Mr. Ravishankar Keerthapati Ramaraju v. The Deputy Director Directorate of Enforcement, Mumbai

2. As per the facts of the case a preliminary enquiry was conducted by CBI, BSFC, Mumbai against the officials of IDBI Bank Ltd., M/s Kingfisher Airline Ltd. and its officials on the allegations that the suspect officers of the IDBI Bank had sanctioned & disbursed term loans to the extent of Rs. 900

2

crores to the said company without conducting due diligence and the said company had diverted the aforesaid funds, and thereby, causing wrongful loss of Rs. 900 crores plus unapplied interest to IDBI Bank. The said

preliminary enquiry revealed that: - M/s Kingfisher Airlines Ltd. a company promoted by Dr. Vijay Mallya was incorporated in the year 2003 and was fully owned subsidiary of M/s UB holdings Ltd. Bangalore. The registered office of M/s Kingfisher Airlines Ltd. is at UB Anchorage, 10091, Richmond Road, Bangalore-560025, India and the company also has an office at Kingfisher House, Western Express Highway, Ville Parle (E) Mumbai-400039. Dr. Vijay Mallya, r/o Villa B-92, Palm Jumeriah, P.O. Box 20827 Dubai, NA, United Arab Emirates (also at Kingfisher Villa, Goa) is the chairman and CEO of the Company, Sh. A Raghunatham, r/o 104-iiB, Wallace Apartments, Nausherbharocha Road, Grant Road, (W) Mumbai-400007 is the Chief Financial Officer of the company.

The proposal dated 01.10.2009 for the sanction of the corporate loan of Rs. 950 crores, against which the above facilities were sanctioned, was signed and submitted by Sh. A. Raghunathan and was marked to the attention of Sh. B.K. Batra MD. While proposal was pending, vide letter dated 07.10.2009, Sh. A Ragunatham, giving reference to the meeting dated 06.10.2009 between Dr. Vijay Mallya and Sh. Yogesh Aggarwal, CMD, IDBI requested the bank to release a short terms loan of Rs. 150 crores for period of six months to meet certain critical obligation to overseas vendors. On the same day a memorandum was put up to the committee and the facilities were sanctioned though the company was having negative financial & negative net-worth, and the borrower, being a new client did not satisfy the conditions/norms stipulated in the corporate loan Policy of the bank.

3

Similarly in November 2009, vide order dated 04.11.2009, Sh. A. Raghunathan CFO, Kingfisher Airlines Ltd. gave reference of the meeting held between Dr. Vijay Mallya with the bank's CMD and sought an adhoc release of Rs. 200 crore pending sanction of the proposal for corporate loan of Rs. 950 crores to meet critical obligations to overseas vendors. The said proposal was put up to the group head (Corporate Banking) Sh. S.K. Batra also recommended that the CMD may approve the proposal and a confirmation of the CMD's action in releasing the facilities would be sought of by the ED. Sh. Yogesh Aggarwal, the then CMD approved the proposal while instructing for expediting the ratings, though the memorandum mentions that auditors of the company had observed that funds aggregating to Rs. 4630 crores raised on the short-term loan basis were for long term proposed, undisputed TDS amount of crores of rupees was not deposited for over six months and the rating were not available.

The above limits were sanctioned and disbursed though the Original proposal for sanction of Corporate loan of Rs. 950 crore was pending. The said proposal was put up before the credit committee of IDBI bank on 19.11.2009 and the deficiencies existing in the previous sanctions were still existing. The Company M/s Kingfisher Airlines Ltd. was having poor financials, a negative net-worth and a rating of "BB". However, the sanctioning Authority had sanctioned the facilities by accepting the hypothecation/assignment of KFA brand, negative lien on the basis of hire purchase/finance lease aircraft, corporate guarantee of United Breweries Holdings Ltd. and personal guarantee of Dr. Vijay Mallya Chairman as Securities against the loan.

Inquiry also revealed that a significant portion of [Rs. 263.48 crs] of the aforesaid funds sanctioned and disbursed by IDBI bank Ltd. was transferred by M/s Kingfisher Airlines Ltd. a/c Axis Bank [Rs. 169 crores], a/c ICICI bank (Rs. 39 crore), by way of two fund transfers of Rs. 38 crores &

4

Rs. 1 crore and a/c Bank of Baroda [Rs. 54.83263 crore] from where the same were further transferred to other accounts of kingfisher Airlines and others as under:

Out of 38 crores transferred to ICICI bank, an amount of Rs. 15.37 crore was utilized for debt servicing.

