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2013 (9) TMI 1144 - MADRAS HIGH COURT

2013 (9) TMI 1144 - MADRAS HIGH COURT - TMI - W.P.Nos.14083 to 14085 of 2013 and M.P.Nos.1, 2, and 3 of 2013 - Dated:- 25-9-2013 - M. VENUGOPAL J. For the Petitioners: Mr. V.T. Gopalan, Senior Counsel, Mr. P.S. Raman, Senior Counsel for M/s. Nathan and Associates and Mr. A. Ramesh, Senior Counsel for M/s. Yuvaraj Mohan kumar For the Respondent: M. Dhandapani ORDER The Petitioners have preferred the present Writ Petitions praying for issuance of Writ of Certiorari in calling for the records in su .....

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oney-Laundering Act, 2002, he required the presence of the Writ Petitioners at his office on the dates and time specified. 3.The Summation of Facts: (i)According to the Petitioners, one Abinesha Babu through his brother Nagarajan in the capacity of Director to a Company called M/s. Al Tirven Steels Limited, lodged a complaint against A.M. Mohan (husband of the Writ Petitioner in W.P.No.14083/2013) and his friend Valluvan (Petitioner in W.P.No.14085/2013) before the Central Crime Branch, Egmore, .....

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2011 on the file of learned Chief Judicial Magistrate, Egmore, Chennai who took cognizance and charges were also framed. In the meanwhile, A.M. Mohan (husband of the Petitioner in W.P.No.14083/2005) filed O.P.No.280 of 2010 before this Court praying for appointment of an Arbitrator with reference to his claim of ₹ 82.5 Crores from the defacto complainant which was allowed on 01.04.2011 by this Court and the matter is now pending before the Hon'ble Supreme Court of India. (ii)After fra .....

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issued to the C.B.C.I.D., Chennai to conduct further investigation. As against the said order passed in the Crl.O.P.No.14032 of 2011, the Writ Petitioner in W.P.No.14083 of 2013 along with two other accused preferred a petition to grant Special Leave to Appeal in SLP.Crl.No.8160/2011, 8313/2011 and 8317/2011 before the Hon'ble Supreme Court of India wherein the Hon'ble Supreme Court was pleased to grant stay of operation of the impugned order passed in the Crl.O.P.No.14032 of 2011. As s .....

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19095 of 2010 was filed by A.M. Mohan before this Court and this Court was pleased to allow the petition by making the following observations: 35. The disturbing factors in dealing with the property are as follows; i. The sale agreement dated 22.6.1999 was in favour of M.S. Tirven Garments Private Limited represented by its Directore L.S.Abinesh Babu. ii. Without any benefit, a mortgage by deposit of title deeds was created by Mrs. Meerabai Dawson in favour of Global Trust Bank Limited for the l .....

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f a Commissioner of Oath of England and Wales. v. An affidavit of Meerabai was filed before this Court in OP No.93/1975 (in the matter of grant of Letters of Administration of Vedamma Rangachari mother of Meerabai Dawson). This affidavit was sworn on 21.8.2002 and was numberred as Application No.3804 of 2002 on which date Meerabai Dawson was not alive. vi. The property was substituted in an auction sale which was purchased by A.R. Housing Private Limited represented by Govindarajulu. Vii. One Si .....

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rket value of the property as per sale deed was rupees 64 crores. x. A.R. Housing Private Limited is shown as confirming party. xi. The financial arrangements are mind boggling. Xii. Lastly, under FEMA and FEM Acquisition Regulation, the money which was actually payable to the tors in London, U.K. being the sale consideration of the property of a non resident, cannot be repatriated without the permission of The Reserve Bank of India. (iv)Since even after the orders passed in Crl.O.P.No.19095 of .....

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under: "6. Given the above, this Court considers it appropriate that the respondents strictly follow the orders of this Court, dated 08.12.2010 and in keeping there with the enquiry order by this Court shall be conducted by the Deputy Commissioner of Police, Crime Branch, Chennai. Such enquiry shall be completed within a period of three months from the date of a receipt of a copy of this order and to file the report before this Court on or before 11.07.2011." (v)Finally, the State Pol .....

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e the various authorities to know the status of the said complaint filed by him through Right to Information Act. In the letter of the Reserve Bank of India dated 26.07.2010, it is categorically stated that 'In this connection we advise that your complaint on the captioned subject has been forwarded to the Directorate of Enforcement, New Delhi for investigation into the matter and necessary action at their end, if any'. (vi)That apart, in another letter dated 25.02.2013, the Reserve Bank .....

