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AFROZ MOHMAD HASANFATTA Versus DEPUTY DIRECTOR & 1

2015 (11) TMI 131 - GUJARAT HIGH COURT

Bail application - Arrest made without the mentioning of name in FIR - arrest of the applicant without a warrant in a non-cognizable offence - applicant is alleged to have received ₹ 7 crores from one Natural Trading Company and ₹ 6.31 crores from one M/s Gangeshwar Mercantile Pvt. Ltd. without satisfactory explanation - revention of Money Laundering Act, 2002 - Held that:- Applicant, at this stage, has failed to satisfactorily establish that the moneys received by him are untainted, .....

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of the offences alleged against him. It may be reiterated that while considering the question of grant of bail in the present case, since the applicant is an accused in the scheduled offence, the rigours of section 45 of the PML Act would apply and the court is required to record twin satisfaction, one that, there are reasonable grounds for believing that the applicant is not guilty of such offence and second that, he is not likely to commit any offence while on bail.

One of the con .....

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ainst appellant. - CRIMINAL MISC. APPLICATION (FOR REGULAR BAIL) NO. 17000 of 2014 - Dated:- 5-10-2015 - MS. HARSHA DEVANI, J. FOR THE APPELLANT MR PM THAKKAR, SR. ADVOCATE with MR RJ GOSWAMI, ADVOCATE FOR THE RESPONDENT MR DEVANG VYAS, ADVOCATE, MS TRUSHA K PATEL, ADVOCATE JUDGMENT 1. By this application under section 439 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the Code ) read with section 45 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as .....

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te of Enforcement, Ahmedabad (ED). 2. The facts giving rise to the present application are that a search came to be carried out under the provisions of the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA ) at the registered office of M/s Nile Industries Pvt. Ltd. as well as the residence of the applicant at Surat, pursuant to which, certain documents were seized under FEMA. The statement of the applicant also came to be recorded by the officers of the Directorate of Enforc .....

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Pvt. Ltd., M/s Agni Gems Pvt. Ltd. and its Directors by the Manager of ICICI Bank, Surat for the offences punishable under sections 420, 465, 467, 468, 471, 477A and 120B of the Indian Penal Code. Once again, the applicant was not named in the said first information report; however, subsequently, he was arrested in connection with the said scheduled offence. Later on, the Directorate of Enforcement registered a case being ECR No.1/2014 on 17.04.2014 wherein, the applicant was not named. On 23.04 .....

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appeared before the Directorate of Enforcement in pursuance of the summons and his statement came to be recorded under section 50 of the PML Act and he came to be arrested on the very same day. It is the case of the applicant that he, however, was not brought before the Judicial Magistrate or the Metropolitan Magistrate, as prescribed under section 19(3) of the PML Act, but was brought before the Special Court designated under section 43 thereof. The applicant submitted an application for bail o .....

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Madanlal Jain was arrested by the Directorate of Enforcement in connection with ECIR No.1/2014 and on the same date, the Deputy Director, Directorate of Enforcement passed an order provisionally attaching the properties of the applicant and his family members under section 5 of the PML Act. On 18.07.2014, the Directorate of Enforcement filed a complaint before the Special Court which was numbered as PMLA Complaint No.3/2014. The applicant, therefore, withdrew that bail application being Bail App .....

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the applicant came to be arrested in connection with the first information report being C.R. No.16/2014 by the DCB, Surat and nine days remand of the applicant was granted. On 01.09.2014, another co-accused Rakesh Manekchand Kothari was arrested in connection with the ECIR No.1/2014. On 07.10.2014, the bail application filed by the applicant before the Special Court being Criminal Miscellaneous Application No.1072 of 2014 came to be rejected. On 29.10.2014, the Directorate of Enforcement filed .....

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onal validity of section 45 of the PML Act as well as his illegal custody and detention, which came to be dismissed by a Division Bench of this court by a judgement and order dated 16.01.2015. On 04.03.2015, a review application came to be filed in the above referred special criminal application wherein, the court observed that the observations made in the said decision would not come in the way of the bail application and that the bail application may be decided on merits. By an order dated 05. .....

