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Ashok Sunderlal Daga, & Others Versus Union of India & Directorate of Enforcement

2018 (1) TMI 502 - BOMBAY HIGH COURT

Application of provisions of Prevention of Money Laundering Act, 2002 - pray for quashing and setting aside of Enforcement Case Information Report with different numbers registered by respondent no.2 Directorate of Enforcement against them, along with enquiry/investigation therein - Held that:- It is apparent that this court cannot make any observation and record any finding which will interfere with proceedings pending before the Appellate Tribunal. It is also apparent that this court cannot an .....

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ns based upon Article 20, and we need not therefore, go into this issue at all. - Thus we uphold the preliminary objection raised by learned A.S.G.I. We declare that Criminal Writ Petitions filed before this Court are not maintainable. We also clarify that the observations made by us supra, are in the light of arguments advanced and only to the extent necessary to evaluate the same. The same will not have any bearing or influence on the pending appeal before the Appellate Authority under 200 .....

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549/2017. Mr. D.V. Chauhan, Advocate for Petitioner in Writ Petition No.343/2017. Mr. S. Khedkar, Advocate for Petitioner in Writ Petition No.607/2017. Mr. U.M. Aurangabadkar, A.S.G.I. with Mrs. M.Chandurkar, Advocate for Respondents. (Per B.P. Dharmadhikari, J) By these petitions, petitioners more or less identically placed question application of provisions of Prevention of Money Laundering Act, 2002 (hereinafter referred to as the 2002 Act for short), to them and pray for quashing and settin .....

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ion of India along with Directorate of Enforcement and its Assistant Director have raised a preliminary objection. They invite attention to judgment dated 13.07.2017, delivered by the Hon'ble Supreme Court in Criminal Appeal No. 1137/2017 (Girish Kumar Suneja .vrs. C.B.I.), and submit that this Court cannot take cognizance, as such controversies are to be looked into by a Special Court constituted for that purpose at Delhi by the Hon'ble Supreme Court. They submit that the Hon'ble Su .....

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suing Rule and making it returnable forthwith with consent of all. Accordingly, we have heard Shri U.M. Aurangabadkar, learned A.S.G.I. with Mrs. M. Chandurkar, learned Counsel in support of the same. Shri S.P. Dharmadhikari, learned Senior Counsel with Shri S. Dewani, learned counsel for Petitioner in Writ Petition No. 697/2017; Shri H.D. Dangre, learned Counsel for petitioners in Writ Petition Nos.463 and 489 of 2017, Shri D.V. Chauhan, learned Counsel for petitioner in Writ Petition No.343/20 .....

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;01 to Ministry of Coal for allocation of coal block. Application was moved by Gondwana Ispat Limited, a Company before its incorporation. Various other details are also then given. In charge sheet it is claimed that the petitioner disposed of his 50% equity in said Gondwana Ispat Limited at a profit of ₹ 7,50,000/­. It is also claimed that he disposed off the company without installing plant and developing the coal mine for captive consumption. This was without any intimation and perm .....

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is amounted to sale of coal meant for captive /exclusive use in EPU (end process unit) undertaken to be set up by the petitioner. It is claimed that Shri Daga made huge financial gains by cheating the government. We need not go into other details of the complaint or charge sheet, however, petitioner has submitted that he terminated this agreement and in consideration thereof got ₹ 1.55 Crores. There is reference to statements made by other petitioners in this matter. All petitioners, excep .....

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of CBI. The criminality associated with allocation of coal blocks extends also to money laundering matters, and hence, the present Writ Petitions as filed before this Court needs to be dismissed. He has taken us through opening paragraph of the said judgment to explain the background, and then through other paragraphs to demonstrate the concern felt by the Hon'ble Supreme Court and remedial measures mandated by it. 7. He submits that charge sheet No.20/2015, is admittedly filed in Special C .....

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lines have been issued in other petitions. He states that interim orders passed by this Court on 06.06.2017, interfere with the freedom available to investigating agency & militate with the orders of the Apex Court. 8. Senior Counsel Shri Dharmadhikari, submits that facts as presented by the investigating agency itself show that money laundering has surfaced in 2015, and provisional attachment order was passed on 12.09.2016. This order has been confirmed on 08.02.2017. Relying upon provision .....

