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TMI Blog2019 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... IPC found in part-A of the schedule to PML Act refers to IPC offences only and if it was referable to other offences, the framers of law would not have incorporated the expression conspiracy under Part-A Paragraph -1 as defined under other enactments. Section 120B is a predicate, distinct and stand alone offence. The inclusion of said offence under the schedule is not under challenge in these writ petitions. As rightly contended by Sri K M Nataraj, learned Additional Solicitor General of India that summons issued under Section 50(2) of PML Act has nothing to do with the regulations as defined under the Regulatory Rules and said rules is referable only to proceedings for adjudication and not to pre-adjudication proceedings. In fact, Section 50(2) does not refer to an accused at all. Summons issued under Section 50(2) is contrary to the Adjudicating Authority Procedure Regulation, 2013 and it does not contain material particulars nor the details which is required to be furnished by the petitioner - A plain reading of the said Regulation would indicate that same has been enacted in exercise of the power conferred by subsection (15) of Section 6 of the Act. Section 6 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 stating thereunder that they would not press other prayers as indicated in the respective memos and would restrict their prayer as indicated therein. In other words, prayer sought for in all these writ petitions relates to quashing of the summons issued to petitioners by the Enforcement Directorate (for short ED ) to appear before them for investigation. The reliefs now sought for in the respective writ petitions relates to quashing of summons issued by ED and for immediate reference the prayer sought for in W.P.No.5824/2019 is extracted herein below: e. issue an appropriate writ or order declaring that the action of the Enforcement Directorate Authorities registered ECIR/HQ/4/2018 for an alleged offence under Prevention of Money Laundering Act, 2012, whereby necessitating the petitioner to appear for an investigation and other proceedings as illegal and resultantly quash the summons issued to the petitioner dated 15.02.2019 vide Annexure-L and summons dated 25.02.2019 vide Annexure-M to the writ petition and quash all further proceedings pursuant thereto. Hence, these writ petitions are examined in the background of above prayer sought for which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y contending that offence punishable under Section 276C(1) and Section 277 of the IT Act are compoundable offences under Section 279(2) and stage has not come where prosecution can be lodged and the procedure adopted by the enforcement authority is unknown to the cannons of law. Hence, he seeks for quashing of summons issued to petitioner to appear for investigation and entire proceedings pending before ED. 4. Sri B.V.Acharya, learned Senior counsel appearing on behalf of petitioner in W.P.No.5299/2019 would submit that very initiation of the prosecution against petitioner for the alleged offences punishable under IT Act has been challenged by the petitioner in W.P.No.32593/2018 by questioning the validity of the sanction order, contending interalia that said authority who had issued the sanction order to prosecute the petitioner did not possess authority and said order is without jurisdiction and he is not the competent authority empowered to grant such sanction under Section 279(1) of IT Act, which fact had been taken note of by the co-ordinate Bench and by order dated 30.07.2018 had granted stay of further proceedings pursuant to order passed by the jurisdictional Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t insofar as offence under Section 120B is concerned, would be attracted if the offence which is the object of conspiracy or in other words, it is only the predicate offence if cognizable, the offence under Section 120B becomes cognizable as otherwise, if the predicate offence is non-cognizable, it would also follow the same. He would also contend that if predicate offence is bailable or non-bailable, then offence under Section 120B would also follow the suit. Same principle is also applicable to the court which can try the said offence namely, if offence under Section 120B IPC hinges on the predicate offence, then such court which can try the predicate offence would also be having jurisdiction to try the offence of 120B IPC. Hence, he contends that on the strength of Section 120B IPC having been included in Part A of the Schedule by itself would not partake the character of same being as independent offence and it has to be necessarily read along with predicate offence. He would also contend that notice issued to the petitioner is vague and nothing is indicated in the notice namely, as to what is required to be answered by the noticee/petitioner and as such, it is violati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being there, question of proceeds of crime coming into existence does not arise and consequently, the proceedings under PML Act cannot be continued. 10. He would also contend that it is not open to the tax authorities to invoke Section 120B IPC and Section 279 of IT Act which authorizes grant of sanction, does not authorize said authority to award sanction for prosecution of an offence under Section 120B IPC. 11. He would further contend that Section 120B IPC deals with punishment with criminal conspiracy and definition of conspiracy can be found in Section 120A IPC and object of criminal conspiracy must be to do an illegal act, which must be clear and Schedule I to the Cr.P.C clearly indicates that to constitute an offence under Section 120B, it would always relate to the objective offence. On these amongst other grounds as urged in the petition, he seeks for quashing of the proceedings by allowing the writ petition. 12. Sri Shyamsundar, learned Advocate appearing for petitioner in W.P.Nos.5420-423/2019 would contend if a particular act describes for confiscation of a property, then, it stands excluded from the purview of PML Act. He would contend th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is not an independent offence. 