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Money Laundering - Case Laws
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2020 (12) TMI 1385
Money Laundering - attachment of properties through PAO - proceeds of crime - appellant is a bona fide third party or not - initiation of actions against mortgaged properties under SARFAESI Act, 2002 - the provisions of Prevention of Money Laundering Act, 2002 override the provisions of SARFAESI Act, 2002 or not - the jurisdiction of this Appellate Tribunal under Section 26(4) of the PMLA to modify or set aside the impugned order is curtailed by second proviso to Section 8(8) as alleged by the respondent, or not - material for the formation of “reason to believe” under Section 5(1) of PMLA, 2002 or not - applicability of Section 3 of the PML Act, 2002.
First submission of appellant is that the appellant is a bona fide third party and has acquired interest in the properties in question at a time anterior to commission of alleged schedule offences - HELD THAT:- Admittedly, neither the appellant nor any of its officials have been named in the FIR or ECIR but that does not mean that the property attached would be released in favour of the appellant, in view of the allegations of the respondent that the properties in question are involved in proceeds of crime. The appellant has not been named may be because of the fact that the appellant is not involved in commission of the crime. The appellant has filed certain documents on 27.11.2020 in support of his contention that due diligence was followed which includes (a) copy of legal verification report, (b) copy of CIBIL reports of the borrowers, (c) copy of valuation reports of secured assets and (d) copy of memorandum submitted to credit committee for approval of loan to borrowers - Even though, the appellant has shown some diligence before sanction of the loan but the attachment under consideration cannot be lifted as any release of attachment from the questioned properties in favour of the present appellant is tantamount to depriving the Consortium of Banks of their money and jeopardizing their interest - thus, even if the appellant is considered as a bona fide third party then also the order of attachment cannot be set aside or modified due to the fact that prima facie allegation is that the proceeds of crime have been travelled to acquire the properties in question. Therefore, this legal submission is not acceptable.
The second legal submission made by the appellant that it is a secured creditor being a bona fide third party had initiated actions against mortgaged properties under SARFAESI Act, 2002, and rules framed thereunder prior to the order of attachments under PMLA - HELD THAT:- While dealing with first legal submission, it is already held that the properties in question, prima facie appears to have been acquired out of the proceeds of crime and merely because the provisional attachment order was passed subsequent to the initiation of proceedings under SARFAESI Act that does not ipso facto create a right in favour of the appellant to claim priority of right over the properties in question particularly in the present facts and circumstances of the case where proceeds of crime has been used to acquire the properties in question - this legal submission is also not acceptable.
The third legal submission of the appellant is that the provisions of Prevention of Money Laundering Act, 2002 do not override the provisions of SARFAESI Act, 2002 - HELD THAT:- The learned counsel for the appellant, during the course of argument submitted that this Tribunal is bound by the judgment of the Hon’ble High Court having territorial jurisdiction in the event any conflict in the judgment of two High Courts on the same issue. In my view, there is no conflict in the judgment passed by the Division Bench of the Hon’ble High Court in PNB Housing Finance case [2020 (2) TMI 1685 - PUNJAB & HARYANA HIGH COURT] and the judgment of Hon’ble High Court of Delhi passed by Single Bench in Axis Bank case [2019 (4) TMI 250 - DELHI HIGH COURT] so the jurisdictional question raised by the appellant does not apply to the present facts and circumstances of the case.
The fourth legal issue raised by the learned counsel for the appellant that the jurisdiction of this Appellate Tribunal under Section 26(4) of the PMLA to modify or set aside the impugned order is not curtailed by second proviso to Section 8(8) as alleged by the respondent - HELD THAT:- This legal issue has arisen in view of the submissions made by the learned counsel for the respondent that the prosecution complaint has already been filed before the Special Court and cognizance has already been taken and in view of that the appellant should approach the Special Court to lay its claims for release of the properties. According to the learned counsel for the respondent, once the cognizance is taken, it amounts to beginning of criminal trial in the court - the submission made by the learned counsel for the respondent not agreed upon that this Tribunal has no jurisdiction to pass any order on the legality of attachment order passed by the respondent and confirmed by the Adjudicating Authority - the contention of the learned counsel for the respondent not agreed upon that this Tribunal has no jurisdiction to pass an order or on impugned order confirming/setting aside or modifying the attachment particularly when the charges are yet to be framed and the trial is yet to begin.
The fifth legal submission made by the learned counsel for the appellant that there is no material for the formation of “reason to believe” under Section 5(1) of PMLA, 2002 - HELD THAT:- In the present case, neither party has filed the copy of the provisional attachment order or the copy of the O.C. But on perusal of para 3 to 26 of the impugned order, the details have been mentioned about how the proceeds of crime have been used to acquire the properties and para no. 27 to 29 of the impugned order are the conclusions arrived at by the complainant on reason to believe. Therefore, it appears that there is compliance with regards to the reason to believe - there is no merit in these legal submission of the appellant.
The last legal submission made by the appellant is that Section 3 of the PML Act, 2002 is not applicable in the present matter - HELD THAT:- The appellant is admittedly neither an accused in the FIR nor in the ECIR nor there is any material on record that the present appellant is arrayed as an accused in the prosecution complaint in which the properties involved herein are part of the prosecution complaint. The proceedings before this Tribunal is to examine the legality or infirmity in the impugned order passed by the Adjudicating Authority not of the persons who alleged to have committed the offence of money laundering. Therefore, it is felt that there is no necessity to record any finding on this legal issue.
There are no illegality or impropriety in the impugned order passed by the Adjudicating Authority and it is held that the appeal has no merit - appeal dismissed.
