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TMI Blog2020 (8) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the writ petition. 2. In connected W.P. No. 8031/2020, the petitioner Mr. Vinod Ramnani who happens to be the first petitioner in the aforesaid writ petition, has invoked the writ jurisdiction seeking a writ of certiorari for the quashing of impugned communication dated 15.5.2020 whereby, the Bank Accounts of the accused Company have been freezed in view of ongoing investigation under the provisions of Prevention of Money Laundering Act, 2002 and in the light of criminal proceedings that are impugned in the above writ petition; the respondent-Directorate of Enforcement after service of notice, having entered appearance through the learned CGC, opposes the writ petition; since both the writ petitions are structured on a common fact matrix and involve common questions of law, the same are taken up for hearing together, as consensually suggested at the Bar. 3. Facts in brief: First petitioner is the husband of second petitioner; he was the Promoter, Chairman & Director of M/s. Opto Circuits India Ltd. (OCIL) which happens to be the first accused (hereafter "Company"); both the petitioners being US citizens, were carrying on business in India; the Company had been availing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Company to pay 15% of the upfront money as a precondition for considering the latest OTS offer; the Company vide letter dated 24.1.2019 having agreed to the said proposal, clarifying that it had already paid Rs. 7.5 crore and therefore, it would pay the remainder i.e., Rs. 4.95 crore which together constitute 15%; the Bank vide e-mail dated 23.10.2019 asked the Company to submit OTS proposal in the standard format and accordingly, the Company has submitted one on 9.11.2019, which is pending consideration by the Bank. (v) The second petitioner as on the date the Company was declared to be a willful defaulter and its account was branded as NPA, was no longer a director, she having resigned to the post a bit before and her resignation having been approved on 1.3.2013; that being the position, there was absolutely no justification for subjecting her to the criminal investigation at the hands of CBI. (vi) The Forensic Audit for the period between 1.4.2010 & 31.03.2016 having been accomplished vide report dated 27.6.2016, the criminal proceedings now initiated after long lapse of time sans any plausible explanation for the delay brooked, are marred by delay & latches; initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and therefore, initiation of criminal proceedings is unsustainable; it need not be stated that a same set of facts may constitute a civil wrong like a breach of contract and a crime, as well and that the legal proceedings concerning them may run concurrently, the nature, scope & object of one being miles away from the other; whether one should be halted till the other is accomplished because of the arguable prejudice that may be occasioned by the parallel process, has not fallen for consideration here; it is profitable to see the observations of the Apex Court in Vesa Holdings Pvt. Ltd. Vs. State of Kerala, (2015) 8 SCC 293, para 13: "it is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant, that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not." The Apex Court granted relief to the accused stating "In our view the complaint does not disclose any criminal offence at all. The criminal proceedings should not be encouraged when it is found to be malafide or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.10 is carved out as an exception to the said principle; case of the petitioners squarely fits into this exception as rightly contended by learned CBI counsel; he has some justification for putting forth a passionate submission that swindling of public money at times in astronomical values, in the guise of serial borrowing from the banks & financial institutions has become rampant in the country and that the writ court should not readily interdict or interfere with the criminal investigation. (c) There is a lot of force in the vehement submission of the learned CBI counsel that the case of the petitioners does not fit into any of the seven broad parameters delineated by the Apex Court vide Bhajan Lal supra and therefore, there is no warrant for quashing the impugned proceedings; following are the two of them that are pressed into service by the learned counsel for the petitioners: "(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of commission of these two offences in the complaint or not. In other words, in order to see whether any prima facie case against the accused for taking its cognizable is made out or not, the Court is only required to see the allegations made in the complaint.... In our view, the High Court had no jurisdiction to appreciate the evidence of the proceedings under Section 482 of the Code." Similarly, what the Apex Court in the case of Mohd. Ibrahim Vs. State of Bihar, (2009) 8 SCC 751 observed, is also relevant: "8. This Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to repay the debts does not justify initiation of criminal proceedings vide Sushil Sethi Vs. State of Arunachal Pradesh, (2020) 3 SCC 240, as a legal proposition is true; but the facts of these petitions