TMI Blog2017 (3) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 to 18.12.1988, petitioner has been alleged of converting demonetized currency of ₹ 6,12,50,000/- out of which possession of ₹ 27 Lakhs has been admitted in the petition itself. Secondly, that the explanation to the possession of ₹ 27 Lakhs is not satisfactory. In the circumstances, petitioner’s case does not merit recording a finding of satisfaction by this Court to the effect that there are reasonable grounds for believing that the petitioner is not guilty of the offences alleged against him and that he is not likely to commit any offence while on bail. Grant of bail in this case is undebatably contingent upon this Court recording it’s satisfaction as required under Section 45(ii) of the PML Act. In view of the finding that the petitioner’s case does not merit recording such satisfaction, the said statutory requirement remains unfulfilled. Resultantly, this petition fails and is accordingly dismissed. - Criminal Petition No.366/2017 - - - Dated:- 23-2-2017 - THE HON BLE MR.JUSTICE P.S.DINESH KUMAR FOR THE APPELLANT : SHRI.C.V. NAGESH, SENIOR COUNSEL FOR SHRI.SANDEEP PATIL, ADV., FOR THE RESPONDENT : SHRI.S.MAHESH, ADV., ORDER Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered based on the FIR lodged by the C BI; that the persons accused in the FIR are involved in fraudulently exchanging old demonetized currency notes of ₹ 500/- and ₹ 1,000/- leading to commission of offences under Sections 120B, 420 and 471 IPC; and Section 13(2) read with Section 13(1)(c)(d) of PC A ct. It is also stated that the investigation by the ED revealed petitioner s involvement in acquiring/ possessing/ exchanging/converting the old demonetized currency notes of ₹ 500/- and ₹ 1,000/- into newly introduced currency notes of ₹ 2,000/- in connivance with various middle-men. It is further stated that the petitioner appears to be guilty of fraudulently acquiring/possessing/ converting/ exchanging getting converted old demonetized notes into new notes in connivance with several persons by using his official position and that he has amassed wealth disproportionate to his known source of income. vi) Though the specific case of the ED against the petitioner is acquiring /possessing /converting /exchanging getting converted old demonetized notes into new notes, ED has given up the allegation with regard to exchange of notes and during the pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Item No.17 is the construction put up on items described at Sl.No.4, 5, 6, 7 and 8. 4. With the above facts on hand, the learned Senior Counsel submitted that the ED could invoke the provisions of PML Act only if there is an occurrence of any offence described in the schedule. As per the grounds of arrest, the petitioner was involved in acquiring/ possessing/ converting/ exchanging / getting converted old demonetized note s into new notes. However, the complaint is based on the FIR registered by the Karnataka Lokayukta Police alleging commission of offences under Section 13(1)(e) read with 13(2) of the PC Act. He argued that the ED was not thus sure of offences, if any committed by the petitioner. The allegation was exchanging of demonetized notes. The RBI had p laced an embargo from exchanging demonetized notes in excess of ₹ 4,500/-. Therefore, if at all there was any violation of such direction, it could be an offence under the RBI Act attributable to the banker, and at any rate, it cannot be construed as an offence committed by the petitioner . Further, offence under the RBI Act is not a scheduled offenc e under the PML Act. This Court having stayed further investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under the provision s of Cr.P.C., it is to be noted that in the complaint fi led by the ED before the Principal City Civil Sessions Judge, during the pendency of this petition, it is stated that the genesis of the instant complaint is the FIR registered by CBI in Crime No.91/2008 dated 17.12.2008 under Section 13(1)(e) r/w Section 13(2) of the PC Act. There is also a reference to the FIR RC 23(A)/2016 registered by CBI/ACB/BLR dated 3.12.2016 which is registered for involvement in fraudulently exchanging/converting the old demonetized currency for offences punishable under Section 120-B r/w Section s 420, 406, 409, 468, 471 477-A of IPC, 1860 and Section 13(2) r/w Section 13(1)(c) Section 13(1)(d) of PC Act. He submitted that during the course of Income Tax raid , a sum of ₹ 27 Lakhs were seized from the two premises be longing to the petitioner out of which ₹ 5 Lakhs was in new currency of denominations of ₹ 2,000/-. The remaining cash was in the form of demonetized currency of ₹ 500/- and ₹ 1,000/-. In the complaint, ED has prayed to take cognizance of the complaint and to proceed against the petitioner and other accused named therein. ED h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is irrefutable that demonetize d currency of ₹ 22 Lakhs and new currency of ₹ 2,000/- worth ₹ 5 Lakhs were found in the two premises belonging to t he petitioner. The search/raid was conducted on 30.11. 