P. Mohanavelu And Another vs Deputy Director Directorate Of Enforcement, Chennai

FPA-PMLA-559/CHN/2014

The present appeal has been filed on 04.04.2014 under Section 26 of Prevention of Money Laundering Act, 2002 with a prayer to set aside the

order dated 04.02.2014 passed by Adjudicating Authority and provisional attachment order dated 08.08.2013 and to declare that the Appellantâ€s

property is not involved in the offences of money laundering under Section 3 of Prevention of Money Laundering Act, 2002.

The brief facts are that a Complaint dated 13.06.2007 was filed by the AGM of the Union Bank of India, and an FIR No. 5/2008 dated 31.03.2008

was registered by CBI, BS&FC, Bangalore, against (i) Shri K. Gnanasekharan, then Branch Manager, Union Bank of India, Adyar Branch, Chennai

and (ii) Shri B. Subramaniam, Proprietor, M/s. R.S. Constructions, Chennai, interalia, under Sections 120-B read with 409, 419, 420, 467, 468 & 471 of

Indian Penal Code and Section 13(2) read with 13(1)(c)&(d) of Prevention of Corruption Act, 1988 and substantive offences thereof to the effect that

the above said persons conspired and cheated the above said bank to the tune of Rs. 16.27 Crores by sanctioning 171 housing loans by abusing official

position and by corrupt or illegal means and the outstanding in those loan accounts was Rs. 13.88 Crores plus interest. Further, upon conclusion of

investigation by CBI authorities, a Final Report (Charge Sheet) No. 6/2009 dated 29.08.2009 (under Section 173 of Cr.P.C.) was also filed by CBI,

BS&FC, Bangalore, before the Honâ€ble Special Judge for CBI Cases, Chennai, against S/Shri K. Gnanasekharan, B. Subramaniam and M.

Sathyaseelan for violation of the provisions of sections 120-B read with 409, 420, 467, 468 & 471 of Indian Penal Code and Section 13(2) read with

13(1)(d) of Prevention of Corruption Act, 1988.

As per respondent, the Investigation conducted by this Directorate revealed that, during 2005 a criminal conspiracy was entered into between Shri

B. Subramanyam, Proprietor of M/s. R.S. Constructions and Shri K. Gnanasekaran, the then Branch Manager of Union Bank of India, Adyar Branch,

Chennai, for cheating the Union Bank of India in the matter relating to sanction and release of housing loans. The Union Bank of India was cheated to

the tune of Rs. 16,27 Crores by sanctioning and releasing 171 housing loans by abusing his official position by corrupt or illegal means. Some of those

loans were in the names of fictitious persons. In some cases, the flats were not completed and as such by releasing the amounts to M/s R.S.

Constructions, the amounts were misappropriated by Shri B. Subramanyam and the loans were not secured by any asset. The said loans were

sanctioned and released by Shri K. Gnanasekaran, in connivance with Shri B. Subramanyam knowing fully well that they were all fictitious loans and

also knowing that the construction of the same is incomplete and as such the loans were not secured by any asset/security. Moreover, Shri K.

Gnanasekaran, then Branch Manager, Adyar Branch, Union Bank of India, Chennai, in his statement dated 14.3.2012 given before the Assistant

Director of Enforcement, Chennai, had admitted that there were some procedural lapses on his part with regard to the verifications, viz., the identity of

the borrower, the project site for which the loan was sanctioned, the documents submitted by the individual and the documents pertaining to the

property, relating to the housing projects developed by Shri B. Subramanyam of M/s R.S. Constructions and that on account of his procedural lapse,

there could be around 50 instances where loans were sanctioned thereby causing a loss to his bank. Further, on completion of departmental enquiries

in this regard, Shri K. Gnanasekaran was also dismissed by the Union Bank of India. Apart from getting the amounts transferred into the accounts of

his company M/s R.S. Constructions from the loan account of the individual borrowers, Shri B. Subramanyam had also resorted to registration of flats

twice, i.e., Double Documentation process and amounts were illegally earned by him. The amounts that have been earned illegally had been projected

as untainted money and invested in his various sites. Shri B. Subramanyam in his statement dated 4.6.2012 given before the Assistant Director of

Enforcement, Chennai, had admitted that he had invested a total amount of Rs. 91 Lakhs as mentioned below:

(i) An amount of Rs. 46 Lakhs towards the land cost & the construction cost in respect of his project situated at Part â€" I measuring 1180 sq. ft. at

No. 3 Elango Nagar, 4th Street, Padi, Chennai â€" 600050 and

(ii) Rs. 45 Lakhs was invested towards the land cost & the construction cost in respect of his project situated at Part â€" II measuring 1200 sq. ft. at

No. 3 Elango Nagar, 4th Street, Padi, Chennai â€" 600050.

The statements recorded by this Directorate from several other persons, such as S/Shri C. Palpandian, S. Thulasingam, J. Dineshkumar and R.

