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TMI Blog2024 (11) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs emanating therefrom. 2. The petitioner submitted that the material on record does not meet the essential ingredients for declaring the petitioner herein as a Fugitive Economic Offender, and thus the proceedings are not maintainable. The petitioner has argued that the Fugitive Economic Offenders Act, 2018, can apply only in cases where a Non-Bailable Warrant is issued against the accused person, and where the value involved in such Scheduled Offence is one hundred crores rupees or more. The petitioner contends that the impugned Miscellaneous Application merely makes a bold averment that "the accused is covered under the definition of Fugitive Economic Offender as defined under Section 2(f) of the Act." It further states that "the proceeds of crime in the Scheduled Offence are in excess of Rs. 100 crores," which has been confirmed by the Income Tax Authorities via their communication dated 09.07.2019 (Annexure A-6). 3. The petitioner has asserted that there is not a shred of evidence to show that the proceeds of crime allegedly generated by the petitioner from the Scheduled Offence are Rs. 100 crores or more. Furthermore, it has been submitted that the Directorate of Enforcemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to the commencement of the Black Money Act. It has been submitted that the "proceeds of crime" must be generated from the commission of the Scheduled Offence and cannot predate it in any event. The petitioner claims to be facing consistent harassment from the agency, as the properties of the petitioner were seized under the PMLA via the First Provisional Attachment Order No. 3/2017 dated 01.06.2017. While adjudicating on this order, the Adjudicating Authority categorically held that there are no cross-border implications in the present case and that the Scheduled Offence under the PMLA is not made out. 7. The petitioner further submitted that the agency had also attached the assets of certain companies via an order dated 26.12.2017 under the Foreign Exchange Management Act, in which the petitioner is a shareholder. The assets of these companies were previously attached under the First Provisional Attachment Order No. 03/2017 dated 01.06.2017 and later rejected by the judgment dated 17.11.2017 of the Learned Adjudicating Authority. The petitioner has challenged the attachment made by the Respondent under the FEMA in WP(C) No. 4000/2018, and this Court, via order dated 12.07.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner has been declared a "proclaimed person" and a Red Notice has also reportedly been issued against the petitioner by Interpol, and FIR No. 173 of 2016 has been registered under Sections 3/5 of the Official Secrets Act and Sections 409, 379, and 120B of the Indian Penal Code against the petitioner. In light of this background, the respondent submitted that the petitioner is not entitled to the discretionary remedy under Section 482 Cr. P.C. Reliance has been placed upon Wave Hospitality Private Limited vs. Union of India & Ors. [WP C 5511/2019 dated 30.05.2019] and Parbatbhai Bhimsinhbhai Karmur & Ors. vs. State of Gujarat & Anr. [(2017) 9 SCC 641]. 11. The respondent further submitted that the petitioner is an Indian resident as defined in Section 6 of the Income Tax Act, 1961, and is thus legally obligated to declare all global income and assets to the Indian Tax Authorities. Consequently, the petitioner is liable to pay taxes, interest, and penalties on global income under Sections 5 and 4 of the Income Tax Act, 1961. The respondent submitted that the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (referred to as the "Black ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent has further denied all the averments made by the petitioner. 15. This Court, by order dated February 24, 2020, directed the petitioner to file a response before the Learned Trial Court within a period of seven days. However, it was directed that no coercive action be taken until the next date of hearing. It was expressly made clear that the pendency of the present proceedings would not be an embargo on the proceedings being conducted by the Learned Trial Court. SUBMISSIONS OF THE PETITONER 16. Sh. Dayan Krishnan, learned senior counsel for the petitioner, submitted that the complaint filed and the impugned Miscellaneous Application under Section 4 of the Fugitive Economic Offenders Act do not meet the requisite essentials as provided under Section 2 (1) (f) and Section 2 (1) (m) of the Fugitive Economic Offenders Act. Learned senior counsel submitted that Section 4 of the Fugitive Economic Offenders Act lays down the procedure to be followed by the Directorate of Enforcement. It has further been submitted that Sections 4 (2) (a) and (c) require that the officer must be satisfied that a person fulfills the criteria as laid down in Section 2 (1) (f) read with Section 2 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of lifting the corporate veil, ruling that it should only occur in cases of fraud or misuse of corporate structure. In case of absence of evidence of improper conduct, the corporate entity's structure would be respected, reinforcing the boundaries of corporate identity protection. 20. Learned senior counsel also submitted that the Directorate of Enforcement's satisfaction was entirely and exclusively based on the letter dated 09.07.2019. Learned senior counsel argued that independent reasons to believe must be established based on the Enforcement Directorate's own application of mind, rather than a "borrowed satisfaction." Reliance was placed on King Emperor v. Sibnath Banerji (1946) 48 BOMLR1. Furthermore, learned senior counsel argued that the impugned summoning order dated 24.12.2019 is entirely unreasoned, lacking any application of judicial mind. It was submitted that to meet the criteria under Section 4 of the Fugitive Economic Offenders Act, the Enforcement Directorate officer must independently form reasons to believe based on materials in their possession to confirm that the stipulated requirements under the Act are met. 21. Learned senior counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled as "Oaths and Affirmations and Affidavits" as there is no identification of the deposing the petitioner. It has been submitted that in terms of Rule 11, the deponent has not been identified. It has further been submitted that in term of Rule 9 of Volume 4 Chapter-12, Delhi High Court Rules, 2018, the petitioner has not provided the place of his residence. Learned counsel further submitted that therefore the petitioner has approached this Court with unclean hands. It has further been submitted that LOC dated 27.06.2016 has already been issued by the Immigration authorities in the behest of Income Tax authorities and another LOC dated 14.02.2017 was issued against the petitioner by the respondent. It has also been submitted that the petitioner is in accused in FIR No. 173/2016 under Section 3 and 5 of the Official Secret Act, 1923 and Section 409/ 379/ 120 B of the Indian Penal Code, PS Crime Branch, New Delhi. It has further been submitted that trade notice has also been issued against the petitioner by the Interpol for declaring the petitioner as a fugitive. 