9911796707
TMI Blog2024 (12) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Hon ble Division Bench, in respect of the aforesaid order, wherein the Appeal Court was prayed to interfere and modify the order directing the learned Single Judge to hear the writ petition after exchange of affidavits. As such, the findings of the learned Single Judge by the Hon ble Division Bench cannot be considered as an authoritative finding in respect of Section 17 or Section 17(1-A) of the PMLA, 2002. Section 17(1-A) of the PMLA, 2002, postulate that where it is not possible to seize any record or property, the authorized officer may pass an order to freeze such property so that the property is not transferred or otherwise dealt with except without prior permission of the officer passing such freezing order and a copy of the order should be served upon the person concerned - Section 17(2) of PMLA, 2002 states that immediately after search, seizure or issuance of freezing order the authorized officer/authority referred to in Section 17(1) of the PMLA, 2002 shall forward a copy of the reasons so recorded along with material in his possession to the Adjudicating Authority in a sealed envelope. While Section 17(1-A) of the PMLA, 2002 is in the nature of intimation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on 12th August, 2024, the office premises of M/s Bahubali Properties Ltd., M/s Niharika India Ltd., and Mangalam India Ltd. at 10 Princep Street, 2nd Floor, Kolkata, 700072 was searched in an arbitrary manner and as the petitioner company had its registered office at the same premises, the respondents arbitrarily and illegally named the petitioner in the enclosure to the impugned orders of freezing and illegally and arbitrarily and without any legal justification froze Rs.31.46 crores. Neither the Order of Freezing passed under Section 17(1-A) of the PMLA nor the Panchnama drawn on 14th August, 2024, provide for any legal justification as to why the petitioner's properties have been treated as proceeds of crime within the meaning of Section 2(1)(u) read with Section 17 of the PMLA. The petitioner contended that the genesis of the case purportedly relate to ECIR/NGSZO/02/2023 which was registered by the Enforcement Directorate (respondent no.1). Petitioner has no access to the ECIR and verily believes that the same has been registered by the respondent pursuant to the FIR, being RC. 2232022A008, dated 20th December, 2022, under Sections 120B read with Section 420, 468, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ED proceeded to initiate action under Sections 17 and 17(1- A) of The PMLA for freezing the bank accounts of the petitioner no. 1. The ECIR case of 2012 shows that the impugned orders can be traced to the 2009 Rates Circular and the show-cause notices issued to the petitioner no. 1. Significantly, the Summons produced by the parties also mentioned the same ECIR case number of 2012. The Summons are of February-September, 2014. Hence, the Summons were issued prior to the stay order of the Supreme Court which was passed in 2015. It is also not the case of the ED that the ED initiated action against the petitioner no. 1 or proceeded to take steps pursuant to any new case filed or show-cause notices issued after 2012. The contention of the ED that the impugned freezing orders were passed on incriminating material being found in the premises of the petitioner no. 1 also does not reveal that the searches were made pursuant to a new ECIR case filed against the petitioner no. 1 after 2012. 8. It can therefore reasonably be presumed that the ED took steps for search and seizure and freezing of the petitioners bank accounts after 7 years from the date on which all pending proceedings were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime and tainted property (Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929). 14. Therefore, the search and seizure under Section 17(1) must also satisfy the defining characteristic of moneylaundering and proceeds of crime as well as their respective procedural requirements as separately stipulated in The PMLA. In other words, the power to enter and search any place or to seize any record or property must be predicated by the satisfaction of all the requirements under Section 17(1) which should find a particularized statement in the written reason to believe component by the authorised officer under Section 17(1). It is only on the fulfillment of the conditions stipulated under Section 17(1) together with the satisfaction of the conditions of Sections 2(1)(u) and 3 that the power to search and seize is crystallized. . 23. The discouragement of the Supreme Court with regard to passing orders of stay of criminal investigation in Siddharth Mukesh Bhandari v. The State of Gujarat passed on 2nd August, 2022, relying upon Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, 2021 SCC OnLine SC 315 was in light of the Gujarat High Court granting the very same interi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned Single Judge is interlocutory in nature, therefore, the conclusions drawn therein and findings recorded therein are only tentative in nature. 12. Thus, we dispose of the appeal by setting aside the last sentence of paragraph 21 of the order of the learned Single Judge which states WPA 17454 of 2022 is disposed of in terms of the above and permit the appellants to file affidavit-in-opposition within two working weeks from today before the learned Single Judge in WPA 17454 of 2022 and thereafter, affidavit-in-reply be filed within two working weeks. 13. The learned Single Judge is requested to decide the writ petition expeditiously. Meanwhile, the parties are directed to maintain the status quo existing as on today in respect of the accounts in question which were subject matter of orders of freezing dated 13th of July, 2022. The petitioner also relied upon the judgment passed in WPO 1772 of 2023 (M/s Kedia Fintrade Pvt. Limited Ors. Vs. Union of India Ors.), particularly with regard to the authority of the Officer issuing freezing orders, however, I find that the Co-ordinate Bench was pleased to observe as follows: 13. Under Section 17(1) of the PML Act, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed a copy of the reasons to believe . In reality, this would effectively prevent the accused from challenging their arrest, questioning the reasons to believe . We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the reasons to believe should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest. 56. Undoubtedly, the opinion of the officer is subjective, but formation of opinion should be in accordance with the law. Subjectivity of the opinion is not a carte blanche to ignore relevant absolving material without an explanation. In such a situation, the officer commits an error in law which goes to the root of the decision making process, and amounts to legal malice. 