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2020 (12) TMI 1373
Money Laundering - Locus of the petitioner-ED in a closure report filed by the State of Maharashtra before the Magistrate, in a case registered at the behest of respondent No.2-Akbar Travels (India) Pvt. Ltd. - HELD THAT:- Admittedly, the respondent No. 2-Akbar Travels (India) Pvt. Ltd. filed a private complaint as against respondent Nos. 3 to 5 in the Court of the learned Metropolitan Magistrate at Ballard Pier, Mumbai, praying therein for an order under Section 156(3) Cr.P.C. The learned Magistrate was pleased to pass an order under Section 156(3), pursuant to which, the M.R.A Marg Police Station registered an FIR being C.R. No. 66 of 2020 as against respondent Nos. 3 to 5 for the alleged offences punishable under Sections 406, 420, 465, 467, 468, 471 and 120-B of the IPC. The said offences being scheduled offences under the PMLA, the petitioner-ED registered an ECIR as against the respondent Nos. 3 to 5 under the PMLA and proceeded with its investigation - It appears that the petitioner-ED, on being informed by the respondent No.2 about the closure report, also filed a Protest Petition before the learned Magistrate and prayed that they be heard before any order could be passed on the closure report filed by the respondent No.1-State.
It is thus evident that an informant/complainant is entitled to a notice before any orders are passed on the closure report by the Magistrate, whereas, an injured or in case of death, the relative of the deceased can be heard, even without notice i.e. in cases where the police file a closure report, or a `C’ summary report in respect of a complaint. Thus, the three categories of persons whose `locus’ has been recognized are the complainant, injured persons or the relatives/heirs of the deceased.
The petitioner-ED is an independent investigating agency, empowered to investigate offences under the PMLA and FEMA and in the facts, cannot be termed as a victim or aggrieved/injured/interested person, having regard to the judicial pronouncements. There is no provisions in law which supports the claim of the petitioner-ED with respect to its locus to intervene and contest the closure report filed by the respondent No.1- State. Thus, the petitioner cannot be permitted to intervene and contest in the closure report filed by the respondent No.1-State - it is clearly evident that Magistrates having no inherent powers cannot entertain applications/ petitions from any person other than a victim/complainant/injured person or relative of the deceased.
The petition, being devoid of merit, is dismissed and accordingly disposed of.
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2020 (12) TMI 1355
Money Laundering - proceeds of crime - staff members accountable for procedural lapses - genuinty of purchase transactions under LC and corresponding sales transactions performed by the company - diversion of funds - abnormal delay in lodging the complaints by both the banks - alleged forensic audit alleged to have been conducted by M/s. S.P. Rungta and Associates is behind back of the petitioners and they have not given any opportunity to the petitioners - loan transaction can be converted into a criminal prosecution or not - Utilization of loan amount for a purpose other than for which it is sanctioned.
HELD THAT:- In all the OTS, it has been found that all the banks were put to a total loss to a tune of Rs.182.99 Crores approximately. The Enforcement Directorate has initiated investigation/enquiry under the provisions of PMLA since the offences alleged against the petitioners are scheduled offences under the said Act. There are serious allegations against the petitioners. Bank loan frauds are a scourge on our economy and therefore it is the duty of the Enforcement Directorate to investigate all bank frauds in which there is loss of more than Rs.25.00 Crores to the banks. The present case is not falling in any of the exceptions mentioned by the Apex Court in State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT].
The Apex Court in Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur [2017 (10) TMI 1194 - SUPREME COURT] categorically held that economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanor. The consequences of the act complained of upon the financial or economic system will weigh in the balance.
Similar principle was laid down by the Apex Court in GOPAKUMAR B. NAIR VERSUS C.B.I. AND ORS. [2014 (4) TMI 1291 - SUPREME COURT]. In the said judgment, it was further held that the offences are certainly more serious. They are not private in nature. The charge of conspiracy is to commit offence under the Prevention of Corruption Act. The accused has also been charged for commission of substantive offence under Section - 471 of IPC. Though the amounts due have been paid, the same is under private settlement between the parties. There is no acknowledgement on the part of the Bank of the exoneration of the criminal liability of the accused unlike the terms of compromise decree.
There are serious allegations against the petitioners. M/s. S.P. Rungta and Associates has mentioned in its report about the lapses of the petitioners. The said lapses were specifically mentioned in the complaints dated 30.06.2018 and 29.02.2020. The account of petitioner No.4 in Central Bank of India was declared as fraud on 30.11.2016 and at paragraph No.14 of the complaint dated 30.06.2018, the Central Bank of India specifically mentioned the details of the same. There are serious allegations that the funds of petitioner No.4 were diverted by petitioner Nos.1 to 3 for their personal needs. Petitioner No.4 has not filed financial statements for the years 2013-14 and 2014-15. Petitioner Nos.1 to 3, being the Managing Director and Directors of petitioner No.4 respectively have not co-operated with the auditors in carrying the financial audit and also have not made available the books and records to assess the inventory position - It is a loan fraud which is a serious fraud and there are serious allegations against the petitioners.
The Enforcement Directorate has initiated investigation under the provisions of the PMLA considering the fact that the offences alleged against the petitioners in both the FIRs registered by Central Bureau of Investigation are scheduled offences. The modus operandi adopted by the petitioners in availing the loans and getting the accounts NPA/fraud and availing OTS by paying meager amounts is specifically mentioned in the complaints dated 30.06.2018 and 29.02.2020.
There are specific allegations against the petitioners herein. The modus operandi adopted by the petitioners is also specifically mentioned in the complaints - Petition dismissed.
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2020 (12) TMI 1351
Maintainability of writ petition - territorial Jurisdiction - Money Laundering - proceeds of crime - Validity and/or legality of the registration of Enforcement Case Information Report (ECIR) in proceedings in ECIR. No. KCZO/4/2014, dated 19.08.2014 - Validity of provisional attachment order - Whether the Writ Petitions are maintainable as against the PAO passed by the Deputy Director of the Enforcement Directorate, Cochin, when there is an alternative remedy before the statutory authority at Delhi? - Whether this Court has jurisdiction to entertain these Writ Petitions on the ground that the properties of the petitioners, which are subjected to attachment under the PAO, are situated within the State of Tamil Nadu?
