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2014 (5) TMI 1154 - HC - Money LaunderingOffence under PMLA Act - eligibility of initiation of the proceedings against the petitioners - eligibility of benefits of all the procedures applicable to the woman - Held that - Inquiry, investigation, etc., are permissible under Cr.P.C. by the authorities or officers exercising the jurisdiction under P.M.L. Act. It therefore goes without saying that on noticing an offence under P.M.L. Act against the offenders, the case can be tried as provided in Chapter VII of P.M.L.A. Act. Thus, a separate machinery for trial of the offences under P.M.L. Act is provided under Chapter VII as distinguished from adjudication under Section 8 of the Act. To enable such trial, the investigation and inquiry with the assistance of the provisions of Cr.P.C. is permissible. Looking to the fact that the petitioners are not arrayed as accused, it appears that they are sought to be interrogated to ascertain their complicity in the offence if any. Such action cannot be thwarted at a preliminary stage where only summons have been issued after freezing the accounts of the petitioners. Even if the argument of the petitioners that freezing of the accounts was not permissible that Sections 5 and 17 of P.M.L.A. Act were applicable at this stage is accepted, as noticed in a greater detail, acts under Sections 5 and 17 are only provisional and subject to confirmation by the Adjudicating Authority. Before such adjudication, a notice to the interested person is contemplated under Section 8 of P.M.L. Act and therefore, by convincing the Adjudicating Authority that no offence under Section 3 is committed by the petitioners, the orders defreezing their accounts can be obtained from the such authority. In the facts and circumstances discussed hereinabove, it is difficult to accept the contention that initiation of the proceedings against the petitioners are illegal. True it is that the vexatious search would expose the authority or officer concerned to prosecution but that in fact is a safeguard provided to the suspects so as to prevent them against unnecessary harassment or inconvenience. In view of such safeguard, at this stage, this Court would not doubt the credentials of the respondents when they are inquiring into or investigating what may turn out to be a serious offence. Further Sections 22 and 23 raise various presumptions against the suspects and Section 24 casts a burden of proof under various situations on the person charged with the offence. Thus, the offence under Section 3 is treated as serious offence and interference by this Court at the preliminary stage may frustrate the purpose and object of the Act. Further, a bare perusal of sub-section (2) of Section 50 shows that power to summon any person whose attendance is considered necessary as provided in sub-section (2) is vested with various authorities including Assistant Director and therefore, it is misconceived to say that the officer issuing summons being the Assistant Director is not so empowered. In view of the above discussion, the arguments that without compliance with Sections 5 and 17, Section 16 was the only provision applicable to the respondents, after noticing the material in search under FEMA, also cannot be accepted. So far as petitioner-Foziya Samir Godil is concerned, being a woman, it is rightly contended by the learned counsel for the petitioners that she is entitled to benefits of all the procedures applicable to the woman under the relevant law and to that extent, the respondents at the threshold shall have to comply with the provisions of law. The contention that exclusive procedure for summoning a person under Section 50 not providing the safeguards to a woman as under various provisions of Cr.P.C. and therefore, no benefit as is available to the woman under Cr.P.C. can be conferred upon her, is devoid of merits and suffers from misconception of law inasmuch as concededly by virtue of Section 65 of P.M.L. Act, provisions of Cr.P.C. as are not inconsistent with the provisions of P.M.L. Act are applicable to the proceedings under P.M.L. Act and it cannot be said that the provisions providing safeguard to a woman under Cr.P.C. cannot stand with the provisions of P.M.L. Act and therefore, such provisions cannot be said to be inconsistent with P.M.L. Act. Subject to the aforementioned observations, no substance is found in the petitions
Issues Involved:
1. Legality of the investigation and search warrants issued by the Enforcement Directorate. 2. Jurisdiction of the Enforcement Directorate under the Prevention of Money-Laundering Act, 2002 (PML Act). 3. Validity of freezing the petitioners' accounts. 4. Compliance with procedural safeguards under the Criminal Procedure Code (Cr.P.C.) and PML Act. 5. Rights of a woman under Section 160 of Cr.P.C. in the context of summons issued under the PML Act. 6. Applicability of Sections 5 and 17 of the PML Act at the preliminary stage of investigation. Detailed Analysis: 1. Legality of the Investigation and Search Warrants: The petitioners challenged the investigation carried out by the Assistant Director, Directorate of Enforcement, and the orders passed freezing their accounts. They questioned the search warrants issued by the Joint Director, Enforcement Directorate, Ahmedabad, and the panchnamas drawn during the raids. The court noted that the premises of the petitioners were raided, and various documents were seized under the panchnama. 2. Jurisdiction of the Enforcement Directorate: The petitioners argued that the Enforcement Directorate lacked jurisdiction to conduct the inquiry/investigation under the PML Act. The court examined the definitions and provisions under the PML Act, including Sections 2(d), 2(k), 2(p), 2(u), 2(na), 2(wa), 2(y), and 2(z), and concluded that the Enforcement Directorate had the authority to inquire into and investigate the case under the PML Act. 3. Validity of Freezing the Petitioners' Accounts: The petitioners contended that freezing their accounts was illegal without compliance with Section 5 of the PML Act. The respondents argued that the freezing of accounts was permissible even before initiating proceedings under Section 5. The court referred to the case of FFR Software Private Limited Vs. Union of India, which supported the respondents' contention that prohibitory orders restraining the operation of accounts could be issued during the preliminary inquiry/investigation stage. 4. Compliance with Procedural Safeguards: The petitioners argued that the search and seizure were unauthorized without a search warrant under the PML Act and that the respondents failed to comply with procedural safeguards under the Cr.P.C. The court noted that the PML Act's provisions, including Sections 5, 8, 17, and 18, provided sufficient safeguards with a time-bound schedule for attachment and adjudication. The court also emphasized that the Adjudicating Authority under Section 8 was authorized to undertake civil proceedings and adjudicate upon the attachment of properties. 5. Rights of a Woman under Section 160 of Cr.P.C.: Petitioner-Foziya Samir Godil contended that being a woman, she could not be summoned to the office of the second respondent without compliance with Section 160 of Cr.P.C., which mandates interrogation of a woman only at her premises. The court upheld her contention, stating that she was entitled to the benefits of all procedures applicable to women under the relevant law, and the respondents must comply with these provisions. 6. Applicability of Sections 5 and 17 of the PML Act: The petitioners argued that without compliance with Sections 5 and 17, the proceedings were unauthorized. The court clarified that the respondents had not reached the stage of Sections 5 and 17 and that the proceedings were at a preliminary stage. The court further noted that the respondents had the authority to freeze accounts under Section 17(1-A) without a report under Section 157 of Cr.P.C. The court also emphasized that the investigation and inquiry could proceed with the assistance of Cr.P.C. provisions. Conclusion: The court concluded that the proceedings initiated against the petitioners were not illegal, and the Enforcement Directorate had the authority to conduct the investigation under the PML Act. The court dismissed Special Criminal Application No.1748 of 2014 and disposed of Special Criminal Application No.1725 of 2014 with observations, emphasizing the need to comply with procedural safeguards for women under the Cr.P.C. There was no order as to costs.
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