 2899 , 5183 of 2022 & 11520 of 2023
COMMON ORDER:
The Writ Petitions vide W.P.Nos.4043 and 4044 of 2019 are filed by
Corporation Bank for a Mandamus declaring that G.Os.issued by Home
Department, Government of Andhra Pradesh, to the extent of the
properties mortgaged by M/s. Agri Gold Farm Estate India Private Limited
to the petitioner Bank as illegal, arbitrary, unjust and violation of Article
300-A of the Constitution and consequently raise the attachment of the
properties mortgaged to the petitioner bank.
2. The writ petition vide W.P.No.7987 of 2021 is filed by Union Bank
of India (erstwhile Corporation Bank) for declaring that Provisional
Attachment order No.4/2020, file No.ECIR/HYZO/09/2018 issued by the
Enforcement Directorate, under Section 5(1) of Prevention of Money
Laundering Act, to the extent of the properties mortgaged by respondent
No.6-m/S. Singaraya hills Green Power Genco Pvt. Ltd., to the petitioner
Bank as illegal, arbitrary, unjust and violation of Article 300-A of
Constitution of India.
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3. The Writ Petition vide W.P.No.9441 of 2021 is filed by M/s. Agri
Gold Farm Estates Pvt. Limited for a writ of certiorari calling for the records
pertaining to the Provisional Attachment Orders 04/dated 21.12.2020 in
proceedings ECIR No. ECIR/HYZO/09/2018 passed by the Directorate of
Enforcement and the consequential proceedings in OC No.1391 of 2021
pending before the Adjudicating Authority, under the provisions of PML Act
and quash the same being illegal, arbitrary, violative of principles of natural
justice.
4. The writ petition vide W.P.No.16770 of 2021 is filed by Sai
Fortune Apartment Owners Association for writ of mandamus declaring the
action of respondent nos.1 and 2- Union of India, rep. by Secretary,
Ministry of Finance and the Director of Enforcement in issuing the
provisional attachment order vide (POA) No.04/2020 dated 24.12.2020 in
ECIR/HYZO/09/2018 passed by the 2 nd respondent- Director of
Enforcement and the consequential proceedings in OC No.1391 of 2021
pending before the 4th respondent-Adjudicating Authority and quash the
same being illegal and arbitrary.
5. Writ Petition vide W.P.No.5183 of 2022 is filed by M/s. BLG Infra
Projects Private Limited for a writ of mandamus declaring the attachment
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order No.4/2020, File No.ECIR/HYZO/09/2018 issued by respondent No.3-
The Enforcement Directorate under Section 5(1) of Prevention of Money
Laundering Act, to the extent of the properties purchased by the petitioner
in the auction conducted on 13.11.2020 pursuant to proclamation of sale-
cum-E Auction notice dated 09.09.2020 in R.P.No.01/2018 in O.A.No.968
of 2016 before the Debts Recovery Tribunal, Visakhapatnam in respect of
the properties mortgaged to 7th respondent bank-Union Bank of India
(Erstwhile Corporation Bank).
6. Writ petition vide W.P.No.2899 of 2022 is filed by M/s. Agri Gold
Farm Estate India Limited for a Writ of certiorari calling for the records
pertaining to the Provisional Attachment Orders 12/2021 dated 30.11.2021
in proceedings ECIR No. ECIR/HYZO/09/2018/5556 passed by the
Directorate of Enforcement and the consequential proceedings in OC
No.1598 of 2022 pending before the Adjudicating Authority, under the
provisions of PML Act and quash the same being illegal, arbitrary, violative
of principles of natural justice.
7. Writ Petition vide W.P.No.11520 of 2023 is filed by All India Agri
Gold Customers & Agents Welfare Association for a writ of Mandamus
declaring the Provisional Attachment Order No.04, dated 24.12.2020
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passed by the 1st respondent-Director of Enforcement, in File
No.ECIR/HYZO/09/2018 to the extent of attachment of properties
belonging to the members of the petitioner association, being arbitrary,
illegal and violative of principles of natural justice.
8. Almost all the Writ petitions were filed to declare the provisional
attachment orders passed by the Enforcement Directorate and the
proceedings pending before the Adjudicating Authority in relation to the
properties of the Agri Gold Farm Estates Private Limited. Whereas the
Corporation Bank though filed writ petitions vide W.P.Nos.4043 & 4044 of
2019 for declaring the G.Os.issued by Home Department, Government of
Andhra Pradesh, to the extent of the properties mortgaged by M/s. Agri
Gold Farm Estate India Private Limited to the petitioner Bank, later filed
another writ petition vide W.P.No. W.P.No.7987 of 2021 challenging the
Provisional Attachment order No.4/2020, file No.ECIR/HYZO/09/2018
issued by the Enforcement Directorate, in respect of the subject matter of
the above writ petitions. Thus, the common thread that pass through all
these writ petitions is the provisional attachment order passed by
Enforcement Directorate and filing and pendency of Original Complaint
(OC) before the Adjudicating Authority.
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9. As much as the issue involved in all these writ petitions is similar,
these writ petitions are heard together and being disposed of by this
common order.
10. The facts that are essential for disposal of all these writ petitions
can be summarized as under:
(i) M/s.Agri Farm Estates India Private Limited and its
associate/subsidiary companies purchased various large extents of lands
suitable for real estate ventures and converted/developed such lands into
residential/farm plots and had sold, registered, transferred, allotted several
lakhs of plots to customers including 'Fortune Helapuri Apartment'
constructed in the year 2010. The petitioners in W.P.No.16770 of 2021 are
bona fide purchasers of the plots in the said Apartment prior to
01.03.2015.
(ii) M/s. Singaraya Hills Green Power Genco Pvt. Ltd., and M/s. Agri
Gold Farm Estate India Pvt.Ltd., are under the Management of M/s.Agri
Gold Group. At the request of M/s. Singaraya Hills Green Power Genco
Pvt.Ltd., Union Bak of India (Erstwhile Corporation Bank) sanctioned Term
Loan of Rs. 18 crores to acquire land and to cultivate Energy Plantation
subject to the condition of creation of equitable mortgage of land
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purchased out of the loan amount, hypothecation of Irrigation System,
Pump sets, Tractors and Trucks acquired with Bank finance and
accordingly, the said M/s. Singaraya Hills Green Power Genco Pvt. Ltd.,
deposited documents of title relating to Ac.1064.70 cents of agricultural
land thereby creating mortgage. Subsequently, as the said firm failed to
repay the liabilities, the Bank filed O.A.No.968 of 2016 before the Debts
Recovery Tribunal, Visakhapatnam. The said O.A. was allowed on
31.01.2018 for realization of debt by enforcing mortgaged and
Hypothecated properties. Pursuant to the orders dated 31.01.2018,
Demand notice was issued in R.P.No.1/2018 followed by Form
16/attachment orders dated 12.02.2019 and Form 17 dated
12.02.2019/Notice for settling sale proclamation by Recovery Officer, Debts
Recovery Tribunal, Visakhapatnam. Whereas, on 15.02.2019,
G.O.Ms.No.39, Home (General A) Department, dated 15.02.2019 and
G.O.Ms.No.23, Home (ARMS & SPF) department dated 20.02.2015 were
issued under Section 3 of the Andhra Pradesh Protection of Depositors of
Financial Establishments Act, 1999 (for short, 'APPDFE Act'), attaching
various properties of M/s. Agri Gold Farm Estate India Private Limited
including the properties of M/s.Singaraya Hills Green Power Genco Private
Limited, which were mortgaged in favour of the Bank for the purpose of
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credit limits sanctioned to it. Questioning the said G.O.Ms.No.39 and
G.O.Ms.No.23, the bank filed writ petitions vide W.P.No.4043 of 2019 and
W.P.No.4044 of 2019 before this Court.
(iii) The Recovery Officer, Debts Recovery Tribunal, Visakhapatnam,
issued proclamation of sale-cum-E auction notice dated 09.09.2020 in
R.P.No.01/2018 in O.A.No.968 of 2016 and brought the properties
mortgaged to the bank i.e. Ac.1069.51 cents of land for sale and auction
was conducted on 13.11.2020 and M/s. BLG Infra Projects Pvt. Ltd., (writ
petitioner in W.P.No.5183 of 2022) became the successful bidder and
accordingly the entire bid amount was deposited to the credit of the
R.P.No.01/2018 in O.A.No.968 of 2016 on the file of the Debts Recovery
Tribunal, Visakhapatnam.