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nch of this court by an order dated 03.08.2015, granted interim relief releasing the said co-accused and admitted the matter as it was of the opinion that the same required deeper consideration. 4. Mr. P. M. Thakkar, Senior Advocate, learned counsel with Mr. R. J. Goswami, learned advocate for the applicant submitted that the applicant was neither named in the first information report, nor in the second first information report registered in respect of the scheduled offences. Therefore, at the t .....

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ble under the Act shall be cognizable. It was pointed out that subsequently, section 45 of the PML Act came to be amended with effect from 17.01.2013 whereby, clause (a) which provided that every offence under the Act shall be cognizable, came to be deleted. Reference was made to the speech of the Minister of Finance made at the time of introducing the Bill to amend the Prevention of Money Laundering Act, 2002 wherein broadly the reasons for the amendment are the following: Under the existing pr .....

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er Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions. They have not been removed. We have enabled only the Director or an officer authorised by him to investigate offences. Xxxxxx What we are doing is, we are inserting a new .....

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the petitioner without obtaining warrant from the Metropolitan Magistrate in view of section 2(l) read with section 155 of the Code. Therefore, the arrest of the applicant without a warrant in a non-cognizable offence, which is being investigated without any order of the Magistrate, is in total violation of the mandatory provisions of section 155 read with section 4(2) of the Criminal Procedure Code read with section 45 of the PML Act and is therefore, unauthorised and illegal. 4.2 It was submi .....

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Kumar v. State of Bihar and another, (2014) 8 SCC 273, wherein the court has endeavoured to ensure that police officers do not arrest the accused unnecessarily and Magistrate do not authorise detention casually and mechanically. 4.3 Referring to the complaint lodged by the Directorate of Enforcement, it was pointed out that the applicant is alleged to have received ₹ 7 crores from one Natural Trading Company and ₹ 6.31 crores from one M/s Gangeshwar Mercantile Pvt. Ltd. It was submit .....

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the scheduled offence in connection with the first information report registered vide C.R. No.I-16/2014 of DCB or C.R.No.I-17/2014 of DCB, Surat. It was submitted that there are no averments in the complaint under the PML Act, which if accepted at face value, would show that M/s Natural Trading Company had received any proceeds of crime as defined under section 2(u) of the PML Act from the scheduled offence being C.R. No.I-16/2014 of DCB or C.R.No.I- 17/2014 of DCB, Surat. It was contended that .....

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the PML Act is concerned, all statements supporting the complaint are of the co-accused, who are facing trial with applicant in the very complaint and even they do not show that amount received by M/s Natural Trading Company and M/s Gangeshwar Mercantile Pvt. Ltd. were proceeds of crime. It was submitted that in the same trial, the statements of the co-accused would be inadmissible in evidence. Thus, the complaint is entirely supported by statements of the coaccused which have no evidentiary val .....

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he complaint, they are stated to be fictitious firms; however, no statement of any person has been obtained in this regard. Moreover, both the firms and their directors are arraigned as accused and such firms have bank accounts and hence, it is wrong to say that they are fictitious firms. It was submitted that receiving money from fictitious firms is not proceeds of crime because in the light of the definition under section 2(u) of the PML Act, the proceeds of crime must emanate from the schedul .....

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these statements are not referred to or relied upon in the complaint lodged by the Directorate of Enforcement against the applicant, and that the same having been recorded in a separate criminal case cannot be relied upon. 4.6 Strong reliance was placed upon the interim order passed by a Division Bench of this court in the case of co-accused Rakesh Kothari rendered on 03.08.2015 in Special Criminal Application No.4275 of 2015, to point out that the court has recorded prima facie findings at the .....

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1 of the Constitution of India. It was pointed out that the Division Bench has recorded that if the offence under the PML Act is held to be cognisable offence, it was mandatory to comply with sections 154 and 157 of the Code apart from sections 157(1) and 172 of the Code and if the offence under the PML Act is held to be noncognizable, it was mandatory to comply with section 155 of the Code apart from sections 167(1) and 172 of the Code. It was pointed out that the court had turned down the subm .....

