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M. Shobana, M. Senthamarai and A. Valluvan Versus Assistant Director, Directorate of Enforcement

2013 (9) TMI 1144 - MADRAS HIGH COURT

Summons issued as per Section 50 (2) and (3) of the Prevention of Money-Laundering Act, 2002 - Held 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 appear before the Respondent/Assistant Director, Directorate of Enforcement, Chennai with records mentioned therein for the purpose of enquiry/ investigation under the Prevention of Money-Laundering Act to ascertain the pr .....

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y Laundering Act is designated to adjudge the breach of any statutory obligation and it is not a Court of Law or a Judicial Tribunal, in the considered opinion of this Court. 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. Respondent has issued show cause notices/summons dated 10.04.2013 to the Petitioners in question based on authority in terms of Section 50 .....

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r. 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 summons vide ECIR No. CEZO/2/2013 (KCM) dated 10.04.2013 issued by the Respondent and to quash the same. 2.The Petitioners were directed to appear on 09.05.2013, 07.05.2013, 08.05.2013 respectively by the .....

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ough 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, Chennai with an allegation of impersonation and cheating and also that the Central Crime Branch, Egmore registered a case in Crime No.96 of 2010 under Sections 419, 420 r/w 34 I.P.C. on 25.02.2010. Durin .....

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ed 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 framing of charges against the accused, the trial commenced and summons was issued to the witnesses P.W.1 and P.W.2 on the beginning day of trial itself, an aggrieved party M/s.IVRCL Limited (formerly it wa .....

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used 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 such, the trial in C.C.No.88 of 2011 on the file of the Learned Chief Metropolitan Magistrate, Egmore, Chennai is pending as on date. (iii)Under the above background, a separate complaint was lodged by th .....

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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 loan facilities of the agreement holder through a document dated 18.10.1999. iii. A Power of attorney in favour of the above said person dated 18.8.2000 was also executed and on the basis of power of atto .....

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f 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 Sivananatha raj, Power of Attorney of Executors of the Will of Mrs. Meera Bai applied for Letters of Administration based on the Will which specifically excludes her property in India. Viii. A.R. Housing P .....

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nd 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 2010 by this Court, the State Police had not initiated action to investigate in a right direction, the said Mohan was forced to file a original petition before this Court seeking transfer of investigati .....

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ourt 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 Police registered a case in Crime No.450 of 2011 and there is no progress in the investigation, except filing of status report before this Court. Further, in one such status report filed by the State Police .....

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hat '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 of India, stated as follows: "In this connection we invite your attention to our letter No.FE/Co.FID/ 2077/10.51.000/2010-11 dated July 26, 2010, and reiterate that the case has been forwarded to t .....

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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 drag the Petitioners to their fold. (viii)The contention advanced on behalf of the Petitioners is that the summons issued by the Respondent/Directorate of Enforcement dated 10.04.2013 are premature one bec .....

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olourable 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 proposed investigation with reference to crime proceeds is unwarranted, illegal and against law. (xi)The grievance of the Petitioners is that when the accused facing with criminal charge before the trial Co .....

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and 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 to the Petitioners for conducting fresh enquiry that too in respect of the already pending charge, a compound application is pending wherein only a formal order has to be passed by the trial Court. 4.Coun .....

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ranch, 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 the course of their business, they had entered into a Memorandum of Understanding with M/s.IVR Prime Urban Development Limited, for facilitating in the purchase of lands in Sandavellore, Chittoor and Papa .....

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nd 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 25.11.2010. (iii)It transpired from the perusal of the document that M/s.Al Tirven Steels, Chennai entered into a Memorandum of Understanding on 20.12.2006 with M/s.IVR Prime Urban Developers Limited for the pr .....

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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, Arumbakkam Branch, Chennai, with the assistance of Mohan's sister, Senthamarai into the Savings Bank Account No.128915500016195 and the said amount immediately transferred to the Current Account No.128913 .....

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.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 to order for further investigation in Crime No.96 of 2010 by any other independent agency or more specifically the C.B.I. other than the Police Authority and also consequently, to frame additional charge .....

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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'ble Supreme Court of India with prayer to stay and quash the order so passed. However, the Petitioners obtained an order of interim stay on 14.11.2011 wherein it was observed that the Interim Order had .....