14.2. He would also contend that summons issued under Section 50(2) of PML Act has nothing to do with The Adjudicating Authority (Procedure) Regulations, 2013 which relates to the procedure to be adopted by the Regulating Authority after complaint has been filed and not pre-investigation. He would submit that persons to whom summons are issued under Section 50 would not be an accused. He would also contend that sanction issued under the IT Act has nothing to do with the proceedings under PML Act and for initiating proceedings under the PML Act for the offence punishable under Section 120B IPC, no sanction is required. He would also contend that under Section 24 of PML Act, a presumption arises that money in question are proceeds of crime which is being laundered and it is for the noticee to rebut such presumption. DISCUSSION AND FINDINGS: BRIEF BACKGROUND: 15. A search action under Section 132 of the IT Act came to be conducted by the Income Tax Department at various premises in New Delhi, which is said to have resulted in seizure of more than 7 Crores in cash and statements recorded by the Income Tax Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in the administration of justice in the larger public interest whereas Article 226 of the Constitution is meant for protection of individual grievance. Therefore, the power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above. 18. It is to be further observed that, no doubt would arise with regard to exercise of jurisdiction under Article 226 and 227 of Constitution of India by this Court and same cannot be curtailed. Yet, judicial restraint would be adopted where there is no allegation of fundamental right being violated or the authority exercising the jurisdiction is contended as not possessing jurisdiction. Though Article 226 of the Constitution of India is the repository of vast powers vested in this Court, yet, the very vastness of the powers imposes the responsibility to use them with circumspection and in accordance with the well established principles. As held by the Hon ble Apex Court in STATE OF MAHARASHTRA VS ABDUL HAMID HAJI MOHAMMAD re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its power to issue the same to the petitioners to appear for investigation is under challenge contending their right to liberty under Article 21 of the Constitution is being violated. Hence, this Court is of the considered view that writ petitions cannot be thrown or nipped at the bud on the ground of same not being maintainable. Said contention stands rejected. 20. The PML Act came to be enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money laundering and for matters connected therewith or incidental thereto. That illegal activities of money laundering posed a great and serious threat not only to the financial system of the country, but also to the integrity and sovereignty and therefore, international communities including the United Nations on different conventions recognized concerted efforts of all Member Countries to strictly deal with the evil of money-laundering. The object of the Act is to prevent money-laundering and connected activities and confiscation of proceeds of crime and preventing legitimizing of the money earned through illegal and criminal activities by investments in movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) confiscation of the proceeds of crime; (iv) declaring money-laundering to be an extraditable offence; and (v) promoting international cooperation in investigation of money-laundering. (d) the Political Declaration and Global Programme of Action adopted by United Nations General Assembly by its Resolution No. S-17/12 of 23rd February, 1990, inter alia, calls upon the member States to develop mechanism to prevent financial institutions from being used for laundering of drug related money and enactment of legislation to prevent such laundering. (e) the United Nations in the Special Session on countering World Drug Problem Together concluded on the 8th to the 10th June, 1998 has made another declaration regarding the need to combat money-laundering. India is a signatory to this declaration. 2. In view of an urgent need for the enactment or a comprehensive legislation inter alia for preventing money-laundering and connected activities confiscation of proceeds of crime, setting up of agencies and mechanisms for coordinating measures for combating money-laundering, etc., the Prevention of Money-Laundering Bill, 1998 was intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposes to (a) relax the conditions prescribed for grant of bail so that the Court may grant bail to a person who is below sixteen years of age, or woman, or sick or infirm, (b) levy of fine for default of non-compliance of the issue of summons, etc. (c) make provisions for having reciprocal arrangement for assistance in certain matters and procedure for attachment and confiscation of property so as to facilitate the transfer of funds involved in money-laundering kept outside the country and extradition of the accused persons from abroad. 4. The Bill seeks to achieve the above objects. 