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as further recorded that the provisions of section 45 of the PML Act do not override the provisions of Article 21 of the Constitution of India. 4.7 Reliance was also placed upon the decision of the Supreme Court in the case of Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and another, (2005) 5 SCC 294I, to submit that the applicant was called under section 50 of the PML Act and then arrested. It was urged that the nomenclature of section under which he was summoned is inconsequential .....

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the crucial test to determine whether an officer is a police officer for the purpose of section 25 of the Evidence Act viz. the influence or authority that an officer is capable of exercising over a person from whom a confession is obtained. The court further held that the term police officer has not been defined in the Code or in the Evidence Act and, therefore, the meaning ought to be assessed not by equating the powers of the officer sought to be equated with a police officer but from the pow .....

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ded under the Act; (ii) is capable of exercising influence or authority over a person from whom the confession is obtained. 4.8 Referring to the preamble of the PML Act, the learned counsel pointed out that the Act has been enacted only for the purpose of dealing with the proceeds of crime and nothing else. The applicant is in jail since fourteen months. The money is already attached and that the proceeds so attached are more than ₹ 16 crores. It was urged that all the accused, other than .....

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s accepted, it does not conclusively show that money received is definitely proceeds of crime and hence, an excellent prima facie case for grant of bail has been made out. 4.9 It was further submitted that the arrest of the applicant without warrant in a non-cognizable offence renders the arrest and continued custody pursuant thereto illegal and in violation of section 155 read with section 4(2) of the Code and the fundamental rights guaranteed under Articles 14 and 21 of the Constitution of Ind .....

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s under the Act not to be cognizable Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898) an offence under this Act shall not be cognizable. 6. Power to arrest without warrant Any superior officer or member of the Force may, without an order from a Magistrate and without a warrant, arrest any person who has been concerned in an offence punishable under this Act or against whom a reasonable suspicion exists of his having been so concerned. It was submitted that t .....

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vestigate and then, if required, to seek warrant for arrest in respect of the non-cognizable offence punishable under the PML Act. 4.10 The learned counsel further invited the attention of the court to various provisions of the Code as well as to the provisions of section 65 of the PML Act, to submit that all the procedure under the Code unless inconsistent with the provisions of the PML Act has to be followed. It was submitted that the Sessions Court/Special Court comes into the picture only at .....

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hours is a statutory safeguard which also gives the earliest opportunity to get bail. It was submitted that in the facts of the present case, section 19(3) of the PML Act has been violated and therefore also, the detention of the applicant is unauthorized because at no point of time, the court of competent jurisdiction before which he ought to have been produced, viz. the Magistrate, has authorized the detention of the applicant after the arrest. It was argued that in view of section 2(l) read .....

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h was numbered as PMLA No.4/2014 and the Special Court took cognizance of the offence and issued non-bailable warrants against seven accused persons, who approached the High Court praying that the same be quashed. It was pointed out that by an order dated 19.11.2014 made in Special Criminal Application No.4697 of 2014, this court quashed and set aside the nonbailable warrants. It was also pointed out that the Directorate of Enforcement had approached the Special Court seeking non-bailable warran .....

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ther co-accused persons are concerned, either non-bailable warrants have not been issued at all, or if issued, the same have been quashed, and in other cases, they have been granted bail, to submit that under the circumstances, there is no reason for refusing to grant bail to the applicant. 4.12 In conclusion, it was urged that a prima facie case has been made out for grant of bail inasmuch as the arrest of the applicant is itself bad in law. Moreover, even on merits, there is no legally admissi .....

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r the applicant, it was submitted that insofar as the arrest and continuation of detention of the applicant in alleged breach of certain provisions of the PML Act as well as the Code is concerned, while considering a bail application, this court is required to satisfy itself about the two conditions stipulated under section 45 of the PML Act. It was contended that if the court is not satisfied that the said two conditions are fulfilled, assuming without admitting that there is a procedural lapse .....