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or 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 Information Report (referred to ECIR) bearing No.CEZO/2/2013 dated 26.03.2013 to carry out the investigation under PMLA against the Petitioners. (viii)The objects of the Prevention of Money-Laundering Act are .....

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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 Court. There is no legal block for conducting investigation under PMLA by the Respondent, which is an independent process. (x)The summons dated 10.04.2013 issued by the Respondent requiring the Petitione .....

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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, 2002 proceeding on the basis of any crime or criminal proceedings would not arise. In the present case on hand also, already the investigation was completed and that was questioned before this Court in Crl. .....

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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 Finance, Department of Revenue, Chennai, 2012 (4) CTC 225, in paragraph 43, it is held as follows: "43. The action of the Adjudicating Authority in proceeding with the hearing of the original Complaint d .....

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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)Before the Criminal Court, the compromise petition/ application is still pending. The said petition/application has been filed by the aggrieved party and the accused persons (Petitioners herein). The effect o .....

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s 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 investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into legitimate channels so that its original source cannot be traced." "Method of di .....

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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 Development Limited, in the charge sheet, as per the transaction in question, has admitted that the said amount became payable to the first accused as his facilitation charges and incidental expenses through one .....

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o 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) along with Valluvan (Petitioner in W.P.No.14085/ 2013) approached the Petitioner/Proposed 2nd Respondent and represented that they know the people of the village and offered to facilitate for procuring t .....

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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 was in confidence that the same could not be misused by the aforesaid persons. (v)In one incident, the aforesaid persons received ₹ 5,09,00,000/- (Rupees Five Crores and Nine Lakhs only) through D .....

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m 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 Demand Draft, the amount was transferred to the account of one SRI YAAZHINI REALTOR, a company formed only for the purpose, in which the said A.M. Mohan and Mrs.Shobana, the Petitioner in the Writ Petit .....

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his 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 Magistrate Court, Egmore, Chennai. (x)Though the Petitioner/Proposed Respondent made all efforts effectively/legally against A.M. Mohan and the Writ Petitioners but still they were freely enjoying the Proceeds o .....

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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 notice is to be given and then only the attachment can be made absolute the Director has to file a complaint before the Adjudicating Authority and if a person is acquitted the property wold be returned to .....

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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 under the Prevention of Money-Laundering Act, 2002 is to secure the property. 9.Added further, instead of attachment and issuing of summons by the authority concerned, if a person gives security for one& .....

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t 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. Submissions of the Petitioner in W.P.No.14085 of 2013: 10.The Learned Senior Counsel for the Petitioner in W.P.No. 14085 of 2013 contends that the summon in question is to be quashed in so far as the Writ Pet .....

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f 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 was taken in favour of Sundarambal and in this regard, the allegation is that it was not encashed by P.Sundarambal but it was encashed by Mohan's Sister Senthamarai etc. 12.At this stage, the Learned .....

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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.The Director General of Police, Chennai, 2.The Commissioner of Police, Greater Chennai City, Chennai 600 002 3.L.S.Abinesh Babu wherein a relief was sought for issuance of a direction by the Court to the .....

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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. Mohan V. Al Tirven Steels Limited, Chennai- 40 and two others wherein this Court has appointed Justice A.Ramamurthi, a retired Judge of this Court as the sole Arbitrator to hear the disputes and adjudicat .....

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urrent 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 had not complained and in fact, IVCC like Sundarambal has not lodged the complaint. 17.According to the Learned Senior Counsel for the Petitioner, A.M. Mohan filed complaint on 02.07.2010 in which the D .....

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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 is open to the Respondent/ Directorate of Enforcement to get impleaded before the Hon'ble Supreme Court and in the teeth of the Hon'ble Supreme Court order (wherein the impugned order passed in Cr .....

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ith 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 issued by the Respondent should mention the criminal case number and if they mentioned the criminal case in the summons, then, it would be the stand of the Writ Petitioner that the matter was stayed by the .....

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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 Prevention of Money-Laundering Act, 2002 refers to the situation where the provisional order of attachment made under sub-section (1) of Section 5 has been confirmed under sub-section (3), the Director or any ot .....

