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TMI Blog2024 (9) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and Procedure of Attachment and Confiscation of property' deals with reciprocal arrangement with a contracting state. Effects of corruption in the economy of a country - HELD THAT:- Businessmen often view corruption as a form of illegal tax due to the secrecy involved and the unpredictability of whether the bribe-taker will honour their part of the deal. This perception reduces their motivation to invest. This results in a significant reduction in investment and affects the economic growth of the nation in a serious way - Corruption results in the diversion of benevolent funds that are spent for the purpose of economic and social upliftment of the country and thus slows down the socio-economic growth of the country - When corruption takes the form of tax evasion or claiming improper tax exemptions, corruption brings about loss of tax revenue which further affects the economic growth of the country. All the three grounds raised by the petitioner fail and thus, there are no reason to interfere with the impugned order - petition dismissed. - Honourable Mr. Justice S.M. Subramaniam And Honourable Mr. Justice V. Sivagnanam For the Petitioner : Mr. K.P.Ananthakrishnan for M/s.V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of monies services of an Uruguay based financial operator anmely VINICIUS CLARET ( JUCA ) and CLAUDIO BARBOZA ( TONY ), both of whom pleaded guilty; that more than 3,000 offshore companies were registered, whose accounts were existing in 53 countries, in transactions totalling to more than USD 1,632,000,000.00 (one billion, six hundred and thirty-two million dollars) and out of that US $13,249,403.49 was transferred to India through the accounts of 47 Indian entities, details of which were provided by the Brazilian Authority and Brazilian Authorities have requested for details of the Indian entities to which the amounts have been transferred and further requested to freeze the said bank accounts. 5. The accounts of M/s. Royal Impex was also frozen according to the details provided by the LoR and the investigation that followed. The Petitioner herein is the sole proprietor of M/s. Royal Impex. 6. On perusal of documents submitted by the Petitioner, it was revealed that as per the invoices, Glamour Commorio De Cabelos LTDA , Emporio Commorio De Cabelos LTDA Angel Commorio De Cabelos LTDA were the consignees and the goods were shipped to Brazil. However, perusal of Foreign Inward Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court set aside the order of attachment dated 14.07.2020. III. REPLY BY THE RESPONDENTS: 9. Mr.Rajnish Pathiyil, the learned Special Public Prosecutor (ED), appearing on behalf of the respondent would strenuously oppose by stating that none of the ground raised by the petitioner are tenable in view of the provisions of PMLA. 10. As per Section 56 of PMLA, an agreement between the Indian Government and the Government of Brazil is in force, enforcing the provisions of PMLA. Therefore, exchange of information for prevention of any offence under PMLA or under the corresponding law in force in that Country or investigation of cases relating to any offence under the PMLA is permissible. 11. The reciprocatory agreement between the Indian government and the Brazil Government got the assent of the Indian Parliament. The said position has been clarified in Para No.8 of the counter that the incoming LOR, received in India, and the outgoing LOR, sent from India, the legal mandate is provided under Chapter IX (Sections 55 to 61) of the PMLA, 2002 (Reciprocal Arrangement for Assistance in certain matters and procedure for attachment and Confiscation of Property). Besides, in the present case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India for enforcing the provisions of the PMLA would be sufficient. The language employed in Section 56(2) of PMLA is that the Central Government may and not shall . Therefore, the consequential Central Government notification is not mandatory even under Section 56(2) of PMLA. 15. That apart, Sub Section (2) of 56 further proceeds that the reciprocal agreement or arrangements have been made, subject to such conditions, exceptions or qualifications as may be specified in that notification. Therefore in the event of any conditions, exceptions or qualification, Central Government notification under Section 56(2) is required and in other cases, where exist reciprocal agreement between the Government of India and any other Country, it would be sufficient for the purpose of enforcing the provisions of PMLA. Thus, the ground raised on behalf of the petitioner is untenable and stands rejected. 