An amount of Rs. 1.57 crore was utilized to service the short-term loan in IDBI bank itself while another amount of Rs. 200 crore was utilized to repay the loan of Rs. 200 crores sanctioned on 04.11.2009 by IDBI Bank. The amount of Rs. 54.86 crore transferred to Bank of Baroda was utilized to clear the documentary bills discounted by the said bank under the bill discounting facility availed by M/s Kingfisher Airlines Ltd. from Bank of Baroda.

An amount of Rs. 1.27 crore was also utilized to service the interest on the loan of Rs. 200 crores availed by M/s Kingfisher Airlines Ltd. from M/s India Bulls Financial Services Ltd. Similarly, an amount of Rs. 1.13 crore was transferred to the account of M/s UB Engineering Ltd. to service a term loan taken by the said company.

A major chunk of funds transferred to the Axis Bank Ltd. were used for foreign remittances towards lease rentals, purchase of aircraft parts etc. Since these remittances have gone outside the country, further inquiry can only be made by sending letters Rogatory for foreign investigation by taking up a regular case.

Similarly, funds aggregating to Rs. 3.45 crore were paid into the bank account of the company in London. Since the funds were gone out of India further inquiry can be made only through sending a letter Rogatory for foreign investigation.

5

On the basis of the preliminary enquiry report FIR No. RC BSM 2015E 0006 dated 26.07.21015 was registered by CBI-BS&FC, on the following allegations:

a. Sh. Vijay Mallaya laid M/s Kingfisher Airlines Ltd. (KAL) and unknown officers of IDBI and others for showing undue favor to KAL in the matter of sanction and disbursement of short-term loan (STR) to the tune of Rs. 150 crores, Rs. 200 crore and Rs. 750 crores; despite weak financial, negative net-worth loan aggregate rate of the borrower company and despite the fact that KAL being a new client did not satisfy the norms stipulated in the corporate loan policy of bank.

b. The officials of IDBI Bank limited, KAL (D-1) and its officials conspired among themselves and got sanctioned and disbursed term loan aggregating to Rs. 750 crore to KAL without conducting due diligence and KAL had diverted the said funds thereby putting the IDBI bank to a wrongful loss of Rs. 750 crore.

The FIR revealed that the following loan amounts were sanctioned and disbursed by the IDBI bank M/s KAL:

d. That significant portion of the aforesaid funds sanctioned and

disbursed by IDBI bank limited were transferred by D-1 to their bank

accounts held with different banks. Axis Bank Rs. 169.60 crore, ICICI Bank

Rs. 39 crore, Bank of Baroda Rs. 54.86 crore which were further transferred

to other accounts of D-1. The amount of Rs. 54.86 crore transferred to Bank

of Baroda was utilized to clear the documentary bills discounted by the said

bank under the bill discounting facility availed by D-1 from Bank of Baroda.

An amount of Rs. 1.27 crore was utilized to service the interest on the loan of

6

Rs. 200 crore availed by D-1 from M/s India Bulls Financials Services limited and similarly Rs. 1.13 crore was transferred to the account of M/s UB Engineering (UBE) limited to service a term loan taken by UBE. The major chunk of funds transferred to the Axis Bank were used for foreign remittances towards lease rentals, purchase of Aircrafts parts etc. Thus, the said amount goes outside the country. An amount of Rs. 3.45 crore was paid into the bank account of D-1 at London.

The said FIR was registered against the accused persons for commissions of offences under section 120-B of IPC read with section 409 IPC and also r/w 13(2) r/w 13(1)(d) of Prevention of Corruption Act 1988 and substantive offences thereunder:

Based on the scrutiny of the facts, the Enforcement Directorate registered a case bearing no. ECIR/03/MBZO/2016 dated 25.01.2016, against the suspects namely M/s KAL, Dr. Vijay Mallya, Sh. A. Raghunathan and unknown officers of IDBI banks and others, as a prima facie case for commission of an offence of money laundering (sections 3 of the Prevention of Money Laundering Act, 2002) punishable under section 4 of the said Act was made out which requires investigation by ED.

