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Money Laundering - Case Laws
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2023 (3) TMI 1566
Seeking a direction by issuance of a writ in the nature of mandamus to respondents 2 and 3 to consider the representation - Recalling of a Look Out Circular (LOC) issued against the petitioner - HELD THAT:- It is deemed appropriate to notice the office memoranda issued by Government of India in the Ministry of Home Affairs from time to time. It would suffice for the journey to commence from the judgment of the Delhi High Court in the case of SUMER SINGH SALKAN v. ASSISTANT DIRECTOR AND OTHERS ILR [2010 (8) TMI 1083 - DELHI HIGH COURT] wherein it is observed that 'Since the matter pertaining to these offences is subjudice, it will not be appropriate to comment on this aspect but suffice it to say that the action against the petitioner of issuing RCN was uncalled for in view of the fact that neither offence, for which the petitioner is facing trial in India, is an extraditable offence, nor any request for extradition of the petitioner has been made for the last 7 years despite knowing whereabouts of the petitioner. I, therefore, consider it a fit case for quashing the RCN issued against the petitioner at the behest of Delhi Police. The RCN, is therefore, hereby quashed.'
The petitioner is issued summons on 26-11-2021 after his arrival and stay in India for more than three months by the ED for investigation or questioning in a criminal case registered against one Mr. Srikrishna, brother of the petitioner in Crime No.153 of 2020. On registration of the crime against several persons, the ED also registers an Enforcement Case Information Report in ECIR No.1 of 2021 which was registered on 04-01-2021. Therefore, there are two proceedings pending against the brother and father of the petitioner and several others in the predicate offence or under the provisions of the Prevention of Money Laundering Act, 2002.
An accused or any other person who is connected with the proceeds of crime, but may not be accused in the predicate offence, has a bounden duty to co-operate with the investigation. If the investigation does not get completed on account of his noncooperation which would result against others not being taken to logical conclusion, it would defeat the delivery of justice as it would defeat discovery of crime. Therefore, it is for the petitioner to give complete details and desist answering vaguely to the ED, explain as to why temporary mails were created for transactions and reveal the password that the ED is asking. Therefore, his travel beyond the shores of this nation will be subject to such clearance by the ED.
It cannot also be ignored by the ED that the petitioner cannot be kept on tenterhooks by the sword of LOC hanging on him for all time to come. The LOC is issued on 13.01.2022 and more than a year has passed by. The ED shall also bear in mind plethora of judgments rendered by constitutional Courts from time to time where emphasize is on the right to travel abroad being a fundamental right. A positive direction is not rendered in the peculiar facts of the case at hand - it is deemed appropriate to direct the Enforcement Directorate to complete the investigation insofar as the petitioner is concerned, within an outer limit of 6 weeks from the date of receipt copy of the order for which, the petitioner shall co-operate and give such information that is necessary for completion of such investigation. After 6 weeks’, the ED shall consider the representation of the petitioner for withdrawal of LOC issued against him.
Conclusion - The ED is directed to complete the investigation related to the petitioner within six weeks and to reconsider the LOC based on the petitioner's cooperation.
Petition disposed off.
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2023 (3) TMI 1509
Provisional attachment order - unsold units mortgaged to SBICAP - effect of attachment order on SBICAP's first charge over certain assets - intent to mitigate the debt servicing burden - HELD THAT:- There is no disputing the investment by SBICAP or SWAMIH or the creation of the security documents. There is no finding that the assets over which security has been created are proceeds of crime. What is sought to be equated is the value of the assets for recovery. But the Petition points out that this approach not only jeopardizes but possibly torpedoes the entire purpose of SWAMIH and for no discernible reason. The effect of this attachment under the impugned order is that banks and financial institutions have stopped lending to flat purchasers. This has a direct impact on the cash flow and the sales in the project.
That the Petitioner has a first ranking charge cannot be disputed. It is correctly said that this kind of an approach defeats the purpose of the establishment and formation of SWAMIH, the centrally funded project meant to assist desperate home buyers.
There is no involvement of any Mantri Group entity in this at all and it cannot transfer any interest in the attached units. No such transfer would be recognized or valid in law. The second charge, that of Piramal, continues and is for Rs. 650 crores. Now there is a hypothecation of the receivables in favour of the Petitioner and the Piramal Group. From where this theory is derived that the Mantri Group “might” transfer an interest is unclear; and it is only speculation The Mantri Group must have an interest to be able to transfer it. Absent that interest there is nothing for the Mantri Group to transfer.
There are no provision of the PMLA that has, combined with the non obstante clause, an overriding charge that would defeat, efface or render subservient the rights of a secured creditor. It is even unclear whether the attachment by the PMLA constitutes a sovereign debt in a case like this. Even if it did, it would not prevail over the rights of a secured creditor claiming security under a contract - It is no argument to say that the PMLA proceedings are in the public interest. Every statute is in the public interest. But is it being suggested that the SWAMIH fund is not in the public interest, despite all that is known? SBICAP is not even made a party to the PMLA proceedings.
There is no conceivable answer to the Petition. Apart from anything else, no amount of affidavits can supply reasons if these are not to be found in the impugned order itself.
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2023 (3) TMI 1497
Monay Laundering - schedule offence - challenge to criminal proceedings - required sanction under Section 19 of the Prevention of Corruption Act was obtained or not.
The learned counsel for the respondent did not dispute the fact that the case against the accused No. 1/petitioner No. 2 herein, which was a schedule offence under the Prevention of Money Laundering Act, was quashed by this Court in [2023 (2) TMI 1309 - KARNATAKA HIGH COURT] and therefore, in view of the judgment of the Hon'ble Apex Court in the case of Vijay Madanlal Choudhary, [2022 (7) TMI 1316 - SUPREME COURT], the proceedings under the Prevention of Money Laundering Act would not survive.
HELD THAT:- The prosecution of the petitioners/accused for the predicate offence under Section 3 punishable under Section 4 of the Prevention of Money Laundering Act, 2002 pending before the Principal City Civil and Sessions Judge, Bengaluru (CCH - 1) is quashed - Petition allowed.