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arious letters to the Directorate of Enforcement under the Right to Information Act. In its reply dated 12.12.2012, the Directorate of Enforcement stated that they are exempted from Right to Information Act. The enforcement directorate instead of investigating the criminal act of accused, annoyed over the letter of A.M. Mohan, with a malafide intention and ulterior motive diverted themselves and under the pretext of investigation in terms of the Prevention of Money-Laundering Act, 2002 are to dr .....

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stay the order passed by this Court in Crl.O.P.No.14032 of 2011 dated 28.09.2011 wherein this Court had directed further investigation by the CBCID and as such, the issuance of summons is nothing but a colourable exercise of power by the authorities concerned. (x)The Petitioners urges before this Court that when Section 320 of the Criminal Procedure Code enables an Accused to compound the charge with the aggrieved/affected party and when a petition/ application is pending in this regard. The pro .....

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e same would restrict their rights as guaranteed under Article 20(2) of the Constitution of India and therefore, the summons are liable to be quashed. (xii)Apart from the above, the Petitioners take a stand that the ingredients of Section 300 of Criminal Procedure Code and General Clauses Act, Section 26 enjoin that the accused who are facing criminal charge with a privilege of not prosecuting twice as it amount to double jeopardy and it is unjust on the part of the Respondent to issue summons t .....

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d with Section 34 of I.P.C. 1860 as against A.M. Mohan (husband of the Petitioner in W.P.No.14083 of 2013) and A.Valluvan (Petitioner in W.P.No.14085/2013) by the Sub-Inspector of Police, Central Crime Branch, EDF Wing, Team IV, Emgore, Chennai 600 008. Later, a charge sheet was filed on 25.11.2010 before the Learned Additional Chief Metropolitan Magistrate Court, Egmore, Chennai. (ii)In the aforesaid complaint, it was mentioned that they are engaged in the real estate business in India and in t .....

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a Memorandum of Understanding dated 03.08.2007 with the said Mohan. The said two persons collected the entire payment from them for all the lands on behalf of the land owners of Sandavellore, Chittoor and Papankuzhi Villages in and thereby cheated them to the tune of ₹ 27 Crores. After completion of enquiries conducted by the Deputy Commissioner of Police, Central Crime Branch, Chennai, a charge sheet was laid before the Additional Chief Metropolitan Magistrate, Egmore, Chennai on 25.11.2 .....

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ers Limited. As agreed, the complainant Company gave ₹ 5.09 Crores to A.M. Mohan through 28 demand drafts relating to the period from 29.11.2007 and 04.12.2007 towards the purchase of land from one Sundarambal. The said Mohan and Valluvan paid only ₹ 2.65 Crores to P.Sundarambal for the purchase of 5.09 acres from her and the balance amount viz., 2.44 Crores was drawn in the form of demand drafts favouring Sundarambal were credited by way of impersonation with Karur Vysya Bank, Arumb .....

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#8377; 2.44 Crores and in turn they made a wrongful gain to themselves and thereby attracted the ingredients of Sections 419, 420 read with 34 I.P.C. (iv)The Police filed FIR in Crime No.96 of 2010 on 25.11.2010 for an amount of ₹ 2.44 Crores against the amount of ₹ 27 Crores as alleged by M/s.Al Tirven Steels India Limited, Chennai. Aggrieved of the same, M/s.Al Tirven Steels India Limited filed Crl.O.P.No.14032 of 2011 before this Court under Section 482 Cr.P.C. 1973 with a prayer .....

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, this Court is of the view that further investigation must be ordered. At the same time, this Court feels that further investigation must be conducted by CBCID, Chennai, and accordingly it is ordered. A competent officer from CBCID, Chennai may be nominated to investigate further and to file additional final report'. (vi)Being dissatisfied with the order passed in Crl.O.P.No.14032 of 2011 on 28.09.2011 the Petitioners preferred Special Leave to Appeal (Crl) No.8160 of 2011 before the Hon .....

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ore the Hon'ble Supreme Court of India. (vii)The charge sheet laid on 25.11.2010 was filed against the Petitioners in respect of alleged offences under Sections 419, 420 read with Section 34 I.P.C. for criminal activities. Inasmuch as the charged offences under Section 419, 420 I.P.C. 1860 were the Scheduled Offences under clause (1) of sub-section (y) of Section 2 of the Prevention of Money-Laundering Act, 2002, the Respondent/ Directorate of Enforcement registered an Enforcement Case Infor .....

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R on 26.03.2013 as per Section 50(2) of the Prevention of Money-Laundering Act, the Respondent issued summons dated 10.04.2013 to the Petitioners whose presence was considered necessary for investigation purposes. (ix)The Petitioners through their letter dated 22.04.2013 intimated about the Interim Stay granted by the Hon'ble Supreme Court of India vide order dated 14.11.2011 and requested the Respondent to withdraw the summons issued to them. Otherwise, the same would amount to Contempt of .....

