TaxTMI 
TaxTMI 
2013 (9) TMI 1144
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....ion of Money-Laundering Act, 2002, he required the presence of the Writ Petitioners at his office on the dates and time specified. 3.The Summation of Facts: (i)According to the Petitioners, one Abinesha Babu through his brother Nagarajan in the capacity of Director to a Company called M/s. Al Tirven Steels Limited, lodged a complaint against A.M. Mohan (husband of the Writ Petitioner in W.P.No.14083/2013) and his friend Valluvan (Petitioner in W.P.No.14085/2013) before the Central Crime Branch, Egmore, Chennai with an allegation of impersonation and cheating and also that the Central Crime Branch, Egmore registered a case in Crime No.96 of 2010 under Sections 419, 420 r/w 34 I.P.C. on 25.02.2010. During the investigation, the Investigation Officer came to a conclusion that the sister of the Petitioner's husband N.Senthamarai (Petitioner in W.P.No.14084/2013), herself and A.M. Mohan (husband of the Petitioner in W.P.No.14083/2013) committed the crime and filed a final report in C.C.No.88 of 2011 on the file of learned Chief Judicial Magistrate, Egmore, Chennai who took cognizance and charges were also framed. In the meanwhile, A.M. Mohan (husband of the Petitioner in....
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....through a document dated 18.10.1999. iii. A Power of attorney in favour of the above said person dated 18.8.2000 was also executed and on the basis of power of attorney, various documents of the property were deposited by L.S.Abinesh Babu on 27.8.2000. iv. A letter of confirmation dated 17.8.2001 was signed by Mrs.Meerabai Dawson. All these documents are on India Non-Judicial Stamp Papers, but signed by Meerabai Dawson at Middlesex, London in the presence of a Commissioner of Oath of England and Wales. v. An affidavit of Meerabai was filed before this Court in OP No.93/1975 (in the matter of grant of Letters of Administration of Vedamma Rangachari mother of Meerabai Dawson). This affidavit was sworn on 21.8.2002 and was numberred as Application No.3804 of 2002 on which date Meerabai Dawson was not alive. vi. The property was substituted in an auction sale which was purchased by A.R. Housing Private Limited represented by Govindarajulu. Vii. One Sivananatha raj, Power of Attorney of Executors of the Will of Mrs. Meera Bai applied for Letters of Administration based on the Will which specifically excludes her property in India. ....
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....es to know the status of the said complaint filed by him through Right to Information Act. In the letter of the Reserve Bank of India dated 26.07.2010, it is categorically stated that 'In this connection we advise that your complaint on the captioned subject has been forwarded to the Directorate of Enforcement, New Delhi for investigation into the matter and necessary action at their end, if any'. (vi)That apart, in another letter dated 25.02.2013, the Reserve Bank of India, stated as follows: "In this connection we invite your attention to our letter No.FE/Co.FID/ 2077/10.51.000/2010-11 dated July 26, 2010, and reiterate that the case has been forwarded to the Director of Enforcement (DoE), New Delhi as RBI is not an investigating agency. We have no further information in the case. Your are therefore advised to follow-up with DoE for further information / status of the case". (vii)The said Mohan on the advise of the Reserve Bank of India sent various letters to the Directorate of Enforcement under the Right to Information Act. In its reply dated 12.12.2012, the Directorate of Enforcement stated that they are exempted from Right to Information Act....
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....spect of the already pending charge, a compound application is pending wherein only a formal order has to be passed by the trial Court. 4.Counter Averments of the Respondent: (i)Pursuant to the complaint dated 25.02.2010 received from S.Nagarajan, Director, M/s.Al Tirven Steels Limited, Chennai, the First Information Report in Crime No.96 of 2010 dated 25.02.2010 was registered except of the alleged offences under Sections 419, 420 read with Section 34 of I.P.C. 1860 as against A.M. Mohan (husband of the Petitioner in W.P.No.14083 of 2013) and A.Valluvan (Petitioner in W.P.No.14085/2013) by the Sub-Inspector of Police, Central Crime Branch, EDF Wing, Team IV, Emgore, Chennai 600 008. Later, a charge sheet was filed on 25.11.2010 before the Learned Additional Chief Metropolitan Magistrate Court, Egmore, Chennai. (ii)In the aforesaid complaint, it was mentioned that they are engaged in the real estate business in India and in the course of their business, they had entered into a Memorandum of Understanding with M/s.IVR Prime Urban Development Limited, for facilitating in the purchase of lands in Sandavellore, Chittoor and Papankuzhi Villages in Sriperumbudu....