Koteraj have also undoubtedly confirmed that at the instances of Shri B. Subramanyam only, they have applied for housing loans with Union Bank of

India, Adyar Branch, Chennai, and the amount disbursed in their names have been utilized by Shri B. Subramanyam, without their knowledge.

In the present appeals, this tribunal is concerned only with 1180 sq. ft. As per appellants the entire proceeds of the crime took place with regard to

part 2 measuring 1200 sq. ft. The appellants are not charge sheeted under the schedule offence. The appellants are not the borrowers of the loan

sanctioned by the bank.

The appellant no. 2 is the wife of appellant no. 1. Both are senior citizens. Both are not charge-sheeted under schedule offence and no prosecution

complaint under PMLA is filed. They are in possession of impugned property i.e. 1180 sq. ft. since April, 2004 as per their case when this PMLA

does not exists.

Case of the Respondent against the appellants are that:

(a) Shri B. Subramaniam in his statement dated 24.04.2012 has admitted, interalia, that the land at Plot No. 3 was owned and possessed by one Shri

N. Soundara Rajan who has given General Power of Attorney in favour of one Shri T. Harish Bhandari; that out of the above said property, a portion

of land measuring 1200 Sq. ft. (46†2†by 26†0â€) was sold by Shri N. Soundara Rajan through his Power of Attorney Shri Harish Bhandari to

Shri A. Ganesh and that the remaining area of 1180 Sq. ft. in the above site was sold by Shri Harish Bhandari to S/Shri J. Dinesh Kumar, R. Koteraj

and Smt. Devaki.

(b) Shri A. Ganesh in his statement dated 25.04.2012 has stated interalia that during 2003, the property situated at Plot No. 3, Padi Village, Saidapet

Taluk, comprised in Survey No. 343/1A2, New S. No. 343/4, measuring about 1200 Sq. ft. (46†2†by 26†0â€) was purchased by him from Shri

Harish Bhandari, Power Agent for Shri N. Soundara Rajan; that later, he intended to sell the above property to Shri B. Subramanyam, Proprietor, M/s.

R.S. Constructions, Anna Nagar, Chennai; that he had not done the UDS Registration in respect of the said property and later on he came to know

that Shri Subramanyam has sold the above property to S/Shri C. Palpandian, S. Thulasingam and Smt. S. Sivagami, without his knowledge and

consent.

(c ) In the further statement dated 04.06.2012 given before the Assistant Director, Directorate of Enforcement, Chennai, Shri Subramanyam has

stated, interalia, that with regard to the project in the total area of 2380 sq. ft. at No. 3 Elango Nagar, IV Street, Padi, Chennai, the construction was

done in two parts i.e. Part â€" I and Part â€" II, consisting of areas measuring 1180 sq. ft. and 1200 sq. ft. respectively; that in Part I, he had

constructed 3 flats, out of which two flats were meant to S/Shri Koteraj and Dinesh Kumar on whose name the loan was sanctioned and the said flats

were illegally occupied by Shri Mohanavelu, who is the owner of the third flat.

(d) Shri. J. Dinesh Kumar, S/o Shri V. Jayakumar, in his statement dated 15.06.2012 given before the Assistant Director, Directorate of Enforcement,

Chennai, interalia has stated that registration of UDS to the extent of 330 Sq. ft. was done in his name by Shri Harish Bhandari, who was the Power

Agent for the plot, in respect of flat at No. 3, Elango Nagar, Padi, Chennai vide Sale Document dated 04.05.2005.

(e ) Shri. R. Koteraj, S/o Shri V.N. Raghupathy, in his statement dated 18.06.2012 given before the Assistant Director, Directorate of Enforcement,

Chennai, interalia has stated that registration of UDS to the extent of 368.26 sq. ft. in respect of flat at No. 3, Elango Nagar, Padi Village, Chennai,

was done in his name by Shri Harish Bhandari, who was the Power Agent for the plot vide Sale Document dated 04.05.2005.

It is submitted on behalf of respondent that the Appellant herein, Shri. P. Mohanavelu, in his statement dated 11.06.2012 given before the Assistant

Director, Directorate of Enforcement, Chennai, while explaining about the details of the house Survey No. 343/A2, New Survey No. 343/4 and its

purchase interalia has stated that the size of the property in the said address is 1180 sq.ft. and in the first stage, he purchased 308 sq.ft. from

Soundarajan through his Power agent Shri. Bhandari for Rs 1,54,000/- (Rupees One Lakh Fifty Four Thousand only), which was registered as

Document No. 209/2007 (22.01.2007) with the S.R.O, Villivakkam in his name and in the name of his wife, Smt. Devaki Mohanavelu, a copy of the

same was submitted by him; that in the building in which he was residing comprises of 740 Sqft in Ground Floor, 840 sq.ft. in First Floor and 840 Sq.ft

in Second Floor; that for the remaining area, Rs. 6,00,000/- has been paid in instalments for which he does not have any written document.

