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TMI Blog2018 (2) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... nauthorized channel accumulated the same with mala-fide intention. 3. It was revealed that Paras Mal Lodha along with his associates, namely Shri Rohit Tondon besides others were involved in a deep rooted conspiracy and was indulged in converting the old demonetized currency into new currency on commission basis which constitutes offences of money laundering. It is the case of respondent that the new currency notes which were entrusted to banks and Govt. officials and was supposed to be delivered to public/bank account holders appears to have been misappropriated by Paras Mal Lodha, Rohit Tondon besides others for their monetary gains thereby cheated the public at large and had also caused monetary loss to the Govt. of India. 4. The case of the respondent is that the named accused person besides others are involved in the activity of monetizing the demonetized currency on commission. 5. The following lockers were searched in the presence of appellant and other witnesses where certain valuable were found and are under further examination. The details of searches are as follows: a. Locker No. 475, being maintained in Indian Overseas Bank, Ballygunge Park Road, in the name of Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. B.D. Lodha and Smt.Kusum Nahata. The above bank locker was searched on 17.04.2017 in my presence. The letter of authority in my favour by Smt. Kusum Nahata (my sister) is already on record. As already explained during the course of search, the said locker was searched by the Income Tax Department on 23.08.2016 and finding every item contained in the locker as duly explained, the contents were released by them and the restrain order was revoked on the same day. 11. The contents of the valuation report prepared by Income Tax Department on 23.08.2016 match with the valuation report prepared on 17.04.2017, as per details below:- Item No. of valuation Item No. of valuation Report of ED Report of ITD 1 1 2 2 3 3 4 4 5 5 6 (A, B, C, D) 6 7 7 12. Similarly, the sister of appellant Smt. Kusum Nahata vide her letter dated 25.03.2017 addressed to the Applicant inter alia stated:- Sub:- Locker No. 475 in the name of Mrs. Kusam Nahata Maintained with Indian Overseas Bank, Ballygung Park Road, Kolkata. The operation of the above locker was put under prohibition order on 29.12.2016. The Appellant on behalf of Mrs. Kusum Nahata, vide her letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by them and the restrain order was revoked on the same day. 18. Admittedly during the investigation two lockers no. 475 and 652 in Indian Overseas Bank Ballygung Park Road, Kolkata in the name of Smt. Kusum Nahata and late Smt. B. D. Lodha were searched on 17.04.2017 and contents of both these lockers in the form of gold/stone studded jewellery and gold coin totally valued at Rs. 28,58,533 and Rs. 6,42,178 were seized. 19. Counsel for the Respondent does not dispute the factual position that IT Department has released the said jewellery much prior to the date of demonization. 20. It was the contention of the respondent that the valuables seized during the search of lockers may be required to be attached under section 5(1) of PMLA and therefore these jewellery articles are required. 21. Counsel for the respondent has also referred the rejoinder filed by the Respondent No. 2 wherein was it has been stated that the valuables of the said Locker are under scrutiny and the same need to be retained for investigations. It has further been stated that it was during the course of search of the locker in the name of Smt. Madhu Lodha maintained with Indian Overseas Bank, Kolkata that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch that the said locker was searched by the Income Tax Department on 23.08.2016 and finding every item contained in the locker as duly explained, the contents were released by them and the restraint order was revoked on the same day. 27. It is not denied by the Respondent that items mentioned at Sl. No.1 to 7 of the valuation report prepared on 17.04.2017 match with the items at Sl. No. 1 to 7 of the valuation report of the Income Tax Department and that as regards the only remaining item No. 8 of valuation report dated 17.04.2017 as per Appellants, its value is below Rs. 5,000/- and not Rs. 15,925/- shown incorrectly as the base of the said item is plastic. 28. The main purpose of conducting the searches, as mentioned in the reason to believe, no material or any seizure of incriminating documents or any demonetized currency. The search of the said lockers conducted was not in conformity with the provisions of law relating "reasons to believe" for conducting search of the lockers. Copy of the reasons to believe here also not been served. 29. The Respondent at no stage has stated that the contents of Bank Locker are "proceeds of crime‟ and there is no whisper even in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of the competent authority is imperative before a show cause notice is issued. Section 68-H of the Act provides for two statutory requirements on the part of the authority viz: (i) he has to form an opinion in regard to his `reason to believe'; and (ii) he must record reasons therefor. Both the statutory elements, namely, `reason to believe' and `recording of reasons' must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. Indisputably therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show cause notice on his own ipse dixit. A roving enquiry is not contemplated under the said Act as properties sought to be forfeited must have a direct nexus with the properties illegally acquired. 29. It is now a trite law that whenever a statute provides for `reason to believe', either the reasons should appear on the face of the notice or they must be available on the materials which had been placed before him. We have noticed hereinbefore that when the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial review by superior Courts. h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice. i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. j. Insistence on reason is a req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 SCC 186], while dealing with similar requirements under Section 68H of the Narcotics Drugs and Psychotropic Substances Act, has held that both the statutory elements, namely, "reason to believe" and "recording of reasons" must be premised on the materials produced before him and that such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. It was further held that indisputably, therefore, he must have some materials before him and that if no such material had been placed before him, he cannot initiate a proceeding. 34. The Hon'ble High Court of Andhra Pradesh, in the case of K. Munivelu v. The Government of India and Ors. [AIR1972AP318], while dealing with the terms "Reason to Believe" and "suspects", with respect to Section 3 (2) of Essential Commodities Act, 1955, which deals with the power of the authorized officer to enter and search the premises and the seizure thereof, and the Andhra Pradesh Coarse Grains (Export) Control Order, 1965, has held that the term "Reason to believe" is a much stronger expression than the word "suspect" and further observed from the meanings attributed to the words "suspect" and "reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases are relevant to be reproduced: (a) In Joti Parshad Vs. State of Haryana 1993 Supp (2) SCC 497, it was observed by the Hon'ble Supreme Court that "suspicion‟ and "reason to believe‟ are not the same thing. "Reason to believe" is a higher level of state of mind. Section 26 of IPC explains the meaning of the words "reason to believe" as "A person is said to have "reason to believe‟ a thing, if he has sufficient cause to believe that thing and not otherwise". (b) This Appellate Tribunal (PMLA) in the case of IPRS in Appeal No.- FPA-PMLA-1302/MUM/2016 decided on 22.06.2017 and FPA-PMLA-1026/KOL/2015 and others decided on 14.07.2017 observed as under: "59. It cannot be the Scheme of the Act whereby bona fide person without having any direct/indirect involvement in the proceeds of the crime or its dealings can be made to suffer by mere attachment of the property at the initial stage and later on its confirmation on the basis of mere suspicion when the element of mens rea or knowledge is missing". 40. For the abovementioned reasons, we set aside the impugned order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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