During the course of investigation under PMLA by ED, besides gathering record and other investigations, statements of several persons were recorded by the officers of Enforcement Directorate under the provisions of section 50(2) & 50(3) of PMLA. As the said statements reveal about the money laundering activities, substances thereof are reproduced as under:

I. Statement dated 11.03.2016 of Ms. Mythili Balasubramaniam, Executive Director of IDBI

In her statement recorded on 11.03.2016. she inter-alia stated that, she is presently designated as Executive Director of IDBI Bank Ltd.; that there are three applications excluding restructuring package viz. an application letter

7

dated 01.10.2009 seeking a loan of Rs. 950 crore, an application letter dated 07.10.2009 seeking short term loan of Rs. 150 crore for 06 months period, an application letter dated 04.11.2009 seeking adhoc release of Rs. 200 crore pending processing sanction of Rs. 950 crore loan as applied; the application dated 07.10.2009, which was received for an amount of Rs. 150 crore was sanctioned, disbursed, fully recovered and account has been closed; that another application was received for Rs. 950 crore against which an amount of Rs. 750 crore was sanctioned (including subsuming of Rs. 200 crore); that she explained the process of sanction and disbursement of loans and the authority to sanction these loans; that M/s KAL defaulted on repayment; that post conversion under the restructuring package, the outstanding liabilities against M/s KAL was to the tune of Rs. 1342.06 crore as on 01.03.2016 (outstanding principal - Rs. 808.00 crore and Outstanding interest - Rs. 534.06 crore); that the collateral security for loan was personal guarantee of Shri Vijay Mallya, corporate guarantee given by M/s United Breweries Holdings Ltd. (UBHI) and Kingfisher Airline Brand value of Rs. 3400 crore & negative lien on M/s KAL asset. She further stated that the valuation of Kingfisher Airlines brand to the tune of Rs. 3,400 crore was carried out by M/s Grant Thornton, who was appointed by M/s KAL for the same.

II. Statement dated 11.03.2016 and 12.03.2016 of Sh. A. Raghunathan, CFO of KAL

In his statement recorded on 11.03.2016, he inter-alia stated that he was working in the capacity of Chief Financial Officer in M/s Kingfisher Airlines from January, 2006 and earlier to that he was working with M/s United Spirits Ltd.; that M/s UB Group was the promoter of M/s Kingfisher Airlines Ltd., that Shri Vijay Mallya was the Chairman of M/s Kingfisher Airlines Ltd. and the other Directors on the board were Shri Subhash Gupta, Shri Ravi Nedungadi, Capt. Gopinath, Shri Vijay Amritraj, Capt. K.I. Samuel, Shri A.K.

8

Ganguly, Shri G.S. Bajpayee, Shri Piyush Mankad, Shri Naresh Trehan, Shri Dewan Arun Nanda, Shri Vijay Rekhi, Shri R.N. Pillai, Shri M.S. Kapoor, Shri Lalit Basin and Shri Srinivasula Reddy, that at various points, some of the Directors have resigned and new persons have been appointed in their place; that at present, Shri Vijay Mallya and Shri Srinivasula Reddy are the two Directors of the company; that his role consisted of accounting and auditing of financial transactions; that whenever there was a CFO, he was reporting to him or else he was reporting to the Managing Director; that Shri Vijay Mallya was the Managing Director through out and the CEO was Shri Sanjay Aggarwal, who came in October, 2010 and left somewhere in early 2014; that initially the erstwhile M/s Kingfisher Airlines Ltd. was 100% subsidiary of M/s UBHL; that post Air Deccan acquisition, the UB Group held about 60% (approx.) of M/s Kingfisher Airlines Ltd. and subsequently, came down to 15% to 20%; that M/s Kingfisher Airlines owned the property at Vile Parle €, a few aircrafts were acquired on finance lease viz. Six ATR-72, Two Airbus 320s, Two Helicopters, One Corporate Jet etc, that as far as heremembers, M/s Kingfisher Airliens Ltd. have taken loans from Axis Bank, ICICI Bank, Bank of India, Bank of Baroda, Central Bank, Federal Bank, Punjab National Bank, Punjab Sind Bank, IDBI Bank, State Bank of India, State Bank of Mysore, IndusInd Bank, Yes Bank, United Bank, United Commercial Bank, Vijaya Bank, Corporation Bank, J&K Bank, Indian Overseas Bank, Indian Oriental Bank, Union Bank, Laxmi Vilas Bank; that the outstanding loan amount is to the tune of Rs. 5600-5800 crore; that the last loan amount of Rs. 20 crore was received from Indian Overseas Bank somewhere in 2012 and thereafter, no loan amount was received from the banks; that the loan application was prepared by the Corporate Finance of UB Group and routed through M/s Kingfisher Airlines ltd; that the total request made for the loan from IDBI Bank was to the tune of Rs. 950 crore, initially an amount of Rs. 150 crore was sanctioned as a short-term loan (STL) and pending the

