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Money Laundering - Case Laws
Showing 121 to 140 of 2022 Records
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2024 (12) TMI 470
Money Laundering - criminal conspiracy - scheduled offences - Legality of retention of the seized properties and jewellery items seized under Prevention of Money Laundering Act, 2002 - appellant argued that no criminal activity is attributed to the appellant or his business nor the appellant is an FIR named accused nor named in the chargesheet and supplementary chargesheet filed by CBI. Since, no criminal activity has been alleged therefore, the proceeding under section 17(4) of the PMLA, 2002, is nonest and illegal.
HELD THAT:- It is seen from the record that the respondent ED has seized the cash and jewellery on the basis of the oral and documentary evidences so far available with them. From the contents of OA, it is prima facie seen that the appellant has allegedly earned illegal commission as an intermediary in the import of DAP by the IFFCO and IPL from M/s JPMC when there was no requirement for an intermediary to import the DAP. Even though, the appellant is not named in the FIR, chargesheet and supplementary chargesheet, the investigating authority under PMLA, 2002, can go ahead with search & seizure to arrive at a conclusion whether the retention of the seized items is required for the purposes of further investigation. The respondent ED, in the OA, has categorically reflected the reasons of making further investigation in the matter.
It is alleged in the OA that the appellant has made illegal earnings arising out of the criminal acts (illegal commission) and generated funds, which were Proceeds of Crime and that were required to be traced out and that the appellant could not explain the source of acquiring the cash and jewellery during search proceedings. Since, the proceedings before the ED are at the investigation stage, it would not be proper to release the cash and jewellery which are highly liquid in nature.
The appeal has no merit. Hence, dismissed.
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2024 (12) TMI 359
Seeking grant of Regular Bail - Money Laundering - economic offences - liquor scam - fundamental right to liberty - offences punishable under Sections 420, 468, 471,120-B IPC read with Sections 7 & 12 of the Prevention of Corruption Act, 1988 - HELD THAT:- In the present case, charges have been brought against the applicant for offences punishable under Sections 420, 467, 468, 471, and 120-B IPC and Sections 7 & 12 of the Prevention of Corruption Act. It is the case of the prosecution that from the charge sheet, it is alleged that the present applicant along with co-accused Anwar Dhebar was the head of the criminal syndicate comprising of high level State government officials, private persons and political executives in extorting illegal commission in the sale of liquor and was also involved in unauthorized sale of unaccounted liquor through government liquor shops in the State of Chhattisgarh.
In the matter of Nimmagadda Prasad v. Central Bureau of Investigation [2013 (5) TMI 920 - SUPREME COURT] their Lordships of the Supreme Court have held that economic offence is a grave offence affecting the economy of the country as a whole and observed 'Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep-rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.'
It is the case of the prosecution that the EOW had received a communication from the Enforcement Directorate and after due verification and on being satisfied, case was registered as FIR No. 04/2024 under Sections 7 & 12 of the Prevention of Corruption Act and Sections 420, 467, 468, 471, and 120-B IPC. It has been revealed that a criminal syndicate has been operating in the State of Chhattisgarh which was extorting illegal commission in the sale of liquor and was also involved in unauthorized sale of unaccounted liquor through government liquor shops - The investigation revealed that the applicant played a pivotal role in facilitating the payment of bribes to the syndicates in collusion with other co-accused.
Considering the facts and circumstances of the case, noticed hereinabove and taking into account the nature and gravity of the offences, the role of the applicants herein, the manner in which the present applicant is alleged to have involved in the commission of the offence and that the investigation is going on and further taking note of the fact that the applicant along with the co-accused persons has caused huge financial loss to the State exchequer and the estimated proceeds of crime is around Rs. 1660,41,00,056/-.
It is prima facie clear that on the one hand, the prosecution agency is claiming that the matter is of a huge economic loss to the State Exchequer and the offence is of highly serious nature and on the other hand, the distillers who are allegedly supplying illegal liquor causing huge financial loss to the State exchequer and the estimated proceeds of crime is around Rs. 1660,41,00,056/-, have not been made accused despite the fact that their name has been mentioned in the complaint made by the ED as member of the syndicate - In the present case, he was involved in the criminal acts of the syndicate and is in possession of the proceeds of crime and that he received commission from the liquor suppliers. However, no recovery of unaccounted money has been made in this regard. The details of the whatsap chats annexed with the charge sheet prima facie shows the involvement of the applicant in the present case.
Taking into account the severity of the punishment prescribed for the aforesaid offences and keeping in mind, the binding observations of their Lordships of the Supreme Court in aforesaid cases [2017 (4) TMI 1410 - SUPREME COURT] that corruption is a enemy of the nation and tracking down corrupt public servants and punishing such persons is a necessary mandate of the Prevention of Corruption Act, 1988 and further taking in view that corruption is really a human rights violation specially right to life, liberty, equality and non-discrimination and it is an economic obstacles to the realization of all human rights and further taking into consideration that charge-sheet has been filed against the applicant and considering the nature of accusation and gravity of offence, the applicant has been charged, which are extremely serious and such offences are alleged to have been committed in the State of Chhattisgarh, in the considered opinion of this Court, it is not proper to order release of present applicant on regular bail.
The prayer for grant of bail to the applicant is liable to be rejected and it is hereby rejected.
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2024 (12) TMI 293
Seeking grant of Regular Bail - money laundering - proceeds of crime - scheduled offences - violation of right to liberty - requirements of section 45 of PMLA fulfilled or not - Delay in trial and long incarceration.
HELD THAT:- PMLA legislation was brought in to prevent and control the issue of money laundering, to seize the proceeds of crime, and to punish the perpetrators. Now what exactly is money laundering, to put in simple words, an act of dealing with illegal money or assets i.e. money obtained or derived as result of criminal act relating to scheduled offence.
The Hon’ble Supreme Court in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT] has very categorically laid down the distinction with respect to ‘proceeds of crime’. The above paras hold that any property derived or obtained directly or indirectly ‘as a result of criminal activity’ which is a scheduled offence under the PMLA is proceeds of crime. In other words, any property obtained following the commission of the scheduled offence or from the proceeds of the scheduled offence will be the proceeds of crime.
