FPA-PMLA-5846/AHD/2023
By this order, we are deciding the application moved by the appellant on service of notice under Section 8 (4) of the Prevention of Money Laundering
Act, 2002 (in short the Act of 2002) read with sub-rule 2 of rule 5 of the Prevention of Money Laundering (taking possession of attached or frozen
properties confirmed by the Adjudicating Authority) Rules of 2003 (in short the Rules of 2003)for possession of following properties: -
1. Flat No. 6B, Siddhi Apartment, Opp. IDBI Bank, Near Siddhivinayak Savita Temple FP No. 967 of TPS IV, Mahim, Shankar Ganekar Marg,
Prabhadevi, Mumbai-25.
2. Flat No. B-1/61, Gagan Apartment, Gokuldham, Goregaon (East), Mumbai.
3. Flat No. 87A, Reso Villa, Deharje Village, Palghar District, Maharashtra.
The learned counsel for the appellant submitted that the respondent had passed a provisional attachment order after recordingECIR. The provisional
attachment order was confirmed by the Adjudicating Authority. An appeal has been preferred to challenge the said order. After confirmation of the
provisional attachment by the order dated 14.03.2023, the respondent issued a notice under Section 8(4) of the Act of 2002 on 12.04.2023 for
possession of the properties referred to above. The notice for possession has been issued without giving any exceptional reasons rather caused as a
rule. It is byignoring the judgment of the Apex Court in the case of Vijay MadanlalChoudhary vs. Union of India reported in 2022 SCC Online SC 929.
The notice for possession dated12.04.2023 does not give any exceptional reasons so as to evict the appellant from properties referred above. In
absence of disclosure of exceptional reasons in the notice despite a mandate of the Apex Court in the case of Vijay MadanalChoudhary(Supra), the
impugned notice for possession deserves to be stayed during the pendency of the appeal. The respondents have filed reply to supply exceptional
reasons for taking possession but when impugned order does not containreasons, it cannot be now supplemented by way of reply. The counsel for the
appellant has referred to the judgment of the Apex Courtin the case of OPTO Circuit India Ltd. v/s Axis Bank reported in (2021) 6 SCC 707to
emphasize that reasons needs to be given in the notice and cannot be supplemented. The counsel for the appellant has made further reference of
following judgements: -
1. The Judgment of Hon’ble Supreme Court in M/s KrantiAsso. Pvt. Ltd. &Anr. vs Masood Ahmed Khan (2010) 9 SCC 496
2. The judgment of Hon’ble Supreme Court of India in Union of India v. Mohan Lal Capoor, (1973) 2 SCC 836
3. The Judgment of Hon’ble Punjab and Haryana High Court in Prince Pal Singh Versus State of Haryana and Another 2018 SCC OnLine P &
H 7242
4. The judgment of Hon’ble Delhi High Court in the matter of Jugal Kishore vs. Lt. Governor, Delhi and Ors. 2017 (2) JCC 1335
5. The Judgment of Hon’ble Supreme Court of India in the case of JayrabhaiJayantibhai Patel vs. AnilbhaiJayantibhai Patel and Ors. 2006 (8)
SCC 200.
It is to support the argument that an administrative order should not be passedwithout assigning reasons. A non-speaking order is not sustainable in the
eyes of Law. The administrative order needs to passed containing reasons to support it so that the Court or Tribunal may examine the justification
given therein. The impugned order does not contain reasons to make out a case of exceptional nature. It is further submitted that Flat No. 6B, Siddhi
Apartment has been occupied by mother-in-law of the appellant for last six years. The appellant also resides there but presently she is travelling out of
India with the permission of Gujrat High Court. In Flat No. B-1/61, Gagan Apartment, Mrs. ShrimatiSawaleMrudula Ananta is residing as tenant.
Leave and License agreement was entered in the year 2021 and so far as Plot No. 87 A is concerned, it is under occupation of the brother-in-law of
the appellant. Since, all the properties have been occupied by one or other person, eviction from those properties would cause inconvenience to the
appellant and otherwise there exists no exceptional reason to seek possession of the property.
The counsel for the appellant has otherwise made reference of the facts of this case. It is stated that the Flat No. 6-B, Siddhi Apartment was acquired
on 09.11.2017 from Aries Management Service Pvt. It has been considered to be proceeds of crime and accordingly attached. However, the other
properties i.e., Flat No. B-1/61, Gagan Apartment and Plot No. 87 A in Reso Villa, have been attached for the value of the proceeds of crime and
thereby it was not acquired out of the proceeds of crime. The property of Siddhi Apartment was purchased by the appellant alongwith her husband
DhananjayDatar through sale deed dated 09.11.2017. The said property was purchased from Aries Management Pvt. Ltd on the understanding with
the Yes Bank Ltd. that Aries Management would repay the dues of Yes Bank out of the sale of the property. The appellant was otherwise having her
own income out of salary, gains from the share, professional fees earned by the defendant No. 18, rental income. The purchase of attached properties
was not out of the proceeds of crime, but from appellants own sources. She had even redeemed funds to get One Crore to purchase Siddhi Apartment
Flat. The amount was also taken from the friends and the relatives. The details of transaction has been given. The appellant’s husband received
total consideration of 3.95 Crores even from sale of DB Woods Flat at Goregaon. The Flat No. B-1/61, Gagan Apartment was purchased in the year
of 2004, i.e., much prior to the alleged offence. The source of funds to purchase the aforesaid property has also been given. Plot No. 87A, Reso Villa
has also been attached for value equivalent to the proceeds of crime. The said property was purchased by the appellant alongwith her husband
DhananjayDatar in the year of 2013. The husband DhananjayDatar was working with ABG Shipyard and was drawing salary. The purchase of Flat in
Siddhi Apartment has been taken to be the proceeds of crime and other properties were attached for the value thereof to the proceeds of crime. The
appellant had nothing to do with alleged fraud of Rs. 22842 Crores said to have been committed by ABG Shipyard Ltd.
