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Money Laundering - Case Laws
Showing 101 to 120 of 196 Records
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2021 (6) TMI 426 - PATNA HIGH COURT
Bank accounts were opened fraudulently - misuse of account without knowledge - shell companies where the cash deposits were transferred from the bank accounts of petitioner and other dummy accounts - HELD THAT:- No allegation of any fraud with State Exchequer or affecting any Govt. policy like demonetization. Neither any allegation nor any material to suggest that money was acquired by cheating anyone, by defrauding anyone, being ransom for kidnapping, proceeds of any dacoity, obtained from any corrupt practice or embezzlement of Govt. fund-sets. The only allegation is that its source was not disclosed in income tax before the cash was deposited in Muzaffarpur. The money belonged to the clients for accommodation entry; petitioner has admitted this fact in the statement given under Section 50 of PML Act.
The ED has not stated that the money was arranged or collected by commission of any Scheduled offence to become proceeds of crime. In the charge-sheet filed by the ED, it is stated that “because all the unaccounted cash has been deposited / placed into normal banking channels by use of this criminal modus operandi through the bank accounts opened through fraudulent means, thus, the same became proceeds of crime”. The ingredients of crime offence are based on fact and not an inference or interpretation - offences alleged, if proved, may jeopardize the economy of the country. At the same time, I could lose sight of the fact that the investigating agency has already completed the investigation agency has already completed investigation and the charge sheet has already been filed before the Special Judge, ED, Patna. Therefore, his presence in the custody may not be necessary for further investigation.
The petitioner is entitled to the grant of bail pending trial on stringent condition in order to ally the apprehension expressed by the ED - bail granted subject to conditions imposed - application allowed.
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2021 (6) TMI 424 - GUJARAT HIGH COURT
Seeking grant of Regular Bail - siphoning of funds - scheduled offences - bogus purchase invoices - Constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002 - two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act - HELD THAT:- Assuming that the twin conditions of section 45 of the PMLA Act still remain in the Statute Book, in that eventuality also the observations of the Supreme Court do not get obliterated. The Schedules attached to the PMLA Act still continue. The insertion of the words "under this Act" by deleting "offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule" only makes an ostensible change. The offence of money laundering as stipulated under section 3 of the PMLA Act stems out of the offences prescribed in the Schedules.
The defects which the Supreme Court in Nikesh Tarachandra Shah [2017 (11) TMI 1336 - SUPREME COURT] had pointed out while invalidating the existing law are not substantially removed by the amendment. The Supreme Court has asserted that, the twin conditions prescribed in Section 45 of the PMLA Act would have no nexus whatsoever with a bail application which concerns itself with the offence of money laundering, for if Section 45 of the PMLA Act is to apply, the Court does not apply its mind to whether the person prosecuted is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. It is observed that Section 45 of the PMLA Act is a drastic provision which affects the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India and turns on its head the presumption of innocence which is fundamental to a person accused of any offence.
Burden or proof on the person charged as envisaged in section 24 of PMLA Act - HELD THAT:- In the present case, the applicant is charged with scheduled offences as defined under section 2(u) of the Act. An F.I.R. is registered for the offence under Sections 465, 468, 471, 420, 120B of the IPC which are specified in Paragraph No. 2 of Part-A. The maximum punishment prescribed for the offences for which the applicant is charged is seven years. The applicant has been granted bail for the IPC offences on the condition of depositing ₹ 50,00,000/-.
The applicant is ordered to be released on regular bail - Application allowed.
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2021 (6) TMI 423 - KARNATAKA HIGH COURT
Provisional attachment order - seeking grant of interim relief - violation of the statutory provisions as contained in FEMA, 1999 - HELD THAT:- In the present case, the contentions canvassed before this Court can certainly be looked into by the Adjudicating Authority and the date has already been fixed by the Adjudicating Authority. The present appellant-Trust is certainly free to participate in the proceedings before the Adjudicating Authority.
Hence, in the considered opinion of this Court, keeping in view the totality of the circumstances of the case and as the matter is pending before the Adjudicating Authority, this Court does not find any reason to interfere with the order of the learned Single Judge as substantial relief has been granted by the learned Single Judge in permitting the operation of two bank accounts in order to cater the day-today need of the appellant-Trust - the present writ appeal is disposed of with a liberty to the appellant to argue all the grounds before the Adjudicating Authority.