In the present case, ED has alleged that all the petitioners are members/office bearers of the banned organisation i.e. PFI. The role of the petitioners are that they have collected funds for and on behalf of the organization from unknown sources, thereafter they provided fake receipts/showed the collections as legitimate donations to utilize those funds to commit terrorist activities (scheduled offences). Hence, the funds so collected by the petitioners are the proceeds of crime - On perusing the Complaint, there is no evidence to show that any scheduled offence has been committed, it is stated that the petitioners participated in the anti-CAA protests in Delhi which culminated in Delhi Riots. Learned counsels for the petitioners have rightly pointed out that in the present case i.e. collection of funds precedes the crime i.e. Delhi Riots. The proceeds of crime has to be generated as a result of criminal activity (scheduled offence).
In the present case, the role of the petitioners is that they collected funds and deposited the same to the accountant or PFI’s account. Hence, in this scenario, prima facie, the dominion and control over the generation of alleged proceeds of crime is not of the petitioners herein.
In the present case, the twin conditions of section 45 have been met. The Special Counsel for ED has been given an opportunity to oppose the bail applications. Prima facie, the offence of money laundering is not made out against the petitioners herein.
Delay in trial and long incarceration - HELD THAT:- Special statutes have stringent conditions for grant of bail but they should not become means to detain the accused without there being any possibility of concluding the trial, expeditiously. Merely charging an accused person under the provisions of these special statutes should not become a punishment in itself which violates Article 21. A perusal of the aforesaid judgment also shows that Article 21 prevails over the stringent conditions of section 45 of PMLA and in case the accused has been incarcerated for a reasonably long period of time without there being any reasonable chance of concluding trial, Article 21 will take primacy.
In the present case, it is stated that the matter is at the stage of 207/208 proceedings for supply of documents and thereafter charges are yet to be framed. As per the Complaint and Supplementary Complaints filed by the ED, it is stated by the learned counsels for the petitioners that there are total 185 prosecution witnesses which are proposed to be examined and the trial is to be conducted jointly with all co-accused persons, there are 456 relied upon documents and digital evidence running into lakhs of pages. The same factual position is not disputed by the learned counsel for the ED.
Thus, it is evident that there is no hard and fast formula as to what is the minimum period which is to be considered as substantial period undergone but keeping in view the timelines of the Hon’ble Supreme Court and the trial will take considerable time to conclude, the petitioners i.e. Parvez Ahmed, Mohd Ilyas and Abdul Muqeet are directed to be released on bail subject to the fulfilment of terms and conditions imposed - bail application allowed.
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2024 (12) TMI 292
Money Laundering - proceeds of crime - allocation of the coal block to the appellant company constituted proceeds of crime under the Prevention of Money Laundering Act, 2002 (PMLA) - HELD THAT:- It is undisputed that the Appellant Company along with others has been convicted for the scheduled offence by the Ld. Special Judge (PC Act) (CBI) Rouse Avenue, New Delhi. The reasons given in the judgment dated 13.11.2019 has categorically brought out that the letter of allocation of coal block was issued because the Appellant Company and its Directors had misrepresented and exaggerated their financial status as well as their progress already made for setting up the Sponge Iron Plant in Lohardaga. The additional investment including the purchase of 50% shares by Shri R.S. Rungta and his family members happened after the issuance of letter of allotment of coal block. Shri Rungta has admitted this fact in his statement u/s 50 of PMLA - there is no predicate offence for which any investigation has been carried out about the misrepresentation or cheating or deceiving to the investor either in the chargesheet already decided or in a separate chargesheet.
The conviction in the trial for the predicate offence for the reason that the letter of allocation of Coal Block was obtained through misrepresentation, with dishonest and fraudulent intentions as held in the judgment dated 13.11.2019 of the Court of Ld. Special Judge, (PC Act) (CBI), Rouse Avenue, New Delhi has not held anyone guilty for attracting additional investments through such misrepresentation, dishonesty and fraud. Since the letter of allocation of Coal Block has been held as conferment of valuable right, it cannot by itself be regarded as proceed of crime - the indelible connect between the scheduled offence cannot possibly be construed, unless the chargesheet for scheduled offence and the judgement thereupon would have incorporated such link. In the absence of such finding in the course of investigation of the predicate offence, the Respondent Directorate could not have either assumed existence of such link or even undertake to investigate such link, being only empowered to conduct investigations of the offence of money laundering and not that of the scheduled offence.
In the absence of any predicate offence having been registered and investigated with respect to the flow of investment from outsider investors into the Appellant Company, the attempt by the Respondent Directorate to make such flow of funds as proceeds of crime fails.
The Appeal is therefore allowed and pending applications are accordingly disposed of.
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2024 (12) TMI 291
Legitimacy of the Provisional Attachment Order under the Prevention of Money Laundering Act, 2002 - undervaluation of reserve price - HELD THAT:- The facts on record shows that initially a complaint was filed under Section 200 Cr. P.C. and in pursuance to it, the cognizance of the offence was taken by the learned Judicial Magistrate First Class vide its order dated 14.10.2011 for the offence under Section 120-B read with Section 409,420,468,471 and 34 IPC. It is, however, a fact that the allegation levelled in the said FIR was pertaining to the auction of the factory and sale it to M/s Guru Commodity Services Pvt. Ltd. in an illegal manner. The allegation was for undervaluation of the property for auction. However, the allegations aforesaid were tested by the Additional Sessions Judge followed by the judgment of Bombay High Court holding allegations to be erroneous. It would be gainful to refer and quote the relevant para of the order of the learned Additional Sessions Judge which would otherwise deal with the main issue raised by the appellants.
