9911796707
TMI Blog2025 (5) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... be retracted. iv. The impugned summons issued under Section 50 of PMLA, 2002, dated 29.10.2024 and 06.11.2024 and the various statements recorded under Section 50 of the Act are hereby quashed. v. Liberty is reserved with the petitioner to initiate action under Section 62 of the PMLA, 2002 against the officer concerned before the appropriate forum, as whether the impugned search and seizure is vexatious or not is matter of trial." 2.1 Now, the present application is filed by the applicant-appellant seeking stay of the order of learned Single Judge. It is prayed as under, "This Hon'ble Court may be pleased to stay the operation of the order dated 27.01.2025 in W.P. No.32956/2024 (GM-RES) in the interest of equity and justice or in the alternative, in the interim, observe that the impugned order shall not be relied upon by any person in any other proceedings or that the impugned order shall not be treated as a precedent." 3. A brief prelude of factual background leading to passing of the judgment and order by learned Single Judge would be relevant. The writ petitioner happens to be a former Commissioner of the Mysore Urban Development Authority. A complaint came to be lod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment recorded under the said provision were quashed. 4. Learned Additional Solicitor General of India, Supreme Court Mr. S.V. Raju, appearing through video conferencing with learned Additional Solicitor General of India, Karnataka, Mr. K. Arvind Kamath, present in the Court, assisted by learned special counsel Mr. Zoheb Hossain, through video conferencing and learned special counsel Mr. Madhukar Deshpande for the applicant-Enforcement Directorate, making the Court sail through the facts, highlighted that the case involved serious facts and issues. It was submitted that FIR was registered before the Lokayukta police, Mysore Police Station against Sri Siddaramaiah, his wife Smt. Parvathi, Sri Mallikarjunaswamy, Sri Devaraju and others under Section 120B, 420 of the Indian Penal Code, as also under the Sections 9, 13 of the Prevention of Corruption Act, which are the Scheduled Offences under PML Act. 4.1 It was submitted by the applicant that as per the allegations in the FIR, said Sri Devaraju illegally sold the land to Sri B.M. Mallikarjunaswamy, who happens to be the brother-in-law of Sri Siddaramaiah-the present incumbent in the office of the Chief Minister of the State. The lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed that the 'reason to believe' existed and was sufficient to indicate that the respondent had been assisting in generation and acquisition of proceeds of crime. (iv) It was erroneous to hold that 'reason to believe' must exist on the basis of evidence regarding existence of certain facts without describing what is meant by 'existence of certain facts'. The investigation would have to proceed on the basis of available facts. (v) It was not correct on the part of learned Single Judge to observe and hold that the applicant agency can summon any person only in case where there is credible evidence that an offence under Section 3 of the Act is committed, for, power to issues summons under Section 50 of the Act and the stage at that juncture does not contemplate examination of credible evidence that an offence is committed. The very fact that the First Information Report was registered in respect of commission of several scheduled offences, leading to allotment of sites was sufficient. (vi) The Scheduled Offences related to large scale allotment of sites run into more than one thousand in numbers. The case against the respondent relating to 14 sites investigated before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal vs. Union of India [2025 SCC Online 449] was pressed into service for its propositions laid down, particularly in paragraphs 9 and 10, that sufficiency or adequacy of material on the basis of which the belief is formed by the officer, or the correctness of the facts on the basis of which such belief is formed to arrest the person, could not be a matter of judicial review. 4.1.5(a) The following observations were highlighted, "...The criteria or parameters of judicial review over the subjective satisfaction applicable in Service related cases, cannot be made applicable to the cases of arrest made under the Special Acts. The scrutiny on the subjective opinion or satisfaction of the authorized officer to arrest the person could not be a matter of judicial review, in as much as when the arrest is made by the authorized officer on he having been satisfied about the alleged commission of the offences under the special Act, the matter would be at a very nascent stage of the investigation or inquiry. The very use of the phrase "reasons to believe" implies that the officer should have formed a prima facie opinion or belief on the basis of the material in his possession that the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in real sense, is to undertake inquiry to ascertain relevant facts to facilitate initiation of or pursuing with an action..." (para 431) 4.1.7(b) The further observations were highlighted that the summoning person need not be an accused, but the summons is issued even to a witness in the furtherance of inquiry. It was stated that the stage of issuance of summons, but the person cannot claim protection under Article 20 (3) of the Constitution, "It is a different matter that the information and evidence so collated during the inquiry made, may disclose commission of offence of money-laundering