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Judgment
FPA-PMLA-2551/GWY/2018
The present appeal has been filed under Section 26 of the Prevention of Money Laundering Act, 2002 challenging the impugned notice bearing no.
F. No. GWZO/Property/2016 dated 31/08/2018 issued by the Joint Director, Guwahati Zonal Office, Enforcement Directorate.
It is seen from the record that the respondent issued the notice dated 31.08.2018 for taking possession under sub-section 4 of section 8 of
Prevention of Money Laundering Act (PMLA), 2002. The immovable property involved in the present appeal is as below:-
Dag no. 151, KP Patta No. 69 & Dag No. 208 KP Patta No. 04, Dag No. 154 KP Patta 36, Village Karmarkuchi NC, District Kamrup (M), Assam
in name of M/s Saradha Realty India Ltd. and Dag No. 177, KP Patta no. 129, Village- Kamarkuchi NC, Mouza- Panbari District Kamrup (M).
Heard the submissions of the learned counsels for both the parties on 21.12.2018. The Appeal was allowed in terms of short order dated 21.12.2018
which is reproduced as below:
“Both the parties have made their submissions. Appeal is allowed. The matter is remanded back. Possession be handed over forthwith to
the appellant subject to the condition that the appellant shall not create any third party interest. Attachment of the property shall continue.
Detailed order to follow.â€
Accordingly the detailed order is as follows:
CASE OF THE APPELLANT AS PER THE APPEAL MEMO
I. It is the case of the appellant that, the appellant is a company duly incorporated under the Company Act, 1956 having its registered office at
Landmark Building, MG Road, Machkhowa, Guwahati, Assam.
II. The Appellant/company, amongst other deals in agricultural products, timber and wood etc. It has been the consistent endevour of the
Appellant/company to promote and protect natural habitat for flora and fauna of the region. The Appellant humbly begs to state that it was in search
of some land for the philanthropic purpose of promoting a green environment as well as organic agricultural use. Sometime in November, 2012, the
Appellant received a proposal about a plot of land in issue situated at Sonapur, Guwahati from one Sri Sanjay Jain, a local business man who was well
conversant en-mass in Guwahati and also to the Appellant and with whom it already had some dealings. Sri Sanjay Jain informed that he had a high
profile client, the then renowned and the Kolkata based M/s. Saradha Realty India Ltd., who wanted to sell the above plot of land.
III. The Appellant is a bona fide purchaser and had no connection with the Director of the said Company nor its CMD Sudhipto Sen. The appellant
got the land documents verified through its advocate who examined the land records for last thirty years as well as other legal parameters and
thereafter reported that the title of the land is clear and the same was free from any encumbrances.
IV. After much deliberation, towards the third week of March 2013, the Appellantâ€s offer of Rs. 70,00,000/- (Rupees Seventy Lakhs only) was
accepted as the full and final amount for the aforesaid plot of land. The entire negotiations and dealings was with Shri Sanjay Jain, who was authorized
on behalf of M/s. Saradha Realty India Ltd. to deal with all matters pertaining to the said sale. M/s. Saradha Realty India Ltd. vide their board
resolution authorized Mr. Sudipta Sen to execute Power of Attorney in favour of Mr. Sanjay Jain, authorizing him to execute Sale Deed etc. The said
Power of Attorney was registered in favour of Shri Sanjay Jain.
V. A Memorandum of Understanding as well as a Registered Agreement for Sale were executed on 22.03.2013 in respect of land in question
between the Appellant/Company and M/s. Saradha Realty India Ltd. pursuant thereto the Appellant paid Rs. 19,00,000/- (Rupees Nineteen Lakhs
only) to M/s. Saradha Realty India Ltd. At this stage the seller backtracked from its promise for which reason the appellant had to file a suit before
the Learned Civil Judge No.2, Kamrup (M) and for specific performance of the contract vide Title Suit No. 174/2013 and an injunction was issued in
the matter restraining the seller from further alienating the property during the proceedings of the suit.
VI. In the meanwhile, the Appellant came across of media reports that M/s. Saradha Realty India Ltd. had duped many investors and, as such,
several other cases were also filed against them. The Appellant could also learn from media reports that the authorities intend to confiscate/attach the
properties belonging to M/s. Saradha Realty India Ltd. As such the appellant of its own volition by way of letter dated 06.05.2013 informed all the
concerned authorities including CBI, Enforcement Directorate and Assam Police regarding its investments with the said party in respect of the land in
question and that the matter was sub-judice in the court with an injunction force. Subsequently informed ED vide letters dated 07.05.2013, 13.05.2013
& 05.06.2013 and submitted copies of documents.