The attachment order has been passed in reference to the FIR registered in the year 2019 pursuant to the order of the Bombay High Court in a PIL. The allegation in the PIL was of general nature regarding working of the co-operative societies at different levels. The FIR was registered in pursuance to the order of the High Court to deal with the irregularities in the functions of the co-operative societies in lending and borrowing the loans - the issue raised in the Provisional Attachment Order to make out a case is on the basis of facts unconnected to FIR registered in the year 2019. It was totally on different issues. In view of the above, the reasons for the police to give closure report though it is pending consideration before the competent court.
The perusal of the order of the Adjudicating Authority shows brief facts of the case and even the outcome of the investigation pursuant to the FIR registered in the year 2019 but the respondents and Adjudicating Authority were persuaded to have taken initial FIR and allegation contained therein to be the basis for passing the impugned orders.
It is not found that the impugned order can sustain - the impugned orders are set aside - The appeal is allowed.
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2024 (12) TMI 290
Money Laundering - proceeds of crime - attachment of properties - Compliance with procedural requirements under Section 8 of PMLA 2002 - HELD THAT:- The facts on record reveals that Ashok Yadav was a reckoned criminal against whom as many as 26 cases were registered out of which he has been acquitted in majority of the cases. The orders of acquittal have been submitted but it is not in all the cases. The fact, however, remains that ECIR was recorded against the accused followed by cognizance of offence which has not been set aside by the court thus not only ECIR remains against the accused but cognizance of offence has also been taken. The aforesaid is relevant and reflects that even after the acquittal, the ECIR records a case of money laundering in the hands of the appellant. To come out with the allegation of money laundering, the appellants were having opportunity to disclose the source for acquisition of the properties. The perusal of Section 8(1) of the Act of 2002 would reveal that Adjudicating Authority give notice to call upon the parties to disclose source for acquisition of the properties.
In the PMLA investigation, it was revealed that cash was utilized for purchase of all the properties though deposited in the bank first but source to acquire the cash to deposit in the bank has not been disclosed - Perusal of account statement shows irregular cash deposits which do not match with profile of any kind of business activity. Further, he did not appear before the investigation and did not produce any evidence in respect of the source of this cash utilized for making cash deposits and for acquisition of properties. Hence, in view of the charge sheet filed by state police, it is logical to conclude that the cash utilized for acquisition of properties and for making deposits in the bank accounts of Ashok Yadav, are proceeds of crime.
The analysis of income by the Income Tax Department would be for charging the tax. They would not analyze as to whether the amount deposited is a ‘proceeds of crime’. Thus, the ITR submitted under the Income-Tax Act is for different purpose than to be analyzed under the Act of 2002 to find out whether rightful source of income has been disclosed to acquire the property. It is no doubt true that the source has been disclosed but the minute scrutiny revealed that it was after utilizing cash with deposit of the amount directly in the bank account of Bibha Devi or routing through many persons without giving justification as to why the amount was routed through other persons - the Adjudicating Authority has even made reference of the LPG Dealership in the name of Bibha Devi and even acquisition of benami liquor shop.
The appellant tried to disclose the source of income but the way income was generated itself is sufficient to prove the case against them. The cash deposited in bank without disclosure of source would indicate it to be tainted money otherwise no one prevented the appellants to produce documents to show the business transaction coupled with the receipt of payment towards it. It is more so when they produced certain documents along with the rejoinder but failed to produce any document to prove the business transactions in the relevant years to generate sufficient funds which was used for the purchase of the property In the background aforesaid, there are no reason to cause interference in the order.
Appeal dismissed.
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2024 (12) TMI 289
Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act (PMLA) - proceeds of crime - compliance with the statutory timeline for filing a Prosecution Complaint under Section 8(3) of PMLA - Impact of supplementary prosecution complaints on the validity of the PAO - HELD THAT:- It is not disputed that the first Prosecution Complaint under PMLA was filed by the Respondent Directorate on 18.07.2018 that is even before the impugned Order dated 20.07.2018 which confirmed the PAO dated 01.02.2018 was passed. It is also not disputed that the Appellant was made an accused in the Supplementary Prosecution Complaint under PMLA which was filed on 17.12.2018. The provision of the statute viz. Section 8(3)(a) of PMLA required investigation to be completed within 90 days of the confirmation of the Provisional Attachment Order. It is therefore on record that the Prosecution Complaint was filed even before the confirmation of Provisional Attachment Order.
On reading of the provisions of Section 8(3) of PMLA, it is obvious that while the investigations had to be completed within 90 days of the confirmation of the Provisional Order, there is no such requirement as to the investigations per se the person whose property has been attached was to be completed within the said 90 days. In fact, it is on record that the investigations were completed and the Prosecution Complaint under PMLA was lodged on 18.07.2018, even before the passing of the impugned Order on 20.07.2018.
Perusal of the judgment of the Apex Court in Vijay Madanlal Chaudhary [2022 (7) TMI 1316 - SUPREME COURT] clearly brings out that the objective of the Act is to immobilize the proceed of crime, irrespective of it being in the hands of the accused or any other person, till it’s confiscation. The provisions of Section 8(3) (a) while providing for confirmation of either the attachment or seizure of the proceed of crime till the completion of investigation within the period stipulated therein, does not have the requirement of filing the Prosecution Complaint under PMLA against every person whose property has been either attached or seized.
In the facts of the present Appeal the Prosecution Complaint was filed even before the passing of the impugned Order confirming the attachment. The bank accounts of the Appellant and of his proprietorship firm provided for the ‘parking place’ for the proceed of crime. The filing of the Supplementary Prosecution Complaint on 17.12.2018 in which the Appellant came to be named for the first time, does not impinge in any manner on the requirement of the provisions of Section 8 (3) (a) of PMLA to complete the investigation and file the Prosecution Complaint within the stipulated period of time, since the Prosecution Complaint in the matter had already been filed on 18.07.2018. Thus, in the present appeal that requirement was met with the filing of the Prosecution Complaint before the passing of the impugned Order.
The argument of the Appellant has no merit - the Appeal accordingly fails and is dismissed.
