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TMI Blog2022 (5) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No.2 - Directorate of Enforcement. It is also prayed that respondent No.1 - CBI and respondent No.2 - Directorate of Enforcement be further directed to act in co-ordination and harmony with each other during the course of investigation relating to the cases of sale and purchase of land in Manesar. Learned senior counsel for the petitioners has argued that petitioner No.1 is engaged in the business of real estate, commodity trading and stock trading for the last 30 years whereas petitioner No.2 is engaged in food processing and real estate business. It is further submitted that both the petitioners were acquainted with one Lalit Modi for the last about 20 years and he was advising the petitioners to make certain investment in the real estate. On the asking of Lalit Modi, the petitioners have purchased and then sold certain properties in an around NCR Delhi during this period. In the year 2004, the petitioners along with one Raj Kumar Arora and Lalit Modi became promoters of M/s. Sheel Buildcon Private Limited, Progressive Buildtech Private Limited and Ecotech Buildcon Private Limited. All the 03 companies were land owning companies. The shareholding of the petitioners an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome land was taken by Lalit Modi as most of adjoining land was purchased by other persons. The 03 companies purchased the land between November, 2004 to November, 2005. Later on, Lalit Modi proposed to the petitioners that one Atul Bansal through his company is interesting in acquiring 03 land owning companies and the petitioners gave consent and on 30.11.2006, an oral agreement was arrived at between Lalit Modi and Atul Bansal and Rs.5.00 crores as advance was paid by Atul Bansal towards the sale consideration of the 03 land owning companies, however, at that time, no share was transferred. Later on as per the agreement, the shares in the 03 land owning companies was transferred to A.B.W. Group (Aditya Build Well Group) belonging to Atul Bansal. Learned senior counsel for the petitioners has also submitted that in fact, there was no sale or purchase of the actual land and rather, it was an investment in property through the 03 land owning companies and the entire shareholding in the company was transferred in favour of A.B.W. Group. It is also submitted that later on, on 24.08.2007, acquisition proceedings were dropped and FIR No.510 dated 12.08.2015 under Sections 420, 465, 467, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the government for withdrawal of the land from the acquisition proceedings as it was a simple investment made by the petitioners. It is further submitted that in the meantime, the proceedings under the PMLA Act, were initiated by the Enforcement Directorate, Chandigarh, as per ECIR No.04/CDZO/2015 dated 24.09.2016. It is next contended that the petitioners were also summoned by the Enforcement Directorate on various occasions wherein, they appeared and recorded their statements on 23.11.2007 and furnished all the documents as required by the Enforcement Directorate with regard to the transactions of the 03 land owning companies, the shareholding of the petitioners and of Lalit Modi, which were transferred in the name of M/s. A.B.W. Group. Learned senior counsel for the petitioners has relied upon the statements recorded under Section 50 of the PMLA, attached as Annexures P-7 and P-8, respectively, wherein in reply to the questionnaire, the petitioners have given the details of the land purchased and sold to M/s. A.B.W. Group, the time upto which the petitioners were holding the share in the company, the details of the other companies held by the petitioners, the source of purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate and in this complaint, the petitioners were not arraigned as an accused. Vide order dated 27.08.2018, the trial Court took cognizance of the said complaint and issued process against the accused persons arraigned in the said prosecution complaint. Later on, during those proceedings, the Enforcement Directorate issued a Provisional Attachment Order against M/s. A.B.W. Group on 24.12.2018. It is also submitted that a Supplementary Prosecution Complaint was filed on 14.02.2019, by the Enforcement Directorate and even in this complaint, the petitioners were not arraigned as an accused. The trial Court took cognizance of this complaint also and issued the process against the additional accused. Learned senior counsel for the petitioners has next contended that after 02 years of the investigation in which the petitioners were associated, time and again, and the investigation was started by CBI and prosecution was launched by the Enforcement Directorate, the petitioners were summoned again by the Enforcement Directorate on 22.07.2019 and again, Saurav Aggarwal, authorized agent of the petitioners appeared and supplied all the relevant documents. It is also submitted that on 05.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of the petitioners under Section 161 Cr.P.C., the petitioners are cited as witness No.300 and 301, respectively. It is also submitted that when the 1st R.C. was registered under the PMLA Act, the statement of the petitioners were recorded under Section 50 of the PMLA Act. However, the petitioners are nominated as an accused in the 2nd complaint, filed in exercise of powers under Section 44 of the PMLA Act, though, the prosecution by CBI and by the Enforcement Directorate is to be tried together by the same Judge, therefore, the prosecution of the petitioners by the Enforcement Directorate is mala fide as at no point of time, in the investigation by the CBI, the petitioners were found to be accused persons and rather they are cited as a witness. (e) Learned senior counsel for the petitioners has also submitted that the Enforcement Directorate in the 1st complaint did not arraign the petitioners as accused or even in the supplementary