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2023 (3) TMI 1493
Legality of bail order - Section 45 of the Prevention of Money Laundering Act - it is submitted that the High Court wrongly released both the respondents on bail without having regard to the gravity of the offence and without considering the restrictive provisions of Section 45 of the Prevention of Money Laundering Act - HELD THAT:- So far as the position of trial is concerned, the same is at the stage of framing of charges and investigation is complete.
As both the respondents in these petitions have been enlarged on bail four years back and further that they have already suffered about three years imprisonment in the predicate offences, we do not think any benefit would accrue to the investigating agency by taking them again in custody. In the event the prosecution finds that these two respondents are not cooperating in the trial, or there are any subsequent developments requiring their detention, the Enforcement Directorate shall be at liberty to apply for cancellation of bail before this Court.
Petition disposed off.
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2023 (3) TMI 1474
Grant of Anticipatory bail - Money Laundering - proceeds of crime - twin conditions as prescribed u/s 45 of the PMLA - HELD THAT:- The Hon’ble Supreme Court in THE ASST. DIRECTOR ENFORCEMENT DIRECTORATE VERSUS DR. V.C. MOHAN [2022 (1) TMI 511 - SUPREME COURT] has held that once the prayer for anticipatory bail is made in connection with offence under the PML Act, the underlying principles and rigors of Section 45 of the PMLA must get triggered-although the application is under Section 438 of the Code of Criminal Procedure.
Further, the three judge Bench of Apex CoVIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT] has held that twin conditions shall apply irrespective of the nature of proceedings i.e. regular bail or anticipatory bail.
The petitioner cannot be enlarged on anticipatory bail - prayer for anticipatory bail of the petitioner is hereby rejected.
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2023 (3) TMI 1453
Relevant days to calculate Default Bail - Whether the date of remand is to be included or excluded, for considering a claim for default bail, when computing the 60/90 day period as contemplated in proviso (a) of Section 167 (2) of the CrPC? - HELD THAT:- The purpose of the first proviso to Section 167(2) is to impress upon the police officers to expeditiously complete investigation within the prescribed period and prevent laxity. In default, the Magistrate shall release the accused on bail. This is subject to the restriction imposed in Section 436-A, providing for the maximum period for which, an under-trial prisoner may be detained. Chapter XXXVI provides for limitation for taking cognizance in certain offences. Section 468 imposes a bar on taking cognizance of an offence specified in sub-section (2) after the expiry of the period of limitation. Section 469 provides for commencement of period of limitation and it is to be noted that while setting out the date on which the period of limitation would have started, sub-section (2) states that in computing the period of limitation, the day from which such period is to be computed, shall be excluded. Barring the said provision contained in Section 468 and Section 436A, there is no limitation prescribed in completion of investigation and the investigation may continue except for the default-bail right which accrues to the accused on expiry of the 60th or 90th day, in terms of the first proviso to sub-section (2) of Section 167. Thus, the legislative intent providing for the 60/90 day statutory period- serves a twin purpose, firstly speedy trial of the accused which would transform him into a convict or his release on culmination of the trial and secondly, to assure speedy justice to the victim and to the society in general.
The law of binding precedent provides that the rule of per incuriam is an exception to the doctrine of judicial precedent. Quite literally, it provides that when a judgment is passed in ignorance of a relevant precedent or any other binding authority, the same is said to be postulating incorrect law. It becomes pertinent to resolve the conflict arising from diverging opinions by taking recourse to the ratio decidendi of the earliest opinion.
The 60/90 day limit is a statutory requirement which allows the State agencies to investigate serious offences beyond the 15-day police custody. In case the State fails to file chargesheet or supplementary request for remand within the stipulated 60/90 day period, a balance is needed between the rights of the individual and the restriction on those rights and prevent prolonged incarceration without legal support. The very instance, the statutory remand period ends, an indefeasible right to default bail accrues to the accused and same needs to be guarded - the right to default bail is not extinguished by the subsequent filing of the chargesheet, and the accused continues to have the right to default bail.
The accused herein were remanded on 14.05.2020 and as such, the chargesheet ought to have been filed on or before 12.07.2020 (i.e. the sixtieth day). But the same was filed, only on 13.07.2020 which was the 61st day of their custody. Therefore, the right to default bail accrued to the accused persons on 13.07.2020 at 12:00 AM, midnight, onwards. On that very day, the accused filed their default bail applications at 8:53 AM. The ED filed the chargesheet, later in the day, at 11:15 AM. Thus, the default bail Applications were filed well before the chargesheet.
In M. RAVINDRAN VERSUS THE INTELLIGENCE OFFICER, DIRECTORATE OF REVENUE INTELLIGENCE [2020 (10) TMI 1105 - SUPREME COURT] and BIKRAMJIT SINGH VERSUS THE STATE OF PUNJAB [2020 (10) TMI 1244 - SUPREME COURT], which followed the Constitution Bench in SANJAY DUTT VERSUS STATE THRU. C.B.I. BOMBAY [1994 (9) TMI 351 - SUPREME COURT] it was rightly held that if the accused persons avail their indefeasible right to default bail before the chargesheet/final report is filed, then such right would not stand frustrated or extinguished by any such subsequent filing - It is declared that the stipulated 60/90 day remand period under Section 167 CrPC ought to be computed from the date when a Magistrate authorizes remand. If the first day of remand is excluded, the remand period, as noticed will extend beyond the permitted 60/90 days’ period resulting in unauthorized detention beyond the period envisaged under Section 167 CrPC. In cases where the chargesheet/final report is filed on or after the 61st/91st day, the accused in our considered opinion would be entitled to default bail. In other words, the very moment the stipulated 60/90 day remand period expires, an indefeasible right to default bail accrues to the accused.
The impugned order of the High Court granting default bail to the respondents by applying the proviso (a) (ii) of Section 167(2) CrPC is found to be in order - Appeal dismissed.