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2021 (6) TMI 413 - CALCUTTA HIGH COURT
Jurisdiction - maintainability of appeal filed by Enforcement Directorate itself before Learned Tribunal - Money Laundering - scheduled offences - proceeds of crime - defalcation of ₹ 2672 Crores, involving 25 banks of which five were private ones - Section 26(1) of the PML Act - HELD THAT:- Section 26 is a provision enabling certain entities to file an appeal. In this, so far the Directorate is concerned, the Legislature thought it prudent to specify the Head of the Directorate i.e., the Director as the authority to initiate an appeal. This, however, cannot preclude the Enforcement Directorate itself from preferring an appeal if it decides to do so for some reason. In doing so, the Directorate may fairly be represented by any of its authorities, especially the ones who have been specifically mentioned in section 48 of the Act.
Had the appeal been filed by the Assistant Director in his own name instead of by the Director, then a question could have at all arisen about proper adherence to the provisions of section 26 of the Act in filing an appeal. But, when the Directorate itself files the same, whether through the Assistant Director or any other authority as mentioned in the Act itself, it is a substantial compliance of the said provision - Moreover, section 68 of the PML Act espouses a spirit of pragmatism and shuns thwarting actions taken under the said Act merely on the excuse of technicalities.
Whether the Enforcement Directorate could also invoke the locus of an 'aggrieved person' in filing an appeal under section 26 of the PML Act? - HELD THAT:- It is true that in the instant case, there is no interpretation clause present to qualify the inclusive definition. However, section 48 of the PML Act, as referred to above, squarely brings an aggrieved entity like the Enforcement Directorate within the ambit of a 'person' as described in section 2 (s) of the Act - the Enforcement Directorate should be competent to file an appeal under section 26 of the PML Act.
Thus, there is no bar on the Enforcement Directorate to file an appeal under section 26 of the PML Act, through the Assistant Director, before the learned Appellate Tribunal - appeal dismissed.
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2021 (6) TMI 405 - MADRAS HIGH COURT
Seeking permission to travel Singapore - Seeking to uplift Lookout Circular in F. No. ECIR/CEZO/I/01/2018 - overstaying in abroad during COVID-19 situation - non-cooperation in proceedings or not - HELD THAT:- The Special Court (PC Act), CBI-16, Rouse Avenue District Court, Delhi, passed the order dated 15.03.2021 permitting the petitioner to travel abroad from 16.03.2021 to 30.06.2021, by suspending the LOC till 30.06.2021, on the same terms and conditions that have been imposed in its earlier order dated 07.02.2020. The learned Senior Counsel for the petitioner as well as the Special Public Prosecutor for the second respondent submitted that similar conditions may be imposed for the present travel also by suspending the LOC issued by the second respondent till 30.06.2021.
This Court is of the view that without expressing any view on the other contentions raised by both parties, the petitioner shall be granted the relief sought for on the same terms and conditions. Accordingly, the LOC issued by the second respondent shall remain suspended till 30.06.2021, so as to enable the petitioner to travel abroad, namely, Singapore, Malaysia and United Kingdom, any day on and from 27.04.2021 till 30.06.2021 on compliance of conditions imposed.
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2021 (6) TMI 404 - MADRAS HIGH COURT
Seeking enlargement on Bail - Money Laundering - transfer of money outside the country without making any import - the amount parked outside India - tampering of evidence is possible - HELD THAT:- Considering the serious nature of the offence, this Court declines to grant bail.
Petition dismissed.
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2021 (6) TMI 403 - GUJARAT HIGH COURT
Money Laundering - issuance of non-bailable warrant - HELD THAT:- The learned Designated Judge was pleased to register a complaint under Sections 3 and 4 of the PMLA Act and was pleased to issue summon against respondent no. 1-M/s. Sanket Media Private Limited (represented by the Directors-Shri PVS Sharma) and accused no. 2-Shri PVS Sarma who is in judicial custody and further, ordered to issue non-bailable warrant against accused nos. 3 and 4.
It appears that before passing the order of issuance of non-bailable warrant against accused nos. 3 and 4, the Court should direct serving of the summons along with the copy of the complaint. If the accused seem to be avoiding the summons, the Court, in the second instance, should issue bailable-warrant. In the third instance, when the Court is fully satisfied that the accused is avoiding the Court proceedings intentionally, the process of issuance of the non-bailable warrant should be resorted to.