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acts disclosed by the investigating agency to be correct, the above argument needs to be upheld. 9. Learned Senior Counsel draws our attention to Section 3, Section 4 of 2002 Act along with Section 2[u], defining proceeds of Crime and Section 2[y] defining Schedule Offences , to explain the relevance thereof for the purpose of proviso to Section 4. He submits that Section 120­B of Indian Penal Code dealing with criminal conspiracy & Section 420 about offence of cheating and dishonestly i .....

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d purpose of attachment to secure recovery. However, in present matter, no offence as yet has been registered under 2002 Act, against petitioners. Action of provisional attachment therefore is erroneous and without jurisdiction. In an attempt to distinguish judgment of Hon'ble Supreme Court in case of Girish Suneja (supra), he submits that petitioners do not seek stay of the trial going on at Delhi or then stay of investigation. The Hon'ble Supreme Court has only found it proper not to c .....

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notification dated 06.03.2009 and Schedule appended to 2002 Act, 2002 Act cannot be used in present matters at all. 11. Shri H.D. Dangre, learned counsel adopts above arguments and submits that 2002 Act envisages three types of proceedings; First proceeding is to secure property; Second proceeding contemplates complaint by authority. Third proceeding envisaged under Section 44[b] and [c] of 2002 Act, contemplate merger of IPC prosecution with P.M.L.A. prosecution. In present petitions, there is .....

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d during said investigation and he adds that at the most petitioners could have approached this Court in appeal against order of attachment. He also adds and reiterates that proceedings under Section 3 and prosecution for scheduled offence are independent of each other. He therefore prays for dismissal of petitions. 13. Thus, petitioners before this Court mainly contend that action for attachment taken against them is in respect of a scheduled offence and offence under Section 120B and 420 of In .....

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or is in possession of proceeds of crime. Two types of persons are thus envisaged here, one an offender & other holding proceeds of crime. 15. Section 5[1] is the first step in that direction. The director or any other officer, not below the rank of Deputy Director, if he has reason to believe that any person is in possession of any proceeds of crime, and such proceeds are likely to be concealed/transferred or dealt with in any manner, which may result in frustrating the proceedings relating .....

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Adequacy or sufficiency or relevance of material or then process of formation of subjective satisfaction by the authority attaching provisionally are not the issues presented to this Court. Section 5[1] does not contemplate provisional attachment only if offence is established i.e. only if person is convicted. It empowers Director to take action against any person who is in possession of any proceeds of crime. Section 8[1] again draws this distinction between person committing offence under sec .....

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usion in this respect thereafter, if challenge can reach it legally. 17. Section 3 is offence of money laundering. It contemplates direct or indirect attempt to indulge or knowingly sustain or bring a party or getting involved in any process of activity connected with proceeds of crime. This phraseology therefore, is employing wide words and attempt obviously is to cover as much as possible, the field of money laundering. Its' wide scope is also apparent from efforts like concealment, posses .....

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at the Courts while interpreting it must construe it as liberally as possible to advance the interest of public revenue. 18. Section 4 prescribes punishment for money laundering and it is in two parts. Its substantive part prescribes rigorous imprisonment for a term not less then 3 years and upto 7 years. It has a proviso which speaks of laundering of money, if such money is in connection with offence specified in paragraph no.2 of Part A of the Schedule. If that be the case, the maximum possibl .....

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visaged therein appears to be perceived as offence since the inceptiont (i.e. 17.01.2003) of 2002 Act. Moreover, whether the offence in so far as petitioner in Writ Petition no. 697/2017 is concerned, was completed in 2005 or then before 2009 or then in 2011, are all questions of fact. In this jurisdiction and at this stage we cannot record any finding about it. The investigating agency may unearth some material which may show continued indulgence of petitioners in offence under Section 3 punish .....

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on in possession of any proceeds of crime. Thus, person in possession may not be aware of the character of proceeds in his hand or may not be party to various operations, made offence under Section 3. Attachment of proceeds of crime wherever they are found, is allowed. This discussion, therefore, shows that the contentions about offence being already complete before addition of Section 120B or Section 420 of Indian Penal Code, as scheduled offence, are misconceived and cannot be examined at this .....