and the involvement of the person, who has been summoned for making disclosures pursuant to the summons issued by the Authority. At this stage, there would be no formal document indicative of likelihood of involvement of such person as an accused of offence of money-laundering. If the statement made by him reveals the offence of money-laundering or the existence of proceeds of crime, that becomes actionable under the Act itself. To put it differently, at the stage of recording of statement for the purpose of inquiring into the relevant facts in connection with the property being pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand, learned Senior Advocate Mr. Dushyant Dave, appearing through video conferencing, as always assertive, emphatic and energetic, assisted by learned Senior Advocate Mr. Sandesh Chouta, learned Advocate Ms. Anisha Aatresh and learned Advocate Mr. Vivek Jain, appearing in the court, submitted that the whole case of the Director of Enforcement is hollow and empty in as much as the facts in no way indicated that either there was any criminal activity, or proceeds of crime or money laundering which are three essential requirements to justify the invocation of the rigors of the provisions of the PML Act. It was sought to be submitted that a complaint by a stranger came to be filed before Lokayukta police without any foundational facts and the investigation was made to trigger. 4.2.1 It was submitted that in allotment of sites or plots, there was no criminal activity. Such allotment could not be viewed as involving any criminality. It was submitted that there was no element of crime, therefore, the question of occurrence of proceeds of crime did not arise and the offence under Section 3 of the Act was not made out even prima facie. Learned Senior Advocate took the court through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcotic Drugs and Psychotropic Substances, Basel Statement of Principles, 1989 and other International Conventions. The Statement of Objects and Reasons of the Act was highlighted and it was submitted that it was also guided by the principles professed and adopted at the Vienna Convention, 1988. It was submitted that money laundering, that is cleansing of proceeds of crime, such as extortion, treason, drug trafficking, etc., poses threat to the integrity and sovereignty of the country and to its financial system. It was submitted that the law was enacted to combat such ills and threats, however, in the present case, it's application amounts to rank misuse and harassment to the innocent persons. 4.2.5 Referring to observations in paragraph 269 in Vijay Madanlal (supra), it was submitted that the bare language of Section 3 of the Act makes it clear that the offence of money laundering is an independent offence regarding the process connected with the proceeds of crime and that element of criminality does not exist in the facts of the case. It was further submitted with reference to paragraph 282 of the same judgment, the authority to prosecute any person for the offence of money laun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressing anything on merit in relation to the legality or otherwise of the judgment and order of learned Single Judge. 5.3 At the same time, the impugned judgment and the operative directions thereof, could not be viewed or construed as a judgment in rem. The aspect emerge weighty, when it was submitted to demonstrate that the judgment has a cascading effect, and further that it has been used and employed to stall the investigative process under the PML Act, 2002, initiated against the other persons, whether they are accused persons or the persons to be summoned, etc., for investigation purposes. 5.4 The undisputed details are given by the applicant-appellant in the application for stay by pointing out that on the basis of the impugned order, at least in seven cases, the summons issued by the appellant-Enforcement Directorate to the other persons in the alleged scam have been stayed by the different courts and that the whole investigation is halted. The details of such cases are as under, (i) In Smt. Parvathi vs. Directorate of Enforcement which was Criminal Petition No.1132 of 2025, order dated 27th January 2025 came to be passed on the basis of the decision in the instant writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with as Document No.8 and 9 respectively." 5.6 The Court cannot permit that a judgment which could be viewed only as, and which is indeed an inter-parte, has the effect of stalling all the investigation process in general, as if it is a verdict in rem. Even otherwise, it is well settled law that the process of investigation by the investigating agencies cannot be interjected and the investigation has to be permitted to proceed. The allowing of process of investigation of any crime, whether under the PML Act or offences under any other law, is part of rule of law. The investigation or inquiry into any alleged criminal activity or offence has to be permitted by the Court uninterrupted in accordance with law. There is no valid reason not to permit the appellant investigating agency to continue with its investigation in relation to other persons, whether to be investigated in capacity of accused or otherwise. 5.7 While the legality and correctness of the impugned judgment and order is under consideration in the appeal already admitted and slated to be listed on the next date, in the mean time, it would not be proper to interject the process of investigation by the applicant-Director ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
