Rama Luthra vs Directorate Of Enforcement ...
2021 Latest Caselaw 451 Del

                                                                                              Signature Not Verified
                                                                                              Digitally Signed By:DINESH
                                                                                              SINGH NAYAL
                                                                                              Signing Date:13.02.2021
                                                                                              21:03:26

                                $~21
                                *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                               Date of decision: 10th February, 2021
                                +              W.P.(C) 1448/2021 & CM APPLs. 4155-56/2021
                                       RAMA LUTHRA                                ..... Petitioner
                                                          Through:     Mr. Jayant Mehta, Mr. Kumar
                                                                       Vaibhav, Mr. Gautam Khazanchi, Mr.
                                                                       S. Uday Bhanu & Mohd. Ashaab,
                                                                       Advocates. (M: 9560620075)
                                                          versus
                                       DIRECTORATE OF ENFORCEMENT THROUGH: ITS
                                       DIRECTOR & ANR.                         ..... Respondents
                                                    Through: Mr. Amit Mahajan, CGSC with Mr.
                                                              Asheesh Jain, Advocate for R-1&2.
                                       CORAM:
                                       JUSTICE PRATHIBA M. SINGH
                                Prathiba M. Singh, J. (Oral)

1. This hearing has been done through video conferencing.

2. The present petition has been filed by the Petitioner who is a 72 years' old widow. She was working as a public relations professional in Lexicon Public Relations and Corporate Consultants (P) Ltd., Lexicon PR Management Services (P) Ltd., as also in an advertising company called FS Advertising Ltd.

3. The Petitioner raises a challenge in the present petition to the Provisional Attachment Order (hereinafter 'PAO') dated 22nd January, 2021 by which her bank accounts, immovable property and shares etc. have been provisionally attached by the Enforcement Directorate (hereinafter, 'ED') on the suspicion that these amounts are proceeds of crime and were used to make unauthorised payments for obtaining the coal blocks allocation.

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

4. A perusal of the PAO dated 22nd January, 2021 shows that the allegation in the PAO is that the Petitioner and her earlier employees have all made contradictory statements and there is no explanation for various expenses which were incurred. A total amount of Rs.5.60 crores is stated to have been received from a company called M/s. AES Chhattisgarh Energy Private Ltd and the Indian subsidiary of a U.S. company which was allocated the coal block in Chhattisgarh. The Petitioner is alleged to have been involved in providing consultancy services to the said company. Vide the PAO, the total immovable and movable assets of Rs.3,23,51,787.86/- have been attached and further, vide letter dated 1st February, 2021, a further amount of Rs.2.38 crores is sought to be attached out of the deposits of the Petitioner with M/s Centrum Wealth Management Ltd. (hereinafter, 'M/s Centrum') totalling to Rs.6,19,59,931.51/-.

5. Mr. Jayant Mehta, ld. counsel appearing for the Petitioner submits that there is no basis for the PAO as there is no allegation against the Petitioner. The Petitioner is not an accused, neither has she been named in the FIR. For the first time, a PAO has been issued against her, attaching her assets.

6. Mr. Asheesh Jain, ld. counsel appearing for the ED however submits that there is sufficient material to suspect that the Petitioner was in some way involved in making unauthorised payments for ensuring allocation of the coal block.

7. Initially, on 4th February, 2021, the matter was heard and an oral order was passed disposing of the petition. However, owing to the fact that the judgment of the Supreme Court in Opto Circuit India Limited v. Axis Bank & Ors., [Criminal Appeal No. 102/2021, decided on 3rd February, 2021] was later on brought to the notice of the Court in an unconnected matter, in

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

order to consider the impact of the said judgment on the present case, this Court deemed it appropriate to hear submissions of ld. Counsels in light of the said judgment. The order passed was kept on hold and the matter was adjourned to enable counsels to make submissions.

8. Thereafter, today, counsels for the parties have been heard once again. Mr. Amit Mahajan, ld. CGSC and Mr. Asheesh Jain, ld. Counsel have pointed out that there is a subsequent PAO which has now been passed by the ED on 8th February, 2021. Vide this PAO, the ED has again modified the attachment to the following effect:

"10. Now, therefore, having perused and taken into consideration the material on record placed before me, it appears that the following mentioned persons i.e., M/s Lexicon Public Relations and Corporate Consultants Pvt. Ltd., through Smt. Rama Luthra, Director, as detailed in chart incorporated in para 6.1.7 above valued at Rs.2.37 crores as value thereof, are in possession of aforesaid proceeds of crime with themselves or with the mentioned entities/ authorities. Further, I have reasons to believe that aforementioned movable/ immovable properties mentioned in Para 6, if not provisionally attached at the stage, the non-attachment may frustrate the proceedings under this act and therefore, I hereby order provisional attachment of the aforesaid properties valued at Rs.2.37 crores (Rs. In words two crores and thirty seven lakhs rupees only) in terms of Section 5(1) of PMLA, 2002, for a period of 180 days (One hundred and eighty days) and further order that the same shall not be transferred, disposed, removed, parted with or otherwise dealt with, until or unless specially permitted to do so by the undersigned."

9. The cumulative effect of the two PAOs is that the bank accounts, the Petitioner's shares in the Demat account, the immovable property, as also a

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

sum of Rs.2.37 crores out of the Fixed Deposit in M/s Centrum have been attached by the ED.