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ssued 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 the present Writ Petitions praying to quash the summons issued by the Respondent at the preliminary stage of investigation under Prevention of Money-Laundering Act and that the Writ Petitions are not mai .....

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rted 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 paragraph 10 of the writ petition that in respect of proceedings which were pending similar notices were issued by the Income-tax Officer and those had been duly complied with. Under the circumstances, as .....

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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 the collection of materials and he does not act as a court at that stage. There are no two parties before him, and the procedure in the adversary system of proceedings cannot be applied to him. However, th .....

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xamined 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 1947). It was pointed out that while in the proceedings under Act No.XXX of 1947, the assessee would be entitled only to get copies of that portion of the materials, which were brought on record and which .....

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s 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 Constitution does not arise. A person who is summoned to appear before the Enforcement Directorate is not an accused in a criminal case. The Supreme Court in Poolpandi -vs- Superintendent, Central Excise r .....

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ublic 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 under the earlier enactment, viz., FERA, 1973, the attempt to challenge the summons served under section 40 was repelled by this Court. In paragraph 11, it was stated as follows:- Para 11. .'' M .....

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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 between the petitioner and those third parties. Hence, I am of the view that the non-mentioning of the (nature) of investigation and the purpose of the requirement of documents do not vitiate the summons in .....

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it 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 the nature of properties possessed by him. 25. The Supreme Court in C. Sampath Kumar -vs- Enforcement Officer reported in (1997) 8 SCC 358, while deciding the case in respect of Section 40 of the FERA, .....

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vel 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 prohibition against the department for having issued the summons by the exercise of the powers vested on them under section 37 read with section 131 of the Income Tax Act. In Standard Chartered Bank and others -vs .....

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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 settled by the decisions of this Court that a writ of prohibition will issue to prevent a tribunal or authority from proceeding further when the authority proceeds to act without or in excess of jurisdict .....

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ssued 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 palpably without any authority of law. On the facts of this case, it cannot be said that these notices are palpably without authority of law. In that situation, the appellants cannot successfully challen .....

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ma, 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 the notice relative at this stage unless the notice is shown to have been issued palpably without any authority of law'. 25.The pith and substance of the submission of the Learned Counsel for the Respo .....

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he 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.During the last leg of the argument, the Learned Counsel for the Respondent contends that the act of the Money-Laundering poses a grave economic threat not only to the financial system of our country bu .....

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y 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 emphasized the necessity to have laws to protect the people from money laundering and swindlers." Definition of Money-Laundering: 28.It is to be noted that Section 2(p) of the Prevention of Money-Laundering .....

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) [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 'Money Laundering' can be said to be any process or activity connected with the proceeds of crime and projecting or claiming proceeds of crime as an untainted property. In plain language, it can saf .....

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om 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 defined under the Prevention of Money-Laundering Act, centres around the 'Proceeds of Crime'. 33.Money Laundering is the illegal practice of filtering 'Dirty Money' or Ill-gotton gains throu .....

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ions; 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 Systems and mutual evaluation procedures 1992-1999. 35.The money laundering involves disguising financial assets so that they can be used without deduction of illegal activity that produced though money la .....

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cial 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 reasonable notice of the case which he has to meet/face. Of course, an opportunity is to be provided to the affected party which must be real, reasonable and substantial too. (iii) The affected party shou .....

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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 by means of which he has acquired the property provisionally attached under sub-section (1) of Section 5, or, seized or frozen under Section 17 or Section 18 of the Act, the evidence on which he relies .....

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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 one person who all the persons holding such property. Before passing an order, the Adjudicating Authority is necessarily to consider the reply, if any, filed by any of the individuals to whom the notice i .....

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en 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 of the ingredients of the Prevention of Money-Laundering Act, 2002 shows that the authority not below the rank of Assistant Director is enjoined to summon any person whose attendance such authority cons .....

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tion 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 part of such inter-connections. In fact, the term 'inter-connected transactions' is not defined under the Prevention of Money-Laundering Act, 2002. 44.Section 24 of the Prevention of Money-Launderi .....

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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 within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order etc. 47.Section 47 of the Act says that t .....