HELD THAT:- On a perusal of the reasons assigned in the impugned PAO, it is seen that reason was recorded to the effect that huge money was earned by the petitioners predominantly through the business of Sikkim Lotteries in the year 2009-2010 and 2010-2011, which they have claimed as legitimate income in the Income Tax Returns. It was further recorded in the impugned PAO that on a comparison of the money earned by the petitioners and the remittance made to the Sikkim Government towards sale of Lottery, it was a pittance received by the Government of Sikkim and thereby Government Revenue have been misappropriated. It is also recorded that such an earnings was by way of a conspiracy with the officials of the Sikkim Government to cheat the Government of Sikkim, which is a glaring violation of the provisions of the Lotteries (Regulation) Act.
Admittedly, as against the PAO, there is an alternative remedy of appeal provided under Sections 8(1) and 8(2) of the PMLA Act, 2002, before the Adjudicating Authority (PMLA), New Delhi, but the petitioners have not availed of such a remedy before the Adjudicating Authority. Instead, the petitioners have approached this Court with these writ petitions - It is trite law that when an alternative and appellate remedy is inbuilt in the statute, resorting to invoke the inherent and discretionary jurisdiction conferred upon this Court under Article 226 of The Constitution of India, is not proper - thus, when alternative remedy is available, the present Writ Petitions are not maintainable. The hastiness with which the petitioners have filed the present writ petitions before this Court, is not proper, when there is an alternative remedy provided under Section 8 of PMLA.
Thus, first of all, the Writ Petitions are not maintainable before this Court, when there is an efficacious alternative remedy available for the petitioners to approach the concerned authority under the PMLA; secondly, only a small fraction of cause of action had arisen before this Court and the larger and substantial part of cause of action had arisen only in the State of Kerala, where the FIRs have been registered and the trial is pending before the Special Court at Kerala. Therefore, this Court is not the appropriate Court to entertain the present Writ Petitions.
Petition dismissed.
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2020 (12) TMI 1296
Money laundering - Hawala Transactions - scheduled offences under Section 2(1)(y) of PML Act - continuing offence or not - proceeds of crime - sub-section (4) of Section 8 of PML Act is violative of Article 14 and Article 300A of the Constitution of India or not - offence of money laundering under Section 3 of PML Act is a stand alone offence or not - procedural lapse prescribed under Sections 5 and 8 of PML Act or not - notice/s issued by the authorities to take possession of the property on provisional order of attachment - maintainability of petition on account of petitioners having not availed the alternate remedy of appeal available under Section 25 and under Section 42 of PML Act.
HELD THAT:- Time and again, Hon'ble Apex Court in catena of judgments has held that whenever it is possible to do so, it must be done to construe the provisions which appear to conflict so that they harmonise. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute.
Hon'ble Apex Court in SHASHIKANT SINGH VERSUS TARKESHWAR SINGH & ANR. [2002 (4) TMI 958 - SUPREME COURT] has held that it is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.
A conspectus reading of sub-sections (3), (4), (5), (6) of Section 8 along with Sections 20 and 21 of the PML Act and Rule 5 of Possession Rules 2013, it would clearly emerge that the stages of confirmation of an order of provisional attachment, retention of the property so attached and the seizure of the attached property and its possession being taken are all intermediatory stages prior to confiscation. Thus, where the property is provisionally attached or record is seized from the ownership, control or possession, of a person accused of an offence under Section 3 or not so accused, the attachment, retention and the eventual authority to order confiscation of the property would be dependent and contingent upon proof of guilt and finality of an order of conviction of a person of the offence of money laundering under Section 3 or on conclusion arrived at by the Special court that property so attached, retained and possession taken thereof was the property which had been used for the commission of the offence of money laundering. The scheme of the Act empowers the authorities under the Act to tentatively assume or form opinion after having recorded their reasons to believe that any person is in possession of any proceeds of crime to provisionally attach the property, its confirmation thereof, as well as taking possession of such property to secure the interests of the State.
PML Act was brought to prevent money laundering and confiscation of property derived from or involved in money laundering - The PML Act envisages attachment of all properties involved in the offence of money laundering and the proceeds of such crime would also come within the sweep of the PML Act.
Under Section 8(5) of the PML Act the Special Court is empowered to confiscate such property after arriving at a conclusion that the offence of money laundering has been committed or such property has been used for commission of the offence of money laundering. In that view of the matter, it cannot be gainsaid by any of the petitioners that property which has been provisionally attached and said provisional order of attachment having been confirmed, the possession of such property cannot be taken under Section 8(4) of the PML Act or frozen under sub-section (1A) of Section 17. It is only the beneficial enjoyment of the property by the owner or the occupier which is taken away by the authority by virtue of express provision namely Section 8(4) - this court is unable to accept the contention raised by learned Advocate appearing for petitioners that sub-section (4) of Section 8 of PML Act falls foul of either Article 14 of the Constitution of India or Article 300A of the Constitution of India.
The main thrust of the arguments advanced by the learned Advocates appearing for the parties is that the provisions of The Prevention of Corruption Act, 1988 did not find a place in the Schedule to the PML Act or in other words, Section 13 of PC Act came to be added to the Schedule of the PML Act with effect from 01.06.2009 by Act 21 of 2009 and as such the offences which had occurred prior to 01.06.2009 cannot be brought under the sweep of the PML Act or it cannot be made applicable retrospectively - The PML Act is a special enactment having been enacted to deal with ever increasing menace of money laundering. The provisions of the PML Act have over-riding effect over provisions in other statutes or in other words, the provisions of PML Act prevail over anything inconsistent contained in any other law. It is trite law that when two Acts are Special Acts, in such an event it is the later act which will prevail.