9

sanction of the remaining Rs. 750 crore an ad hoc release of Rs. 200 crore was requested; that this has happened consequent to meeting of Shri Vijay Mallya with Shri Yogesh Aggarwal, CMD of IDBI Bank ltd; that accordingly, he had submitted a request letter for adhoc release of Rs. 200 crore was released; that thereafter, Rs. 750 crore was sanctioned and disbursed; that immediately after disbursal of Rs. 750 crore, an adhoc amount of Rs. 200 crore was repaid to IDBI Bank; that the amount of Rs. 150 crore was also repaid on the due date along with interest; that as on date the outstanding amount towards IDBI Bank Ltd. is to the tune of Rs. 750 crore exclusive of interest; that he had attended one meeting along with Shri Vijay Mallya and met Shri Yogesh Aggarwal, the then CMD, Shri Batra, MD and another senior person, who was the advisor, who were present during the meeting, that the Income Tax Returns were filed from Bangalore Registered Office who have employed the service of M/s B.K. Ramdhayani & Co. as Statutory Auditors of the company; that they used to employ the service of Shri Vijay Patil, C.A. for the issuance of loan end use certificate for handing over to the respective banks from whom they have taken loans; that they have executed the loan documents to the bank and all other documents required by the bank such as Corporate/personal guarantees, shareholders resolution for borrowing limits etc.; that for sanctioning of the loan as a security, they have provided hypothecation/assignment of KEA Brand (valued at Rs. 3400 crore approx.), negative lien on fleet of hire purchase/finance lease aircraft, Corporate Guarantee of United Breweries Holdings Limited & personal guarantee of Shri Vijay Mallya, Chairman that KFA brand in the aviation business clause has been assigned by M/s UBHL to M/s Kingfisher Airlines Ltd. and the deed of assignment signed by both the parties have been filed with the trade mark Registry; that M/s Kingfisher airlines has got the trade mark valued by M/s Grant Thornton for an amount of Rs. 4100 crore (approx.) and which was subsequently revised to the tune of Rs. 3400 crore;

10

that regarding negative lien on fleet of hire purchase/finance lease aircraft, the title of the finance lease aircraft will come to M/s KAL only upon the payment of the last installment of the financial lease payment; that since, the title is not currently with the company, the company undertook that upon the company getting the title after the expiry of the lease term, it will offer the same as a security to the bank; that regarding the Corporate Guarantee of UBHL, it is standard format of undertaking the loan repayment in the event of the borrower's failure to repay the loan and in the similar manner a personal guarantee was also issued by Shri Vijay Mallya; that the loan amount was utilized for the operational expenses/payments of the company; that they are filing the I. Tax Returns of M/s KAL regularly till March, 2014 till March, 2014 from their Registered office located at UB City, UB Tower, 24 Vittal Mallya Road, Bangalore; that the Income Tax Department is investigating a case for not depositing of TDS amount deducted from the employees salaries and other expenses and the Services Tax Department is investigating a case for non-deposit of Service Tax amount which has been collected from the passengers travelling in M/s KAL; that the I.T. department has claimed an amount of Rs. 370 crore (approx.) out of which we have paid amount of Rs. 140 crore (approx.); that regarding Service Tax collected and not paid, is to the extent of Rs. 50 crore (approx.); that the CBI-BS&FC is also investigating the non-payment of loan disbursed by IDBI Bank Ltd. and the SHO is also conducting investigation against them; that he was aware of the Earnest & Young Report, which is a Forensic Audit initiated by State Bank of India on behalf of the consortium banks. In his further statement dated 12.03.2016, he inter-alia, stated that, he was staying at the mentioned place in Mumbai from August, 1993 and the said flat is owned by UB Group; that he was not aware as to which company of the UB Group is holding the said property; that the said flat had been purchased in late 1980's; that Inter Corporate deposits (ICD) were

11

taken from time to time for meeting the working capital requirements; that major amounts of ICDs were taken from M/s Dynamix Balwa, M/s Suraksha Realtors & M/s India Bulls Financial Services; that there are also small IDCs mainly through Calcutta based broker viz. M/s LSI Financial Services, M/s Followel Engineering Ltd.; that ICDs have been taken from Anchor Investments (P) Ltd.; that between M/s Dynarix Balwas & Suraksha, they took ICDs to the tune of Rs. 225 crores out of which Rs. 5 crore is still pending; that regarding the ICD from M/s India Bulls, it should be somewhere around Rs. 100 crores, which have been fully paid; that both the companies viz. M/s Dynamix Balwa & Suraksha, are owned by M/s DB Group and the negotiation was done by Shri Vijay Mallya; that since there was some delay in release of bank loans and to tide over the period; that he was not able to recollect about the debit transaction to M/s Shakti Computer on 29.09.2011 to the tune of Rs. 14 crore made from Axis Bank A/c; that they have made payments to M/s UBICs, M/s UB Engineering, M/s UBHL and its subsidiaries; that they have received payments from UB Group & its associates; that it was Corporate Finance Department of the UB Group, Bangalore, who were taking the decisions of the payments with the concurrence of Shri Vijay Mallya; that the major ICDs have been negotiated/ arranged by Shri Vijay Mallya himself or Corporate Finance Department, Bangalore; that regarding small ICDs from time to time, the Treasury In charge from M/s KAL used to negotiate with the brokers and keep him informed of their efforts; that presently, he was not able to recollect the exact amount given to Formula 1 as there were two agreements with Force India- Formula 1 Team and all the payments were made according to the said agreement; that since M/s KAL was contemplating to start their international flights in mid-2008, Shri Mallya felt that the international motor grande is a good medium for advertising the brand in various countries especially in Europe & Middle East and therefore, decided that