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i v. Ahmadalieva Nodira, (2004) 3 SCC 549, and observed that the limitations on granting of bail come in only when the question of granting bail arises on merits. Apart from the grant of opportunity to the Public Prosecutor, the other twin conditions which really have relevance so far the accused therein is concerned, are the satisfaction of the court that there are reasonable grounds for believing that the accused is not guilty of the alleged offence, and that he is not likely to commit any off .....

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t, 1993 (1) GLH 861, wherein the court has held that merely because some default is committed either in not physically forwarding the custody of the accused or the police papers pertaining to him to the Special/Sessions Court, that by itself cannot be held to be sufficient to mechanically confer any right on the accused to be released on default-bail, who is otherwise arrested and kept in the custody on some serious charges of non-bailable offences under the NDPS Act, for which the Legislature h .....

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en away all the rights of the accused to have the benefit of default-bail. The court, accordingly, held that despite contravention of the provisions of section 36(1)(b) of the Act, by operation of section 37 (amended) of the NDPS Act, they would not be entitled to be released on bail. 5.1 Reliance was further placed upon the decision of the Supreme Court in the case of Union of India v. Thamisharasi and others, 1995 (2) GLH 244, for the proposition that the limitation on the power to release on .....

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n 37 to the extent it is inconsistent with section 437 of the Code supersedes the corresponding provision in the Code and imposes limitation on granting of bail in addition to the limitations under the Code as expressly provided in subsection (2) of section 37. These limitations on granting of bail specified in sub-section (1) of section 37 are in addition to the limitations under section 437 of the Code and were enacted only for this purpose. Reliance was placed upon an unreported decision of t .....

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o dispute that, both the stipulations need to be met with and if any one is missing, it would not be permissible to release the applicant on bail. The court observed that the contention that the applicant has not committed any scheduled offence cannot be gone into by the court on the face of the decision of the Division Bench of this Court recorded on Special Criminal Application No.4496 of 2014. The court made special reference to paragraphs 10.12 to 12.13 of the said decision which was rendere .....

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here are surrounding circumstances which reveal that there were doubts about origin of accounts and monies deposited therein, and when the accused had not been able to establish that the same were neither proceeds of crime nor untainted property, he ought not to have been released. 5.3 Ms. Patel next submitted that the applicant has neither challenged the act of his production before the Designated Judge, nor has he raised any protest about his arrest by the Directorate of Enforcement without wa .....

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f section 44(b) of the PML Act, to submit that the Special Court has been duly authorized to take cognizance of an offence under section 3 of the PML Act upon a complaint being made by an authority authorized in this behalf under that Act without the accused being committed to it for trial. 5.5 As regards the contention that under section 19 of the PML Act, an officer of the Directorate of Enforcement cannot arrest without warrant as the offence is now made noncognizable, the learned counsel sub .....

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eted only to take away powers of the police and it did not intend to restrict the powers of the Directorate of Enforcement as contended by the applicant. It was submitted that the provisions of the PML Act have overriding effect and section 65 thereof provides that the Code of Criminal Procedure would only apply only so far as it is not inconsistent with the PML Act and hence, when the PML Act does not require the officer of the Directorate of Enforcement to obtain warrant from the court, the pr .....

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that even if there is any irregularity in following any procedure, the same would not invalidate the action if it is in furtherance of the object. According to the learned counsel, by production of the applicant directly before the Designated Judge, the object and purpose of the Act is, in no manner, defeated. Reliance was placed upon the decision of the Supreme Court in the case of Sundeep Kumar Bafna v. State of Maharashtra and another, AIR 2014 SC 1745, for the proposition that no provision .....

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lication of the applicant, it was submitted that the supplementary complaint is in connection with the same case registered vide ECIR-1/SRT/2014-15 and that only because the Designated Judge has numbered it with a separate number, it does not become an independent complaint. It was pointed out that even at the time of filing the initial complaint, liberty was reserved to file further complaint as the investigation was going on. Reliance was placed upon the decision of the Supreme Court in the ca .....