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2023 (3) TMI 1422
Four High Courts listed for non compliances - compliance reports were filed before the Court but copy not given (regarding undertrial prisoners) - HELD THAT:- It is found that in some of the States there is a disproportionately large number of undertrial prisoners unable to comply with bail. The issue of Allahabad High Court has been flagged to the counsel. Other High Courts/States where the data stares us in face is of the Madras, Orissa and Gauhati High Court. We have to emphasize to the counsel for the Gauhati High Court and the Orissa High Court that possibly some special steps are necessary to tackle this problem and they assure us that the needful will be done. Insofar as the Madras High Court is concerned, none has even cared to attend the proceedings. Let the Registrar remain personally present in Court as even the arrangement for representation has not been made.
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2023 (3) TMI 1367
Money Laundering - proceeds of crime - scheduled offences - SCN issued to indicate the source of income out of which the provisionally attached properties were procured - provisional attachement of such properties - provisional attachment challenged on the ground that the same was passed without jurisdiction and in breach of Section 6 of the PMLA - it is contended that order confirming the provisional attachment was passed beyond the prescribed period of 180 days which is in breach of Section 5 of the PMLA.
Whether the scheme under the PMLA permits an Adjudicating Authority consisting of a single member? - HELD THAT:- It is trite law that a provision has to be interpreted in light of the entire scheme of the statute. The Court cannot read a provision in part or in isolation. Where the statute expressly provides jurisdiction to a quasi-judicial body consisting of one member to decide the issue, the Court cannot reach a conclusion or interpretation that such constitution with a single member having the requisite competence/eligibility is bad in law
A full bench of the Apex Court in Newtech Promoters & Developers (P) Ltd. v. State of U.P. [2021 (12) TMI 892 - SUPREME COURT] dealt with a similar issue as to whether the adjudicating authority therein under Section 81 of the Real Estate (Regulation and Development) Act, 2016 could have delegated its powers to a single member of such authority. The Petitioners therein contended that the Real Estate (Regulation and Development) Act, 2016 does not contemplate delegation of powers to hear complaints to a single member which ought to be heard by the authority consisting of two members - Similar to the present case, the Petitioners therein contended that such delegation of power to a single member is illegal and orders passed by such single member are without jurisdiction. The Apex Court negatived the contention of the Petitioners therein and held that where statutory mandate permits delegation of powers by a competent authority to a single member, such single member can exercise such delegated powers.
In the present case, a plain reading of Section 6 of the PMLA negates the contention of the Petitioners that Adjudicating Authority shall consist of a Chairperson and two members. The word ‘shall’ used in Section 6(2) is not mandatory. This Court agrees with the view expressed in the above decisions that constitution of Adjudicating Authority with one member is permissible under PMLA. Therefore, the issue is answered accordingly.
Whether a single member alone who has experience in the field of administration, finance or accountancy and no experience in the field of law can issue a show cause notice under Section 8(1) of the PMLA and pass orders confirming provisional attachment of properties under Section 8(3) of the PMLA? - HELD THAT:- The Apex Court in Shivji Nathubha v. Union of India [1960 (1) TMI 31 - SUPREME COURT] relying on a decision of a Constitution Bench consisting of six judges in Province of Bombay v. Khushaldas S. Advani [1950 (9) TMI 15 - SUPREME COURT] explained the distinction between an administrative act and a quasi-judicial act. The Court therein held that the act will be treated as quasi-judicial act if the body exercising power had legal authority, by exercising such power it should decide a lis between the parties and while exercising such power it should act judicially. The Court relied on Khushaldas S. Advani to hold that unless the statute provides otherwise, a body is under a duty to act judicially.
Further, the Apex Court in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala [1961 (4) TMI 23 - SUPREME COURT] discussed in detail the question as to what constitutes a quasi-judicial action. The Court therein held that actions of authorities will be treated as judicial functions if such an authority conducts proceedings by hearing parties and passes orders thereon and where a right to appeal is available against such orders. Further, the Court noted that where actions of quasi-judicial authorities have trappings of judicial functions, such actions will be treated as quasi-judicial actions.
Section 8 of the PMLA deals with adjudication by the Adjudicating Authority. Under Section 8 (1) of the PMLA, once a complaint is filed under Section 5(5) of the PMLA detailing the nature of offence and the properties involved, the Adjudicating Authority after satisfying itself that reasons to believe exist that a person has committed the offence of money laundering or he/she is in possession of proceeds of crime has to issue a show-cause notice to such person calling upon him to give details of such properties including sources of income involved in purchasing such properties and to show cause why such attachment of properties should not be confirmed - Section 8(2) of the PMLA provides that the Adjudicating Authority shall consider if any reply to such show cause notice is filed and hear the aggrieved person whose property is sought to be attached. Further, the Adjudicating Authority shall also consider all the relevant material placed on record. Upon such consideration of reply to the show cause notice, hearing the parties and other material placed on record, the Adjudicating Authority in its order shall record a finding whether the properties provisionally attached are involved in money laundering. If the Adjudicating Authority reaches a conclusion that the provisionally attached properties were involved in money laundering, it shall pass an order confirming such provisional attachment under Section 8(3) of the PMLA.
Whether the action of issuing a show cause notice under Section 8(1) of the PMLA by the Adjudicating Authority is quasi-judicial in nature? - HELD THAT:- The action of issuing show cause notice under Section 8(1) of the PMLA is quasi-judicial in nature. The Adjudicating Authority before issuing a show cause has to apply its mind to the material placed before it along with the complaint filed under Section 5(1) of the PMLA. It is only after such application of mind that the Adjudicating Authority can reach a conclusion that ‘reasons to believe’ exist regarding the commission of money laundering. The application of mind here involves a quasi-judicial function as the Adjudicating Authority has to come to conclusion and record its reasons that an offence of money laundering as defined under Section 3 of the PMLA was committed - An authority recording its subjective satisfaction after due application of mind performs a quasi-judicial function. An action involving interpretation of a statute and recording of reasons has trappings of judicial functions. Such actions are quasi-judicial and cannot be termed as administrative, more particularly when the requirement of issuing a show cause notice based on ‘reasons to believe’ was incorporated as a procedural safeguard.
