TMI Blog2019 (4) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... es financials for the period were seized/taken from the premises of Yash Raj Films Pvt. Ltd., (YRF), 5 Shah Industrial Estate, Veera Desai Road, Andheri (West), Mumbai - 400053 by the authorities. A Panchnama was also made. 3. The Director of the Appellant was summoned on 9th November, 2017 by the Asst. Director of ED, Ballard Estate, Mumbai to tender evidence. 4. The date was fixed for hearing on 16th November, 2017. The Appellant was asked to submit License/Agreement wise details of all revenues generated with regard to exploitation of music during the Financial Years 2012-13 to 2016-17. 5. The Appellant submitted the same duly classifying the same as - (i) Licensing Revenue with TV Channels (ii) Radio Stations and (iii)Telecom (Mobile) and Digital platforms. 6. Thereafter the Appellant requested the ED office to permit the Sr. General Manager at the Appellant, handling copyright and royalty related matters, to appear in the matter. Accordingly, he appeared on 16th November, 2017 and gave a statement pertaining to all questions raised by ED office. Thereafter, statements of the Director and Vice President & CFO of the Company have been recorded. 7. In the statements made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he complainant. ED was the party to the said proceedings. 15. REGISTRATION OF MULTIPLE ECIRs BY RESPONDENT TO HARASS THE APPELLANT: It is also a matter of record that the respondent had previously registered ECIR: MBZO/05/15 ("1st ECIR") dated 31.03.2015 on the basis of similar facts and circumstances and cause of action as the present ECIR against IPRS and others. The said earlier FIR No. 455 of 2014 ("1st FIR") (filed in Sadar Police Station, Agra at the instance of one Mr. Surendra Sathi) on which the aforesaid earlier 1st ECIR was lodged was u/s 420, 406, 468, 471, 506 and 120-B r/w 34 of the IPC. The 1st ECIR and 1st FIR which was previously registered by the Respondent against IPRS and others was based on similar facts and circumstances as the present 2nd FIR and 2nd ECIR respectively. 16. The same has already been decided by this Tribunal in the proceedings relating to aforementioned 1st ECIR: A. The Appeal No FPA-PMLA-1302/MUM/2016 titled "Indian Performing Rights Society Ltd (IPRS) Vs Deputy Director, Directorate of Enforcement" vide order dated 22.06.2017 qua ECIR NO MBZO/05/2015 dated 31.03.2015 & B. The Appeal No FPA-PMLA-1631/MUM/2017 titled "Deputy Director, Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LA, 2002. If for the sake of argument if it was assumed that that the royalty collected was proceeds of crime then the amount which has been distributed also will amount to proceeds of crime and all those who have received the same will have to be booked for offence for money laundering along with the persons from whom the said sums of royalty had been collected. That the contention of the respondent that the royalties so collected in legal and lawful manner were 'proceeds of crime' was grossly wrong, baseless and without any logic." (emphasis supplied) 18. The Hon'ble High Court of Allahabad, after hearing the parties at length, vide its orders dated 07.11.17 in Criminal Misc. Application No. 22187-88 of 2015 had quashed the charge-sheet dated 04.05.15 filed in the afore-said 1st FIR. The said order has attained finality as it has not been challenged by any of the Respondent therein (including the investigating agency). The said disputes were also settled between the parties with regard to royalty towards the songs. 19. Subsequently, IPRS, PPL and its Committee approached the Hon'ble Delhi High Court in order to quash the said F.I.R. u/s 482 of Cr. PC by filing Writ Petition ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ED has chosen to proceed further with the matter and pressed the impugned order on 10.4.2018 after the order of Division Bench. The observations made in the said order of the Division Bench have been ignored by both authorities. The respondent has proceeded with the matter. Admittedly, Adjudicating Authority has passed the impugned order after passing the order of Hon'ble Division Bench. 24. The Adjudicating Authority while passing the impugned order, without having any material/document before it, completely erred in concluding that: "I had gone through the original application and other documents received with the application carefully and had reasons to believe that the retention of the record/property seized may be required in connection with the offence of money laundering by the Respondent."(emphasis supplied) 25. It appears from the record that the relied upon documents included only the Original Application for retention of records, and the Panchnama attached thereto, the Adjudicating Authority did not have sufficient material, to even consider the question of whether or not the Appellant "has committed an offence under Section 3 or is in possession of proceeds of crime" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.] [(1A) Where it is not practicable to seize such record or property, the officer authorised under subsection (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be.] (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate: Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest gazetted officer, superior in rank to him, or Magistrate's Court. (4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is possession, referred to in sub-section (1), to the Adjudicating Authority, in a sealed cover, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. 