The facts available on record shows that the appellant has not taken advantage of proceeds of crime of ABG Shipyard rather purchased properties
out of their own funds. Ignoring the aforesaid, the properties were attached followed by notice for its possession.
Thelearned counsel for appellant has given reference to the judgment of the Apex Court and also of various High Courts to support his argument. The
first judgement referred by the appellant is in case of Vijay MadanlalChoudhary(Supra).Reference of para 304 to 307 of the judgement (Supra) has
been given.It is submitted that stage of taking possession of the property comes on an order of confiscation. In the instant case, the stage of
confiscation has not yet come rather it would be on conclusion of the trial and only when an order of conviction is passed. It is not a case where
exceptional circumstance exist. In the case ofUnion of IndiaVs GanpatiDealcom Pvt. Ltd. dated 23.08.2022 in Civil Appeal No. 5783/2022,the Apex
Court has illustrated out few exceptions for taking possession. It can be whenappellant is involved in terrorist activities or in drug cartels. It can also in
a case of organized crime. The case in hand is not falling in any of such category thus referring to the aforesaid judgment, the appellant prayed for an
interim order.
The another judgment referred by the counsel for the appellant is of Telangana High Court in the case of State Bank of India vs The Deputy Director
Directorate of Enforcement in writ petition (c) 5744/2022 dated 22nd March, 2023. In that case, the judgement of the Apex Court in the case of Vijay
MadanlalChoudhary (Supra) was elaborately discussedand relied and it was held that anotice for possession can not be given as a rule but as an
exception and thereto when it reaches to the stage of confiscation of property.
The learned counsel for the appellant has given reference of the judgment of this Tribunal in the case of Karti P. Chidambaram vs The Deputy
Director, Directorate of Enforcement dated 03.09.2019. We are not elaborately referring to those judgments as it would be nothing but repetition of
the ratio propounded by the Apex Court in the case of Vijay MadanlalChoudhary (Supra).
Other than the argument aforesaid, no other argument was raised by the counsel for the appellant thus, we wouldbe recording our finding only on the
groundsraised orally before us.
The application is seriously contested by the learned counsel for the respondent. A detailed reply to the application has been filed to justify the notice
for possession byinvoking Section 8 (4) of the Act of 2002 read with rule 5 (2) of the rules of 2013. The counsel for the respondent has given
complete background of the case to showhow ABG Shipyard and other companies cheated and committed fraudon the consortium banks to obtain
loan of Rs. 22,842 Crores and appellant became part of it. The completefacts in that regard have been narrated and would be referred by us while
dealing with rival arguments of the parties. The counsel for the respondents has reasons to carve out an exception to take possession of the flat in
question.
The appellant alongwith other associated companies of ABG Shipyard Ltd.got involved in organized crime. It would be coming out from the narration
of facts given in the ECIR and even referred in the Provisional Attachment Order, so also in the order passed by Adjudicating Authority. The facts
would show how ABG Shipyard Ltd. alongwith itssubsidiary and associated companies committedfraud in an organized manner on the consortium
banks. The loan of Rs. 22,842 Crores was taken by manipulating the books of accounts and instead of using the said fund for the purpose, it was
diverted in a planned manner by giving it to subsidiary and associatecompanies. The funds were diverted out of India also and are not available. The
loan was otherwise taken by committing fraud.All those facts came on an Audit after the matter was taken for insolvency before NCLAT. The way
fraud was committed not onlyshows the intention of the appellant and other companies but would show the organized crime. If the proceeds of crime
is out of the organizedcrime, the possession of the property thereupon is considered to be on exceptional ground. To support the argument,reference of
the judgment of the Apex Court and different High Court has been given and would be referred while analyzing the arguments.
The learned counsel for the respondents submitted that as against the loan of Rs. 22,842Crores taken by ABGShipyard and given to its
associatedcompanies and others, the attachment of properties could be only for a sum of Rs. 2747 Crores. The loan was siphoned by the ABG
Shipyard Ltd. and Subsidiary Companies and it cannot be without committing a crime in organized manner. It is a crime against the country and the
public which cannot be ignored rather the Tribunal should take a serious view on it.
It is submitted that the Appellant has not approached the Hon’ble Tribunal with clean hands. The Appellant is the wife of the CFO of ABG
Shipyard Ltd and the beneficiary of the diverted funds from ABG Shipyard. The conduct of the Appellant herself during the course of the proceeding
under the provisions of PMLA, 2002 has been such that she has evaded the proceedings before the Respondent at a previous juncture by escaping
abroad after the search proceedings and if the possession of the property is not taken immediately, she may try to dispose of the same and escape
with the sale proceeds to a foreign country and may never return, thereby, frustrating the present proceedings. Hence, in view of  these exigent
circumstances, the present application deserves to be dismissed.