VII. Though all the relevant documents were placed before the respondent no.3 in respect of the purchase of the aforesaid plot of land, however, for
reasons other than bonafide the said authority chose to sit over the matter and nothing was intimated to the Appellant. The respondent authorities were
also informed about the ex-parte decree dated 19.04.2014 in Title Suit No. 174/2013.
VIII. As the seller failed to comply with the directions of the Learned Court stated above, the Appellant had to file Title Execution Case No. 6/2014
for execution of the Decree dated 19.04.2014. Accordingly, the Appellant was directed to deposit the balance amount of Rs. 51,00,000/- (Rupees Fifty
One Lakhs only) in the court. In compliance thereof, vide Petition No. 476/2015 the Appellant deposited a cheque amounting to Rs. 51,00,000/-
(Rupees Fifty One Lakhs only) in the name of the Civil Judge No. 1, Kamrup (Metro), Guwahati before the learned court below, which was
acknowledged by the said Court vide Order dated 05.02.2015. At present the said amount of Rs. 51,00,000/- (Rupees Fifty One Lakhs only) is lying
with the Learned Civil Judge No. 1, Kamrup (M), Guwahati. Subsequent thereto the Sale Deed in question has been executed in favour of the
Appellant be following due process of law.
IX. Subsequently the land records have been mutated in favour of the Appellant in place of M/s. Saradha Realty India Ltd.
X. On the direction of the respondent authorities, the Appellant, on dated 08.08.2018, appeared before the respondent authorities and again placed the
relevant documents pertaining to the purchase of the land and after examination of the original documents kept copies of all the documents mentioned
at Para 13 of Appeal Memo. The Appellant, vide communication dated 10.08.2018, appraised the respondent authorities about the submission of the
documents with regard to the purchase of land in question and stated therein that Appellant is/are nowhere connected with M/s. Saradha Realty India
Ltd.
XI. The Appellant has made substantial investments to develop the property into a protected habitat for flora and fauna since 2013.
XII. On 31.08.2018 it was informed by the caretakers and workers of the appellant that the respondent authorities came to the property along with
armed police and driven them away. When the Director of the Company visited the site, he found two notice boards regarding attachment of the said
property under PMLA. It is also contended by the appellant that for the first time he came to know about the Provisional Attachment under Section
5(1) dated 16.07.2014 and about the confirmation of the PAO by the Adjudicating Authority in O.C. No. 344/2014 dated 07.11.2014. The respondent
no. 3 has taken over constructive possession of the property in question by the impugned order dated 31.08.2018.
XIII. It is also contended by the Appellant that the impugned notice also reflects that land covered by Dag No. 177, KP No. 129 belonging to one Sri
Podum Ch Borthakur has been attached. The Appellant has been baffled by such inclusion and categorically states that it is not aware where this
property is situated and why it has been included along with the property of the Appellant.
GROUNDS OF APPEAL
The main grounds of appeal are as below:
i. That the appellant is innocent and bonafide purchaser and had/has no connection or nexus with Shri Sudipta Sen.
ii. The property sealed of the appellant was its own money purchased through lawful means and the said money is not even alleged to be coming
under PMLA, 2002.
iii. The Appellant is not associated with any provisions of PMLA.
iv. Having full knowledge about the bonafide transaction of the land in issue, the respondent failed to comply with Section 8(2) of the PMLA, 2002.
v. Once the Appellant become the lawful owner of the land, bonafide the Appellant becomes a claimant under the PMLA, 2002 and was entitle to
notice under Section 8(2) of the PMLA, which was never done.
vi. The Appellant/Company, appeared before the respondent authorities and submitted the relevant documents which was examined by them.
vii. No notice was served on the Appellant/Company. The Appellant was denied of ay opportunity being heard by the Adjudicating Authority and kept
completely in dark about the same.
viii. There has been gross negligence on the part of the officials of Enforcement Directorate, Guwahati Zonal Office, resulting in violation of natural
justice, transgression of Article 14, 19 and 21 of the Constitution.
ix. The Appellant/Company has not been even remotely implicated for any offence associated with M/s. Saradha Realty India Ltd.
x. The Appellant/Company was neither named in the FIR nor anywhere in the Chargesheet filed by the respondent nor is there any reference to the
Appellant in the report filed before the Adjudicating Authority.
xi. The Purchase, Registration of Sale Deed and Mutation have been carried out good faith and bonafide without any connivance under judicial orders
of the Honâ€ble Court and even the Sale Deed has been executed directly by the Honâ€ble Court of the Civil Judge Kamrup Metropolitian, District.
xii. The Appellant/Company has relied on the judgments dated 13.08.2018 passed by this Tribunal in the matter of “Ms. Kiran Mazumdar Versus
Deputy Director, Directorate of Enforcement, Mumbai†and “Shri Vivek Mathias Versus Deputy Director, Directorate of Enforcement,
Mumbaiâ€.
