Delhi High Court
The Joint Director, Directorate ... vs A. Raja & Ors. on 23 November, 2020
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: September 10, 2020
Pronounced on: November 23, 2020
+ CRL.M.A. 10885/2020 & Crl.M.A. 12520/2020
in CRL.L.P. 184/2018
THE JOINT DIRECTOR,
DIRECTORATE OF ENFORCEMENT .... Petitioner
Through: Mr. Sanjay Jain, ASG with
Ms.Sonia Mathur &
Mr.Naveen Matta, Special
Public Prosecutors with
Mr.Amit Mahajan, CGSC,
Mr. Padmesh Mishra, Mr.
Arkaj Kumar, Ms. Noor
Rampal & Ms. Mallika
Hiremath, Advocates with
Mr. Sudhir Kumar, AD ED
Versus
A.RAJA & ORS. .... Respondents
Through: Mr. Manu Sharma, Advocate
for respondent No.1.
Mr. Vijay Aggarwal, Mr.
Mudit Jain, Mr.Ashul
Aggarwal, Mr. Shailesh
Pandey, Ms. Barkha Rastogi,
Mr. Hardik Sharma,
Advocates for respondents
No. 2, 4, 5, 12, 15, 18 &19.
Mr.Varun Sharma, Advocate
for respondent No. 11.
Mr.Mahesh Agarwal, Ms.
Neha Nagpal & Mr.
Vishvendra Tomar, Advocates
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By:PRADEEP SHARMA
Signing Date:23.11.2020
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&17.
CORAM:
HON'BLE MR. JUSTICE BRIJESH SETHI
% ORDER
CRL.M.A. 10885/2020 & Crl.M.A. 12520/2020 ( both u/s 482
Cr.P.C.)
1. The application Crl.M.A. 10885/2020 is filed by respondent
No.17- M/s Conwood Construction & Developers (P) Ltd. and
Crl.M.A. 12520/2020 is filed by respondent No.15- M/s Dynamix
Realty. The applicants are seeking modification of the ex parte ad
interim order dated 21st March, 2018, vide which status quo in
respect of the attached properties was directed to be maintained,
which were directed to be released upon acquittal of the present
applicants vide order dated 21st December, 2017 passed by the
learned Special Judge, CBI, New Delhi.
2. The pleas raised in these applications are almost similar and
therefore, these applications are being disposed of by this common
order.
3. At the hearing, while addressing his submissions in Crl.M.A.
10885/2020, Mr. Vijay Aggarwal, learned counsel appearing for the
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applicants submitted, that in FIR bearing No. RC DAI 2009 A 0045,
registered on 21st October, 2009, by the Central Bureau of
Investigation for the offences under Sections 120-B of IPC and
Section 13(2) r/w Section 13(1)(d) of the Prevention of Corruption
Act, 1988 ("PC Act"), the present applicants i.e. respondent No.17-
M/s Conwood Construction & Developers (P) Ltd. and respondent
No.15/ M/s Dynamix Realty were not named. However, based on the
allegations of CBI, the Enforcement Directorate (henceforth referred
to as the "ED") registered a case No. ECIR/31/DZ/2010 under the
provisions of Prevention of Money Laundering Act, 2002 (PMLA)
and it was alleged that the present applicants with other accused
were intentionally aiding and facilitating the payment of alleged quid
pro-quo of Rs.200 crores as a reward for alleged undue favours
shown to company- M/s Swan Telecom Pvt. Limited. After
registration of ECIR, the ED by way of a provisional attachment
order No. 01/2011, dated 30th August, 2011 attached the properties
worth Rs.223.55 crores under the provisions of PMLA and the said
attachment was confirmed by the adjudicating authority on 10 th
January, 2012 alleging that the monies returned to M/s Dynamix
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Realty constitute "proceeds of crime" and hence, come under the
purview of the PMLA.
4. Learned counsel further submitted that the learned Special
Court vide order of 31st October, 2014 framed charges on the
accused persons, including the present applicants for commission of
offence under Section 4 of PMLA and vide order dated 21 st
December, 2017 all the accused persons, including the present
applicants, were acquitted of the charges framed against them.
5. Learned counsel for the applicants next submitted that in the
instant 'leave to appeal' under Section 378(4) Cr.P.C filed by the
ED, Crl.M.A. 9402/2018 has already been filed for modification of
order of 21st March, 2018 for exclusion of assets/ properties of the
applicant from "status quo". Learned counsel further submitted that
the said application is pending for long and is resulting in grave
injustice due to "ex-parte status quo" order dated 21st March, 2018,
thereby depriving the innocent and acquitted applicants from use and
enjoyment of their property. Learned counsel submitted that it stands
admitted during evidence that the assets and properties of applicants,
which were attached during trial, were not acquired out of the
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alleged 'proceeds of crime' and no part of alleged 'proceeds of
crime' has either reached applicant or Eversmile Construction Co.