It is submitted that Aries Management Services Pvt. Ltd had acquired the entire property at Serial No. 1 i.e. Siddhi Apartment, Opp. IDBI Bank,
Near Siddhivinayak Temple, Shankar Ghanekar Marg, Prabhadevi, Mumbai using funds diverted from ABGSL. Funds were transferred from ABGSL
during the period from Dec, 2007 to Feb, 2008. These funds have been utilized by Aries Management Services Pvt. Ltd for acquisition of the entire
property of Siddhi Apartment comprising 14 flats. Out of these 14 flats at Siddhi Apartment acquired by Aries Management Service Pvt. Ltd using
funds of ABGSL, one flat i.e. Flat No. 6B, Siddhi Apartment, Opp. IDBI Bank, Near Siddhivinayak Temple, FP No. 967 of TPS IV, Mahim Shankar
Ganekar Marg, Prabhadevi, Mumbai â€" 25 has been transferred to Mrs. Savita Datar (present appellant) & her husband Mr. DhananjayDatar.
It is submitted that by utilizing funds of ABG Group Company, Savita DhananjayDatar had acquired property from Aries Management Service Pvt.
Ltd, which was even originally acquired using funds from ABG Shipyard Ltd. Total consideration amounting to Rs. 4.5 Crore for purchase of property
were made from the account (s) of Savita DhananjayDatar (3.25 Crore) and Sanyog Infrastructure Pvt. Ltd. (1.25 Crore). Savita Datar was an
authorized signatory in the bank account of Sanyog Infrastructure Pvt Ltd. and her husband was director of the company.
It is submitted that apart from the funds diverted from ABG Shipyard Ltd to Smt. Savita Datar for purchase of property i.e. Flat No. 6B, 6th Floor,
Siddhi Apartment, Prabhadevi, Mumbai -25 (as discussed in para above), Savita DhananjayDatar, had received funds from related entities of ABG
Shipyard Ltd., which had no major source of revenue and had no business activity. The account No. 015801002431 of Savita DhananjayDatar, had
many credit entries from companies like ABG Cement Holdco Pvt. Ltd. (holding company of ABG Cement Ltd.) &Ashmit Mercantile Pvt. Ltd.
(having no business activity) amounting to Rs. 35 Lakh. Here, it is necessary to mention that Mrs. Savita DhananjayDatar was never associated with
any of ABG Group Companies though her bank accounts were used for diversion of funds from ABGSL. Mrs. Savita Datar also received funds from
Mahavir Distributors Pvt. Ltd. through Sanyukta Trading Pvt. Ltd. and Sanyog Infrastructure Pvt. Ltd. all amounting to Rs. 93.10 Lakh. Further, A/c
No. 001101511606 of Mr. DhananjayDatar, CFO of ABG Group had many credit entries amounting to Rs. 1.06 Crore from companies with which he
was never associated in any capacity e.g. Ashmit Mercantile Pvt. Ltd., Mahavir Distributors Pvt. Ltd., One Ocean Shipping Pvt. Ltd. and ABGFPSO
Pvt. Ltd. Further, most of these credits have been made after the association of DhananjayDatar ended with ABG Group i.e., September, 2015.
However, the purpose of these credit entries remained unknown as Mr. DhananjayDatar neither appeared for his statement and nor supplied any
clarification in this regard.
It is submitted that Mrs. Savita Datar was authorized signatory of Sanyog Infrastructure Pvt. Ltd. and DhananjayDatar was director of the company.
This company controlled and managed by Savita Datar and DhananjayDatar had received multiple credit entries from group companies of ABG
Shipyard Ltd. i.e., Sanyukta Shipping & Logistics Private Limited (ABGFPSO Pvt. Ltd.) (Rs. 10 Lakh), Onaway Industries Pvt. Ltd. (Rs. 25 Lakh),
Aries Management Pvt. Ltd (Rs. 1 Crore), altogether aggregating to Rs. 1.35 Crore. That, total amount of credits into the accounts of Mrs. Savita
DhananjayDatar, Mr. DhananjayDatar&Sanyog Infrastructure Pvt. Ltd. has come out to be Rs. 3,69,10,000/- from group companies of ABG
Shipyard Ltd. and the same has been squandered by the duo to meet their personal expenses. It is further submitted that during the statement
recorded u/s 50 of PMLA, directors of various group companies of ABG Shipyard Ltd. have admitted that Ashmit Mercantile Pvt. Ltd, Mahavir
Distributors Pvt. Ltd., One Ocean Shipping Pvt. Ltd. &Sanyukta Shipping & Logistics Private Limited had no business activity, therefore, the funds
transferred to these companies were transferred without any rationale and just to create the circular/ paper transactions. The prayer is not to pass an
interim order.
The learned counsel for the respondent further submitted that to carve out an exception to invoke Section 8 (4) of the Act of 2002 reasons areÂ
not required to be given in the notice itself, rather it can be given when a challenge to the notice is made. Section 8 (4) of the Act
of 2002 and rule 5 (2) of the rules of 2013 does not mandate disclosure of reasons in writing as otherwise such mandate exists for causing a notice for
provisional attachment and other actions under the Act of 2002. The Apex Court in the case of Vijay MadanlalChoudhary (Supra) has not issued
direction or mandated the department to give exceptional reason in the notice for causing possession of the propertyrather what has been directed that
an actionfor possession should be an exception and not as a rule. Exceptional reasons have been given to contest the application.Therefore, a
challengeto the eviction notice on the ground that it does not disclose reasons is not tenable.
The Apex Court in the case of Vijay MadanlalChoudhary (Supra) has referred to the possession at the stage of confiscation of the property but in
para 304 to 307 itself, it has permitted eviction after confirmation of the provisional attachment order but not as a rule but as an exception. There
exists some contradiction in the judgment of the Apex Court and in any case what should prevail is the statutory provisions having been held to be
constitutionally valid. Statutory provision cannot be re-written by a court and thereby it is absolutely erroneous on the part of the appellant to submit
that notice for eviction can be caused only at the stage of confiscation rather if that stage comes,the property immediately vests in the government. In
view of the above, the respondents were justified to cause a notice for eviction.