16. With reference to the 2nd ground that ECIR has not been registered in the present case under Section 58 of PMLA, the respondent would rely on the legal principles settled by the Hon'ble Supreme Court of India in the case of Vijay Madanlal Choudhary and Others Vs. Union of India and Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation as inserted in 2019, therefore, does not entail in expanding the purport of Section 3 as it stood prior to 2019, but is only clarificatory in nature. Inasmuch as Section 3 is widely worded with a view to not only investigate the offence of money-laundering but also to prevent and regulate that offence. This provision plainly indicates that any (every) process or activity connected with the proceeds of crime results in offence of money-laundering. Projecting or claiming the proceeds of crime as untainted property, in itself, is an attempt to indulge in or being involved in money-laundering, just as knowingly concealing, possessing, acquiring or using of proceeds of crime, directly or indirectly. This is reinforced by the statement presented along with the Finance Bill, 2019 before the Parliament on 18.7.2019 as noted above . 17. In paragraph No.457 of Vijay Madanlal Choudhary's case (supra) , the Apex Court held that There is force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with process or activity connected with proceeds of crime. Thus, ECIR is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investigation, where prima facie allegations exist regarding commission of the offence of money laundering. The background stated in the OA sufficiently indicates that the proceeds of crime are involved. The investigation of money laundering is going on. There is justification for continuation of freezing of accounts mentioned in OA and in view of the discussion in the preceding paragraphs. Hence the Original Application for continuation of freezing of accounts mentioned in OA deserves to be allowed and is hereby allowed. The material shown in OA is sufficient to arrive at the satisfaction by this Authority that the continuation of freezing of accounts as mentioned in OA is required for the purpose of Adjudication under Section 8 of PMLA. xli) The proceedings at present are in the form of OA, wherein continuation of freezing of accounts mentioned in OA are prayed by the Enforcement Directorate to be retained for the purpose of investigation and Adjudication. As of now there is nothing in this Application which affects substantial right of the Respondent, like confiscation of the property of the Respondent. The Application is simply for continuation of freezing of accounts menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prevent money-laundering 1. Each State Party shall: (a) Institute a comprehensive domestic regulatory and supervisory regime for banks and nonbank financial institutions, including natural or legal persons that provide formal or informal services for the transmission of money or value and, where appropriate, other bodies particularly susceptible to money-laundering, within its competence, in order to deter and detect all forms of money-laundering, which regime shall emphasize requirements for customer and, where appropriate, beneficial owner identification, record-keeping and the reporting of suspicious transactions; (b) Without prejudice to article 46 of this Convention, ensure that administrative, regulatory, law enforcement and other authorities dedicated to combating money-laundering (including, where appropriate under domestic law, judicial authorities) have the ability to cooperate and exchange information at the national and international levels within the conditions prescribed by its domestic law and, to that end, shall consider the establishment of a financial intelligence unit to serve as a national centre for the collection, analysis and dissemination of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper tax exemptions, corruption brings about loss of tax revenue which further affects the economic growth of the country. 31. When Mahatma Gandhi said that The earth provides enough to satisfy every man's need but not every man's greed , what Gandhi meant was that the earth has enough resources and means to meet the basic requirements of a man but it can't serve the endless greed of man. A corrupt man after using the resources that is given to him by this earth also takes away those that are given to others. VIII. CONCLUSION: 32. All the three grounds raised by the petitioner fail and thus, we do not find any reason to interfere with the impugned order. 33. During the pendency of the Writ Petition, the Enforcement Directorate filed a complaint before the Adjudicating Authority in O.A.No.661 of 2022 and by order dated 21.10.2022, confirmation has been made. An order of confirmation is appealable order under Section 26 of the PMLA. Therefore, the petitioner is at liberty to approach the Appellate Tribunal under Section 26 of the PMLA 2002. In the event of preferring an appeal, the Appellate Tribunal has to decide the issues on merits, uninfluenced by the observations mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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