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s required for the purpose of investigation to ascertain the proceeds of crime under the Act. 5.Common Rejoinder contents of the Petitioner in W.P.No.14085 /2013 (for himself and on behalf of other Writ Petitioners in W.P.Nos.14083 & 14084/2013): (i)In the interim order passed by this Court in M.P.Nos.1 and 1 of 2013 in W.P.Nos.8383 and 8384 of 2013 dated 02.04.2013, the prosecution itself was stayed and as such, the question of the authority under the Prevention of Money-Laundering Act, 200 .....

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.No.14032 of 2011 was stayed by the Hon'ble Supreme Court, it tantamount to the investigation and the final report were stayed. (ii)The trial Court where the subject matter of criminal proceeding is pending has rightly appreciated the order of the Hon'ble Supreme Court in S.L.P.(Crl.)Nos.8313 and 8317 of 2011 dated 14.11.2011 and accordingly, the matter is being adjourned. (iii)In the decision Indian Bank, represented by its Chief Manager, Chennai V. Government of India Ministry of Finan .....

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itions is illegal and are liable to be set aside as null and void." (iv)In the aforesaid decision, the present Respondent is a party. Further, the summons issued by the Respondent to the Petitioners are clearly ultra vires of Article 20(3) of the Constitution of India. In this regard, the Petitioners rely on the decision of the Hon'ble Supreme Court in Bharathidasan University and another V. All India Council for Technical Education and others, (2001) 8 Supreme Court Cases 676. (v)Befor .....

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Hon'ble Supreme Court of India the trial Court is not taking up the matter, notwithstanding the fact that the compounding petition is pending. When once the compounding petition is accepted and orders passed on the said petition, then, acceptance of compounding is acquittal of the accused and there would be no question of any crime. (vi)In P.Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edition, 2005, the term 'Laundering' is described as follows: "term used to describe the in .....

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ant case, the original source of money traceable and identified. Therefore, the source of income cannot be said to be out of any illegal business. Also, there is no concealment of source of income. Under these circumstances, there is absolutely no cause of action or jurisdiction to proceed against the Petitioners under the Prevention of Money Laundering Act, 2002 and the Respondent is trying to harass the Petitioners. Also the person who can be said to be aggrieved viz., IVR Prime Urban Developm .....

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by the Hon'ble Supreme Court of India. 6.The short averments in M.P.No.3 of 2013 in W.P.No.14083 of 2013 filed by the Petitioner/Proposed 2nd Respondent: (i) The Petitioner's company entered into a Memorandum of Understanding with one IVR Prime Urban Developers Limited, for procurement of 600 Acres of land in Sandavellore Village and Papankuzhi village of Sriperambudur Taluk, Kancheepuram District dated 8.12.2006. (ii)One A.M. Mohan (the husband of the Petitioner in W.P.No.14083/2013) .....

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greement, the Demand Drafts were given in the name of the owners/vendors of the land and obtained Power of Attorney in some cases and in other matters, the sale deed would be directly executed in favour of the said IVR Developers (iv)The aforesaid persons started bringing fictitious persons and obtained huge amounts from Petitioner's company by stating that the amounts were collected as advance. Since the amounts were issued by way of Cheques/Demand Drafts, the Petitioner/Proposed Respondent .....

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nd obtained 5.09 Crores from the Petitioner/Proposed Respondent. (vi)After obtaining the aforesaid Demand Draft, the said A.M. Mohan along with Valluvan opened an Account with Karur Vysya Bank, Arumbakkam Branch, Chennai in Sundarambal's name with false details by impersonating one Senthamarai who is the Petitioner in connected Writ Petition No.14084/2013 and she is none other than the said A.M. Mohan's own sister. (vii)Further the modus operandi is that immediately on realisation of the .....

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the Inspector of Police, Central Crime Branch Team IV, Egmore, Chennai in Crime No.96 of 2010. The said A.M. Mohan and other accused viz., Valluvan filed Crl.O.P.No.8575 of 2010 and 8580 of 2010 before this Court to quash the aforesaid FIR and this Court on 29.07.2010 was pleased to dismiss the said petitions. (ix)Subsequently, a charge sheet in C.C.No.88 of 2011 was also filed against the aforesaid persons by the Investigating Officer, Central Crime Branch before the Chief Metropolitan Magistra .....