(iv) On 02.01.2015, the SHO, Pedapadu Police Station, West
Godavari District, Andhra Pradesh, registered a case against M/s. Agri Gold
Farm Estates India Private Limited under sections 120B, 420 IPC, section 5
of Andhra Pradesh Protection of Depositors of Financial Establishments Act,
1999 (for short, APPDFE Act) and Section 45 of the RBI Act and Sections
3,4 and 5 of Prize Chit & Money Circulation (Banning) Act, 1978 and the
Government of Andhra Pradesh by invoking the provisions of Section 3 of
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the APPDFE Act, 1999 issued G.O.Ms.No.22 and G.O.Ms.No.23 of Home
(Arms & SPF) Department, dated 20.02.2015, G.O.Ms.No.73 of Home (Gen
A2) Department, dated 05.06.2015, G.O.Ms.No.21 of Home (General-A2)
Department, dated 29.02.2016 and G.O.Ms.No.39, Home (General-A)
Department, dated 15.02.2019 and attached the properties of the
Company. Thereafter, the CID, Andhra Pradesh filed petitions before the
Special Court, Eluru designated to deal with the offences under APPDFE
Act and the Special Court, Eluru passed orders on 23.09.2015, attaching all
the properties of the company covered under G.O.Ms.22 and 23, dated
20.02.2015 and G.O.Ms.No.73 dated 05.06.2015.
(v) As many as fifteen (15) criminal cases in the State of Andhra
Pradesh, three (03) criminal cases in the State of Telangana and some
criminal cases in the State of Karnataka, Orissa and also in Andaman &
Nicobar Islands were registered, for the same offence.
(vi) A Public Interest Litigation, vide PIL No.193 of 2015 was filed by
Telangana Customers and Agents Association, Hyderabad seeking a
direction to the respective governments of the State of Telangana and the
State of Andhra Pradesh, seeking to take appropriate action for returning
back their advance amounts paid to the Agrigold. The said PIL was
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retained in the High Court of the State of Telangana for further
adjudication, after bifurcation of the unified High Court. The State of
Telangana as well as State of Andhra Pradesh are contesting in the PIL.
The Composite High Court, after considering the entire material on record
was pleased to constitute a committee with a retired judge of Hon'ble High
Court vide orders dated 09.10.2015. The said committee is taking all steps
for the purpose of alienation of the properties attached and for distribution
among the Depositors. The High Court has directed for sale of the
properties, by way of various methods, including appointing the District
Legal Services Authorities in both the States of Telangana and Andhra
Pradesh and accordingly, nearly nine (09) properties were identified and
sold under the supervision of the Court. The sale proceeds were deposited
in the bank and the same were still lying for the purpose of disbursement
to the Depositors of the Agri Gold Group of Companies. The Enforcement
Directorate is arrayed as respondent no.8 in PIL No.193/2015.
(vii) The Directorate of Enforcement registered ECIR in the year
2018 vide ECIR No. ECIR/HYZO/09/2018 and on 24.12.2020, the Assistant
Director, Directorate of Enforcement attached all the properties of the Agri
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Gold group of companies invoking powers under Section 5 of the
Prevention of Money Laundering Act, 2002.
(viii) As already stated, all these writ petitions were filed either
questioning the attachment of properties under Section 3 of the
A.P.Protection of Depositors of Financial Establishment Act, 1999 by the
investigating agency in the predicate offence or the Provisional Attachment
Order under Section 5(1) of the Prevention of Money Laundering Act,2002
by the Enforcement Directorate or both.
11. The contents of the counter affidavit filed by the Competent
Authority-CID, so far as they are relevant for adjudication of these writ
petitions, can be summarized as under:
(i) The Agri Gold Construction Company, which constructed Helapuri
Apartment, Fathebada at Eluru, is one of the accused company in Crime
No.3 of 2015 of Pedapadu Police Station. The said property was attached
under Section 3 of the APPDFE Act vide G.O.Ms.No.23, dated 22.02.2015
and the said attachment was made absolute by the Special Court-cum-PDJ,
Eluru on 23.09.2015. Merely because the flats in the subject Apartment
were purchased prior to registration of Cr.No.3 of 2015 of Pedapadu Police
Station does not absolve the fact that the subject property was purchased
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and constructed by an accused company in the said crime with the
amounts collected from the depositors as such the subject apartment is
one of the derived proceeds of crime. The petitioner Association of flat
owners, did not raise any objection before the Special Court-cum-Principal
District Judge, Eluru before the attachment of the said property was made
absolute vide order dated 23.09.2015. The inadvertent mention of note in
G.O.Ms.No.23, dated 22.02.2015 that except the plots that were registered
in the respective Sub Registrar Offices before the Criminal cases were
registered i.e. on 01.03.2015 at Pedapadu, West Godavari District, the rest
of the land shall cover under the above G.O., was subsequently remedied
by way of issuance of G.O.Ms.No.19, dated 09.02.2021. Therefore, the
petitioner association cannot contend that the flats of Fortune Helapudi
Apartment are outside the purview and scope of investigation under the
APPDFE Act, 1999. The provisions of the Act make no distinction as
regards the amassment of properties by the accused of conducting its
business in violation of Section 5 of the Act,1999 read with the other
provisions of IPC. The entire property and the transactions which have
been conducted by the accused company would be within the zone of
proceeds of attachment by the competent authority under the provisions of
the Act in order to secure its administration and disposal in accordance
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with law to meet the pending claims of the depositors whose monies have
not been refunded in accordance with the agreed terms by the accused
company. The amended G.O.Ms.No.19, dated 09.02.2021 omitting the
note to G.O.Ms.No.23 dated 22.02.2015 has been placed before the
Special Court by way of memo and the same was taken on record by
Special Court and pursuantly made the orders of attachment absolute. The
amendment to G.O.Ms.No.23, dated 15.02.2015 issued vide G.O.Ms.No.19,
dated 09.02.2021 was not placed before the Court for its consideration and
thus the observations made in the decision in 2021(1)ALT 599(AP) cannot
be considered as a direction to exclude the schedule property from the
purview of investigation by the competent authority and the proceedings
before the Special Court under the APPDFE Act, 1999.
(ii) The objectives of the APPDFE Act inter alia include securing the
monies which are amassed by the accused under the provisions of the Act,
so as to secure the means to meet the obligations flowing from the
deposits collected from the depositors. The same can only be secured by
disposing of the property so secured by the accused by deploying the
deposits received from the depositors under Section 10 of the Act r/w. the
Rules framed thereunder. The said proceedings of the administration of
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property and the auction of the said property so as to primarily first cater
to the meeting of the payment dues to the respective depositors or
securing the return of the monies deposited by them are conducted under
the supervision of the designated special Court under the provisions of the
APPDFE Act,1999. The allegations against the accused in crime registered
emanate from the violation of Section 5 of the APPDFE Act,1999, which is
not a schedule offence under PMLA Act. Therefore, the objectives sought
to be achieved under the State Act cannot be frustrated by the
supervening orders of attachment issued under the PMLA more specifically,
in the context of the primary objective of the State Act inter alia to
mitigate the hardship of depositors who have suffered on account of the
default of the accused in repaying the dues arising from such deposits.
Therefore, to subserve the ends of justice and to ensure that there is no
frustration of the objectives of the State imposed upon it under a validly
made State Law to protect the interest of depositors and also the public
interest, the continuance of the proceedings under the State Act is very
much essential. The remainder of the sale proceeds, if any, after meeting
out the requirements of payment to the depositors, shall be continued to
be remained in deposit with the Special Court subject to such further
conclusion of proceedings under the PML Act.
