9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 34 - AT - Money LaunderingPrevention of Money Laundering - Mis-management especially as regards payment of royalties with number of complaints were registered against - retention of documents seized by the Directorate of Enforcement against the appellant - non recording any reason to believe for retention of documents seized - HELD THAT - No civil or private disputes between two parties and any criminal proceedings can become subject matter of PMLA, unless the officer authorized has reason believe on the basis of information and material available in his possession to the effect that the person concerned has committed an offence under Section 3 of the Act; and the person concerned has derived and obtained proceeds of crime and as a result of criminal activities relating to a schedule offence or against third party who is in possession of any proceeds of crime and it is likely to be concealed, transferred or dealt with which may frustrate any proceedings under this Act within the meaning of Sections 5, 17 to 21 read with definition of Section (u) of the Act. The Respondent proceedings under the provisions of PMLA for securing proceeds of crime does not arise at all and the present proceedings are completely abuse of process of law. The continuation of proceedings are just for harassment and nothing else. The complainant has already deposed her statement who raised no-objection to quash the said F.I.R. before the Hon ble Delhi High Court. She has settled the disputes prior to registering the ECIR, search and seizure, on the date of filing of application under Section 17(4) for retaining the records In the present case, the statutory obligations laid down in section 20 (1), 20(2), 20 (4) and 21(4) of PMLA have not been complied with. An attempt has been made to retain the records without recording any reason to believe . The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days. The said prescribed period has already been expired as more than a year has already elapsed but the properties and records have not been returned so far which is in clear violation of the provisions of PMLA. No prosecution complaint has been filed against the Appellant. In the light of above, the present appeal is allowed. The impugned order dated 20.4.2018 is set-aside. The application filed by the respondent under Section 17(4) for retention of documents is dismissed accordingly.
Issues Involved:
1. Legality of the retention of documents seized by the Directorate of Enforcement. 2. Validity of the reasons to believe recorded by the authorized officer under PMLA. 3. Compliance with procedural requirements under PMLA for search, seizure, and retention of property. 4. Allegations of harassment through multiple ECIRs by the respondent. 5. Applicability of precedents and legal principles established by higher courts. Issue-wise Detailed Analysis: 1. Legality of the Retention of Documents Seized by the Directorate of Enforcement: The appeal was filed to set aside the order dated 20.04.2018 by the Adjudicating Authority, which confirmed the retention of documents seized on 03.11.2017. The Adjudicating Authority had observed that the seized records were relevant for the investigation and involved in money laundering activities. Despite the withdrawal of the Shubha Mudgal FIR, the Authority retained the documents, citing Section 8 of PMLA, which allows retention during ongoing investigations. 2. Validity of the Reasons to Believe Recorded by the Authorized Officer under PMLA: The appellant argued that no valid reasons to believe were recorded before the search and seizure. Section 17 of PMLA mandates that reasons to believe must be recorded in writing. The respondent admitted that recording reasons is mandatory but contended that there is no requirement to serve a copy to the concerned person. The Tribunal emphasized that reasons to believe must be cogent, clear, and based on reasonable grounds, not merely on suspicion or allegations in the FIR. 3. Compliance with Procedural Requirements under PMLA for Search, Seizure, and Retention of Property: The Tribunal highlighted the procedural requirements under Sections 17 to 21 of PMLA. It noted that the authorized officer must record reasons to believe in writing and forward them to the Adjudicating Authority. The retention of property is limited to 180 days unless extended by the Adjudicating Authority. The Tribunal found that the respondent failed to comply with these procedural requirements, rendering the retention order invalid. 4. Allegations of Harassment through Multiple ECIRs by the Respondent: The appellant alleged harassment through multiple ECIRs for the same cause of action. The Tribunal noted that the respondent had previously registered ECIRs based on similar facts and circumstances. The Tribunal referred to previous judgments, which held that the money sought to be attached had been generated through legal commercial transactions and could not be considered proceeds of crime. The Tribunal emphasized that the continuation of proceedings based on multiple ECIRs was an abuse of process. 5. Applicability of Precedents and Legal Principles Established by Higher Courts: The Tribunal referred to various judgments, including those of the Supreme Court and High Courts, which established the requirement for recording and communicating reasons to believe. It cited the judgment in C.B. Gautam vs. Union of India, which held that reasons must be communicated to the affected parties. The Tribunal also referred to the judgment in J. Sekar v. Union of India, which emphasized that reasons to believe must be made available to the person concerned. The Tribunal concluded that the respondent's failure to comply with these principles rendered the retention order invalid. Conclusion: The Tribunal allowed the appeal, set aside the order dated 20.04.2018, and dismissed the application for retention of documents. It directed the respondent to return the seized documents to the appellant, emphasizing that the proceedings were an abuse of process and lacked compliance with procedural requirements under PMLA.
|