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2024 (12) TMI 288
Condonation of Delay in filing the appeal - lack of knowledge about impugned order and provisional attachment order - non-service of notice - violation of principles of natural justice - HELD THAT:- The appellant could know about the order only when he sent the counsel to verify the status of the disputed property. The application is silent about the date when verification of the status of the property was sought from the Registrar Office and even the date of information thereof. The application is further silent as to how the appellant could know about the impugned order because the information is not said to have been given by the Registrar Office. The application is vague on that aspect as to how the copy of the order was received on 04.08.2024. In fact, if one is not a party to the litigation, justification of delay in filing the appeal may remain but in the instant case, the appellant could know about that attachment of the property at the earliest and even sent an application to the ED who remains with no authority to release the property after attachment. Appellant did nothing and filed the appeal after 11 months.
There are no justification for Condonation of Delay in pursuance to the vague application with conflict of statement to para 6 of the appeal.
The application is accordingly dismissed so as the appeal.
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2024 (12) TMI 163
Money Laundering - Validity of arrest of petitioner under Section 19 of the PMLA - Seeking quashing of Arrest Memo and Arrest Order for arrest of petitioner - violation of Section 19 of Prevention of Money Laundering Act, 2002 - constitutional safeguards against arbitrary detention - petitioner was not provided with “reasons to believe” - HELD THAT:- The arrest of the petitioner did not fall foul of provision of Section 19 of the PMLA, and that judicial review (not merits review) of the grounds for arrest (which subsume the reasons to believe, as per the ED) does not invite an adverse inference from this Court.
Needless to state that, as pointed out by the Supreme Court itself in Arvind Kejriwal [2024 (7) TMI 760 - SUPREME COURT], all grounds can be agitated by the petitioner/accused at the stage of plea of bail, and the Court may have a larger canvas before itself to consider the petitioner’s plea, if and when taken up.
Needless to state, any observation by this Court in this judgement is only for the purposes of assessing the challenge to the legality of arrest of the petitioner, and may not be construed as a conclusive opinion on the merits of the case.
The present petition is dismissed.
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2024 (12) TMI 162
Seeking to assail the complaint filed under Section 45 read with Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 - Customs duty evasion in the import of Carbide inserts imported vide 9 bills of entry during the period from 2009-2011 - HELD THAT:- In light of the language employed under Section 3 of the PMLA, any person whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. Therefore, if a person other than a Company is also found to have committed the offence as contemplated under Section 3 of the PMLA punishable under Section 4 of the PMLA the person can be arraigned as an Accused.
It has been repeatedly held by the Courts that the person Accused of committing an offence under Section 3 of the PMLA need not even be arrayed as an Accused in the prosecution of the predicate offence as long as the said person has satisfied the ingredients mentioned under Section 3 of the PMLA.
The contention of the 2nd and the 3rd Petitioner herein are that they had nothing to do with the day-to-day administration of the Company, will not hold water, even if proved to be true by the Accuseds in trial, since the Complaint under PMLA was filed against them for the possession, acquisition, use of the proceeds of crime, while claiming the same to be untainted property and not for the offences committed by them in their capacity as the Directors of the Company.
It has been repeatedly reiterated by the Hon'ble Apex Court that the offence of Money-Laundering is a stand-alone offence. The offence under the Customs Act is totally different and distinct from the offence of Money- Laundering. The Petitioners/Accuseds are attempting to paint two distinct offences, as if it is the very same transaction. Therefore, the submission of the Petitioner/Accused that the subject matter of investigation by the Department of Customs and ED emanates from the same transaction is incorrect.
The Hon'ble Apex Court in "Vijay Madanlal Choudhary and Ors -Vs- Union of India and Ors"[2022 (7) TMI 1316 - SUPREME COURT] held that the investigation conducted by the Respondent Department is into the offence of money laundering and the same can be established through the prosecution of the offence of money laundering independent of the predicate offence.
There are no hesitation in arriving at a conclusion that the present petition is devoid of merits and the petitioners have to face the trial. However, the Trial Court shall proceed with the trial uninfluenced by the observations made in the present order with reference to the facts, if any.
Petition dismissed.
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2024 (12) TMI 161
Money Laundering - proceeds of crime - challenge to Provisional Attachment Order - manipulating and forging the records and supplied sub-standard and mis-branded quality materials to DG, Family Welfare at exorbitant rates - HELD THAT:- The consideration (in cash) was not paid as a lumpsum at the time of execution of the sale deed, but “on different dates”. As such, there are no merit in the submission of the appellant that the consideration paid was out of the cash withdrawn from the separate account of the appellant maintained in respect of Sommya Prakashan. Notably, the time when property was purchased falls squarely within the time-period of the alleged scheduled offence. Consequently, on the pre-ponderance of probabilities, the appellant has failed to prove the source of acquisition of the subject property for which the burden was upon him under sections 8(1), 23 and 24 the Act. On the contrary, there is every reason to believe that the amount was sourced from the proceeds of crime derived from NRHM funds.
In the present case, the impugned order was passed on 24.02.2016 when there was no time limit for filing the prosecution complaint. The prosecution complaint in this case was filed on 27.03.2018, prior to the date when the amendment made by the Finance Act, 2018 setting a 90- day time period for filing the prosecution complaint came into force. As such the attachment order shall continue till the final disposal of the prosecution case against the accused. Accordingly, there are no merit in the appellant’s challenge to the impugned order on account of prosecution complaint not being pending when the same was passed.
It is also to be borne in mind that at this stage of the proceedings, the subject property has only been attached. As per the definition of the term “attachment” provided u/s 2(1)(d), “attachment” means prohibition of transfer, conversion, disposition or movement of property. Attachment of property per se does not alter the ownership status of the property. It does not even alter the status of possession and user of the property, unless in a given case, owing to exceptional circumstances, the provisions of section 8(4) are invoked by the Directorate in order to take possession of the property - as and when the prosecution case is decided by the Special Court, it is required to either order the confiscation of the same under section 8(5) where it finds that the property was involved in money-laundering, or the release thereof in the event the Court finds that the property is not involved in money-laundering. Therefore, at this interim stage when the prosecution case against the accused is pending, both the legal position as well as the balance of interests lies favour of continuance of the attachment of the subject properties.
