FINAL ORDER

14.05.2024

The batch of four appeals were filed against the order of Adjudicating Authority dated 15.11.2022. The order aforesaid was passed on OA No. 670/2022 under Section 17 (4) of the Prevention of Money Laundering Act, 2002 (for short ‘the Act of 2002). It was to retain the documents, gadgets and the bank accounts on search and seizures under Section 17(1) of the Act of 2002.

2. The learned counsel for the appellants submits that EOW registered FIR No. 50/2019 under Section 420/409/120B IPC against Malvinder Mohan Singh, Shivinder Mohan Singh, Sunil Godhwani, Anil Saxena and Kavi Arora for siphoning of amount of Rs.1260/- crores of ReligareFinvest Limited (hereinafter referred to as `RFL‟). It was caused by giving unsecured loans under the Corporate Loan Book (hereinafter referred to as ‘CLB‟) portfolio to entities under direct or indirect control of promoters. The fund was routed to the promoters owned entities as ultimate beneficiaries.

3. It was alleged that CLB was going on since 2008 and it is a fact that the amount was even repaid through by ever-greening of loans to prevent classification of accounts as non-performing assets. It was alleged that the loan disbursed to 19 entities amounting to Rs.2037/- crores was never returned. The loan given to various entities was misappropriated by diverting a sum of Rs.1260/- crores to the companies belonging to the promoters and utilising them to square their liability thereby causing wrongful loss to the RFL.

4. The charge sheet in pursuance to the FIR was submitted and the ECIR was also recorded on 24.07.2019 based on the FIR for the schedule offence. The prosecution complaint under Section 44 of the Act of 2002 was filed containing allegation that under the CLB portfolio, RFL extended unsecured loans to 115 entities and disbursed an amount of Rs.47,968/- crores between 01.04.2009 and 31.03.2018. As on 31.03.2018, 19 companies defaulted on loans amounting to Rs. 2036.69 crores. The majority of outstanding loans were utilized for repayment of earlier outstanding loans given by RFL to the same and different entities. It is by ever-greening the loan.

5. The process of money laundering entailed placement of funds as fresh loans under CLB. The loan was advanced by RFL to RHC Group companies layered through BAP group entities which was used towards the repayment of existing liabilities and even for acquisition of properties with no intention to repay the loan, resulting in siphoning of the funds belonging to the RFL. The default loan amount was considered to be the proceeds of crime through the criminal activities related to schedule offence.

6. It is stated that on 20.05.2022, the appellant NimritaParvinder Singh was called for her statement under Section 50 of the Act of 2002. Her statement was recorded thereupon. The said appellant provided all relevant data as desired by the respondents. The respondents thereupon conducted search on appellant NimritaParvinder Singh and her mother JapnaParvinder Singh. The search was conducted for two days from 20.05.2022. A Panchnama was then prepared for retention of documents and the bank account by invoking Section 17(1A). It was also to freeze/seize the artworks/sculptures belonging to the appellant. The details of the bank accounts and investments pertaining to the appellant was given in Table 3 of Para 11 of the application dated 17.06.2022. The respondents sent the application to the Adjudicating Authority on 17.06.2022 to seek confirmation of retention/freezing of the account and the record. The impugned order was thereupon passed by the Adjudicating Authority after a show cause notice to the appellant.

7. The learned counsel for the appellants submitted that Malvinder Mohan Singh set up a Company namelyM/s Clonberg Holdings Limited in British Virginia Island in the year 2009. It was in his name and in the name of his wife Japna Singh. Nimrita Singh, Nanaki Singh and Nandini Singh being the shareholder in the company. The Company t