57. A contention raised by the DoE, and accepted in Vijay Madanlal Choudhary (supra), was that the order of arrest under Section 19(1) of the PML Act is a decision taken by a high ranking officer. Thus, it is expected that the high ranking officer is conscious of the obligation imposed by Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters, in the event, it has reason to believe on the basis of material in possession that an offence under Section 3 of the 2002 Act has been committed. 186. However, when it comes to search and seizure, Section 17 of the 2002 Act permits only the Director or any other officer not below the rank of Deputy Director authorised by him to exercise that power on the basis of information in his possession and having reason to believe that any person has committed some act which constitutes money laundering or is in possession of proceeds of crime involved in money laundering, including the records and property relating to money laundering. . 188. As noticed from the amended provision, it has been amended vide Act 21 of 2009, Act 2 of 2013 and finally by the Finance (No. 2) Act, 2019. 188.1. The challenge is essentially in respect of deletion of the proviso vide Finance (No. 2) Act, 2019 which provides that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 157 of the 1973 Code or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of credit received from various Abhijeet Group Companies into individual accounts of Mangalam India Ltd, Niharika India Ltd, Arissan Energy Ltd, Arissan Power Ltd, Arissan Infrastructure Private Ltd and other entities which were operated by him during the period from 2009 till the date of search. In order to explain the money trail, a tabular chart has been presented before the Court in respect of Arissan Energy Limited which reflects that from Corporate Power Limited, amounts were transferred to Abhijeet Projects and from Abhijeet Projects to Parikshit Tie Up and from Parikshit Tie Up to the account of Arissan Energy Limited. It was emphasized by the learned advocate that the writ petitioners are in receipt of proceeds of crime and as such the authorized officer of the Enforcement Directorate was well within his power to exercise and invoke the same under Section 17 and Section 17 (1A) of the PMLA, 2002. Learned advocate submits that the contentions of the petitioners are based on facts and the word reason to believe has been explained as the authorized officer has referred to the ECIR number in the freezing order as also stated regarding the purpose of investigation of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Adjudicating Authority. The Authority on receipt of an application under Section 17(4) of the PML Act, has already issued summons to the petitioners seeking their explanation. 8. Preliminary investigation paper indicates that during search various property documents, electronic record were recovered on the same registered premises. It was primarily revealed that the seized assets were diversion of proceeds of crime of the accused company in dummy entities of the relatives of accused. Primary search indicates that crores of rupees have been transferred from accused company to the faulty companies. Prima facie we see no deficiency to invoke writ jurisdiction in either of the petitions. The Magnitude of the investigation is quite vast as allegedly huge sum to the extent of Rs.4037.87 crores has been siphoned through various shell entities. In the wake of above position, the petitioners have to satisfy the Adjudicating Authority, which is the mechanism set up for its redressal. Apparently, an effective efficacious remedy is available for the petitioners. In view of above, at this stage, we see no propriety in passing interim order. The Authority to expedite the proceeding con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered as an authoritative finding in respect of Section 17 or Section 17(1-A) of the PMLA, 2002. In M/s. Kedia Fintrade Pvt. Limited Ors. (supra) in fact, the question which was raised related to the authority of the Assistant Director in issuing the freezing orders and the same was approved by the Hon ble Court, as such there is no dispute regarding the authorization of Assistant Director in issuing the freezing orders under Section 17 and Section 17(1-A) of the PMLA, 2002. The decision of Arvind Kejriwal (supra) referred to by the petitioner was in respect of an application for bail being considered by the Hon ble Apex Court and the reasons assigned therein. So far as the reference made by the petitioner in the case of Vijay Madanlal Chaudhary (supra) is concerned, the Hon ble Apex Court has only observed that the authorized officer, if he has reason to believe that any person has committed some act which constitutes money laundering or is in possession of proceeds of crime involved in money laundering including the record and property relating to money laundering, shall be authorized to exercise his power. In the judgment referred to by the Enforcement Directorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2024 has assigned the reason for the purposes of investigation requires to be frozen and in the said freezing order there is a reference to ECIR/MGSZO/02/2023, it would be enough information furnished. It would be then for the petitioner to explain the circumstances as to how it has received the money from the source. The documents submitted by the investigating agency reflect that notices under Section 50 of the PMLA, 2002 have been issued to the persons responsible for the day-to-day activities of the company. It would therefore be the responsibility of the persons who have been called to explain in respect of the proceeds which they have acquired in regular course of their business transactions. The petitioner is also not without any option as they are entitled to take up their plea before the adjudicating authority. Now Section 17(1-A) of the PMLA, 2002, postulate that where it is not possible to seize any record or property, the authorized officer may pass an order to freeze such property so that the property is not transferred or otherwise dealt with except without prior permission of the officer passing such freezing order and a copy of the order should be served upon the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