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12. The contentions raised by the Directorate of Enforcement in all
these writ petitions, can be summarized as under:
Since the petitioner in W.P.No.2899 of 2022 viz.,Avva Venkata
Rama Rao, Chairman of M/s. Agri Gold Farm Estates India Private Limited
has been arrayed as accused in the FIR No.3 of 2015, dated 09.01.2015
and charge sheet No.5 of 2019 was filed by CID, Andhra Pradesh for the
offences r/w. Section 420, 403, 406, 477A IPC r/w. section 120-B IPC and
section 5 of the A.P.Protection of Depositors of Financial Establishments
Act, 1999 for cheating the gullible public by collecting deposits from them
under the guise of real estate business by making false promises and since
the offences under Sections 420 read with 120-B IPC are the scheduled
offences under PML Act, 2002, the respondent initiated investigation under
the provisions of PML Act to investigate the case of money laundering after
recording brief facts of scheduled offence in the File No.ECIR/HYZO/
09/2018 on 26.12.2018. The investigation under PML Act, 2002 is based on
various FIRs registered against Agri gold Group including FIR No.3 of 2015,
dated 02.01.2015 by Pedapadu Police Station, Eluru, West Godavari
District. During the course of investigation, it is inferred that Agri Gold
Company led by Avva Venkata Rama Rao along with his brothers and other
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Directors, hatched a plan to run an illegal unregulated Collective
Investment Scheme by collecting deposits from public, without the
approval of RBI/SEBI or any Government agency, under the name board of
Real Estate Business and it is found that the group of companies collected
deposits to the extent of Rs.6380 crores. It is observed from the Forensic
Audit Report conducted by CID, AP, that various amounts, out of the
deposits collected from public, were diverted to their different businesses/
interests, as per their sweet will. The scheme was neither a genuine real
estate business nor a genuine CIS can be understood from the fact that
Agri gold Group engaged the services of thousands of agents and promised
them 20-25% commission on the amount of deposits arranged by them. It
is also observed from the investigation under PMLA that the Directors of
Agri Gold Group have established various companies in Dubai, UAE and
Cayman Islands.The Enforcement Directorate issued a Provisional
Attachment Order (PAO) No.04/2020 dated 24.12.2020 and PAO
No.12/2021 dated 30.11.2021 and has provisionally attached various
movable properties worth Rs.4109.13 Crore and various immovable
properties worth Rs.31.99 Crore of Agri Gold Group, its promoters/
Directors and other connected persons respectively. Further, investigation
is under progress to trace the remaining Proceeds of Crime amounting to
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more than Rs.2000 crore. The entire amounts collected by Agri Gold group
into their different companies in the form of their unregulated Collective
Investment Scheme, are from general public under the pretext of real
estate business. All the properties purchased by the Companies and the
Directors and other family members, are from these public funds only. The
Enforcement Directorate had attached the properties under Section 5(1) of
PML Act, 2002 and clearly justified the reasons for such attachment. It is
true that ED is also a respondent in PIL No.193/2015, whereas the prayer
of the petitioner in the said PIL itself is seeking directions of the Hon'ble
Court for investigation by Central Agencies like CBI and ED, as the said
Agri Gold scam is massive and spread over various states in India. Hence,
the action taken by Enforcement Directorate, in passing an attachment
order, is not against any law/ directions of any Court, in fact it is the duty
of the central investigative agency under money laundering Act, however,
the respondent department will obey the orders of the High Court in PIL
No.193 of 2015. There is nothing in the stay order granted by this Court on
the proceedings of Adjudicating Authority in relation to OC No.1391 of
2021 debarring the Enforcement Department from conducting any further
investigation and proceedings under PML Act. The fresh and new
provisional attachment order vide PAO No.12 of 2021, dated 30.11.2021 in
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ECIR/HYZO/09/2018 is passed upon further investigation which reveals
that companies of Agri Gold Group and its directors are holding various
immovable properties. Further, the FIRs in Cr.No.3 of 2019 and Cr.No.36
of 2020 registered by CID, AP, against director of the company regarding
fraudulently dealing in properties on fake/forged documents & fake
identity, there is every likelihood that the Directors of Agri Gold Group may
come up with similar ideas and may deal with the newly found properties
by way of further transfer/sale to their known persons so as to avoid any
further attachment in future and there is also likelihood that they may buy
back the properties being auctioned as per the orders of the High Court in
WP (PIL) No.193 of 2015 through their known persons/ benami persons at
a cheaper rate, which may entirely defeat the interest of the depositors
and frustrate the proceedings under the PML Act. The Agri Gold Group was
rapidly diversifying the deposits of the gullible investors in all and sundry
sectors and layering them through complex maze of shell companies to
obscure the fund trail of this diversion of the public deposits. Whether the
scam performed by Agri Gold Group is a Collective Investment Scheme or a
contravention of APPDFE Act, 1999, is immaterial for the Enforcement
Department. The SEBI pass orders dated 19.02.2015 and 14.09.2015
saying that the collection of deposits by Agri Gold group comes under
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Collective Investment Scheme and despite instructions from SEBI, the
group collected deposits by dubious means. From the investigation
conducted by the respondent department so far, it leave no doubt that the
accused had indulged in money laundering. Provisional Attachment orders
were passed as stipulated in Section 5 of PML Act by the Authorized Officer
of the Department and Original Complaints were filed before the
Adjudicating Authority (PMLA) praying for confirmation of the attachment
orders. The Adjudicating Authority as per Section 8 of the Act is proceeding
with the adjudication proceedings, including issuance of show cause notice
to the accused of the crimes, for which they can file a written
counter/reply to the Original Complaints filed by the Enforcement
Directorate. After following due procedures and after hearing both sides,
the Adjudicating Authority would confirm/not confirm the Provisional
Attachment orders as stipulated under Section 8(2) and 8(3) of the PML
Act,2002, by order in writing. If any party, aggrieved by the said order ,
can approach the Appellate Tribunal (PMLA) by filing an Appeal under
Section 26 of PMLA,2002. If any party is still aggrieved by the orders
passed by the Appellate Tribunal, may approach this Court under Section
42 of the PML Act,2002. Hence, it is clear that the PML Act is providing all
the remedies to the parties under principles of natural justice. The
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petitioners have an efficacious statutory remedy available under Section 8
of the PML Act. Instead of exhausting the statutory remedy available in
PML Act, these writ petitions have been filed invoking Article 226 of
Constitution of India and they are liable to be dismissed.
13. Heard Smt. Dyumani, learned Standing Counsel for Union Bank
of India (erstwhile Corporation Bank) for petitioners in W.P.Nos.4043 &
4044 of 2019 and W.P.No.7987 of 2021, Sri S.Vivek Chandrasekhar,
learned counsel for petitioner in W.P.No.5183 of 2022, Sri P.Narahari Babu,
learned counsel for petitioner in W.P.No.16770 of 2021, Sri P.S.P.Suresh
Kumar, learned counsel for the petitioners in W.P.No.9441 of 2020 and
W.P.No.2899 of 2022, Sri C.V.Narasimham, learned counsel for the
petitioner in W.P.No.11520 of 2023, Sri S.Sriram, learned Advocate General
for the Competent Authority-CID, Sri Josyula Bhaskar Rao, learned
Standing counsel for Enforcement Directorate and N.Harinath, learned
Deputy Solicitor General for Union of India.
14. Smt. Dyumani, learned Standing Counsel for Union Bank of
India, while reiterating the contents of the writ affidavit, further contended
that M/s. Singaraya Hills Green Power Genco Pvt. Ltd and M/s. Agri Gold
Farm Estate India Private Limited are under the management of M/s. Agri
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Gold Group and at request of M/s. Singaraya Hills Green power, the
petitioner Bank sanctioned Term loan of Rs. 18 crores to acquire land and
for repayment of the said term loan, the said company deposited title deed
relating to the agricultural lands to an extent of Ac.1064.70 cents and as
the said entity could not repay, the bank filed OA No.968 of 2016 before
the Debts Recovery Tribunal, Visakhapatnam and pursuant to the orders
dated 31.1.2018 passed by the Tribunal, demand notice was issued,
followed by Form 16-attachment orders dated 12.02.2019 and Form 17
notice of even date for settling sale proclamation. Thereafter the property
was auctioned and M/s. BLG infra projects Private Limited became the
highest bidder and the said company had deposited the bid amount into
Court. The petitioner bank being the Mortgagee is having interest under
Section 58(f) of the Transfer of Property Act and accordingly it had filed
CrlMP No.1220 of 2015 in Crime No.3 of 2015 before the Special Court
under APPDFE Act,1999 at Eluru under Section 3, 7(3) of the APPDFE Act
to raise interim attachment to enable the petitioner to proceed against the
mortgaged properties and the said petition is still pending.
The learned counsel for the petitioners would further submit that
since the lands were purchased with the credit facility availed by the
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company from the petitioner Bank, the bank is having first charge and as a
first charge holder, the petitioner bank is having priority of charge over
others. Therefore, the attachment orders passed by the investigating
agency in the predicate offences as well as the Provisional Attachment
Order passed by Enforcement Directorate in relation to the property which
were purchased with the credit limit advanced by the petitioner bank and
mortgaged to the bank are illegal, arbitrary and unconstitutional.
Accordingly, prayed to allow the writ petitions vide W.P.Nos.4043 & 4044
of 2019 and W.P.No.7987 of 2021.
15. Sri S.Vivek Chandrasekhar, learned counsel for the petitioner,
while reiterating the contents of the writ affidavit in W.P.No.5183 of 2022
and while reiterating the contentions raised by the learned Standing
Counsel for the bank, further contended that the petitioner in this writ
petition had purchased the property pursuant to proclamation of sale-cum-
E auction conducted by Union Bank of India of the properties mortgaged
to the said bank. Therefore, the said property stands outside the purview
of the definition "proceeds of crime" under Section 2(u) of the Prevention
of Money Laundering Act and thus the Provisional Attachment Order has
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been issued without proper application of mind. The same is liable to be
set aside.