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....4 I.P.C. (iv)The Police filed FIR in Crime No.96 of 2010 on 25.11.2010 for an amount of Rs. 2.44 Crores against the amount of Rs. 27 Crores as alleged by M/s.Al Tirven Steels India Limited, Chennai. Aggrieved of the same, M/s.Al Tirven Steels India Limited filed Crl.O.P.No.14032 of 2011 before this Court under Section 482 Cr.P.C. 1973 with a prayer to order for further investigation in Crime No.96 of 2010 by any other independent agency or more specifically the C.B.I. other than the Police Authority and also consequently, to frame additional charge sheet in C.C.No.88 of 2011. (v)This Court in Crl.O.P.No.14032 of 2011 on 28.09.2011 in para 18 has observed to the effect that 'Even according to the investigating officer, the investigation being incomplete and as it is claimed by the defacto complainant that he has got sufficient materials, this Court is of the view that further investigation must be ordered. At the same time, this Court feels that further investigation must be conducted by CBCID, Chennai, and accordingly it is ordered. A competent officer from CBCID, Chennai may be nominated to investigate further and to file additional final report'. ....
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....ing the Petitioners to appear on 09.05.2013, 07.05.2013 and 08.05.2013 respectively is very well within the competence of the Respondent in terms of Section 50(2) and (3) of the Prevention of Money-Laundering Act, 2002 in and by which the presence of Petitioners were required to give evidence or to produce records required for the purpose of investigation to ascertain the proceeds of crime under the Act. 5.Common Rejoinder contents of the Petitioner in W.P.No.14085 /2013 (for himself and on behalf of other Writ Petitioners in W.P.Nos.14083 & 14084/2013): (i)In the interim order passed by this Court in M.P.Nos.1 and 1 of 2013 in W.P.Nos.8383 and 8384 of 2013 dated 02.04.2013, the prosecution itself was stayed and as such, the question of the authority under the Prevention of Money-Laundering Act, 2002 proceeding on the basis of any crime or criminal proceedings would not arise. In the present case on hand also, already the investigation was completed and that was questioned before this Court in Crl.O.P.No.14032 of 2011 and this Court passed an order directing the conduct of further investigation by a different agency viz., C.B.C.I.D. and to file additional final report. ....
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....eptance of compounding is acquittal of the accused and there would be no question of any crime. (vi)In P.Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edition, 2005, the term 'Laundering' is described as follows: "term used to describe the investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into legitimate channels so that its original source cannot be traced." "Method of disguising the origin of funds by moving them rapidly from one account or country to another. It thus becomes a complicated business to trace their origins, movements and eventual destination. Counterfeit money, stolen money or money received for illegal activities laundered." (vii)In the instant case, the original source of money traceable and identified. Therefore, the source of income cannot be said to be out of any illegal business. Also, there is no concealment of source of income. Under these circumstances, there is absolutely no cause of action or jurisdiction to proceed against the Petitioners under the Prevention of Money Laundering Act, 2002 and the Respondent is trying to harass the Petitioners. Also ....
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....stating that she possessed 20 acres of land. Though the said Sundarambal had only 5 acres in her possession, A.M. Mohan (husband of the Petitioner in W.P.No.14083/2013) falsely represented that she possessed 20 Acres of land and obtained 5.09 Crores from the Petitioner/Proposed Respondent. (vi)After obtaining the aforesaid Demand Draft, the said A.M. Mohan along with Valluvan opened an Account with Karur Vysya Bank, Arumbakkam Branch, Chennai in Sundarambal's name with false details by impersonating one Senthamarai who is the Petitioner in connected Writ Petition No.14084/2013 and she is none other than the said A.M. Mohan's own sister. (vii)Further the modus operandi is that immediately on realisation of the Demand Draft, the amount was transferred to the account of one SRI YAAZHINI REALTOR, a company formed only for the purpose, in which the said A.M. Mohan and Mrs.Shobana, the Petitioner in the Writ Petition No.14083/2013 were the Directors of the company M/s.SRI YAAZHINI REALTOR. (viii)When the above irregularities, forgeries and cheating committed by the aforesaid persons came to light, the Petitioner/ Proposed Respondent lodged a complaint a....
