TaxTMI 
TaxTMI 
2015 (12) TMI 1133
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....year 1999 and registered under the Companies Act, 1956. Certain non-convertible debentures were issued by the Rose Valley by 'private placement method.' No advertisements etc. were issued to the public. The said debentures were issued to the employees of the Company and to their friends and associates after fulfilling the formalities for private placement of debentures. Thus, the appellant collected money by issuing secured debentures by way of private placement in compliance with the guidelines issued by the Securities and Exchange Board of India from time to time. 4. On 26.03.2013, the Adjudicating Officer, SEBI, passed an order imposing a penalty of Rs. 1 crore upon the Rose Valley for violation of the provisions of Sections 11(C) of the Securities and Exchange Board of India Act, 1992 (hereafter referred to as the SEBI Act) which was reduced to Rs. 10 lakhs by the Securities Appellate Tribunal, Mumbai. A letter was issued on 26.06.2013 by the Securities and Exchange Board of India ("SEBI") to the appellant Rose Valley informing the appellant about the offences alleged to have been committed by it under the Companies Act, SEBI Act & Regulations, and Section 405 of the I....
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.... PMLA as also the validity of the search and seizure against Rose Valley. It was further directed that the Adjudicating Authority should pass a reasoned order in the matter and communicate the same to the appellant Rose Valley within two days from the date of passing such order. 8. A complaint was filed by the respondent on April 2, 2015, in the Court of learned Chief Judge, City Sessions Court at Kolkata, against the appellant under Section 4 of PMLA, though no offence is made out against the appellant under Section 3 of the PMLA. The said complaint has been registered as ML Case No.3 of 2015. Despite having fully cooperated with the investigation, the appellant was arrested on 25.03.2015 on suspicion of having committed an offence punishable under the provisions of the PMLA and is detained in custody since then. 9. While the appellant was in custody, his father expired on 06.04.2015 upon which he moved an application before the High Court of Calcutta for interim bail to perform the rituals for his deceased father. The High Court vide its order 08.04.2015, directed release of the appellant on provisional bail for two weeks on the conditions mentioned in the said order. On comple....
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....es". Rather the heading "acquisition of securities or control" is part of the heading of Section 12A read with Section 24 which is the scheduled offence. The relevant extract of the Schedule to the PMLA, as it stood after the 2009 Amendment, is as follows: Paragraph 8 - The Securities and Exchange Board of India Act, 1992 (15 of 1992) 12A read with Section 24 Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control The relevant extract of the Schedule to the PMLA as it stands today after the Amendment Act of 2012 w.e.f. 15.02.2013 is as follows: Paragraph 11 - The Securities and Exchange Board of India Act, 1992 (15 of 1992) 12A read with Section 24 Prohibition of manipulative and deceptive devices, insider trading and substantial. Section 24 Acquisition of securities or control 15. The learned senior counsel for the appellant submitted that if the offences prescribed against the sections in paragraph 11 in both the rows are read together, the same will appear as the heading of Section 12A of the SEBI Act. A conjoint reading of two rows under paragraph 11 of Part A of the Schedule would show th....
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....rections or orders, he shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend to ten years or with fine, which may extend to twenty-five crore rupees or with both." 16. According to the learned senior counsel for the appellant, the fact that no new offence was meant to be added by way of the 2012 amendment, is clear from a plain reading of the "Statement of Objects and Reasons" to the Amendment of 2012, as well as the "Notes on Clauses" on the Amendment Act, 2012 and from a comparison of the Schedules of PMLA of 2009 and amended PMLA of 2012. It is submitted by the learned senior counsel for the appellant that the respondent is wrongly reading Section 24 of SEBI Act simplicitor as a separate scheduled offence, whereas Section 24 is a general penal provision for violation of any and every provisions of the SEBI Act or any rules or regulations made thereunder. 17. It was further submitted by the learned senior counsel appearing for the appellant that if the intent of the legislature was to incorporate Section 24 of SEBI Act alone as an offence, in that event, there would have been no necessity to incorporate "12A read with Sec....
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....plation of the statute. [See: Gurudevatta VKSSS Maryadit v. State of Maharashtra, (2001) 4 SCC 534 at para 26]. It has also been held by this Court that "the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intent is that every part of the statute should have effect. The legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the legislature will not be accepted except for compelling reasons." [Visitor, AMU v. K.S. Misra, (2007) 8 SCC 593, at para 13)]. 20. Therefore, learned senior counsel for the appellant submitted, the words "acquisition of securities or control", appearing next to Section 24 of the SEBI Act in the Schedule to the PMLA must be given due meaning and cons t rued to mean that only that extent of the offence which pertains to ""acquisition of securities or control" is a punishable offence under PMLA and not any other violation under the SEBI Act. 21. It was further submitted by the learned senior counsel for the appellant that Section 24 alone cannot by itself be a scheduled offence under the PMLA since it does not enumerate a specific offence....