16. Sri P.Narahari Babu, learned counsel for the writ petitioners in
W.P.No.16770 of 2021 while reiterating the contents of the writ affidavit,
further contended that the members of the petitioner association had
purchased their respective flats much prior to registering the above crime
i.e. 02.01.2015 and further the Government while issuing G.O.Ms.No.23,
Home (ARMS & SPF) Department, dated 20.02.2015 had clearly mentioned
that except the plots that were registered in respective Sub-Registrar
Offices before the criminal cases were registered at Pedapadu, the rest of
the land shall cover under the above G.O. The property purchased by the
members of the association was not at all mentioned either in the G.O.
issued by the Government or in the orders in the orders passed by the
Special Court in CrlMP No.998 of 2015 dated 23.09.2015 in Cr.No.3 of
2015 of Pedapadu P.S. Questioning the notice issued by CID directing the
members of the association to deposit the rents in the bank of the 5 th
respondent authority, members of the association approached this Court
and filed Writ Petition vide W.P.No.11515 of 2020 and this Court had set
aside the said notices on the ground that as the petitioners are owners of
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various flats in the apartments, it is not subject matter of attachment
under Section 3 of the APPDFE Act and hence the petitioners cannot be
called upon to deposit rent to the credit of CID. The allegations made by
the Enforcement Directorate in the Provisional Attachment Order is not
correct and the same had been issued without proper appreciation of the
facts and circumstances of the case.
17. Sri C.V.Narasimham, learned counsel for the petitioners in
W.P.No.11520 of 2023 while reiterating the contents of the writ affidavit,
further contended that , G.O.Ms.No.23, dated 20.02.2015 issued by the
Government clearly mentions that the plots and other properties which
were already sold and registered in the name of the buyers prior to
registration of the offence are not attached. A public Interest Litigation
vide PIL No.193 of 2015 was filed praying to appoint a committee to
enable sale of properties belonging to Agri Gold Group of companies to
mobilize and disburse amounts to the depositors as refund of their money.
As per directions of the PIL, a committee was constituted vide order dated
09.10.2015 and some of the properties were sold excluding the properties
which were sold and registered to the members of the petitioner
association in W.P.No.11520 of 2023 and finally the High Court of
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Telangana vide final order dated 25.02.2022 directed that all the issues are
to be dealt with by the Principal District Judge, a special Court to deal with
all the matters pertaining to the attachment made by the 5 th respondent-
Home Department. The special Court vide its orders dated 16.03.2023 had
observed that the properties which are already sold to plot owners/ flat
owners should be out of ambit of the attachment. Thus, the issue of
attachment of the properties of the members of the petitioner association
by the 5th respondent Government vide G.O.Ms.No.23 and others G.Os. is
still pending before the Special Court. While so, the 1 st respondent-
Enforcement Directorate vide impugned provisional Attachment order
dated 24.12.2020 had attached all properties that were originally attached
by the 5th respondent vide various G.Os. including G.O.Ms.No.23, despite
the clear mention made in the said G.O. that the properties stand outside
the purview of attachment. The 1st respondent had made Provisional
Attachment Order without verifying the facts of the case and without
making any enquiries. None of the plot owners were issued notice as
mandated under Section 8(2) of the PML Act. The 1st respondent is a party
to Public Interest Litigation No.193 of 2015 and the same is bound by the
orders passed in the said PIL. Therefore, the Provisional Attachment Order
passed by the 1st respondent to the extent of attachment of properties
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belonging to the members of the petitioner association is illegal and is
liable to be quashed. Accordingly prayed to allow the writ petition.
18. Sri P.S.P.Suresh Kumar, learned counsel for M/s. Agri Gold Farm
Estates India Private Limited-petitioners in W.P.Nos.9441 of 2020 and 2899
of 2022, while reiterating the contents of the writ petitions, in elaboration
would submit that pursuant to the registration of the crime, the
Government of Andhra Pradesh by invoking the provisions of Section 3 of
the Act, 1999 , issued G.O.Ms.Nos.22 & 23, dated 20.02.2015 and
G.O.Ms.73, dated 05.06.2015 and G.O.Ms.No.21, dated 29.02.2016 and
attached the properties of the companies worth thousands of crores.
Besides the properties of the companies, the personal properties of the
writ petitioner, Director and their family members were also attached by
the Government. The Special Court, Eluru passed orders on 23.09.2015
attaching all the properties of the Company covered under
G.O.Ms.Nos.22,23 and 73 and the petitions filed by CID department before
the Special Court, Eluru for confirmation of the attachment in respect of
properties covered under the other G.Os. is pending.
19. The learned counsel for the petitioners, in one voice, further
contended that a public Interest Litigation vide PIL No.193 of 2015 was
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filed and the High Court of Telangana was pleased to appoint a committee
to take all steps with a retired judge of High Court and vide final orders
dated 25.02.2022 in the said PIL, the High Court, Telangana directed that
all the issues are to be dealt with by the Principal District Judge, a special
Court to deal with all the matters pertaining to the attachment made by
the 5th respondent-Home Department. The Enforcement Directorate is
respondent No.8 in the PIL and it is aware of all the proceedings and
orders passed in the said PIL. Thus, the Enforcement Directorate is bound
by the orders passed in the PIL and are estopped from registering
ECIR/HYZO/09/2018 and in passing Provisional Attachment Orders. The
reasons to believe mentioned in the Provisional Attachment Orders are not
at all sustainable and they do not meet the requirement of Section 5 of
PML Act.
The learned counsel for the petitioners further submitted that
though there is a statutory remedy provided under Section 8 of PML Act,
2002 to agitate before the Adjudicating Authority, since the Provisional
Attachment Orders are passed in violation of the series of orders passed by
the High Court in PIL No.193 of 2015 and attaching the properties which
were already auctioned by this Court and since the same are in clear
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statutory violations, the requirement of exhausting the alternative remedy
is not a bar for filing the writ petitions. The Provisional Attachment Orders
in PAO No.12 of 2021, dated 30.11.2021 and PAO No.4 of 2020, dated
24.12.2020 in proceedings ECIR No.ECIR/HYZO/09/2018 are liable to be
quashed and so also the consequential proceedings in OC No.1598 of 2022
and OC No.1391 of 2021. Accordingly, prayed to allow the writ petitions.
20. The learned Advocate General for Competent Authority-CID,
while reiterating the contents of the counter, further contended that, the
inadvertent mention of note in G.O.Ms.No.23 was omitted by issuing
G.O.Ms.No.19, dated 09.02.2021, thus the writ petitioners in W.P.No.
16770 of 2021 and W.P.No.11520 of 2023 cannot claim any benefits of
inadvertently mentioned note contained in G.O.Ms.No.23. Further, the
orders passed by this Court covered by 2020(1) ALT 599 (AP) was
challenged by preferring Writ Appeals and they are pending.
The learned Advocate General further contended that the subject
properties were already attached by the State under the provisions of the
Andhra Pradesh Protection of Depositors of Financial Establishments Act,
1999 and they have been made absolute by orders of the Special Court
constituted under the provisions of the Act. The objectives of the Andhra
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Pradesh Protection of Depositors of Financial Establishments Act, 1999
inter alia include securing the money which were amassed by the accused
under the provisions of the Act, so as to secure the means to meet the
obligations flowing from the deposits collected from the depositors. The
same can only be secured by disposing of the property so secured by the
accused by deploying the deposits received from the depositors, under
Section 10 of the Act, read with the Rules framed thereunder. The
administration of property and auction of the property to pay back to the
depositors from whom monies have been collected by way of deposits
would be conducted under the supervision of the designated Special Court
under the provisions of the Act,1999. Achieving the objective of meeting
the payment obligations due to the depositors in respect of the deposit
made by the secured depositors is not one of the objectives of the
Prevention of Money Laundering Act,2002. Therefore, the State Act having
been passed with the due assent of the Hon'ble President and the
proceedings under the PMLA being under the Central Enactment, in the
context of the specific provisions of these respective Acts being in addition
to existing laws and in derogation thereof would not be a pointer to
investing the Enforcement Directorate with supervening powers of
attachment to frustrate the objectives of the State Act.
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The learned Advocate General would further submit that the
accusation made against the accused clearly discloses that he had
collected deposits from depositors in contravention of Section 5 of the
APPDFE Act, which is not a schedule offence under the PML Act. In the
FIR, the accused was charged with IPC offences along with the main
charging provision under Section 5 of the APPDFE Act. By that reason
alone the proceedings of crime which are detectable during the course of
investigation on the basis of such predicate offence, does not render the
subject matters to be in the sole domain of the Enforcement Directorate to
enforce the provisions of PML Act.
The learned Advocate General further submitted that the objectives
sought to be achieved under the State Act cannot be frustrated by the
supervening orders of attachment issued under the PML Act more
specifically in the context of the primary objective of the State Special Act,
assented to by the Hon'ble President, is to inter alia mitigate the hardship
of the depositors who have suffered on account of the default of the
accused in repaying the dues arising from such deposits. If the subject
property is sought to be permitted to be attached subject to further
consequences under the PML Act,2002, the entire proceeds of crime would
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not be available to the State or its machinery under the provisions of the
State Act for the purpose of meeting the objectives of the State Act.