31. Section 21 of PMLA reads as under:- "21. Retention of records. - (1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, such records may if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such records were seized or frozen, as the case may be. (2) The person, from whom records seized or fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oor, box, locker, safe, almirah or other receptacle where the keys thereof are not available and seize any record or property found as a result of such search, place marks of identification on such record or make or cause to be made extracts or copies therefrom; make a note of an inventory or such record or property and to examine on oath any person who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation. However, the said action is sustainable subject to conditions stipulated in the proviso of Section 17(1) of the Act, which says that the search and seizure shall not be conducted unless - * in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973, (2 of 1974) or * a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the schedule offence, as the case may be, or * in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order along with the material in his possession to the Adjudicating Authority in a sealed cover within the meaning of Subsection (2) of Section 20. Sub-section (3) of Section 20 mandates that on the expiry of 180 days, the property shall be returned to the person concerned from whom such property was seized and whose property was ordered to be frozen unless the Adjudicating Authority permits retention or confirmation thereof of such property beyond the said period. 37. It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property is 180 days from the date of seizure of any property or records. The said period is not extendable as per the scheme of the Act, unless the prayer for retention is allowed and subject to filling of prosecution complaint within 90 days from the date of passing the retention order. 38. No doubt, once the prayer is allowed, the person concerned/aggrieved party of such order, is entitled to file the appeal under Section 26 of the Act. The same shall be heard and after giving an opportunity of being heard, the appellant Tribunal shall pass the order either to confirm the order of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. It is rightly held in the case of Hussein Ghaidially v. State of Gujrat [(2014) 8 SCC 425], the Hon'ble Supreme Court held that- "21.3 If the statute provides for a thing to be done in a particular manner, then it must be done in that manner alone. All other modes or methods of doing that thing must be deemed to have been prohibited." The same proposition was recognized by the Court in Nazir Ahmed v. King Emperor, 1936 SCC Online PC 41 and State of Rajasthan v. Mohinuddin Jamal Alvi (2016) 12 SCC 608. 44. Reason to believe The guidelines of recording the reason to believe have been laid down in various judgements of Apex Court and High Courts. It is held time and again by the said Hon'ble Courts directing that the approach should be not the subjective satisfaction of the officer concerned. Such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with the restraints imposed by law. The belief must be that of an honest and reasonable person based upon reasonable grounds, the officer concerned may act on direct or circumstantial evidence but not on mere suspicion or the allegations mentioned in the FIR or charge-sheet so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 is required to be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. Reasons for the order must be communicated to the affected party. " The above referred to decision has been followed in various judgments by many High Courts, as well the Hon'ble Supreme Court of India in subsequent decisions. 48. a) In Kra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harvard Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". b) In Income Tax Officer v. Lakhmani Mewaldas 1976 (3) SCR 956, the Supreme Court held that there should be a live link or close nexus‖ between the material before the ITO and the formation of his belief that income had escaped assessment. More recently, in Aslam Mohd Merchant v. Competent Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikewise, 'knowledge' will be slightly on a higher plane than 'reason to believe'. A person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has sufficient cause to believe the same. Section 26 IPC explains the meaning of the words 'reason to believe' thus: 26. Reason to believe - A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing and not otherwise." 