22. In all these writ petitions, summons issued by the Enforcement Directorate under Section 50(2) and (3) of PML Act is called in question. A person issued with a summons under the PML Act may or may not be an offender of any scheduled offences. The authorities are invested with the power to investigate the offence of money laundering. The offence of money laundering under Section 3 of the Act, involves attempting or indulging in or knowingly assisting or knowingly being a party or being involved in any process or activity connected with the proceeds of crime , including its co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence or otherwise . The only requirement is that that person should be in possession of any proceeds of crime. The governing factor is possession of any proceeds of crime by a person. Taking any other view may defeat the legislative intent. In as much as, a person who has been charged of having committed a scheduled offence can successfully defeat the object of the enactment of attachment and confiscation of the proceeds of crime by transferring it to some other person who is not so involved with him in commission of stated scheduled offence. In our opinion, on fair reading of section 5 (1) read with section 8 of the Act, it postulates two categories of persons against whom action of attachment of property can be proceeded with. The first category is any person who is in possession of any proceeds of crime. A person falling in this category need not be a person, charged of having committed a scheduled offence. The second category is of a person who has been charged of having committed a scheduled offence. Besides, being charged of having committed a scheduled offence, that person is found to be in possession of any proceeds of crime. In either case, it is open to take recourse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld create a piquant situation as a person who is not charged of having committed a scheduled offence even if can be proceeded for offence of money laundering and even if such person is in possession of any proceeds of crime, no action of attachment and confiscation of the proceeds of crime can be resorted to qua himalbeit the proceeds of crime are in his possession. If the argument of the appellants were to be accepted, even the expression whosoever appearing in section 3 and 4 of the Act will have to be limited to person who has been charged of having committed a scheduled offence. The object of the enactment of 2002 would be completely defeated by such approach. Besides, the view that we propose to take is reinforced also from the purport of section 8 of the Act of 2002. It provides that the Adjudicating Authority if has reason to believe that any person has committed an offence under section 3, may serve notice upon such person calling upon him to indicate his source of his income, earning or assets, out of which or by means of which he has acquired the property attached under section 5(1) of the Act. Once again, the legislature has unambiguously used the term any person a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or is not required to be dropped. 24. Even in case of proceeds of crime not being in possession of the alleged offenders, but if it is sought to be projected as an untainted money and sought to be ploughed into the economy, which ultimately derails the economy of the country, then, authorities under the PML Act would be empowered to proceed under the provisions of PML Act. As to whether it is proceeds of crime or its use or concealment or acquisition is to be decided only by the adjudicating authority after verifying the facts and circumstances that would be unraveled by verifying the relevant records and documents during the course of investigation. The mere suspicion of the authorities that proceeds of crime is being ploughed into main stream of the economy as untainted money is sufficient enough for the authorities to investigate and examine and this can be done only by collecting the information, recording the statements who might not be the offender also. 25. The PML Act being a special enactment contemplates a distinct procedure at the initial stage and thereafter provide for initiation of prosecution in order to achieve the special purpose envisaged under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PML Act can initiate investigation on any of the scheduled offences stipulated under Section 2(1)(x) and 2(1)(y) of the Act. The predicate offence may be a trigger for initiating prosecution under PML and the investigation can be relatable predicate offence or for the offence of money laundering as defined under Section 3 of the PML Act, which investigation is normally conducted by the authorities invested with the power under such enactment and may for various reasons drop or close the proceedings and thereby it cannot be contended that investigation or prosecution commenced under the PML Act would ipso facto fall. Even in cases of the proceeds of crime, if any, not being in possession of an alleged offender, even then authorities under the PML Act are empowered to proceed under PML Act since possession of the proceeds of crime or its concealment or acquisition would fall within the mischief of money laundering and this aspect will have to be unearthed by the investigating authority in the background of facts and circumstances that may be obtained in a given case, which can be done only after verifying documents and statements, if any during the course of investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial irregularities, which came to be challenged by the petitioner therein as same being illegal, null and void, which had found favour by the Division Bench came to be reversed by the Apex Court by arriving at following conclusion: 5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presences of the parties. Unless, the High Court is satisfied that the show cause notice was totally non est in the eye of law for absolute want of jurisdiction of the authority to even invent gate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine and the writ petitioner should invariably be directed to respond to the show cause notice and take all stands highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under different enactments by different authorities. Though in the statement of objections filed by the Enforcement Authority at paragraph 4 it has been admitted that: The averments in the petition that this respondent had registered in ECIR for the offences under the provisions of the Prevention of Money Laundering Act, pursuant to private complaint filed by the first respondent on the basis of the scheduled offence under Section 120B of the Indian Penal Code is true and correct , the fact remains that Section 120B is a predicate offence by itself or in other words, it is a stand alone offence and as such said argument would not be of any avail to the petitioner to assail the summons issued under Section 50(2) and 50(3) of the Act. That, I have already held, money laundering is an offence independent of the predicate offence and to launch prosecution under Section 3 of the Act, it would not be necessary that a predicate offence should also have been committed. 