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TMI Blog2018 (5) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... offence if committed by his son cannot be attributed to the father unless the father has link and nexus in the crime and involves in the criminal activities. In the present, such allegations against the appellant are not raised by the respondent. The impugned order dt. 17/10/2012 passed by the Adjudicating Authority against the appellant is not sustainable in law and wholly contrary to section 5 and 8 of the Act. The appeal is accordingly allowed. The impugned order is set-aside against the appellant, consequently the provisional attachment order with regard to present appellant is also quashed. The property is released forthwith. It is directed that in case, his son who is one of the accused in prosecution complaint which is still pending ( The proceedings have been stayed by the Hon’ble High Court at Karnataka ) and if he is hold guilty after trial if to be conducted after disposal of writ petition. The respondent would be entitled to attach a sum of ₹ 10 lacs if it established that it was a proceed of crime. The appeal and pending applications are disposed of. - FPA-PMLA-449/BNG/2013 - - - Dated:- 11-5-2018 - Justice Manmohan Singh Chairman For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f IPC 6 Mr Basavapoornaiah 12 PC Act, 1988 120(B) of IPC 7 Mr T.P.Muninarayanappa 13(1)(d) r/w 13(2) P.C. Act, 1988 120(B) of IPC 8 Mr B.K.Manju. 420 ,506 r/w 120(B) of IPC 9 Mr M.Gopi 420, 506 r/w 120(B) of IPC 4. The Joint Director of Enforcement Directorate based on the charge- sheet dated 25.09.2012 filed by the Karnataka Lokayuktha Police Wing in Spl CC 135/20111 passed a provisional order of attachment bearing No. ECIR/07/BZO/2011 AD MNT/1477 attaching the properties of the Appellant herein amongst others. Thereafter, in view of provisional order of attachment, the Joint Director of Enforcement Directorate, being the Complainant filed a complaint bearing No. 158/2012 under Section 5(5) of the Prevention of Money Laundering Act ( Act ), before the Adjudicating Authority under the Act. 5. Under the said provisional order of attachment, the respondent had attached House No. 20, 18th Cross, Malleswaram Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs towards renovation of my house situated at No. 20, 18th Cross, Malleswaram, Bangalore (ii) ₹ 5 lakhs towards day-to-day expenses for a period of one year (iii) ₹ 8 lakhs towards hospitalization expenses to my wife 11. On the basis of said questions and answers in the said statement relying the same as his admission, the property of the appellant was attached on the basis of Complaint and the reason is mentioned reproduced hereunder: 19.1 (j) that he has utilized the money derived from M/s ITASA towards the following (i) 10 lakhs towards renovation of his house situated at No. 20, 18th Cross, Malleswaram, Bangalore. (Property mentioned at Sl. No. 29 of Para 2 above) (ii) ₹ 5 lakhs towards day to day expenses for a period of one year (iii) ₹ 8 lakhs towards hospitalization of his wife. 12. Smt V. Sarawathi who is the wife of appellant is also not accused either in the schedule offence or in the section 45 compliant filed by the Respondent herein numbered as SPL CC 124/2014. Her immovable properties are also attached. The appeals filed by her are also being decided by separate order. 13. It is evident that the allegation against the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised the tax for properties by additional tax of ₹ 620/-. The BBMP thereafter called upon this Appellant to pay a tax of ₹ 2,620/- per year. The Copy of the said endorsement which is in Kannada are filed with English translation as ANNEXURE A-9 A-10 at page 379 and 380 respectively and the copy of the assessment extract maintained by BBMP is also filed as ANNEXURE A-11 at page 381. It is evident that the Appellant had established that a building was in existence and it was taxed during the year 1975 itself and Katha of the two properties were merged in the year 1992. Thus, it is clear that the said house was not purchased from any proceed of crime. 17. In order to explain the allegation about the renovation in his house, it is stated by him that during the year 2007-08, the Appellant and his wife went abroad to visit their daughter. When they returned, they found that the flooring of the house had been changed. The Appellant s son S.V Srinivas intimated him that he had carried out this work, from out of his own funds. Parents were not aware as to whether it was or was not tainted money, the respondent even prima facie is not able to establish nor any alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of A/c payee cheques as a part of the alleged scheduled offences under PMLA. 23. It is submitted on behalf of appellant that once the payment made by ITASCA through A/c payee cheques is not alleged in the Charge Sheet to be related to the alleged offences, the Complainant could not have improved upon the Charge-Sheet and treated the said payments as proceeds of crime. 