Private Limited. Learned counsel submitted that the present
applicant was neither arraigned as accused in the FIR nor in the
chargesheet and during recording of evidence, the Investigating
Officer had specifically stated that that the applicant/company had
no role in the transactions. It was submitted that during the cross-
examination, it emerged that no money flew to or from the applicant/
company with respect to the transaction in dispute and applicants
were arrayed only on the basis of civil liability and a bare perusal of
the complaint under Section 45 PMLA confirms that no money
originated from Eversmile Construction Co. Pvt. Ltd and Conwood
Construction & Developers (P) Ltd. during the flow of funds of
Rs.200 crore from Dynamix Realty to Kusegaon Fruits and
Vegetables (P) Limited.
6. Learned counsel submitted that the present case is
contradictory to the complaint filed by the ED under Section 5 (5) of
the PMLA before the learned adjudicating authority, wherein the
applicant/Company has been arrayed as respondent only on the
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concept of civil liability, being partners of Dynamix Realty and the
fact that the companies were roped in on the concept of civil liability
was known to the complainant, however, the complainant arrayed
the applicant/company in the present case on the allegation that the
applicant/company had knowledge of the alleged transactions.
7. Learned counsel for the applicants submitted that the ED had
taken actual physical possession of the properties since September,
2014, which are various shops/offices and were "stock in trade" and
situated in Building Shagun Arcade & Shagun Towers. They are Co-
operative Housing Society formed by Purchasers of Premises in
Building Shagun Arcade & Shagun Towers, which is entitled to
recover "maintenance and other charges/funds" for the various shops
and offices and that Municipal Corporation of Greater Mumbai is
entitled to claim "Property Taxes" for the various Shops/Offices
including those belonging to applicant, which are attached and under
the possession of ED and are not being released due to "status quo"
order.
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8. Learned counsel for the petitioner submitted that with respect
to the applicant-M/S Conwood Constructions and Developers Pvt.
Ltd., the following immovable properties have been attached:-
S.No. Land /Property Name & Address Appx.Value in Rs.
1. Unsold Units at Gen. A.K. Vaidya 224594892.00
Shagum Mall Marg, Goregaon
(E), Mumbai
2. Shop No. 105 at Gen. A.K. Vaidya 848000.00
Shagun Mall Marg, Goregaon
(E), Mumbai
Total value 225633928.00
9. It was submitted by learned counsel that though the
applicant's properties have been attached and the ED has taken the
possession, but has failed to bear and pay the maintenance and other
charges/funds/ property tax for these attached shops/offices which
has resulted in grave harm and prejudice to the applicants and led to
situation where "ownership rights" of applicant are being put to
jeopardy.
10. It was also submitted that the applicants have been forced to
reach this Court seeking urgent hearing of the issue in hand because
the applicants have received a Notice dated 7 th August, 2020 from
the Assistant Assessor / Collector, Brihanmumbai, vide which the
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applicant/ company has been asked to pay the outstanding tax to the
tune of Rs. 1,66,21,857/- within 48 hours or else action would be
taken against the property. The Municipal Corporation of Greater
Mumbai has issued Statutory Notice for taking recourse under
Mumbai Municipal Corporation Act and auction the attached
shops/offices for recovery of outstanding property tax without there
being any fault on the part of the present applicant.
11. Learned counsel submitted that similarly Shagun Arcade
Premises Co-Operative Society Ltd. has initiated proceedings under
Section 101 of Maharashtra Co-Operative Societies Act for order of
auction for recovery of outstanding maintenance and other
charges/funds, to the tune of Rs.53,89,762/-. The attached property
could be subjected to auction without there being any fault on the
part of the present applicant.
12. It was submitted by learned counsel that the properties have
been attached by the ED as a "bailee", who is bound to take all the
necessary steps and actions to ensure that the value of the property
attached is not reduced. Learned counsel strenuously submitted that
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Signing Date:23.11.2020
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the present situation is also affecting the rights of the
applicant/company, as the assets/properties of the applicant cannot
be developed and put to use for business and also that
applicant/company is apprehensive of any coercive action under the
Insolvency and Bankruptcy Code, 2016 and applicant's properties
will become subject of auction causing irreparable damage and loss,
despite the fact that the present applicant has been acquitted of all
the charges by the learned Special Court.
13. Learned counsel for the applicant/ company submitted that the
ED has to prima facie establish that the applicant had committed the
offences and they had a nexus or a link in relation to criminal
activities which constituted proceeds of crime and the property
constituting the value of any such property. The attached property
has to have a link or nexus with the actual property derived from
criminal activity and it cannot merely be a property equivalent in
value, attachment of which is only permissible if the proceeds of
crime is taken or held outside India. Such
evidence/averments/conditions are conspicuously missing in the
instant case.
Signature Not Verified in CRL.L.P. 184/2018
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By:PRADEEP SHARMA
Signing Date:23.11.2020
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14. It was further submitted that as per Section 35 of PMLA, the
order of an Appellate Tribunal is akin to a decree passed by a Civil
Court, which makes it clear that the proceedings of attachment are
civil in nature and the attachment under Section 5 of PMLA only
serves one purpose i.e. 'confiscation of properties' till the time final
order is passed by a Special Court. If a valid case is made by the
ED, the proceeds of crime must be preserved so that after final order,
it should be confiscated for the benefit of the State. However, in the
present case the applicant has already been acquitted by the learned
Special Court and the properties attached were directed to be
released. However, by virtue of the order dated 21st March, 2018,
status quo has been directed to be maintained by this Court.