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.... complaint is doing the mischief and there is an inter party rivalry and one endeavouring to clutch the other. Moreover, the purpose of adjudication by the authority concerned under the Prevention of Money-Laundering Act, 2002 is to secure the property. 9.Added further, instead of attachment and issuing of summons by the authority concerned, if a person gives security for one's, then, the provisions of the Prevention of Money-Laundering Act, 2002 are concluded and further, the investigation is not yet completed. Also that, if the security furnished by the Writ Petitioner in W.P.No.14083/ 2013 in respect of properties mentioned in the items 1 to 4 of the schedule of the common affidavit filed is accepted, then, the same shall remain a security till the prosecution is over and depending on the result of the prosecution, the Respondent, thereafter, can pass resultant orders. Therefore, in view of the Affidavit of Understanding furnished by the Petitioner in W.P.No.14083 of 2013 giving the items of property mentioned in the schedule of the property of the common affidavit filed as security, there remains nothing to be adjudicated in the Writ Petitions. Submissions of the Peti....
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....nt therein to monitor the case and file reports. This Court on 08.12.2010 passed an elaborate order while disposing of the original petition by giving direction to the Deputy Commissioner, City Crime Branch, Chennai to conduct an enquiry on the complaint of A.M. Mohan pending with the CCB Team 1, Chennai and initiate action if any cognizable offence is made out as per Section 154(1) of Cr.P.C. 15.The Learned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 draws the attention of this Court to the order passed by this Court dated 01.04.2011 in O.P.No.280 of 2010 between A.M. Mohan V. Al Tirven Steels Limited, Chennai- 40 and two others wherein this Court has appointed Justice A.Ramamurthi, a retired Judge of this Court as the sole Arbitrator to hear the disputes and adjudicate the same by passing a reasoned Award. 16.The Learned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 submits that a case of impersonation was alleged to the effect that for the balance of Rs. 2.44 Crores drawn in the form of demand drafts favouring Sundarambal were credited in Karur Vysya Bank, Arumbakkam Branch with the assistance of Senthamarai, Mohan's Sister into the Savings Ba....
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....issued by the Respondent should mention the criminal case number and if they mentioned the criminal case in the summons, then, it would be the stand of the Writ Petitioner that the matter was stayed by the Hon'ble Supreme Court. Further, as per Article 20(3) of the Constitution of India, no one can self-incriminate himself and if a person is not named as an accused, then, the summons can be issued but when he is named as an accused, then, the summons cannot be issued. 20.The Learned Senior Counsel for the Petitioner in W.P.No.14085/2013 contends that an offence under Section 420 I.P.C. can be compounded and if a Court of Law allows the compounding application, then, as per Section 320 (8) of Cr.P.C., it would have the effect of acquittal of the criminal main case and if that would be the position then, no purpose would be served for issuance of summons by the Respondent. 21.The Learned Senior Counsel for the Petitioner in W.P.No.14085 of 2013 submits that Section 8(4) of the Prevention of Money-Laundering Act, 2002 refers to the situation where the provisional order of attachment made under sub-section (1) of Section 5 has been confirmed under sub-section (3), the Directo....
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....rt in V.Datchinamurthy and another -vs- Assistant Director of Inspection (Intelligence), I.T.Department and another reported in 1984 Vol.149 I.T.R. 341, set out the purpose of the power conferred on an Income-tax Officer under Sections 131 and 132 of the Income Tax Act. In page 356, V.Sethuraman, J. speaking for the Bench, had observed as follows:- ''It is thus manifest that there is great latitude allowed to the ITO in the collection of materials and he does not act as a court at that stage. There are no two parties before him, and the procedure in the adversary system of proceedings cannot be applied to him. However, the ITO, before he uses the materials so collected, is bound to give the necessary opportunity to the assessee to test the evidence, to adduce any evidence in rebuttal and to explain the facts that appear against him. Thus, it is clear that the ITO cannot be asked to put on, or be thrust with, the garb of a court, even at the stage of collection of evidence. There can be no reasonable apprehension of the ITO not utilising the favourable materials appearing in such evidence. The Supreme Court has examined this aspect in Suraj Mall Mohta and Co. -vs- A.V.Visvan....