The present appeal fails, and is hereby dismissed.
Seizure of amount of Rs. 9.50 lakh and attachment by the Respondents, treating it to be proceeds of crime - HELD THAT:- The Ld. Adjudicating Authority has pointed out that the Appellant has submitted before it unsigned receipts and payment account, unsigned cash receipts, quotation forms etc. which could not constitute authentic evidence of transactions and were in all likelihood false and fabricated. The claim of having paid tax in respect of some of the transactions also cannot be considered to be authentic proof of the entries made in the books of account and availability of cash balance as per books. The findings of the Ld. Adjudicating Authority were justified given the facts and circumstances stated above, including the fact the cash was seized from the residence and not the premises of M/s Midtown Hotel and Banquets, and that no satisfactory explanation could be provided by the appellant at the time of seizure. Accordingly, there are no merit in the contentions of the Appellant in this regard.
Appeal dismissed.
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2024 (12) TMI 160
Retention of records and digital devices seized by the respondents - offences punishable under Section 120-B read with Section 420, 468,471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - HELD THAT:- The offence has been committed by M/s Moser Baer India Ltd. with the active support of Rajiv Saxena and Shivani Saxena. Abhinav Saxena was supporting them and for that reason alone, the incriminating documents were found in his possession. It is a fact that during the pendency of the appeal, all the documents and the gadgets recovered during the course of search have been filed along with the PC. It is after showing relevance of the documents with the commission of crime. Hence, there are no reason to order for release of documents.
The perusal of the provision reveals that if anyone is found in possession of the record relating to money laundering, then subject to the rules, the Director or an officer authorized by him can search and retain seized property and record, etc. initially for a period of 180 days but after it is sent for confirmation, then subject to the order of the Adjudicating Authority, the retention would continue. Section 17(1) does not provide lapse of the seizure and retention after a period of 180 days, rather sub-section (1) permits continuation subject to the rules.
In the absence of the pleadings on factual issues, it cannot be proceeded further to analyze the grounds but it is found that the documents and gadgets seized by the respondents was referred in the Panchnama and is now part of the PC. In the light of the aforesaid, it is not found that any of the provisions have been violated by the respondents to retain the documents/devices relevant for the case and are part of the PC. Thus, even if the appellant is allowed to take the fresh ground without its pleading involving factual issues, a case is not made out to cause interference.
This is not a case in favour of the appellant. Interference in the seizure and retention cannot be made only on the ground that the seized material now retained was recovered from a person not implicated as an accused. In fact, Section 17 permits recovery of the documents/record relating to money laundering without any condition that it should be in the possession of the accused - there are no reason to cause interference in the impugned order - Appeals accordingly fail and are dismissed.
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2024 (12) TMI 159
Challenge to provisional attachment order - appellant submits that prosecution complaint has not been filed against anyone which includes the accused named in the ECIR despite expiry of 365 days from the date of the impugned order, thus, the attachment and so the order should lapse - HELD THAT:- The freezing/ attachment would continue during the period of investigation to be completed within 365 days or pendency of the case before the Court in reference to offences under the Act of 2002. At times, the respondent make argument that with sending a copy of ECIR is to be considered as pendency of the case in the competent court for the offence of Act of 2002.
There are no reason now for the respondent to continue freezing rather it stands lapsed which are otherwise perishable goods and after freezing by the respondent, a period of more than 2 years as already gone by now.
In the light of the aforesaid and the legal position in reference to Section 8(3) of the Act of 2002, there are reasons to cause interference in the impugned order rather the freezing order and its confirmation is declared to have lapsed by an afflux of time in absence of the prosecution compliant against any of the accused and accordingly the impugned order is said aside.
The appeals are allowed.
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2024 (12) TMI 90
Seeking grant of bail - Illegal appointment of candidates in TET-2014 - predicate/scheduled offence - evidence to suggest involvement in concealment of any proceeds of crime or laundering of money or not - HELD THAT:- The Hon’ble Supreme Court, in the authority in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] has held that 'The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.'
In the said judgment, dealing with section 24 of the PMLA, the Hon’ble Supreme Court has observed that only after the prosecution establishes at least three basic or foundational facts, the onus to rebut the presumption laid down under the said provision shifts on the accused.
In the case in hand, huge assets and money have been recovered from the petitioner which according to the E.D. is tainted and can be termed as proceeds of crime. On the contrary, it is submitted on behalf of the petitioner that every unaccounted for or disproportionate property does not ipso facto lead to the inference that they are proceeds of crime. The link between the properties and the involvement of the accused in the crime is required to be proved - The petitioner shall be granted an opportunity before the learned Trial Court to substantiate the same and also rebut the presumption under section 24 of the Act.
The E.D. intends to rely upon voluminous evidence including 182 statements, 210 documents spanning over 20,000 pages and examine 167 witnesses to substantiate their case. The case is primarily based on documentary evidence which is in custody of the E.D. and there is no scope for the petitioner to tamper with the same. To address the apprehension of the petitioner influencing witnesses of the case, stringent conditions may be imposed upon him while releasing him on bail - It is not in dispute that the petitioner is not at flight risk.
The Hon’ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused/under-trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part.
This Court is inclined to release the petitioner on bail subject to stringent conditions keeping in mind his right to speedy trial under Article 21 of the Constitution as well as his prolonged incarceration without trial - Application for bail allowed.
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2024 (11) TMI 1350
Money Laundering - cognizance of the offence by Trial Court - whether such cognizance was valid given the ongoing investigation? - retrospective applicability of Explanation-II to Section 44(1)(b) of the PMLA - impugned order passed without taking into consideration the entirety of the matter - violation of principles of natural justice - HELD THAT:- In Devarapally Lakshminarayana Reddy v. V. Narayana Reddy, [1976 (5) TMI 101 - SUPREME COURT], the Hon’ble Supreme Court elucidated the scope and purview of the term ‘taking of cognizance’ and gave a detailed explanation thereof. It was observed that the stage, at which cognizance of an offence is taken, depends upon the facts and circumstance of the particular case - It was held that taking cognizance of an offence is subjective to each case and mere issuance of a search warrant or a warrant of arrest does not, by itself, mean that cognizance of the offence has been taken rather cognizance of the offence is said to be taken only when the Court applies his mind to proceed further under Section 200 (now Section 223 of the BNSS) or under Section 204 of Chapter XVII of the CrPC.