The learned Advocate General further submitted that in the event
the entire property is confiscated in pursuance of a conviction under the
provisions of the PML Act, the property would not be available for being
distributed to the depositors and therefore, no Central Enactment, even if
subsequent, can be read as causing or enabling frustration of the
objectives enshrined in a State Act, whose vires had already been upheld
by the Hon'ble Supreme Court.
The learned Advocate General further submitted that in a similar fact
situation concerning Sarada Chit Funds, the Hon'ble Supreme Court
specifically observed that the transfer of invesetigaton to CBI or any
consequent investigation by the Enforcement Directorate shall not however
affect the proceedings pending before the commissioner of enquiry or stall
any action that is legally permissible for recovery of amount for payment to
the depositors.
The learned Advocate General further submitted that since so many
depositors have committed suicide, it is the primordial interest of the
State to ensure that the depositors who have lost money secure their
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monies or some percentage thereof by auctioning the properties under the
provisions of the State Act. The learned Advocate General had also brought
to the notice of the Court that the State, to alleviate the agony of the
depositors, had remitted nearly Rs.929 crore to the depositors.
The learned Advocate General finally submitted that the unlike other
IPC offences the APPDFE Act embodies inbuilt safeguards to ensure that
the depositors, whose money was collected by the accused as deposits, be
paid by auctioning the properties attached. Therefore, the interests of the
depositors would well be subserved if the properties attached are sold and
the sale proceeds are administered under the supervision of Special Court
designated under the APPDFE Act. Accordingly, prayed to quash the
Provisional Attachment Orders of the Enforcement Directorate and so also
the consequential proceedings pending before the Adjudicating Authority
under PML Act.
In support of his contentions, the learned Advocate General placed
reliance on the Soma Suresh Kumar vs. Government of Andhra
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Pradesh and others1 and Subrata Chattoraj vs. Union of India and
others2
21. Whereas, Sri Josyula Bhaskar Rao, learned Standing counsel for
Enforcement Directorate, while reiterating the contents of the counter
affidavits further contended that the writ petitions are not maintainable, in
view of availability of efficacious alternative remedy. The Prevention of
Money Laundering Act contains a mechanism and the persons aggrieved of
Provisional Attachment Orders may approach the Adjudicating Authority
and prove that the properties attached are not involved in money
laundering. Further, the orders passed under Section 8(3) of the Act
confirming Provisional Attachment are appealable before the Appellate
Tribunal contemplated under Section 26(3) of the PML Act and if aggrieved
by the orders of the Appellate Tribunal, further appeal under Section 42 of
the PML Act lies to the High Court. Without availing the remedies before
the Adjudicating Authority and Appellate Tribunal, the petitioners had
straight away filed this writ petition and thus the writ petitions are liable to
be dismissed on this ground alone.
. (2013) 10 SCC 677
. 2014(8)SCC 768
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The learned Standing counsel would further submit that since FIRs
were registered against M/s. Agri Gold Group including predicate offences,
investigation was initiated under PML Act in File No.ECIR/HYZO/09/2018
and during the course of investigation, it revealed that the Companies
under the Flagship Agri Gold Group, collected deposits from public and
transferred the collected funds to other companies in guise of investments/
loans & advances, which was layered further by way of further
investment/loans & advances/ Inter Corporate Deposits and this layering
was done with a view to obscure the source of the funds and its end
utilization. Considering the facts revealed during the investigation,
Provisional Attachment orders were issued.
The learned Standing Counsel would further submit that PML Act is a
Central legislation and as per Section 71 of the Act, it shall have overriding
effect over all the laws for the time being in force. It is no doubt true that
ED is also a respondent in PIL No.193/2015, whereas the prayer of the
petitioner in the said PIL itself is seeking directions of the Hon'ble Court for
investigation by Central Agencies like CBI and ED, as the said Agri Gold
scam is massive and spread over various states in India. Hence, the action
taken by Enforcement Directorate, in passing an attachment order, is not
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against any law/ directions of any Court, in fact it is the duty of the central
investigative agency under money laundering aspect, however, the
respondent department will obey the orders of the High Court in PIL
No.193 of 2015. The Enforcement Directorate had attached the properties
under Section 5(1) of PML Act, 2002 and clearly justified the reasons for
such attachment.
The learned Standing Counsel would further submit that the FIRs in
Cr.No.3 of 2019 and Cr.No.36 of 2020 registered by CID, AP, against
directors of the company regarding fraudulently dealing in properties on
fake/forged documents & fake identity, there is every likelihood that the
Directors of Agri Gold Group may come up with similar ideas and may deal
with the newly found properties by way of further transfer/sale to their
known persons so as to avoid any further attachment in future and there is
also likelihood that they may buy back the properties being auctioned as
per the orders of the High Court in WP (PIL) No.193 of 2015 through their
known persons/ benami persons at a cheaper rate, which may entirely
defeat the interest of the depositors and frustrate the proceedings under
the PML Act. Thus, there is reason to believe for attaching the properties
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by issuing Provisional Attachment Order as per Section 5(1) of the PML
Act.
In support of his contentions, the learned Standing Counsel for
Enforcement Directorate relied on the decisions (1) The Deputy Director,
Directorate of Enforcement vs. Axis Bank and others3, (2) B.Rama
Raju vs. Union of India4, (3) Union Bank of India vs. Satyawati
Tondon & Ors. 5 (4) Mr. John Kennedy vs. M/s. Martin Property
Developers Pvt. Ltd., Coimbatore6 (5) Sri P.Trivikrama Prasad vs.
Enforcement Directorate 7 (6) Union of India and another vs.
Kunisetty Satyanarayana 8 , (7) Arun Kumar Mishra vs. Union of
India 9 (8) Raj Kumar Shivhare vs. Asst. Director, Directorate of
Enforcement & Anr. 10 (9) Thansingh Nathumal and Ors. vs.
A.Mazid, Superintendent of Taxes 11 (10) M/s. Modern Industries
vs. M/s. Steel Authority of India 12 (11) G.Srinivasan vs. The
. Orders dated 02.04.22019 passed in CRL.A.No.143/2018 and batch passed by Delhi High Court
. Orders dated 04.03.2011 passed in W.P.Nos.10765, 10769 & 23166 of 2010 passed by Division Bench of
this Court
. Orders dated 26.07.2010 passed in SLP(C) No.10145 of 2010 by Supreme Court of India
.Orders dated 17.12.2020 passed in W.P.Nos.25177 and 25231 of 2019 of High Court of Madras
. Orders dated 16.10.2014 passed in W.P.No.21124 of 2014 by High Court of Andhra Pradesh
. Orders dated 22.11.2006 passed by Hon'ble Supreme Court in Appeal (civil) 5145 of 2006.
. Orders dated 31.01.2014 passed by High Court of Delhi in LPA 99/2014, CMs No.2003/2014 &
2004/2014.
. Orders dated 12.04.2010 passed by Hon'ble Supreme Court in Civil Appeal No.3221 of 2010.
. 1964 AIR 1419
.Orders dated 15.04.2010 passed by Hon'ble Supreme Court in Civil Appeal Nos.3305-3306 of 2010
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Chairperson, Adjudicating Authority under PMLA, New Delhi13 (12)
Smt. Nabla Begum vs. Union of India & Others14 and (13) Karampal
Goyal vs. Assistant Director, Directorate of Enforcement15.
22. Perused the material available on record, considered the
submissions made by learned counsel for both parties and also the
judgments relied on by learned counsel for both the parties.
23. There is no much dispute regarding the factual aspects of the
matters. Based on a complaint lodged by one of the customers, the Station
House Officer, Pedapadu Police Station, West Godavari District, registered
a case against M/s. Agri Gold Farm Estates India Private Limited under
Sections 120B, 420 IPC, Section 5 of the Andhra Pradesh Protection of
Depositors of Financial Establishments Act, 1999, Section 45 of RBI Act
and Sections 3,4 and 5 of Prize Chit & Money Circulation (Banning) Act,
1978. Subsequently, the investigation of the case was referred to CID
Department of the State of Andhra Pradesh. The Government of Andhra
Pradesh, by invoking the provisions of Section 3 of the APPDFE Act, had
issued G.O.Ms.No.22, & 23 of Home (Arms & SPF) Department, dated
.Orders dated 01.04.2011 passed by High Court of Madras in W.P.No.530 of 2011
.Orders dated 03.04.2012 passed in OWP No.1468 of 2011 of Jammu & Kashmir High Court.
.Orders dated 10.01.2012 passed by Punjab-Haryana High Court in CRM M No.693 of 2011.
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20.02.2015 and G.O.Ms.No.73 of Home (Gen A2) Department, dated
05.06.2015 and G.O.Ms.No.21 of Home (General-A2) Department dated
29.02.2016 and attached the property of the company worth thousands of
crores situated in the State of Andhra Pradesh, States of Telangana,
Karnataka & Odisha. Thereafter, CID filed petitions before the Special
Court, Eluru seeking confirmation of the attachment. The Special Court,
Eluru passed orders on 23.09.2015 by attaching all the properties of the
company covered under G.O.Ms.No.22, 23 and 73. Later, the CID filed
petitions before the Special Court, Eluru for confirmation of attachment of
the properties in respect of other properties covered in other G.Os. and the
same is pending adjudication before the Special Court, Eluru.
