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TMI Blog2015 (12) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... and Section 71 provides that the provisions of the PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Cr.P.C. would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 of Cr.P.C. That coupled with the provisions of Sect ion 24 provides that unless the contrary is proved, the Authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. There is no denying the fact that Section 24 of the SEBI Act is a penal provision of inclusive nature and thus it clearly reflects the legislative intent of a scheduled offence under PMLA. Admittedly, the complaint was filed by SEBI against the appellant on the allegation of committing offence punishable under Section 4 of PMLA. The complaint reveals that SEBI received a letter from the Ministry of Corporate Affairs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 21st July, 2015 passed by the High Court of Calcutta in CRM No.6285 of 2015, whereby the High Court has rejected appellant's application for bail under Section 439 of the Code of Criminal Procedure, 1973. The appellant was arrested on 25.03.2015 in relation to an offence alleged to have been committed under Section 3 of the Prevention of Money Laundering Act, 2002, (hereinafter referred to as PMLA ). 3. The appellant is the Chairman of Rose Valley Real Estate Construction Ltd. (hereinafter referred to as the Rose Valley ), a public company incorporated in the year 1999 and registered under the Companies Act, 1956. Certain non-convertible debentures were issued by the Rose Valley by 'private placement method.' No advertisements etc. were issued to the public. The said debentures were issued to the employees of the Company and to their friends and associates after fulfilling the formalities for private placement of debentures. Thus, the appellant collected money by issuing secured debentures by way of private placement in compliance with the guidelines issued by the Securities and Exchange Board of India from time to time. 4. On 26.03.2013, the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the High Court of Calcutta challenging the said Show Cause Notice. The said writ petition was dismissed by the learned Single Judge of the High Court. Thereafter, the matter was taken in appeal before the Division Bench of the Calcutta High Court, being AST No.345 of 2014. The Division Bench of the High Court dismissed the said appeal and directed the appellant Rose Valley to appear before the Adjudicating Authority under Section 8 of the PMLA and directed the Adjudicating Authority to decide the preliminary objections as may be raised by the Rose Valley, including the applicability of the PMLA as also the validity of the search and seizure against Rose Valley. It was further directed that the Adjudicating Authority should pass a reasoned order in the matter and communicate the same to the appellant Rose Valley within two days from the date of passing such order. 8. A complaint was filed by the respondent on April 2, 2015, in the Court of learned Chief Judge, City Sessions Court at Kolkata, against the appellant under Section 4 of PMLA, though no offence is made out against the appellant under Section 3 of the PMLA. The said complaint has been registered as ML Case No.3 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant for violation of Section 12A read with Section 24 of the SEBI Act. 14. According to learned senior counsel for the appellant, Section 24 of the SEBI Act was printed separately in the Schedule of PMLA for the first time vide PMLA (Amendment) Act, 2012 w.e.f. 15.02.2013, which is clearly an inadvertent typographical error. The description of offence given under paragraph 11 of the Schedule to PMLA for Section 24 of the SEBI Act reads as acquisition of securities or control , which is different from the description given to the Section under the SEBI Act, which describes the Section as Offences . Rather the heading acquisition of securities or control is part of the heading of Section 12A read with Section 24 which is the scheduled offence. The relevant extract of the Schedule to the PMLA, as it stood after the 2009 Amendment, is as follows: Paragraph 8 - The Securities and Exchange Board of India Act, 1992 (15 of 1992) 12A read with Section 24 Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control The relevant extract of the Schedule to the PM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity share capital of a company whose securities are listed or proposed to be listed on a recognized stock exchange in contravention of the regulations made under this Act. Section 24 of the SEBI Act reads as follows: 24. Offences. - (1) Without prejudice to any award of penalty by the Adjudicating Officer under this Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both. (2) If any person fails to pay the penalty imposed by the Adjudicating Officer or fails to comply with any of his directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend to ten years or with fine, which may extend to twenty-five crore rupees or with both. 16. According to the learned senior counsel for the appellant, the fact that no new offence was meant to be added by way of the 2012 amendment, is clear from a plain reading of the Statement of Obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the appellant further submitted that the description given to the offence under Section 24 of SEBI Act, in the Schedule to PMLA is acquisition of securities or control , and even if Section 24 is treated as a separate scheduled offence, the words used in the description have to be given meaning to and its application has to be restricted to the offence described under it in the Schedule. The learned senior counsel for the appellant further submitted that this Court has held in numerous judgments that the Court should give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surplus, if they can have a proper application in circumstances