In the order passed by the learned Designated Judge dated 21.01.2021 below Exh. 1 in PMLA Case No. 1 of 2021 in ECIR Number ECIR/01/STSZO/2020, non-bailable warrant against accused nos. 3 and 4 would be converted into bailable warrant against accused nos. 3 and 4. Rest of the order passed by the Court-below would remain as it is - Application disposed off.
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2021 (6) TMI 217 - CHHATTISGARH HIGH COURT
Validity of second Bail application - seeking grant of regular bail - scheduled offences - preparation of forged documents and records by In-charge Executive Engineer, Water Resources Division – Bilaspur - HELD THAT:- The Supreme Court in the matter of ROHIT TANDON VERSUS THE ENFORCEMENT DIRECTORATE [2017 (11) TMI 779 - SUPREME COURT] has held that economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.
The first bail application of the applicant was rejected by this Court on 03.01.2020 taking into consideration the gravity of offence and the nature of allegation against the applicant. After dismissal of first bail application, there are no change in circumstances - the second application filed under Section 439 of the Code of Criminal Procedure is rejected.
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2021 (6) TMI 178 - CHHATTISGARH HIGH COURT
Grant of regular bail - Money Laundering - reverse burden of proof on the accused under Section 24 of the PML Act - allegation against this applicant is of very serious nature that the applicant being an IAS officer, misused his position and power and made unlawful gain - HELD THAT:- On the basis of the report of Adjudicating Authority dated 27.06.2018 in which, it has been held that the properties of M/s Prime Ispat Ltd., which has been attached by the PAO, is not involved in the money laundering. It is the submission of the respondent side, that this report is under challenge before the Appellate Authority, but for the present, there is no order of the Appellate Authority, setting aside or varying the report of the Adjudicating Authority.
Under the present scenario, the applicant has the report of Adjudicating Authority in his favour, which has not been varied or set aside by the Appellate Authority so far. There is no specific report present to show that the applicant has tampered with the investigation or made any manipulation during pendency of investigation/ enquiry since year 2010. There is no reason to hold that the applicant may abscond in case, he is granted bail. The maximum punishment, which can be imposed is upto seven years. The applicant is in judicial custody since 09.11.2020 therefore, this appears to be no further requirement of his detention for custodial interrogation or for any other purpose of investigation.
It would be proper to grant bail to the applicant at this stage - Bail application allowed.
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2021 (5) TMI 1070 - KARNATAKA HIGH COURT
Constitutional Validity - whether Sub-section (4) of Section 8 of the Prevention of Money Laundering Act, 2002 (PMLA) is intravires the Constitution of India for the purpose of initiating proceedings under Section 3 of the PMLA, or not?
HELD THAT:- The Co-ordinate Bench of this Court in SRI M.B. VIKRAM VERSUS DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT, BANGALORE [2021 (2) TMI 1355 - KARNATAKA HIGH COURT] having already refused to interfere in the matter and having permitted the appellants therein to agitate all their contentions before the Appellate Tribunal, it is opined that the same would be applicable to the present proceedings. Hence, it is deemed appropriate to dispose of the appeals by relegating the appellants to the Appellate Tribunal reserving liberty to press for interim/protective orders pending disposal of the appeal by the Appellate Tribunal.
Pending disposal of the appeal to be filed by the appellants and consideration of any interlocutory application to be filed by the appellants, the respondents are restrained from taking any precipitative action against the appellants.
Appeal disposed off.
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2021 (5) TMI 1065 - CALCUTTA HIGH COURT
Money Laundering - Seeking grant of bail - the case is that the E.D. has chased several Bank Accounts which have been used by the petitioner to divert property under PMLA 2002 - habitual offenders or not - HELD THAT:- If the special provisions of the PMLA, including Section 45 thereof, are seen as having been diluted or struck down as being unconstitutional by the Supreme Court, this Court must take recourse to Section 439 of the Cr. P.C. for the purposes of the present application. The contention of the Enforcement Directorate that the petitioner is a habitual offender or is likely to tamper with evidence or influence witnesses is not apparent from the records and can only be presumed if the petitioner had committed the same/similar offence after being released from custody or detention. The other relevant consideration is that despite today being the 56th day of the 60-day timeframe under Section 167 (2) of the Cr.P.C., the Enforcement Directorate has not filed any complaint against the petitioner since the time of his arrest on 9th March, 2021.
