FINAL ORER

18.08.2025

FPA-PMLA-5775/MUM/2023

By this appeal under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’), a challenge has been made to the order dated 27.01.2023 passed by the Adjudicating Authority confirming the Provisional Attachment Order dated 02.08.2022.

2. It is a case where an FIR was registered by the Central Bureau of Investigation (CBI), Economic Offence, New Delhi on 07.03.2020 for the offence under Section 120-B read with Section 420 IPC and Sections 7, 12,13 (2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. It was alleged that Mr. Rana Kapoor, former Promoter Director & CEO of Yes Bank, misused his official position and obtained undue pecuniary advantage in conspiracy with Kapil Wadhawan and Dheeraj Wadhawan of M/s DHFL by investing Rs. 3,700 Crores in short-term debentures of M/s DHFL and Rs.283 Crore in Masala Bonds. Mr. Rana Kapoor received a kickback of Rs. 600 Crores from M/s DHFL in the garb of loan to the company M/s DOIT Urban Ventures (India) Pvt. Ltd. jointly owned by his daughters. M/s DHFL failed to redeem the debentures, rather laundered and siphoned off the money and accordingly the ECIR was recorded by the respondent ED.

3. The allegation is that Mr. Rana Kapoor of Yes Bank diverted public fund into M/s DHFL to the tune of Rs. 3983 Crores. Kapil Wadhawan of M/s DHFL thereupon diverted Rs. 2317 Crores (Rs.1100 Crore+Rs.439 Crore+Rs.678 Crore+Rs.100 Crore) to the entities of which beneficial ownership was with Mr. Sanjay Chhabria. It was in the name of development of project “Avenue-54” at Santacruz.

4. The allegation was further diversion of Rs.678 Crores to M/s Flag Industries India Pvt. Ltd. (appellant herein). It was given for construction of the Club House in 'Avenue-54' Project. The project for which the loan was sanctioned is still incomplete and the account became Non Performing Asset (NPA). Out of the aforesaid fund, an amount Rs. 115 Crores was illegally and fraudulently diverted by Mr. Sanjay Chhabria to M/s Mentor Capital Ltd. of Mr. Sanjay Dangi. The diversion of the aforesaid fund was on the direction of Kapil Wadhawan without any genuine business transaction but to create an impression of genuine business transaction, a sham agreement was executed on 23.10.2018 though the amount of Rs.115 Crores was disbursed on 24.09.2018 itself. The sham agreement was for buying development rights in one property at Bangalore. The amount of Rs. 115 Crores was otherwise diverted by Mr. Sanjay Chhabria to M/s Mentor Capital Ltd. and used by Mr. Sanjay Dangi for buying the shares of M/s DHFL to stop further fall in the share price.

5. It was further alleged that the loan of Rs.678 Crores was not sanctioned in usual course of business and otherwise it was without proper security. Mr. Rajendra Mirashie, President (Project Finance) of M/s DHFL in his statement under Section 50 of the Act of 2002 admitted that loan to the maximum permissible limit of Rs.2000 Crore to Radius Group of Sanjay Chhabria had been sanctioned yet the loan of Rs.678 Crore was sanctioned to the appellant company beneficially owned by Mr. Sanjay Chhabria through his employees Mr. Jayesh Khandelwal & Ms. Tarannum Merchant but was not a part of his Radius Group. The loan of Rs.678 Crores was sanctioned by Kapil Wadhawan without placing it before M/s DHFL’s Project Finance Team or Finance Committee and without any proper security. Therefore, in order to secure the amount of Rs.678 Crores, 2500 shares of M/s United Estate Builders and Developers Ltd. held by the appellant company have been attached for value equivalent to the proceeds.

Arguments of counsel for the appellant:

6. The learned counsel for the appellant has given brief facts pertaining to the incorporation of the appellant company and thereupon shareholding with different persons which includes the Team Merchant Jayesh Khandelwal and also of Sanjay Chhabria. The learned counsel for the appellant submitted that the term lo