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party. Contentions of Petitioners in W.P.Nos.14083 & 14084 of 2013: 7.It is the submission of the Learned Senior Counsel for the Petitioners in W.P.Nos.14083 and 14084 of 2013 that the object of the Prevention of Money-Laundering Act, 2002 specifies that the proceeds will go to the Central Government and now the power is given to the Special Court and that Court has to say now as to whom the amount should be paid and also there is a provision for passing an order of interim attachment and n .....

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hich the Petitioners and others are accused. Further, in the case on hand, the person who had given the complaint viz., M/s.Al Tirven Steels Private Limited is one of the facilitators and one A.M. Mohan along with the Company was facilitated and later he directly dealt with the matter and M/s.Al Tirven Steels who filed the complaint is doing the mischief and there is an inter party rivalry and one endeavouring to clutch the other. Moreover, the purpose of adjudication by the authority concerned .....

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f the common affidavit filed is accepted, then, the same shall remain a security till the prosecution is over and depending on the result of the prosecution, the Respondent, thereafter, can pass resultant orders. Therefore, in view of the Affidavit of Understanding furnished by the Petitioner in W.P.No.14083 of 2013 giving the items of property mentioned in the schedule of the property of the common affidavit filed as security, there remains nothing to be adjudicated in the Writ Petitions. Submi .....

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rned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 submits that the original criminal case inter alia relates to the complainant company paying ₹ 5.09 Crores to A.M. Mohan in the form of 28 demand drafts for the period relating to 29.11.2007 and 04.12.2007 for the purchase of land from one Sundarambal and that Mohan and Valluvan paid only ₹ 2.65 Crores to P.Sundarambal for the purchase of her 5.09 acres of land and for the balance sum of ₹ 2.44 Crores demand draft w .....

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aint was made by a person who was remotely affected. 13.The Learned Senior Counsel for the Petitioner in W.P.No. 14085 of 2013 brings it to the notice of this Court that A.M. Mohan earlier on 02.07.2010 gave a complaint to the authorities mentioned therein making a request to take action for recovery of the scheduled mentioned properties from the hands of land grabbers mentioned and to take appropriate action against them. 14.Also that, Crl.O.P.No.19095 of 2010 was filed by A.M. Mohan against 1. .....

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te order while disposing of the original petition by giving direction to the Deputy Commissioner, City Crime Branch, Chennai to conduct an enquiry on the complaint of A.M. Mohan pending with the CCB Team 1, Chennai and initiate action if any cognizable offence is made out as per Section 154(1) of Cr.P.C. 15.The Learned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 draws the attention of this Court to the order passed by this Court dated 01.04.2011 in O.P.No.280 of 2010 between A.M. M .....

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ur Vysya Bank, Arumbakkam Branch with the assistance of Senthamarai, Mohan's Sister into the Savings Bank Account number as stated earlier and further, the amount was immediately transferred to the current account number with the same Bank in the name of M/s.Sri Yaazhini Realtors (P) Limited where Mohan and his wife Shobana are the Directors and Sundarambal recently died one year back and she had not given the complaint as an aggrieved person and the transaction related to the year 2007, she .....

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r as stated supra. 18.The Learned Senior Counsel for the Petitioner submits that before the trial Court in C.C.No.88 of 2011 the compounding application is pending and at that time the Petitioner in W.P.No.14085 of 2013 received the summons and when the order in Crl.O.P.No.14032 of 2011 dated 28.09.2011 was stayed by the Hon'ble Supreme Court in the petition for Special Leave to Appeal (Crl) No.8160 of 2011 with S.L.P.(Crl) No.8313/2011 and S.L.P. (Crl) No.8317/2011 on 14.11.2011, then, it i .....

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and to issue summons under Section 50 of the Prevention of Money-Laundering Act, the Writ Petitioner in W.P.No.14085/2013 must be a third party who is unconnected with the criminal case or unconnected with the sale proceeds and in the summons, they have not specified any property and as per Section 45 of the Prevention of Money-Laundering Act, 2002 the offences are cognizable and non-bailable one. Further, the Writ Petitioner in W.P.No.14085/2013 is an accused in a criminal case, the summons is .....

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nsel for the Petitioner in W.P.No.14085/2013 contends that an offence under Section 420 I.P.C. can be compounded and if a Court of Law allows the compounding application, then, as per Section 320 (8) of Cr.P.C., it would have the effect of acquittal of the criminal main case and if that would be the position then, no purpose would be served for issuance of summons by the Respondent. 21.The Learned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 submits that Section 8(4) of the Preventi .....

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e property. Contentions of the Respondent: 22.Repudiating the submissions of the Learned Senior Counsel for the Petitioners, the Learned Counsel for the Respondent strenuously contends that the summons issued to the Writ Petitioners as per Section 50(2) and (3) of the Prevention of Money-Laundering Act, 2002 are deemed to be judicial proceedings within the meaning of Section 193 and 228 of Indian Penal Code and the Petitioners instead of answering the summons have rushed to this Court by filing .....