2016. The currency was demonetized with effect from 8.11. 2016. Petitioner s explanation that the consideration amount received from three prospective purchasers of Flats constructed by M/s.Shaakya Infrastructure Private Limited belonging to his wife and son is incorrect, as the said three prospective purchasers are fictitious. Adverting to the three affidavits of the prospective purchasers filed by the petitioner, he submitted that the said three affidavits of the prospective purchasers namely, H. Nischal Anantha Purshotham, Devanand and Anil Rathod disclose that the first two of them had handed over the sum of ₹ 10 Lakhs each and the third had given ₹ 7 Lakhs into the hands of petitioner s wife between 5.8.2016 and 5.10.2016. Petitioner has admitted in his statement recorded under Section 50(2) (3) of P ML Act that one Jayaram had arranged for exchange of ₹ 5 Lakhs. He has also admitted that the said Jayaram and associates had arranged exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel and Shri S . Mahesh, learned Standing Counsel for the ED; and perused the records. 15. The controvertible facts of the case are that the Income Tax Authorities conducted a raid on the premises belonging to the petitioner and seized demonetized currency of ₹ 22 Lakhs and ₹ 5 Lakhs in the form of new currency notes having face value of ₹ 2,000/-. Petitioner is an Engineer working with the State Government. He has held various positions from 2003 till date such as Executive Engineer, Superintendent Engineer, Chief Engineer ( Minor Irrigation), Chief Engineer (Bruhat Bengaluru Mahanagara Palike), Managing Director (State Development Corporation) and Chief Project Officer (Karnataka State Highway Improvement Project). 16. CBI has registered an FIR bearing RC No.23(A)/2016. The petitioner was arrested in the said case and this Court has granted bail in Crl.P.No.9791/20 16 on 10.1.2017. The ACB has registered an FIR on 5.12.20 16. The proceedings pursuant to the said FIR have been stayed by this Court in W.P.No.3091/2017. In this petition, the petitioner is seeking enlargement on bail in the ca se registered by the ED in EICR/BGZO/13/2016 for offences puni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of offence under Section 3 r/w 4 of PMLA along with the offence under Part B of the Schedule inserted in PMLA w.e.f. 14.05.2015, either under Section 156(3) or under Section 155(2) of the code of Criminal Procedure, as the case may be, pending grant of sanction requisite for taking cognizance in said Scheduled Offence or under PMLA, iv) issue any other writ, order or directions, which this Hon ble Court may deem just and fit. In paragraphs No.12.23 and 12.24 the Hon ble Punjab Haryana High Court has held as follows: 12.23 We, therefore, in light of the Statement of Objects and Reasons as incorporated in the Prevention of Money- Laundering (Amendment) Bill, 2011 and the above discussion and findings, have no hesitation in holding that the reference to the offences under Part-A of the Schedule in the context of Section 45(1) has to be necessarily read down to apply only those persons who are arrested under Section 19 of PMLA on accusation of money laundering, who are accused of commission of scheduled offences which were listed under the Part A of the Scheduled existing prior to 2013 amendment. In other words, the limitations in grant of bail under Section 45 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Code to the Magistrate nor any complaint for taking cognizance of a Scheduled Offence by an officer authorized to investigate such Scheduled Offence. 20. The Hon ble Supreme Court in Criminal Appeal No.737/2016 [ Gorav Kathuria v. Union of India and others ], on 12.8.2016 has passed the following order: O R D E R Though the High Court has granted certificate to appeal, we have heard the learned counsel for some time and are of the opinion that the impugned judgment of the High Court is correct. This appeal is, accordingly, dismissed . 21. The record of proceedings of the Hon ble Supreme Court in the above criminal appeal made available to this Court in a compilation filed by the learned Counsel for the petitioner shows that the respondent-Union of India was not represented before the Hon ble Supreme Court. 