TaxTMI 
TaxTMI 
2016 (1) TMI 907
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....t applications which producing relevant documents collected by the authority filing of the above referred case. 3. The facts of the case arose from the record are as under. It is a case of the prosecution that in pursuance of the specific intelligence recording the operation of large scale into "Hawala Racket" in online international cricket betting through UK based website "Betfair.com" by A1 Girishbhai Patel and his associates and A2 Kiran Mala premises rented farm house owned by Jitendra Shah and taken on rent in the name of driver Nagji Rabari situated at village Sikandarpur at Vadodara was raied and searched on 19th March, 2015 under Section 37 of the Foreign Exchange Management Act (FEMA), 1999 which resulted into recovery as well as seizure of incriminating documents, articles and digital records etc. 4. The accused were indulging in the acts of cricket betting at that time. The E.D. also seized literatures of international cricket betting. It is further case of prosecution that, during the course of initial investigation, other material indicated commission of offences under the Indian Penal Code so, in turn the information along with the documents including statem....
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....her the case of E.D. that, several summons of appearance were issued under P.M.L. Act, but the accused did not turn up. Therefore, the complainant-E.D. filed Criminal Misc. Application No.565 of 2015 before the Designated Court, under P.M.L. Act, 2002 on 09.04.2015 and the learned Designated Judge, Ahmedabad Rural by his order dated 10.04.2015 issued nonbailable warrants against 4 accused to be executed through officers of E.D. 8. From the record produced along with the petition that, the petitioner came to know that about registration of FIR against him by Kishanwadi Police Station, under Indian Penal Code offences, therefore, the petitioner surrendered themselves before the learned Judicial Magistrate, First Class on 16.04.2015. In that case, the petitioners were remanded and were in custody. 9. It also appears form the record that, on an application of the E.D., the Desognated Court issued transfer warrants and the learned Judicial Magistrate First Class, Vadodara City 3rd Court handed over custody of the present petitioners to the E.D. on 22.04.2015. Thus, the petitioners came to be arrested by E.D. in connection with the present E.D. offence on 22.04.2015. 10. From th....
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.... by the applicant herein. C) That it is pertinent to mention here that pursuant to the search that was conducted by the Enforcement Directorate on 19.03.2015 under Section 37 of FEMA, 1999, the said matter was referred to the local Police Station and they registered a case bearing No.IInd C.R.No.222 of 2015 under the provisions of Section 4 and 5 of the Gambling Act, and Section 65 and 66 of the Information and Technology Act, 2000. D) That it was during the course of investigation of the case IInd C.R.No.222 of 2015 that it was found that about 39 SIM cards were procured by the persons involved in the case IInd C.R.No.222 of 2015 on the basis of false and forged documents, pursuant to a second FIR bearing No.I CR No.85 of 2015 was registered. E) That during the searches conducted on 19.03.2015, the applicant herein was not present at the spot and same is clear from FIR No.222 of 2015 where his name does not figure in the said FIR. However, it is still a mystery that how the name of the present applicant got roped in case No.I CR 85 of 2015. The first CR No.85 of 2015 was registered under Section 120B read with Section 418, 419, 420, 467 & 471 of the IPC,....
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....n, purchase of various properties by Shreeji Buildcon and Shreeji Corporation, is having the knowledge that Ganesh Patel, Kiran Mala are bookies engaged in cricket betting for the last 15 years, existence of a firm in the name and style of Maruti Ahmedabad engaged in the business of cricket betting and he is doing the cricket betting in the name of JK and various accounts of settlement in respect of the cricket betting. Learned Counsel Mr Panchal has contended that as per the statement of original accused No1 it is disclosed that both are main masterminds and leaders . From the statement of accused No.3 he is shown simply as a partner in Shreeji Buildcon. From the statement of accused Nos.5, 6, 7, there is no allegation leveled against applicants. Mr. Panchal has further drawn attention from the coordinate bench of this Court who has granted bail of two co-accused in Criminal Misc. Application (For regular bail) No. 18711 of 2015 and 14446 of 2015. 14. As per the case of prosecution and complaint filed by E.D. is to the effect that A1 to A4 carried out illegally online cricket betting racket using mobile phones and sim cards which were obtained by forging signatures of differ....
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....s are concerned, they are vague and general in nature. In their submissions, Mr. Panchal and Mr. Shah have invited the attention of the Court to the chargesheet submitted by the Police in Indian Penal Code offences against the accused and has argued that M/s. Maruti Ahmedabad is projected as oral partnership firm. Learned counsels have also argued that there cannot be any oral partnership firm. Mr. Panchal has also submitted that, there is no material to show that M/s Maruti Ahmedabad is in existence. 18. Learned counsels have also argued that, merely, because the petitioners are a friend of Accused No.1 and 2, he is falsely involved in the present offence. Learned counsels have also canvassed the argument that, petitioners are in the business of partnership in the name and style of Shriji Corporation and Shriji Build Cons. It is also vehemently argued by counsels that, the petitioners have no connection with the activities carried out by Accused No.1 and 2 and the petitioners have no connection with the proceeds of crime. 19. By relying on the chargesheet submitted by Police in Indian Penal Code offences. learned counsels for both the applicants have also argued that, in the....