Under the PMLA, a Special Court can only take cognizance of an offence under Section 3 of the PMLA, punishable under Section 4 of the PMLA, based on a complaint filed by the ED. It was held that while Section 46 of the PMLA stipulates that the provisions of the CrPC apply to proceedings before the Special Court as well since it functions like a Sessions Court as the phrase “save as otherwise provided in PMLA” allows exceptions - in the absence of any overriding provision in the PMLA, Sections 200 to 204 of the CrPC (now Section 223 to 227 of the BNSS) duly applies to complaints filed under the PMLA. This means that the Special Court must assess if a prima facie case exists for an offence under Section 3 of the PMLA. If no such case is found, the Court can dismiss the complaint under Section 203 of the CrPC, however, if a prima facie case is established, the Court may proceed under Section 204 of the CrPC.
As per the settled position of law, cognizance under Section 44 (1) (b) of the PMLA is based on the prosecution complaint filed by the ED pursuant to an investigation and the said complaint duly incorporates the gist of the offences and the manner in which the offences were committed by the accused persons, accompanied with the evidence collected during the statement along with the statement of witnesses and accused.
The CrPC provisions related to investigation are applicable to investigations under the PMLA. Furthermore, Section 46 of the PMLA states that the provision of the CrPC applies to proceedings in Special Courts under the PMLA, making the Special Court equivalent to a Court of Sessions. Unless stated otherwise in the PMLA, CrPC provisions, including those on bail and preliminary procedures (Sections 200 to 204 of the CrPC), apply to PMLA cases - there is no doubt that a supplementary complaint can certainly be filed by the respondent ED against an accused, who is already facing prosecution for offence under Section 3 of the PMLA before the Special Judge.
It is evident that when an investigating agency is authorized to conduct the investigation and carries out additional investigation to collect further evidence, the concerned agency has the right to submit a supplementary complaint to present the newly collected material on record - Upon the perusal of Explanation-II to Section 44 (1) (b) of the PMLA, it is revealed that it has been explicitly stated that the ED has the right to include any subsequent complaint in order to conduct further investigation into an alleged offence against the accused persons. This is to bring forth additional evidence, oral or documentary against any accused person for which a complaint has been already filed, whether named in the original complaint or not.
This Court is of the view that an initial complaint can be filed under Section 44 of the PMLA, even if the investigation is not fully completed, especially in light of the Explanation-II, introduced in the year 2019, which permits the filing of a supplementary complaint - this Court does not find any force in the arguments of the petitioner that the cognizance has been taken illegally as the complaint was filed pending investigation due to filing of subsequent complaints.
There is no illegality in the order passed by the learned ASJ-03, North West District, Rohini Courts, Delhi, in Ct. Case No. 515651/2016 and the same is, hereby, upheld - Petition dismissed.
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2024 (11) TMI 997
Seeking grant of regular bail - Money Laundering - conspiracy to fraudulently set up Vivo group of companies in India without revealing their true beneficial ownership and carried out mis-declarations before government bodies - concealment of Chinese ownership - Section 45 of the PMLA - HELD THAT:- Since the offence pertains to money laundering, apart from the usual considerations, it would have to be seen whether the twin conditions stipulated in Section 45 of the PMLA are met. A plain reading of Section 45 of the PMLA shows that the public prosecutor must be given an opportunity to oppose the application and the Court should have reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. The twin conditions though restricts the right of accused to be released on bail but do not impose absolute restraint and the discretion vests in the Court.
Section 45 of the PMLA while imposing additional conditions to be met for granting bail, does not create an absolute prohibition on the grant of bail. When there is no possibility of trial being concluded in a reasonable time and the accused is incarcerated for a long time, depending on the nature of allegations, the conditions under Section 45 of the PMLA would have to give way to the constitutional mandate of Article 21. What is a reasonable period for completion of trial would have to be seen in light of the minimum and maximum sentences provided for the offence, whether there are any stringent conditions which have been provided, etc. It would also have to be seen whether the delay in trial is attributable to the accused.
In Senthil [2024 (9) TMI 1497 - SUPREME COURT], the Supreme Court while reiterating the ratio enunciated in Union of India v. K.A. Najeeb (Three Judge bench) [2021 (2) TMI 1212 - SUPREME COURT], also held that if the Constitutional Court comes to the conclusion that the trial would not be able to be completed in a reasonable time, the power of granting bail could be exercised on the grounds of violation of Part III of the Constitution of India notwithstanding the statutory provisions.
The issue of long incarceration and right of speedy trial also cropped up in Manish Sisodia v Directorate of Enforcement, Manish Sisodia v Directorate of Enforcement, [2024 (8) TMI 614 - SUPREME COURT] wherein it has been held by the Supreme Court that the right to bail in cases of delay in trial, coupled with long period of incarceration would have to be read into the Section 439 CrPC as well as Section 45 of PMLA while interpreting the said provisions.
Prem Prakash v. Union of India through the Directorate of Enforcement, Prem Prakash v. Union of India through the Directorate of Enforcement, [2024 (8) TMI 1412 - SUPREME COURT]is another recent decision where it has been reiterated that the fundamental right enshrined under Article 21 cannot be arbitrarily subjugated to the statutory bar in Section 45 of the Act and the constitutional mandate being the higher law, the right to speedy trial must be ensured and if the trial is being delayed for reasons not attributable to the accused, his incarceration should not be prolonged on that account.
The right to speedy trial was also upheld and other special legislations where provisions akin to Section 45 PMLA exist.