This Court is of the considered view that existence of a predicate offence for initiation of proceedings under the PML Act is not a condition precedent or in other words, the offence under Section 3 of the PML Act is a stand alone offence. Hence, the presence of a schedule offence as prescribed under the PML Act would not be condition precedent for proceeding against such person under the PML Act - reading of second proviso to clause (b) would clearly indicate that it excludes clause (b) of Section 5(1). In other words, the legislative intent to exclude clause (b) of Section 5(1) in the circumstances provided under the second proviso, is clear and unambiguous.
The proper and rational meaning to be attached to clause (a) in sub-section (3) of Section 8 is, that once the provisional attachment order passed under Section 5, is confirmed by the adjudicating authority under Section 8(3), the attachment would continue till the conclusion of proceedings relating to any offence under PML Act. It does not mean that confirmation of provisional attachment will not have any force if no proceedings relating to the offence of money laundering are pending before Special Court on the date of confirmation.
This court is of the considered view that contention of the petitioners with regard to applicability of unamended Section 8(3) (a) would not hold water and it is liable to be rejected and accordingly it stands rejected.
This Court is of the considered view that contentions raised by the petitioners to quash the proceedings on the ground of the proceedings initiated against them is without jurisdiction for want of either there being no predicate offence or on the date of launch of proceedings under the PML Act, the predicate offence referred to in the schedule was not incorporated in the schedule and as such, there would be retrospective application of law cannot be accepted, inasmuch as, the offence of money laundering as indicated under Section 3 of PML Act is a stand-alone offence.
The challenge is not only to the provisional order of attachment but also to the confirmation order of attachment, notice issued seeking information from the Banks and financial institutions, consequential notices issued to comply with the confirmation order of attachment, consequential notice for handing over possession of the properties issued, summons issued under Section 50(3) and the remand application filed before the Special Judge of PMLA Court and as such on the short ground of the petitioners having not availed the remedy provided under Section 8, 26 and 42 of the PML Act, the writ petitions are liable to be dismissed. However, this court desist from doing so for the reason, the grounds urged in some of the writ petitions would touch upon the very jurisdiction of the authority to adjudicate and the procedural aspects alleging violation of principles of natural justice being involved and as such this court has proceeded to adjudicate the writ petitions on merits also - the issue is answered in the negative.
The contentions raised by the petitioners challenging the action of the respondents in initiating the proceedings under the PML Act cannot be accepted and same stands rejected.
Petition disposed off.
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2020 (12) TMI 1275
Seeking time to file counter affidavit - HELD THAT:- Time as prayed for is granted.
Let counter affidavit be filed before the next date of hearing. Status quo as on today with regard to ownership, possession and encumbrance upon the properties in question shall be maintained by the parties on both sides of the appeal.
List on 08.01.2021.
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2020 (12) TMI 1235
Permission for withdrawal of Bail application - HELD THAT:- The bail as sought is granted - the bail application filed under Section 439 of Cr.P.C. is dismissed as withdrawn with the liberty sought.
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2020 (12) TMI 1129
Grant of pre-arrest bail - petitioner submitted that the relief of anticipatory bail sought by the petitioner is not premature and that the petitioner's reliance on a news article of a reputed news agency for apprehension of arrest by the respondent cannot tantamount to being speculative - whether the petition filed under Section 438 of the Cr.P.C. before the High Court without exhausting remedy before the Court of Sessions Court is maintainable or not? - HELD THAT:- It is trite law that in case of economic offences, which is having an impact on the society, the Court must be very slow in exercising the discretion under Section 438 of Cr.P.C. But on perusal of the factual matrix of the case on hand, prima facie, there is no material to come to the conclusion that the act of the petitioner is having impact on the financial status of the country as a whole and in that light the ratio laid down in P.Chidambaram [2019 (12) TMI 186 - SUPREME COURT] is not applicable to the facts of the present case.
The power under Section 438 of Cr.P.C. is an extraordinary power which was incorporated before other provisions for granting of bail under Section 437 and 439 of Cr.P.C. and judicial discretion is a matter regard and required to be exercised with due care and caution. Grant or refusal of bail is entirely discretionary and discretion should depend upon the facts and circumstances of each case. Certain parameters have to be kept in mind while considering or dealing with the application for anticipatory bail.
On perusal of the factual matrix on hand, the allegation leveled against the petitioner has to be considered and appreciated during the course of trial. The only consideration which has to be looked into for the purpose of granting or refusing bail is whether the accused would be readily available for trial and whether he is likely to abuse the discretion granted in his favour by tampering with evidence. If there is no prima facie case, there is no question of considering other circumstances. Even where a prima facie case is established, the approach of the Court in the matter of bail is not that the accused should be detained by way of punishment, but whether the presence of the accused would be readily available for trial or that he is likely to abuse the discretion granted in his favour.
Section 438 Cr.P.C. clearly stipulates in the beginning statement itself that when a person has a reasonable apprehension to believe that they can be arrested on an accusation for commitment of a non-bailable offence, they can move the High Court or the Court of Sessions for grant of an anticipatory bail. The approaching of the petitioner to the High Court has been discussed earlier and held that the petition for anticipatory bail filed before this Court is very well maintainable - The power to grant anticipatory bail must be exercised by the Court in very exceptional cases. The Court must be satisfied that there is a reasonable cause and a reasonable ground for grant of anticipatory bail. Section 438 Cr.P.C. protects the right to life and personal liberty of such persons by providing them with a remedy against frivolous detention. In a country where rifts and rivalries are common, its citizens should have a remedy which prevents disgracing their right to life and personal liberty.
When a person apprehends arrest and approaches a Court for anticipatory bail, his/her apprehension has to be based on concrete facts relatable to a specific or particular offence. Petition seeking anticipatory bail should contain clear and essential facts relating to the offence, and why the applicant reasonably apprehends his/her arrest, as well as his/her version of the facts - In the present case, the apprehension expressed by the petitioner is based on news item and the respondent also admitted that there was news item and they have initiated investigation under the Prevention of Money Laundering Act against the petitioner.