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vernment 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 of 'money-laundering' has three ingredients. (a)In placement, it concerns the division of proceeds into smurfing so as to make movements thereof less suspectable. (b)In layering, the funds introd .....

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rime'. 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 obligation on the reporting entity which term covers Banking, Country Financial Institutions, Intermediary and individual carrying on Designated Business or Profession to maintain record of transactions pre .....

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al 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 Decision: 52.At this stage, this Court recalls and recollects the decision In Re Exp Sidebotham (1880) 14 Ch D 458 (which was relied upon decision 2001 Crl. J. 2853) wherein it is held as follows: "But .....

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cation' 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 after hearing the concerned persons. The onus of adducing evidence during trial in respect of the offences under the Prevention of Money-Laundering Act is on the prosecution. Analysis: 54.As far as the pres .....

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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 Respondent/Directorate of Enforcement who is authorised to trace and attach the proceeds of crime under the Prevention of Money-Laundering Act. 55.Also, a plea is taken on behalf of the Respondent that the pr .....

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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 Enforcement V. M/s.MCTM Corporation Private Limited and others, AIR 1996 Supreme Court 1100 wherein it is held as follows: "The proceedings under Section 23(1)(a) FERA, 1947 are "adjudicator&quo .....

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hey 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 liability of the contravenor for the breach of his "obligations" imposed under the Act. They impose "penalty' for the breach of the "civil obligations' laid down under the Act an .....

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d' 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 adjudicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender." Also, in the aforesaid decision, at page Nos.1100 and 1101 .....

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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 intention" or not. Therefore, unlike in a criminal case, where it is essential for the "prosecution" to establish that the "accused" had the necessary guilty intention or in other wor .....

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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 can still be tried and punished for the commission of an offence under the penal law, where the act of the defaulter also amounts to an offence under the penal law and the bar under Article 20(2) of the Co .....

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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 the Customs Authorities and gold was seized from his possession. Proceedings Under Section 167(8) of the Act were taken by the Customs Authorities and after recording evidence, an order was passed confis .....

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t 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 the footing that the appellant had committed an offence insofar as he brought gold into India without any permit from the Reserve Bank of India on which allegations alone the gold stood already confiscat .....

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hief 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 the Constitution. By special leave the appellant filed an appeal in this Court. It was in this background that the Constitution Bench proceeded to determine whether the appellant could be said to have b .....

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rdy" 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 same offence before a Court of law or a tribunal, required by law to decide the matters in controversy judicially on evidence on oath which it must be authorised by law to administer and not before a trib .....

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ted 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 statute which creates the offence and regulates the procedure. 10.The Court then laid down various tests for determining when a tribunal can be considered to be a judicial tribunal and after referring to .....

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ion 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 plea of double jeopardy. It therefore follows that when the Customs Authorities confiscated the gold in question neither the proceedings taken before the Sea Customs Authorities constituted a prosecution o .....

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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 effect of a breach of the obligations by the defaulter under the Act. On a parity of reasoning what holds true for the adjudicator machinery under the Sea Customs Act holds equally true for the administrativ .....

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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 FERA, 1947. We, therefore, hold that mens-rea (as is understood in criminal law) is not an essential ingredient for holding a delinquent liable to pay penalty Under Section 23(1)(a) of FERA 1947 G for co .....

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oof 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 question formulated by us above is, therefore, in the negatives." 57.It is to be remembered that in terms of Article 20(2) of the Constitution of India no person shall be prosecuted and punished for .....

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ioners 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 ascertain the trail of Evil act of money laundering. 59.To put it succinctly, the initiation of proceedings like issuance of summons etc. in Prevention of Money-Laundering Act are self-contained, in-built and .....

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mut 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 appear before the Respondent/Assistant Director, Directorate of Enforcement, Chennai with records mentioned therein for the purpose of enquiry/ investigation under the Prevention of Money-Laundering Act .....

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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 Prevention of Money-Laundering Act against the Petitioners. Moreover, the summons issued to the Petitioners is a preliminary one relating to the investigation under the Prevention of Money-Laundering Act b .....

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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 proceeds of crime if proved in a given case. In this connection, it may not be out of place for this Court to point out that the Hon'ble Supreme Court in S.L.A.(Crl)No.8160 of 2011 with S.L.P.(Crl.).No .....

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