15. Learned counsel for applicants further submitted that the
properties of the applicant attached, admittedly were not acquired
out of the alleged proceeds of crime and the same are not connected
with proceeds of crime and it is not the case of petitioner/ED that the
property is derived or obtained from the scheduled offence and it is
acquired as a result of any criminal activity relatable to the schedule
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offence. It is an admitted fact that the properties have no nexus with
the 'proceeds of crime'.
16. Reliance was placed by learned counsel for
applicant/respondent upon a decision of this Court in State vs. Rajbir
Singh & Ors. 2002 Crl.L.J 3882, wherein it has been observed that
the High Court should not interfere in the judgment of acquittal
passed by the trial court. The Court has observed as under:-
"19. We know from the decision of the
Supreme Court almost five decades ago in the
case of Prandas v. The State that High Court
indeed has the power to set aside a judgment
of acquittal. The leading case of
Sbeo.Swarup.v.Emperor was looked with
approval, which provided the following
guidelines:
Section 417, 418 and 423 of the Code, give
to the High Court full power to review at large
the evidence upon which the order of acquittal
was founded, and to reach the conclusion that
upon that evidence the order of acquittal
should be reversed. No limitation should be
placed upon that power, unless It be found
expressly stated in the Code. Put in exercising
the power conferred by the Code and before
reaching its conclusions upon fact, the High
Court should and will always give proper
weight and consideration to such matters as
(1) the views of the trial Judge as to the
credibility of the witnesses, (2) the
presumption of innocence in favour of the
accused, a presumption certainly not
weakened by the fact that he has been
acquitted at his trial, (3) the right of the
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accused to the benefit of any doubt, and (4) the
slowness of an appellate Court in disturbing a
finding of fact arrived at by a Judge who had
the advantage of seeing the witnesses. To state
this, however, is only to say that the High
Court in its conduct of the appeal should and
will act in accordance with rules and
principles well known and recognised in the
administration of justice."
20. In other words, it was held that the
High Court would be slow to interfere
because it is the trial court which had the
advantage of seeking the demur of seeing the
presumption of innocence verified by the
judgment of acquittal."
17. Reliance was also placed by learned counsel upon a decision
of the Division Bench of this Court in State Vs. Sanjay Kashyap @
Omi & Ors. CrI. L.P. 861/2018 to submit that the Court should not
grant leave to appeal unless it is established that the view taken by
the trial court was one of the possible views and the High Court
should interfere only when it finds that the findings of the trial court
are "perverse". It has been observed as under:-.
"22. It is a settled law that while deciding a
leave to appeal petition filed by the State, in
case two views are possible, the High Court
must not grant leave, if the trial court has
taken one of the plausible views, in contrast
there to in an appeal filed against acquittal.
Upon re- appraisal of evidence and relevant
material placed on record, in case, the High
Court reaches a conclusion that another view
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can reasonably be taken, then the view, which
favour's the accused, should be adopted unless
the High Court arrives at a definite conclusion
that the findings recorded by the trial court
are perverse, the High Court would not
substitute its own views on a totally different
perspective".
18. It was submitted by learned counsel for the applicant/company
that in plethora of cases, the attached properties have been released
on furnishing of indemnity bond in cases where investigation was in
progress, whereas in the present case, the case of applicant/company
is on a better footing, as the innocence of the applicant is fortified by
order of acquittal passed by the learned Special Court. Reliance is
placed upon decisions of the learned Appellate Tribunal dated 29th
August, 2019 in Omar All Obaid Balsharaf Vs. The Deputy
Director, ED FPA-PMLA-2617/DLI/2018; dated 26th July, 2019 in
FPA-PMLA-751/DLI/2014, M/s. Alpha Avenue Pvt. Ltd. Vs. The
Deputy Director, Directorate of Enforcement, Delhi; order dated
17th September, 2019 in 1735/MUM/2017, 63 Moons Technologies
Ltd. Vs. The Deputy Director, Director of Enforcement, Mumbai
FPAPIV1LA; order dated 26th July, 2019 in FPA-PMLA-
503/DLI/20, titles as Jagat Publications Pvt. Ltd. Vs. The Joint
Director, Director of Enforcement.
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By:PRADEEP SHARMA
Signing Date:23.11.2020
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19. Learned counsel Mr. Vijay Aggarwal on behalf of applicant-
M/s Dynamic Realty submitted that ED had attached the sundry
debtors of the applicant and one of the debtors -M/s Graceworks
Realty and Leisure Pvt. Ltd., had deposited a sum of
Rs.34,51,20,750/- on 1st October, 2014 with the department and on
vide communication of 12th May, 2015, it had requested the ED to
invest the said amount into "Fixed Deposit Receipts". However, no
reply to the said communication was received by the applicant from
the ED. Learned counsel submitted that the following accounts of
applicant- M/s Dynamic Realty have been attached:-
S.No. Account Number / Name & Address of the bank / Balance as on
Description of the Sundry Debtors 24.08.2011/
Sundry Debtors Amount with the
Sundry Debtors as
on 22.08.2011 in
Rupees
1. 05211011000957 OBC, Rajnigandha Shopping Rs.429368.71/-
Centre, Gokuldham, Goregaon,
Mukund Link Road, Film City
Road, Goregaon(E), Mumbai
2. 05211131000530 do Rs.424252.00/-
3. 0062002900000018 PNB, PNB House, Sir PM Road Rs.380257.07/
Fort, Mumbai-01
4. 006200PS00006526 do Rs.20,00,000/
5. 02122320001852 HDFC Bank Ltd., Conwood House Rs.366046.63
Yashodham, Gen A.K. Vaidya
Marg, Goregaon (East), Mumbai-
400063
6. M/s Grace Works 462, Senapati Bapat Marg, Lower Rs.690241500 .00
Realty & Leisure Parel, Mumbai-400013
Pvt. Ltd.
