TMI Blog2017 (10) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Even no reasons can be supplied/disclosed by the respondent for the first time in its application made to the Adjudicating Authority under Section 17(4) of the PMLA. Reference may be made to the “Reason to Believe” document annexed by the respondent with its Section 17(4) application and the OA. It is well settled that if a statute prescribes a particular manner of doing a thing it must be done in that manner alone, and no other. Not following the statutory requirements makes the action null and void. Under these circumstances, the order against the present appeal is set aside. The application filed pertaining under section 17(4) of PMLA against the appellant is accordingly dismissed. The documents seized from the premises of the appellant shall be returned forthwith. The file summoned from the Adjudicating Authority be returned back by the registry to the Adjudicating Authority as early as possible. - FPA-PMLA-1196/BBS/2016 - - - Dated:- 18-10-2017 - Justice Manmohan Singh Chairman And Shri G. C. Mishra Member For the Appellant : Shri Dayan Krishnan, Sr. Advocate Shri Vijay Pal Dalmia, Advocate Shri Pavit Singh Katoch, Advocate Shri Rajat Jain, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Reason to Believe and found that nothing has been alleged about the appellant. 7. It is the contention of the appellant that on 9th July, 2015 the Search was conducted at the office premises of the appellant at 1110, Thadagam Road, Coimbatore-641001 in violation of statutory requirements and constitutional norms. Section 17(1) read with Rule 3(1)/Form-I and Rule 4(2)/Form-II of the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005 and had seized the following documents/records from the premises of the appellant: (a) Income Tax Returns and the Balance Sheet and Profit and Loss A/c; (b) Work Order with mine owners (Srejaudeen Co.) (b1 b2); (c ) Work Order with contractors and sub-contractors (c1 c2); (d) Copy of the immovable property in the name of individuals and in the name of company namely M/s SS Earth Movers Resources, etc.; (e) Soft Copy of Financial Statements uploaded in the pen drive from Tally Software for the period from 2011-12 to 2013-14 iro M/s Eart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her accused party, the said procedure apparently has been complied with. 11. It is apparent therefore, the authorisation for search and seizure was wholly illegal as it did not authorize a specific officer and specific premises to be searched as mandated under Section 17(1) of the PMLA read with Rule 3(1). Additionally, it was not even in the form prescribed in Rule 3(1)/Form I. Even, there was no communication of reason to believe to the appellant as per record. The following judgement clearly supports our view points raised in this appeal. The relevant portion of the judgement are: a). The judgments delivered by the Supreme Court and many High Courts in wheels it is held that the authorities are bound to communicate the reason to believe recorded to the affected person judgments referred to P.P Abdullah Vs. Competent Authority 2007 2 SCC 510 para 7 to 8 wherein it has been held by the Apex Court that reason to believe must be communicated along with counter affidavit at least and the authorities are bound to place the same before the court to check the veracity of the same and to come to the conclusion whether such reason to believe are relevant or germane or not. b). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound to be materially prejudiced in the enforcement of his right to have such books and documents returned to him by being kept ignorant about the factum of fulfillment of either of the conditions it is obligatory upon the Revenue to communicate the Commissioner's approval as also the recorded reasons to the person concerned. In the absence of such communication the Commissioner‟s decision according his approval will not become effective. c). In the case of C.B. Gautam vs. Union of India (1993(1) SCC 78), a Constitution Bench of the Hon'ble Supreme Court of India held that the reasons to be recorded in writing shall not only be incorporated in the order but also shall be communicated to the affected parties. The relevant extract from the judgement is as under: Sec. 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purchase of the property for reasons to be recorded in writing'. Sec. 269UD(2) casts an obligation on the authority that it shall cause a copy of its order under sub-s. (1) in respect of any immovable property to be served on the transferor . It is, therefore, inconceivable that the order which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof, and the Andhra Pradesh Coarse Grains (Export) Control Order, 1965, has held that the term Reason to believe is a much stronger expression than the word suspect and further observed from the meanings attributed to the words suspect and reason to believe , that it is evident that the initial stage for believing the existence of a certain thing or an alleged fact is suspicion. After suspecting the existence of a thing, condition or a statement of fact, you collect information and then examine that information and come to a final conclusion on the basis of that information, that such a thing, condition or statement of a fact exists. All these ingredients are prerequisite for forming any opinion based on Reason to Believe . g). The Hon'ble High Court of Andhra Pradesh, in the case of K. Munivelu v. The Government of India and Ors., referred to the judgment of the Division Bench of the Andhra Pradesh High Court, in the case of Sriram Durga Prasad (P.) Ltd. Visakhapatnam v. Deputy Collector. Customs Dept. Visakhapatnam, 1965: AIR1965AP294. 12. The search did not follow the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the Manner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of and on that basis, this Court has reiterated the position in law that even an authority higher in rank would not be competent to give the approval as required under sub- Section(1)of Section 20-A of the TADA Act. The same has been interpreted in the said judgment in the following manner: (SCC pp-438-40, para 21) 21. A careful reading of the above leaves no manner of doubt that the provision starts with a non obstante clause and is couched in negative phraseology. It forbids recording of information about the commission of offences under TADA by the Police without the prior approval of the District Superintendent of Police. The question is whether the power of approval vested in the District Superintendent of Police could be exercised by either the Government or the Additional Police Commissioner, Surat in the instant case. Our answer to that question is in the negative. The reasons are not far to seek: 21.1 We say so firstly because the statute vests the grant approval in an authority specifically designated for the purpose. That being so, no one except the authority so designated, can exercise that power. Permitting exercise of the power by any other authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by anyone in the police hierarchy the provision specifying the authority for grant of such approval might as well not have been enacted. 7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe of the Competent Authority must be recorded in writing. In the counter-affidavit it has also been stated in para 8 that the reasons in the notice under section 6(1) were recorded in writing. In our opinion this is not sufficient. Whenever the statute requires reasons to be recorded in writing, then in our opinion it is incumbent on the respondents to produce the said reasons before the court so that the same can be scrutinized in order to verify whether they are relevant and germane or not. This can be done either by annexing the copy of the reasons along with the counter-affidavit or by quoting the reasons somewhere in the counter-affidavit. Alternatively, if the notice itself contains the reason of belief, that notice can be annexed to the counter-affidavit or quoted in it. However, all that has not been done in this case. 8. It must be stated that an order of confiscation is a very stringent order and hence a provision for conf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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