statement again, did not arraign them as an accused and after 02 years of the initiation of the prosecution, in the 2nd complaint, the petitioners were referred to as accused Nos.5 and 6, which is contrary to the investigation conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he details as mentioned, makes it clear that for the currency seized, the tax is already paid, therefore, it is not the quantum earned and used for money laundering. In our opinion, even in cases of PMLA, the Court cannot proceed on the basis of preponderance of probabilities. On perusal of the statement of Objects and Reasons specified in PMLA, it is the stringent law brought by Parliament to check money laundering. Thus, the allegation must be proved beyond reasonable doubt in the Court. Even otherwise, it is incumbent upon the Court to look into the allegation and the material collected in support thereto and to find out whether the prima facie offence is made out. Unless the allegations are substantiated by the authorities and proved against a person in the court of law, the person is innocent. In the said backdrop, the ratio of the judgment of Radheshyam Kejriwal (supra) in paragraph 38 (vi) and (vii) aptly applicable in the facts of the present case. 19. As discussed above, looking to the facts of this case, it is clear by a detailed order of acceptance of the closure report of the schedule offence in RC MA1 2016 A0040 and the quashment of two FIRs by the High Court of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and use of tainted money and subsequent acquisition of properties by using the same. The offence of money laundering is three- fold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money. The offence of money laundering under the PMLA is therefore, layered and multi-fold and includes the stages preceding and succeeding the offence of laundering money as well. 30. The offence of money laundering, however, is not to be appreciated in isolation but is to be read with the complementary provisions, that is, the offences enlisted in the Schedule of the Act. The bare perusal of the above mentioned provisions of the PMLA establishes the pre-requisite relation between the commission of "scheduled offence"s under the PMLA and the subsequent offence of money laundering. The language of Section 3 clearly implies that the money involved in the offence of money laundering is necessarily the proceeds of crime, arising out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive 'and', makes it luminous that any persons concerned in any process or activity connected with such "proceeds of crime" relating to a ""scheduled offence"" including its concealment, possession, acquisition or use can be guilty of money laundering, only if both of the two prerequisites are satisfied i.e. - (i) Firstly, if he - (a) directly or indirectly 'attempts' to indulge, (b) 'knowingly' either assists or is a party, or (c) is 'actually involved' in such activity; and (ii) Secondly, if he also projects or claims it as untainted property. 38. The first of the two prerequisites to attract Section 3 of PMLA shall thus satisfy any of the following necessary ingredients - A. Re : Direct or Indirect Attempt: In State of Maharashtra v. Mohd. Yakub, (1980) 3 SCC 57, [1983 (13) ELT 1637 (S.C.)] the Hon'ble Supreme Court observed that - "13. Well then, what is an "attempt"? .............. In sum, a person commits the offence of "attempt to commit a particular offence" when (i) he intends to commit that particular offence, and (ii) he, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the '"scheduled offence"s' punishable under Indian Penal Code for direct or indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of them. 39. The second of the two prerequisites to attract Section 3 of PMLA would be satisfied only if the person also projects or claims proceeds of crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowledge of tainted nature i.e. the property being 'proceeds of crime' derived or obtained, directly or indirectly, as a result of criminal activity relating to a "scheduled offence", would be utmost necessary, which however is lacking in the instant case. 40. Great emphasis was laid on behalf of the respondent on Section 24 of PMLA which reads after amendment vide Act 2 of 2013 as under - "24. Burden of Proof.- In any proceeding relating to proceeds of crime under this Act, - (a) in the case of a person charged with the offence of money-laundering under Section 3, the Authority or court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-launderi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be charged with the offence of money laundering. Whether a person shall be charged with money laundering or not shall thus depend only upon satisfying the requirements of Section 3 of PMLA as already explained above. 43. In the instant case, neither there is anything to raise a presumption of fact or law that any of the petitioners was aware that the monies received in their bank accounts through banking channels were 'proceeds of crime' derived from any '"scheduled offence"', nor is there anything to further presume that the petitioners were intentionally projecting or claiming any proceeds of crime as untainted one. In absence of the same, merely because the petitioners are close relatives of Shri Afroz and had banking transaction with him or at his instance would not attract offence of money laundering under Section 3 of PMLA even on prima facie basis." (j) Learned senior counsel for the petitioners has argued that in para No.16.37 and 16.38, the CBI chargesheet has drawn the following conclusions:- "16.37. Investigation has revealed that Sh. Shashi Kant Chaurasia s/o Sh. Kamalkant Chaurasia, r/o R-729, New Rajendra Nagar, New Delhi, Mr. Dilip Kumar Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 crores each lying in the Union Bank of India, Patel Nagar Branch, New Delhi Saving Bank Account No.308002050000155 & 308002010043649 respectively which is "Proceeds of Crime" as per Section 