7. M/s Mystical 2-5, Ramnagar, Opp. Patkar Rs.621100000.00
Advisory Services College Goregaon (W) Mumbai-
Pvt. Ltd.. (Dr.) 400060
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8. M/s UBS Dream 27S-A. JBB Marg, Belasi Road, Rs.23933364.00 is
Constructions ,Pvt. Mumbai-400009. attached out of
Ltd.(Drs) the total of Rs.
27500000.00
Total Rs.1338877171.00
20. It was submitted by the learned counsel that the applicant
would suffer huge financial loss of interest in case the said amount
was not deposited in the fixed deposit receipt by the petitioner/ED. It
was submitted that a sum of Rs.34,51,20,750/- has already been
deposited by M/s Graceworks Realty and Leisure Pvt. Ltd. and
further a sum of Rs.35,99,924.41/- is attached by ED, which is lying
in various bank accounts, so, the amount of Rs.34,51,20,750/-
received from M/s Graceworks Realty and Leisure Pvt. Ltd. (along
with interest accrued thereupon) be released to M/s Dynamic Realty
subject to furnishing of indemnity bonds to enable the applicants to
run and manage its affairs in a smooth manner.
21. On behalf of applicant-M/s Conwood Construction &
Developers (P) Ltd., learned counsel submitted that the applicant be
permitted to execute an 'indemnity bond' by way of an undertaking
to the tune of Rs.22,56,33,928.00 as a surety and if the appeal filed
by ED is allowed in its favour and if the impugned order acquitting
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the applicant is set aside by this Court, the applicant shall deposit the
said amount with the ED as equivalent to value thereof.
22. Lastly, it was submitted by learned counsel for the applicants
that the instant applications have been filed without prejudice to all
the rights and contentions raised in Crl.M.A. 9402 of 2018 as well as
"Stay Application" and "Leave to Appeal" in the instant case, and so,
in the interest of justice, impugned order of 21 st March, 2018 be set
aside and the attached properties/accounts/amounts of applicants be
released on furnishing of indemnity equivalent to the value thereof.
23. On the other hand, learned Additional Solicitor General (ASG)
appearing for petitioner-Directorate of Enforcement (ED) at the
outset sought dismissal of these applications and submitted that
though in this case leave to appeal has not yet been granted, yet
while passing ex parte ad interim order dated 21st March, 2018, this
Court had applied its mind to prima facie inference that the matter
requires consideration and therefore, until the present appeal under
Section 378 Cr.P.C. is heard and decided, these applications be not
decided, as it would be abuse of the process of law.
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By:PRADEEP SHARMA
Signing Date:23.11.2020
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24. Learned ASG pointed out that another application Crl.M.A.
9402/2018 seeking similar relief has already been filed by the
applicants- respondent No.16 & 17 and reply dated 10th August,
2018 to the said application has already been filed and, therefore,
the instant applications are not maintainable.
25. Learned ASG submitted that the learned Special Judge while
passing the impugned order failed to appreciate the fact that the
offence of money laundering is a standalone offence and on the basis
of acquittal of applicants/respondents in the scheduled offence,
investigated & prosecuted by the CBI, acquitted the respondents
from the offence of money laundering also. Learned ASG further
submitted that that the facts of the present matter are intrinsically
connected to that of CRL. L.P.No. 185/2018 (CBI vs. A Raja &
Ors), as both matters arise out of a common judgment. The acquittal
and release of attached properties in this case was merely followed
by the acquittal of applicants in the CBI matter and accordingly, the
arguments in the present matter would flow from the arguments in
the CBI matter.
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Signing Date:23.11.2020
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26. Learned ASG submitted that the offence of money laundering
as defined under Section 3 of PMLA has been committed by the
firm, M/s Dynamix Realty (in which M/s Conwood Construction &
Developers (P) Ltd. is a partner) and certain accused individuals who
were controlling the affairs of the present applicant as well as of M/s
Dynamix Realty, in which proceeds of the crime were parked and
hence, the applicants are jointly and severally liable for the illegal
acts and actions of their firms. Learned ASG submitted that the
prime accused persons in the scheduled offence, who were
investigated by the CBI, were controlling the day to day affairs of
the present applicants/companies and therefore, these applicants
were liable under Section 70 of the PMLA and accordingly, the
value equivalent to proceeds of crime in terms of Section 2(l)(u) of
the PMLA to the tune of Rs. 22.56 crore, was attached from the
present applicants.