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09) wherein in paragraphs 17 to 20, it is mentioned as follows: "17. Once again another Division Bench of the Calcutta High Court in Income-Tax Officer and others -vs- James Joseph O'Gorman reported in 1993 Vol.204 I.T.R. 454, referred to Dwijendralal Brahmachari's case (cited supra) and in page 458, it was observed as follows:- ''Under the circumstances, it appears that the issuance of such notice by the Income-tax Officer was without jurisdiction. It has been averred in pa .....

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id not find acceptance by this court. A Division Bench of this Court in V.Datchinamurthy and another -vs- Assistant Director of Inspection (Intelligence), I.T.Department and another reported in 1984 Vol.149 I.T.R. 341, set out the purpose of the power conferred on an Income-tax Officer under Sections 131 and 132 of the Income Tax Act. In page 356, V.Sethuraman, J. speaking for the Bench, had observed as follows:- ''It is thus manifest that there is great latitude allowed to the ITO in th .....

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garb of a court, even at the stage of collection of evidence. There can be no reasonable apprehension of the ITO not utilising the favourable materials appearing in such evidence. The Supreme Court has examined this aspect in Suraj Mall Mohta and Co. -vs- A.V.Visvanatha Sastry (1954) 26 ITR 1, at page 13 and pointed out the rights available to the assessee under the I.T.Act as contrasted with the rights available under the Taxation on Income (Investigation Commission) Act, 1947 (Act No.XXX of 19 .....

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ssee in order to meet the case made against him. We cannot assume that the ITO is not likely to act in accordance with law and give directions to him. Therefore, the apprehension of the Federation at this stage appears to be absolutely misconceived." 19. Mr.M.Dhandapani, learned special counsel for Enforcement Directorate submitted that the provisions of FEMA cannot be compared with the provisions of other enactments. Here the question of application of Article 20(3) or Article 21 of the Co .....

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ovisions of the Constitution have to be construed in the spirit in which they were made and the benefits thereunder should not be expanded to favour the exploiters engaged in tax evasion at the cost of public exchequer and, therefore, such persons do not have the protection of Article 20(3) of the Constitution. 20. He also referred to the judgment of this Court in T.T.V.Dinakaran -vs- Enforcement Officer, Enforcement Directorate reported in 1995 (80) ELT 745 (Mad) for the purpose of stating that .....

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oned the petitioner's passport, petitioner's account books relating to his accounts in India and abroad and his property details. If we take into consideration the required documents mentioned in the schedule, the enquiry relates only to the petitioner in respect of his involvement in some transaction under the FERA Act. If the investigation relates to any other person, then the authorities would have mentioned the documents relating to the concerned third parties or the transaction betw .....

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property which has resulted out of the conversion of that property. Under the said sub-section, the adjudicating authority, adjudging the contravention under sub-section (1) to Section 13, if he thinks fit then in addition to any penalty, which he may impose for such contravention, direct the property in respect of which the contravention has taken place to be confiscated to the Central Government. Therefore, the petitioner cannot contend that he has no obligation to inform the authorities about .....

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ion under Article 20(3) of the Constitution. Therefore, the concept of applying the theory of self-incrimination even at the stage of investigation in case of violation of FEMA cannot be raised to the level of an investigation of a criminal offence protected by Articles 20(3) and 21 of the Constitution. 26. If it is seen in this context, then the attack made against the summons issued by the Department cannot be countenanced by this Court. The petitioner in essence seeks for a writ of prohibitio .....

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9;'25. The prayer for the issue of a writ of prohibition restraining the authorities under the Act from proceeding with the adjudication and the prosecution is essentially based on the constitutional challenge to the relevant provisions of the Act on the ground that they violate Articles 14 and 21 of the Constitution. Once we have held, as the High Court did, that the provisions are constitutional, the basis on which the writ of prohibition is sought for by the appellants disappears. It is s .....

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straining the authorities from continuing the proceedings pursuant to the notices issued. As indicated by this Court in State of U.P. -vs- Brahm Datt Sharma (1987) 2 SCC 179 when a show-cause notice is issued under statutory provision calling upon the person concerned to show cause, ordinarily that person must place his case before the authority concerned by showing cause and the courts should be reluctant to interfere with the notice at this stage unless the notice is shown to have been issued .....

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to costs. Consequently, the connected miscellaneous petition is also dismissed." 24.The Learned Counsel for the Respondent relies on the decision in (1987) 2 SCC 179 State of U.P. V. Brahm Datt Sharma, wherein it is observed that 'when a show cause notice is issued under statutory provision calling upon the person concerned to show cause, but ordinarily that person must place his case before the authority concerned by showing cause and the Courts should be reluctant to interfere with th .....