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.... Ld counsels have also at the same time argued that, sim card for cricket betting would not by itself generate proceeds. Ld counsels have also submitted that, the applications form for getting sim card are not valuable security. 23. It is submitted that main offence which is committed by the accused are gambling and other offences are ancillary in nature. Lastly, it has been argued by both the counsels that maximum punishment under the P.M.L. Act, which is provided is 7 years so considering from this point of view also, the accused persons may be enlarged on bail. Ld counsels have also relied on Section 3 of P.M.L. Act and argued that, basic ingredients of the offences are not made out against the present petitioner. Both the Ld. counsels have also submitted that, no incriminating material is found from the house of both present petitioners. It is further argued by the counsels that, no monetary loss is caused to mobile provider company and no liability of any person is created by using mobile sim cards. It has also been submitted that, there is no material available on record to show any meeting of mind or any agreement by the accused for the purpose of hatching any criminal co....
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....te has submitted that even otherwise considering the gravity of the offence and the maximum punishment provided under the PMLA Act, for bail is concerned, Court may not use its powers under Section 439 of Code. Ms. Patel has also relied upon the judgment order of the coordinate bench of this Court passed in Criminal Mis Application (Regular Bail) No.17000 of 2014 (Afroz Fatta Case) and also submitted that Section 45 of the PMLA Act is also required to be considered. She has also relied upon the judgment order of Hon'ble Apex Court passed in the case of Union of India VEersus Hasan Ali Khan , 2011 (10) SCC 235, and 2015 (O) AIGELHC 232328, Rakesh Kothari Vs Deputy Director Enforcement (Order of Coordinate bench of this Court ) and Order of Hon'ble Apex Court passed in Same party case in Writ Petition (Criminal) No.(S) 61/2015 and (2013) 7 SCC page 466 Nimma Gadda Prasad Vs CBI and 1999 (O) GHELSC 30069 State of UP Vs O.P.Sharma and AIR 1970 SC 940 and 1995 Supp. (4) SCC 663. Ms. Patel has further drawn attention from the provision of Section 17, Section 27, Section 24 and 50 and argued that statements of present applicants-accused and other co-accused are produced on record and p....
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....r (ii) is in possession of any proceeds of crime involved in money-laundering, Or (iii) is in possession of any records relating to money-laundering, 2[or] 3[(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or 4[property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: 5[Provided that ....
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....y shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in subsection (1) shall be required for search under this subsection. 3[(4) The authority seizing any record or property under subsection (1) or freezing any record or property under subsection (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under subsection (1) or for continuation of the order of freezing served under subsection (1A), before the Adjudicating Authority. Section 23 reads as under. 23. Presumption in interconnected transactions.-Where money laundering involves two or more interconnected transactions and one or more such transactions is or are proved to be involved in money-laundering,....
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....tain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not- (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Director. 28. It is also argued by learned Counsel of applicant in connection of reply of argument of Ms. Patel that in the case of "Unlawful Activities Prevention Act, 1967" Section 2(g) of the said Act defines 'proceeds of terrorism' as all kinds of properties which have been derived or obtained from commission of have been acquired from funds traceable to a terrorist act, irrespective of person in whose name such proceeds are standing or in whose possession they are found, also gives a very restricted meaning to the word proceeds of terrorism as related to properties having nexus with terrorist activity. That the advanced law Lexicon while differentiating the words 'derived', 'traced' and 'deducted' has stated that the act of deriving is immediate and direct, that o....
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....ts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering". Hence, the main fulcrum of the offence in the present case is "proceeds of the crime" and since in the present case there are no "proceeds of crime". Hence there is no offence under Section 3 of PMLA. That the respondent No.2 is harping upon Section 23 and 24 of the PMLA from drawing a presumption against the present applicant. For the applicant of the said Section it is necessary that the "proceeds of crime" should exist and since in the present case there is no "proceeds of crime" as mentioned above against the applicant herein, hence, the question of applicability of Section 23 and 24 of the PMLA does not arise. The respondent No.2 is trying to place the "cart before the horse". 29. I have carefully perused provision of section 17, section 23, 24, 25 and section 50 and its applicability under PMLA Act and also perused various judgments cited by both the parties. I have also peru....
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.... Section 2(1)(U) of the Act defines "proceeds of crime" and under Section 105A(C) defines proceeds of crime as under: "any property derived or obtained directly or indirectly, by any person as a result of criminal activity (including crime involving currency transfers) or the value of any such property". As per the provision of Section 65 of PMLA Act to application of the provision of Criminal Procedure Code, 1973, it is true that word (proceeds of crime) as defined in Act has a restrictive and narrow meaning under Section 105A of CR.P.C meaning of "proceeds of crime" and in a result of criminal Acts related to schedule offence. The Hon'ble Supreme Court while giving the meaning to the word 'derived from' in various provisions of the Income Tax Act has given it a very narrow and restrictive meaning. That the Hon'ble Supreme Court, in the case of Liberty India Versus CIT (2009) 9 SCC 329 has held that 'derived from' is narrower than 'attributed to' and the Parliament intended to cover sources not beyond the first degree source. There is a requirement of direct nexus and immediate source or first degree source. Similarly in the case of CIT Vs Sterling Food Mangalore....