TaxTMI 
TaxTMI 
2019 (4) TMI 2031
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....st & Crompton Engineering Projects Limited, engaged in the business of Engineering, procurement, construction and trading. The Central Bureau of Investigation, Bangalore, registered F.I.R. on 01.02.2016 against M/s. Best & Crompton Engineering Projects Limited and its Managing Director for the offence under Section 120B read with Sections 420, 468 and 471 of the Indian Penal Code on the basis of a complaint given by the Central Bank of India. On the basis of the above said F.I.R, the Enforcement Directorate, registered a case in ECIR. No. CEZO/05/2016 dated 27.04.2016, alleging that a prima facie case for the offence of money laundering under sections 3 and 4 of the Prevention of Money Laundering Act appears to have been made out. On completion of investigation by the Central Bureau of Investigation, a charge sheet was filed on 15.06.2017 before the Additional Chief Metropolitan Magistrate, Egmore, Chennai. The petitioner herein is arrayed as Accused No. 4 therein. The petitioner has been complying with the summons issued by the first respondent, being promptly appearing for enquiry by rendering utmost cooperation. On 02.11.2018, the petitioner received summons from the first respo....
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....tered by CBI, BS & FC, Bangalore, under Section 120-B r/w 420, 468 & 471 of IPC against Shri Kalyan Srinivasa Rao, Managing Director, M/s. Best & Crompton Engineering Projects Ltd., Sterling Road, Nungambakkam, Chennai - 600 034 (hereinafter referred to as BCEPL), the other Directors of the Company including the petitioner herein and the Company BCEPL and others who entered into a criminal conspiracy hatched amongst themselves at Chennai and Hyderabad and other places during the period from 2010 to 2013 for defrauding/cheating a Consortium of Banks led by the Central Bank of India. The other two banks in consortium are Andhra Bank, Zonal Office, Chennai and the Corporation Bank, Zonal Office, Chennai. In furtherance to their criminal conspiracy, the said persons had induced Central Bank of India, Corporate Finance Branch, Chennai by submitting fraudulent LC (Letter of Credit) Documents, without any physical movement of goods and unlawfully availed the credit facilities/enhancement, for which, they were otherwise, not eligible and then diverted the said loan amount for purposes other than for which, it was sanctioned and caused a wrongful unlawful loss to the extent of Rs. 364 Crore....
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....ction 50 (2) & (3) of PMLA, 2002. The petitioner has been issued with Summons under Section 50(2) & (3) of PMLA, 2002 only on the basis of materials available on records, collected during the investigation. v) The petitioner herein has given all his statements voluntarily without any force, threat or coercion. The petitioner herein is the promoter Director of BCEPL and has held a key position in conducting the affairs of the company BCEPL. It is a fictitious averments made by the petitioner herein stating that he was made to write false statements about certain persons, who are in no manner involved with the investigation. vi) It is submitted that the persons who were summoned under Section 50 of the Prevention of Money Laundering Act is only for the purpose of collection of evidence and to know the complicity of the persons so summoned to the crime. Only after collecting evidence and statements from the persons so summoned and if it is established after completion of investigations that the person is involved in the crime of Money Laundering, he will be treated as an accused and the prosecution complaint will be filed against such person. Till filing of the prosecution complia....
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.... proceedings cannot be conducted without the assistance/presence of a lawyer on the side of the petitioner. Explanation 2 to Section 193 of Indian Penal Code contemplates that investigation, directed by law, preliminary to a proceedings before a Court of justice, is a stage of judicial proceedings, though the investigation cannot take place before the Court of justice. Therefore, the presence of lawyer is a must at the time of enquiry in pursuant to the summons issued under Section 50 of the said Act. The petitioner has specifically averred in the affidavit filed in support of the writ petition that the Enquiry Officer has caused severe harassment to the petitioner and therefore, the relief sought for in these writ petitions have to be granted, thereby protecting the constitutional rights guaranteed to the petitioner. 7. In support of his submission, the learned counsel relied on a decision of the Gujarat High Court reported in MANU/GJ/0015/2017 (Jignesh Kishorbhai Bhajiawala vs. State of Gujarat and Ors.) and the Division Bench decision of the Delhi High court made in LPA. 607/2016 dated 24.05.2018 (Competition Commission of India and another vs. Oriental Rubber Industries Privat....
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....respondent, not to cause any physical, mental and verbal harassment to the petitioner during the pendency of investigation. In the second Writ Petition, one more direction is sought against the first respondent to re-record the statement to be tendered under Section 50 of the Prevention of Money Laundering Act and conduct the proceedings in camera and in the presence of an advocate appointed by the petitioner. Going by the above prayer sought for in these writ petitions, it is evident that the petitioner has not challenged the summons issued under Section 50 of the Prevention of Money Laundering Act 2002 and on the other hand, he seeks for conducting the enquiry in the presence of an Advocate appointed by him and to re-record the statement to be made by him under the above said provisions of law. The grievance of the petitioner is that under the guise of investigation, the first respondent caused physical, mental and verbal harassment to the petitioner. Therefore, it is evident that the contention of the learned counsel for the respondents as if these writ petitions are filed against the summons is not correct. Since the prayer is for issuing mandamus as stated supra, this Court is....
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....attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860). (5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: PROVIDED that an Assistant Director or a Deputy Director shall not- (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Joint Director. 14. The above said provisions of law section 50 make it clear that powers are conferred on the authorities to summon persons whose attendance is necessary to give evidence or produce any record during the course of investigation ....
