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TMI Blog2024 (12) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... h seized vide Panchnama dated 29.09.2023 for further investigation in terms of section 17(4) of the PMLA, 2002. II. It is, inter-alia, pleaded in the said O.A that the Respondent ED registered ECIR vide F.No. ECIR/DLZO-I/43/2021 on the basis of scheduled offences registered vide RC221/2021/E/009 dated 17.05.2021 under section 120-B & 420 of Indian Penal Code & Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 against U.S Awasthi, MD & CEO, Indian Farmer Fertilizers Cooperative Ltd. (IFFCO), Pavinder Singh Gahlaut, MD, Indian Potash Ltd. (IPL), Anmol Awasthi, Anupam Awasthi, Vivek Gahlaut, Pankaj Jain, Promoter of M/s Jyoti Trading Corporation and Rare Earth Group, Dubai, Sanjay Jain, brother of Pankaj Jain, President of M/s Jyoti Trading Corporation, Rajiv Saxena, Chartered Accountant, Sushil, Sr. Vice President, Sushil Kumar Pachisia, an employee of Pankaj Jain, unknown Directors of IFFCO, IPL and unknown others, for criminal conspiracy, cheating and criminal misconduct. III. It is also revealed from the O.A that the above-named persons entered into criminal conspiracy during the period 2007-2014 cheated and defrauded, IFFCO as well as IPL, the General Sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied was to be in full conformity with Indian Fertilizer Control Order. This clearly demonstrated that the DAP being purchased was meant only for Indian purchasers. 3. Further, as per the said agreement the purchased fertilizer was shipped directly to India and it was not the case that M/s Astra Global DMCC took delivery first and later handed over the same to the Indian entities. 4. And that, it was further revealed that the agreements were signed within a span of 7 days and there was no major reason for such huge price variation in the absence of any value addition. 5. It is further alleged in the O.A. that the agreement dated 24.04.2007 between M/s Astra Global DMCC and JPMC was signed by Ajay Kumar Gupta as authorized signatory (though his name is not mentioned in the agreement to conceal his identity) on behalf of M/s Astra Global DMCC and that the agreement dated 30.04.2007 between M/s Astra Global DMCC and Indian Potash Limited was signed by Manoj Kumar, who is a close relative of Ajay Kumar Gupta. 6. It is also alleged in the O.A that the appellant was controlling and managing funds of M/s Astra Global DMCC even though he denied in his statement recorded u/s 50 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sh. Ajay Kumar Gupta at U & I vault, F-41, South Extension, Part-I, Ring Road, New Delhi-110049 on 29.09.2023 under section 17 (1) of the PMLA. 2002. Search of the above-mentioned locker resulted in recovery of jewelry and cash. The details of such recovery and seizure are as under: i. Cash i.e. Indian Currency amounting Rs. 16.5 Lakhs were recovered and seized during the search proceedings: Denomination Number of notes Amount in Rs. 2000 800 Rs. 16,00,000/- 500 100 Rs. 50,000/- Rs. 16,50,000/- (Rupees Sixteen Lakhs and Fifty Thousand only) ii. Jewellery items valued at Rs. 7,61,79,069/- as per valuation Report (having 33 serial no. in 3 pages) dated 14.02.2023 drawn by Sh. Kailas Chouhan, Govt. approved valuer. 12. Basing on aforesaid facts, the respondent ED is of the view that seized cash and jewellery items might have been acquired through funds obtained through criminal activity related to scheduled offences under PMLA, 2002, as the source of the same could not be explained during search proceedings and thus the same is required to be retained for knowing the source of the same and establishing money trail which would be further confronted with the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking over of possession. And that, the contents of locker could not be seized under PMLA, 2002, on 29.09.2023 without lifting seizure made under FEMA, 1999, on 14.02.2023. And that, for the purpose of retention of any property an order is required to be made in terms of section 20(2) of PMLA, 2002, in the absence of which further proceedings under PMLA, 2002, are erroneous and unsustainable. And that, the Ld. AA has not confirmed retention of seized jewellery and ED cannot continue to retain the jewellery as digital device and documents are only mentioned, the order is patently without application of mind. And that, the appellant has duly explained and reflected in ITRs and hence could not be in any manner the proceeds of crime or involve in money laundering. And that, there is no prima facie satisfaction recorded by the Ld. AA and in the absence of the same the impugned order is unsustainable. And that, procedure envisaged in terms of the Prevention of MoneyLaundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso be accused of scheduled offence. The respondent ED has relied on the judgement in the matter of Radha Mohan Lakhotia v. the Deputy Director [2010 SCC OnLine Bombay 1116] 15. And submitted that, in the event the cash and jewellery, which are highly liquid in nature, are released, the investigation against the appellant and his companies namely M/s Tradex India Corporation Pvt. Ltd. and M/s Astra Global DMCC,will be frustrated. 16. The Ld. Counsel for the respondent reiterated the contentions made in the O.A which are already reflected in preceding paragraphs no. 1 to 9 and in the reply to the appeal. In addition to above, it was orally argued that the statement of objects and reasons of PMLA, 2002, are totally different from FEMA, 1999, and it was argued that the accused persons named in the CBI FIR had defrauded IFFCO as well as IPL, the general shareholders of these entities and the Government of India by fraudulently importing fertilizers and other materials for fertilizer production at inflated prices and that after investigation/further investigation made under the PMLA, 2002, prosecution complaint was filed on 30.07.2021 and first supplementary prosecution complaint date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is still going on for which the seized items are very much required. 20. With regards to the question raised by the appellant for non-filing of O.A within 30 days from the date of original seizure under FEMA, 1999 is concerned, the O.A was to be filed within 30 days from the date of seizure made under PMLA, 2002, not under FEMA, 1999. The jewellery and cash under PMLA, 2002 was seized on 29.09.2023 and O.A was filed on 27.10.2023 and thus the OA has been filed within the stipulated period of 30 days. So, the argument of the Ld. Counsel for the appellant is not acceptable. 