**Case Study: 4** Nutcase Private Limited ("NPL") is a premium cashew, almond farming and manufacturing company which specialises in growing, and selling salted cashew, almonds and other dry fruits in India and abroad. NPL was started in the year 2014 by Mr. Vishwanath Naroda, Managing Director and has its head office in Nasik, Maharashtra with branches all over the country. Vishwanath started this company along with his long-time friend Mr. Arjun Nambiar, who comes from a family of civil engineers. Arjun is a Chartered Accountant and is the Chief Financial Officer of NPL. Vishwanath and Arjun together own 70% of the share capital of NPL and the balance is held by a large private equity investor. Arjun and his brother Ajit, commenced a real estate company called Nambiar Constructions (NC) with its head office in Trivandrum and announced a new 60 apartment project named as "Nambi Sundaram", a luxury apartment complex in Trivandrum with a variety of amenities including swimming pool, cricket net, fully equipped club house with all amenities, etc. The Company applied for registration of the project on 15th September, 2020. Based on the past performance of the Nambiar Constructions group and the general image of Arjun and Ajit, there was tremendous demand for the apartments in the project and all the apartments were booked within 1 month from the date of launch (20th September, 2020). After registering the apartments in the name of the allottees, Nambiar Constructions informed the allottees that they need to pay the water and electricity charges directly to the concerned departments for their apartments. The following were some of the conditions mentioned in the agreement for sale entered into by NC with its allottees: (1) Expected date of completion of constructions - 31st March, 2022. (2) Expected date of handover – 31st May, 2022, subject to a grace period of 4 months. (3) Booking Advance amount to be paid prior to entering into agreement to sale - 25% of total cost of apartment (4) Open car parking cost - INR 400,000 (optional) (5) Any delay in payment of dues by the allottees will be liable for interest on such delayed payments. (6) Return of booking amount shall not be entertained for any reason whatsoever. (7) Nambiar Constructions shall be liable for any deficiency in quality of construction for a period of 3 years from the date of handing over the apartments. Nambiar Constructions collected a total amount of INR 8000 lakh from the allottees and deposited an amount of INR 6000 lakh in an escrow account for exclusively use for construction of the complex. Separately, an amount of INR 5 lakh each was collected from the 60 allottees in cash, aggregating to INR 300 lakh towards interior work, modular kitchen, supplying fans and lights, etc. This money was accounted as receipt in a separate company, M/s. Decorit Interiors, which was owned by Ms. Amaya Nambiar, sister of Arjun. Ajit attended one of the real estate conclaves held in Mumbai, in which he met one Mr. Hershelle Stuart, who runs an interior designing warehouse in Belgium and showed quite a few exhibits to Ajit. Ajit was impressed by the designs and the prices quoted by Hershelle. He was also amenable to receive funds in cash in India through an intermediary and then provide the material to Ajit from Belgium. Based on the same, Ajit arranged for making cash payment to the extent of INR 200 lakh to an intermediary in Delhi, and the material was received from Hershelle in a month. During his visit to India, Hershelle noted that his Belgian passport got expired and he did not realise the same. Since he did want to leave India immediately, he got in touch with a travel agent, Saurabh Shankar, who helped him get a forged passport, for which Hershelle paid INR 4 lakh in cash. Out of the balance INR 100 lakh cash available with Decorit Interiors, Ajit used cash amounting to INR 25 lakh to pay amount to various intermediaries to facilitate timely and smooth registration process of the apartments of Nambi Sundaram, which was paid by the intermediaries to the officials of the Sub Registrar. As one of the shareholders of Decorit, Amaya decided to visit Belgium to see the interior designs and then place an order for the upcoming projects. During her visit, she purchased 500 grams worth of gold (costing INR 15 lakh) and since, she did not have enough money, she asked Ajit to make the payment through the intermediary in Delhi. Based on the discussion with the intermediary, Ajit provided an antique coin which he got from one of his social friends to the intermediary as consideration for the gold purchased by Amaya in Belgium. Based on the same, Ms. Amaya brought the gold with her through the green channel. The Enforcement Directorate sent a notice to Ajit that he was in possession of the immovable property in the US jointly with a relative outside India and it was observed that there was an outflow of funds from India equivalent to USD 300,000. Ajit responded that the outflow of funds to the extent of USD 250,000 was from the Resident Foreign Currency (RFC) account held in his name. The adjudicating authority held an inquiry in which it was found that the balance USD 50,000 were sent out of India from the earnings by Ajit out of' the proceeds from the sale of opium to a dealer in Nigeria. Answer the following questions:
Sub-questions (8)
As per provisions of RERA, collection of cash by Decorit Interiors for interior work, modular kitchen, supplying fans and lights, etc.:
(A) May be appropriate, since RERA does not specify the mode of collection.
(B) May not be appropriate, since collection should be done as per the stipulations of RERA.
(C) May be appropriate, since provisions of RERA are not applicable.
(D) May not be appropriate, since Decorit Interiors are not registered with RERA.
Evaluate the view of the Nambiar Constructions relating to the payment of water and electricity charges by the allottees.
(A) The registration of the apartments denote that the allottees are now the legal owners of the apartments and hence, need to bear the water and electricity charges.
(B) The promoter is liable for making payment for the water and electricity charges until the physical possession is transferred to the allottees.
(C) This is dependent on the terms of the agreement of sale between Nambiar Constructions and the allottees.
(D) This amount needs to be paid equally by Nambiar Constructions and the allottees, since the registration is completed and only transfer of physical possession is pending.
Which of the following entities are not obligated to provide information under Section 12A of the PMLA 2002
(A) Person running a Casino
(B) Department of Tourism
(C) Real Estate Agents
(D) Real Estate Investment Trust
Post demonetization, the intermediary helped many of his customers in exchanging their old currency notes with newly issued currency. Is he liable for punishment under any of the provisions of the law applicable in India, if the total value involved in such transactions is less than INR 100 lakh?
(A) Liable for the commission of offence under the Indian Penal Code,1860 as well as under the Prevention of Money Laundering Act, 2002.
(B) Liable to be punished under the Indian Penal Code, 1860 for the commission of offence but he is not liable under the Prevention of Money Laundering Act, 2002 as the total value involved is less than INR 1 crore.
(C) Liable under the Foreign Exchange Management Act, 1999 for non-compliance with regulations related to foreign exchange.
(D) Not liable for any punishment under any of the provisions of the law applicable in India, since this was done on humanitarian grounds to assist people who needed cash urgently.
Amaya bought gold jewellery worth INR 15 lakhs from Belgium through the green channel. Is this an offence under the PMLA, 2002?
(A) Yes, because she came through the green channel and evaded duty of customs.
(B) No, whilst it is an offence, it is not actionable under the PMLA 2002.
(C) No, she did not pay any cash for the purchase.
(D) Yes, since purchase of gold from EU countries requires specific consent as per the agreement entered with foreign countries as per Section 56 of PMLA 2002.
Examine the appropriateness of the conditions mentioned in the agreement for sale, in the context of the provisions of RERA, 2016.
The enforcement directorate has sought your advice on identifying all 6 the offences committed by the parties under the PMLA, 2002 described in the case study. Identify the offences, the parties involved and the punishment for the offence of money laundering.
What are the possible actions that can be taken against Ajit for the offence committed by him under the provisions of the Prevention of Money Laundering Act, 2002?