We have considered the rival submissions of the parties and scannedthe matter carefully. Before dealing with rival arguments raised by the counsel
for the parties, it would be relevant to refer to the history of the case which revolves not only against the appellant but ABGShipyard Ltd. and its
associate companies. The facts in this regard have been given by Adjudicating Authority and are referred hereunder:
Subsequent to the receipt of the complaint the reasons u/s 8 (1) of PMLA 2002 was recorded by the Adjudicating Authority for the purpose
of issue of notice U/s 8 (1) as under: -
1) “The Original Complaint (OC) 1824/2022 and its annexures/ RUD were received on 20.10.2022, with reference to the Deputy
Director, Enforcement Directorate, Ahmedabadâ€s Provisional Attachment Order No. 08/2022 dated 21.09.2022. Following a review of the
aforementioned documents and the exhibits thereto, the pertinent facts are briefly stated below for the purpose of issuing a notice under
section 8 (1) of the Act.
2) On the basis of the written complaint dated 25.08.2020 filed by Shri Balaji Singh Samanta, DGM, State Bank of Inida, SAM Branch, The
Arcade, II Floor, World Trande Centre, Cuffe Parade, Colaba, Central Bureau of Investigation, AC-V, New Delhi registered an FIR no.
RC2232022A0002 dated 07.02.2022 for commission of offence under Sections 409, 420, r/w Section 120-B of IPC, 1860 and Section 13(2)
read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 against:
(a) ABG Shipyard Limited. (ABGSL)
(b) Shri Rishi Kamlesh Agarwal, Chairman, ABGSL
(c) Shri SanthanamMuthuswamy, Director, ABGSL
(d) Shri Ashwini Kumar, Director, ABGSL
(e) Shri Sushil Kumar Agarwal, Director, ABGSL
(f) Shri Ravi VimalNevatia, Director, ABGSL
(g) ABG International Limited and
(h) Unknown Public Servant (s) and Private Person (s).
3) FIR dated 07.02.2022 alleged inter-alia, commission of offences of criminal conspiracy, cheating, criminal breach of trust, abuse of
official position, thereby causing wrongful loss to the tune of Rs. 22,842/- Crores to the consortium of banks, comprising State Bank of
India, erstwhile State Bank of Patiala (presently State Bank of India), Commercial Finance Branch, New Delhi, erstwhile State Bank of
Travancore (presently State Bank of India), Commercial Branch, New Delhi etc. let by ICICI Bank.
4) The complaint dated 25.08.2020 filed by SBI alleged that the accused person has colluded together to commit illicit activities including
diversion of funds, misappropriation and used the funds for purposes other than the purposes for which the funds were released by the
bank.
5) The bank accounts of ABGSL were maintained at SBI, Overseas Branch, Mumbai, where the fraud occurred, the fraud had also taken
place at the branches of erstwhile State Bank of Patiala, Commercial Finance Branch, New Delhi and State Bank of Travancore,
Commercial Branch, New Delhi. The fraud perpetrated by the accused came to light consequent to the Forensic Audit conducted for the
period from April, 2012 to July, 2017 by Ernst and Young LLP (E&Y) vide its report dated 18.01.2019.
6) It has been placed on record that ABGSL was incorporated in the year 1985 under the name Magdalla Shipyard at Magdalla, Surat
(Guj.). Later in 1994, name of the company was changed to ABG Shipyard Limited. Mr. Rishi Kamlesh Agarwal was the Managing Director
and Chairman of ABGSL was the flagship company of ABG Group and engaged in the business of shop building and ship repair. ABG
Group, promoted by Shri Rishi Kamlesh Agarwal was the major player in the Indian Shipbuilding Industry. ABGSLâ€s Shipyard were
located at Dahej and Surat, Gujarat. ABG International Ltd. (AIPL) was the holding company of ABG Shipyard Ltd.
7) The complainant has brought on record the contents of the investigation conducted and statement u/s 50 (2) & 50 (3) of the PMLA as
mentioned on pages 34-240 of the OC, elaborating the modus operandi of the generation of the proceeds of crime and deployment thereof.
8) Investigation under PMLA has revealed that ABG Shipyard Ltd., its Chairman and Managing Director, Mr. Rishi Kamlesh Agarwal, ABG
International Pvt. Ltd. in connivance with others, have misappropriated the credit facilities availed from the consortium of banks led by
ICICI Bank and utilized the funds for the purposes other than its actual cause that eventually caused monetary loss to the tune of Rs.
22,842/- Crores to the consortium. ABGSL, its promoter/directors and other associated entities. Persons have colluded together and diverted
the funds availed from credit facilities to various paper entities incorporated in India and abroad in the garb of loans, bogus purchase
orders, overseas investments in Singapore, Mauritius, Cyprus, Dubai and Norway etc. ABGSL floated various group companies like Gold
Croft Property Pvt. Ltd., G.C. Property Pvt. Ltd., Aries Management Pvt. Ltd., Somerset Estate Pvt. Ltd., Tirupati Landmark Pvt. Ltd., ABG
Power Pvt. Ltd. A &Agbros Leasing and Finance Pvt. Ltd., which were having no business activities and the same had been incorporated
only for purpose of acquiring immovable properties through the funds diverted from ABG Shipyard Ltd and projecting those immovable
assets as untainted properties.