21. The Ld. counsel for the appellant argued challenging that procedure of seizing the cash and jewellery under PMLA, 2002, was illegal as these were already under the possession of ED after seizure under FEMA, 1999. So far as the question submitted by the appellant that the respondent authority would not have conducted search under section 17(1) unless a report is forwarded to the magistrate under section 157 of CrPC in the scheduled offence is concerned, it may be mentioned here that the respondent ED has clearly stated in the O.A that not only a complaint has been filed but supplementary complaint has also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 29. As per Section 12 of the P.M.L. Act, reporting entity is obliged to maintain the records and furnish the information to the Director and perform such other acts as are contemplated therein and as per Section 12A, the Director can have access to the information with the reporting entity. It is also noticed that the Adjudicating Authority under Section 6(15) is not bound by the Code of Civil Procedure, 1908. From the aforesaid provisions of P.M.L. Act, it can be noticed that the main purpose and object is to contain money-laundering activities. Other purpose of the Act is to prevent the moneylaundering activities by attaching, confiscating and freezing the properties involved in such activities. As can be seen from proviso to Section 17, a report or a complaint under Section 157 of Cr.P.C. may be necessary where prosecution is contemplated and may not be necessary where the prosecution is not immediately contemplated. In such a case, information has to be furnished to the authority mentioned under Section 17. 30. The main purpose of Section 5 appears to be provisional attachment of the properties where prosecution is intended. Conjoint reading of Sections 5 and 8 clearly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended to be an authority dealing with the criminal acts, the proviso dispensing with Code of Civil Procedure would not have been made. Instead, proviso dispensing with Cr.P.C. would have been made. These facts thus sindicate that the Adjudicating Authority under Section 8 is authorized to undertake civil proceedings and adjudicate thereupon as rightly argued by the learned counsel for the respondents. 32. True that the first proviso to Section 5(1) and Section 17(1) requiring the compliance of the aforementioned provisions before embarking upon the exercise under Section 5 of P.M.L. Act but that would be the basis for proceedings to make attachment or passing of various other orders as contemplated under the Act particularly Section 5 so far as present case is concerned. 33. The contention of the respondents is that the respondents have not reached the stage of Sections 5 and 17 and the proceedings are at a very preliminary stage. It thus appears that the summons are issued to the petitioners at a preliminary stage on the basis of the facts detected by the respondents in pursuant to the lodgment of two FIRs, it appears that the respondents intend to inquire into the fact as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d properties, movable or immovable, liable to be attached in the course of investigation. The challenge mounted by the petitioners on such powers of the authorities is therefore, erroneous. The term investigation as defined in section 2 (na) of PML Act has to be read in consonance with the provisions of section 65 which empowers the authorities under PML Act to issue such directions/prohibitory orders. Therefore, any such direction issued in the course of investigation is within the four walls of law and in consonance with the object and reasons of the Act 10 ensure that the proceed of crime do not change hands making it impossible for authorities to trace and recover such proceeds of crime. 6. The provisional order of attachment of property suspected to be proceeds of crime in terms of section 2(u) of the Act and primacies involved in money laundering and confirmation thereof in terms of section 8 of the Act by the Adjudicating Authority do not violate the provisions of Articles 14, 19(1) (g) and 300A of the Constitution of India. Moreover, in the given circumstances when directions are issued to the concerned authorities viz. the letter dated 12.07.2011 issued by the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying to it to seek resort to the machinery so set up. 10. *****" 35. True that the said FFR Software Private Limited (supra) deals with the case pursuant to registration of the FIR. In the instant case also, two FIRs though not naming the petitioners but on the same subject have been lodged and thus legal proposition as discussed in the aforementioned authority can as well be applied to the facts of the present case. The contention of the learned counsel for the petitioners to the contrary thus cannot be accepted. 36. As noticed above, inquiry, investigation, etc., are permissible under Cr.P.C. by the authorities or officers exercising the jurisdiction under P.M.L. Act. It therefore goes without saying that on noticing an offence under P.M.L. Act against the offenders, the case can be tried as provided in Chapter VII of P.M.L.A. Act. Thus, a separate machinery for trial of the offences under P.M.L. Act is provided under Chapter VII as distinguished from adjudication under Section 8 of the Act. To enable such trial, the investigation and inquiry with the assistance of the provisions of Cr.P.C. is permissible. Looking to the fact that the petitioners are not arrayed as accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance of mandatory provisions can be raised at appropriate stage of the proceedings and not at the threshold as interference by the Court at the threshold may frustrate the very purpose and object of P.M.L. Act." .............................................................. ............................................................. And held as below: "Subject to the aforementioned observations, no substance is found in the petitions. Special Criminal Application No.1725 of 2014 is thus disposed of with the aforesaid observations and Special Criminal Application No.1748 of 2014 fails and is dismissed. There shall be no order as to costs." 23. Therefore, the contention of the appellant that the procedure provided under the proviso to Rule 3 of the "Prevention of Money Laundering ( Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention ) Rules, 2005" will not come to the help of the appellant. 24. The Ld. Counsel for the appellant argued that no criminal activity is attributed to the appellant or his business nor the appellant is an FIR named ..... X X X X Extracts X X X X X X X X Extracts X X X X
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