25. Sh. Zoheb Hossain, learned special counsel further submitted that the passport of the petitioner has also been imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer. 29. In rejoinder, learned senior counsel argued that the judgments cited by the respondent are irrelevant and inapplicable to the present case. It was further submitted that this Court's decision in the instant petition would primarily concern two issues: (1) Whether the respondent independently formed reasons to believe, under Section 4 of the Fugitive Economic Offenders Act, 2018, based on material in their possession, and that the petitioner met the requirements under Section 2 (1) (f) read with Section 2 (1) (m) of the Act; and (2) whether the Learned Special Court correctly assessed if the application under Section 4 was "duly filed." 30. The petitioner has filed the present petition challenging the impugned the Miscellaneous Application No.249/2019 dated 13.12.2019 before the Court of learned Special Judge and all proceedings emanating therefrom filed. 31. Mr. Dayan Krishnan, learned senior counsel for the petitioner has predominantly argued that the letter dated 07.02.2019 on which the respondent based it's case as nowhere states that the amount involved in the contravention under Section 51 BMA will be at least Rs.100 Crores. The challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Schedule provides Section 15 of Black Money Act as "Scheduled Offence". 36. Chapter -2 of Fugitive Economic Offender Act, 2018 deals with the declaration of the fugitive economic offenders and confiscation of Properties. Section 4 reads as under; 4. Application for declaration of fugitive economic offender and procedure therefore (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that any individual is a fugitive economic offender, he may file an application in such form and manner as may be prescribed in the Special Court that such individual may be declared as a fugitive economic offender. (2) The application referred to in sub-section (1) shall contain-- (a) reasons for the belief that an individual is a fugitive economic offender; (b) any information available as to the whereabouts of the fugitive economic offender; (c) a list of properties or the value of such properties believed to be the proceeds of crime, including any such property outside I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest in any of the properties listed under clauses (v) and (vi). (2) The index and material prepared under sub-rule (1) shall be signed on each page and forwarded to the Special Court in a sealed envelope, indicating a reference number and date of despatch. (3) The Director or the authorised officer, as the case may be, shall maintain registers and other records such as acknowledgement slip register and dak register and shall ensure that necessary entries are made in the register immediately as soon as a copy of the application along with the materials are forwarded to the Special Court." 38. Section-4 sub-Section (2) provides that the application filed in Section 4 (1) shall contain followings; (2) The application referred to in sub-section (1) shall contain-- (a) reasons for the belief that an individual is a fugitive economic offender; (b) any information available as to the whereabouts of the fugitive economic offender; (c) a list of properties or the value of such properties believed to be the proceeds of crime, including any such property outside India for which confiscation is sought; (d) a list of properties or benami properties owned by the individual in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accused. Further, a Red Corner Notice (RGN) dated 16.10.2017 had been issued against the said Accused in another case FIR No. 173/2016 being investigated by Crime Branch, New Delhi and he has been declared a Proclaimed Person. A copy of the Order dated 31.07.2018 of the Hon'ble High Court of Delhi in Criminal Revision Petition 223/2018 is annexed as Annexure A-7. Also, the Passport of the said Accused was impounded by the Regional Passport Office, vide its order dated 21.03.2018. The said Order is annexed as Annexure A-8. The Accused however evaded the process of law and despite the instant developments being well in his knowledge, has chosen to deliberately not return to the country and submit to the jurisdiction of the Hon'ble Court. 41. It is also pertinent to mention here that the complainant has also given the statement of information available on the whereabouts of the accused. The complainant has filed list of properties connected to the proceed of crime as Annexure-2 In the complaint, the complainant has given a list of properties and benami properties owned by the accused and the list of such properties has duly been filed as Annexure A-3. It was stated that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused is the owner of the properties listed in Annexure A to Annexure A3, which were acquired by him and are involved in the commission of the scheduled offence. The complainant has further asserted that, based on the available material, it is abundantly clear that the proceeds of crime in the present case exceed Rs. 100 crores as of date, and that Non-Bailable Warrants have been issued against the accused. Therefore, the petitioner falls within the scope of Section 2 (1) (f) of the Act. 45. A combined reading of Section 4 and Section 10 leads to the conclusion that, if an application under Section 4 has been filed in accordance with "The Declaration of Fugitive Economic Offenders (Forms and Manner of Filing the Application) Rules, 2018," the Special Court is required to issue a notice to any individual alleged to be a fugitive economic offender. The jurisdiction exercised under this Act is distinct from the summoning of an accused for other criminal offences. The Fugitive Economic Offenders Act, 2018 is a special statute enacted for a specific purpose, and the legislature, in its wisdom, has provided that upon filing a complaint application in accordance with the aforementione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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