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y the Police in C.C.No.88 of 2011 relates to the investigation for predicate offences committed for criminal acts and it does not relate to the 'Proceeds of Crime'. In effect, the contention of the Learned Counsel for the Respondent is that the Respondent/Authorised Investigating Agency is empowered to trace and attach the proceeds of crime under Prevention of Money-Laundering Act and in this regard, there is no prohibition for the Respondent to proceed further in the matter in issue. 26 .....

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ntal matters connected thereto. 27.The Learned Counsel for the Respondent aptly points out the order in W.P.No.530 of 2011 dated 05.04.2011 between G. Srinivasan V. The Chairperson, Adjudicating Authority under PMLA, New Delhi and three others whereby and whereunder, in paragraphs 18, it is observed as follows: "18. Before parting with the case, it is necessary to refer to the observations made by the Supreme Court in K.K. Baskaran's case (cited supra), where the Supreme Court emphasize .....

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or is actually involved in any process or activity connected (Subs. By Act 2 of 2013, sec. 3, for "with the proceeds of crime and projecting" (w.e.f. 15.2.2013, vide S.O. 343(E), dated 8.2.2013) [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering." 29.From the aforesaid definition of 'Offence of Money-Laundering' mentioned in Section 3, the terms  .....

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tly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. 31.The 'Offence of Money-Laundering' relates to proceeds of crime derived from a scheduled offence. Scheduled Offences are mentioned under Part A of the schedule of the Prevention of Money-Laundering Act, 2002 and (2) for offences specified under Part C of the Schedule viz., having cross border implications etc. 32.Indeed, the 'Offence of Money-Laundering' as def .....

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hree factors: 1.The conversion or transfer of property for the purpose of concealing or disguising the illicit origin of the property or assisting any person; 2.To evade the legal consequences of his actions; 3.The concealment or disguise of true nature source, location, disposition movement, rights with respect to or ownership of property; The acquisition, possession or use of property, knowing at the time of receipt, that such property was proceeds [vide Review of FATE Anti-Money-Laundering Sy .....

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inciples of Natural Justice. Only to prevent miscarriage of Justice, the purpose of following Principles of Natural Justice is emphasised, as opined by this Court. 37.As a matter of fact, (i)A quasi-judicial authority ought not to make any decision adverse to a party without affording an opportunity of meeting the allegations made against him. (ii)The party whose rights are to be affected should be provided with the information upon which the action is raised and the affected party should have r .....

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ssession of the proceeds of crime the adjudication authority is required to be satisfied that in respect of the Proceeds of Crime, Offence of Money-Laundering is committed or a person is in possession of proceeds of crime, in the considered opinion of this Court. 39.For the purpose of Adjudication, the Adjudicatory Authority is required to serve a notice of not less than thirty days to the concerned person by requiring him to indicate the sources of his income, earning or assets, out of which or .....

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ng Authority Regulations, 2006 have been now replaced by the Adjudicating Authority (Procedure) Regulations, 2013 which specifies to whom the notice is given viz., (a)to an individual in respect of whom the Adjudicatory Authority has reason to believe that he has committed an offence under Section 3 of the Prevention of Money-Laundering Act, 2002; (b) In case of any property held by a person on behalf of any person or such other person also; (c)In case of any property held jointly by more than o .....

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eing heard' is a cardinal Principal of Natural Justice and the authority is to take into account all relevant materials placed on record by the parties concerned before him. 41.The authority in a given case may come to a resultant conclusion that the property attached/retained is not the property involved in money-laundering, in which event, he is to vacate the order of attachment and order return of property. Aerial view of some provisions of Prevention of Money-Laundering Act: 42.A perusal .....

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l representative or they are examined or furnished statements and also to produce such documents as may be required. Such proceedings shall be deemed to be a judicial proceeding within the meaning of Section 193 and 228 I.P.C. 43.Section 23 of the Prevention of Money-Laundering Act speaks to the effect that 'If there are two or more inter-connected transactions and atleast one is proved to be involved in money-laundering, it shall presume that the remaining transaction or transaction form pa .....

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d domain as per Section 106 of the Indian Evidence Act, 1872. 45.Section 26(3) of the Prevention of Money-Laundering Act, 2002 speaks of filing of an Appeal by the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, save as otherwise provided in sub-section (3). 46.Section 42 of the Prevention of Money-Laundering Act provides an opportunity to any person aggrieved by any decision or order of the Appellate Tribunal to file an appeal to the High Court wi .....