22. In the light of submissions made on behalf of both petitioner and respondent with regard to applicability of Section 45, it is necessary to examine whether the judgment in the case of Gorav Kathuria is applicable to the facts of this case. Learned Counsel for the ED has placed strong reliance on the judgment in the case of Gautam Kundu, supra. It was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Cr.P.C would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 of Cr.P.C That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant . (emphasis supplied) Further in paragraph No.33, the Hon ble Supreme Cour t has held as follows: 33...................... We have noted that Section 45 of the PMLA will have overriding effect on the general pro visions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section of the PMLA imposes two conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule from ₹ 30,0 0,000/- or more to 1,00,00,000/- or more and insertion of Section 132 of Customs Act in Part-B. It was held by the Hon ble Punjab Haryana High Court that Section 45(1) had to be read down. But it is significant to note that the writ petition has been ultimately dismissed. The Hon ble Supreme Court has also dismissed the Criminal Appeal and not rendered any finding on the substantial questions of law framed by the Hon ble Punjab Haryana High Court. In Gautam Kundu s case, the Hon ble Supreme Court was dealing with SEBI Act brought into Part-A of the Schedule post amendment in 2013. The offences alleged against the petitioner herein were also in Part B prior to amendment and brought into Part A of the Schedule in 2013. Therefore, the reliance placed by the learned Counsel for the petitioner on Gorav Kathuria s case will not lead his case any further. Learned Senior Counsel for the petitioner also placed reliance on another judgment of the Hon ble Supreme Court in the case of Kunhayammed and others v. State of Kerala and another reported in (2000)6 SCC 539 to contend that since a certificate was granted by Hon ble Punjab Haryana High Court, the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction; (ii) the jurisdiction should have been exercised after issue of notice; and (iii) after a full hearing in presence of both the parties. Then the appellate or revisional order would replace the judgment of the lower court and constitute the only final judgment. In Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC 774 : AIR 1975 SC 1185 ] the doctrine of merger usually applicable to orders passed in exercise of appellate or revisional jurisdiction was held to be applicable also to orders passed in exercise of review jurisdiction. This Court held that the effect of allowing an application for review of a decree is to vacate a decree passed. The decree that is subsequently passed on review whether it modifies, reverses or confirms the decree originally passed, is a new decree superseding the original one. The distinction is clear. Entertaining an application for review does not vac ate the decree sought to be reviewed. It is only when the application for review has been allowed that the decree under review is vacate d. Thereafter the matter is heard afresh and the decree passed therein, whatever be the nature of the new decree, would be a decree superseding the earlier one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise dut y on industrial alcohol. The bench answered the question in the negative as industrial alcohol being unfit for human consumption the State legislation was incompetent to levy any duty of excise either under Entry 51 or Entry 8 of List II of the Seventh Schedule. While doing so the bench recorded the conclusion extracted earlier. It was not preceded by any discussion. No reason or rationale could be found in the order. This gives rise to an important question if the conclusion is law declared under Article 141 of the Constitution or it is per incuriam and i s liable to be ignored. 40 . Incuria literally means carelessness . In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The quotable in law is avoided and ignored if it is r endered, in ignoratium of a statute or other binding authority . (Young v. Bristol Aeroplane Co. Ltd. [(1944) 1 KB 718 : (1944) 2 All ER 293] ). Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity beyond reasonable limit s is inimical to the growth of law. (emphasis supplied) 30. Therefore, in the light of authoritative pronouncement in Gautam Kundu s case, I am unable to persuade myself to accept the argument advanced on behalf of the petitioner by placing reliance on Gorav Kathuria s case. The resultant position is that, the limitations pre scribed in Section 45(1) of the PML Act shall apply to the case on hand. 31. In compliance with Section 45(1), the Public Prosecutor (the Special Counsel for ED) has been given an opportunity to oppose the application. The respondent ED has strongly opposed release of petitioner on bail. 32. The sum of ₹ 27 Lakhs seized during the Income Tax raid is explained in the petition in the following manner: 13. At the time when the Income Tax officials conducted raid, an amount of ₹ 27,00,000/- was seized from the two premises belonging to the Petitioner. One a residential house in Chandra Layout, Bengaluru and the other being an apartment in Raheja Pebble Bay in Bengaluru. It has been specifically stated before the authorities that the amount was given by three different persons as advances towards the sale c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reads as foll ows:- 4. I state that I am a genuine person and not a fictitious one as is being contented by the Enforcement Directorate. I reiterate that I did pay to the hands of Smt.Bharathi Jaychandra on 1.09.2016 a sum of ₹ 10,00,000/- by way of advance sale considerat ion after finalizing the deal for purchase of a unit bearing number F-3 (203), First Floor, Shaakya Elite, No.1133, 1 st Block, 1 st Stage, Nagarbhavi, Bengaluru. (emphasis supplied) Paragraph 4 of Anil Rathod s affidavit reads as follows:- 4. I state that I am a genuine person and not a fictitious one as is being contented by the Enforcement Directorate. I reiterate that I did pay to the hands of Smt.Bharathi Jaychandra on 1.09.2016 a sum of ₹ 7,00,000/- by way of advance sale conside ration after finalizing the deal for purchase of a unit bearing number No. 302, 3rd Floor, Shaakya Enclave, No.12, 2 nd Main, KPA Layout, Chandra Layout Bengaluru . (emphasis supplied) 34. It is significant to note that, the petitioner s wife, who is said to be the partner of the construction firm has stated in her statement recorded by the ED as follo ws:- Answer to Question No.1: . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reiterated that they have paid money in the hands of petitioner s wife between 5.8.2016 to 5.10.2016. The notes with face value of ₹ 500/- and ₹ 1,000/- were demonetized with effect from 8.11.2016. The sum of ₹ 27 Lakh s found during the raid is sought to be explained as advance sale consideration. Admittedly, seller of the Flat is M/ s.Shaakya Constructions, which is said to be Private Limited Company. Income Tax conducted the raid on 30.11.2016. Petitioner s wife has stated in her statement recorded by the ED authorities under Section 50 of PML Act that only one Flat was proposed to be sold and the advance amount received was ₹ 10 Lakhs. While answering question No.7 put by the ED Authorities, she has categorically stated that her husband had brought the said amount; out of the said sum, R s. 5 Lakhs was exchanged by one Prashanth. She has further stated that, she is a house wife and did not interfere in any transaction and would put her signature on the documents shown to her. The petitioner has also admitted in his statements recorded under Section 50 (2) (3) of the PML Act that one Jayaram had arranged for the exchange of R s.5 Lakhs. He has also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that limitations of Section 45 of PML Act are applicable in the instant case. In terms whereof a person accused of commission of an offence found in Part A of the schedule shall not be released on bail unless the Court is satisfied that there are reasonable grounds to believe that he is not guilty of such offence and that he is not likely to commit an y offence while on bail. 42. The fact remains that whilst there was an earlier raid in the year 2008 and Lokayukta is awaiting approval from the Government to prosecute the petitioner, the current raid by the Income Tax has taken place. The explanation with regard to legitimacy of ownership of properties listed in the complaint are all subject matters of previous raid in the year 2008 and investigation thereon. Thus, prima facie , it appears that petitioner after a raid in the year 2008, has again indulged in the offences alleged against him in the FIR registered by the CBI on 03.12.2016. 43. In Gautam Kundu s case, the Hon ble Supreme Court has noticed that no order by a competent Court was passed holding that no offence was made out against the petitioner therein under Section 24 of the SEBI Act. It is precisely recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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