24. The material would disclose that Telangana Agri Gold Customers
and Agents Welfare Association filed Public Interest Litigation vide PIL
No.193 of 2015 on the file of the High Court of Judicature at Hyderabad,
for the state of Telangana and the State of Andhra Pradesh praying to
issue a Writ Order or Direction more particularly one in the nature of Writ
of Mandamus declaration the inaction of the respondent in not taking any
action on the respondent No.7-M/s.Agri Gold Farms Estates India Private
Limited, as illegal, arbitrary and unconstitutional, without any valid
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reasons, (b) direct the respondents to appoint a committee to conduct
Sale/Auction of properties own by respondent no.7 to mobile money, (c)
direct the respondents to return money paid by the depositors to save their
rights/protect livelihood, d) Direct respondent 1-6 to conduct in depth
investigation/enquiry on the lines of Sharada and Sahara scams, e) Direct
the respondent 1-6 to appoint an expert committee to assess the assets
and liability of Agri Gold i.e., 7th respondent properties, f) Direct the
respondent 1,2 and 7 to pay compensation for the agents families who
have committed suicides in act of 7th respondent, g) Direct respondent
nos.3,4 and 8 to conduct in depth investigation through Central Bureau of
investigation (CBI) punishing the culprits forthwith, h) Direct the
respondent 1 and 2 to provide appropriate employment for the
agents/families, i) Direct the respondent 5 and 6 to grant protection for the
petitioner from highly influenced Agri Gold ownership/Management.
25. The unified High Court passed the following order by consent of
parties:
1. The following Committee of three members headed by (1) Mr.Justice
T.Ch.Surya Rao, retired High Court Judge of this Court, (2) Mr.
K.Ramakrishna Rao, IAS, Secretary to Government, Financial
Department, Telangana, Hyderabad and (3) Mr.K.Narasimha Murthy,
Financial Expert, is constituted to verse the E-auction direction
through this order.
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The E-auction/sale shall be conducted under the supervision of the
Committee. The Committee shall issue appropriate directions,
consistent with this and other orders passed so far from time to time
for conducting uninterrupted sale and to see that the properties
fetch maximum price and the sale is complete within the stipulated
time.
Sri P.Ravi Prasad, learned counsel practicing in this Court, is
appointed as an Advocate to represent the committee in the ongoing
proceedings.
ii. C-1 is appointed as the agency to conduct E-auction under the
guidance and supervision of the Committee. The Vice President Mr.
Ravinder Kumar Narula, who is present in the Court, has consented
for this order.
iii. The Company and C-1 are directed to place on record the modalities
of sale of properties shown in Schedule-II on or before 26 th October,
2015 before this Court. They shall also place the notifications/
advertisements to be placed on interest to conduct E-auction of the
properties covered by Schedule-II. In other words, the extent, mode
and manner of advertisement of properties shall be specifically
stated in these details.
iv. The Registrar (judicial) shall open a separate account for depositing
or crediting the sale proceeds realized from these properties. He
shall open the account on receipt of the first Cheque/DD/pay order.
It is made clear that the Company/C-1 shall accept the consideration
only by Cheque/DD/Pay order or through RTGS and in any case n ot
by cash. This Court shall take a serious view of the matter, if it is
revealed that cash has been accepted by them.
v. The E-auction is directed to be undertake under supervision of the
Committee constituted by this Court and it shall be the responsibility
of the Committee and C-1 to maintain complete confidentiality of E-
auction details and every care is taken to avoid inside trading of
information for direct, indirect, collateral or advantage in conduct of
E-auction.
vi. The Chairman of the Company and Agri Group shall make available
to C-1 the details of title documents together with legal opinion on
the right and entitlement of the company to sell and convey
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unencumbered right in the properties sought to be auctioned
through C-1. C-1 is further directed to display the details made
available either through this Court or through the Committee on the
portal dealing with the subject E-auction. C-1 is further directed to
display by way ofo notice in the proposed E-auction the pendency of
the instant PIL and the orders under which the E-auction is being
conducted by them (C-1) and that the confirmation of sale and
registration of property in favour of successful bidder/ tenderer is
subject to further orders of this Court in the instant Public Interest
Litigation.
vii. The Company is directed to meet all incidental and ancillary
expenses, including reasonable development charges for getting the
layout sanctioned for conduct of E-auction and the expenses so
incurred by them will be reimbursed by this Court upon being
satisfied about the genuineness of such claims by separate orders
from time to time. The sale proceeds are directed to be deposited in
the account of Registrar (judicial) exclusively for distribution to the
depositors as well be directed by this Court upon receiving full and
authenticated information from respondent nos. 2 and 6.
viii. C-1 on receipt of complete details as indicated above from Company
through Mr. D.Prakash Reddy learned senior counsel places before
the Court its action plan, sale advertisement details and the time
schedule for undertaking and completing the sale of the properties
covered by Schedule II to this order.
These directions shall not be understood as interdicting the pending
civil and criminal actions against the Company and Agri Group. It is
open for the authorities to take action in accordance with law. The
breach of any undertaking or statement/submission of false and
exaggerated information will be construed as interference with
administration of justice and appropriate action under the Contempt
of Courts Act,1971, will be initiated. "
26. The material available on record would further disclose that
some of the properties of M/s.Agri Gold Group were auctioned as per the
interim directions given by Unified High Court and an amount of
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Rs.50,42,70,521/- was credited in the account directed to be opened by
the Court. Later, the said PIL No.193 of 2015 along with batch of writ
petitions was disposed of on 20.05.2022 and relevant portions of the
common orders are extracted hereunder for sake of expediency:
"A statement at bar has been made that a Special Court i.e. the
Court of Principal District and Sessions Judge, Eluru has been constituted
for the cases related to Agrigold Farms Estates India Private Limited,
Akshaya Gold Farms Villas India Limited et., and the matters are pending
before the said Court. He (Sri P.Govind Reddy, learned Special Counsel
for the State of Andhra Pradesh) has also informed that the competent
authority was also appointed long back in the matter. Meaning thereby,
all claims in respect of the depositors are to be adjudicated by the
Special Court constituted for the purpose.
Learned Senior Counsel Sri P.B.Vijay Kumar has stated before this
Court that various orders have been passed in the present cases and
other connected matters from time to time and the Special Court be
directed to consider those orders also while passing orders in respect of
disbursement of amount. Not only this, he has stated that an amount of
Rs.50,42,70,521/- is lying with the Registry of this Court and therefore,
the amount be transferred to the Special Court for distribution of the
same to the depositors.
After hearing the learned counsel for the parties in the present
matters, this Court is of the opinion that it is the Special Court which is
having jurisdiction to make equitable distribution of the money realized
out of the property attached, among the depositors.
Therefore, the amount of Rs.50,42,70,521/- along with the accrued
interest be transferred to the Special Court constituted for the purpose.
The petitioners before This Court as well as all other depositors shall be
free to file appropriate applications in respect of their claims before the
Special Court by furnishing all minute details and the special Court shall
proceed ahead in accordance with law keeping in view the statutory
provisions as contained in the Act.
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It ha been brought to the notice of this Court that in some of the
cases the petitioners are Banks. The said Banks shall also be certainly
free to file an application before the Special Court.
It has further been brought to the notice of this Court that there
are two writ petitions i.e. W.P.Nos. 23870 and 24347 of 2018 filed by the
Bharat Sanchar Nigam Limited (BSNL). The BSNL shall also be free to
approach the Special Court or avail any other remedy available under the
law.
It has also been brought to the notice of this Court that certain
properties are sold on account of the order passed by this Court.
Therefore, the Special Court shall now be free to proceed ahead in
accordance with law in respect of those properties also.
Resultantly all the writ petitions and the public interest litigations
are accordingly disposed of."
27. It is not in dispute that Enforcement Directorate is arrayed as 8 th
respondent in the above Public Interest Litigation.
28. It is the specific contention raised by the learned Advocate
General that objectives of the State Act (APPDFE Act) which include
securing the monies by disposing of the properties secured by the accused
by deploying the deposits received from the depositors, to answer the
claims of the depositors, cannot be permitted to be frustrated by the
supervening orders of attachment issued under PML Act, though a
subsequent central legislation, since the objects of the said Act,2002 does
not include meeting the payment obligations due to the depositors, except
confiscation of the proceeds of the crime in case the accused is found
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guilty of the schedule offences. The said contention was refused by the
learned Standing Counsel for Enforcement Directorate that PML Act being a
central legislation that too subsequent to the State Act, with a specific
provision contained therein as to the overriding effect of the Act over the
other laws for the time being, the provisional attachment orders shall have
precedence over the attachment orders made under the State laws.