It is also submitted on behalf of respondent that Shri T. Harish Kumar Bhandari in his statement dated 19.06.2012 has stated, interalia, that the land

measuring 2380 square feet situated at No. 3, Elango Nagar, 4th Street, Padi, Chennai â€" 600050, comprised in Survey No. 343/1A2, New Survey

No. 343/4 was owned by Shri N. Soundara Rajan; that as the said land was identified by Shri. B. Subramaniyam, Proprietor of M/s. R.S.

Constructions for the promotion of the Flats and on settlement of sale consideration with Shri N. Soundara Rajan, has given him General Power of

Attorney for sale of the said property; that the said plot was divided into 1200 square feet, facing south abutting the road and 1180 square feet, in the

rear side of the plot; that the plot measuring 1200 square feet was sold to Shri A. Ganesh; that Shri Subramaniam also identified the buyer namely

Shri. Dineshkumar, Shri R. Koteraj & Shri. Mohanavelu, and as per his nomination, the property in the form of UDS were sold to Shri. Dineshkumar,

Shri R. Koteraj and Shri. Mohanavelu, for the UDS measuring 330 sq. ft., 368.26 sq. ft. and 308 sq. ft., respectively; that subsequently, the UDS were

registered in the respective name in SRO, Villivakkam by document dated 04.05.2005, 04.05.2005 and 22.01.2007 respectively vide Document

Numbers 1559/2005, 1558/2005 and 209/2007 respectively; that the cost of the UDS with respect to Shri Mohanavelu was received by B.

Subramaniyam which was not yet settled to him, whereas the cost with respect to Shri. Dineshkumar, Shri R. Koteraj were settled by B.

Subramaniyam. Further, Shri Harish Kumar Bhandari while explaining about the boundaries of the land in which the UDS has been sold to Shri.

Mohanavelu, Shri. Dineshkumar and Shri R. Koteraj has inter alia stated that the UDS comprised in the land measuring 1180 sq. ft., to the extent of

308 sq. ft. was sold to Shri. Mohanavelu; that the boundaries of 1180 sq. ft. of the land is on the North: land in Survey No. 344; South: Remaining part

of land in Plot No. 100; East: Plot No.4; West : Plot No.2, measuring North to South on the East and West Side: 23â€10†and East to West on the

North and South side: 34â€0†accessing through the passage of 46â€2â€x 8â€0â€. But whereas in the boundaries are wrongly registered as 34â€8â€

x 34â€0â€. But, whereas the measurements from North to South was wrongly registered as 34â€8â€. Though the boundaries remains the same with

respect to UDS sold to Shri Dinesh Kumar and Shri. Koteraj, the boundaries were wrongly mentioned as follows:

North to South on the Eastern Side: 46’2â€​

North to South on the Western Side: 46’2â€​

East to West on the Northern Side: 26’0â€​

East to West on the Southern Side: 26’0â€​

Though he sold the UDS to Shri. Mohanavelu, Shri. Dineshkumar and Shri R. Koteraj, the documentation was prepared by Shri B. Subramaniyam and

he did not have any part in documentation; that he propose to file rectification deed along with the above said persons in the SRO, Villivakkam so that

they did not face any problem as to the registration in future. He once again reiterated that the plot measuring 1180 sq. ft. was sold as UDS to Shri

Dineshkumar, Shri R. Koteraj and Shri. Mohanavelu, measuring 330 sq. ft., 368.26 sq. ft. and 308 sq. ft. respectively; that the flat constructed by Shri

Subramaniam, Proprietor, M/s. R.S Constructions, in the said site would be occupied by Shri Dineshkumar, Shri R. Koteraj and Shri. Mohanavelu and

no other person could claim right over the property.

It is stated on behalf of respondent that the Shri P. Mohanavelu, who is by profession a “B†License Electrical Contractor has clearly

admitted in his statement dated 11.06.2012 that he had purchased only 308 sq.ft. from Shri Soundara Rajan, through his Power Agent Shri T. Harish

Kumar Bhandari. Being a person involved in the real estate field for nearly 45 years, had he purchased the entire land measuring 1180 sq.ft. in the

said site, the question of registration of UDS would not have raised. On the other hand, only registration of Sale Deed to the extent of land measuring

1180 sq.ft. would have taken place. In his case, only registration of UDS to the extent of 308 sq.ft. alone has taken place. Moreover, even in the said

UDS registration, the description of the property was also wrongly defined and the same was tresspassing in the property i.e. Part â€" II of the

property measuring 1200 sq.ft. where the UDS registrations were done in the names of S/Shri S. Thulasingham, C. Palpandian and Smt. S. Sivagami.

Further, it was clear from the documents available on records that the access to the rear building i.e. Part â€" I is only through the passage of 8â€

from the road, which is silent in the document relating to the UDS in the name of Shri P. Mohanavelu and Smt. Devaki Mohanavelu. Further, in

support of his claim of having paid totally a sum of Rs. 6,00,000/- (3,00,000/- + 2,50,000/- + 50,000/-) during 2003, till date as alleged by him, he has not

got registration of the land measuring 1180 sq.ft, from which it is very clear that he is not entitled to claim ownership regarding the remaining portion

of land i.e. 1180 sq. ft. â€" 308 sq.ft.