CASE OF THE RESPONDENT
The pleading of the respondent in its reply to the appeal inter-alia are as below:
a) The issue in this Appeal is related to the infamous Saradha Scam. The Director, Shri Sudipta Sen, the prime accused and mastermind in the multi-
crore Saradha Scam which swindled Rs. 2,500 Crores from over 1.7 million depositors from West Bengal, Assam, Tripura, Jharkhand, Odhisha ,
before it was exposed in April, 2013. Shri Sudipta Sen, Director, hatched the conspiracy with the Appellant in connivance with the support of Shri
Sanjay Jain to save this proceeds of crime (landed property in this case) from action under PMLA.
b) On the basis of written complaint dated 13.04.2013 made by Shri Tapash Paul and other employees of a Bengali Daily “Sakalbelaâ€, an FIR No.
276/2013 dated 13.04.2013 was registered invoking Section 406 of IPC at the Police Station, Paltanbazar, District-Kamrup (M), Guwahati. Similarly
other FIRs were also filed in State of Assam.
c) Subsequently, the SSP, CID, Assam had forwarded copies of 19 FIRs lodged in different Police Stations against Saradha Group of
Companies/Sudipta Sen and Others.
d) Also subsequently, the CBI, SCB, Kolkata registered FIR No. RC-62/S/2014 dated 26.12.2014 on the basis of Notification No.
PLA(V).151/2012/186 dated 06.05.2013 of Government of Assam, Political (Vigilance Cell) Department, Dispur and Notification dated 09.12.2014 of
the Government of India, Ministry of Personnel, Public, Grievances and Pensions, Department of Personnel and Training, New Delhi by taking over
Dispur (Assam) PS Case No. 732/2013 dated 10.04.2013, registered u/s 420 and 406 of the IPC, 1860 against the Manager of Saradha Group of
Companies, Lalganesh Branch. Subsequently, the case was transferred to the CBI, ACB, Guwahati.
e) CBI investigations has revealed that Shri Sudipta Sen and Ms. Debjani Mukherjee from Kolkata Head Office used to visit Guwahati and held
meetings with the agents/public by saying that Saradha Group of Companies have been doing very good job in the investment sector as well as in the
employment sector, trusted by highly educated people. They used to say that Saradha Group is financially very sound and is acquiring properties/media
houses etc. in different places in India.
f) During the course of investigation by ED, it was transpired that the said Shri Sudipta Sen, Ms. Debjani Mukherjee of Saradha Group of Companies
had collected huge amount of money from public by giving false promise of high return. Money, thus collected, was used to purchase property in the
name of Saradha Realty India Ltd./Saradha Group of Companies. Shri Sudita Sen in his statements dated 26.10.2013, 27.10.2013, 30.10.2013,
31.10.2013, 02.11.2013, 03.11.2013, 04.11.2013, 05.11.2013, 18.12.2013 and Debjani Mukherjee in her statements dated 26.09.2013, 27.09.2013,
30.09.2013, 05.11.2013, 07.11.2013, 10.11.2013, 17.11.2013 given before the office of Enforcement Directorate under Section 50 of Prevention of
Money Laundering Act, 2002 had confessed it accordingly. During the course of investigation it was revealed that the funds derived out of their illegal
activities were laundered into various movable and immovable properties. It further revealed that there was a large number of properties purchased by
Shri Sudipta Sen in the name of M/s. Saradha Realty India Ltd. in Assam and Tripura and the same was found to be the proceeds of crime.
g) Consequent upon investigation by ED, the Provisional Attachment Order dated 16.07.2014 was issued. The same was duly confirmed by the
Adjudicating Authority vide order dated 07.11.2014 in terms of Section 8(2) of PMLA, 2002. Consequent to the confirmation order dated 07.11.2014
passed by the Adjudicating Authority, the Department took the possession of the property on 31.08.2018.