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rovides that to the extent they are not inconsistent, the provisions of the Code apply. It was submitted that sub-section (1) of section 173 of the Code speaks about report to be filed after investigation without delay; but does not provide for any limitation for the same. Moreover, section 173(8) of the Code provides for further investigation and that there are no contrary provisions in the PML Act and hence, further investigation can be carried out by the Directorate of Enforcement even under .....

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officer shall be proof as against a person accused of any offence, would not be attracted in the present case. It was submitted that sub-section (2) of section 50 of the PML Act specifically provides for evidentiary value of such statements and sub-sections (2) and (3) thereof provide that the person giving the statement under that Act has to say the truth and the proceeding of recording statement etc. is considered as judicial proceedings within the meaning of sections 193 and 228 of the Indian .....

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he present application is an application for bail which has to be considered within the limited scope of section 45 of the PML Act. Thus, the scope of both the provisions is entirely different. It was also submitted that the order passed by the Division Bench being an interim order, cannot be treated as a precedent. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of State of Assam v. Barak Upatyaka D. U. Karmachari Sanstha, AI .....

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voices. It was submitted that the applicant was in the know that preparing fake documents, such as, bills of entry and invoices and presenting the same before the ICICI Bank for fraudulent remittances was a crime under the relevant provisions of the Indian Penal Code. He along with his accomplice Shri Bilal Haroon Galani, was responsible for sourcing of funds from various places in India and making RTGS transfer to the firms, viz., M/s Vandana & Co., M/s G. T. Traders, M/s Maruti Trading, M/ .....

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that the applicant was actually involved in the offence of money laundering under section 3 of the PML Act, as he had used the seven companies belonging to his accomplice Shri Madanlal Manekchand Jain for siphoning off precious foreign exchange out of India to the entities owned by him in Hong Kong and Dubai. It was contended that the entire remittances made by the seven companies had started from late December 2013 to the first week of March 2014 and during this period, the applicant and his b .....

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k of India, Nanpura, Surat and investments thus made in the stock market and real estate and projecting the same as untainted property was clearly covered under section 3 of the PML Act. It was contended that Shri Jafar Mohamed Hasan Fatta had stated that his brother Shri Afroz had arranged the said money when he was in need of the same. It was contended that receipt of ₹ 7 crores in the applicant s own account with Union Bank of India from M/s Natural Trading Co. was nothing but proceeds .....

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ad on the strength of fake documents is covered under the scheduled offences. It was pointed out that M/s Nile Trading Corporation is into trading of utensils and has surprisingly received ₹ 6.31 crores in the month of February 2014 from one M/s Gangeshwar Mercantile Pvt. Ltd., which was revealed to have been created by Shri Madanlal Manekchand Jain who had full control over it. The statement of the applicant revealed that he had made an attempt to cover up the receipt of the proceeds of c .....

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Co. and M/s Gangeshwar Mercantile Pvt. Ltd. are nothing but proceeds of crime. Various other facts were brought to the notice of the court from the complaint lodged by the respondents to point out that there is sufficient material on the record to connect the applicant with the offence in question. It was, accordingly, urged that the applicant who is one of the main accused in the crime, has not been able to satisfy the twin requirements laid down under section 45(1) of the PML Act for grant of .....

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ll as the order of remand made under section 167 of the Code; however, this court cannot be oblivious of the fact that it is considering a bail application under section 439 of the Code read with section 45 of the PML Act and not a habeas corpus or other application under Article 226 of the Constitution of India. As observed by the Division Bench of this court in the case of Rakesh Manekchand Kothari v. Union of India (supra) on which strong reliance has been placed by the applicant, the powers .....

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ch are applicable to a bail application under section 439 of the Code and under section 45 of the PML Act. Therefore, in addition to the normal parameters which are applied while granting bail under section 439 of the Code, the conditions laid down under section 45 of the PML Act are also required to be taken into consideration. 9. As noticed hereinabove, various contentions have been raised by the learned counsel for the applicant as regards the validity of arrest of the accused on the ground o .....

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. Union of India (supra) rendered in a habeas corpus petition filed by a co-accused. What the applicant has lost sight of is that the present application is an application for bail under section 439 of the Code read with section 45 of the PML Act and not a petition under Article 226 of the Constitution of India challenging his detention for infringement of his right under Article 21 of the Constitution of India. If at all the petitioner wants to challenge the validity of his arrest and continued .....