10. The Supreme Court in Opto Circuit (supra), has clearly held that there have to be proper and cogent reasons for PAOs to be issued under Section 5 of the Prevention of Money Laundering Act, 2002 (hereinafter, 'PMLA, 2002'). The relevant portions of the judgment are set out herein below:

"11. The scheme of the PMLA is well intended. While it seeks to achieve the object of preventing money laundering and bring to book the offenders, it also safeguards the rights of the persons who would be proceeded against under the Act by ensuring fairness in procedure. Hence a procedure, including timeline is provided so as to ensure that power is exercised for the purpose to which the officer is vested with such power and the Adjudicating Authority is also kept in the loop. In the instant case, the procedure contemplated under Section 17 of PMLA to which reference is made above has not been followed by the Officer Authorised. Except issuing the impugned communication dated 15.05.2020 to AML Officer to seek freezing, no other procedure contemplated in law is followed. In fact, the impugned communication does not even refer to the belief of the Authorised Officer even if the same was recorded separately. It only states that the Officer is investigating the case and seeks for relevant documents, but in the tabular column abruptly states that the accounts have to be 'debit freezed/stop operations'. It certainly is not the requirement that the communication addressed to the Bank itself should contain all the details. But what is necessary is an order in the file recording the belief as provided under Section 17(1) of PMLA before the communication is issued and thereafter the requirement of Section 17(2) of PMLA after the freezing is made is complied. There is no other material placed before the Court to indicate compliance of Section 17 of PMLA, more particularly recording the belief of commission of

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

the act of money laundering and placing it before the Adjudicating Authority or for filing application after securing the freezing of the account to be made. In that view, the freezing or the continuation thereof is without due compliance of the legal requirement and, therefore, not sustainable."

11. The Petitioner is a senior citizen who is stated to have recently lost her daughter to cancer. Her plea in the petition is almost on humanitarian grounds i.e., that her entire life savings have in effect been frozen and she is even unable to pay her medical bills and undertake her day-to-day expenses. The allegations against her in the PAOs date back to the time when she was a PR professional i.e., sometime between 2007-08 to 2015 when the FIR was lodged.

12. The allegation in the FIR is that the company M/s. AES Chhattisgarh Energy Private Ltd had received FDI from its Principal in the USA of Rs. 49.24 crores out of which Rs. 5.60 crores was disbursed to Lexicon Public Relations and Corporate Consultants (P) Ltd., for allegedly obtaining assistance in approvals/authorisations. The PAO concludes:

"Accordingly, the interpretational connotations regarding existence of ulterior motives of siphoning out of an amount for unspecified purposes cannot be ruled out as such disbursed amounts were appeared to have been integrated at some financial platform and might have been used as bribe to get the coal block allocated....".

This PAO is followed up with a letter dated 22nd January 2021, to M/s. Centrum to the effect that any funds lying with it which belong to the Petitioner are not to be dispensed with/transferred/transacted in any manner without prior intimation to the ED, as the same are being considered for Provisional Attachment under Section 5 of the PMLA, 2002. Thus, as on the

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

date when letter dated 22nd January 2021 was issued, no attachment order existed in respect of the funds lying in M/s. Centrum.

13. After the first hearing on 4th February 2021, when the first PAO was considered, along with the letter to M/s Centrum, a second PAO was passed on 8th February 2021, in effect, justifying the letter to M/s Centrum but reducing the attachment to 2.37 crores. The cumulative effect of both the PAOs is that the immoveable property of the Petitioner, all her bank accounts, her Demat account consisting of her shares in various companies as also her Fixed deposits to the tune of Rs. 2.54 crores stand attached. The submission of ld. Counsels for the ED is that the remaining amounts in the fixed deposits are now at the disposal of the Petitioner.

14. In the opinion of this Court, the manner in which all the liquid savings of the Petitioner have been completely frozen appears completely unjustified, especially when the allegations against the Petitioner are merely in the realm of speculation, at this stage. The letter dated 22nd January 2021 issued to M/s. Centrum attached the Petitioner's entire deposits to the tune of Rs. 6 crores. Coupled with the assets attached in the PAO, the total assets attached are cumulatively worth 9,23,51,787/- crores, when admittedly, even as per the ED's own case, the total amount received by M/s. Centrum from M/s. AES Chhattisgarh Energy Private Ltd is only Rs. 5.60 crores. Some opportunity ought to have been granted to the Petitioner before passing orders attaching all her accounts and deposits. Attaching all her assets was totally unwarranted.

15. Keeping in mind the status of the Petitioner and the above facts, it is directed that in place of the attachment of the assets of the Petitioner, as per the PAOs dated 22nd January, 2021 and 8th February, 2021, the Petitioner shall

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:13.02.2021 21:03:26

voluntarily keep a fixed deposit of Rs.3 crores and not dispose of the immovable property, being Commercial Shed bearing No. Gat No.-126, Sawardari, Tal-Khed, Chakan, Pune-410501, Maharashtra, India, valued at Rs.2,24,43,670/-. Details of the Fixed deposit of Rs. 3 crores, shall be provided to the ED within one week. Subject to the above terms being complied with within a week by filing of an affidavit of undertaking before this Court, the Petitioner would be free to deal with all other assets. The PAOs dated 22nd January, 2021 and 8th February, 2021 are modified in the above terms.

16. The Petitioner is now free to approach the Adjudicating Authority in accordance with law, at the appropriate stage.

17. PAO dated 8th February, 2021 was e-mailed to the Court Master today. The same is taken on record. Let a copy of the same be filed by Mr. Asheesh Jain, ld. Counsel, in the Registry.

18. The de-freezing of the bank accounts shall be effected by the banks concerned upon service of a digitally signed copy of this order, downloaded from the High Court's website. No further communication from the ED would be insisted upon by the Banks.

19. With these observations, the present petition, along with all pending applications, is disposed of.

PRATHIBA M. SINGH JUDGE FEBRUARY 10, 2021 dj/T (corrected and released on 13th February, 2021)

Digitally Signed By:PRATHIBA M SINGH Signing Date:13.02.2021 18:44