Hence, it is very much clear from the above statements, documents and discussions made above that ownership of Undivided Share of land in Part

â€" I measuring 1180 sq.ft. in the said property is only 308.sq.ft.

A final report (Charge Sheet) No.6 of 2009 un/s 173 of Cr.P.C. was also filed on 29.08.2009 by CBI, BS & FC, Bangalore, before the Honâ€​ble

Sessions Judge for CBI cases.

Based on the F.I.R., and Enforcement Case Information Report (ECIR) was registered on 18.11.2010 in the Directorate of Enforcement, Chennai

and investigation under PMLA was initiated.

Statement of Shri B. Subramaniam was recorded by Assistant Director, Directorate of Enforcement, Chennai on 29.02.2012. The statement of K.

Gnanashekharan, then Branch Manager, UBI, was recorded by Assistant Director, Directorate of Enforcement, Chennai on 14.03.2012. The

statement of Mohanavelu was recorded by Assistant Director, Directorate of Enforcement, Chennai on 11.06.2012. The statement of Dinesh Kumar

was recorded by Assistant Director, Directorate of Enforcement, Chennai on 15.06.2012. The statement of R. Koteraj was recorded by Assistant

Director, Directorate of Enforcement, Chennai on 18.06.2012. The statement of T. Harish Bhandari was recorded by Assistant Director, Directorate

of Enforcement, Chennai on 19.06.2012.

Provisional Attachment Order dated 08.08.2013 under sub-section 1 of Section 5 of the Prevention of Money Laundering Act, 2002 was passed

by the Joint Director, Directorate of Enforcement.

The complaint was filed on 04.09.2013 under sub-section 5 of section 5 of Prevention of Money Laundering Act, 2002, with prayers

(i) To take on record for the purpose of adjudication under Section 8 of Prevention of Money Laundering Act, 2002,

(ii) Declare under sub-section 2 of Section 8 of Prevention of Money Laundering Act, 2002 that the said property is involved in the offence of money

laundering under Section 3 of Prevention of Money Laundering Act, 2002,

(iii) Confirm the attachment of the property made under Section 5(1) of Prevention of Money Laundering Act, 2002 vide provisional attachment order

dated 08.08.2013 under Section 8(3) of Prevention of Money Laundering Act, 2002.

On 04.02.2014, order of Adjudicating Authority was passed who held that the property under provisional attachment is involved in money

laundering and confirming the order of provisional attachment under Section 5(1) and the same will become after an order of confiscation is passed

under Section 8(7)(5) or Section 60(2A) of Prevention of Money Laundering Act, 2002.

There is no dispute that one Mr. N. Soundar Rajan was the original owner of the land admeasuring 2380 sq. ft. The said land was divided into two

parts. They are part 1 admeasuring 1180 sq. ft. and part 2 admeasuring 1200 sq. ft.

It is the case of the appellants that Appellants expressed their willingness to purchase the land of part 1 (1180 sq. ft.) and paid advance amount of

Rs.3 lakhs on 12.06.2003 and Rs.2.5 Lakhs on 10.10.2003. The said payment was acknowledged by the owner / N. Soundar Rajan by issuing two

receipts stating that the said advance was received towards advance payment for residential land bearing Plot No.100, Door No.3, Elango Nagar, 4th

Street, Padi, Survey No. 343/1A2, New Survey No.343/4 measuring about 1180 sq. ft.

(a) Receipt of Rs.3 Lakhs dated 12.06.2003 is annexed as Annexure-A8 at page 464 of the typed set filed by the appellant dated March 2014.

(b) Receipt of Rs.2.5 Lakhs dated 10.10.2003 is annexed as Annexure-A8 at page 465 of the typed set filed by the appellant dated March 2014.

It is stated on behalf that in pursuance to the receipt of part payment of Rs.5.5 Lakhs by original owner / N. Soundar Rajan from the appellants

handed over the vacant possession of the land admeasuring 1180 sq. ft. in the month of April 2004 as a part performance. Since then the appellants

are in peaceful possession of the land 1180 sq. ft. till date.

It is not denied on behalf of respondent that N. Soundar Rajan executed General Power of Attorney in favour of Shri T. Harish Kumar Bhandari

vide document No. 163 of 2003 dated 06.03.2003 with respect to 2380 sq. ft.

It is stated on behalf of appellants that N. Soundar Rajan, the original owner after receiving Rs.5.5 Lakhs and Rs.50,000/- for the expenses

incurred by the appellant for obtaining the plan approval.

On receiving Rs.6 Lakhs from the appellants, N. Soundar Rajan informed the appellants that the Sale Deed would be duly executed by his General

Power of Attorney Shri T. Harish Kumar Bhandari.

Counsel for the appellants has argued that the disputes between the original owner, Shri B. Subramaniam, the appellants, Shri T. Harish Kumar

Bhandari cannot be decided by this tribunal which are civil disputes. The appellants are claiming ownership on the basis of titles as well as on the basis

of adverse possession if the titles are not clear. It is stated by him that the appellants are using the said property since April, 2004.