Since the news item appeared in the online news is pursuant to the CBI investigation, in which the petitioner has got anticipatory bail, now the apprehension stated by the petitioner is bona fide and as stated supra, the respondent themselves admitted that they have initiated investigation against the petitioner under the Prevention of Money Laundering Act. Thus, this Court is of the opinion that the apprehension of arrest by the respondent Directorate Enforcement is well founded and reasonable as the petitioner is a public person. This Court cannot lost sight of the fact that the news article had received wide publication/coverage in the media, both electronic and print. In the aforesaid facts and circumstances of the case, the interest of justice warrants grant of anticipatory bail to the petitioner in the investigation being conducted by the respondent under the Prevention of Money Laundering Act. Further, the petitioner is duty bound to co-operate with the investigation by the respondent at all stages.
The petition is allowed - the petitioner is granted anticipatory bail in connection with the respondent investigation.
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2020 (12) TMI 1128
Grant of Bail - Money laundering - fraud with home/flat buyers - siphoning off/diversion of funds - conspiracy and huge loss of public funds - HELD THAT:- But for the Supreme Court's intervention and undertaking painful and strenuous exercise to secure and protect the interest of innocent home/flat buyers, the fraud played by the accused-applicant and other accused in cheating and defrauding thousands innocent home/flat buyers of their hard earned money, could not have been unearthed - The Supreme Court is monitoring the investigation. The Supreme Court had been in pain to note the conduct of the accused-applicant and other accused. They had even violated the Supreme Court orders and did not comply the directions issued on several occasions. The forensic auditors appointed by the Supreme Court had meticulously flagged the fraud and cheating by the accused-applicant and other coaccused in creating bogus and sham companies and diversion of funds of the flat buyers money and creating assets etc.
PMLA is a special statute enacted by Parliament for dealing with money laundering. Section 5 of the Cr.P.C. clearly lays down that the provisions of Cr.P.C. will not affect any special statute or any local law. In other words, the provisions of the special statute will prevail over the general provisions of the Cr.P.C. in case of any conflict - The economic crime of such scale and magnitude are carefully and meticulously planned and executed. It is well settled that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. While granting bail, the court has to keep in mind the nature of accusations, magnitude and gravity of offence and nature of evidence in support of the accusations.
The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Section 44 of the PMLA confers jurisdiction on special court to deal with the offences under PMLA. Section 45 of the PMLA makes the offence of money laundering cognizable and nonbailable notwithstanding anything contained in Code of criminal Procedure, 1973. Money laundering is a serious economic offence and serious threat to the national economy and national interest and, these offences are committed with cool calculation with the motive of personal gain regardless of the consequences on the society.
The plea for bail is refused and the bail application is rejected.
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2020 (12) TMI 1103
Grant of Anticipatory Bail - Money Laundering - proceeds of crime - complainant/ officials of ED has made specific allegation that petitioner and his family members has acquired movable and immovable properties worth ₹ 80 lacs from the proceeds of crime of his father-in-law - HELD THAT:- The petitioner was married with Pooja Kumari in the month of June, 2014. Prior to the year 2014 the petitioner and his father have not produced any documentary evidence to show the acquisition of movable and immovable properties save and except ancestral property standing in the name of ancestor of the petitioner but after marriage of the petitioner with Pooja Kumari, daughter of Binay Yadav and Srimati Devi, the petitioner and his family acquired many buses, vehicles and immovable property. The petitioner also made attempt to file income tax return of the year 2015-16, 2016-17 and 2017-18 to legalize the proceeds of crime as his income but the facts show that petitioner got money from his mother-in-law either through his wife or through different persons in acquiring movable and immovable properties.
The petitioner does not deserve anticipatory bail - Application dismissed.
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2020 (12) TMI 1102
Grant of Bail - allegation that some loan was given by the Bank officials on the basis of forged and fictitious documents - it is evident that the applicant never misused the liberty given by the Directorate of Enforcement - HELD THAT:- Investigation was conducted by the investigating officer of Directorate of Enforcement for a period of about 8 years and it was obligatory on his part to discover all the facts and the evidence against the accused persons. In such circumstances, it is a fit case for bail. Let applicant -Rajendra Kumar Mishra be released on bail in the aforesaid Case Crime, on his furnishing personal bond of ₹ 10 lakh and two sureties each of the said amount to the court concerned subject to conditions imposed.
Application allowed.
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2020 (12) TMI 1098
Offence under PMLA - seeking bail - accused-applicant, who is Managing Director of Amrapali Group of Companies - investigation has been going on qua other accused and matter involves huge amount of ₹ 6,000/- Crores - HELD THAT:- The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. Money laundering is a serious economic offence and serious threat to the national economy and national interest and, these offences are committed with cool calculation with the motive of personal gain regardless of the consequences on the society.
Considering the order [2019 (7) TMI 1233 - SUPREME COURT] in which involvement of the accused in offence has been meticulously flagged, his conduct before the Supreme Court and, the fact that the investigation is still on and money trail has to be completely unearthed, it would not be appropriate to enlarge the accused on bail. Therefore, the plea for bail is refused and the bail application is rejected.
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2020 (12) TMI 1097
Seeking Interim restoration of the attached property for using the same for the purpose of marriage - Whether the property attached under Section 5 of PMLA and as confirmed under Section 8 of PMLA can be de-sealed/released on interim basis by the Appellate Tribunal during pendency of the proceedings?
HELD THAT:- A perusal of Section 3 of PMLA as well as explanation thereof shows that in case any person, directly or indirectly, has enjoyed the proceeds of crime by way of concealment or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner, said person is prohibited from enjoying the proceeds of the crime. As per the provisions of Section 5 of PMLA, the Director or any other officer not below the rank of Deputy Director, so authorised by him, is competent to provisionally attach the property. Thereafter, he shall take the possession of that property so attached under Section 5 of PMLA.
