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Kolakalapudi Brahma Reddy Versus Union of India

Validity of summons issued under Section 50(2) of PMLA - whether summons are illegal, arbitrary and violation of principles of natural justice and violation of Articles 14 and 21 of the Constitution of India and violation of Section 50 of Prevention of Money Laundering Act, by holding that the respondents 2 and 3 have no authority or jurisdiction to issue summons? - Held that:- Section 50(2) of the Act, vest power in the competent authority to summon any person whose attendance he considers nece .....

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sted in the Assistant Director to summon the petitioner as alleged by the petitioner. No merit in the writ petition. - Writ Petition No.38314 of 2013 - Dated:- 7-2-2014 - P. NAVEEN RAO J. Sri D.V. Sitarama Murthy, Senior Counsel for Sri. P. Kasi Nageswara Rao for the Petitioner. Sri P. Ashok gound, Asst. Solicitor General for Sri N. Harinath, Standing Counsel for the Respondent. ORDER This writ petition is instituted by the petitioner with a prayer to issue writ of mandamus declaring the action .....

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ations and Horticulture Private Limited and M/s. Maithri Realtors India Private Limited. Petitioner avers that he negotiated with the companies and resigned from both the companies. Accordingly, an agreement was executed on 02.11.2012 with the concerned Managing Directors and Directors of both the companies separately. Petitioner approached the Registrar of Companies and got the necessary entries in the registers of companies. The petitioner avers that he has no relation with both companies afte .....

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hat respondent Nos.2 and 3 issued summons dated 11.12.2013 directing the petitioner to appear before the 3rd respondent on 20.12.2013 along with relevant documents. Accordingly, petitioner appeared before the third respondent on the said date. Petitioner was directed to appear again after fifteen days. Though petitioner appeared before the third respondent as directed by him, petitioner challenges the order dated 11.12.2013 directing him to appear before the third respondent in this writ petitio .....

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s, thus, contended that even without final report as mandated by Section 173 of Cr.P.c., or filing of complaint before the Magistrate or Court, property can be seized. It is further contended that according to Section 50(2) of the Act, 2002, third respondent has power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under the Act. Petitioner was the Director of M/s.Sri Nakshthra Bu .....

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ed on behalf of the respondents 2 and 3. 5. Learned senior counsel mounted the challenge on the impugned decision of respondents 2 and 3 summoning him for enquiry by placing reliance on the decision of this Court in Criminal Petition No.11459 of 2011, dated 29.01.2012. Learned senior counsel contended that this Court held in the above case that only on the report filed by the Police under Section 173 of Cr.P.c., or on filing of a complaint under Section 36(1) of N.D.P.S.Act, 1985, ECIR can be re .....

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nd, therefore, directing him to produce relevant records is ex facie illegal. Learned senior counsel therefore submits that in view of the law laid down by this Court in Criminal Petition No.11459 of 2011, the order impugned herein is liable to be set aside and petitioner cannot be summoned for enquiry until and unless final report is filed in the crimes registered before the respective police stations. 7. Learned senior counsel further contended that there is a difference in terminology used in .....

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petitioner indicate that an offence of money laundering is made out and registered Enforcement Case Information Report (ECIR) and took up investigation. As part of investigation, summons issued directing appearance of petitioner. He further submits that judgment of this court in Criminal Petition No.11459 of 2011 has no application to the facts of this case. He submitted that it was the case where the investigating officer filed quash petition contending that he was not supposed to conduct any i .....

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ner is summoned as part of investigation into violations of the Act 2002. Therefore, at this stage, interference by this court under Article 226 is not warranted and it is premature. Learned counsel relied on the decision of High Court of Madras in the case of M.Shobana Vs. The Assistant Director, Directorate of Enforcement Government of India in support of his contention that it is permissible and within a competence of investigating officer under Act, 2002 to issue summons in exercise of power .....

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basing on the crime registered against the petitioner and others, the competent authority, under the Act, has registered ECIR and has taken up investigation. In the process of investigation, petitioner was summoned. 11. As seen from the judgment of this Court in Criminal Petition No.11459 of 2011, it was a petition filed by the Assistant Director, Directorate of Enforcement against registering of crime on the allegation that his conduct attracted the provision of Section 166 of the Indian Penal .....

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ed to the Magistrate, property cannot be attached. It is to be noted that Section 5(1) of the Act, underwent amendment in the year 2001 and 2013. By way of amendment second proviso to Section 5(1)(b) is incorporated. Second proviso is an exception to the main provision in Section 5(1) (b). The scope of the amended second proviso to section 5(1)(b) including other provisions of the Act, 2002 were considered by Division Bench of this Court in B.Rama Raju Vs. Union of India . The division bench of .....

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has reason to believe. the non obstante clause in the second proviso clearly excludes Clause (b) of Sec 5(1). It is this clause (b) that incorporates the requirement that the proceeds of crime should be in possession of a person who is charged of having committed a scheduled offence, for initiating proceedings for attachment and confiscation. If the provisions of the Section 5(1)(b) are to be eschewed for ascertaining the meaning of the second proviso (qua the legislative injunct of the non obst .....

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