12

M/s KAL should sponsor Formula 1 team as in any event M/s KAL had already sponsored the Toyata Team with the same objective; that it was around USD 5 million; that the total number of aircrafts that M/s KAL had at its peak was Eighty Eight (88) under its Scheduled Air Operators permit as they are covered under NSOP (Non Scheduled Operators Permit); that there were 68 aircrafts lease agreements (approx.) entered by M/s KAL. However, he does not have the copies of the agreements as the same were submitted to SFIO and their copies were taken away by CBI during their search operation conducted in October, 2015; that most of lease agreements entered by M/s KAL was much before he joined M/s KAL viz. in January, 2006; that the price variation might be to the extent of 5% - 10% mainly due to the variation & specification of the LOPA (Lay Out Plan of Aircraft) and other fittings; that M/s Calyon Bank, France, a specialist in aviation leasing was appointed by M/s KAL to assist in finalizing the lease transactions of aircraft for M/s KAL. In additional, the Chief Operating Officer at the relevant periods namely Shri Alex Wilcox initially and then Shri Nigel Harwood were incharge of finalizing the lease agreements. The COO's were assisted by the Damania Brothers viz/ Pervez & Vispi Damania; that after the exit of Shri Nigel Harwood & Damania Brothers, Shri Hitesh Patel was entrusted the responsibility of lease agreements with inputs from M/s Calyon Bank; that he is no longer working in UB Group; that he is currently working with a leasing company known as M/s Veling; that only two ATR-72 were leased from M/s Veling Group, Mauritius. The term sheet was signed from M/s KAL side by Shri Niegel Harwood, COO & Shri Uday Naik, CEO of M/s Veling Group; that since it is a very critical decision, Shri Mallya is always kept aware of the negotiations & without his concurrence no lease agreements will be finalized; that the major expenses incurred by M/s KAL are fuel cost, lease rental, airport charges & interest & financial charges; that since leasing of aircrafts involves substantial investments by the leasing

13

company, it is not possible for any leasing company to cater to all the requirements of aviation industry; that M/s KAL has entered into leasing agreement with reputed leasors with whom other Indian aircraft companies have entered into leasing the aircrafts; that Rs. 1 crore is a small limit in terms of aviation operation as the daily fuel bill itself is in excess of Rs. 5 crore. Further, currently, they do not have access to books of accounts as the servers containing their financial and other data were not working since the time they were re-located from Mumbai to Bangalore in November, 2014. Efforts are being made to re-activate the server; that the funds have been utilized for making payments towards lease rent, Overseas Engineering vendors, Ground Handling expenses, inflight costs including catering. An end use certificate has also been obtained as per the requirement of bank and has been handed over to the IDBI Bank, who have acknowledged the same.

Accordingly, CBI registered the FIR No. RC BSM 2015 E-0006 dated 29.07.2015 on the basis of the aforesaid facts revealed in the preliminary enquiry.

As the suspects committed the Scheduled Offence, Enforcement Directorate register ECIR No. 03/2016 dated 29.01.2016, as the above facts revealed prima facie Commission of Offence of Money Laundering under Section 3 of Prevention of Money Laundering Act, 2002, punishable under Section 4 by the said suspect, ED conducted investigation and recorded the statement of the suspect and other persons under Section 50 of PMLA, 2002 and thereafter attached the properties vide PAO No. 11/2016 dated 11.06.2016 as mentioned in para no. 1 above. Thereafter Original Complaint No. 612/2016 was filed before the Adjudicating Authority for confirmation of the said attached property. Being satisfied with the allegation mentioned in the Original Complaint the Adjudicating Authority after forming reasonable belief issued the Show Cause Notice to the defendants.

14

After receiving the replies on behalf of the said defendants and the rejoinders filed by ED and hearing the arguments, the Adjudicating Authority passed the detailed order dated 01.12.2016 confirming the PAO No. 11/2016 aggrieved by the said order, appellants filed the present appeals.

