9911796707
TMI Blog2019 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... R-1 AND R-2) O R D E R In these writ petitions though initially reliefs as set out in the respective writ petitions was sought for, they have restricted to single prayer only by filing memos on 07.03.2019 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is sine qua non for the provisions of PML Act being attracted, question of petitioner appearing before ED does not arise. He would elaborate his submission by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether said offence is cognizable or non-cognizable, bailable or non-bailable and by what court the offence is triable has clearly indicated that 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fundamental and essential pre-condition for any proceedings under the PML Act and without schedule offence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petitioners to contend that 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 Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 reported in (1994) 2 SCC 664 the exercise of the powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and immovable properties often involving layering of the money so generated through illegal activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undering. (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 introduced in the Lok Sabha on the 4th August, 1998. The Bill was referred to the Standing Committee on Finance, which presented its report on the 4th March, 1999 to the Lok Sabha. The recommendations of the Standing Committee accepted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 concealment, possession, acquisition or use and projecting or claiming it as an untainted property. In fact, it is an offence independent of the predicate offence and to launch prosecution under Section 3 of the Act, it is not necessary that a predicate offence should also have been committed. Section 3 of the Act clearly discloses that possession or the 'conversion' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 to section 5 of the Act if the specified Authority has reason to believe and reason for such belief is recorded in writing that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. Indeed, the proviso to subsection (1) as was applicable at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument 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" and not person charged of having committed a scheduled offence. Indeed, any person referred to in this provision is a person who has committed an offence under section 3 of the Act of 2002. He may not necessarily be a person charged of having committed scheduled offence. The proviso to sub-section (1) thereof stipulates that where a notice under the said sub-section specifies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Act and as such, it cannot be construed that proceedings under the PML Act is to be equated with prosecution initiated under the criminal proceedings for the offence punishable under the Indian Penal Code. Thus, initiation of action under the PML Act cannot have any implication or impact in respect of registration of other cases either under the Indian Penal Code or any other penal laws. 26. The offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 29. It is trite law that at the stage of show cause notice, charge sheet, summons or notice to appear, constitutional courts would not interfere so as to interject the proceedings and thereby prevent the authorities from proceeding with. 30. Ordinarily a writ petition would not lie against a show cause notice for the reason that it does not give raise to any cause of action. It does not amount to an adverse order which affects the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 notice initially, before the aggrieved could approach the Court. Further, when the Court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is accorded to the writ petitioner even at the threshold by the interim protection, granted." 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property, would be punishable for the offence of money laundering. The expression of "proceeds of crime" has been defined under Section 2(u) of the Act which means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence xxxxx within the country and the expression "scheduled offence" has been defined u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spiracy 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 evidence. While however doing so, it must bear in mind that meeting of the minds is essential; mere knowledge or discussion would not be. As the question has been dealt with in some detail in Criminal Appeal No.76 of 2004 (R. Venkatakrishnan vs. CBI-12), it is not necessary for us to dilate thereupon any further. 114. We may, however, notice that recently in Yogesh v. State of Maharashtra13 a Division Bench of this Court held: (SCC p.402, para 25) "25. Thus, it is manifest that the meeting of minds of two or more persons for doing an illegal act or an act by illegal means is sine qua non of the criminal conspiracy but it may no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 conclusion about the guilt of the accused can be safely drawn, and no other hypothesis against the guilt is possible. The criminal conspiracy is an independent offence in the Penal Code. The unlawful agreement is sine qua non for constituting offence under the Penal Code and not an accomplishment. Conspiracy consists of the scheme or adjustment between two or more persons which may be express or implied or partly express and partly implied. Mere knowledge, even discussion, of the plan would not per se conspiracy. The offence of conspiracy shall continue till the termination of agreement." 38. The expression "criminal conspiracy" has been the subject matter of interpretation by the Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Jagannatha Shetty, J. in Kehar Singh and Ors. v. State (Delhi Administration), [1988 (3) SCC 609 at 731] AIR 1988 SC 1883) brings out the legal position succinctly: "The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties. Agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se enough" 84. It was further noted in that case that to establish an offence of criminal conspiracy '[i]t is not required that a single agreement should be entered into by all the conspirators at one time. Each conspirator plays his separate part in one integrated and united effort to achie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 determining the guilt of the accused rather than adopting an isolated approach to each of the circumstances. Of course, each one of the circumstances should be proved beyond reasonable doubt. Lastly, in regard to the appreciation of evidence relating to the conspiracy, the Court must take care to see that the acts or conduct of the parties must be conscious and clear enough to infer their concurrence as to the common design and its execution. In Ram Narayan Popli (AIR 2003 SC 2748: 2003 AIR SCW 3119) (supra), this Court noted: "...Law making conspiracy a crime is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which co-conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish the ground for visiting conspirators and abettors with condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 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 Act relates to the power of adjudicating authorities and the composition of such adjudicating authority. Section 2(a) defines 'Adjudicating Authority' to mean an authority appointed under sub-section (1) of Section 6. Section 2(na) defines 'Investigation' so as to include all proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for collection of evidence. 43. Section 6(15) provides the method of adjudication to be followed by the adjudicating authority and it does not refer to any procedure to be adopted by the investigating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