9) It has been further revealed that ABGSL in collusion with others have resorted to illicit practices of inflating the books of accounts of
ABGSL by way of making circular transaction among its various group companies and other related entities so as to hoodwink the creditors
and to enjoy enhanced credit limits from consortium of banks. Part of funds availed from credit facilities was transferred and diverted to
various Singapore based entitles like ABG Singapore Pvt. Ltd as a loan of USD 71 million and the fund was further invested in Standard
Chartered Trust (Cayman), however, out of USD 71 Million, USD 28.1 Million was brought back to India but for the remaining USD 43
million, ABGSL acquired preference shares of ABG Singapore Pvt. Ltd., however, it failed to prove the genuineness of this transaction,
therefore, the end use of this amount remains unknown.
10) Further, as per the statement of Mr. MuthuswamySanthanam, it is revealed that though he had been appointed director in various
Singapore based entities/ companies of ABGSL but he was not able to explain the business activities carried out by those Singapore based
entities/ companies. Mr. Rishi Kamlesh Agarwal, Mr. DhananjayDatar and Mr. Balaji Gopal was the key persons controlling the affairs
such Singapore based companies.
11) Further, the POC here, which were the loan amount received from the consortium of banks led by ICICI bank were used to purchase
properties, providing loans/ advances/ guarantees to subsidiary companies in India as well as abroad, acquiring equity shares in overseas
entities for making investments in mutual funds, payment to related parties which were not the actual purpose for which the loan facilities
were advanced to ABGSL and hence, these investments/ loans/ advances/ guarantees/ payments are nothing but Proceeds of Crime within
the meaning of section 2 (1) (u) of PMLA, 2002.
12) Hence, the complainant has reasons to believe that attached properties were Proceeds of Crime and were liable for attachment in view
of second proviso of Section 5 of PMLA, 2002. As the Charge Sheet in the present case is yet to be filed by the LEA and the schedule of
Attached Properties covers various assets including bank accounts and immovable properties which could easily change hands, and if not
attached, the same were likely to be concealed, transferred of dealt with any manner which may result in frustrating any proceedings
relating to confiscation of POO.
13) The complainant, having described the nature of offence and their relation to the movable/ immovable properties attached, issued
Provisional Attachment Order No. 08/2022 dated 21.09.2022 under sub section (1) of section 5 for provisional attachment in the form of
movable/immovable properties to the tune of Rs. 27,47,69,57,435/- (Rupees Two Thousand Seven Hundred Forty-Seven Crores Sixty-Nine
Lakhs Fifty-Seven Hundred Forty Seven Crores Sixty-Nine Lakhs Fifty-Seven Thousand Four Hundred and Thirty-Five Only) acquired
by/under the possession of the defendant as mentioned on pages 9 -15 of the OC.
The reference to facts has been given to show the background of the case. The facts would otherwise be considered while hearing and deciding the
appeal. The respondents have shown a case of exceptional nature for invoking Section 8 (4) of the Act of 2002. It is pursuant to the judgment of Apex
Court in the case of Vijay MadanlalChoudhary (Supra) wherein it was held that possession of the attached property should not be taken by invoking
Section 8 (4) of the Act of 2002 as a rule but can be as an exception. The detailed reasons to show exception has been given by the respondents,
though contested by the appellant.
It is stated by respondent that the ABG Shipyard had taken loan of Rs. 22,842 Crores from the consortium banks by resorting to the illicit practices of
inflating the books of accounts of the company by way of making circular transaction among the various groups of companies and other related
entities so as to hoodwink. It was to enjoy enhanced credit limit from consortium of banks. The part of funds availed from credit facilities were
transferred and diverted to various Singapore based entities like ABG Singapore Pvt. Ltd. apart from others from whom substantial amount remain
unpaid. The fund was even diverted to Standard Chartered Trust (Cayman) and many other companies located at different countries like Singapore,
Mauritius, Dubai etc. The appellant is one among them, as it purchased the property from Aries Management Service Pvt. The Aries Management
Pvt. Ltd., Somerset State Pvt. Ltd., Thirupati Landmark Pvt. Ltd., ABG Power Pvt. Ltd., Agbros Leasing and Finance Pvt. Ltd.werehaving no
business activities. They were incorporated only for the purpose of acquiring immovable properties through the funds diverted by ABG Shipyard Ltd.
Those, immovable assets were projected to be untainted properties though are out of the proceeds of crime. The other properties have been attached
for value thereof. It is shown that ABG Shipyard Ltd. obtained huge amount of Rs. 22,842 Crores from the consortium of banks by manipulating the
books of account and diverted the said funds in an illegal manner and thereby a serious fraud was committed on the banks. It is on the public and the
country because such a transaction effects the economy of the country.
We wouldgo indetails as to how the crime was organised while deciding the appeal but have touched upon the facts to find out a prima facie case of
organised crime. The facts on record shows that huge amount was rotated in an illegal manner through associated companies in an organised manner
and thereby even the properties worth of the equivalent amount of proceeds of crime could not be attached rather value of attached properties after
the order of Adjudicating Authority is only of a sum of Rs. 2041 Crores out of the properties worth of Rs. 2747 Crores, so attached as against the
proceeds of crime of Rs. 22482 Cr. The Crime was committed by the ABG Shipyard Ltd. and associated companies in connivance with the officers
of the bank and, therefore, a case was registered even for an offence under Prevention of Corruption Act also. Thus, it is a serious case where
properties of equivalent value to the proceeds of crime could not be attached.