27. Learned ASG submitted that in view of Section 8(5) and (6) of
the PMLA, it is essential to secure the proceeds of crime in the case
of offence of money laundering and the issues relating to the
possession of properties are pending adjudication before the
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Appellate Tribunal and that there is no contradiction between the
complaint filed by the appellant under Section 5(5) of PMLA before
the adjudicating authority and the present leave to appeal.
28. Learned ASG drew the attention of this Court to the
provisions of sub Sections (4) and (5) of Section 5 of The
Prevention Of Money-Laundering (Taking Possession Of Attached
Or Frozen Properties Confirmed By The Adjudicating Authority)
Rules, 2013, which reads as under:-
5. Manner of taking possession of immovable
property.-
(4) Where the immovable property confirmed
by the Adjudicating Authority is in the form of
a land, building, house, flat, etc., and is given
on lease or rent to any third party where the
registration is optional in accordance with the
provision of section 18 of the Registration Act,
1908, the authorized officer shall proceed to
get the premises vacated and the possession
shall be taken by seeking the assistance of
local Authorities in terms of section 54 of the
Act;
(5) Where the immovable property confirmed
by the Adjudicating Authority is in the form of
a land, building, house, flat, etc., and is under
joint ownership, the authorized officer may
accept the equivalent value of fixed deposit to
the extent of the value of the share of the
concerned person in the property estimated by
the authorized officer, to be involved in money
laundering; and"
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29. Learned ASG contended that it is only after examining the
material on record, this Court had passed the order dated 21st March,
2018 directing status quo with respect to the attached properties. It is
next submitted by learned ASG that no prejudice is caused to the
applicants, whose properties have been attached after following the
due process of law, as they continue to be the owner of the attached
property and are therefore liable to fulfil the liability arising out of
the same. Learned ASG submitted that the prayer of applicants to
release the attached properties/amounts on furnishing of indemnity
bond and reliance placed upon various decisions in support thereof,
is of no avail to the case of applicants as the said decisions
were passed in the peculiar facts and circumstances of those cases.
30. Learned ASG submitted that the impugned order of 21 st
December, 2017 passed by the learned Special Court, vide which
applicants were acquitted, is subjudice before this Court in the
instant leave to appeal and, therefore, the present applications
seeking vacation of interim order of 21st March, 2018 is untenable
and requires no interference by this Court.
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Signing Date:23.11.2020
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31. Lastly, learned ASG appearing for the petitioner submitted
that this Court is not bound by the decision taken by the PMLA or
any Coordinate Bench and since this case involves larger issues for
consideration, which can be gone into only when the case is heard in
its entirety, this application cannot be decided.
32. In rebuttal, learned counsel appearing for the applicants
submitted that the applicants have already disclosed before this
Court about pendency of Crl.M.A. 9402/2018 and the instant
applications have been filed while reserving the rights and
contentions to deal with the Crl.M.A. 9402/2018. Learned counsel
for the applicants submitted that M/s Conwood has moved the
instant application as it has received a Notice dated 7 th August, 2020
from the Assistant Assessor / Collector, Brihan, Mumbai to pay the
outstanding tax of Rs.1,66,21,857/- within 48 hours or action under
the Mumbai Municipal Corporation Act and auction of the attached
properties shall be conducted for the recovery of outstanding
amount. Learned counsel submitted that applicant- M/s Dynamix
Realty has been forced to approach this Court owing to COVID-19
pandemic, as the applicant is facing acute financial distress and
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difficulty in managing day to day expenses of the firm and due to
reduction of cash flows, the situation has become worse and so, the
applicant had to lay off some employees being unable to pay their
salaries and expenses.
33. Learned counsel for the applicants submitted that the
properties attached are under the control of ED, who is liable to
maintain them but it has failed to reply as to what steps have been
taken to prevent the depletion in the value of the attached properties
on account of non maintenance.
34. Learned counsel for the applicants further submitted that stand
of petitioner-ED that the facts of the present matter are intrinsically
connected to that of CRL. L.P.No. 185/2018 (CBI vs. A Raja &
Ors), as both matters arise out of a common judgment, is grossly
misplaced as two separate orders have been passed by the learned
Special Court and the said separate orders are assailed separately by
the ED and the CBI respectively. Learned counsel submitted that the
allegations of petitioner/ED that the individuals involved in the
scheduled offence had complete control over the affairs of the
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present applicant companies, is without any basis as there is no
evidence to show that the present applicant was involved in the day
to day affairs of the firm M/s Dynamix Realty. Further it is
submitted by learned counsel that no money either in the forward
trail or in the reverse trail has reached the present applicants.
35. Learned counsel for the applicants have drawn attention of this
Court to sub Rule (5) and (6) of Section 8 of PMLA which reads as
under:-
"(5) Where on conclusion of a trial for any
scheduled offence, the person concerned is
acquitted, the attachment of the property or
retention of the seized property or record
under sub-section (3) and net income, if any,
shall cease to have effect.
(6) Where the attachment of any property or
retention of the seized property or record
becomes final under clause (b) of sub-section
(3), the Adjudicating Authority shall, after
giving an opportunity of being heard to the
person concerned, make an order confiscating
such property."