Whether the action of passing an order confirming provisional attachment under Section 8(3) of the PMLA is quasi-judicial in nature? - HELD THAT:- Section 8 of the PMLA is titled ‘Adjudication’ which makes it evident that the actions of Adjudicating Authority under the said provision are adjudicatory in nature and the same are quasi-judicial functions - according to this Court, the action of issuing a show cause notice under Section 8(1) of the PMLA and passing an order confirming provisional attachment under Section 8(3) of the PMLA are quasi-judicial in nature as they have trappings of judicial functions.
Whether quasijudicial functions like issuance of show cause notice under Section 8(1) of the PMLA and passing an order confirming provisional attachment under Section 8(3) of the PMLA can be passed by an Adjudicating Authority consisting of a member having no experience in the field of law? - HELD THAT:- In L. Chandra Kumar [1997 (3) TMI 90 - SUPREME COURT], the Apex Court held that constitution of tribunals with members having no experience in law is permissible provided such members are experts in other fields and are paired with members having experience in law. In other words, tribunals shall comprise of members having technical expertise in the area which is sought to be regulated by law and members having experience in the field of law.
A tribunal or a quasi-judicial body like the Adjudicating Authority under PMLA performs adjudicatory functions. Therefore, such bodies shall be manned by members having necessary experience in the field of law. Such members shall be capable of interpreting law and applying it to various sets of facts that may arise before them. The said view that adjudicatory functions of tribunals can only be performed by members having experience in law is further fortified by the decisions discussed below.
In the present case, as the show cause notices and the orders confirming provisional attachment were passed by a member having no experience in the field of law, such show cause notices and orders are non-est and void in the eyes of law - a member having no experience in the field of law is ineligible to pass judicial orders.
This Court holds that issuance of show cause notice under Section 8(1) of the PMLA and passing an order under Section 8(3) of the PMLA confirming the provisional attachment of properties are quasi-judicial functions. Therefore, an Adjudicating Authority consisting of a single member cannot pass quasi-judicial orders, unless such single member has experience in the field of law. Any quasi-judicial function performed by a single member having experience in the field of finance, accountancy or administration is non-est and would be hit by coram non judice - In the present case, the show cause notice under Section 8(1) of the PMLA were issued and confirmation orders under Section 8(3) of the PMLA were passed by a single member having no experience in law. Therefore, the said show cause notices and confirmation orders are non-est and are liable to be set aside.
Whether the period from 15.03.2020 to 28.02.2022 which was excluded by the Apex Court in computation of limitation vide In re: Limitation [2022 (1) TMI 385 - SC ORDER] is applicable to orders confirming provisional attachment within 180 days? - HELD THAT:- Section 29A of the Arbitration & Conciliation Act, 1996 provides a time limit of 12 months within which an award has to be passed. By virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 12 months under Section 29A of the Arbitration & Conciliation Act, 1996. Similarly, Section 12A(3) of the Commercial Courts Act, 2015 provides an outer time period of three months within which pre-institution mediation shall be completed - In re: Limitation, 2022 [2022 (1) TMI 385 - SC ORDER] states that wherever a statute prescribes a maximum period within which proceedings have to be completed, the period from 15.03.2020 to 28.02.2022 shall be excluded to compute such maximum period.
It is true that the period of 180 days within which the provisional attachment order under Section 5(1) of the PMLA has to be confirmed is mandatory. However, in appropriate cases the High Court can exclude certain period while computing the period of 180 days - this Court in Karvy Realty (India) Ltd. v. The Adjudicating Authority [2022 (12) TMI 1198 - TELANGANA HIGH noting that the Petitioner therein did not have sufficient time to effectively reply to the show cause notice under Section 8(1) of the PMLA granted extra time of two months reply to the show cause notice. The Court therein directed that such extra time of two months shall be excluded to compute the period of 180 days.
The Calcutta High Court in Hiren Panchal [2022 (7) TMI 720 - CALCUTTA HIGH COURT] held that vide orders in In re: Limitation [2022 (1) TMI 385 - SC ORDER], the Apex Court extended the period of limitation to safeguard the right of litigants to institute proceedings. The Court held that computation of 180 days to confirm provisional attachment of properties under Section 8(3) of the PMLA cannot be equated to initiation/institution of proceedings. The Court also held that prescription of 180 days is in the form of a protection against deprivation of right to property.
It is true that provisional attachment of property has an effect of potentially depriving a person of his property. However, right to personal liberty and right to property stand on a different footing and cannot be equated. This is evident from the fact that the urgency in concluding proceedings dealing with a person in jail is much higher than a person whose property is provisionally attached. Further, under Section 5(4) of the PMLA, the person whose property is provisionally attached can still enjoy such property till the same is confiscated. Even in cases of confirmation of provisional attachment, a person can still enjoy such property till the same is confiscated.
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], the Apex Court held that provisionally attached properties which are confirmed can still be enjoyed by a party till a confiscation order is passed.
In the present case, Section 5(3) of the PMLA states that provisional attachment of properties will cease to have effect after a lapse of 180 days from the date of provisional attachment. That would mean that attachment proceedings shall terminate if the same are not confirmed within a period of 180 days. Therefore, while calculating/computing the 180 day period, the period from15 .03.2022 to 28.02.2022 shall be excluded - this Court holds that the decision in In re: Limitation [2022 (1) TMI 385 - SC ORDER] and subsequent extensions vide In re: Limitation 2022 [2022 (1) TMI 385 - SC ORDER] are applicable to PMLA proceedings to compute the period of 180 days. While computing such period, the period from15.03.2020 to 28.02.2022 shall be excluded.
Whether the Adjudicating Authority becomes functus officio after a lapse of 180 days from the date of passing of the provisional attachment order, if such provisional attachment is not confirmed under Section 8(3) of the PMLA? - HELD THAT:- The Calcutta High Court in Fairdeal Supplies [2021 (4) TMI 1221 - CALCUTTA HIGH COURT] held that Section 8 of the PMLA contemplates two stages. Section 8(2) of the PMLA involves adjudication by the Adjudicating Authority as to the question of whether the provisionally attached properties were involved in money laundering or not. Section 8(3) of the PMLA is a subsequent stage which comes into picture only if the Adjudicating Authority reaches a conclusion under Section 8(2) of the PMLA that the properties were involved in money laundering - The Calcutta High Court held that a conjoint reading of Section 5(3) of the PMLA and Section 8(3) of the PMLA indicates that the time limit of 180 days is only applicable to the stage of Section 8(3) of the PMLA and is not applicable to the stage of 8(2) of the PMLA.
