A criminal complaint in FIR No.664/2013 was registered on 29.10.2013 with the Cyberabad Police, against six persons, including the appellant herein for alleged offences under Sections 406, 407, 415 to 420, 120B read with Section 34 IPC.
SEBI passed an Order dated 14.07.2020 holding that there were violations of various provisions of Securities and Exchange Board of India Act, 1992 and various regulations of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
The Court also granted the custody of the appellant to the Enforcement Directorate for a period of six days from 06.10.2022 to 11.10.2022.
The sum and substance of the complaint was, that Farmax availed the services of the appellant herein and the other accused in raising GDRs to the tune of USD 71.09 millions equivalent to INR 318 crores; that Vintage FZE, a wholly owned entity of Arun Panchariya solely subscribed to these GDRs, after availing a loan from EURAM Bank, under a loan agreement dated 05.05.2020; that Farmax executed a pledge agreement with EURAM Bank, undertaking that the entire proceeds will be pledged to secure the loan granted by EURAM Bank; that though Farmax issued GDRs, the proceeds were not credited to Farmax’s credit in India, as the same had been kept as collateral; that Vintage FZE repaid only part of the loan and, hence, the balance amount alone got released by the bank to Farmax; that this diversion of funds caused a loss to Farmax to the extent of USD 15.60 millions; that the GDRs were thereafter converted into equity shares and sold in the Indian Stock Market; that when Farmax was advised by the appellant to go for GDRs, Farmax was not eligible for the amount of GDR; that therefore, the appellant herein and According to the Enforcement Directorate, the appellant was responsible for creating the entire infrastructure for Farmax and Arun Panchariya to bring about the fraudulent GDR issue and that the appellant provided formats for Board Resolutions and also helped in transferring the funds from the account of Farmax with EURAM Bank to the Farmax subsidiary, namely, M/s. The relevant portion of paragraph 8 of the prosecution complaint reads as follows: “SPECIFIC ROLE OF THE ACCUSED/ CO-ACCUSED PERSONS IN THECOMMISSION OF OFFENCE OF MONEY LAUNDERING IN TERMS OFSECTION 3 OF PMLA:
Role of Shri Sanjay Aggarwal (A-1):- a) Based on Sanjay Agarwal’s assurances, M/s Farmax India Limited decided to proceed with plans for a GDR listing.
b) Sanjay Agarwal acted as an intermediary for almost all communications with the various participants, and gave instructions to M/s
Farmax India Limited before and after the offering.
by representing Arun Panchariya’s firm Prospect Capital before the depositary, the Bank of New York and being well aware of the relation Arun Panchariya had with EURAM Bank insisted all companies going through GDR to open a bank account in that particular bank, (A-1) being well aware of the arrangement between Arun Panchariya and the Company promoters to share the proceeds of GDR, took the lead role of coordinating the offering, by purposely hiding the subscriber list from submitting to Ahmedabad Stock Exchange and hence was directly involved in the process and activity connected with the proceeds of crime including its acquisition and hence has committed the offence of money-laundering as defined under section 3 of PMLA, 2002 and is liable for punishment under Section 4 of PMLA, 2002.”
Keeping in mind the specific role attributed to the appellant, let us now revert back to the facts pleaded and arguments advanced.
Case Title: SANJAY RAGHUNATH AGARWAL Vs. THE DIRECTORATE OF ENFORCEMENT (2023 INSC 408)
Case Number: Crl.A. No.-001198-001198 / 2023