36. Learned counsel for the applicants submitted that grant of ex
parte ad interim order in favour of the petitioner does not imply that
the petitioner has a good case on merits. He submitted that 'leave to
appeal' has not yet been granted in this case because the Court has to
be convinced that the findings of acquittal returned by the learned
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Special Court are perverse and the submission of petitioner's counsel
that interim order has to continue till the leave of the court is
granted, is frivolous. It is submitted by learned counsel for the
applicants that hearing on the point of 'leave to appeal' is time
consuming, and therefore, the interim order dated 21st March, 2018
be set aside and the applicants be permitted to execute indemnity
bond equivalent to the value of the properties/amounts as surety and
that applicants are ready to furnish the undertaking that in case the
leave to appeal is allowed in favour of ED, the applicants shall
deposit the said amount with the ED.
37. It was once again submitted that the applicants have rightly
relied upon various decisions as referred to above to seek release of
the attached properties/amounts against indemnity bonds, as the case
of applicants is on higher pedestal because they have already been
acquitted by the learned Special Court, whereas in those cases
investigation was in progress.
38. Learned counsel for the applicants further submitted that after
applicant/respondent No.17- M/s Cornwood moved the instant
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application, the petitioner with the mala fide intention to avoid
answering the relief claimed by the applicants, have filed Crl.M.A.
11890/2020 seeking early hearing of this case as well as other cases
[Crl.L.P.185/2018 and 257/2018] but has not informed this Court
that such similar application Crl.M.A. 12246/2020, filed by the
petitioner in Crl.L.P.185/2018, was rejected by a Coordinate Bench
of this Court and, therefore, in the garb of seeking early hearing of
the main case itself, the instant application cannot be ignored and has
to be decided. No other submission was made on behalf of the
applicants.
39. I have heard the learned counsels for the parties and given my
thought to the matter.
40. The stand taken by the prosecution in reply to the applications
filed is that M/s Conwood Constructions & Developers Pvt. Ltd. is a
DB Group i.e. company under the control of Mr. Shahid Usman
Balwa, respondent No. 2 and Mr. Vinod K. Goenka, respondent No.
3 respectively and that the applicant/respondent No. 17 is a partner
in the firm- M/s Dynamix Reality, respondent No. 15 in this petition.
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It stated that respondent No. 17 and the present applicant namely,
M/s Conwood Constructions & Developers Pvt. Ltd. is also a DB
Group company under the control of Sh. Shahid Usman Balwa,
respondent No. 2 and Vinod K. Goenka, respondent No. 3
respectively.
41. The case of the prosecution is that M/s Dynamix Realty was a
partnership firm and a partnership was entered into by M/s D.B.
Realty Ltd., M/s Eversmile Construction Company Pvt. Ltd. and M/s
Conwood Construction Developers Pvt. Ltd. specifically in order to
develop a Slum Rehabilitation Project at Mumbai. The partnership
deed did not provide for any other related project or a project
relating to farm and agriculture business or cinematography work.
None of the companies, firms involved in the entire transactions,
purportedly claimed as loan of an amount of Rs. 200 crores, had the
main objective of lending money. The companies could lend money
only for the purposes incidental to the main objects and lending
money could not be the main object of the company. The amount of
interest purportedly earned out of these monies is a large proportion
of the entire revenue of M/s Kalaignar TV Pvt. Ltd., and M/s
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Cineyug Films Pvt. Ltd. As regards M/s Kusegaon Fruits &
Vegetables Pvt. Ltd., the almost entire earnings of the company are
out of these transactions only. Furthermore, none of these companies
was holding status of non-banking finance company.
42. It is the case of the prosecution that M/s Dynamix Realty
and M/s DB Realty Ltd. had taken credit facilities from M/s IL&FS
Finance Services during 2007 to 2011 for amounts of Rs. 140 crore
and Rs. 102 crores respectively. These loans were secured by M/s
IL&FS Finance Services by way of collateral securities/ mortgages
of big chunks of land held by the entities, shares of the promoters of
the companies concerned and rate of interest charged was 13.5% &
16% respectively. The transactions by which M/s Dynamix Realty
paid the amount of Rs. 200 crores to M/s Kalaignar TV Pvt. Ltd.
through M/s Kusegaon Fruits & Vegetables Pvt. Ltd. & M/s Cineyug
Films Pvt. Ltd. during 2008-2011 at rates of interest of 7.5% to 10%,
while M/s Dynamix Realty itself and its promoters had taken loans
of similar amounts at much higher rate of interest, cannot be said to
be a genuine business transaction.
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43. It is also the case of the prosecution that none of the
transactions among these four companies/firms were secured by way
of any collateral/guarantee/ mortgage when these transactions were
made and if the plea of applicants is taken into consideration that the
payment of funds was in the nature of loan, there exists
incontrovertible material to establish the fact of inadequate
consideration by the applicants/ respondents in as much as these so-
called loans were obtained by M/s Kalaignar TV Pvt. Ltd. at 10%
per annum, whereas those giving the so-called loans themselves took
loans from IL&FS at the rate of 13.5% to 16% per annum. M/s
Kalaignar TV Pvt. Ltd. itself took credit limit from Indian Bank at
the rate of 13.25% to 14.5% per annum.