Once the period of 180-day lapses, the provisional attachment of properties ceases to have effect. In such cases, the ED has to re-initiate the process of attachment under Section 5(1) of the PMLA by passing a fresh provisional attachment order by recording their reasons to believe. While issuing the said fresh attachment order, the ED shall again strictly follow the entire procedure as prescribed under Sections 5 & 8 of the PMLA and the relevant Rules thereunder - ED should record the reasons to believe before issuing the fresh provisional attachment order, forward such fresh provisional attachment order to the Adjudicating Authority and the Adjudicating Authority shall again satisfy itself that the properties were involved in money laundering and shall issue a fresh show-cause notice in relation to the fresh provisional attachment order, the parties shall again be given a right of hearing before passing orders under Sections 8(2) and 8(3) of the PMLA. Needless to say that after issuance of the fresh provisional attachment order, the confirmation shall be completed within a period of 180 days - thus, the Adjudicating Authority will become functus officio after a lapse of 180 days, if the provisional attachment of properties is not completed.
Petition allowed.
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2023 (3) TMI 1277
Money Laundering - siphoning off of funds - sham and bogus transaction for diverting money belonging to the homebuyers - Petitioner states that he, along with other homebuyers who had invested in the said project, have not been handed over their houses as assured by Respondent No. 5 - HELD THAT:- It is trite law that the Courts should monitor investigation only in rarest or rare cases and only when it is absolutely necessary.
In DUKHISHYAM BENUPANI VERSUS ARUN KUMAR BAJORIA [1997 (11) TMI 428 - SUPREME COURT], the Apex Court has held It is not the function of the court to monitor investigation processes so long as such investigation does not transgress any provision of law. It must be left to the investigating agency to decide the venue, the timings and the questions and the manner of putting such questions to persons involved in such offences. A blanket order fully insulating a person from arrest would make his interrogation a mere ritual.
This Court has carefully gone through the status report filed in the matter and the facts of the case remains that SFIO is investigating into the matter. All minute details have been filed in the status report - The facts further reveal that the status report of Directorate of Enforcement also reveals that the cases were registered under the PMLA and the investigation under the PMLA is going on. Therefore, this Court is of the considered opinion that Investigating Agencies are proceeding ahead with the matter to bring it to the logical conclusion.
This Court, in the interest of justice, is of the opinion that the Investigating Agencies deserve a command to conclude the investigation and bring it to a logical conclusion at an early date keeping in view the totality of the circumstances of the case and especially the fact that the investigation is already underway by different agencies, this Court is not inclined to pass any further order in the matter.
The Writ Petition is disposed of.
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2023 (3) TMI 1129
Provisional Attachment Order (PAO) - Permission to sell the immovable property - It is submitted that the subject property could not have been included as proceeds of crime by the Adjudicating Authority (PMLA) - HELD THAT:- It is observed that the challenge is to a PAO dated 2nd September, 2019 and the purpose of ensuring that the subject property is duly sold and the amounts are realized, has been achieved. Further, the Petitioner has a remedy under Section 8(2) first proviso of the PMLA Act, 2002 to approach the Adjudicating Authority (PMLA) and to establish that the subject property is not involved in money laundering.
The matter shall now proceed before the Adjudicating Authority under the provisions of PMLA Act, 2002 - Petitioner would be free to file an application before the Adjudicating Authority under Section 8 of the PMLA Act, 2002 and raise contentions that the subject property is not subject matter of any money laundering activities and was purchased much before the allegations were raised.
Petition disposed off.
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2023 (3) TMI 1073
Money laundering - case of the Petitioner is that it’s case has not even been considered by the Adjudicating Authority (PMLA) despite filing a detailed reply and explaining its position along with its documents and decisions relied upon - Adjudicating Authority (PMLA) is passing template cut-paste orders and the same has been demonstrated to the Court by the ld. Counsel for the Petitioner through a compilation of similar orders passed by the Adjudicating Authority - violation of principles of natural justice.
HELD THAT:- Use of identical templated paragraphs could reflect as non-application of mind by the Authority concerned and hence ought to be avoided. The Adjudicating Authority is cautioned about passing such templated orders.
It is the admitted position that the Appellate Tribunal (PMLA) is now constituted under the PMLA, 2002. The order under challenge is an Attachment Order which is appealable to the Appellate Tribunal (PMLA). Accordingly, the Petitioner is relegated to the Appellate Tribunal (PMLA) to avail of its appellate remedies before the same. The appeal of the Petitioner shall now be listed and taken up by the Appellate Tribunal, for adjudication in accordance with law.
Petition disposed off.
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2023 (3) TMI 1016
Seeking for grant of bail - It is alleged that certain incriminating documents were found in respect of misuse of unaccounted and illegal cash money, which was generated by the main accused Suryakant Tiwari, being brought into the mainstream public money through the Applicant - further case is that Applicant was in connivance with the main accused Suryakant Tiwari in the layering of the proceeds of crime illegally collected by Suryakant Tiwari - HELD THAT:- As regards the incriminating materials that have been collected during the course of investigation, what prima facie reflects is the purchase of two Coal Washeries by the Applicant from the group of Companies owned by Suryakant Tiwari and his associates.
What is also reflected from the materials available on record is the fact that the purchase made by Suryakant Tiwari of the two Coal Washeries at the first instance was for an amount of roughly Rs.90 Crores, of which cheque payments were made only for an amount of around Rs.34-35 Crores and the rest was cash dealing that was made. These two Coal Washeries, worth more than Rs.90 Crores, have subsequently been sold by the main accused Suryakant Tiwari to the Applicant for just around the same value of cheque transaction made by Suryakant Tiwari at the time of purchase of two Coal Washeries at the first instance. This by itself shows that the Applicant has got two Coal Washeries at a very cheap price.