49. In paras 74 to 77, the Double Bench of Hon'ble High Court of Delhi in its judgement J. Sekar v. Union of India and Ors. 2018 SCC Online Del 6523, has held that: 74. The Court, therefore, holds as under as regards the submissions of the learned counsel for the Petitioners with regard to the constitutionality of the second proviso to Section 5(1) PMLA: (i) Although the second proviso to Section 5(1) states that the property has to be 'involved in money-laundering' and section 5(1) states that mere possession of proceeds of crime is sufficient, the Court does not see any conflict in these expressions. When the definition in Section 3 PMLA is read with Section 2(1)(v) and the Explanation thereto, it bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve reply. Therefore, there cannot be any denial of access to the noticee of the materials on record. If there is any sensitive material, it can probably be redacted before issuing copies thereof, after nothing the reasons for such redaction in writing in the file. But even such redacted material will have to be nevertheless shown to the noticee. Though the operation of the aforesaid judgment has been stayed by the Hon'ble Supreme Court, the above dicta cannot cease to be law of precedential value and binding in other matters i.e. third parties, in view of settled law. One of such decision reported as vide Shree Chamundi Mopeds Ltd. v. Church of South India Trust Assn., (1992) 3 SCC 1 (para 10). 50. A division bench of the Hon'ble Calcutta High Court in Niranjan Chatterjee v. State of West Bengal & Ors., 2007 SCC On Line Cal 283 after relying on the aforesaid decision has held that: "17. After hearing the learned Counsel for the parties and after going through the aforesaid position of fact, we find that the Supreme Court by those interim order has, no doubt, stayed the operation of the order of the Division Bench of this Court by directing the parties to maintain status quo but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given any solid reason as to why not to retain the records seized by the respondent. 54. Section 17 and 25 of PMLA, 2002 and Section 6 of SAFEMA are read as under:- PMLA SAFEMA "Sec.17 Search and seizure. (1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person - (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to moneylaundering, (or) (iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorize any officer subordinate to him to - (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section. (4) The authority seizing any record or property under sub- Section (1) or freezing any record or property under sub-Section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-Section (1) or for continuation of the order of freezing served under sub-Section (1A), before the Adjudicating Authority.]. Section -25 Appellate Tribunal "The Appellate Tribunal constituted under sub-section(1) of section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act,1976 ( 13 of 1976) shall be the Appellate Tribunal for hearing appeals against the orders of the Adjudicating Authority and the other authorities under this Act. Sec. 6. Notice of forfeiture (1) If, having regard to the value of the properties held by any person to whom this Act applies, either by himself or through any other person on his behalf, his known sources of income, earnings or assets, any other information or material available to it as a result of action taken under section 18 or otherwise, the competent authority has reason to believe (the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Adjudicating Authority shall communicate thereasons to believe recorded and orders passed at the stage of issuing thenotice in the application for retention of property or documents by therespondent to the person concerned who may aware about the allegationsand material against him for the purposes of defense to be put up in itsreply to the application for retention of property and records. 57. The word 'Adjudication' means a legal process reasoning set by theopposing party to come to a decision which determines right andobligations between the parties. It is known that the parties in every caseare entitled to apply the principle of equal opportunity to address his caseregardless of any stringent law. A level playing field is a concept offairness. Transparency in decision making is not merely essential, but itis also important for sustaining the litigants' faith in the justice deliverysystem and quasi-judicial. Thus, justice must not only be done, it mustalso appear to be done. 58. The Competent Authority is the adjudicating authority within themeaning of Section 6 of the SAFEMA and it is rightly held by the SupremeCourt in the case of Abdulla (Supra) how to serve the copy, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not arise at all and the presentproceedings are completely abuse of process of law. The continuation ofproceedings are just for harassment and nothing else. The complainanthas already deposed her statement who raised no-objection to quash thesaid F.I.R. before the Hon'ble Delhi High Court. She has settled thedisputes prior to registering the ECIR, search and seizure, on the date offiling of application under Section 17(4) for retaining the records andpassing the impugned order, the respondent was party to the saidproceedings but still the Respondent has chosen to conduct the searchand seized several important and confidential records/documentsbelonging to the Respondent on 03.11.2017. 64. The provisions of section 20 (Retention of Property) are pari materiato the provisions of section 5(Attachment of Property) as shown hereunder: Stages Retention of Property Attachment of Property 1. S. 20(1): Recording of 'reason to believe' S. 5(1): Recording of 'reason to believe' 2. S.17(4): OA within 30 days S. 5(5): OC within 30 days 3. S. 20(2): Order by the Authorized Officer S. 5(1): Order by the Authorized Officer 4. Rule 4 of Retention Rules, 2005: Acknowledgment of Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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