It is admitted position that on 22.01.2007, the Sale Deed was executed by Shri N. Soundar Rajan through Power of Attorney Shri T. Harish

Bhandari in favour of the appellants with respect to the vacant land 308 sq. ft. out of 1180 sq. ft. of vacant land. (A copy of Sale Deed dated

22.01.20074 is at page 334 is placed on record).

It is also not is dispute that though Shri Harish Bhandari executed Sale Deed with respect to 308 sq. ft. out of 1180 sq. ft., the appellants are in

peaceful possession of the whole land admeasuring 1180 sq. ft. since April 2004. The said peaceful possession was not at all questioned before any

court of law either by N. Soundar Rajan or by T. Harish Bhandariat any point of time. It is the case of the appellant that Shri Harish Bhandari later on

refused to registered the sale deed for remaining portion.

It is submitted on behalf of appellant that the title of the land with respect to 1180 sq. ft. has to be decided only by the civil court and not by this

Honâ€ble Tribunal and there are ample documents to show in favour of the appellants that they are the one who constructed the structure in the

vacant plot admeasuring 1180 sq. ft.

The Appellants source of income to indicate that he was financially sound to purchase the property of land admeasuring 1180 sq.ft and the same is

filed before this Honâ€ble Tribunal like certified bank deposit Receipts for the amount of Rs.7.70 lakhs (At page 1 of Additional documents dated 05th

October 2015 filed by the Appellants), sale deed selling out Appellantâ€s earlier property (Pg.4-12 of (At page 1 of Additional documents dated 05th

October 2015 filed by the Appellants) and Monthly Bank Statements from may 2000 to November 2008 of the Appellant (At page 15 to 97 of

Additional documents dated 05th October 2015 filed by the Appellants)

The following other documents indicate that the appellants were in possession of the portion of 1180 sq. ft.

(a). Preparatory / Estimate Worksheet pertaining to Civil works, Wood work, Electrical works and Plumbing works for the construction â€"Annexure-

A10 page 468-493 of Typed Set dated March, 2014filed by the appellants.

(b). Purchase bills pertaining to purchase of materials for constructing the house - Annexure-A10 page 468-493 of Typed Set dated March, 2014 filed

by the appellants.

(c ). Extract of the Town Survey Field Register showing the name of appellants - Annexure-A12 page 561-561A of Typed Set dated March, 2014

filed by the appellants and same is translated in English and filed by the appellants as additional documents dated 08.04.2015 at page 1 to 2.

(d). Name Transfer Order issued by Commissioner, Ambattur Municipality in favour of the appellants and the Property Tax Receipt - Annexure-A13

page 562-565 of Typed Set dated March, 2014 filed by the appellantsand same is translated in English and filed by the appellants as additional

documents dated 08.04.2015 at page 3 to 6.

(e ). Electricity Card issued in favour of appellants - Annexure-A15 page 567-574E of Typed Set dated March, 2014 filed by the appellantsand same

is translated in English and filed by the appellants as additional documents dated 08.04.2015 at page 7 to 17.

(f). Family Card issued by Civil Supplies and Consumer Protection Department in the name of appellants - Annexure-A21 page 652 of Typed Set

dated March, 2014 filed by the appellants and same is translated in English and filed by the appellants as additional documents dated 08.04.2015 at

page 24.

In light of the afore stated facts, it is admittedly that the appellants are in possession of the land admeasuring 1180 sq. ft. since April 2004 till date.

Appellantâ€s possession and their title was not questioned at any point of time by the original owner / N. Soundar Rajan or his Power of Attorney / T.

Harish Bhandari. Further title to the said land is to be decided by the competent civil court and not by this Tribunal.

It appears prima facie from the material produced on behalf of appellants that the entire proceeds of crime took place with respect to land which

falls under part 2 admeasuring 1200 sq. ft. and not with the land admeasuring 1180 sq. ft. irrespective of fact whether the appellants may and may not

be legally owner of the entire land of 1180 sq. ft. The following are instances and materials which speck for themselves.

(a) On 13.06.2007 a complaint was given by A.K. Ajmera, Asstt. General Manager of Union Bank of India with the Superintendent of Police, Central

Bureau of Investigation regarding fraudulent sanction and availment of housing loans by M/s R.S. Constructions from Adayar Branch of Union Bank

of India. (at page 35 to 36 of Volume â€" I filed by E.D.).

(b) According to the complaint, Shri B. Subramaniam, Proprietor of M/s R.S. Construction, Chennai. It is one Shri K. Gnanasekharan while

functioning as the Branch Manager of Union Bank of India of Adayar Branch was in connivance with Shri B. Subramaniam, during the period

between April 2004 to October 2005, sanctioned 171 housing loan under the Union Home Scheme for flats being constructed by M/s R.S.

Constructions in 14 sites in Chennai and surrounding areas.