It is noted that the investigation was initiated in the year 2022 and the Prosecution Complaint has named 48 accused persons and cited 527 witnesses. There are 80,000 pages of documents which need to be analysed. A supplementary Prosecution Complaint dated 19 - In a situation such as the present case, where there are multiple accused persons, thousands of pages of evidence to assess, scores of witnesses to be examined and the trial is not expected to end anytime in the near future and the delay is not attributable to the accused, keeping the accused in custody by using Section 45 PMLA a tool for incarceration or as a shackle is not permissible - The accused in a money laundering case cannot be equated with those punishable with death, imprisonment for life, ten years or more like offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, murder, cases of rape, dacoity, etc.
As held in the catena of judgements discussed herein above, Constitutional Courts have the power to grant bails on the grounds of violation of Part III of the Constitution and Section 45 does not act as a hindrance to the same. The sacrosanct right to liberty and fair trial is to be protected even in cases of stringent provisions present in special legislations - The applicant has been in custody since 10.10.2023 and the trial is at the stage supply of documents under Section 207 Cr.P.C. and charges are yet to be framed. Out of the 7 accused persons who were arrested, arrest of 3 persons was declared illegal by the Trial Court vide order dated 30.12.2023 and the other three, as noted above, have already been released on bail.
The fact that the twin conditions under Section 45 of PMLA stand satisfied, the fact that the all the other accused persons who were arrested are out on bail, the period of custody undergone, the trial is at nascent stage of supply of documents under Section 207 Cr.P.C., keeping in mind the import of the catena of decisions of Supreme Court discussed herein above, it is directed that the applicant be released on regular bail subject to him furnishing personal bond in the sum of Rs.1,00,000/- with one surety of the like amount each to the satisfaction of the concerned Jail Superintendent/Trial Court/Duty J.M./link J.M. and subject to fulfilment of further conditions imposed - The bail application is disposed of.
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2024 (11) TMI 996
Money Laundering - scheduled offence - proceeds of crime - whether the properties purchased prior to the alleged commission of offence would not fall under the definition of "proceeds of crime"? - HELD THAT:- In view of the fact that 'proceeds of crime' has been set out in the complaint impugned in the present petition and the identification of proceeds of crime also has been set out, the grounds raised by the petitioner deserves no merit consideration and all other grounds raised on merits or regarding appreciation of materials would be considered only by the Trial Court. However, the Trial Court while proceeding with the trial, has to consider the materials available on record independently and uninfluenced by the findings recorded by this Court in this petition relating to facts.
This Criminal Original Petition stands dismissed.
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2024 (11) TMI 995
Money Laundering - sale proceeds of lottery tickets - challenge to closure report - offences punishable under Sections 294N, Section 420 and 120B of Indian Penal Code - HELD THAT:- A legislation when brought into force with a legislative intent does not stay in the same shape, as it was intended to be. Evolution of the legislation is inevitable in a growing country. The operation and implementation of the law decides that the legislation is taken forward in its intended spirit and force. Once the legislation is applied and tested, the consequences of such application determine the character and fate of the legislation.
The objects of the PMLA as intended is crystal clear from the day of its inception. Economic interest of our great nation is the soul object. The consequent implementation of the law should be in tandem with the legislative intent. Any misuse or abuse of the law will fracture the bones of PMLA, thereby rendering it wholly ineffective. Legislation of such nature must be handled with caution and must not injure any vital organs of Part III of the Constitution of India.
To remind that facts of the present case at this juncture, the seizure of huge amount of cash of Rs. 7.20/- crores was on 12.03.2012. The sale agreement is said to have been entered into on 02.03.2012. The stamp paper has been released by the State Government only on 09.03.2012 and it was sold by the stamp vendor to one Smt.Vimala on 13.02.2012. It is a clear case of cheating by amassing money by sale of illegally printed lottery tickets attracting Section 420 of IPC, creation of a false document in the form of a sale agreement attracting the provisions of Sections 467, 468 and 471 of IPC and hence prima facie materials are available for both the predicate offence and the offence under PMLA. But the PMLA proceedings are sought to be scuttled by closing the proceedings in the predicate offence.
In the present case, the State Investigating Agency registered the predicate offence, conducted investigation and against the dismissal of quash petition filed SLP before the Hon'ble Supreme Court and the criminal case was restored by the order of the Apex Court. When the prima facie case regarding a predicate offence has been upheld by the Hon'ble Supreme Court by restoring the criminal case in the predicate offence, filing closure report thereafter by the very same State Agency is undoubtedly suspicious and doubtful.
The State Agency has made an attempt to bury the predicate offence against the accused persons in a suspicious manner and on extraneous considerations, which are visible through their actions including the closure report filed by the State police - The State Investigating Agency and the Enforcement Directorate are directed to proceed with the case in tandem, so as to ensure that the criminal case instituted is proceeded in accordance with law. However, the trial must go on uninfluenced by the observations, if any made relating to facts in the present case.
The facts established and the legal position considered made us to arrive at an irresistible conclusion that the Closure Report filed by the 1st respondent dated 14.11.2022 accepted by the learned Judicial Magistrate-I, Alandur by order dated 17.11.2022 made in Crime No.304 of 2012 stands set aside - Accordingly, the Criminal Original Petition stands allowed.
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2024 (11) TMI 927
Seeking grant of regular bail - Money Laundering - proceeds of crime - financial irregularities - involvement in paper sale transaction without conducting any actual business transactions which resulted in false inflation of financials - Section 45 of PMLA - HELD THAT:- Apart from the statements of the witnesses recorded under Section 50 of PMLA, the data manifesting relationship of stock, turn over and borrowings by SBFL reflects that SBFL started taking loans from different banks with the help of inflated turn over and fictitious closing stocks.
The fact that the stock worth Rs.3035.52 crores was declared as obsolete/damaged by pest without suitably accounting for the same, prima facie, reflects mala fide intention. There appears to be sufficient material on record, which reflects that the petitioner was knowingly involved in the process and also appears to be the beneficiary of the proceeds of the crime.