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he scope of the present application. Besides, it may be noted that the order of remand was passed after hearing the learned counsel for the applicant. When the order of remand came to be passed by the Designated Court, the applicant was represented by a reputed Senior Advocate, but at that stage no contention was raised with regard to the arrest being without authority of law, or that the said court was not empowered to make an order of remand. Therefore, at this stage, and more particularly, in .....

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r therein had filed a habeas corpus petition and the court was considering the question of infringement of the petitioner s right under Article 21 of the Constitution of India; on merits in the said case, the court noted in paragraph 24 of the order that it was not in dispute that the petitioner therein was not arraigned as accused in the scheduled offence investigated by the Crime Branch. The court observed that a bare reading of section 45 shows that the rigours of bail are applicable only to .....

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he is arraigned as an accused in the complaint only after complying with section 120B of the IPC on the basis of the statement of Praful Patel. Thus, though it is the case of the applicant that he has not committed a scheduled offence, it is nevertheless a fact that he is an accused in the scheduled offence being C.R. No. I 17/2014. Evidently therefore, in view of the fact that the applicant is an accused in the scheduled offence, the applicant does not stand on the same footing as in the case .....

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d ordered that he be released till the final decision in the petition. Thus, the decision on which strong reliance has been placed by the learned counsel for the applicant is only an interim order expressing a prima facie view and at this stage does not lay down any ratio decidendi so as to constitute a binding precedent. 12. Assuming for the sake of argument that the above order passed by the Division Bench, despite being an interlocutory order, is to be treated as a precedent, as noticed herei .....

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word police officer and they are officers of Enforcement Directorate. The court observed that such interpretation as proposed by the respondents would render section 165 (sic. 65) of PMLA meaningless and thus cannot be accepted as contrary to the ratio laid down in Om Prakash v. Union of India, (2011) 14 SCC 1 where Central Excise Officer was held to have no authority to arrest without warrant in noncognizable offence under Central Excise Act, 1944 in light of section 155 of the Code. In this r .....

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, it had held that the offences under the Customs Act were bailable. The court on the basis of the averments and submission was given the impression that the alleged offences were confined to the provisions of the Customs Act alone and had stayed the arrest of the petitioner therein, in connection with the subject matter of the said file, presuming that the same would be relating to the offences under the Customs Act, 1962. The court in paragraph 4 of the said decision noted that however, in the .....

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e stand covered by its decision in Om Prakash v. Union of India (supra). However, as regards the offences under the FEMA and PML Act, the court permitted the respondents to proceed in accordance with law. Thus, the Supreme Court has not expressed any opinion as regards the bailability of the offences under the PML Act. Moreover, as noticed earlier, the Division bench was exercising writ jurisdiction which is wider than the jurisdiction for granting bail under the provisions of section 439 of the .....

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he order of arrest suffers from vice of any illegality on the ground that it is ordered by an incompetent or unauthorized authority and there is no failure in adhering to the procedure laid down under section 19(1) of the PML Act and it cannot be said that the petitioners are detained or confined illegally warranting issuance of writ of Habeas Corpus. Thus, in the said petition, it was open for the applicant to raise all grounds as regards the validity of his detention as well as the order of re .....

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n 45 of the PML Act provides that the limitation in granting bail specified in sub-section (1) thereof is in addition to the limitation under the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting bail. Therefore, while considering an application for grant of bail under section 439 of the Code in relation to an offence under the PML Act, the requirements of both, section 439 of the Code as well as section 45 of the PML Act have to be satisfied. The Supreme .....

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pportunity to the Public Prosecutor to oppose the bail application, and (2) satisfaction of the court that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail. 7. The limitations on granting of bail come in only when the question of granting bail arises on merits. Apart from the grant of opportunity to the Public Prosecutor, the other twin conditions which really have relevance so far as the prese .....