In view of the above, a case has been made out to show exception for taking possession of the properties in question. The crime against the country
cannot be viewed casually rather seriousness to it has to be attached. It cannot be taken to be a case of simple nature or a theft of trivial amount but is
an offence committed after proper planning with a deliberate design regardless of the consequence on the society at large. The Apex Court has taken
a serious view on similar cases.
“Para 11 & 12 of the judgment of the Apex Court in the case of Central Bureau of Investigation vs. Maninder Singh Criminal Appeal l no.
1496/2009 dated 28.08.2015 are quoted:
“11. The inherent power of the High court under Section 482 Cr.P.C. should be sparingly used. Only when the Court comes to the
conclusion that there would be manifest injustice or there would be abuse of the process of the Court if such power is not exercised, Court
would quash the proceedings. In economic offences Court must not only keep in view that money has been paid to the bank which has been
defrauded but also the society at large. It is not a case of simple assault or a theft of a trivial amount; but the offence with which we are
concerned is as well planned and was committed with a deliberate design with an eye of personal profit regardless of consequence to the
society at large. To quash the proceeding merely on the ground that the accused has settled the amount with the bank would be misplaced
sympathy. If the prosecution against the economic offenders are not allowed to continue, the entire community is aggrieved.
12. In recent decision in Vikram Anantrai Doshi (Supra) this Court distinguished Nikhil Merchantâ€s case and Narendra Lal
Jainâ€s case where the compromise was a part of the decree of the court and by which the parties withdrew all allegations against each
other. After referring to various case laws under subject in VikramAnantraiDoshiâ€s case, this Court observed that cheating by bank
exposit fiscal impurity and such financial fraud is an offence against society at large in para (23), this Court held as under: -
“23. Be it stated, that availing of money from a nationalized bank in the manner, as alleged by the investigating agency, vividly exposits
fiscal impurity and, in a way, financial fraud. The modus operandi as narrated in the charge sheet cannot be put in the compartment of an
individual or personal wrong. It is a social wrong and it has immense societal impact. It is an accepted principle of handling of finance that
whenever there is manipulation and cleverly conceived contrivance to avail of these kind of benefitâ€s it cannot be regarded as a case
having overwhelmingly and predominating of civil character. The ultimate victim is the collective. It creates a hazard in the financial interest
of the society. The gravity of the offence creates a dent in the economic spine of the nation. The cleverness which has been skilfully
contrived, if the allegations are true, has a serious consequence. A crime of this nature, in our view, would definitely fall in the category of
offences which travel far ahead of personal or private wrong. It has the potentiality to usher in economic crisis. Its implications have its
own seriousness, for it creates a concavity in the solemnity that it expected in financial transactions. It is not such a case where one can pay
the amount and obtain a “ no due certificate†and enjoy the benefit of quashing of the criminal proceedings on the hypostasis that
nothing more remains to be done The collective interest of which the court is the guardian cannot be a silent or a mute spectator to allow the
proceedings to be withdrawn, or for that matter yield to the ingenuous dexterity of the accused persons to invoke the jurisdiction under
Article 226 of the Constitution or under section 482 of the Code and quash the proceedings. It is not legally permissible. The Court is the
proceeding. It is not legally permissible. The Court is expected to be on guard to these kinds of adroit moves. The High Court, we humbly
remind, should have dealt with the matter keeping in mind that in these kind of litigations the accused when perceives a tiny gleam of
success, readily invokes the inherent jurisdiction for quashing of the criminal proceedings. The courtâ€s principal duty, at that juncture,
should be to scan the entire facts to find out the thrust of allegations and the crux of the settlement. It is the experience of the Judge comes
to his aid and the said experience should be used with care, caution, circumspection and courageous prudence. As we find in the case at
hand the learned Single Judge has not taken pains to scrutinize the entire conspectus of facts in proper perspective and quashed the
criminal proceeding. The said quashment neither helps to secure the ends of justice not does it prevent the abuse of the process of the court
no can it be also said that as there is a settlement no evidence will come on record and there will be remote chance of conviction. Such a
finding in our view would be difficult to record. Be that as it may, the fact remains that the social interest would be on peril and the
prosecuting agency, in these circumstances, cannot be treated as an alien to the whole case. Ergo, we have no other option but to hold that
the order of the High Court is wholly indefensible.â€
The similar view was taken by the Apex Court in the case of RohitTandon vs. Enforcement Directorate Criminal Appeal No. 1878/2017 decided on
10th November, 2017 Para 18 of the said judgement is quoted hereunder:
“18. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public
funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing
serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and
also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds
of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the Act of 2002.â€
The judgements referred to above were on similar facts. It is the submission of the respondent that conspiracies involving huge loss to the public funds
need to be viewed seriously as they affect the economy of the country. In this case, the amount involved and the manner in which it was siphoned
off by the group of companies and thereupon projected it to be untainted money shows their intention to commit the crime in an
organised manner.
The respondents have shown even involvement of the appellant and her husband in the organized crime. The appellant is none else but the wife of the
CFO of ABG Shipyard Ltd. and the beneficiary of diverted funds from ABG Shipyard Ltd. The detail facts in that regard has beenÂ
recorded while referring to the arguments to the learned counsel for the Respondents. It is a fact that the Apartment in Siddhi Apartment
was purchased from Aries Management Services Pvt. Ltd., which company had taken the funds from ABG Shipyard Ltd. The
total consideration amount was of Rs. 4.5 Crores for purchase of the property. Savita Dhananjay Datar (Appellant) contributed Rs. 3.25 Crores
and remaining 1.25 came from Sanyog Infrastructure Pvt. Ltd. The appellant Savita Dhananjay Datarwas authorized signatory of Sanyog
Infrastructure Pvt. Ltd. to whichher husband was the director. The details as to howtheproceeds of crime was usedfor purchase of the property at
Siddhi Apartment and even the involvement of the appellant in money laundering has been given in the proceeding para while recording the arguments
ofthe counsel for the Respondents. We do not wish to repeat the same facts which are otherwise sufficient to prima facia show as to how the
appellant was involved in the transactions for routing the amount of loan taken by ABG Shipyard. A detail reference would be given while hearing and
deciding the appeal finally. In view of the fact that it is case of organized crime, the possession notice cannot be said to have caused as a rule but as
an exception. It has been explained by the respondent and we are convinced with the aforesaid.