conceivable within the contemplation of the statute. [See: Gurudevatta VKSSS Maryadit v. State of Maharashtra, (2001) 4 SCC 534 at para 26]. It has also been held by this Court that the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intent is that every part of the statute should have effect. The legislature is deemed not to waste its words or to say anything in vain and a construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offences are alleged to have been committed between the years 2001 and 2007. The offence under Section 12A r/w Section 24 of SEBI Act became scheduled offence only by way of the Prevent ion of Money Laundering (Amendment ) Act, 2009 w.e.f. 01.06.2009, much after the alleged commission of crime and the appellant is admittedly not accused of violation of Section 12A r/w Section 24 of the SEBI Act. 23. Mr . Ranjit Kumar , learned Solicitor General appearing on behalf of the respondent, on the other hand, submitted that Rose Val ley Group of Companies floated as many as 27 companies although two out of them, i.e. Rose Valley Real Estate Construction Ltd. ( Rose Valley ) and Rose Valley Hotels Entertainment Ltd. were the front runners to allure the investors to invest in (i) Ashirbad Scheme, ( ii )Time Share Scheme, and (iii ) Debenture Scheme, promising high returns to the investors and the funds so collected from the public at large were subsequently laundered in associated companies. Rose Valley made a public issue of debentures without filing any offer document in violation of Section 56 of the Companies Act, 1956, nor did it file statement in lieu of prospectus as claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt' and therefore has to be given restricted meaning. According to him, PMLA is a 'Special Law' applicable to the subject of money laundering, and deals with economic offenders and white collar criminals. The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering. To enable the scheme of the Act, reliance was placed on various provisions of the PMLA. He further submitted that Section 44 of the PMLA only confers jurisdiction on the Special Court to deal with offences under the PMLA. Section 45 of PMLA makes the offence of money laundering cognizable and non-bailable and also provides that notwithstanding the provisions of Criminal Procedure Code, 1973, no person accused of an offence punishable for aterm of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond, unless the Public Prosecutor has been given an opportunity to oppose the application for such release. 27. The learned Solicitor General lastly submitted that 'money laundering' being an economic offence poses a serious threat to the National Economy and National I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other law for the time being in force. PMLA has an overriding effect and the provisions of Cr.P.C. would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 of Cr.P.C. That coupled with the provisions of Sect ion 24 provides that unless the contrary is proved, the Authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. 31. I t was submitted on behalf of the appellant that Section 12A read with Section 24 of the SEBI Act does not include Section 24 of the said Act as a scheduled offence but it is only Section 12A which is to be construed as a scheduled offence as the description of offence against Section 24 of the SEBI Act mentioned under paragraph 11 of the Schedule to PMLA is part of Section 12A of the said Act. In this context it was submitted by the learned Solicitor General that PMLA being a Special Statute cannot be given restricted meaning while interpreting its provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the parties. At this stage we refrained ourselves from deciding the questions tried to be raised at this stage since it is nothing but a bail application. We cannot forget that this case is relating to Money Laundering which we feel is a serious threat to the national economy and national interest. We cannot brush aside the fact that the schemes have been prepared in a calculative manner with a deliberative design and motive of personal gain, regardless of the consequence to the members of the society. 33. With regard to the questions raised by Mr. Gopal Subramanium, learned senior counsel appearing on behalf of the appellant, at this stage, we do not think that we should answer or deal with the same in view of the fact that the matter is pending before a Division Bench of the High Court in writ jurisdiction, as has been pointed out before us. Hence, any observation or remarks made by us may cause prejudice to the case of both the sides. Therefore, we feel that it would be proper for us only to deal with the matter concerning bail. We note that admittedly the complaint is filed against the appellant on the allegations of committing the offence punishable under Section 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant that no offence under Section 24 of the SEBI Act is made out against the appellant, which is a scheduled offence under the PMLA, needs to be considered from the material collected during the investigation and further to be considered by the competent court of law. We do not intend to express ourselves at this stage with regard to the same as it may cause prejudice the case of the parties in other proceedings. We are sure that it is not expected at this stage that the guilt of the accused has to be established beyond reasonable doubt through evidences. We have noted that in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation, (2013) 7 SCC 439, this Court has observed that the economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of country. In Union of India v. Hassan Ali Khan, (2011) 10 SCC 235, this Court has laid down that what will be the burden of proof when attempt is made to project the proceeds of crime as untainted money. It is held in the said paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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