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ial probable causes for believing that the accused is not guilty of the alleged offence. The reasonable belief contemplated in the provision requires existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence. 15. Thus, in terms of section 45 of the PML Act, the court is required to record satisfaction that there are reasonable grounds for believing that the accused is not guilty of such offence and that .....

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ened bank accounts with ICICI Bank, Surat. Further a letter dated 06.03.2014 of the Joint Commissioner of Customs, Surat, also forwarded 18 bills of entry relating to M/s R. A. Distributors Pvt. Ltd. informing that the bills of entry submitted by the said entity before the ICICI Bank for making foreign remittance, were fake. On the basis of the inputs received, it was gathered that within a span of two months, that is, January and February 2014, remittances to foreign shores worth more than S .....

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t seven companies (which have been referred to in detail in the preceding paragraphs) have sent foreign remittances against bogus/forged bills of entry mainly to Hong Kong based companies, one of which was AI Mignas FZE Ltd. The said seven companies received monies through RTGS from M/s Vandana & Co., M/s Natural Trading Co., M/s Maruti Trading, M/s Millennium & Co., M/s Aarzoo Enterprises, M/s G. T. Traders, M/s M. D. Enterprises, M/s Jash Traders etc., which had transferred the amounts .....

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. Funds were received through RTGS also from Cosmo Impex, S G Trade Impex, S K Trading Co., Archana Traders, etc., having bank accounts in Surat, Mumbai and Delhi. Investigation further revealed that a hawala racket was being run by Shri Afroz Fatta and Shri Madanlal Jain and that all the other persons were connected to them. The statement of Shri Amit Patel, Deputy Branch Manager of Axis Bank recorded by the Directorate of Enforcement office, Surat, revealed that some bank accounts in Axis Bank .....

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ed in the hawala racket. From forensic analysis of mobile set of the applicant Afroz Fatta, the following two concrete evidences have been recovered (i) Madanlal Jain had sent a WhatsApp message to Afroz Fatta wherein mention of Arzoo Enterprise, Vandana & Co., M. D. Enterprises, Millennium & Co., Maruti Trading has been found. These Companies are connected to this case, as referred to hereinabove. (ii) In one of the WhatsApp message, someone has sent full address of AL Mignas FZE Ltd., .....

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. Ltd., M/s Harmony Diamonds Pvt. Ltd. and its directors which are also scheduled offences in terms of section 2(y) of the PML Act. Further investigation revealed that the applicant, his brotherin-law and his sister and brother have received money from M/s Natural Trading Co., which is one of the companies through which funds have been transferred to M/s R. A. Distributors. 18. It may also be noted that in the complaint being PMLA Complaint Case No.3/2014, it has been stated that the Surat Custo .....

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and Madanlal Jain, Mumbai. Investigation also revealed that the accounts of the firms, viz. M/s Vandana & Co., M/s Natural Trading Co., M/s Maruti Trading, M/s Millennium & Co., M/s Aarzoo Enterprises, M/s G. T. Traders, M/s M. D. Enterprises and M/s Jash Traders, with Axis Bank were opened pursuant to the directions of Shri Madanlal Jain. M/s Natural Trading Co., Surat was found to have made five such RTGS transfers on a single day on 16.12.2013 and thirtyseven RTGS transfers involving .....

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ght that huge amounts were transferred by M/s Natural Trading Co. to the applicant Shri Afroz Fatta and his brother Shri Jafar Hasan Fatta. A total amount of ₹ 3 crores was transferred to Shri Jafar Hasan Fatta and ₹ 7 crores were transferred to the applicant Shri Afroz Fatta through RTGS from the bank account of M/s Natural Trading Co. It was also found that M/s Natural Trading Co. was also involved in transferring huge amounts to various firms, including M/s Gangeshwar Mercantile P .....

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the account of M/s Nile Trading Corporation on 17.02.2014 in the following manner Sr. No. Date Amount in Rs. 1 17/02/2014 1,71,90,517 2 17/02/2014 1,44,36,831 3 17/02/2014 1,44,98,627 4 17/02/2014 1,69,93,966 19. Investigation carried out led to the tracing of the account number 00672320013409 of M/s Nile Trading Corporation to the HDFC Bank, Ghod Dod Road Branch, Surat. Further scrutiny of its account and account form revealed that the applicant Shri Afroz Mohamed Hasan Fatta was the proprieto .....