In the facts and circumstances, there do not appear to be reasonable grounds for believing that petitioner is not guilty of offence as provided under Section 45 of PMLA. Considering the evidence on record, serious nature of economic offence whereby the public funds to the tune of Rs.3035.52 crores have been siphoned off, and the fact that application preferred on behalf of co-accused Tarun Kumar stands rejected by the Hon’ble Apex Court, this Court is of the considered opinion that the petitioner is not entitled to bail.
Application is accordingly dismissed.
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2024 (11) TMI 833
Money Laundering - attachment of property which were acquired prior to the scheduled offence - connection with the proceeds of crime or not - jurisdiction of impugned PAO on account of non-compliance of mandatory provisions of Section 5 (1) i.e. “reason to believe” - HELD THAT:- The concept of the property of equivalent value was introduced with respect to the aforementioned properties. The amendment enabled the authorities to go after any other property of a person of equivalent value. In 2019, the scope of the phrase ‘proceeds of crime’ was further expanded so as to include other properties which were not directly or indirectly the proceeds of crime, but were held abroad, to be liable to attachment. In 2019, the explanation has been added so as to give a wider scope to the authorities. From the objects and reasons of the ‘2002 Act’, it becomes evident that the money laundering posed a serious threat not only to the financial system of the countries but also to their integrity and sovereignty. The ‘2002 Act’ was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime has undergone transformative changes from time to time so as to include all the complex acts involved in the offence of money laundering.
It is not disputed that the Supreme Court in Vijay Madanlal Chaudhary’s case [2022 (7) TMI 1316 - SUPREME COURT] was examining the scope of the ‘2002 Act’ including definition of phrase ‘proceeds of crime’. The submission put forth by the learned counsel that the phrase ‘or the value of any such property’ is superfluous was rejected by the Court and it was held that the definition of ‘proceeds of crime’ is wide enough to not only include to the property derived or obtained as a result of criminal activity related to a schedule offence but also any other property of equivalent value.
While interpreting a statutory provision, it is the bounden buty of the Courts to interpret it in manner so that each word used by the statute conveys a meaning it was assigned by the Legislature. The words used in statute are of utmost significance. The Court cannot widen or restrict the provisions on its own whims and fancies. When a statute’s language is clear and unambiguous, the general rule of interpretation of statute is to read the provision as a whole and the Court must adhere strictly to the ordinary, plain meaning of the words used. The words in a statute are used precisely, not loosely, and efforts must be made to interpret them in a literal manner to give effect to the objective of the Act. This approach of interpretation is based on the idea that the legislature’s intent is best reflected in the exact words of the statute.
Alleged failure to record reasons to believe - HELD THAT:- In the considered opinion of the Court, the ‘PAO’ has fulfilled the mandatory requirement of recording the ‘reasons to believe’. This is only a provisional attachment order, which is subject to adjudication and confirmation within a period of 180 days by the competent authority in which opportunity has been provided to the petitioner. The reliance placed on para 287 of Vijay Madanlal Chaudhary’s case is not appropriate because it has been observed that the authorized officer can order provisional attachment only upon recording satisfaction regarding two requirements. Specifically, the officer has to form his opinion and provide written reasons for such belief, which must be based on material in his possession rather than on mere assumptions. In this case, the electronic record has been seized and there was sufficient material apart from fake e-Rawana bills to substantiate this satisfaction.
Evaluation of fulfillment of first proviso to section 5(1) in light of the challenge - HELD THAT:- It is evident that forwarding of a report to a Magistrate under Section 173 of Cr.P.C. is not sine qua non for ordering provisional attachment. Moreover, such report is required to be filed against a person who is in possession of ‘proceeds of crime’. The petitioner in CWP-22688-2024, is an accused in FIR No.21, dated 19.01.2024, registered under Section 120B, 420 IPC and Section 15 of the Environmental Protection Act, 1986. In the subsequent FIR that has been registered pursuant to the search carried out by the Enforcement Directorate substantial material has been found to prima facie establish not only the offence of money laundering but also large scale illegal mining of boulders, gravel, sand on the basis of fake, invalid e-Rawana invoices. There is material on record to show that the mined material has been transferred without e-Rawana invoices. There is a huge discrepancy in the minerals mined and sold. This FIR has been filed on the complaint filed by a person authorized to investigate the offences mentioned in the schedule. Hence, requirement of first proviso to Section 5 (1) stands fulfilled.
Significance of the expression 'immediately' and its interpretation - HELD THAT:- It is evident that in Rao Mahmood Ahmed Khan Vs. Ranbir Singh, [1995 (2) TMI 359 - SUPREME COURT], the word ‘immediately’ and ‘forthwith’ were treated as synonyms. Moreover, if failure to follow the statutory provision provides no express consequences, the procedural requirement shall be considered to be ‘directory’.
Disputed questins of fact - HELD THAT:- Vehicles carrying mined material have not been provided with the GPS system and mining has been carried out beyond the permissible depth and National Green Tribunal has imposed penalty of Rs. 2.5 crore, Rs. 4.2 crore and Rs. 12 crore on M/s Delhi Royalty Company, M/s Development Strategies India Pvt. Ltd. and M/s Mubarikpur Royalty Company, respectively. Moreover, it is stated that against the order dated 18.11.2022, the matter is pending before the Supreme Court. In this situation, it would not be appropriate to quash the ‘PAO’ particularly when an appropriate order after considering all aspects is yet to be passed by the adjudicating authority as provided under Section 8 of ‘2002 Act’.
Availability of an efficacious alternative remedy - HELD THAT:- The question of whether the writ petition can be entertained is one that the Court must consider based on the facts of each case. Availability of alternate statutory remedy is one of the grounds that dissuade the Constitutional Court to interfere. The petitioner has filed the writ petition based upon the interpretation given by a Division Bench in Seema Garg’s Case [2020 (3) TMI 460 - PUNJAB & HARYANA HIGH COURT] hence, this Court has considered it appropriate to entertain the writ petition and to adjudicate.
The writ petitions lack merit and hence dismissed.
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