(c ) The sanctioned 171 housing loans by Shri Gnanasekharan out of which some of the loans were in the name of fictitious persons. In some cases,

the flats were not completed by the Builder, the loans are also not secured by any asset.

(d) The details of the loans sanctioned and released under the 14 projects. Out of which serial No.4 pertaining to Elango Nagar Padi (project) is a

question in issue before this Tribunal.

(e ) It is also stated in the complaint that Shri K. Ganasekharan, the Branch Manager of Adayar Branch of Union Bank, in furtherance of the criminal

conspiracy with Shri B. Subramaniam, Proprietor of M/s R.S. Constructions had cheated the Bank to the tune of Rs.16,27,35,000/- by sanctioning the

171 housing loans by abusing his official position by corrupt or illegal means. The present outstanding in this loan amount is Rs.13,88,14,141/-.

Therefore, CBI was requested to make a thorough investigation in these fraudulent transactions.

FIR

Based on the complaint dated 13.06.2007, the FIR No.5/08 was registered on 31.03.2008 against A1 â€" Gnanasekharan, Branch Manager, Union

Bank of India and A2 â€" B. Subramaniam, Proprietor, M/s R. S. Constructions, Chennai for the offences under sections 120B r/w 409, 419, 420, 467,

468, 471 and substantive offences thereof along with 13(2) r/w 13(1)(c) & (d) and substantive offences thereof.

The appellants were not made as accused persons in the said FIR. Charge sheet No. 6/2009 dated 29.08.2009 was filed. The appellants were not

made as accused persons. The charge sheet deals with details of A1 / K. Gnanasekharan, the then Branch Manager, Union Bank of India, Adayar

Branch, Chennai.

The charge sheet deals with details of A2/B. Subramaniam, Proprietor of M/s R.S. Construction.

At page 50 of charge sheetdeals with details of A3 / M. Sathyasheelan, Commission Agent of M/s R.S. Constructions. At page 52 of charge sheet,

7th line from the top states that M/s R.S. Constructions have misappropriated the housing loan funds by neither constructing the said flats nor allotting

such flats to the said borrowers. Thus causing wrongful loss to Union Bank of India and corresponding wrongful gain to A2. At page 53, 4th para of

charge sheet deals with Elango Nagar, Padi, Chennai.

In this project, at Elango Nagar, Padi, Chennai, A1 had dishonestly sanctioned and disbursed housing loans in the name of 4 borrowers for the

construction of flats based on false and forged documents by gross violation of guidelines of UBI and by abuse of his official position in connivance

with A2 and A3 for total amount of Rs.40 Lakhs out of which Rs.38,31,937/- is outstanding. A2 did not complete the construction of flats at this site

and abandoned the site in 2005 by misappropriating the loan amount by transferring it to his account to cheat UBI.

Enforcement Case Information Report (ECIR) dated 18.11.2010 deals with details of suspected accused

a) Sh. K. Gnanasekharan, Branch Manager, Union Bank of India

b) Sh. B. Subramaniam, Proprietor of M/s R.S. Constructions, Chennai

The appellants were not named in the FIR, charge sheet or in the ECIR.

Statement dated 29.02.2012 of Shri B. Subramaniam, Proprietor of M/s R.S. Constructions, Chennai given before Assistant Director, Directorate

of Enforcement of Mr. Subramaniam â€"answered to the question No.3 explaining of double registration in the sites, Subramaniam admits that during

2006-07 on account of the pressure mounted on him by the private financiers. He was forced to take up registration of flats twice i.e. double

documentation and availed loan to fulfil the needs. This has been done in 37 flats out of 171 flats. In that process of double documentation what he did

was he created a Sale Deed for the UDS and Construction Agreement in favour of the fictitious borrower / known and unknown borrowers for the

respective flats which has already sold to the buyer. The details of those 37 flats were tabulated out of which serial No.8 deals with details of J.

Dinesh Kumar (As per E.D., Dinesh Kumar is alleged to be one of the owners of the property admeasuring 1180 sq. ft. as per appellants. The same

is wholly baseless and proves false.

33.1. Statement dated 14.03.2012 of Shri K. Gnanasekaran, then Branch Manager, Union Bank of India given before the Assistant Director,

Directorate of Enforcement, answer No.5, 5th line from the bottom, explaining the methodology adopted in sanctioning house loan. He admits that

there were some procedural lapses on his part with regard to the verification of the identity of the borrower, the project site for which the loan was

sanctioned, the documents submitted by the individual and with regard to the documents pertaining to the property in question. On account of his

procedural lapse there could be around 50 instances where loans were sanctioned thereby causing a loss to his Bank.

Further statement dated 24.04.2012 of Shri B. Subramanyam, Proprietor of M/s R.S. Constructions answer No.1 explaining to the question about the

purchase / construction of flats by him at Elango Nagar, Padi Village, Chennai. He explains the total land measuring 2380 sq. ft. was owned and

possessed by N. Soundar Rajan. He executed Power of Attorney in favour of one T. Harish Bhandari. Out of the above said property, a portion of

land measuring 1200 sq. ft. was sold to Shri A. Ganesh and the remaining area of 1180 sq. ft. was sold by Shri Harish Bhandari to Shri Dinesh

Kumar, R. Koteraj and Smt. Devaki and the flats were constructed.