On perusal of the relevant record, it is apparent that the stand of respondent No.2 is contrary to the record while saying that no notice was ever issued to him, whereas respondent No.2 was issued as many as 17 notices in total w.e.f. 29.11.2011 to 14.02.2020 and he also filed as many as 10 replies to the notices. He was also issued summons, which are annexed as Annexures A-4 to A-29. It shows that respondent No.2 was well aware about the pendency of proceedings but still he did not opt to file any appeal before the Tribunal. The arguments raised by learned Senior counsel is also contrary to the record that there was no partition of the property, whereas in the affidavit dated 17.01.2005 filed by respondent No.1 before the Returning Officer during Assembly Election held in the year 2005, he himself had declared his share as 50% in the residential house constructed over the land bearing Khewat No.97/98/99 and 104 in village Teja Khera, Tehsil Dabwali, Distt. Sirsa, which has been provisionally attached vide order dated 13.04.2019 which was subsequently confirmed on 25.04.2019 by the Adjudicating Authority - there is no provision in PMLA as well as Rules 2013 which allows de-sealing/release of the attached property temporarily for the use of the accused persons. As per the order passed by this Court, both the parties were directed to appear before the Appellate Tribunal on 18.11.2020. The case was fixed only for appearance of the parties. The case should have been adjourned for any other date for arguments and for production of record but the impugned order was passed on that very day without going through the record and without giving opportunity of hearing to the parties as well.
The order passed by the Appellate Tribunal has been relied upon by learned counsel for the respondents, which is not binding upon this Court as the order passed by the Appellate Tribunal is under challenge before this Court. Accordingly, the same is misconceived - it is also apparent that only the provisions of PMLA and Rules 2013 have been mentioned/reproduced but there is no appreciation of the same. Meaning thereby, the impugned order dated 18.11.2020 is contrary to the provisions of PMLA and Rules 2013 as well as the observations made by this Court in the earlier writ petition. In spite of specific directions issued by this Court still stereotype order has been passed. Meaning thereby there is no compliance of the order passed by this Court. No reason, whatsoever, with regard to non-compliance of the specific provisions of the statute by the Enforcement Directorate has been made in the impugned order. There is no finding as to how, when and where there has been non-compliance or violation of the statutory procedural and mandatory provisions of law.
The impugned order is not only bad in law but contrary to the provisions of PMLA and Rules 2013. The Appellate Tribunal has not applied its judicious mind while passing the impugned order - Appeal allowed - decided in favor of appellant.
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2020 (12) TMI 1094
Jurisdiction - power of the Appellate Tribunal to pass an order, allowing the application for interim relief during the pendency of the appeal, such as restoration of the property for a specific purpose for a short period of time- Interim restoration of the attached property - residential house - Prayer was made for interim restoration of the property attached between 15.11.2020 to 30.11.2020 with additional 15 days time to prepare to be used and vacate the property before and after the function.
HELD THAT:- The only bar, if any, which has been projected by counsel for the respondent with reference to Section 8 of the Act, would step in only where the trial has commenced before the Special Court, which, in the present case, admittedly is not the position as till date no charges have been framed against the respondent. The said power of the Special Court, therefore, would not be applicable in any case at this stage, which again is an aspect to be looked into in an appropriate case - There is nothing which would bar the Appellate Tribunal from ordering de-sealing the attached property and that too for a limited period. It goes without saying that exercise of such power will obviously be a subject matter of adjudication depending upon the facts and circumstances where such discretion has been exercised by the Appellate Tribunal. This power, although is discretionary in nature, but the same is required to be based upon proper appreciation of the provisions of the statute and its applicability, which includes non-compliance thereof. This answers the basic issue with regard to jurisdiction of the Appellate Tribunal to pass an interim order or granting an interim relief for a short period of time and that too for a specific purpose.
Admittedly, the proceedings which have been initiated by the Enforcement Directorate, are against the respondent alone and the property in question is a joint property, of which one of the co-sharers is Abhay Singh Chautala, who is not a party to the present appeal - application for seeking interim restoration of the attached property has been allowed alongwith the application for the same relief by respondent-Om Prakash Chautala. As the appeal has been filed against Om Prakash Chautala, this Court is dealing with the appeal qua him only.
A perusal of the order passed by the Appellate Tribunal clearly indicates that the issue raised by the appellant in its reply to the application for grant of interim prayer has not been dealt with, especially with regard to the statutory provisions referred to and relied upon by the appellant. The Appellate Tribunal has simply said in the order that it had inherent powers to restore the property in case the possession of the property is taken without following due procedure of law. No reasons whatsoever with regard to the non-compliance of the specific provisions of the statute has been made in the impugned order.No reference has been made to the facts as to how, when and where there has been non-compliance or violation of the statutory procedural and mandatory provisions of law. This renders the order passed by the Appellate Tribunal unsustainable in law being cryptic, sketchy and non-speaking without any justification for passing such order. There appears to be non-application of mind, rendering the order liable to be set-aside.
The case is remanded to the Appellate Tribunal for fresh decision in accordance with law at an early date keeping in view the prayer of the respondent - Petition allowed by way of remand.
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2020 (12) TMI 1093
Grant of Anticipatory Bail - Money Laundering - proceeds of crime - allegation that the persons named Sarith, Swapna and Sundeep along with several other accused smuggled primary gold from abroad through diplomatic channel of UAE consulate - HELD THAT:- There is no specific provision in the Money Laundering Act dealing with granting of anticipatory bail. The act of money laundering has both civil and criminal repercussions which the offender may have to face. Apart from adjudication, the perpetrator of the crime will also have to face penal consequences. The provisions would indicate that authorities for the purpose of the Act who can take action for violation of the provisions in the Act are the Director, Additional Director, Deputy Director, Joint Director, Assistant Director and such other classes of officers as may be appointed for the purpose under Section 48 of the PMLA. The fact that very senior and experienced officers are empowered to act against the offenders of the PMLA itself would indicate the extent of caution and experience they have to deploy before implicating anyone as an accused or an offender.