3. Ld. Counsel for the appellant M/s. United Spirits Ltd. in appeal no.

FPA-PMLA-2524/MUM/2018 submitted that the appellant company was engaged in business of manufacture and sale of alcoholic beverages and was part of the UB Group. This company was acquired by DIAGEO Group in 2013. Before acquisition, this company purchased 6^thand 7^thFloors of UB Tower, measuring 15551.8 sq. ft. of super built area along with the proportionate share in the common areas vide sale deed dated 06.10.2010. He pointed out that appellant company also purchased 8^thand 9^thFloors of UB Tower measuring 15551.8 sq. ft. of super built area along with the proportionate share in the common areas vide sale deed dated 01.03.2011. The appellant company also purchased Unit No.1001, 10^thFloor of UB Tower measuring 7775.61 sq. ft. of super built area along with the proportionate share in the common areas vide sale deed dated 30.06.2011. The said portions were purchased by appellant company from respondent no. 5 United Breweries (Holdings) Ltd. He pointed out that the description of Schedule C & D properties contained in the impugned order refers to these properties as 1^stFloor Car Parking and 2^ndFloor Reception, which makes it clear that even at the time of proposed attachment, respondent ED was well aware of the fact that these are the common areas of the UB Tower and hence being common areas, the same could not have been attached. He argued that the facility of common areas is given to the individual owners of the unit as an additional facility and thus, the said common areas will go with the sale/allotment of the unit. The various other owners who were enjoying the common facilities of this area situated at 1^stand 2^ndFloor were

15

never summoned to defend their interest. He contended that even the sanctioned plan by BBMP prohibits all common areas of UB Tower from being alienated. Accordingly, he stressed, any attachment and subsequent alienation of these common areas would be in violation of the said sanctioned plan.

He pointed out the judgment passed by Ld. Special Judge, PMLA Court in Special Case No. 7 of 2017 wherein at page no. 18 (1^stpara) it is mentioned that:

"As far as claim of M/s. United Spirits Limited (USL) is concerned, it is pertinent to note that the claimed area is part of attachment and said attachment order has been challenged before the Hon'ble Appellate Tribunal under the Prevention of Money Laundering Act, 2002 in Appeal No. 2524 of 2018. The present claim of USL, is also pending for consideration before the Hon'ble Appellate Tribunal at New Delhi. Therefore, this Court can not independently consider said claim. Resultantly, the claim of USL and other intervenors stands rejected." Accordingly, he submitted that the right of the present appellant was not decided by the Trial Court as the appeal was pending before this Appellate Tribunal.

4. Ld. Counsel for the appellant M/s United Breweries Ltd. in appeal no. FPA-PMLA-2716/MUM/2018 submitted that the appellant company challenged the impugned order qua the attachment of common spaces & parking, lifts, lobby and staircase. He pointed out that sale deed date 28.06.2008 executed by United Breweries (Holdings) Ltd. in favour of United Breweries Ltd. for selling properties of Schedule C measuring 23808.25 sq. ft. situated on Floors III, IV & V, along with proportionate share in all the common areas such as passages, lobbies, lifts, staircases and other areas of common use with 57 car parking spaces in the building for a sum of Rs. 35 Crores, as mentioned at page 6 & 15 of the said sale deed. He argued that appellant company would be put to grave and irreparable prejudice for attaching the common spaces and car parking spaces, without appreciating

16

the fact that the units in the UB Tower were purchased along with these common amenities. The appellants have right to use their respective car parking slots and access through 1^st& 2^ndFloor of common area including reception for reaching to their respective places. Any confiscation and any alienation of the common area would cause grave harm to the occupants of UB Tower. Appellants have right of easement and passage to their respective offices and hence the said common spaces cannot be confiscated in individual manner and separately from the right of the units attached in the UB Tower.

5. Ld. Counsel for the appellant M/s BMM Construction and Projects Pvt. Ltd. in Appeal No. FPA-PMLA-2726/MUM/2018 submitted that the appellant company purchased apartment bearing no. 27C at 27^thFloor in Kingfisher Tower measuring 8321 sq. ft. built up area inclusive for proportionate share in all the common areas and with 5 car parking spaces in the building, as mentioned in Schedule E of the Agreement to Sell dated 25.08.2012. Ld. Counsel for appellant pointed out that as per agreement he was liable to pay sale consideration of Rs. 18,96,45,125/-, out of which he tendered sum of Rs. 10 Crores as part payment. Sum of Rs. 5,98,43,125/- was paid on the date of agreement and the remaining payment was agreed to be paid as per payment schedule (mentioned in Annexure A-2 of construction agreement), which is at page 288 of the appeal paper book. He pointed out that appellant is neither accused in CBI case nor in prosecution complaint filed by respondent ED. There is no direct or indirect evidence against the appellant for commission of any crime. He is a Bonafide purchaser of aforesaid flat. He filed his claim by way of Company Application for specific performance vide CA No. 248/2018 before Hon'ble High Court of Karnataka, against the vendor company M/s United Breweries (Holdings) Ltd. through Official Liquidator, as the said company was under liquidation and the said case is still pending before Hon'ble High Court.