repel the invocation of the said proposition; the case of the petitioners is not a mere non-payment of debts; there is a whole range of things that are allegedly perpetrated by them during the period between availing of huge loans and the same remaining as outstanding dues till date; there is sufficient material too accompanying the FIR namely Forensic Audit Report, the Resolution of Fraud Identification Committee, etc., which specifically mention fraudulent deals and fabrication of records; it is also alleged that the properties furnished by way of security having been gifted away by registered instruments, there are ingredients of offence of cheating, in addition to other; all this merits investigation at the hands of CBI. (h) The argument of the petitioners that the Bank came to know of alleged commission of fraud way back in June 2016 even going by the Forensic Audit Report and the Resolution passed by the Fraud Identification Committee, and that the complaint having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the counsel, the second petitioner who is none other than the spouse of the first, continued to be a Director of the accused company till March 2013 which falls within the Forensic Audit period; under the scheme of law relating to companies, a Director continues to be liable for the past acts as well, subject to all just exceptions; however, it is open to the second petitioner to seek her exculpation from the offence in the course of investigation, by showing the circumstances that may render her involvement improbable. 7. As to contentions in re Prevention of Money-Laundering Act, 2002 in connected W.P. No. 8031/2020: Learned Sr. Advocate Mr. Shetty vehemently argues that in the connected writ petition, there is absolutely no justification nor jurisdiction for initiation of proceedings under the provisions of PML Act in the absence of conviction of the offender for the "predicate offence" and therefore, the impugned communication whereby the bank accounts of the accused are freezed, is unsustainable; he structures this argument on the basis of the text of sections 3 & 5 of the Act specifically stressing the expression "proceeds of crime" employed therein; this submission is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (c) Petitioner's argument that both the provisions of sections 3 & 5 of the Act employ the expression "proceeds of crime" and therefore, conviction of the offender is a sine qua non for invoking the same, again does not gain countenance; relevant parts of the said sections, are as under: Section "3. Offence of money-laundering.--Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering." Section "5. Attachment of property involved in money-laundering-- (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-- (a) any person is in possession of any proceeds of crime..." These provisions amongst others are structured on the UN Conventions inter alia relating to money laundering, which the Objects & Reasons that prelude the Act prominently refer to; it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Parliament vide Article 253 which has the following text: "253. Legislation for giving effect to international agreements Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body." The gist of Article 51 of the Constitution is succinctly put by the jurist, Mr. H.M. Seervai in his "Constitutional Law of India" Volume 2, 4th Edition; para 17.162 at page 2017, he writes: "Article 51 directs that the State shall endeavour to promote international peace and security, maintain just and honourable relations between nations, foster respect for international law and treaty obligations in the dealings of organized peoples with one another, and encourage the settlement of international disputes by arbitration. But in considering any conflict between municipal and international law, it is well settled that: 'every statute is to be interpreted and applied, as far as its language admits, as not to be inconsistent wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the provisions of Chapter III; the object of former is punitive, whereas that of the latter is confiscatory; obviously, the proceedings under one chapter are independent of those under the other, and therefore, the determination of proceedings under one stream does not ipso facto affect or influence those in the other; thus, even the closure of criminal proceedings would not determine the departmental proceedings, the offence of money laundering u/s. 3 being completely a stand alone event; in other words, the departmental proceedings for the purpose of confiscating the proceeds of crime and the criminal proceedings for punishing the offender, can run concurrently and that they need not converge at any point. (f) "Offence of money laundering" is expansively defined u/s. 3 and the Explanation inserted by amendment 2019 to this section & to section 44, being clarificatory of the legal position ab inceptio, applies to the case of the petitioner, contend Mr. Prasanna Kumar & Mr. Jayakar Shetty; they justified this submission through interpretative process by placing reliance on the observations of a Five Judge Bench of the Apex Court in CIT Vs. Vatika Township, (2015) 1 SCC 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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