h) It is the contention of the Respondent that the Appellant in connivance with Directors of Saradha Realty India Ltd. acting through Mr. Sanjay Jain
under a well-thought-out conspiracy has deliberately ignored the proceedings under the PMLA and has filed a Civil suit and got an ex-parte decree
from the Civil Court-2, Kamrup by asserting to mis-statement, collusion, suppression of facts. The Appellant had the knowledge of proceedings under
PMLA. If their action were bonafide they would have taken recourse to proviso (8) of Section 8 of PMLA, 2002, which provides for rights of
claimant with a legitimate interest in the property by the Special Court. On the contrary, with a malafide intention, they have approached the Civil
Court, without making ED a party to the suit. This step of the Appellant is in complete violation of Section 67 of PMLA, 2002 which bar filing of suits
in Civil Courts to set aside or modify any proceedings under PMLA.
i) The Appellant knowingly has not challenged the PAO dated 16.07.2014 issued by the Department and confirmation order of Adjudicating Authority
dated 07.11.2014.
j) There is no necessity that the person whose properties are attached or who are made accused in PMLA proceedings also be arrayed in the FIR and
in the charge-sheet.
k) There are no rare flora and fauna in the property as claimed by the Appellants except plantation of Mango and Guava plants supplied by the Forest
Department. There are plantation of “Segun†(Teak) and other plants which were planted well before the alleged purchase or taken possession of
the property.
l) It is a fact that the Appellant has appeared and submitted the documents in his possession in the Guwahati Zonal Office, but it was evident from the
documents that the appellant has allegedly acquired the properties fully knowing the fact the said properties is involved in the offence of money
laundering. The entire paper work was an act of afterthought and done in connivance with the Directors of Saradha Realty India Pvt. Ltd. with an
intention to frustrate the legal proceedings undertaken under PMLA against M/s. Shardha Realty India Pvt. Ltd.
m) The Appellant with the help of his own muscleman and miscreants who has close proximity with the appellant trespassed into the sealed premises
and broke a boundary pillar and took photograph of the same in order to raise allegation against lawful possession taken over by the ED.
n) Shri Sanjay Jain was examined by the ED on 16.10.2018 to verify the actual transaction. Shri Sanjay Jain has stated about the circumstances,
consideration amount, unaware of the Civil proceedings etc. which are stated in the last part of the Para 3 of the reply.
o) In reply to the grounds of appeal the ED has not stated anything new, so the same are not repeated.
p) The respondent has relied upon the judgment dated 09.05.2014 of Honâ€ble Supreme Court in the matter of “Shri Subrata Chattoraj Versus
Union of India & Orsâ€.
DISCUSSIONS/FINDINGS:
i. We have heard the arguments of learned counsels of both the parties and gone through the relevant papers/documents including Memo of Appeal
and Annexures, Reply of the Respondents, Rejoinder filed by the Appellant, Written Synopsis, PAO, Impugned Order, O.C., and Prosecution
Complaint.
ii. The cause of action for this present appeal has arisen when the Enforcement Directorate sealed the property in question by affixing the notice
dated 31.08.2018 for taking possession under Section 8(4) of PMLA, 2002 and allegedly driven the caretakers and workers of the Appellant out from
the property in question.
iii. It is the contention of the Appellant that he was not aware of any proceedings under PMLA, 2002 either against the property or against him.
iv. It is an admitted fact that he is not made a Party either in the Provisional Attachment Order under Section 5(1) nor in the O.C. No. 344/2014 filed
before the Adjudicating Authority under Section 5(5) of PMLA, 2002.
v. There is no denial on the part of the respondent regarding the execution of registered deed of agreement to sale executed on 22.03.2013.
vi. It is revealed from ANNEXURES-7, 8, 9, 10 & 14 that the Appellant had approached the Enforcement Directorate and informed them about its
purchase of a plot of land in Sonapur from Saradha Realty India Ltd. The aforesaid annexures bears the seal of Enforcement Directorate as a token
receipt of those letters. ANNEXURE-7 is the letter dated 06.05.2013 sent by Shri Pranav Kumar Sharma, Director of the Appellant/Company
addressed to the CBI, Guwahati Office, Enforcement Directorate Guwahati Office, Director General of Assam Police and SSP (City) Guwahati.
ANNEXURE-8 is the letter dated 07.05.2013 sent by the Appellant/Company addressed to the Enforcement Directorate Guwahati Office.