This court is of the view that the petitioner should not further be kept in custody. The petitioner shall accordingly be released on bail upon furnishing a bond of Rs.20,000/- with two sureties of like amount each, one of whom must be a local resident to the satisfaction of the learned Judge of the Special Court, under the PMLA. Since an apprehension has been expressed by the E.D. that the petitioner may abscond upon release, the petitioner will deposit his passport with the learned Judge of the Special Court. Since the petitioner lives in Hyderabad, Telangana, the petitioner shall deposit his passport within four days from the date of this order. The petitioner will be at liberty to apply for return of his passport from the appropriate forum in fit circumstances.
Bail application disposed off.
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2021 (5) TMI 1014 - BOMBAY HIGH COURT
Seeking grant of Bail - bail sought on medical grounds - HELD THAT:- The Court observed that, there is surge in case of covid-19 and situation is looking grim. Even if respondent No.1 is sent to hospital for test, or otherwise it would be harmful to life due to covid-19. Special Care and medication is required.
The report dated 12th April, 2021 submitted to this Court mention that endocrinology department is not in J. J. Hospital. Due to circumstances as reproduced, the said test is not yet conducted. The applicant is now suffering from covid-19. The above report of J. J. Hospital (General Medicine) mentions that patient is presented with anxiety episodes, abdominal pain, loose stools and rectal bleeding - In the light of factual analysis, the applicant can be granted temporary bail to undergo tests and instant treatment if required. The Special Court, however granted permanent bail on medical grounds. On the basis of material on record, no case for granting permanent bail was made out.
The order granting bail to the respondent No. 1 has been kept in abeyance - temporary bail for a period of two months can be granted to respondent No.1 - bail application allowed in part.
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2021 (5) TMI 999 - RAJASTHAN HIGH COURT
Provisional attachment of Bank Accounts - jurisdiction of proceedings initiated against the petitioner - heavy cost for the harassment caused to petitioner -HELD THAT:- This court notices that the petitioner has preferred the present writ petition in 2017 which was originally placed before the Division Bench wherein the order in RAMESHWAR SHARMA VERSUS UNION OF INDIA AND ORS [2017 (9) TMI 1953 - RAJASTHAN HIGH COURT] was passed on 20.09.2017.
The prayer clause of the writ petition shows that the petitioner had prayed for quashing of the order which his bank account was free zed and secondly he has also prayed to declare the proceedings initiated against the petitioner as without jurisdiction and ultra wires of the Act of 2002 - While passing the order on 20.09.2017, the Division Bench noticed that the saving account had already been seized and so far as apprehension of coercive steps are concerned the petitioner was left free to move appropriate application subsequently.
The preliminary objection raised by the respondent regarding maintainability of the second stay application that it goes beyond the scope of the writ petition, is found to be without basis. The petitioner has by way of the second stay application prayed in the proceedings which have now been initiated from the proceedings arising out if the ECSI case No.2040 for which the writ petition is pending before this Court, in view thereof, this Court would not oust the petitioner’s second stay application - With regard to the new submission of learned Additional Solicitor General with regard to the two parallel remedies this court finds that presenting oneself before the Adjudicating Authority which is department itself, cannot be said to be an alternate remedy available to an individual.
The contention of learned ASG is that the respondents have no knowledge about the contents of the case filed by Anil Kumar Gadodia or of the order passed by the Supreme Court way back on 06.05.2021 cannot be accepted to be correct and truthful - Since the petitioner as well as Anil Kumar Gadodia are commonly arrayed as defendants in the complaint filed under Section 5 (5)of the Prevention of Money Laundering Act, 2002. I would respectfully follow the order passed by the Supreme Court in Anil Kumar Gadodia’s case and restrain the respondent/s from taking any coercive steps against the petitioner in the meanwhile as directed by the Supreme Court.
The writ petition of Anil Kumar Gadodia has been directed to be listed before the Supreme Court on 19.07.2021, list this case thereafter on 26.07.2021.
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2021 (5) TMI 981 - DELHI HIGH COURT
Money Laundering - freezing of petitioner’s bank account - It is the petitioner’s case that the impugned order had been passed without providing it with a copy of the show-cause notice or an opportunity to place on record its objections thereto - HELD THAT:- In order to avoid any further controversy in this matter, it would be in the interest of justice to grant an opportunity to the petitioner to respond to the Show-Cause Notice.