The notice for possession has been questioned by the appellant even on the ground that no reason has been given therein, whereas administrative
order should disclose the reason. The reference of the judgement of Apex Court in the case of OPTO Circuits (India) Ltd. v. Axis Bank, (2021) 6
SCC 707 has been given where it was held that the reasons for passing of an order shall be given therein and cannot be substituted: Para 12 of the
said judgment is quoted thus: -
“12. The action sought to be sustained should be with reference to the contents of the impugned order/communication and the same cannot be
justified by improving the same through the contention raised in the objection statement or affidavit filed before the Court.This has been succinctly laid
down by this Court in Mohinder Singh Gill v/ Chief Election Commr. [Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405] as follows :
(SCCp. 417, para 8)
“8.The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be
judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit otherwise. Otherwise, an order
bad in the beginning may, by the time it comes to court on account of a challenge, gets validated by additional grounds later brought out.
We may here draw attention to the observations of Bose, J. In GordhandasBhanji, 1951 SCC 1088] : (SCC p. 1095, para 9)
“9. Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given
by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public
authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must
be construed objectively with reference to the language used in the order itself.â€
We find that the order impugned therein was containing reasons but additional reasons were given before the court for the first
time. Such a practice was not accepted. The case in hand is not of similar nature. In this case, there is no order under
challenge but a notice under Section 8 (4) of the Act of 2002 which does not direct for giving reasons in the notice for possession. In fact, the
provision aforesaid allow possession of the property forthwith on passing order of confirmation of provisional attachment order. Section 8 (4) is quoted
hereunder for ready reference:
“4. Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the
Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under section 5 or
frozen under sub-section (1A) of section 17, in such manner as may be prescribed:
Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation
shall have the same effect as if the property had been taken possession of.â€
The stage for taking possession comes forthwith on the confirmation of order of provisional attachment and it does not mandate assignment of reasons
therein for causing possession. The notice otherwise does not require a reply from the effected person so as to assign the reasons for its reply. The
appellants have failed to make a differentiation between the administrative order and the notice under the statute not requiring assessment of reasons
for taking possession. In fact, it is in view of the judgement of Apex Court in the case of Vijay MadanlalChoudhary (Supra) that provision of Section 8
(4) cannot be invoked as a course but as an exception. The said judgment does not mandate assignment of the reason in the notice itself. What has
been ruled is that the possession should not be sought as a course but as an exception. In such circumstance notice was not required to contain the
reason for taking possession of the attached property. The reasons can be supplied by the respondents as and when the notice is questioned by the
aggrieved party to show that Section 8 (4) of the Act has not been invoked as a rule but as an exception.
At this stage, it may be clarified that depending on the nature of the administrative order, reasons may require to be assigned therein but not for a
notice requiring no mandate under the law for assignment of reasons. The respondents have otherwise made out a case to fall in the category of
exception to invoke Section 8 (4). Thus, we are unable to accept the ground urged by the appellant to question the validity of the notice under Section
8 (4) of the Act.
The learned counsel for the appellant has even made reference of the judgment of the High Court propounding a ratio on Section 8 (4) of the Act of
2002 after referring to the judgement of the Apex Court in the case of Vijay MadanlalChoudhary (Supra).
Those judgments are not required to be discussed as they have followed the judgment of the Apex Court in the case of Vijay
Madanlal Choudhary (Supra). It is however necessary to clarify as to whether the possession can be caused before confiscation of the property. The
counsel for the appellant has given reference (to Para 304 to 307 of the judgement in the case of Vijay MadanlalChoudhary and are quoted here
under:
“304. The other grievance of the petitioners is in reference to the stipulation in sub-section (4) of Section 8 providing for taking
possession of the property. This provision ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case.
In that, merely because the provisional attachment order passed under Section 5 (1) is confirmed, it does not follow that the property stands
confiscated; and until an order of confiscation is formally passed, there is no reason to hasten the process of taking possession of such
property. The principle set out in Section 5 (4) of the 2002 Act needs to be extended even after confirmation of provisional attachment order
until a formal confiscation order is passed. Section 5(4) clearly states that nothing in Section 5 including the order of provisional
attachment shall prevent the person interested in the enjoyment of immovable property attached under sub-section (1) from such enjoyment.
The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because
sub-section (6) of Section 8 postulates that where on conclusion of a trial under the 2002 Act which obviously in respect of offence of
money-laundering, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in
money-laundering has not taken place or the property is not not involved in money-laundering, it shall order release of such property to the
person entitled to receive it. Once the possession of the property is taken in terms of sub-section (4) and the finding in favour of the person
is rendered by the Special Court thereafter and during the interregnum if the property changes hands and title vest in some third party, it
would result in civil consequences even to third party. That is certainly avoidable unless it is absolutely necessary in the peculiar facts of a
particular case so as to invoke the option available under sub-section (4) of Section.
305. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act
regarding the manner of taking possession of attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also
regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8 (4) for taking possession of the
property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order,
should be an exception and not a rule. That issue will have to be considered on case-to-case basis. Upon such harmonious construction of
the relevant provisions, it is not possible to countenance challenge to the validity of sub-section (4) of Section 8 of the 2002 Act.
306. The learned counsel appearing for the Union of India, had invited our attention to the recommendations made by FATF in 2003 and
2012 to justify the provision under consideration. The fact that non-conviction based confiscation model is permissible, it does not warrant
an extreme and drastic action of physical dispossession of the person from the property in every case â€" which can be industrial/
commercial/ business and also residential property, until a formal order of confiscation is passed under Section 8 (5) or 8 (7) of the 2002
Act. As demonstrated earlier, it is possible that the Special Court in the trial concerning money-laundering offence may eventually decide
the issue in favour of the person in possession of the property as not being proceeds of crime or for any other valid ground. Before such
order is passed by the Special Court, it would be a case of serious miscarriage of justice, if not abuse of process to take physical possession
of the property held by such person. Further, it would served no purpose by hastening the process of taking possession of the property and
then returning the same back to the same person at a late date pursuant to the order passed by the Court of competent jurisdiction.
Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can
proceed only if it is established that the person has directly or indirectly derived or obtained proceeds of crime as a result of criminal
activity to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime.
307. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or
discharge in connection with the scheduled offence. Resultantly, we would sum up by observing that the provision in the form of Section 8
(4) can be resorted to only by way of an exception and not as a rule. The analogy drawn by the Union of India on the basis of decisions of
this Court in Divisional Forest Officer v. G.V. Sudhakar Rao, BishwanathBhattarchary, Yogendra Kumar Jaiswal v. State of Bihar, will be
of no avail in the context of the scheme of attachment, confiscation and vesting of proceeds of crime in the Central Government provided
for in the 2002 Act.â€
The paras quoted above refer to possession at the time confiscation of the property. It, however, allows possession after confirmation of the
provisional attachment order but not as a rule but as an exception. In general practice, possession of the property may be taken at the stage of
confiscation but in the case of exceptional nature, it can be after confirmation of provisional attachment order. If we go strictly by the Section 8 (4),
the right of the respondents to invoke aforesaid provision comes in existence forthwith upon confirmation of the provisional attachment order. The
statutory provision cannot be ignored by us and even by the court. In fact, possession at the stage of confiscation of the property remains automatic
because on confiscation of the property, it vests in the government and would be alongwith the possession and therefore, Section 8 (4) was brought on
the statute to allow possession of the property even prior to confiscation and the said provision has been upheld by Apex Court where its constitutional
validity was challenged. Once the provision is held to be constitutionally valid, a view contrary or offending the statutory provision cannot be taken.
Thus, we are not in agreement with the appellant that possession of the property can be taken only on confiscation. It would be rewriting Section 8 (4)
of the Act though possession after confirmation of the provisional attachment order would not be as a rule but an exception.
The issue now remains as to what would be an exception.
The learned counsel for the appellant has given reference to the judgment of the Apex Court in the case of M/s Union of India &Anr. v/s. M/s
GanpatiDealcomPvt. Ltd. dated 28.08.2022 in Civil Appeal No. 5783/2022where certain cases of exceptional nature have been illustrated. It is in a
case where the proceeds of crime is arising out of Terrorist or Drugs cartel apart from the case of organised crime. The
relevant para of the said judgment is quoted hereunder:
“17.27. In Vijay MadanlalChoudary&Ors v. Union of India, SLP (Civ.) No. 4634 of 2014 and others, this Court dealt with confiscation
proceedings under Section 8 of the Prevention of Money Laundering Act, 2002 (“PMLAâ€) and limited the application of Section 8 (4)
of PMLA concerning interim possession by authority before conclusion of final trial to exceptional cases. The Court distinguished the
earlier cases in view of the unique scheme under the impugned legislation therein. Having perused the said judgment, we are of the opinion
that the aforesaid ratio requires further expounding in an appropriate case, without which, much scope is left for arbitrary application.
17.28. From the above discussion, it is manifest that the Courts have read down the provisions of civil forfeiture to be dependent on the
underlying criminal prosecution to temper the harsh consequences envisaged under such provisions. No doubt, such reading down was
mandated to ameliorate harsh consequences of confiscatory laws which otherwise would have allowed the State agencies to take over the
property without seriously pursuing the criminal prosecutions. At this stage, we can only recommended that the utility of independent
provisions of forfeiture, distinct from criminal prosecution, needs to be utilized in a proportional manner, looking at the gravity of the
offence. Few examples which may pass the muster of proportionality for having such stringent civil forfeiture, may relate to crimes involving
terrorist activities, drug cartels or organized criminal activities. As we have discussed, the application of such a provision to numerous other
offences which are not of such grave severity, would be of serious risk of being disproportionate, if procedures independent of criminal
prosecution are prescribed. We may not that the proportionality of separate confiscation procedure prescribed under 2016 Act, has not
been argued herein. Accordingly, we leave the aforesaid question of law open.â€
The judgement (Supra) refers to exception to invoke Section 8(4) and the present case falls is one of the category carved out by the Apex Court. The
present case is shown to be a case of organised crime, we find that exception exits to invoke Section 8 (4) to take possession of the property. Thus,
for all the reasons given above, we are unable to accept the arguments raised by the learned counsel for the appellant.
In view of the discussion made above, we do not find a case in favour of the appellant for grant of interim order and accordingly application is
dismissed.
Let the appeal be listed on 08th November, 2023.