33.2. Statement of Subramaniam with regard to ownership of 1180 sq. ft. possessed by Dinesh Kumar, Koteraj deserves to be ignored for the

following reasons:

Statement dated 15.06.2012 of Shri J. Dinesh Kumar given before the Assistant Director, Directorate of Enforcement answer in No.2 explaining

about the purchase of property “I expressed my desire to purchase a flat with Shri B. Subramaniam. He said he is constructing a flat at 3, Elango

Nagar, Padi, Chennai and he would allot one of the flat therein. Accordingly, he took me to the flat which was constructed by him and remained under

construction in 2 phase at 3, Elango Nagar, Padi, Chennai and shown me the second building which is behind the front building and which is the back

side of the plot measuring 1180 sq. ft.…â€​

It is submitted by the appellants that Dinesh Kumar had seen the property measuring 1200 sq. fit which is the back side of the plot

measuring 1180 sq. ft. as admitted hereinabove.

Dinesh Kumar, in answer No.3 explaining to the question as to the payment of sale consideration of UDS registration measuring 330 sq. ft. “…..

As described in the said sale document, I have not paid any amount towards the registration of UDS in my name measuring 330 sq. ft. either to Shri

B. Subramaniam or Harish Bhandari …..â€​

It is submitted by the appellants that the alleged Sale Deed executed in favour of Dinesh Kumar without valid consideration is void and

same was admitted in his own statement mentioned herein above).

33.3. Deed of Absolute Sale executed by Shri N. Soundar Rajan through his Power of Attorney, Shri Harish Bhandari in favour of Shri J. Dinesh

Kumar, deals with schedule B of the property admeasuring 330 sq. ft. out of 1200 sq. ft.

It is submitted by the appellants that the alleged Sale Deed executed by Harish Bhandari in favour of Dinesh Kumar with respect to 330 sq. ft. out of

1200 sq. ft.Therefore, it is very clear that there was no Sale Deed with respect to any portion of 1180 sq. ft.

33.4. Statement dated 18.06.2012 of Shri R. Koteraj, Chennai given before the Assistant Director, Directorate of Enforcement and in answer No.2

explaining the purchase of property from M/s R.S. Constructions “They took me to the flat that, he hadconstructed at No. 3, Elango Nagar, Padi

Village, Chennai. The said flat was appeared to have been completed to the extent of 80%. The flat was under construction in 2 Phase at 3, Elango

Nagar, Padi, Chennai and shown me the second building which is behind the front building and which is the back side of the plot measuring 1180 sq. ft.

…â€​

33.5. It is submitted by the appellants that Koteraj had seen the property measuring 1200 sq. fit which is the back side of the plot measuring 1180 sq.

ft. as admitted hereinabove and further his statement with respect to the 80% completion of the construction was false on the ground that the charge

sheet at page 53 of Volume â€" I filed by E.D. itself records that A2 did not complete the construction of flats at this site and abandoned the site in

2005.

33.6. The statement of Koteraj, in answer No.3 explaining to the question as to the payment of sale consideration of UDS registration measuring

368.26 sq. ft. “As described in the said sale document, I have not paid any amount towards the registration of UDS in my name measuring 368.26

sq. ft. either to Shri B. Subramaniam or Harish Bhandari …..â€​

It is submitted by the appellants that the alleged Sale Deed executed in favour of Koteraj without valid consideration is void and same was admitted in

his own statement mentioned herein above.

33.7. Deed of Absolute Sale executed by Shri N. Soundar Rajan through his Power of Attorney, Shri Harish Bhandari in favour of Shri Koteraj deals

with schedule B of the property admeasuring 368.26 sq. ft. out of 1200 sq. ft.

It is submitted by the appellants that the alleged Sale Deed executed by Harish Bhandari in favour of Koteraj with respect to 368.26 sq. ft. out of 1200

sq. ft. Therefore, it is very clear that there was no Sale Deed with respect to any portion of 1180 sq. ft.)

33.8. Statement dated 11.06.2012 of Shri P. Mohanavelu (appellant) given before the Assistant Director, Directorate of Enforcement, Chennai deals

with statement of Mohanavelu is reproduced hereunder:-

“You have asked about the details of the house Survey No.343/A2, new Survey No.343/4 and its purchase for which I state that size of

the property in the said address is 1180 sq. ft. and in the first stage I purchased 308 sq. ft. from Soundar Rajan through his Power of

Attorney Shri Bhandari for Rs.1,54,000/- (Rupees One Lakh Fifty Four Thousand only). The same was registered as Document No.