Under the PMLA, the authorites under the Act are bound to carry out investigation by collecting evidence and for that purpose, they have been sufficiently empowered to summon persons or require them to produce evidence, records, statements and also carry out searches of properties and persons, and even properties can also be seized or attached. But, the fact that very senior officers are alone empowered to proceed in arresting an offender indicates that they would do so only on having sufficient grounds to arrest the person. If that be so, the fact is that the applicant has not yet been made an accused and that he is only required for the purpose of interrogation by the officers of ED and it will have to be concluded that the prayer for anticipatory bail made by the applicant is premature. Even though the applicant is intended to be made an accused on sufficient materials being collected against him, considering the gravity of the offences under the PMLA, the applicant definitely may not be entitled to the extraordinary relief of pre-arrest bail - this Court is not inclined to restrain the applicant from being arrested and the prayer for pre-arrest bail is also premature.
The application for anticipatory bail is dismissed.
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2020 (12) TMI 1019
Money Laundering - Attachment of properties - Agricultural Land - right of the appellants to the properties in question - SCN not issued to appellant - whether there is any violation of the provisions of law as enunciated in Prevention of Money Laundering Act (PMLA), 2002? - HELD THAT:- On perusal of the plain copies of the chain of documents, copy of the impugned order, reply made by the respondent it is prima facie that the appellants are the owners having interest in the properties in question as they had only made-over agreements to different persons for cultivation. A decision cannot be made on assumption & presumption that as the appellants have leased out the aforesaid properties for cultivation purposes for a long period amounts to lose of the ownership. It can only be decided by Competent Civil Court. Nothing has been submitted during the course of hearing that Shri P.K.M. Selvam or Shri S. Sankaranarayanan or the transferors of cultivation rights to these two persons have ever raised any dispute that the present appellants are not the owners of the aforesaid properties in question.
There is a clear violation of principle of natural justice. The appellants ought to have noticed by the respondent (ED) and Adjudicating Authority before deciding on attachment of the aforesaid properties - The Adjudicating Authority shall, in accordance with the provisions of sub-section(2) of Section 8 of the PMLA, 2002, record finding whether all or any of the properties mentioned above are involved in money laundering and pass appropriate orders in accordance with law.
Matter remanded to the Adjudicating Authority for re-adjudication of the case qua the appellants within 150 days from the date of receipt of this order or from the date of the order when either of the parties brings it to the knowledge of this order, before the Adjudicating Authority - appeal allowed by way of remand.
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2020 (12) TMI 816
Money Laundering - continuation of attachment order passed under PMLA Act - section 32A(2) of the IBC - HELD THAT:- Since in the present case there was no resolution plan covering the assets of the Corporate Debtor as attached by the ED vide Provisional Attachment Order ED cannot be precluded from proceeding against the assets of the Corporate Debtor in accordance with law, merely because the CIRP has been initiated against the accused/Corporate Debtor.
That, it is well settled law that the Legislature is presumed to know all existing laws as well as the needs of the society, while enacting a legislation. Therefore, it will be presumed that after considering all possible scenarios when the Ordinance has dealt with only one situation where the powers of ED under PMLA are being curtailed then it will be presumed in law that the powers of ED under PMLA qua all other situations remain untouched and are to be governed by the extant law under PMLA. Therefore, prior to approval of a resolution plan, the ED’s power to attach property under Section 5 cannot sought to be trammelled upon merely because CIRP process is underway or because moratorium has been imposed.
That, once the amended IBC has expressly laid down that only after the approval of a resolution plan under section 31 of the IBC, would the ED be precluded from proceeding against the assets of the Corporate Debtor for the commission of offences prior to the CIRP, it cannot be argued that merely because a moratorium period under section 14 of the IBC is active, the ED is precluded from proceeding against the assets of the Corporate Debtor. If the Applicant’s arguments are accepted, it would lead to whittling down the provision of section 32A as well as reading into section 32A which is not there.
Whether, after the appointment of the Liquidator, without hearing him any order could be passed in the appeal/application? - HELD THAT:- On being asked by this Tribunal as to whether the Liquidator appointed by the NCLT is a necessary party, it is replied by the learned counsel for the appellant that no relief has been sought against the Liquidator and that the present appellant/applicant is not going to sale the attached properties mortgaged with it, if released from attachment and that the present application has been filed only to decide the question of law raised in the application i.e. applicability of amended provisions as incorporated as Section 32A(2) in the I&BC by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 dated 13.03.2020 enforced with effect from 28.12.2019. The Liquidator has no role to play in deciding the present application and that liquidator is not a necessary party.
Admittedly, the Corporate Debtor is not made a party to the proceedings when the properties in the present proceedings are involved, so the Liquidator who has been appointed by the NCLT is necessary to be heard before passing any order. Not impleading the Liquidator as a party to the present proceeding to decide the present question of law is detrimental to the proper adjudication to the present application particulars when the question of law which has bearing on disposal of the appeal then all the necessary parties to be heard.
List the appeal on 26th February, 2021.
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2020 (12) TMI 703
Direction to the 2nd respondent to refrain from detaining the petitioner beyond reasonable time and to permit the presence of a legal practitioner during questioning - Summon order - Section 50 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- There are substantial force in the preliminary objection regarding maintainability raised by the learned ASG. Exhibit P11 summons is issued under Section 50(2) of the Act. A person issued with summons is bound to attend in person or through authorised agents, as the officer issuing the summons directs, and is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents as may be required. As held by the Apex Court in KIRIT SHRIMANKAR VERSUS UNION OF INDIA AND OTHERS [2014 (12) TMI 150 - SUPREME COURT], no cause of action arises merely for reason of a person being called upon to state the truth or to make statements and produce documents. The submission of the learned counsel for the petitioner cannot be accepted that the cause of action is based on the repeated summoning of the petitioner in spite of his illness, which gave rise to the reasonable apprehension that the petitioner will be forced to give statements against his will.