2(1)(u) by involving section 3 r/w section 70 of the PMLA." (l) Learned senior counsel for the petitioners has further argued that as per CBI charge-sheet filed on 01.02.2018, the petitioners are cited as witnesses whereas in the first and supplementary prosecution complaint by the Enforcement Directorate, the petitioners were not arraigned as an accused, however, only in the second prosecution complaint, the petitioners were arraigned as accused Nos.5 and 6 on 05.06.2020 with the only allegations as referred to in Para 16.14. (m) Learned senior counsel for the petitioners has submitted that in view of the CBI charge-sheet and other facts, the prosecution of the petitioners by the Enforcement Directorate is liable to be quashed. (n) Learned senior counsel for the petitioners has further referred to a judgment of the Hon'ble Supreme Court "Nikesh Tarachand Shah vs Union of India", 2018(11) SCC 1. The operative part of the said judgment, reads as under:- "7. Having heard learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that "the petitioners' company had not filed any application for grant of licence and even never authorized anyone else to file an application for licence from DTCP". (q) It is also submitted that the companies of the petitioners never passed any resolution nor given any authority or ever entered into agreement or MOU with A.B.W. for filing application for licence. Similar reply was given while replying to such similar questions when Enforcement Directorate recorded their statements under Section 50 of the PMLA Act. It is further argued that on the basis of the same statement, the CBI has termed the petitioners as witnesses whereas the Enforcement Directorate has without any further evidence, which is of documentary evidence, has nominated the petitioners as an accused. In reply, learned senior counsel for the respondent - CBI has not disputed the factual position and has not opted to file reply on behalf of CBI. Separate reply by way of Assistant Director, Directorate of Enforcement, Chandigarh is filed in which, after verifying the detailed investigation conducted by CBI as well as Enforcement Directorate, it is submitted that the offence under the PMLA Act is an independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), the chances of proving the allegations even for the purpose of prosecution under the PMLA Act are very bleak and therefore, the prosecution is liable to be quashed as no prima facie case on the face of second prosecution complaint is made out against the petitioners. After hearing the counsel for the parties and going through the report of CBI; the statement recorded by CBI under Section 161 Cr.P.C. of both the petitioners as well as recorded under Section 50 of the PMLA by the respondent - Enforcement Directorate and from the perusal of the first prosecution complaint; the second prosecution complaint filed under the PMLA as well as the impugned supplementary prosecution complaint, this Court find merit in the case on the following grounds:- (a) Initially the FIR was registered by the State Police and later on, the same was transferred to CBI in view of the direction of the Hon'ble Supreme Court in Rameshwar's case (supra). The CBI, on conclusion of the investigation, submitted its report under Section 173(2) Cr.P.C. before the Special Judge, CBI as well as under PMLA, in which both the petitioners were arraigned as a witness Nos.300 and 301. As noticed above, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st time, the petitioners were arraigned as accused No.5 and 6. A perusal of this complaint show that all the persons, who are accused in the CBI prosecution were arraigned as an accused along with the petitioners. (d) In paragraph 16.14(vii), as reproduced above, it is stated that the petitioners are Exdirectors/ shareholders of M/s. Sheel Buildcon Private Limited, M/s. Progressive Buildtech Private Limited and M/s. Ecotech Buildcon Private Limited and were indulged in purchasing land through land owning companies and have even purchased notified land from the farmers and then, sold it to Atul Bansal/ABWIL Group of companies and earned huge profits. There is no mention in the entire complaint that the 03 land owning companies, in which the petitioners were shareholders with one Lalit Modi, who was the Incharge of the working of the company, had ever applied for obtaining any licence from any department of the State of Haryana. Even, there is no allegation that the petitioners were found indulged in conspiracy with the State functionaries, who were competent to grant such licence and the only allegation is that the petitioners have purchased the land, which was later on, sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny such application. It was also specifically stated that the petitioners never authorized any other person to file any application for licence with the office of Director, Town & Country Planning, therefore, this Court find that the investigation conducted by CBI finding that the petitioners have not committed any "scheduled offence" and therefore, they are cited only as witness Nos.300 ad 301 in the chargesheet, the prosecution of the petitioners under the PMLA, only on the basis of a preponderance of probabilities cannot be permitted. (h) In the first two complaints filed by the Enforcement Directorate, the petitioners were not arraigned as an accused and in the impugned second supplementary statement, the only allegations as per para 16.14(vii) are that the petitioners have purchased the land through their companies, which amounts to proceeds of crime under Section 2(1)(u) read with Sections 3 and 17 of the PMLA. From the perusal of the impugned complaint, on the face of it, it cannot be held that the alleged proceeds of crime as stated in the impugned complaint is a property derived from the criminal activity relatable to a particular schedule or predicate offence, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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