The petitioner is granted 10 days’ time to respond to the Show-Cause Notice dated 08.10.2020. The Adjudicating Authority will thereafter pass a fresh order in accordance with law, after duly considering the petitioner’s response to the show cause notice - Petition allowed.
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2021 (5) TMI 977 - DELHI HIGH COURT
Hawala transaction - proceeds of crime - Scheduled offences - Section 44 of PMLA - HELD THAT:- Keeping in mind the health of the petitioner and also the fact that the petitioner is in custody since 15.01.2021, this Court is inclined to grant interim bail to the petitioner for 30 days from the date of his release on the conditions imposed - application allowed.
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2021 (5) TMI 530 - DELHI HIGH COURT
Jurisdiction - power of Special Courts constituted under Section 43 of the PMLA to try an offence punishable under the PC Act - HELD THAT:- Both, the PC Act as well as PMLA, are in one sense special enactments. The PC Act was enacted to consolidate and amend the law related to prevention of corruption and for all matters connected therewith. It specifies the offences as well as the penalties that can be imposed. The PC Act also contains special provisions with regard to investigation of cases under the PC Act as well as contains provisions regarding the procedure to be followed. In terms of Section 22 of the PC Act, the Cr.PC would be applicable subject to the modifications as specified therein - The principle that a special act overrides a general act is not applicable in the present case. PC Act and PMLA are both special statutes in their own fields. Both relate to different offences and none of the two enactments can be considered as general or special in relation to the other. Thus, the question whether the provisions of Section 44(1)(a) and Section 44(1)(c) of the PMLA have to be given effect to despite being repugnant to Section 4(1) of the PC Act must be considered keeping in view other principles.
The purpose and objective of including provisions to ensure that the Special Courts under the PMLA also have the jurisdiction to try scheduled offences is obvious when one examines the nature of the offence of money laundering. The said offence is described in Section 3 of the PMLA, which provides that whoever directly or indirectly attempts to indulge or knowingly assists or is otherwise party in any process or “activity connected with proceeds of crime” including its concealment, possession, acquisition or use and projecting or claiming it as an untainted property, shall be guilty of committing an offence of money laundering.
It is not necessary that persons accused of committing an offence of money laundering be also accused of committing the predicate scheduled offence. Nonetheless, the said accused cannot be convicted of committing an offence of money laundering unless the existence of a scheduled offence is established. In cases where the allegation of commission of an offence of money laundering against a person is founded on the allegation that he had committed a scheduled offence; it would follow that he cannot be convicted of an offence of money laundering, unless it is established that he is guilty of committing the predicate scheduled offence. The link between the offence of money laundering and the predicate scheduled offence is inextricable. In such circumstances, it stands to reason that in a given case, it would be expedient if the same Court tries the scheduled offence as well as the offence for money laundering in the interest of consistency and to avoid any possible conflict of opinion.
The contention that cases relating to scheduled offences punishable under the PC Act (as specified in Paragraph 8 of Part A of the Schedule to the PMLA) cannot be tried by the Special Courts designated under the PMLA, which are trying the interlinked offence punishable under Section 4 of the PMLA, for want of jurisdiction to do so, cannot be accepted - there is no ambiguity in the language of Section 44(1)(c) of the PMLA. The concerned court, which is trying the scheduled offence, is required to transfer the same to the Special Court designated under the PMLA, on an application moved by the authority, authorised to make a complaint under the PMLA. This is provided that the said Special Court has taken cognizance of the offence punishable under the PMLA.
This Court finds no infirmity with the impugned order - petition dismissed.
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2021 (5) TMI 269 - SESSIONS COURT, GURUGRAM
Seeking grant of anticipatory bail - Commission of offences punishable under section-420 IPC and section-10 of the Haryana Development and Regulation of Urban Areas Act, 1975 - violating the terms & conditions of the licence granted for the development of a colony - HELD THAT:- Grant of anticipatory bail at this stage of investigation is likely to frustrate the right of investigating agency to interrogate the accused and collect the useful information as well as material which might have been concealed - success in such interrogation would elude if the accused knows that he is protected by the order of the Court and therefore, hold that with regard to the instant offence which comes within the category of economic offence the very purpose of the investigation will stand materially hampered.