The manner of transaction made between the Applicant and the Firms belonging to Suryakant Tiwari, the timing of the transaction, the sale consideration made by the Applicant in the process of purchase of the Coal Washeries from the Firms belonging to Suryakant Tiwari, all establishes the nexus between the Applicant and Suryakant Tiwari and their involvement in the predicate offence. Further, going into the entire materials available in the case records, there seems to be a serious nature of racket involving huge generation of hard cash illegally being collected.
Taking into consideration the fact that the offence is one under the Prevention of Money Laundering Act, in the opinion of this Court, it would not be justified at this juncture to grant bail to the Applicant - Bail application rejected.
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2023 (3) TMI 1015
Seeking grant of bail - possession of disproportionate assets - proceeds of crime had been generated in the form of cash and assets / immovable and movable properties - requirements of Section 45 (1) of PMLA - HELD THAT:- The bail application of the applicant has to be decided keeping in view the provision contained in Section 45 (1) of the PMLA.
From a narration, it transpires that the instant case has been lodged primarily with the allegation that the named co-accused Yadav Singh had committed corrupt practices while awarding certain engineering works and he has acquired disproportionate benami assets in the name of himself and his family members. The applicant happens to be the wife to Yadav Singh. The applicant is a woman and one of her kidneys has been removed and she is surviving with one kidney and she is suffering from anxiety, depression and panic attacks. The Proviso appended to Section 45 (1) of PMLA provides that a woman or a sick or infirm person may be released on bail.
The principal co-accused Yadav Singh has already been granted bail. whereas the applicant alone is languishing in jail for an offence which carries the maximum punishment of imprisonment for a period of seven years, alongwith fine - the aforesaid facts are sufficient for making out a case for enlargement of the applicant on bail in the aforesaid case.
This bail application stands allowed.
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2023 (3) TMI 894
Misuse of bank accounts - It has been alleged that by using the Photographs & documents submitted by the employee provided at the time of appointment, Raj Kumar Goenka and Ashok Kumar Goenka, fraudulently opened several Bank accounts in their name - HELD THAT:- This Court has gone through the facts and circumstance of the case as also the orders passed in case of the two accused persons namely Raj Kumar Goenka and Ratan Kumar Goenka and is of the belief that since both the aforesaid persons have been extended relief, although Raj Kumar Goenka had to take recourse to bail while Ratan Kumar Goenka succeeded before Hon’ble Apex Court, the case will continue and ultimately the accused persons including the petitioner herein will have to face the music, this Court is inclined to grant him the same relief with conditions.
Let the petitioner be released on bail, in the event of his arrest or surrender before the Sub-ordinate court within a period of four weeks from the receipt of this order, on furnishing bail bond of Rs.10,00,000/- each with two sureties of the like amount each in connection with Special Trial (PMLA) No.07 of 2020/PMLA SC No.07 of 2020 in ECIR No.PT20/01/2017 to the satisfaction of learned Sessions Judge/Special Judge, Patna, subject to the conditions as laid down under Section 438(2) of the Cr.P.C. - Application allowed.
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2023 (3) TMI 746
Seeking grant of bail - Money laundering - bank fraud - allegations are that Shakti Bhog Foods Limited (SBFL), where the Applicant was one of the directors, promoter and guarantor and had availed of various loan facilities from a consortium of banks led by State Bank of India from 2006 onwards, and in order to acquire more loan funds from Banks, the company resorted to round tripping and money laundering using its various group companies as platforms - role ascribed to the Applicant in the prosecution complaint is that the Applicant was a director, guarantor and promoter of SBFL - bail urged with regards to the proviso to section 45(1) PMLA that the Applicant is sick and infirm.
Whether the Applicant is “sick or infirm” in terms of the proviso under section 45(1) PMLA?
HELD THAT:- A purposive interpretation of the proviso to section 45(1) shows that it has been incorporated as a lenient provision or to afford ‘relaxation’ to a sick or infirm person as noted in the Statement of Objects and Reasons to PMLA - Proviso to Section 45(1) PMLA is analogous to the proviso to section 437 CrPC.
What is that level of sickness or infirmity that brings an Accused within the parameters of “sick or infirm” as envisaged in the proviso to section 45(1) PMLA? - HELD THAT:- When the sickness or infirmity is of such a nature that it is life-threatening and requires medical assistance that cannot be provided in penitentiary hospitals, then the accused should be granted bail under the proviso to section 45(1) PMLA - The Hon’ble Supreme Court in PAWAN @ TAMATAR VERSUS RAM PRAKASH PANDEY & ANR. [2002 (5) TMI 890 - SUPREME COURT] have noted that every sickness does not ipso facto entitle an accused to medical bail.
In the present case, the Applicant is not ‘sick’ to be granted bail under proviso to Section 45(1) PMLA. The ailments that the Applicant is suffering from are not grave or life threatening that entitle him to bail on medical grounds. Reliance placed upon the opinion of the medical board that has opined that the Applicant is ‘stable’ and can be treated in Tihar Jail Hospital - granting bail on every sickness will render the proviso to section 45(1) PMLA otiose. The proviso should only be invoked in cases where the sickness suffered by the Applicant is so serious and life endangering that it cannot be treated in jail, or the specialized treatment as required cannot be provided from jail hospitals.
In the instant case, it is evident from the medical board’s report that the condition of the Applicant is stable, he is not suffering from lifethreatening ailments and can recuperate with the medical facilities available in jail - the Applicant cannot be termed to be ‘sick’ to fall within the proviso to section 45(1) PMLA.
Once the Applicant falls in the exception clause of section 45(1) proviso, as in the present case by virtue being ‘infirm’, the Applicant need not satisfy the twin test of section 45(1) PMLA - In the present case, the Applicant has been in custody for over 18 months. Investigation qua the Applicant is complete but no chargesheet has been filed yet. The Applicant was released on interim bail for a period of one month and after expiry of the same, he surrendered and there is no allegation of misuse of liberty by him while on bail.
The Applicant is entitled to grant of bail, subject to conditions imposed.