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....bad Scheme, ( ii )Time Share Scheme, and (iii ) Debenture Scheme, promising high returns to the investors and the funds so collected from the public at large were subsequently laundered in associated companies. Rose Valley made a public issue of debentures without filing any offer document in violation of Section 56 of the Companies Act, 1956, nor did it file statement in lieu of prospectus as claimed by it. On the basis of the information/documents received from SEBI, the respondent filed a complaint in the Court of Chief Metropolitan Magistrate at Calcutta for Scheduled Offence under Sect ion 24 of the SEBI Act . The respondent conducted searches of the premises of the Rose Valley Group on 22.05.2014 and 23.05.2014, resulting into seizure of incriminating documents and Indian currency of Rs. 37.07 lacs. The respondent's action of search and seizure was challenged by the appellant by filing a writ petition before the High Court of Calcutta which was dismissed on 7.7.2014. 24. He further submitted that the investigation conducted by the respondent revealed that Rose Valley illegally and fraudulently collected public money from the general public in the State of West Bengal, As....
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....isonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond, unless the Public Prosecutor has been given an opportunity to oppose the application for such release. 27. The learned Solicitor General lastly submitted that 'money laundering' being an economic offence poses a serious threat to the National Economy and National Interest and committed with cool calculation and deliberate design with the motive of personal gain regardless of the consequences to the society. Hence, for Money Launderers 'jail is the rule and bail is an exception, which finds support from many landmark judgments of this Court. 28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of the PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money laundering and the Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute enacted by the Parliament for dealing with money laundering. Se....
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....12A which is to be construed as a scheduled offence as the description of offence against Section 24 of the SEBI Act mentioned under paragraph 11 of the Schedule to PMLA is part of Section 12A of the said Act. In this context it was submitted by the learned Solicitor General that PMLA being a Special Statute cannot be given restricted meaning while interpreting its provisions including the Schedule which is an integral part of this Act. PMLA has been enacted by the Parliament as per commitment of the country to the United Nat ions and having global dimensions and cannot be confined to national boundaries of our country. Moreover , its legislative intent has to be gathered from the plain reading of the language used in the provisions of the Act and the Schedule appended thereunder. Hence, there is no ambiguity that Section 24 of the SEBI Act is a scheduled offence under Paragraph 11 of the Schedule. The fact remains that Section 24 of the SEBI Act is inclusive in nature and also includes Section 12A within its ambit and scope. Further, on perusal of various offences listed in the Schedule in 28 Paragraphs , it could be seen that only penal provisions of the Statutes have been incorp....
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....as been pointed out before us. Hence, any observation or remarks made by us may cause prejudice to the case of both the sides. Therefore, we feel that it would be proper for us only to deal with the matter concerning bail. We note that admittedly the complaint is filed against the appellant on the allegations of committing the offence punishable under Section 4 of the PMLA. The contention raised on behalf of the appellant that no offence under Section 24 of the SEBI Act is made out against the appellant, which is a scheduled offence under the PMLA, needs to be considered from the materials collected during the investigation by the respondents. There is no order as yet passed by a competent court of law, holding that no offence is made out against the appellant under Section 24 of the SEBI Act and it would be noteworthy that a criminal revision praying for quashing the proceedings initiated against the appellant under Section 24 of SEBI Act is still pending for hearing before the High Court. We have noted that Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section ....
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....s grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of country. In Union of India v. Hassan Ali Khan, (2011) 10 SCC 235, this Court has laid down that what will be the burden of proof when attempt is made to project the proceeds of crime as untainted money. It is held in the said paragraph that allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PML Act, 2002. The same proposition of law is reiterated and followed by the Orissa High Court in the unreported decision of Smt. Janata Jha v. Assistant Director, Directorate of Enforcement (CRLMC No. 114 of 2011 decided on December 16, 2013). Therefore, taking into account all these propositions of law, we feel that the application for bail of the appellant should be seen at this stage while the appellant is involved in the economic offence, in general, and for the offence punishable under Section 4 of the PMLA, in particular. 37. We have further noted that the High Court at the time of refusing the....