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TMI Blog2019 (8) TMI 1913X X X X Extracts X X X X X X X X Extracts X X X X ..... thout expressing anything on merit as to whether the appellant was involved or not as it is a matter of fact that the charges are yet to be framed. In advance, no finding can be arrived in the nature of present case of the appellant by concluding that the appellant is involved in money laundering without any recovery. Merely, on the basis of apprehension, one cannot be declared as accused, in advance, without any recovery. The said observations were made without application of mind as it would be prejudiced his case on merit at the time of framing of charges or trial, if the said findings against him are intact. Thus, the observations against him for involvement of money laundering are waived and quashed. The impugned order is modified against him in view of reason mentioned above. As far as person concerned where recovery is made, the burden of proof lies with them to prove their innocence as per law. The appeal is partly allowed by modifying order against him. However, it is clarified that this order shall have no bearing when the matter is pending against the appellant on the basis of allegations. - Justice Manmohan Singh, Chairman For the Appellant : Dr. Shamsuddin, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roximity with the alleged Demand Drafts issued in fictitious names and the same do not belong to him. 7. It is submitted on behalf of the appellant that the act of converting demonetized currency into monetized currency even in violation of RBI Order at most can be considered a violation of section 188 of the Indian Penal Code, 1860 which is not a scheduled offence under PMLA. The Gazette Notification No. 2652 dated 08.11.2016 regarding demonetization did not include any penal provision. The Specified Bank Notes (Cessation of Liabilities) Act, 2017 does not make any penal provisions for violation of the said Gazette Notification. On the other hand, in a similar demonetization drive carried out in 1978 through The High Denomination Bank Notes (Demonetization) Act, 1978 penalty and offences were provided under sections 10 and 11 of the said Act which is not the position in the present case. It is stated that on one hand, the Respondent stated in Table appended to Para 2 of the OC that Proceeds involved in money laundering as commission amount converted in the form of Demand Drafts of Rs. 3.65 Cr. in fictitious names which is presently available in the custody of Income Tax Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visited me along with his Regional manager to wish Diwali greetings. Other than that I have never met him or dealt with Ashish Kumar directly for any work or otherwise. (ii) Statement dated 31.12.2016 of Mr. Rohit Tondon: Q.14 After demonetization, apart from the above said amount, have you got your old currency converted through Mr. Ashish Kumar, Branch Manager, Kotak Mahindra Bank, K.G. Marg, New Delhi? If yes, how much amount have you got converted? A. I have not got any amount converted into new currency through Mr. Ashish Kumar. Q.15 Did Ashish Kumar called you or meet you personally on or after 08.11.2016? A. Ashish Kumar did not either call me or meet me personally on or after 08.11.2016. I have also never called him. (iii) Statement dated 02.01.2017 of the Appellant: Q. The money that you got exchanged and issued DDs in fictitious name for that how much commission you got? A. I haven t exchanged any money and the Demand Draft made as per the transaction requested by the customer and there was only bank commission/ fees charge. I have not got any commission in the same. (iv) Statement dated 27.12.2016 of Mr. Kamal Jain: Q. 3 Did you get any commission from Mr. Ashish? A. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the counteraffidavit. Alternatively, if the notice itself contains the reason of belief, that notice can be annexed to the counter-affidavit or quoted in it. However, all that has not been done in this case. It must be stated that an order of confiscation is a very stringent order and hence a provision for confiscation has to be construed strictly, and the statute must be strictly complied with, otherwise the order becomes illegal. (b) The Hon ble Supreme Court in the case of Mohammad Aslam Merchant v. Competent Authority (2008) 14 SCC 186 while dealing with the statutory requirements, namely reasons to believe and recording of reasons under section 68H of the Narcotics Drugs and Psychotropic Substances Act, 1985 observed as under: 40. Both the statutory elements, namely, reason to believe and recording of reasons must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. Indisputably, therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show-cause notice on his own ipse dix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisional order of attachment passed by an Adjudicating Authority passes through the first check post and the Adjudicating Authority issues a show cause notice under section 8(1), it is not as if he has powers only to pass an order one way. The power conferred by Sub-section (2) of Section (8) is to record a finding whether all or any of the properties referred to in the notice are involved in money laundering or not. Section 8(2) uses the words whether all or any of the properties . It does not uses the words that the properties . If the Adjudicating Authority records a finding under Section 8(2) that all the properties are involved in money laundering, he cannot and he will not confirm the attachment under section 8(3).The finding recorded under Section 8(2) will terminate the proceedings, in case the Adjudicating Authority comes to the conclusion that none of the properties was involved in money laundering. The proceeding will move over to Sub section (3) of Section 8 only if a finding is recorded under Section 8(2) at least in respect of one property that it is involved in money laundering. Therefore, the contention of the learned Adjudicating Authority does not have the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sual or routine manner so as to curb the laxity on the part of the Investigating Authority. In the present case, the Respondent has linked and associated the Appellant with the alleged DDs without recovery either from the appellant or at any stage during investigation. The Hon ble Supreme Court in the case of Anita Malhotra v. Apparel Export Promotion Council 2012 (1) SCC 520 and reliance is made on the following observations: 20. As rightly stated so, though it is not proper for the High Court to consider the defence of the accused or conduct a roving enquiry in respect of merits of the accusation, but if on the face of the document which is beyond suspicion or doubt, placed by the accused and if it is considered that the accusation against cannot stand, in such a matter, in order to prevent injustice or abuse of process, it is incumbent on the High Court to look into those document/documents which have a bearing on the matter even at the initial stage and grant relief to the person concerned by exercising jurisdiction under Section 482 of the Code . 