Taking into consideration the entire facts and scenario and without commenting anything on the merits of the case irrespective of the quantum of financial loss which has been caused to the State Exchequer, the overall act and conduct of the applicant/accused leads this Court to a definite conclusion that affording the benefit of anticipatory bail will deny the investigating agency a fair right to investigate the case properly by effectively interrogating the accused and this denial will scuttle the investigation. Therefore, hold that the applicant/accused is not entitled for the benefit of anticipatory bail and his request for anticipatory bail deserves to be declined.
Hence, the instant application for anticipatory bail is hereby dismissed. However, any observation recorded in this order shall not be treated as an expression of opinion on the merits of the case. File be consigned to the record room after due compliance.
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2021 (5) TMI 264 - DELHI HIGH COURT
Attachment of property under PMLA - Hospitality sector - Seeking permission for extra finance under the Emergency Credit Line Guarantee Scheme (‘ECLGS’) due to covid pandemic - HELD THAT:- A perusal of the valuation report of the property, which is confirmed by the Yes Bank, shows that the total value attributed to the property is to the tune of ₹ 342.40 crores, and the realisable value of the said property is ₹ 325.20 crores. The valuation report has been given by the CBRE, which is a valuation & advisory services agency, and the said report has also been placed on record - Considering the fact that the Yes Bank’s valuation of the property is to the tune of ₹ 342.40 crores which is accepted by the bank and the bank has approved the loan, and the attachment by the ED is to the tune of ₹ 120,20,46,000/- crores, this Court grants permission to availing of the loan under the ECLGS scheme.
While maintaining the ED’s attachment order to the tune of ₹ 120,20,46,000/- crores, and safeguarding the ED’s rights in respect of the said attachment, permission is granted to the Petitioner to avail of the loan to the tune of ₹ 25 crores under the ECLGS scheme, by creating a second charge in respect of the subject property- Holiday INN, which is situated at Asset Area 12, Aero-city, Delhi International Airport, New Delhi- 110037 - Petition disposed off.
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2021 (5) TMI 219 - KARNATAKA HIGH COURT
Offence under PMLA - Former Minister in the Government of Karnataka and his relatives and others - Prevention of Corruption Act, 1988 - Correctness and legality of the proceedings initiated against them under sections 3, 4 and 8(5) of the Prevention of Money Laundering Act, 2002 - predicate offence or not - proceeds of crime - Attachment/confiscation of properties - offences which are alleged to have been committed prior to 01.06.2009 - HELD THAT:- Petitioners appear to have put forward the plea of post facto law on the premise that the acts constituting the offences alleged against them were perpetrated prior to the amendment of the schedule to the PML Act and therefore, the action initiated against them falls within the mischief of Article 20(1) of the Constitution of India. This contention, in the factual setting of the case, is totally misplaced and misconceived and appears to have been canvassed by misconstruing the provisions of sections 3, 2(1)(u) and the Schedule appended to the PML Act. No-doubt, it is true that the Schedule to the PML Act was amended by Act 21 of 2009 and the various offences specified therein came to be included therein with effect from 1.06.2009. Nonetheless, in the instant cases, as on the date of initiation of action against petitioners, be it under section 3 or under section 5 of the PML Act, these provisions were very much there in the statute book.
The Schedule to the PML Act of 2002 was amended by Act 21 of 2009 and section 13 of the Prevention of Corruption Act namely ‘criminal misconduct by a public servant’ and sections 419, 420, 465, 468, 471, 120B of IPC came to be inserted in the schedule with effect from 01.06.2009. As a result, as on the date of initiation of the proceedings against the petitioners, the above offences were already included in the Schedule. But the thrust of the arguments of the learned Counsel for the petitioners is that the ‘proceeds of crime’ as defined under section 2(1)(u) of the PML Act is referable to the offences specified in the Schedule and since section 13 of the PC Act and the offences under IPC (predicate offences) came to be inserted in the Schedule by way of amendment only on 01.06.2009, the petitioners cannot be prosecuted for the acts and events that had taken place earlier to the insertion of those offences as it would take away the protection granted to the petitioners under Article 20(1) of the Constitution of India.