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the cases within the local limits of the jurisdiction of the High Court. 48.The Prevention of Money-Laundering (Amendment) Act, 2012 has come into force with effect from 15.02.2013 as per the Central Government Notification in the Official Gazette. Impact of Money Laundering: 49.The Evil act of money-laundering may create a parallel economic system in a particular country controlled by few persons. Undoubtedly, this will result in destabilisation and also affect the prevailing economy. The act .....

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with successful merging into the legitimate finance stream. 50.It is not out of place for this Court to make a significant mention that money-laundering offence primarily springs from 'Proceeds of Crime'. There is a predicate offence under each activity of money-laundering. Further, the Act speaks of the reporting authority to furnish information of such provided transactions to the Director within the prescribed time. Added further, the Prevention of Money-Laundering Act imposes an obl .....

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ed in Section 8 of the Prevention of Money-Laundering Act as well for the trial of the money-laundering offences. As such, the presumption is attracted in regard to the trial proceedings before the Special Court for an offence under Section 3 of the Act. The Adjudicating Authority or the Court will have to first come to the conclusion that atleast one of the inter-connected transactions is proved by the investigating agency to be involved in money- laundering. Recalling and Recollecting the Deci .....

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wrongly deprived him of something, or wrongfully refused him something or wrongfully affected his title to something." Attachment and Confiscation: 53.No wonder, the term 'Attachment and Confiscation' is a proceeding 'In Rem and not in Personam'. Section 9 of Prevention of Money-Laundering Act, 2002 provides that once a crime relating to property is proved in Competent Court of Law, the Adjudicating Authority shall pass an order in ordering confiscation of such property aft .....

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Respondent under Section 50 (2) and (3) of the Prevention of Money- Laundering Act to the Petitioners are for the purpose of gathering evidence under the Prevention of Money-Laundering Act with a view to ascertain the proceeds of crime be involved in a Evil Act of 'Money-Laundering'. The charge sheet laid down by the Police in C.C.No.88 of 2011 relates to investigation in respect of predicate offences and not for the proceeds of crime. The competent and appropriate authority is the Respo .....

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ation of the same. More importantly, Section 3 and 4 of the Prevention of Money-Laundering Act deal with 'Offence of Money-Laundering' and 'Punishment for Money-Laundering'. Furthermore, as per Section 48(c) of the Prevention of Money-Laundering Act, the Assistant Director is the proper authority to investigate the offences relating to prevention of money-laundering. 56.At this stage, this Court pertinently points out the decision of the Hon'ble Supreme Court in Director of E .....

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justice to the extent applicable but, they are not "Judges' of the "Criminal Courts" trying an "accused' for commission of an offence, as understood in the general context. They perform quasi-judicial functions and do not act as "Courts" but only as "administrators' and "adjudicators'. In the proceedings before them, they do not try "an accused" for commission of "any crime" (not merely an offence) but determine the lia .....

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quot;penalty'. When penalty is imposed by an adjudicating officer, it is done so in "adjudicator proceedings' and not by way of fine as a result of "prosecution" of an "accused' for commission of an "offence" in a criminal Court. Therefore, merely because "penalty' clause exists in Section 23(1)(a), the nature of the proceedings under that Section is not changed from "adjudicator' to "criminal' prosecution. An order made by an .....

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ction 23(1)(a) as soon as contravention of the statutory obligation contemplated by Section 10(1)(a) is established. The breach of a "civil obligation" which attracts "penalty" under Section 23(1)(a) FHRA, 1947 and a finding that the delinquent has contravened the provisions of Section 10 FERA, 1947 would immediately attract the levy of "penalty' Under Section 23, irrespective of the fact whether the contravention was made by the defaulter with any "guilty inten .....

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the "blameworthy conduct" of the delinquent had been established by wilful contravention by him of the provisions of Section 10, FERA, 1947. It is the delinquency of the defaulter itself which establishes his "blameworthy" conduct, attracting the provisions of Section 23(1)(a) of FERA, 1947 without any further proof of the existence of "mens-rea". Even after an adjudication by the authorities and levy of penalty Under Section 23(1)(a) of FERA, 1947, the defaulter ca .....

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e 1104 to 1106, in paragraphs 9 to 13, it is laid down as follows: "9. In Maqbnol Hussain v. State of Bombay, AIR 1953 SC 325 : 1953 SCR 730, a Constitution Bench of this Court while considering the nature of proceedings under the Sea Customs Act and FERA, 1947 dealt with the principle and scope underlying Article 20(2) of the Constitution. In that case gold was found in possession of the appellant therein when he landed at the Santa Cruz Airport. The appellant was detained and searched by .....