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orm of unsecured loan which he received through RTGS in his personal account with Union Bank of India, Nanpura, Surat and the said amount was received in three parts, ₹ 1 crore, ₹ 3 crores and ₹ 3 crores; that on his request, Shri Madanlal Jain had arranged ₹ 3 crores for his brother Shri Jafar Mohamed Hasan Fatta from M/s Natural Trading Co. In his statement recorded under section 50 of the PML Act on 22.05.2014, the applicant had stated that there were no documents rela .....

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ll dated 14.12.2013 for having sold the said cut and polished diamonds for ₹ 1,71,90,517/-, ₹ 1,44,36,831, ₹ 1,44,98,627/- and ₹ 1,69,93,966/- respectively. On being asked, the applicant had stated that he had purchased the above diamonds from M/s Vidhatri Exim Pvt. Ltd. from the office of Shri Madanlal Jain and the payment was not made for the purchase of above stated diamonds from M/s Vidhatri Exim Pvt. Ltd. He had also stated that the diamonds were sold to Shri Madanla .....

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is the case of the investigating agency that the applicant Afroz Fatta was instrumental in the fraudulent outward remittance of foreign exchange for which he was amply compensated monetarily. The entire money received by Shri Afroz Fatta and his brother Shri Jafar Fatta in this process is nothing but proceeds of crime generated through criminal activities relating to scheduled offences under investigation by the Surat District Crime Branch. The applicant Shri Afroz Fatta is one of the main play .....

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tements have been recorded under section 50 of the PML Act have stated that Shri Bilal Haroon who was released on bail would often visit them and threaten them not to go before the Directorate of Enforcement till the applicant comes out on bail. 22. In the aforesaid backdrop, the question that arises for consideration is as to whether the conditions precedent for grant of bail under section 45(1) of the PML Act, are satisfied. Section 45 of the PML Act, requires the court to record satisfaction .....

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ideration as they have no evidentiary value. Strong reliance has been placed upon the decision of the Supreme Court in the case of Toofan Singh v. State of Tamil Nadu (supra) wherein, the Supreme Court has referred the matter to the Larger Bench for reconsideration of the issue as to whether the officer investigating the matter under the NDPS Act would qualify as police officer or not. The second related issue was whether the statement recorded by the Investigating Officer under section 67 of th .....

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between the two sets of provisions. Insofar as section 108 of the Customs Act is concerned, it gives power to the customs officer to summon persons to give evidence and produce documents. Identical power is conferred upon the Central Excise Officer under section 14 of the Act. However, the wording to section 67 of the NDPS Act is altogether different. This difference has been pointed out by the Andhra Pradesh High Court in Shahid Khan v. Director of Revenue Intelligence, 2001 Cri.L.J. 3183 (AP). .....

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wer to the customs officer to summon persons to give evidence and produce the documents. However, the wording of section 67 of the NDPS Act is altogether different. 25. In this regard, it may be germane to refer to the provisions of section 50 of the PML Act. A conjoint reading of section 50 of the PML Act and section 108 of the Customs Act reveals that section 50 of the PML Act is in pari materia with section 108 of the Customs Act. Therefore, prima facie, the decisions of the Supreme Court int .....

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ted hereinabove it is evident that the allegation against the applicant is that the amount of ₹ 13 crores paid to the applicant and further amount paid to his brother at the instance of the applicant, are proceeds of crime within the meaning of such expression as envisaged under section 2(u) of PML Act and that the applicant has attempted to project the same as untainted money. The expression proceeds of crime means any property derived or obtained directly or indirectly, by any person as .....

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ceeds of crime and were not, therefore, tainted shifts on the applicant under section 24 of the PML Act, which provides that in any proceeding relating to proceeds of crime under that Act, in case of a person charged with the offence of moneylaundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering. In the facts of the present case the applicant, at this stage, has failed to satisfactorily establi .....

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