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2023 (3) TMI 745
Grant of Anticipatory Bail - Money Laundering - scheduled offences - proceeds of crime - discharge of burden of prove - Hawala transactions - HELD THAT:- While rejecting the discharge application of the applicant, learned trial court has specifically observed that on the basis of prima facie investigation made by ED, it appears that the applicant is prima facie involved in Hawala ie., illegal transfer of money from nation to foreign countries. Prima facie there is sufficient material, which warrants this court to arrive at prima facie inferences that applicant is involved in such serious case wherein discretion is not required to be exercised. The learned trial court has further observed that as per Section 24 burden shifted upon the accused to show that proceeds of crime are untainted property and the applicant has prima facie miserably failed to discharge his burden under Section 24. It was further observed that there is serious allegations against the applicant so far as Hawala chapter is concerned wherein the Hawala entries via Dubai (UAE), crores of rupees have been credited in the accounts of wife of the applicant as well as his children in USA and the wife of the applicant was made partner in a firm to the extent of 30% by investment of only Rs. 1 lakh and getting crores of rupees from India as well as UAE.
It appears from the record that at this stage, on the basis of the charge sheet and documents produced with it, court should have to take decision. The defence taken and evidences produced by the accused should not be considered at this stage. At the present stage, it is to see that whether prima facie offence is there against the accused or not and evaluation of evidence produced by the accused and evaluation of the evidence should not be considered at this stage.
Considering the impugned order does not suffer from any illegality, irregularity or impropriety and present revision is liable to be dismissed and accordingly, stands rejected.
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2023 (3) TMI 744
Confiscation of property (on death of the accused) - accused had died before the trial could be held - Money Laundering - scheduled offences - criminal conspiracy - cheating - forgery of valuable security - forgery for the purpose of cheating - using as genuine, forged document - criminal misconduct - HELD THAT:- Prevention of Money Laundering Act, 2002 is a new Act and is in the process of growth and evolution by way of legislative amendments and Judicial pronouncements. The provision of attachment of crime proceeds in chapter III of the Act is many ways a leap forward in penal law to retrieve the loss caused to the victim, mostly public exchequer, by commission of the scheduled offence. Statement of objects and reasons of Money-Laundering (Amendment) Bill,2011 3 (d), provided to make provision for attachment and confiscation of proceeds of crime even if there was no conviction so long it was proved that money laundering had taken place and property in question was involved in money laundering. In cases involving large scale embezzlement of public fund, if after the death of the principal accused, crime proceeds are released in favour of his heirs and legal representatives, the very object of the Act will be defeated to a large extent.
In view of the express provision of confiscation in the event of death of the accused, the argument that there is a general presumption of innocence in favour of the accused and therefore death should be deemed to be acquitted is not tenable in view of the special provisions of the Act. Further, there is a reverse burden of proof against a person accused of an offence under Section 3 and unless the contrary is proved it shall be presumed that such proceeds of crime were involved in money laundering.
It has been held in Vijay Madan Lal Choudhary Vs. Union of India [[2022 (7) TMI 1316 - SUPREME COURT]] that the legal presumption in the context of Section 24(b) of the 2002 Act is attracted once the foundational fact of existence of proceeds of crime and the link of such person therewith in the process or activity is established by the prosecution. The stated legal presumption can be invoked in the proceeding before the Adjudicating Authority or the Court, as the case may be. The legal presumption is about the fact that the proceeds of crime are involved in money-laundering which, however, can be rebutted by the person by producing evidence within his personal knowledge.
Accused no.2 Dharamveer Bhadoria died on 2.5.2021 during the pendency of the trial before the special court for offences under PMLA Act. He was also an accused before the Special Court CBI, Ranchi in RC 20/2009. The learned court below has noted that sufficient opportunity was given by the adjudicating authority to discharge the burden of proof u/s 24 of PMLA which it failed to discharge. The present petitioner Naveen Singh S/o of B.P. Singh claiming to the Managing Director of M/s Nav Nirman Builders and Developers Pvt Ltd was a third party failed to provide legitimate source of income or the receipts derived by the company from various sources. Accused no.2 was the person principally dealing with and control of the affairs of the company - Admittedly the confiscated properties are not ‘proceeds of crime’ but are in lieu of the value of crime proceeds. Main contention of the petitioner is that the property in question was not acquired by the proceeds of crime, but was acquired by independent sources of the company.
With regard to the plea of the appeal being pending before appellate authority, this Court is in agreement with the position of law as enunciated in Deputy Director, Directorate of Enforcement Vs Axis Bank [[2019 (4) TMI 250 - DELHI HIGH COURT]] wherein it has been held that the jurisdiction to entertain objections to attachment conferred on the appellate tribunal on the one hand and, on the special court on the other may be co-ordinate to an extent.
The order of confiscation cannot be set aside merely on the ground that the accused had died before the trial could be held and the accused convicted of the charges. Whether there was merit in the plea for release of attached property is a question of fact which needs to be adjudicated by the Court concerned while hearing the petition under Sections 8(7) or 8(8).
This court does not find any infirmity in the impugned order - petition stands dismissed.
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2023 (3) TMI 743
Seeking grant of bail - Money Laundering - mass loot of public money deposited by innocent prospective home buyers and have laundered the said money - discharge of burden of proof - HELD THAT:- In the present case, undoubtedly, the present applicant was taken into custody on 11.10.2018 for the same allegations for which the E.D. has filed ECIR in question. However, EOW of Delhi Police has taken custody of the present applicant on 26.10.2019 and the E.D. has taken custody on 03.12.2019. Therefore, for all practical purposes the present applicant is in judicial custody for more than four years and four months and if the period of judicial custody, so taken by the E.D. is considered, it is more than three years and three months. Undisputedly, the maximum punishment for the offence wherein the trial is going on is seven year. Therefore, in both the situations the present applicant has served half of the sentence.
Since the learned counsel for the E.D. has been heard at good length and a some of Rs.28.95 crores have already been recovered from the applicant in furtherance of the proceed of crime and considering the statement that nothing remains to be recovered from him now, it is found appropriate that the present applicant may be enlarged on bail as rigour of Section 45 of PMLA are satisfied, particularly in view of the fact that the present applicant has already served more than half of the punishment, has not misused the liberty of interim bail granted by the Apex Court and there is no possibility or likelihood to conclude the trial with expedition inasmuch as there are total 150 prosecution witnesses and only two prosecution witnesses have been examined by now.