ANNEXURE-9 is the letter dated 13.05.2013 sent by Shri Pranav Kumar Sharma, Director of the Appellant/Company addressed to the Assistant
Director, Enforcement Directorate Guwahati Office. ANNEXURE-10 is the letter dated 05.06.2013 sent by Shri P. K. Sharma, Director of the
Appellant/Company addressed to the Assistant Director, Enforcement Directorate Guwahati Office. ANNEXURE-14 is the letter dated 10.08.2018
sent by Shri P. K. Sharma, Director of the Appellant/Company addressed to the Enforcement Directorate, Guwahati Office. All these Annexures
were regarding information about purchase of land from Saradha Realty India Ltd. and pendency of civil proceedings concerning the land in question.
In fact these Annexures also disclosed about the pendency of Title Suit and Misc.(J) before the Civil Court.
vii. We have gone through the copy of ex-parte judgment dated 19.04.2014 passed in the matter of Title Suit No. 174/2013. The said suit was against
Saradha Realty India Ltd. & Sanjay Jain as Defendants concerning the property in question. It is also seen from the copies of the daily order sheets
dated 16.05.2013, 01.06.2013, 01.07.2013 & 29.07.2013 in Misc.(J)262/13 in TS174/13 that opposite party no. 2 had appeared in the case. As stated
above, Mr. Sanjay Jain was the defendant no.2 in the suit. The defendants i.e. Saradha Realty India Ltd. and Mr. Sanjay Jain were set ex-parte by the
Honâ€ble Civil Judge vide order dated 26.08.2013. It is also seen from the copy of the order dated 11.03.2015 in Execution case no. 6/2014 of the
Court of Civil Judge No. 2 Kamrup that the Senior Sub Registrar Kamrup was directed to register the Sale Deed in favour of the Appellant.
viii. It is evident that the Appellant continuously brought it to the notice of the Enforcement Directorate several times and this fact has not been denied
by the Respondent. In spite of having the knowledge of the purchase of the land in question, pendency of the suit etc. the Enforcement Directorate,
Guwahati Office did not investigate into this aspect nor try to approach the Civil Court to plead that by virtue of Section 67 of PMLA, 2002 the Civil
Court has no jurisdiction to entertain any suit concerning the property involved in a PMLA proceeding. For the reason best known to ED, Guwahati
Office, in spite of having sufficient informations, the Appellant was not made a party even though the property in question which the Appellant had
claimed to have purchased the property.
ix. Specific query was made to the learned counsel for the respondent as to why the appellant is not made a party in the PAO and O.C. but we could
not get any satisfactory reply.
x. Therefore, it is prima facie felt that the Appellant should have been made a party to the proceedings before the Adjudicating Authority in the
interest of justice and complete adjudication of the case appellant should have been given proper opportunity being heard as provided under the
provisions of PMLA, 2002.
xi. We have gone through the judgment cited by the Respondent. The said judgment relates to the issue regarding transfer of the investigations to the
CBI and expediting the investigation initiated by the Enforcement Directorate into the scam and institution of appropriate proceedings best on the same
in accordance with law. The main issue we are dealing in the present proceeding is regarding the validity of the attachment of the property in question
involved in the present case without hearing the Appellant.
Therefore, the aforesaid judgment of Honâ€ble judgment of Supreme Court is hardly of any help to the respondent in the given fact and circumstances
of the case.
xii. We have also gone through the judgments of this Tribunal cited by the Appellant. The fact and issue of the judgments in the matter of “Ms.
Kiran Mazumdar (supra)†and “Shri Vivek Mathias (supra)†are similar to the extent of attaching the properties therein without affording
opportunity to them. Hence, the principle decided in the above two judgments by this Tribunal to the extent of aforesaid issue is applicable.
xiii. In the light of above, it is held that the Impugned Notice dated 31.08.2018 is bad in law, hence set aside qua the property in question. The order
dated 07.11.2014 of Adjudicating Authority confirming the attachment in O.C. No. 344/2014 and the PAO dated 16.07.2014 to the extent of the
property in question is set aside. The impugned order has been set aside as both authorities have failed to follow the due process of law and
mandatory provisions of Section 5 and 8 of the Act. The possession of the property in question be handed over to the Appellant with immediate effect,
however, the proposed attachment shall continue. The matter is remanded back to the Adjudicating Authority. The Appellant shall file the necessary
reply before the Adjudicating Authority within twenty days, not beyond thirty days, from the date of this Order, with an advance copy of the said reply
to be served on ED. The Adjudicating Authority, thereafter, shall decide the reply of the appellant within 150 days from the date of receipt of such
reply, in accordance with law, after giving due opportunity to both the parties.
In view of the above we have not gone into other legal issues raised in the appeal.
The appeal is accordingly disposed of.
Copy of the order be sent to the parties as well as the Adjudicating Authority.