From the plain reading of section 3 read with section 2(1)(u) of the PML Act, it is clear that what is made punishable under section 3 is the activity connected with the proceeds of crime either by getting oneself involved in the process or activity connected thereto or directly or indirectly attempting to indulge or knowingly assist or knowingly be a party to the alleged activities and projecting it as untainted property, whereas the components of the offences under section 13 of the PC Act and Sections 120B, 419, 420 and other IPC offences are entirely different. The prosecution under section 3 of the PML Act, by no stretch of imagination, could be equated with the prosecution under section 13 of the PC Act or other offences specified in the Schedule namely IPC or other laws. They are distinct and separate offences. Prosecution under section 3 of PML Act is not based on the outcome of the trial of the offenders under section 13 of the PC Act.
No subject has an inviolable right to enjoy the wealth acquired by him by illegitimate means, the legitimate source of which cannot be explained by him. That being the object and purpose sought to be effectuated by section 5 and 8 of the PML Act and a well oiled machinery having been provided with all safeguards to protect the right and interest of the offender as well as those who are not parties to the predicate offence, there is absolutely no basis for the petitioners to seek quashment of the attachment and consequent confiscation proceedings initiated against them on the purported plea that the same is violative of Article 20(1) of the Constitution of India - No legal right having been accrued in favour of the petitioners to hold on or to enjoy the proceeds of crime, the source of which cannot be explained by them, the argument of the learned counsel for the petitioners that the attachment proceedings initiated against them are unjust and bad in law is without any substance.
Petition dismissed.
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2021 (5) TMI 189 - KARNATAKA HIGH COURT
Money laundering - proceeds of crime - huge difference between the said cash deposit and the income of the petitioner - creation of benami Funds - shell companies - Validity of arrest of petitioner - Guilt standard - charge against the arrested person for having committed the predicate offence.
Whether in terms of Section 19 of PMLA, the Investigating Officer or the Arresting Officer is required to inform the grounds of arrest to the person being arrested, if so, is it oral information or does it have to be in writing? - HELD THAT:- The term 'Arrest' has not been defined under the Cr.P.C. or under the IPC, nor for that matter has it been defined under the PMLA. Arrest, as generally understood, is to restrain to stay, and in relation to a person connected to an offence or suspected to be connected to offence, an arrest would mean to detain and restrain a person - Section 41 to 44 and 46 of Cr.P.C. deal with the arrest of a person, Section 41 empowering the police officer to arrest any person without a warrant, Section 42 empowering a Police officer to arrest a person who commits an offence in his presence, Section 43 enabling a private person to arrest any person who commits an offence in his presence and or a proclaimed offender, Section 44 deals with arrest by a Magistrate and Section 46 lays down the manner in which the arrest has to be made.
In the present case, the power to arrest is circumscribed by the PMLA itself. This power has to be exercised in the manner as provided under PMLA or not at all. Apart from the exercise of power to arrest in a particular manner, PMLA also provides or mandates that the arresting officer inform the arrestee of the grounds of his arrest at the earliest without any unnecessary delay so as to safeguard the individual freedom of that person who can on that basis apply for and seek for bail if so provided - The question is as to whether the arresting officer is required to only inform the grounds of arrest or provide the same in writing to the person arrested for an offence under the PMLA. The PMLA has various provisions relating to the offence of money laundering as regards which stringent punishments are prescribed. Furthermore, in terms of Section 45 of the PMLA for the person arrested to seek bail, it is required that such a person establishes before the said Court that the accused is not guilty of the offence alleged against him.
Since it is required that the arresting officer inform and provide the arrestee with the arrest order and grounds of arrest in writing, it would be required that the investigating officer establish the positive fact of having provided the same in writing, since the negative cannot be established by the arrestee. Hence, in such cases, apart from obtaining the acknowledgement of the arrestee on the said arrest order and grounds of arrest, it may also be advisable for the arresting officer to email the said arrest order and grounds of arrest to the arrestee’s email account, to the e-Mail account of the lawyer and or the near and dear ones of the arrestee, if the lawyer or the near and dear ones are provided with a physical copy of the arrest order or grounds of arrest to obtain their acknowledgement of having received the same.
Thus, in terms of Section 19 of PMLA, the Investigating Officer or the arresting officer is required to inform and provide a physical copy of the arrest order and grounds of arrest to the person being arrested. Mere oral information would not be sufficient - In the present case on facts having come to the conclusion that the grounds of arrest have been provided to the petitioner, I hold that requirement of Section 19 in providing grounds of arrest has complied with, and there is no infirmity in the same.