There are no basis for such apprehension inasmuch as the date for appearance was changed by the 2nd respondent on three occasions, acceding to the request made by the petitioner. Having commenced an investigation or proceeding, the 2nd respondent cannot be expected to wait indefinitely to suit the petitioner's convenience - As held by the Apex Court in DUKHISHYAM BENUPANI VERSUS ARUN KUMAR BAJORIA [1997 (11) TMI 428 - SUPREME COURT], it is not for this Court to monitor the investigation and to decide the venue, the timings, the questions and the manner of questioning.
Petition dismissed.
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2020 (12) TMI 640
Maintainability of Revision application - Grant of Police custody - Money Laundering - scheduled offences - Seeking extension of the custody of the accused-respondent No.2 with the applicant for a period of 10 days - investigation under section 156 (3) of the Code of Criminal Procedure - HELD THAT:- In view of the judgment in case Ambarish Rangeshahi Patnigere Vs. State of Maharashtra [2010 (7) TMI 1191 - BOMBAY HIGH COURT], the Single Judge of this Court has considered the aspect in respect of refusal by the Magistrate to consider the request for Police custody and has observed that the observations of the Apex Court in the case State represented by Inspector of Police and others Vs. of N.M.T Joy Immaculate, [2004 (5) TMI 573 - SUPREME COURT] would not apply to the facts of that case since the question which fell for consideration before the Apex Court in the said case was whether the order passed by the Magistrate granting Police custody for one day was an interlocutory order or not. Refusal to grant Police custody, therefore, became a final order since thereafter the State cannot file further application for grant of Police custody and in respect of the said subject matter the order has become final - Thus, in view of the ratio laid down by this Court, the revision application is maintainable.
Nexus of respondent No.2 as well as his knowledge and indulgence either directly or indirectly in the offence of money laundering as well as possessing or holding proceeds of crime - HELD THAT:- It appears that the learned Judge has taken a very casual and perfunctory approach by ignoring that it is not a simple crime but is so enormous and complex which requires a thorough probe and investigation by the Investigating Agency in view of the provisions of P.M.L Act. Merely because, the Investigating Officer could not answer the queries of the learned Judge does not ipso facto mean that the material collected and the statements recorded by the Investigating Agency are figments as there is no reason for the Enforcement Directorate to falsely implicate respondent No.2 when there is clinching material prima facie exhibiting nexus of respondent No.2 with the co-conspirators. Unless there is free, fair and full investigation of the crime of such a large and colossal magnitude, which could fructify only by a custodial investigation, the learned Judge ought to have applied his mind while considering prayer of extending custodial interrogation - It appears that the learned Judge pre-supposed that the complainant being an ex employee of the Tops Group has every reason to implicate the former employer. Such observations are uncalled for, unnecessary and without any basis. Thus, requirements of section 3 of P.M.L Act are precisely attracted from the aforesaid material placed on record. Prima facie, it appears that the proceeds of crime exchanged hands from M.M.R.D.A, Tops Group and respondent No.2.
Arrest of respondent No.2 - HELD THAT:- There is an endorsement in the handwriting of respondent No.2 which has been signed by him in acknowledgment of having been informed about the grounds of arrest on the same day. Not only that there is further endorsement by respondent No.2 that he had informed about his arrest to his lawyer Mr. Shoeb Memon whose mobile number has also been mentioned therein. Therefore, unless something contrary is produced on record, it has to be presumed and held that respondent No.2 was informed about the grounds of arrest and acknowledgment thereof. He has signed beneath the arrest order. If no such grounds were communicated to him, then it is clear that he would have made an endorsement to the effect that he has not received the grounds of arrest. Respondent No.2 is not an illiterate person in the sense that he is not a naive person.
The learned Additional Sessions Judge holding charge of the Holiday Court has not exercised his jurisdiction with due application of mind and approached to the matter in a very casual manner. I am mindful of the fact that liberty of an individual is of paramount importance. However, at the same time, balance needs to be struck between individual’s right as well as there should be no prejudice to the free, fair and full investigation. Material placed on record, prima facie indicates complicity and nexus of respondent No.2 in the alleged crime.
The impugned order is set aside - appeal allowed.
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2020 (12) TMI 639
Grant of Bail - Bribe - allegation that applicant was found in the possession of moveable and immoveable assets - money laundering - HELD THAT:- Trial of the case in relation to disproportionate asset is also pending. In the meantime, on 23rd March, 2010, proceeding under the provisions of PML Act was also initiated by registering a case in the office of Enforcement Directorate as ECIR/02/PMLA/LZ0/2010 and notice was issued to the applicant, reply of which was given by the applicant along with the details of the friends and relatives, who allegedly gifted the applicant the cash or ornaments etc. Thereafter, notices were also issued to the said persons.
Out of 31 members, 12 members appeared before the Enforcement Directorate and their statements were also recorded. It is also evident from the record that Ajay Raj Tripathi, who appeared on 13th March, 2014 before the authorities, categorically denied that any advance was given to the applicant. After investigation, evidence in relation to money laundering was also found against the applicant and the Proceed of Crime was found to be ₹ 1,38,63,445/-. Thereafter, provisional attachment order of property was passed on 30.09.2016, which was confirmed by the competent authority under Section 5 of the PML Act. After investigation, a complaint was filed on 31st March, 2017 before the Special Judge, which was registered as Complaint Case No. 8 of 2017 under Section 3/4 of PML Act. Summoning order was passed on 4th April, 2017, but since applicant failed to appear before the trial court, non-bailable warrant was issued on 17th March, 2018.
There are no case for bail is made out at this stage - bail application dismissed.
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