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itted an offence Under Section 8 FERA, 1947. The appellant thereupon filed a petition in the High Court of Bombay under Article 226 of the constitution seeking quashing of the complaint by contending that his prosecution in the Court of the Chief Presidency Magistrate was in violation of his fundamental right guaranteed under Article 20(2) of the Constitution. It was the case of the appellant before the High Court that since the complaint before the Chief Presidency Magistrate also proceeded on .....

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le 20(2) only if he was the owner of gold which had been confiscated. The Chief Presidency Magistrate was, therefore, directed to first determine the question of fact. After recording some evidence the Chief Presidency Magistrate returned a finding that the appellant was the owner of gold. The High Court, however, reversed the finding and sent the case back to the trial court for its trial in accordance with law after refusing the benefit to the appellant of the protection under Article 20(2) of .....

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ed by the confiscation of gold and the option given to him to pay fine in lieu of such confiscation. The Court examined in detail the ambit, scope and applicability of the principle of "double jeopardy" in the light of the fundamental right guaranteed under Article 20(2) of the Constitution. The Court opined (para 12 of AIR): "it is clear that in order that the protection of Article 20(2) be invoked by a citizen there must have been a prosecution and punishment in respect of the s .....

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"be subjected to a penalty", "commission of the offence", "prosecuted and punished" "accused of any offence", would indicate that the proceedings therein contemplated are of the nature of criminal proceedings before a Court of law or a judicial tribunal and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a Court of law or a judicial tribunal in accordance with the procedure prescribed in the s .....

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nation of duty or the increased rate of duly and for imposition of penalty as prescribed under the Act and not a judicial tribunal. The Court opined (AIR 1953 SC 325 at p.330) :- "We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudging of confiscation, increased rate of duty or penalty under the provisions of the Sea Customs Act do not constitute a judgment or order of a Court or judicial tribunal' necessary for the purpose of supporting a pl .....

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ce with which he was charged before the Chief Presidency Magistrate, Bombay in the complaint which was filed against him Under Section 23, Foreign Exchange Regulation Act." 11.The Constitution Bench then laid down that though the administrative authorities functioning under the Sea Customs Act had the jurisdiction to confiscate gold, illegally brought into the country, and levy penalty on the defaulter, none the less the authorities were not trying a criminal case but deciding only the effe .....

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paragraph 1023, it is stated thus : "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws." 13.We are in agreement with the aforesaid view and in our opinion, what applies to "tax delinquency" equally holds good for the "blameworthy" conduct for contravention of the provisions of .....

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ot; under the Act as equivalent to the commission of a "criminal offence,", overlooking the position that the "blameworthy conduct" in the adjudicator proceedings is established by proof only of the breach of a civil obligation under the Act, for which the defaulter is obliged to make amends by payment of the penalty imposed Under Section 23(1)(a) of the Act irrespective of the fact whether he committed the breach with or without any guilty intention. Our answer to the first .....

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order to operate as a fetter to the second prosecution and punishment for the same offence, in the considered opinion of this Court. 58.Also that, the adjudication proceedings initiated against the Petitioners under the Prevention of Money-Laundering Act by requiring them to appear on the specified dates through summons cannot attract the ambit of Article 20(2) of the Constitution viz., the plea of 'Double Jeopardy' since the object of this Prevention of Money-Laundering Act is to ascert .....

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of 'double jeopardy' taken on behalf of the Petitioners is not acceded to by this Court. Final Disposition: 60.In the light of foregoing detailed discussions and on appreciation of the entire gamut of the facts and circumstances relating to the subject matters in issue, this Court comes to an inevitable conclusion that the present Writ Petitions filed by the Writ Petitioners are not maintainable because of the simple reason that through the summons dated 10.04.2013 they were directed to .....

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Police in C.C.No.88 of 2011 relates to investigation for predicate offences under Sections 419, 420 read with Section 34 I.P.C. for criminal offences. However, since the charged offences under Sections 419 and 420 I.P.C. are the Scheduled Offences under clause 1 of sub-section (y) of Section 2 of the Prevention of Money-Laundering Act 2002, the Respondent registered an Enforcement Case Information Report (ECIR) bearing No.CEZO/2/ 2013 dated 26.03.2013 to carry out the investigation under the Pr .....

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Moreover, the Adjudicating Authority under the Prevention of Money Laundering Act is not trying a criminal case. But only decides the effect of breach of obligations by the concerned. 61.As a matter of fact, the proceedings initiated under the Prevention of Money-Laundering Act by the Respondent through issuance of summons dated 10.04.2013 to the Petitioners is an Independent Process and where the ultimate object of the Respondent is to trace/ascertain the proceeds of crime and to attach the pr .....

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