35. That apart, a plain reading of Section 3 of PML Act would disclose that whosoever directly or indirectly, attempts to indulge or knowingly assess or knowingly is a party or is actually involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be drawn. It is well settled that an offence of conspiracy is a substantive offence and renders the mere agreement to commit an offence punishable, even if an offence does not take place pursuant to the illegal agreement. 37. Hon ble Apex court in the case of SUDHIR SHANTILAL MEHTA Vs. CENTRAL BUREAU OF INVESTIGATION reported in (2009) 8 SCC 1 has held that criminal conspiracy is an independent offence and punishable independent of other offences. Explaining the ingredients of an offence under criminal conspiracy, it came to be held: 113. Criminal conspiracy is an independent offence. It is punishable independent of other offences; its ingredients being: (i) an agreement between two or more persons. (ii) the agreement must relate to doing or causing to be done either (a) an illegal act; (b) an act which is not illegal in itself but is done by illegal means. It is now, however, well settled that a conspiracy ordinarily is hatched in secrecy. The court for the purpose of arriving at a finding as to whether the said offence has been committed or not may take into consideration the circumstantial evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould agree to do a single illegal act, It may comprise the commission of a number of acts. 13. To constitute a conspiracy, meeting of mind of two or more persons for doing an illegal act or an act by illegal means is the first and primary condition and it is not necessary that all the conspirators must know each and every detail of conspiracy. Neither it is necessary that every one of the conspirators takes active part in the commission of each and every conspiratorial acts. The agreement amongst the conspirators can be inferred by necessary implications. In most of the cases, the conspiracies are proved by the circumstantial evidence, as the conspiracy is seldom an open affair, The existence of conspiracy and its objects are usually deducted from the circumstances of the case and the conduct of the accused involved in the conspiracy. While appreciating the evidence of the conspiracy, it is incumbent on the Court to keep in mind the well-known rule governing circumstantial evidence viz., each and every incriminating circumstance must be clearly established by reliable evidence and the circumstances proved must form a chain of events from which the only irresistible con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y must, therefore, be considered on the anvil of a fact which must be established by the prosecution, viz., meeting point of two or more persons for doing or causing to be done an illegal act or an act by illegal means. 81. The courts, however, while drawing an inference from the materials brought on record to arrive at a finding as to whether the charges of the criminal conspiracy have been proved or not, must always bear in mind that a conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish the same. 82. The manner and circumstances in which the offences have been committed and the level of involvement of the accused persons therein are relevant factors. For the said purpose, it is necessary to prove that the propounders had expressly agreed to or caused to be done the illegal act but it may also be proved otherwise by adduction of circumstantial evidence and/ or by necessary implication. [See Mohammad Usman Mohammad Hussain Maniyar Ors. v. State of Maharashtra (1981) 2 SCC 443: AIR 1981 SC 1062)] 83. The following passage from Russell on Crimes (12th Edn. Vol 1) referred to by Jag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use. [See also K.R. Purushothaman v. State of Kerala (2005) 12 SCC 631]: (AIR 2006 SC 35: 2005 AIR SCW 5437 ). 87. We may also notice a decision of this Court being State (NCT) of Delhi v. Navjot Sandhu @ Afsan Guru [(2005) 11 SCC 600]: (AIR 2005 SC 3820: 2005 AIR SCW 4148), commonly known as the Parliament Attack case, wherein upon taking note of various earlier decisions of this Court, it was opined that as conspiracy is mostly proved by circumstantial evidence, usually both the existence of conspiracy and its objects have to be inferred from the circumstances and the conduct of the accused, stating : 101. One more principle which deserves notice is that the cumulative effect of the proved circumstances should be taken into account in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some material, it may then proceed to adjudicate. It all depends on circumstances emerging from investigation in a given case. 40. If principles of interpretation is adopted, then, there was no necessity for the expression conspiracy being indicated in several enactments as found in the schedule to the PML Act. Section 120B of IPC found in part-A of the schedule to PML Act refers to IPC offences only and if it was referable to other offences, the framers of law would not have incorporated the expression conspiracy under Part-A Paragraph -1 as defined under other enactments. Section 120B is a predicate, distinct and stand alone offence. The inclusion of said offence under the schedule is not under challenge in these writ petitions. 41. As rightly contended by Sri K M Nataraj, learned Additional Solicitor General of India that summons issued under Section 50(2) of PML Act has nothing to do with the regulations as defined under the Regulatory Rules and said rules is referable only to proceedings for adjudication and not to pre-adjudication proceedings. In fact, Section 50(2) does not refer to an accused at all. 42. It is contended that summons issued und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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