209/2007 (22.01.2007) with the S.R.O., Villivakkam in my name and in the name of my wife Smt. Devaki Mohannavelu, a copy of the same is

submitted herewith. In the building in which I am residing comprises of 740 sq. ft. in Ground Floor, 840 sq. ft. in First Floor and 840 sq. ft.

in Second Floor. You have asked me that flats in the building has been constructed by Shri B. Subramaniam and out of 3 flats constructed,

2 flats were allotted to Shri Dinesh Kumar and Koteraj and the 3rd flat was allotted to me and my wife, for which categorically I state that

either Dinesh Kumar or Koteraj did not have any right over the property in which I am residing.In support of my claim, I am submitting

herewith a copy of EC No. ………… Shri Subramaniam did not invest any money for constructing this building. The above said building

was constructed by me. For the remaining area, Rs.6,00,000/- has been paid in instalments for which I do not have any written document. I

have constructed the building for 1180 sq. ft. only.â€​

It is submitted by the appellants that from the above statement it is very clear that Dinesh Kumar and Koterajdid not have any right over the property

measuring 1180 sq. ft.

Encumbrance Certificates issued by Govt. of Tamil Nadu with respect to 1200 sq. ft. deals with Certificate of Encumbrance on Property to the

extent of 1200 sq. ft. deals with a Note is reproduced hereunder:-

That the huge amount involved in the offence of particulars: That the huge amount involved in the offence of money laundering has been

invested on the property mentioned above for promoting housing project. Any further transaction in respect of the above property would

frustrate the proceedings of investigation under PMLA, 2002.

At page 37 deals with the property description Elango Nagar, 4th Street, Plot No.100, extent 1180 sq. ft. There is no encumbrance appears.

It is submitted by the appellants that the Encumbrance Certificate issued by the Govt. of Tamil Nadu shows that money laundering was involved with

respect to 1200 sq. ft. and given a clean chit to 1180 sq. ft.

Reply letter issued by Union Bank of India, Chennai to the appellant on RTI request regarding the details of the housing loan disburse in the

schedule property.

The second para deals with loan sanctioned to R. Koteraj against the property admeasuring 368.26 out of 1200 sq. ft. The loan sanctioned to J. Dinesh

Kumar against the property admeasuring 330 sq. ft. out of 1200 sq. ft.

It is submitted by the appellants that the aforesaid loans were sanctioned only against the property admeasuring 1200 sq. ft. and not with 1180 sq. ft.

The E.D. has submitted additional documents in the month of July 2017 i.e. Memorandum of Understanding dated 22.01.2007 entered between

Mohanavelu and B. Subramoniam. The terms of the said Memorandum was mainly agreed that Subramoniam will execute a Sale Deed in favour of

Mohanavelu (appellant) for already received a sum of Rs.8.50 Lakhs. However, E.D. has not disclosed the fact relating to execution of Sale Deed

with respect to which portion of the property. So to understand the Sale Deed as to which portion of the property can be made clear by perusing letter

dated 14.11.2006 addressed by B. Subromanium to Mr. Harish Bhandari (the additional documents dated 04.10.2017 filed by the appellants).

The additional documents dated 14.10.2017 filed by the appellants deals with the Schedule A admeasuring 1200 sq. ft.

It is submitted by the appellants that the alleged Sale Deed was also with respect to 1200 sq. ft. nothing to do with 1180 sq. ft.

It is submitted that alleged loss to the bank was to the tune of Rs.13,88,14,141/- and Enforcement Directorate is silent about their action with

respect to the recovery of said money. The amount involved with respect to the subject matter of property admeasuring 1180 sq. ft. is Rs.46 Lacs.

From the records, it is evident that the entire transaction was happened only with respect to property admeasuring 1200 sq. ft. and not with 1180 sq.

ft.

In view of the aforesaid reasons, Tribunal is of the view that the property admeasuring 1180 sq. ft. was not involved in the offence of money

laundering under Section 3 of the Prevention of Money laundering Act, 2002. From the entire gamut of the matter that the claim of the respondent

with regard to 1080 sq. ft. is a civil dispute. Even tribunal has no jurisdiction to decide the same despite of the fact that the appellants have got the sale

deed registered in their favour for the part of the said portion. This tribunal has also no jurisdiction to declare that the appellants are the owner of the

entire land. It is disputed fact and it is to be decided in other forum and not here. It is also the admitted position that by virtue of sale deed dated

22.01.2007, only the vacant land 308 sq. ft. out of 1180 sq. ft. was purchased. For remaining portion, the appellant has merely produced the receipt in

order to show that certain payment was made the actual owner. The possession of the appellants was not disputed by the counsel for the respondent.

At the best, it may be the illegal possession. It is admitted position that no civil litigation is pending against the appellants for remaining portion either by

the owner of the property or accused party or the bank. Thus, the inference cannot be drawn that the appellants have no right at all in view of having

the possession since 2004. The period of 12 years in order to claim adverse possession also expired. No suit is pending against the appellants.

In light of above, the impugned order dated 04.02.2014 is set aside. Consequently, provisional attachment order dated 08.08.2013 is also quashed in

relation to the appellants. The attachment is released forthwith.

No costs.