Whether the expression “reason to believe that any person has been guilty of an offence” found under Section 19 of the PMLA Act require a preliminary adjudication by the Investigating Officer as regards the guilt of the accused before arresting him? - HELD THAT:- The arresting officer should have "reason to believe" that "a person is guilty of an offence". The "reason to believe" cannot be said to be an adjudication which is required to be performed by the Investigating Officer as regards the guilt of the person being arrested; the Investigating officer cannot be a Judge, jury and executioner. The investigating officer is only to investigate and place the material before the competent court for adjudication - The requirement under Section 19(1) as extracted above, is a "reason to believe on the basis of the material in his possession". This reason to believe, in my considered opinion, would be the objective satisfaction of the Investigating Officer on the basis of the material available with him since the Investigating officer has conducted the investigation and has secured material.
The only requirement under the Act is the "reason to believe" by the Investigating officer or the arresting officer that the person is "guilty of the offence". It is therefore not required for the Investigating officer to prove the purpose of arrest or even to make any submission as regards the requirement of arrest to protect the proceeds of the crime. Though of course, the same is not part of Section 19(1) as contended by Shri Aravind Kamath, learned Senior counsel, the same would be examined by the Court while granting bail to consider whether the person arrested is required to be retained in judicial custody for the reason that the said person may tamper with evidence and or with the proceeds of crime. Said factor would have to be considered at the time of granting of bail and not at the time of the arrest. Arrest and remand to police custody and thereafter to judicial custody, which would also include custodial interrogation, which is an essential weapon in the armoury of the Investigating Officer enabling the Investigating officer to properly and effectively investigate a particular offence.
Suffice to say that one Mohammed Anoop was arrested with possession of the drugs in commercial quantity, thereby having committed an offence under the NDPS Act. On his arrest during the course of his interrogation, Mohammed Anoop has stated that the petitioner is his boss; he would act as per the instructions of the petitioner. The petitioner has invested money in his businesses, and he has transferred monies to the petitioner for use - No proper explanation was given by the petitioner during the course of his interrogation; there are serious offences that have been alleged against the said Mohammed Anoop and the petitioner and several others for offences under the NDPS Act, huge amounts of money had changed hands. It is suspected that these have been realized on account of trafficking or dealing with drugs which is a scheduled offence under the PMLA, therefore the money is suspected or believed to have been generated on account of such dealing with or trafficking in Narcotic or psychopathic substances, these monies would amount to proceeds of crime.
Thus, the phrase “reason to believe that any person has been guilty of an offence” would mean the objective satisfaction of the Investigating Officer or the arresting officer that the person who is to be arrested is guilty of an offence punishable under the Act. It does not mean that the said Investigating officer or the arresting officer has to adjudicate on the guilt, pass a detailed order or record the same in writing to indicate as to why he is of the opinion that the person to be arrested is guilty of the offence, the recordal of the objective satisfaction with reference to the material on record would be sufficient compliance - on the basis of the discussion made as regards the facts that the investigating officer has in writing indicated as to why he is of the opinion that the petitioner is believed to be guilty of committing the offence, the recordal of the objective satisfaction with reference to the material on record is sufficient compliance of the requirement, and there is no infirmity in the arrest made.
Whether the objective satisfaction of the guilt of the accused is required to be reduced to writing on the grounds of arrest formulated by the Investigating Officer? - HELD THAT:- The objective satisfaction of the guilt of the accused can only be ascertained from the material on record, it cannot be expected of an Investigating Officer to in detail record the same in writing and form a part of grounds of arrest formulated by the Investigating Officer - However, the grounds of arrest are required to be sufficiently detailed out as to why a person is being arrested, in brief state as to what is the material available with the Investigating officer which would link the person to be arrested to an offence under the Act and why the person is believed to be guilty of the commission of such an offence. These factors, if contained in the grounds of arrest, would be sufficient, it would not be required for a detailed adjudicatory order to be made by the Investigating Officer as to the guilt of the accused.
Thus, the objective satisfaction of the guilt of the accused is required to be reduced to writing in the grounds of arrest formulated by the Investigating Officer prior to the arrest and to be furnished in writing to the arrestee at the time of arrest or immediately thereafter.
Petition dismissed.
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