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eme Court, CBI filed charge sheet against Girish Kumar Suneja and others. On 29.04.2016, learned Special Judge appointed to hear Criminal case arising out of illegal allocation of coal blocks directed framing of charges. Against that order, Misc. Criminal Case was filed in Delhi High Court by Girish Suneja. Before High Court in the backdrop of paragraph no.10 of order dated 25.07.2014, passed by the Hon'ble Supreme Court, preliminary objection regarding maintainability of the Writ Petition w .....

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9;ble Supreme Court itself. 2. Much earlier, on 25th July, 2014 the following order was passed by this Court in the Coal Block Allocation cases (the relevant extract is reproduced): 4. In pursuance of our order dated 18.7.2014, the Registrar General, Delhi High Court has intimated to the Secretary General of this Court that the Hon'ble the Chief Justice of Delhi High Court has been pleased to nominate Mr. Bharat Prashar, an officer of Delhi Higher Judicial Service for being posted as Special .....

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mmunication of copy of this order. 6. We also order that Mr. R.S. Cheema, senior advocate shall be appointed as Special Public Prosecutor by the Government of India to conduct the prosecution of the offences pertaining to coal block allocation matters on behalf of CBI and Enforcement Directorate. On such appointment, Mr. R.S. Cheema may choose two other advocates, who, in his opinion, will be of assistance in the matter. While doing so, Mr. R.S. Cheema may keep in view the magnitude and complexi .....

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ess in the investigation/trial can be made only before this Court and no other Court shall entertain the same. 22. Several contentions raised by the learned counsel for Shri Suneja are reproduced by the Hon'ble Supreme Court briefly in paragraph no.9. Findings of Hon'ble Supreme Court thereupon show that in extra ordinary circumstances, it is advisable for High Court to decline to interfere under Articles 226 and 227 of the Constitution of India. In paragraph no.41, the Hon'ble Supre .....

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uced below. 49. It must not be forgotten that the cases arising out of the coal block allocations are not ordinary cases but fall under a special or distinct category which requires special attention given the magnitude of the illegalities allegedly committed including some with criminal intent. It is in this view of the matter that this Court had no option but to hand over the investigations to the CBI and to monitor the investigations so that they reach their logical conclusion, without any in .....

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her persons allegedly involved in the criminality associated with the allocation of coal blocks. 23. Discussion in paragraph no.57 in said judgment shows that the Hon'ble Supreme Court found that it was necessary to conclude the coal block allocation scam at the earliest. Any application intended to stay or impede that trial, therefore, is to be considered by the Hon'ble Supreme Court only. 24. These observations of Hon'ble Supreme Court therefore, clearly show that all matters which .....

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ent. The contention of enforcement department that it got knowledge of proceeds of crime only through investigation into coal block allotment, cannot be disputed at this stage. The reply on preliminary objection to the maintainability of the petition filed by respondents, shows that on the basis of FIR dated 07.08.2014, CBI, New Delhi registered a case under Section 120B and 420 of Indian Penal Code and a charge sheet came to be filed on 31.12.2015 before the Additional Sessions Judge and CBI Sp .....

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ties worth ₹ 1.67 Crores. Paragraph no.9 thereof discloses that the adjudicating authority has on 31.01.2017 confirmed the attachment of property. 26. Accused persons have filed an appeal on 24.03.2017 before the Appellate Tribunal under 2002 Act at New Delhi and it is pending before that Tribunal. 27. These facts sufficiently reveal, at least at this stage and before this Court in its jurisdiction under Article 226, that the link between the pending prosecution for coal block allotment an .....

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er Sections 420 and 120­B of Indian Penal Code is at the stage of recording of statement of accused under Section 313 Criminal Procedure Code. Arguments advanced show that the matter has not progressed further because of interim directions of this Court. 29. Though petitioners have not relied upon the judgment delivered by the Division Bench of Karnataka High Court, the respondents have pointed out, that the view reached there in favour of petitioners is stayed in Special Leave Petition by t .....

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