Let the present applicant (Shiv Priya) be released on bail in the aforesaid case crime number on his furnishing a personal bond of Rs.2,00,000/- with two sureties each in the like amount to the satisfaction of the court concerned with the conditions imposed - application allowed.
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2023 (3) TMI 645
Money Laundering - no scheduled offence - whether registration of a scheduled offence is a condition precedent for initiating ED proceeding? - HELD THAT:- Admittedly, the respondent No.1 – ED had registered the ECIR in question, pursuant to the registration of an FIR i.e. scheduled offence/predicate offence, which predicate offence now stands closed.
This Court in the case of State of Maharashtra v/s Bhimrao Vithal Jadhav, [[1974 (9) TMI 137 - BOMBAY HIGH COURT]] had observed that granting of ‘C’ Summary amounts to an acquittal. Similarly, in Vijay Madanlal Choudhary [[2022 (7) TMI 1316 - SUPREME COURT]], the Apex Court had observed that if a person is discharged or acquitted of a scheduled offence by a competent Court, there can be no offence of money laundering against him.
Admittedly there is no scheduled offence as against the petitioner in both the petitions, in view of the closure report filed by the police, which was accepted by the Courts. There being no predicate offence i.e. scheduled offence, the impugned ECIR registered by the respondent No.1 – ED will not survive and as such the said ECIR will have to be quashed and set aside.
Petition allowed.
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2023 (3) TMI 589
Money Laundering - proceeds of crime - Freezing of bank accounts of petitioner - case of petitioners is that the order under Section 17 (1-A), PMLA to freeze the Bank accounts, has not been passed, which order is a pre-condition to issue directions to the Bank - Seeking to furnish the balance held in the accounts maintained in those banks by the petitioner(s)/fixed deposits, with further request not to entertain debit transactions from the said accounts until further directions from the Office of the Enforcement Directorate - Power of Assistant Director to pass the order under Section 17 (1-A) being below the rank of the Deputy Director.
Whether, in the absence of any order to freeze the property (Bank Accounts), under Section 17 (1-A) of the PMLA, the action of the respondents in directing the Bank Respondent Nos.3 and 4, vide the impugned e-mails, not to entertain the debit transactions from the Bank accounts of the petitioners mentioned in the e-mails, is legally sustainable?
HELD THAT:- In OPTO Circuit India Limited [2021 (2) TMI 117 - SUPREME COURT], the Hon'ble Apex Court held that the pre-requisite, is that the Director or such authorised Officer in order to exercise the power under Section 17 of the PMLA should on the basis of information in his possession, have reason to believe that such person has committed acts related to money-laundering and there is need to cease any record or property found in the search and such belief of the Officer should be recorded in writing. Sub-section (1A) of Section 17 of the PMLA, provides that the Officer authorised under sub-section (1) may make an order to freeze such record or property where it is not practicable to seize such record or property, but it was clarified and emphasized that the freezing of the account will also require the same procedure since a bank account having proceeds of crime shall fall, both under the ambit of "property and records" - the Hon'ble Apex Court observed that in that case, except issuing the impugned communication dated 15.05.2020 to Anti-Money Laundering Officer to seek freezing, no other procedure contemplated in law was followed. Such impugned communication also did not even refer to the belief of the authorised Officer. It was held that though it was not the requirement that the communication addressed to the Bank should contain all the details but what was necessary was an order in the file recording the belief as provided under Section 17 (1) of the PMLA before the communication is issued and thereafter the requirements of Section 17 (2) of the PMLA, after the freezing was made, was required to be complied with.
In the present case, the basic facts to attract the applicability of the law laid down in OPTO Circuit India Limited (supra), are almost the same. The respondent No.2 herein issued the E-mail/communication to the respondent Nos.3 and 4 Banks, requesting not to entertain debit transactions hence forthwith from the accounts of the petitioners. The communication, though it is not required to mention all the details, containing the reasons for the belief of issuance of such direction to the Bank in the communication e-mails, does not mention about any order to freeze the account as per the procedure prescribed, on the record/file of the ED. The admitted case of the respondents taken in their counter affidavit is that any order under Section 17 (1-A) of PMLA has not been passed.
This Court is of the considered view that though there is power to direct freezing of the account or to issue the communications as has been issued in the present case to the Banks, under Section 5 or/and Section 17, but such power/direction which has the effect of freezing the property/bank account under Section 17 (1-A) is to be exercised as per the law by following the procedure prescribed. - It is settled in law by various pronouncements, and reiterated in OPTO Circuit India Limited, by the Hon'ble Apex Court, that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner alone and in no other manner.
The impugned E-mails cannot be sustained in law and are liable to be quashed.
As this Court found that the impugned E-mails deserve to be quashed on the ground of there being no order passed under Section 17 (1-A), this Court is of the view that there is no need to enter into the submission of the learned counsel for the petitioners that the Assistant Director, the respondent No.2, is not competent to pass the order under Section 17 (1-A) being below the rank of the Deputy Director, though prima facie, the Court is not in agreement, for, the use of the expression the “officer authorized” under sub-section (1) in Section 17 (1-A) in the phrase “the officer authorized under sub-section (1) may make an order to freeze such property”.
Considering the object of the PMLA which is to achieve preventing money laundering and bring the offenders to book as also at the same time to safeguard the rights of the persons who would be proceeded against under the PMLA by ensuring fairness in procedure, in the light of the facts of the present case, as brought on record from both the sides, but without making any observation on the merit of the correctness thereof or otherwise, that the amount in accounts of the petitioners with the respondent Banks is alleged to be “proceeds of crime”, while setting aside the impugned e-mails it would be in the interest of justice to prevent the alleged money laundering, to keep it open to the authorized officer of E.D under Section 17 of the PMLA to take necessary action, by proceeding in accordance with law and further, for a period of 15 days from today to restrain the petitioners with direction to the respondent Nos.3 to 4 Bank, that there shall be no debit transaction from the aforesaid accounts.
Petition allowed in part.
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