17

Prayer is accordingly made to allow the present appeal, as the appellant is ready to pay the balance sale consideration amount.

6. Ld. counsel for the appellant Mr. Ravishankar Keerthapati Ramaraju in Appeal No. FPA-PMLA-3151/MUM/2019 submitted that the appellant purchased apartment bearing no. 19C at 19^thFloor in Kingfisher Tower measuring 8321 sq. ft. built up area inclusive for proportionate share in all the common areas and with 5 car parking spaces in the building, as mentioned in Schedule E of the Agreement to Sell dated 12.04.2012. Ld. Counsel for appellant pointed out that as per agreement he was liable to pay sale consideration of Rs. 5,23,54,875/- for common space and Rs. 16,76,45,125/- for cost of flat, out of which he tendered sum of Rs. 1,37,50,000/- and 4,12,50,000/- respectively as part payment on the date of agreement. He further pointed out that till date he has tendered some of rupees 19.5 crores, but no sale deed is executed in his favor as the company went into liquidation before execution of sale deed and handing over of the possession. The remaining payment was agreed to be paid as per payment schedule, which are at page 279 & 299 of the appeal paper book. He pointed out that appellant is neither accused in CBI case, nor in prosecution complaint filed by respondent ED. There is no direct or indirect evidence against the appellant for commission of any crime. He is a Bonafide purchaser of aforesaid flat. He pointed out that many unit purchasers have filed their respective claims by way of Company Applications for specific performance vide CA No. 153,165 & 253/2020 before Hon'ble High Court of Karnataka, against the vendor company M/s United Breweries (Holdings) Ltd. through Official Liquidator, as the said company was under liquidation and the said cases were decided in favor of the said applicants vide order dated 22.12.2020, 18.02.2021 & 18.02.2021 respectively, vide which Hon'ble High Court directed the Official Liquidator to register the sale deeds of the subject apartments in their favor, subject to the applicant complying with

18

the conditions as mentioned therein. Prayer is accordingly made to allow the present appeal, as the appellant is ready to pay the balance sale consideration amount.

7. On the other hand, Ld. counsel for the respondent ED submitted that the accused companies of Vijaya Mallya committed the fraud with the bank to the tune of Rs. 900 crores (as mentioned in para 2 above). He pointed out that all the properties claimed by the appellants were attached vide provisional attachment order no. 11/2016 dated 11.06.2016 which was confirmed by the Adjudicating Authority vide impugned order dated 01.12.2016. He contended that the properties mentioned in the schedule C & D are in the name of M/s United Breweries Holdings Ltd., hence the said properties were attached as value thereof in absence of direct proceeds of crime. He stressed that during the course of Adjudication by Ld. Adjudicating Authority show cause notice was issued to the said company, to which the said accused company failed to raise any issue regarding the joint ownership in the disputed/ attached properties. He submitted that the consortium of banks filed company petition number 57/2012 before Hon'ble High Court of Karnataka on 26.03.2012 for winding up and liquidation of the assets of the accused/absconder Shri Vijaya Mallya and his companies, which were widely published in newspapers and electronic media. ED conducted thorough investigation and filed prosecution complaint no. 07/2017 dated 15.06.2017 against Vijay Mallya and eight others before Ld. Special Judge, PMLA court, Mumbai. He pointed out that SBI led consortium also filed company application no. 58/2019 under section 8(8) of PMLA, 2002, for restoration of properties attached by ED. He pointed out that Ld. Special Judge PMLA court vide order dated 01.06.2021 restored the properties to SBI led bank consortium, as ED gave NOC in respect of the properties attached by ED claimed by the appellants in the bunch of present appeals. He argued that present appeals need to be dismissed being

19

infructuous, as the said properties are under the process of disposal by Recovery Officer, DRT, in pursuance to the order dated 01.06.2021. Prayer is accordingly made to dismiss all the appeals.

Sh. Ashok Bannidenni, Advocate for the consortium of Banks

supported the submissions made by the Ld. counsel for the respondent ED, as mentioned in above sub para.