44. It is also the case of prosecution that in furtherance of the
investigation, proceeds of crime to the tune of Rs. 13.76 crore
approx. have been attached under Section 5 (1) of PMLA from the
respondent No. 16 being the partner of respondent No. 15 and
proceeds of crime to the tune of Rs. 52.16 crore approx. have been
attached under Section 5 (1) of PMLA from the respondent no. 17,
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being the partner of respondent No. 15. It is stated that the
attachment of the proceeds of crime from the respondent No. 17 was
done considering the above explained arrangements amongst the said
companies and that the said attachment was done duly following the
procedure provided under the provisions of the PMLA. The stand of
prosecution is that the assets from the said applicants were attached
on the basis of the fact that the firm- respondent No. 15 had received
proceeds of crime and the active role of the respondent No. 16 and
17 can be deciphered from the fact that respondent No. 16 and 17
along with respondent No. 18 were partners in M/s Dynamix i.e.
respondent No. 15 and accordingly, the applicant / respondent No.
17 as a partner is liable for receiving proceeds of crime as well as for
the commission of offence of money laundering as defined under
Section 3 of the PMLA. It is stated that as a matter of fact the
individuals involved in the scheduled offence had complete control
over the present applicant.
45. This Court has carefully gone through the record.
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46. These applications were listed before this Court on 17 th
August, 2020, at the time when the functioning of the Court was
limited to listing and hearing of matters of urgency through video
conferencing. This Court had heard extensive arguments through
video conference and reserved orders on these applications on 10 th
September, 2020. On the same day, i.e. on 10 th September, 2020,
petitioner/ED had filed application for early hearing
[Crl.M.A.11718/2020] of the instant leave to appeal as well as
connected petitions [Crl.M.A.11888/2020 in Crl.L.P.185/2018 and
Crl.M.A. 11890/2020 in Crl.L.P.257/2018].
47. The plea of petitioner/ED raised in these applications for early
hearing was that since this Court is to demit the office on 30 th
November, 2020 and arguments on behalf of petitioner in Crl.L.P.
185/2020 stand concluded and part arguments on behalf of
respondents have already been advanced, the leave petitions should,
therefore, be heard expeditiously and in case, the arguments remain
inconclusive, the petitioners will have to address all the arguments
afresh. The said applications for early hearing were strongly opposed
by learned counsel for the applicants and other respondents on
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various grounds i.e. the Courts are hearing only urgent matters
through video conferencing as per the Roster and non-urgent matters
shall be taken up by the Roster Benches on resumption of regular
hearings. It was also argued as to why these petitions be given
preference in hearing over the appeals in which accused persons are
in jails. It was further submitted that the other matters
[Crl.Rev.P.381/2017; Crl.Rev. P.370/2017 and Crl.Rev.P.57/ 2017]
arising out of "2 G Spectrum case" are pending before different
Benches of this Court and why only these petitions should be heard
on priority. It was next submitted that amendment in Section 13 of
The Prevention of Corruption Act, 1988 is directly relevant for the
adjudication of the present leave to appeal and since this Court has to
demit office on 30th November, 2020, respondents will not get ample
time to argue their case, especially when record is voluminous in
nature.
48. Vide detailed order of 29th September, 2020, this Court
allowed the applications for early hearing while observing as
under:-
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"45. This Court is of the opinion that with the
assistance and cooperation of learned
counsels, all endeavours should be made to
hear the matter as early as possible. Though
this Court has limited time, yet no one should
carry an impression that he will not get a fair
opportunity of hearing. This Court assures
that everyone will be given an effective
hearing. However, at the same time it goes
without saying that irrelevant and repetitive
arguments need to be avoided.
46. In the end, this Court has only one thing to
say that no doubt there may be delay in filing
the applications for early hearing; no doubt
the documents are voluminous in nature; no
doubt the evidence runs into thousands of
pages; no doubt one of the judgment also runs
into 1552 pages, but that does not mean that
this should deter this court in hearing the
criminal leave petitions. The judicial discipline
demands that the Judge should do his duty and
must not succumb to pessimism and it is not
expected from him to sit leisurely with his pen
down and to say that he will not hear the cases
because the record is voluminous and the time
at his disposal is limited. It will be a folly not
to make an attempt and to sit idle abdicating
one's duty. It is advisable to perform one's
duty irrespective of the fact whatever
conclusion the petitions reach. This Court,
therefore, will not fail in its duty and expects
all the learned counsels to cooperate and
assist this Court in deciding the matters
expeditiously.
47. In view of the above discussion, the
applications moved for early hearing of the
leave petitions are allowed. Let the petitions
be listed on 5th October, 2020 at 02:30 P.M.
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for hearing on day to day basis till further
orders."
49. Accordingly, the leave petition [Crl.L.P.185/2020] was set
down for day to day hearing from 5th October, 2020, while the orders
in these applications stood reserved. It goes without saying that
Coordinate Bench of this Court after preliminary hearing and being
satisfied, had passed ex parte ad interim order dated 21st March,
2018 directing the parties to maintain status quo in respect of the
attached properties. Perusal of instant applications and replies
reveals that disputed and complicated issues have been raised which
require analysis of evidence and judgment of learned trial court
which is voluminous in nature and is, no doubt, subject matter of
leave to appeal also which this Court intended to decide at the
earliest and had even directed listing of the same for hearing on day
to day basis from 5th October, 2020 onwards.