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....for the purpose of collecting evidence and to know the complicity of the persons so summoned to the crime and that, only after collecting evidence and statements from the persons so summoned and if it is established after completion of investigation that the person is involved in the crime of Money Laundering, he will be treated as an accused and prosecution complaint will be filed against him. Therefore, there is no dispute to the fact that at the time of making an enquiry under Sections 50(2) and 50(3) of the said Act, the persons so summoned, unless are found to have been involved in the crime of Money Laundering, cannot be treated as an accused at the stage of enquiry itself. Under the above circumstances, now, the question that would arise is as to whether the presence of a lawyer is required at the time of making such enquiry. The above said question has been extensively considered by the Gujarat High Court in Jignesh Kishan Bai case reported in MANU/GJ/0015/2017, wherein the learned Judge in an identical circumstances, in respect of summons issued under Section 50 of the said Act, has observed at paragraph Nos. 22 and 23, by relying on the decision of the Madras High Court r....
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.... than those set out in S. 30. The Supreme Court in Nandini Satpathi's case, MANU/SC/0139/1978 : AIR 1978 SC 1025 : (1978 Cri.L.J. 968), cautions that police station lawyer' system is an abuse which breeds other vices." 18. Thereafter, the learned Judge, considered the question whether the discretionary relief of presence of lawyer should be granted to the applicant or not, by considering the decision of the Apex Court in Nandhini Sarputhin's case reported in MANU/SC/0139/1978 : AIR 1978 SC 1025 and the decision of the Calcutta High Court in the case of Mahendra Jain vs. Union of India reported in MANU/WB/0454/2002 : 2003 Crl.LJ 1464. At paragraph Nos. 12, 13, 19 and 20, it is observed as follows: 12. According to me, a protection of a citizen must have to be better protection than an accused. One can be called as 'accused' when there is a prima facie case against him. But in case of a citizen to prima facie case had then born. Unless and until there is a check and balance, possibility of misuse of power cannot be ruled out. Thus the protection under Article 21 is given by the Constitution of India to the people at large. It is now been reiterated universally ....
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....if at all any complaints are made. ...................... ...................... 19. According to me, there are two ways of looking into the matters. One way is the right of interrogation and another way is right of human dignity. Therefore it is expected that the authorities should keep a sense of proportion or balance in dealing with the matter. In case of any disbalance Court has every right to justify whether the authority has crossed limit of interrogation or whether the petitioners are falsely implicated them in the garb of protection of human right. The affidavit on behalf of the authority is full of evasive denials. Therefore, whether any torture or third degree or any in-human method has been applied for the purpose of extracting statements in the name of interrogation cannot be tested nor it can be said that the apprehension and/or allegations are without any basis. It is true to say that the interrogating officers should have appropriate right for the purpose of interrogation but such right should not exceed the limit of the human right. Therefore, a bare denial cannot be an appropriate reply to the charges. The cases of the petitioners are not to stop the summons ....
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....ed is formally accused or not. It is not be misused for extracting statements by force. It is, further important to say, that the present policy of the Government does not permit the authorities to behave in such a manner. As has already been said, previously there was a rigour on the part of the authority in respect of interrogation under the Customs Act. But by the introduction of the policy of liberalization, the Government thought about commercial viability intentionally. I am not for a moment say that interrogation will not be there. But its application should not be in such a manner that a wrong message should not go to the people attached to the commercial activities. If one wants to flout the law a case has to be made out on the basis of an appropriate reason to believe. Such reason to believe cannot be a weapon of fishing out the evidence by taking the person in the informal custody, torturing him for an indefinite period and extracting statements to make an evidence to fit the purpose. 19. Further, the learned Judge, cited various orders of the Apex Court relied upon by the writ petitioner therein at paragraph Nos. 29 and 35, wherein, in all those cases, the presence of ....
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.... attempted and insist on questions and answers being noted where objections are not otherwise fully appreciated. He cannot harangue the police but may help his client and complain on his behalf, although his very presence will ordinarily remove the implicit menace of a police station. 21. The Division Bench of Delhi High Court in its decision made in L.P. No. 607/2016 dated 24.05.2018 has observed at paragraph Nos. 19, 22 & 23 as follows: 19. Under the regime of the Competition Act, there can be no doubt that the DG is authorized to record evidence. Section 36(2) of the Act provides the DG powers similar to that of a Civil Court and allows him to take evidence. Section 36 is given further content through Regulation 41 and 43 of the CCI Regulations (reproduced in relevant part above), which also clarifies that the DG is authorized under the Competition Act to take evidence. That being the case, the DG would fall under Section 30(ii) of the Advocates Act, as being a person "legally authorized to take evidence". Therefore, advocates under Section 30 would have the right to practice before such individual. That being the case, what the Court must then discern is whether the Act cont....
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.... made, an appropriate procedure to be followed during such investigation, where the counsel may be allowed to accompany the party, but not continuously confer with him when the DG is taking his or her testimony or asking questions. Therefore, while the party is allowed his right to be accompanied by an advocate, the DG's investigations are not unnecessarily hindered. The Commission having regard to the appropriate best practices across jurisdictions in antitrust matters may formulate such procedures and incorporate them in regulations; till then, it is open to the DG to make appropriate procedural orders. This court feels additionally that this precautionary note is essential, because often there can be situations where the prominent presence of a counsel might hinder questioning of the witness by the investigating officers or the Director General. Apart from non-verbal communication, the counsel might restrict the element of surprise that is essential when collecting such evidence. Therefore, the DG shall ensure that the counsel does not sit in front of the witness; but is some distance away and the witness should be not able to confer, or consult her or him. The Court does no....