29. In view of the above contentions, it is necessary to evaluate the
aims and objects of both the Acts to ascertain as to the procedure
envisaged under which law would better serve the purpose of meeting the
obligations of the depositors, whose hard earned money was collected by
the accused luring them of high returns to amass wealth.
30. The statement of Objects and Reasons of Andhra Pradesh
Protection of Depositors of Financial Establishments Act, 1999 read as
under:
"Instances have come to the notice of the State Government, wherein a
number of unscrupulous financial establishments in the State are cheating
innocent, gullible depositors by offering very attractive rates of interest,
collecting huge deposits and then vanishing suddenly. The depositors are
being cheated and as put to grave hardship by losing their hard-earned
savings. To curb these malpractices, the State Government had decided to
bring a law to protect the interests of depositors of the financial
establishment in the Sate and for matters connected therewith or incidental
thereto. The above issue was also discussed in a conference of the State
Chief Ministers and Finance Ministers presided by the Union Finance
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Minister on 14.9.1998 at Vigyan Bhavan, New Delhi. The Union Finance
Minister also desired that States should take expeditious steps for enacting
legislation on the lines of 'Tamil Nadu Protection of Depositors (in Financial
Establishments) Act, 1997, to restore the confidence amongst the innocent
depositors and also to serve as a deterrent against malpractices by such
establishments during the course of acceptance of public deposits.
To achieve the above objection, the Government has decided to make
separate law by undertaking legislation."
31. The Act was reserved by the Governor on 13.04.1999 for
consideration and assent of the President and on 23.06.1999, the same
was granted and the Act was published on 1.7.1999, in the Andhra
Pradesh Gazette for general information.
32. The vires of the APPDFE Act was upheld by the Hon'ble Supreme
Court in Soma Suresh Kumar vs. Government of Andhra Pradesh
(supra 1).
33. Sections 6,9,10, 11 and 14 of the Act are extracted hereunder
for sake of convenience:
"6. Special Court:- (1) For the purpose of this Act, the Government shall,
with the concurrence of the Chief Justice of the High Court, by notification,
constitute a District and Sessions Court as a special Court.
(2) No Court including a Court constituted under the Presidency
Towns Insolvency Act, 1909 (Central Act III of 1909) and the
Provincial Insolvency Act, 1920, (Central Act V of 1920), other than
the Special Court shall have jurisdiction in respect of any matter to
which the provisions of this Act apply.
(3) Any pending case in any other Court to which the provisions of
this Act apply shall stand transferred to the Special Court.
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(4) The Special Court shall, on an application by the competent
authority, pass such order or issue such direction as may be
necessary for the equitable distribution among the depositors of the
money realized from out of the property attached.
9. Security in lieu of attachment:- Any financial establishment or
person whose property has been or is about to be attached under this Act
may, at any time, apply to the Special Court for permission to give security
in lieu of such attachment and where the security offered and given is in
the opinion of the special Court, satisfactory, and sufficient, it may cancel
the ad-interim order of attachment or, as the case may be refrain from
passing the order of attachment.
10. Administration of property attached:- The Special Court may, on
the application of any person interested in any property attached under
this Act and after giving the Competent Authority an opportunity of being
heard, make such orders as the Special Court considers just and
reasonable for,--
(a) Providing from such of the property attached as the applicant
claims an interest in such sums as may be reasonably necessary for
the maintenance of the applicant and of his family, and for
expenses connected with the defence of the applicant where
criminal proceedings have been instituted against him in the Special
Court under Section 5;
(b) Safeguarding so far as may be practicable the interest of any
business affected by the attachment and particularly by in the
interest of any partners in such business.
11. Appeal:- Any person including the Competent Authority, if aggrieved
by an order of the Special Court, may appeal to the High Court within
thirty days from the date of such order.
14. Act to override other laws - Save as otherwise provided in this
Act, the provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in
force or any custom or usage or any instrument having affect by virtue of
any such law."
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34. Sub Section (4) of Section 6 of the Act empowers the Special
Court to pass orders for the equitable distribution among the depositors of
the money realized from out of the property attached.
35. Prevention of Money Laundering Act is a legislation brought by
the Parliament to prevent money laundering and to provide for confiscation
of property derived from, or involved in, money laundering and for matters
connected therewith or incidental thereto. The said legislation came into
force with effect from 01.07.2005. According to Section 3 of the Act,
whomsoever, directly or indirectly attempts to indulge or knowingly assists
or knowingly is a party or is actually involved in any process or activity
connected (Proceeds of crime, including its concealment, possession,
acquisition or use and projecting or claiming) it as untainted property, shall
be guilty of offence of money laundering. Section 4 of the Act deals with
the punishment for money laundering, which stipulates that whoever
commits the offence of money laundering shall be punishable with a
rigorous imprisonment for a term which shall not be less than three years,
but which may extend to seven (07) years, and shall also be liable to fine.
Section 5 of the Act which deals with the attachment of property involved
in money laundering, reads as follows:
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"5. Attachment of property involved in money-laundering.-- [(1) Where the
Director or any other officer not below the rank of Deputy Director
authorized by the Director for the purposes of this section, has reason to
believe (the reason for such belief to be recorded in writing), on the basis of
material in his possession, that--
(a) any person is in possession of any proceeds of crime; and
(b) such proceeds of crime are likely to be concealed, transferred or dealt
with in any manner which may result in frustrating any proceedings relating
to confiscation of such proceeds of crime under this Chapter, he may, by
order in writing, provisionally attach such property for a period not
exceeding one hundred and eighty days from the date of the order, in such
manner as may be prescribed:
Provided that no such order of attachment shall be made unless, in
relation to the scheduled offence, a report has been forwarded to a
Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of
1974), or a complaint has been filed by a person authorised to investigate
the offence mentioned in that Schedule, before a Magistrate or court for
taking cognizance of the scheduled offence, as the case may be, or a similar
report or complaint has been made or filed under the corresponding law of
any other country:
Provided further that, notwithstanding anything contained in clause
(b), any property of any person may be attached under this section if the
Director or any other officer not below the rank of Deputy Director
authorised by him for the purposes of this section has reason to believe
(the reasons for such belief to be recorded in writing), on the basis of
material in his possession, that if such property involved in money-
laundering is not attached immediately under this Chapter, the non-
attachment of the property is likely to frustrate any proceeding under this
Act.].
(2) The Director, or any other officer not below the rank of Deputy Director,
shall, immediately after attachment under sub-section (1), forward a copy
of the order, along with the material in his possession, referred to in that
sub-section, to the Adjudicating Authority, in a sealed envelope, in the
manner as may be prescribed and such Adjudicating Authority shall keep
such order and material for such period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall cease to
have effect after the expiry of the period specified in that sub-section or on
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the date of an order made under sub-section (2) of section 8, whichever is
earlier.
(4) Nothing in this section shall prevent the person interested in the
enjoyment of the immovable property attached under sub-section (1) from
such enjoyment.
Explanation.--For the purposes of this sub-section "person interested", in
relation to any immovable property, includes all persons claiming or entitled
to claim any interest in the property.
(5) The Director or any other officer who provisionally attaches any
property under sub-section (1) shall, within a period of thirty days from
such attachment, file a complaint stating the facts of such attachment
before the Adjudicating Authority."
36. Section 5 of the Act authorizes the Enforcement officials not below
a specific rank to attach any property of any person, if he has reason to
believe (the reasons for such belief to be recorded in writing), on the basis
of material in his possession, that if such property involved in money-
laundering is not attached immediately under this Chapter, the non-
attachment of the property is likely to frustrate any proceeding under this
Act. The Provisional Attachment order in the instant case had been issued
invoking the power conferred under this section.
37. Section 5 of the PML Act does not contain any provision as was
contained in Section 6 of the APPDFE Act empowering the Adjudicating
Authority for issuing a direction as may be necessary for equitable
distribution among the depositors of the money realized from out of the
property attached.
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38. In the instant case, the prime charge against the accused persons
is that they have collected deposits from the depositors by making false
promises of high returns by contravening Section 5 of the APPDFE Act. As
rightly contended by the learned Advocate General, the said provision is
not included in the schedule offence under PML Act.
39. The prime intention of any legislation more particularly in the
matters relating to economic offences would be to restore back the
position or status of victim or deceived as much as possible by recovering
the property illgotten from the accused. Mere confiscation of the property
to the State would not serve the purpose of legislation, if it would not
come to the rescue of the victim.
40. The Prevention of Money Laundering Act, though a self contained
code and provides for appeal over the decisions taken by the Adjudicating
Authority, did not contain any provision in pari materia with that of Sub
Section (4) of Section 6 of the APPDFE Act, which comes to the rescue of
the depositors that were deceived by the accused, which would always to
be the prime intention of any legislation dealing with economic offences in
relation to private individuals. The provision contained in PML Act for
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confiscation of the property in case the accused person found guilty of the
schedule offence, would not cater the needs of the deceived depositors.