18. It is argued on behalf of appellant that the Adjudicating Authority committed an error in law while deciding already declaring i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by filing a complaint u/s 44 of PMLA for the offence of money laundering defined u/s 3 of PMLA punishable under section 4 of PMLA. The mandatory presumption thus arises that the proceeds of crime are involved in Money Laundering. The raising of presumption is thus justified. The material pertaining to the commission of the scheduled offence, the emergence of the proceeds by commission of the Scheduled offence, clearly establishes the existence of proceeds of crime. The Defendants have not established anything contrary thereto. In terms of Section 24 once it is shown that there exist proceeds of crime, which are present in the present case beyond doubt, as by the commission of the scheduled offences, the proceeds of crime are generated and involved in money-laundering. The money laundering is presumed as well as established. In order to rebut this presumption, it was absolutely essential for the Defendants to show that there was no emergence of proceeds of crime. The Defendants have however failed to show that. Nothing is produced by the Defendants, which would rebut the presumption. The burden to prove that the properties/monies are not proceeds of crime and were not therefore tain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving that proceeds of crime are untainted property shall be on the accused. Unamended provision has been toned down by virtue of amendment. 27. Therefore, unless the charges are framed with the offence of money laundering under Section-3 of the Act, the burden of proof still lies with the respondent to prove that the person concerned is involved with the offence of money laundering in order to invoke Section-3 of the Act. 28. In Rajya Sabha debate held on 17th December 2012 on the issue of Section 24 of PML Act, 2002, the Hon ble Finance Minister, the following discussions were taken place Mr. Deputy Chairman, Sir, I am grateful to the hon. Members, especially ten hon. Members who have spoken on this Bill and supported the Bill. Naturally, some questions will arise; they have arisen. It is my duty to clarify those matters. Sir, firstly, we must remember that money-laundering is a very technicallydefined offence. It is not the way we understand money laundering in a colloquial sense. It is a technically-defined offence. It postulates that there must be a predicate offence and it is dealing with the proceeds of a crime. That is the offence of moneylaundering. It is more than simply c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a drastic provision. Simply by an accusation that he had committed an offence of money-laundering, the burden of proof was shifted to the accused. He may not even be charged at that time. This was what we found to be an onerous provision and an unfair provision. And, what we have now done is to tone down this provision. In (a) and (b), you asked me as to why (b) was there. Now, (a) and (b) will make a distinction. In (a), there is a person charged with the offence of money-laundering the principal offence under the Act. In (b), it is any other person who is brought before the Court. Therefore, in the case of (a), we maintain the rigour of the section. We borrow from the Evidence Act, shall presume , and shall presume , as you know, means that the court shall regard that the fact is proved unless it is disputed. So, we maintain the rigour of the section. But, we use the well-accepted phrase shall presume . In the case of any other person, we borrow the phrase may presume ; the court may presume, may not presume and evidence to the contrary can be let off. So, we have now made a distinction between a person charged with the main offence of moneylaundering, and persons who are ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: 8. But the scope of sub-section (1) of section 52 is extremely restricted because it applies only where the transferee is a person directly or indirectly connected with the assessee and the object of the understatement is to avoid or reduce the income-tax liability of the assessee to tax on capital gains. There may be cases where the consideration for the transfer is shown at a lesser figure than that actually received by the assessee but the transferee is not a person directly or indirectly connected with the assessee or the object of under-statement of the consideration is unconnected with tax on capital gains. Such cases would not be within the reach of sub section (1) and the assessee, though dishonest, would escape the rigour of the provision enacted in that sub-section. Parliament therefore enacted sub-section (2) with a view to extending the coverage of the provision in sub-section (I) to other cases of under statement of consideration. This becomes clear if we have regard to the object and purpose of the introduction of sub-section (2) as appearing from travaux preparatoire relating to the enactment of that provision. It is a sound rule of construction of a statute fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to the day-to-day occurrences that are happening before our eyes in regard to the transfer of property. I think, this is one of the key sections that should help us to defeat the free play of unaccounted money and cheating of the Government. Now it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred t o for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in Western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. In fact there are at least three decisions of this Court, one in Loka Shikshana Trust v. Commissioner of Income-Tax(1) the other in Indian Chamber of Commerce v. Commissioner of Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the discussion and question and answer, the said debate can be relied upon by any party. The same may not be relied upon if same with only the Member of Parliament. The said discussion by the Minister is meant in order to understand the incorporation of said respective provision in the statute. 32. The Supreme Court in Kalpana Mehta Ors. v. UOI Ors., (2018) 7 SCC 1 has opined: 117. From the aforesaid, it clear as day that the Court can take aid of the report of the parliamentary committee for the purpose of appreciating the historical background of the statutory provisions and it can also refer to committee report or the speech of the Minister on the floor of the House of the Parliament if there is any kind of ambiguity or incongruity in a provision of an enactment. Further, it is quite vivid on what occasions and situations the Parliamentary Standing Committee Reports or the reports of other Parliamentary Committees can be taken note of by the Court and for what purpose. Relying on the same for the purpose of interpreting the meaning of the statutory provision where it is ambiguous and unclear or, for that matter, to appreciate the background of the enacted law is quite differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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