24. It is admitted by the adjudicating authority in impuged order that at the best a sum of ₹ 10 lac was spent for renovation and it was tainted money but despite such findings, the entire immovable property was attached which was wholly unconnected with the proceed of crime as the same was purchased many decades earlier before registering the FIR. Thus, the impugned order was passed without application of mind. It was the case of S.V. Srinivas is that he received only a sum of ₹ 20 Lac from by M/s ITASCA which was by way of A/c payee cheques, in consideration for his services rendered to M/s ITASCA as an employee in the capacity of a Director. There is no allegation in the Charge-Sheet submitted before the Prevention of Corruption Act Special Court by the Lokayuktha Police Wing that S.V. Srinivas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eirs (Rs.) Amount (Rs) 1 A/c INDU BUILDERS 16,03,07,700/- 37,23,29,000/- 32,02,27000/- 85,2863,700/- 2 A/c ITASCA MALLESHWARAM 5,77,00,000/- 33,87,18,000/- 30,90,33,178/- 70,54,51,178/- 3 A/c ITASCA BASAVESHWAR NAGAR 5,25,00,000/- 13,20,50,000/- 20,58,00,000/- 39,03,50,000/- Total 27,05,07,700/- 84,30,97,000/- 83,60,60,178/- 194,86,64,878/- 28. It is argued by the counsel for the appellant that the charge-sheet forms the basis of the complaint, no money received otherwise than in the manner alleged in the charge-sheet can be treated as proceeds of crime. Then what remains against SV Srinivas in the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. The appellant in appeal No. 447/2013 is Smt Reshma Srinivas. She is the wife of SV Srinivas. She is not accused in the schedule offence. She is an accused in the section 45 compliant filed by the Respondent herein numbered as SPL CC 124/2014 and is arrayed as accused No.22. The said SPL CC124/2014 was instituted on 24/03/2014 after the impugned order dt: 21/02/2013 passed by the Adjudicating authority in OC 158/2012. 33. The appellant was arrayed as part no. 36 in the provisional attachment order. When the complaint under section 5(5) was filed before the Adjudicating Authority who after receipt of complaint issued the direction to the respondent to issue the notice to all the defendants including the appellant bypassing two lines order that they have reason to believe than an offence has been committed under section 3 of the Act by all the defendants by forgetting that the appellant was not accused in the schedule offence nor any complaint u/s 45 has been filed. 34. The Adjudicating Authority upon receipt of a complaint under section 5(5) of Act; under section 8 (1) of the Act is bound to peruse the same and upon perusal of such a complaint if it has reason to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non- attachment of the property is likely to frustrate any proceeding under this Act.] 37. The first proviso of section 5(1) stipulates that no such order of attachments shall be made unless in relation to the schedule offence, a report has been forwarded to a magistrate under section 173 of the Code of Criminal Procedure, 1973. 38. However, as per second proviso, the respondent without filing the charge-sheet is empowered to attach the properties without filing the report under section 173 of Cr.R.C. on the basis of material in the possession of the respondent if it is apprehended that non-attachment is likely to frustrate the proceedings. It is also mandated in second proviso that the reasons for such belief to be recorded in writing. 39. The reasons of believe have to be recorded all the more reasons after incorporation of second proviso of section 5(1) where the ample powers are given to the respondent to attach the properties without even filing of charge-sheet before the Special Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the appellant either in the charge-sheet filed by the Lokayuktha Police Wing or the complaint filed by the Complainant and as such Section 2(u) of PMLA does not come into operation and as a consequence of the same Section 5 of PMLA. It has not established even prima facie that the appellant was aware that any alleged proceed of crime is spent on renovation. There is no evidence available on record. In the absence of that, the property of innocent party cannot be attached when admittedly when he party is not charged with schedule offence and in the prosecution complaint. 45. The Adjudicating Authority is bound to go through reason to believe recorded before passing the provisional attachment order while coming to the conclusion to issue a notice under section 8(1) of the Act particularly to a person who is not an accused in the schedule offence and not a party to the prosecution complaint. Stereotypes notice under section 8(1) cannot be issued in such types matters in these types of cases. The case of appellant has not been dealt by the Adjudicating Authority in the impugned order. His property was provisionally attached without any notice and without recording his statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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