41. In view of the above, though the PML Act is a central legislation
having overriding effect that too subsequent in point of time to the State
legislation i.e. APPDFE Act, the interest of the depositors would well be
subserved if the properties of the accused firm remained attached under
APPDFE Act so that there may be equitable distribution among the
depositors.
42. At this juncture, it cannot be lost sight of the fact that Division
Bench of this Court in PIL No. 193 of 2015 filed inter alia to direct
respondent nos.3,4 and 8 therein to conduct in depth investigation through
Central Bureau of investigation (CBI) for punishing the culprits forthwith,
after considering the relevant provisions of the APPDFE Act, had opined
that the Special Court which is having jurisdiction to make equitable
distribution of the money realised, out of the property purchased, among
the depositors. From this, it is clear that, Division Bench of this Court, in
view of the provisions of the APPDFE Act, would have thought it fit that the
Special Court is competent to deal with the matters for distribution of
proceeds of the property among the depositors. Lest, the Division Bench of
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this Court in the above PIL would have either directed CBI or Enforcement
Directorate to probe into the matter. This also would reinforce the
observations made above by this Court that continuance of proceedings in
Special Court under APPDFE Act would subserve the interest of the
depositors.
43. Almost all the decisions relied on by the learned Standing Counsel
for Enforcement Directorate are in relation to ouster of writ jurisdiction
when efficacious remedy is available. No doubt, the decisions envisage well
established principle of law. However, in view of the facts and
circumstances that exist in these matters, more particularly in view of the
orders passed in PIL No.193 of 2015, the observations made in the above
decisions cannot be made applicable to the facts of the present case.
44. In the decision in Subrata Chttoraj vs. Union of India and
others (supra 2) relied on by the learned Advocate General, the Hon'ble
Supreme Court while dealing with Sarada Chit Funds when the matters
were transferred to CBI and Investigation by Enforcement Directorate held
as follows:
"44. Transfer of Investigation to the Central Bureau of Investigation (CBI) in
terms of this order shall not, however, affect the proceedings pending
before the Commissions of Enquiry established by the State Government or
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stall any action that is legally permissible for recovery of the amount for
payment to the depositors. Needless to say that the State Police Agencies
currently investigating the cases shall provide the fullest cooperation to CBI
including assistance in terms of men and material to enable the latter to
conduct and complete the investigation expeditiously."
45. The Enforcement Directorate may go on investigating the case
initiated by it into the offences said to have been committed by accused.
However, in view of the reasons given above that the attachment made
under the provisions of the APPDFE Act would subserve the interest of the
depositors, the Provisional Attachment Orders passed by the Enforcement
Directorate are liable to be quashed, for the reason that the same would
deter the primary objective of the APPDFE Act in mitigating the hardship of
the depositors.
46. All the depositors are natives of this State and the properties
attached are situated in this State and the possible inconvenience that may
be caused to the depositors, who had parted with their hard earnings with
the Company by way of deposits, in approaching the Authority under PMLA
Act for pursuing their claims to get back the amount, is also taken into
consideration while reaching to the conclusion that proceeding with the
matter before the Special Court designated under APPDFE Act would
subserve the interest of the depositors.
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47. Regarding the claim made by Union Bank of India (corporation
bank) vide W.P.Nos.4043 & 4044 of 2019 for declaring G.O.Ms.No.23 and
39 to the extent of the properties mortgaged by M/s.Singaraya Hills Green
Power Genco Pvt.Ltd., is concerned, it is brought to the notice of this Court
that the Bank had already filed relevant petitions before the Special Court.
It is also brought to the notice of this Court that the writ petitions in
W.P.No.11520 of 2023 and the petitioners in W.P.No.16770 of 2021 are
agitating their claims by virtue of the note contained in G.O.Ms.No.23
before the special Court, Eluru. Therefore, the bank and also the
petitioners in W.P.Nos.11520 of 2023 and W.P.No.16770 of 2021 can
pursue its remedies before the Special Court.
48. So far as the claim made by M/s.BLG Infra Projects, petitioner in
W.P.No.5183 of 2022 is concerned, the same is covered by the writ
petitions filed by the bank vide W.P.Nos.4043 and 4044 of 2019. M/s. BLG
Infra Projects purchaser can agitate his claim before the Special Court.
49. In so far as the writ petitions vide W.P.Nos.7987 of 2021 filed by
Bank, W.P.No.16770 of 2021 filed by Sai Fortune Apartment Owners
Association, W.P.No.5183 of 2022 filed by BLG Infra Projects Private
Limited, W.P.No.11520 of 2023 filed by All India Agri gold Customers &
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Agents Welfare Association and W.P.No.9441 of 2021 filed by M/s. Agri
gold Farm Estates Private Limited for quashing PAO No.04/2020 dated
24.12.2020 and also the Writ Petition vide W.P.No.2899 of 2022 filed by
Agri Gold Farm Estate India Limited for quashing the Provisional
Attachment Order 12 of 2021, dated 30.11.2021 are concerned, the
Provisional Attachment Orders 04/2020 dated 24.12.2020 and 12/2021,
dated 30.11.2021 are quashed so far as they relate to the properties
attached by the investigating agency in the predicate offences and
consequently the original complaint vide O.C.Nos.1391 of 2021 and 1598
of 2022 so far as they relate to the properties covered by the attachment
made by the investigating agency in predicate offences, are also quashed
to that extent.
50. The Enforcement Directorate is at liberty to participate in the
proceedings before the Special Court, Eluru under the provisions of
APPDFE Act for taking necessary action on the surplus of the amount of
the sale proceeds of the auction of the attached properties in accordance
with the provisions of the PLM Act. Further, the Enforcement Directorate is
free to deal with the properties, which were not attached by the
investigating agency of the predicate offence and are covered under
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Provisional Attachment Orders impugned in these writ petitions, in
accordance with the provisions of the PMLA Act.
51. Accordingly,
(a) Writ Petition Nos.4043 & 4044 of 2019 filed by Union Bank of India
(corporation bank) and Writ Petition No.5183 of 2022 filed by
M/s.BLG Infra Projects, are disposed of and the writ petitioner can
raise all the grounds that are available to the Bank in relation to
G.O.Ms.NO.23 and 39 before the Special Court in relation to the
properties mortgaged to the bank by M/s. Agri Gold Group and
were purchased by M/s.BLG Infra Projects in E-auction.
(b) Writ Petition nos.11520 of 2023 and W.P.No.16770 of 2021 are
disposed of and the writ petitioners can raise all the grounds in
relation to G.O.Ms.No.23 in relation to their flats are concerned.
(c) In so far as the writ petitions vide W.P.Nos.7987 of 2021 filed by
Bank, W.P.No.16770 of 2021 filed by Sai Fortune Apartment
Owners Association, W.P.No.5183 of 2022 filed by BLG Infra
Projects Private Limited, W.P.No.11520 of 2023 filed by All India
Agri gold Customers & Agents Welfare Association and
W.P.No.9441 of 2021 filed by M/s. Agri gold Farm Estates Private
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Limited for quashing PAO No.04/2020 dated 24.12.2020 and also
the Writ Petition vide W.P.No.2899 of 2022 filed by Agri Gold Farm
Estate India Limited for quashing the Provisional Attachment Order
12 of 2021, dated 30.11.2021 are disposed of by setting aside the
Provisional Attachment Orders 4/2020 dated 24.12.2020 and
12/2021 dated 30.11.2021 so far as they relate to the properties
attached by the investigating agency in the predicate offences and
consequently the original complaint vide O.C.Nos.1391 of 2021 and
1598 of 2022 are quashed so far as they relate to the properties
covered by the attachment made by the investigating agency in
predicate offences.
(d) The Enforcement Directorate is at liberty to participate in the
proceedings before the Special Court, Eluru under the provisions of
APPDFE Act for taking necessary action on the surplus of the
amount of the sale proceeds of the auction of the attached
properties in accordance with the provisions of the PLM Act.
(e) The Provisional Attachment Orders so far as they relate to the
properties that are not covered under the attachments made by the
investigating agency in predicate offence holds good. The
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Enforcement Directorate is free is deal with those properties as per
the provisions of the Prevention of Money Laundering Act.
(f) There shall be no order as to costs.
As a sequel, miscellaneous petitions, if any pending, shall stand
closed and the interim orders, if any, shall stand closed.
_________________________
JUSTICE RAVI CHEEMALAPATI
11th March, 2024.
RR
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HON'BLE SRI JUSTICE RAVI CHEEMALAPATI
WRIT PETITION Nos. 4043, 4044 of 2019,
7987, 9441 & 16770 of 2021 & 2899 , 5183
of 2022 & 11520 of 2023
11th March, 2024
RR
