2022 (7) TMI 141 - HC - Money Laundering

Seeking a writ of mandamus directing the Directorate of Enforcement to withdraw the Look Out Circular (LOC) issued against the petitioner - case against against the petitioner s grandfather, late father and late uncle on the allegations of commission of offences under the IPC and Prevention of Corruption Act, 1988 - it is claimed that petitioner was a minor being 8 to 14 years old and was not involved in the family business - Petitioner's involvement in the offence or not - Doctrine of Colourable Legislation - HELD THAT - From clause (h) of para 8 of the O.M. dated 27th October, 2010, it is evident that unless a citizen is suspected to be involved in the commission or facing investigation or trial on the accusation of offences which are cognizable under the Indian Penal Code or other Statutes, the citizen can neither be detained, arrested or prevented from leaving the country and the originating agency can only seek intimation of his arrival and/or departure. Further in LOC of intimation the authorities at the airport/ or any other port of departure or arrival cannot restrain or detain the person on the pretext that intimation of his arrival or departure is required to be given to the originating agency which would indirectly serve as a detentive/ preventive LOC. It is well settled that what cannot be done directly, cannot be done indirectly. In the present case the petitioner was not an accused either in the predicate offence nor the 2 ECIRs as he was admittedly a minor at the time of commission of the transactions purportedly resulting in the alleged offences under IPC, PC Act or even under PMLA. Thus, a preventive/ detentive LOC leading to the detention of the petitioner was clearly unwarranted. It is only when the petitioner filed the present writ petition that this preventive/ detentive LOC was converted into an intimative LOC. Since the respondent no.1 has already taken remedial action, no further directions are required to be passed in this petition. Needless to note that in the garb of LOC of intimation, the petitioner will not be detained or prevented at the airport or any other port on the pretext that first intimation has to be given to the originating agency. The writ petition and application are disposed off with the hope and expectations that respondents will abide by the terms as laid down in the O.M. dated 27th October, 2010 issued by the respondent No.2.

Summary

Issues Involved:

1. Legality of the Look Out Circular (LOC) issued against the petitioner.
2. Involvement of the petitioner in the predicate offences.
3. Provisional attachment of assets held by the petitioner.
4. Compliance with the guidelines for issuance and continuation of LOCs.

Detailed Analysis:

1. Legality of the Look Out Circular (LOC) Issued Against the Petitioner:

The petitioner sought a writ of mandamus directing the Directorate of Enforcement to withdraw the LOC issued against him in ECIR No. 02/DLZO/2016. The petitioner argued that he was not made an accused in the seven RCs registered by the CBI against his relatives for offences under the IPC and Prevention of Corruption Act, 1988, as he was a minor during the alleged offences (2005-2011) and not involved in the family business. Despite this, upon his return to India in February 2021, he was detained due to the LOC. The petitioner contended that the LOC was illegal and arbitrary, referencing the decision in ILR (2010) VI DELHI 706, Sumer Singh Salkan Vs. Assistant Director & Ors.

2. Involvement of the Petitioner in the Predicate Offences:

The respondent's status report stated that seven FIRs were registered by the CBI based on complaints from bank officials, resulting in charge-sheets against the petitioner's relatives. The petitioner was not named as an accused in either of the two ECIRs recorded in 2013 and 2016. The report detailed that the group companies defrauded public sector banks of approximately ?2671 crores and laundered money through various transactions. The petitioner, having no independent income and being dependent on his parents, was implicated due to the proceeds of the crime being invested in his name. The petitioner was considered non-cooperative, leading to the issuance of the LOC to secure his presence for investigation.

3. Provisional Attachment of Assets Held by the Petitioner:

The respondent attached several assets held in the petitioner's name, including bank accounts, mutual funds, an insurance policy, and a family trust bank account, through Provisional Attachment Orders confirmed by the adjudicating authority. These assets were allegedly connected to the proceeds of the crime from the predicate offences. The petitioner argued that these actions were taken despite his minor status during the alleged offences, making the continued LOC unjustified.

4. Compliance with the Guidelines for Issuance and Continuation of LOCs:

The court examined the guidelines for issuing LOCs, as outlined in the judgment in Sumer Singh Salkan Vs. Assistant Director & Ors. and the Office Memorandum dated 27th October 2010. The guidelines specify that LOCs can be issued in cognizable offences where the accused is evading arrest or trial and likely to leave the country. The LOC must be approved by a competent officer and can be challenged if wrongly issued. The court noted that the petitioner was not an accused in the predicate offences or the ECIRs, and thus, a preventive/detentive LOC was unwarranted. The LOC was modified to an intimative LOC, allowing the petitioner to travel abroad with intimation to the authorities. The court emphasized that the petitioner should not be detained or prevented from traveling under the guise of intimation.

Conclusion:

The court concluded that since the petitioner was not an accused in the predicate offences or ECIRs and was a minor during the alleged offences, the preventive/detentive LOC was unjustified. The modification to an intimative LOC was deemed appropriate, and the petitioner should not face detention or prevention from traveling. The court disposed of the petition, expecting the respondents to adhere to the guidelines laid down in the Office Memorandum dated 27th October 2010.