50. However, on 5th October, 2020 itself, an application Crl.M.A.
13703/2020 was filed on behalf of respondent No.13- Asif Yusuf
Balwa and Mr. Vijay Aggarwal, learned counsel appearing on his
behalf, had sought issuance of directions to petitioner/CBI to furnish
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copy of mandatory approval obtained under Section 378(2) Cr.P.C.
with concerned note sheets, reports, drafts, letters and
correspondence to file the present leave to appeal. Proceedings and
hearing qua this application continued from 5th October, 2020 till 12th
October, 2020. On 12th October, 2020, another application
[Crl.M.A.14091/2020] was filed by respondent No.13 and was listed
before this Court and Mr. Vijay Aggarwal, learned counsel
appearing for the respondent No.13 conceded that almost similar
relief is sought in this application and, therefore, on the said date i.e.
12th October, 2020, orders in Crl.M.A.13703/2020 and
Crl.M.A.14091/2020 were reserved after hearing arguments.
51. Thereafter, on 12th October, 2020, learned counsel appearing
for applicants and other respondents insisted that this Court should
first hear the question of applicability of Prevention of Corruption
(Amendment) Act, 2018 to the case in hand and pressed for hearing
of Crl.M.As.1731/2020, 1820/2020 and 13784/2020 [in
Crl.L.P.185/2020] pending before this Court. Arguments on the said
applications were heard in part on behalf of respondents by this
Court. However, hearing of the petition was deferred because of
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lock down due to Covid-19. This Court had, thereafter started
hearing arguments in these applications. During the hearing of these
three applications [Crl.M.A.1731/2020, 1820/2020 and 13784/2020
in Crl.L.P.185/2020], another application [Crl.M.A. 14230/2020]
seeking the same relief was filed by respondent No.5 on 14 th
October, 2020 and arguments were heard on the said application as
well.
52. Thereafter, on 20th October, 2020, two writ petitions [W.P.(C)
No. 7978/2020 and W.P.(C) No.8071/2020] were filed before this
Court. The relief sought in these writ petitions was more or less same
as sought in the applications [Crl.M.A.1731/2020, 1820/2020,
13784/2020 and Crl.M.A.14230/2020 in Crl.L.P.185/2020], which
were already in the process of being heard. This Court had then
started hearing arguments in W.P.(C) No. 7978/2020 on behalf of
Mr.Vijay Aggarwal, learned counsel for the petitioner.
53. On 3rd November, 2020, two more writ petitions [W.P.(C) No.
8617/2020 and W.P.(C) No.8620/2020] for the same relief were filed
by respondent No.3 and respondent No.16 before this Court. This
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Court heard arguments in these writ petitions as well, not only on
behalf of the petitioners, but also by other respondents who had not
even filed any formal application or petition but claimed similar
relief. The arguments were heard in detail in the applications and
writ petitions and these were reserved for order on 6 th November,
2020.
54. Vide order of even date, this Court has pronounced separate
detailed order in Crl.M.A.1731/2020, 1820/2020, 13784/2020 and
Crl.M.A.14230/2020 in Crl.L.P.185/2020 deciding the issue whether
any mandatory approval is required to file appeal under Section
378(2) Cr.P.C. Order has also been pronounced in
Crl.M.A.1731/2020 & Crl.M.A.1820/2020 & Crl.M.A.13784/2020
& Crl.M.A.14230/202 in Crl.L.P.185/2020 adjudicating the issue
regarding applicability of the Prevention of Corruption
(Amendment) Act, 2018 as well as in four writ petitions [W.P.(C)
7978/2020; W.P.(C) 8021/2020; W.P.(C) 8617/2020 and W.P.(C)
8620/2020] vide which note-sheets, correspondence, drafts and file
containing approval/sanction to file the leave to appeal were sought
from Central Government.
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55. Since the subject matter of present applications required
thorough examination of the impugned judgment, this Court had,
therefore, made an earnest effort to hear and decide the leave to
appeal as expeditiously as possible. However, this Court has to say
with a heavy heart that limited time available at its disposal was
consumed in hearing and disposal of miscellaneous applications and
writ petitions filed one after another on behalf of the respondents,
which have been dismissed vide detailed orders/judgments on merits.
Had the leave to appeal been heard on merits, a clear picture would
have emerged and this Court could have arrived at a conclusion
whether the properties at all are required by the prosecution or these
should be released to the applicants. In the absence of any
arguments on merits, this Court is of the opinion that the order dated
21st March, 2018 vide which status quo in respect of attached
properties was directed to be maintained, need not be interfered with
at this stage.
56. In view of the above discussion, this Court is of the opinion
that it will be in the interest of justice if these applications are
decided only after hearing arguments in criminal leave to appeal.
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However, if there is inordinate delay in disposal of leave to appeal,
the applicants/respondents are at liberty to approach this Court by
filing fresh application for release of attached properties, which will
then be considered in accordance with law.
57. With aforesaid observations, these applications stand disposed
of accordingly.
58. The order be uploaded on the website of this Court forthwith.
BRIJESH SETHI, J
NOVEMBER 23, 2020
r/ak/ap
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