8. After hearing the rival submissions, we have given our thoughtful consideration for the same. Perusal of records reveals that: - Appellant M/s United Spirits Ltd. filed 3 sale deeds annexure A2 to A4 dated 06.10.2010, 01.03.2011 & 30.06.2011 which are at page number 241-262, 263-284 & 285-302 respectively in folder no. 3 of the said appeal paper book. Annexure A2 reveals that sale deed dated 06.10.2010 was executed between M/s United Breweries Holdings Ltd. in favor of M/s United Spirits Ltd. vide which the Board of Directors of seller companies in board meeting dated 21.07.2010 have approved the sale of the schedule C property together with schedule B property in favor of the purchaser for sale consideration of Rs. 19,62,21,840/-. The schedule B reflects undivided share to the extent of 4707.13 sq. ft. with right, title, interest & ownership in schedule A property measuring 6.99 acres. The schedule C reflects office space being the 6^th and 7^thfloor measuring 15,551.82 sq. ft. of super built- up area, which is inclusive of proportionate share in all the common areas such as passages, lobbies, lifts, staircases & other areas of common use in the UB tower block and UB city built on the schedule A property together with 28 cars and 24 two wheelers parking spaces (equivalent to four car parking spaces) aggregating to 32 car spaces.

Appellant M/s United Breweries Ltd. filed sale deed annexure A2 dated 28.06.2008, which are at page number 241-266 in folder no. 3 of the said appeal paper book. Annexure A2 reveals that sale deed dated

20

28.06.2008 was executed between M/s United Breweries Holdings Ltd. in favor of M/s United Breweries Ltd. vide which the seller company has agreed to sell the schedule B property together with schedule C property in favor of the purchaser for sale consideration of Rs. 35,00,00,000/-. The schedule B

reflects undivided share to the extent of 7023.43 sq. ft. with right, title, interest & ownership in schedule A property measuring 6.99 acres. The

schedule C reflects office space bearing no. 24/106, 24/107, 24/108, 24/109, 24/110 measuring 23808.25 sq. ft. of super built-up area in floors- III, IV & V, which is inclusive of proportionate share in all the common areas such as passages, lobbies, lifts, staircases & other areas of common use in the UB tower block and UB city built on the schedule A property together with 57 cars parking spaces.

On the basis of the sale deeds referred by the appellants the schedule B properties are part and parcel of the floors purchased by the appellants in the first two appeals and hence the same can not be segregated for alienation, transfer, attachment or auction in separation of the ownership rights of the floors VI and VII and III to V purchased by the appellants respectively. The owners, tenants, leases, transferees, occupants etc. of the said premises can not effectively enjoy their respective properties in absence of the enjoyment of the common areas as mentioned in the schedule B of the respective sale deeds. The said common area and parking space etc. will go with an ownership right of the main property situated at different floors. Thus, we are of the considered view that the present appeals need to be allowed on the said basis, without expressing about the ownership right of the individual units situated at different floors.

9. Now coming to the contention of the appellants in appeal no. 2726/2018 & 3151/2019, the appellants have entered into an agreement to sell in their favor pertaining to unit no. 27C & 19C respectively. As per their contention they have made substantial part payment to the seller company

21

United Breweries Holdings Ltd., which is now under liquidation. No sale deed has been executed by the said company in their favor till date. Even possession of the respective units is not handed over to them. There is nothing on record to show whether they were part and parcel of any conspiracy with the accused company and the other accused persons for obtaining any amount directly or indirectly from the proceeds of crime or the said agreement to sell in their favor are false and fabricated documents, without part payment of sale consideration amount. However, seeing the fact that some of the allotees have already claimed relief and obtained conditional order in their favor from Hon'ble High Court of Karnataka in Company Application no. 153/2020, 165/2020 & 253/2020 in Company Petition no. 162/2013, they may also file their claim applications before the Hon'ble High Court, as this Appellate Tribunal can not entertain their claim, as the said company is under liquidation. Hence, these two appeals need to be disposed of with liberty to the appellants as above.

10. In sequel to our findings, the appeals at serial no. 1 & 2 are hereby allowed and appeals at serial no. 3 & 4 are hereby disposed of with liberty to file claim petitions before Hon'ble High Court of Karnataka in Company Petition no. 162/2013, which is still pending for liquidation of assets of M/s United Breweries Holdings Ltd..

Appeals 2524/2018 and 2716/2018 are allowed and appeals 2726/2018 and 3151/2019 are disposed of with directions.

Pronounced on this 26^thday of December, 2024.

(Rajesh Malhotra) (G. C. Mishra) Member Member

22