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.... it was stated as follows:- Para 11. .'' Moreover, if the summons is taken into consideration it is stated therein that the petitioner's attendance is necessary to give evidence and/or to produce documents in an investigation being made by the respondent under the FERA Act. So far as the documents mentioned are concerned, it is mentioned the petitioner's passport, petitioner's account books relating to his accounts in India and abroad and his property details. If we take into consideration the required documents mentioned in the schedule, the enquiry relates only to the petitioner in respect of his involvement in some transaction under the FERA Act. If the investigation relates to any other person, then the authorities would have mentioned the documents relating to the concerned third parties or the transaction between the petitioner and those third parties. Hence, I am of the view that the non-mentioning of the (nature) of investigation and the purpose of the requirement of documents do not vitiate the summons in any manner." Also in the aforesaid Judgment, in paragraph 24 to 27, it is mentioned and laid down as follows: "24. In this context, it is ....
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....of the Act on the ground that they violate Articles 14 and 21 of the Constitution. Once we have held, as the High Court did, that the provisions are constitutional, the basis on which the writ of prohibition is sought for by the appellants disappears. It is settled by the decisions of this Court that a writ of prohibition will issue to prevent a tribunal or authority from proceeding further when the authority proceeds to act without or in excess of jurisdiction; proceeds to act in violation of the rules of natural justice; or proceeds to act under a law which is itself ultra vires or unconstitutional. Since the basis of the claim for the relief is found not to exist, the High Court rightly refused the prayer for the issue of a writ of prohibition restraining the authorities from continuing the proceedings pursuant to the notices issued. As indicated by this Court in State of U.P. -vs- Brahm Datt Sharma (1987) 2 SCC 179 when a show-cause notice is issued under statutory provision calling upon the person concerned to show cause, ordinarily that person must place his case before the authority concerned by showing cause and the courts should be reluctant to interfere with the notice at....
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....ear 2002 to prevent money-laundering and to provide for attachment and confiscation of property derived from or involved in money-laundering and for other incidental matters connected thereto. 27.The Learned Counsel for the Respondent aptly points out the order in W.P.No.530 of 2011 dated 05.04.2011 between G. Srinivasan V. The Chairperson, Adjudicating Authority under PMLA, New Delhi and three others whereby and whereunder, in paragraphs 18, it is observed as follows: "18. Before parting with the case, it is necessary to refer to the observations made by the Supreme Court in K.K. Baskaran's case (cited supra), where the Supreme Court emphasized the necessity to have laws to protect the people from money laundering and swindlers." Definition of Money-Laundering: 28.It is to be noted that Section 2(p) of the Prevention of Money-Laundering Act, 2002 defines 'Money-Laundering' has the meaning assigned to it in Section 3 of the Act. Section 3 of the Act speaks of 'Offence of Money-Laundering' which runs as follows: "Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in ....
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....hat such property was proceeds [vide Review of FATE Anti-Money-Laundering Systems and mutual evaluation procedures 1992-1999. 35.The money laundering involves disguising financial assets so that they can be used without deduction of illegal activity that produced though money laundering, the launderer transforms the money proceeds derived from criminal activity into funds with an apparently legal source (vide Finance Intelligence unit, in India). Procedure to be adopted by an Adjudicating Authority: 36.Adjudicating Authority is to adopt the procedure of following the Principles of Natural Justice. Only to prevent miscarriage of Justice, the purpose of following Principles of Natural Justice is emphasised, as opined by this Court. 37.As a matter of fact, (i)A quasi-judicial authority ought not to make any decision adverse to a party without affording an opportunity of meeting the allegations made against him. (ii)The party whose rights are to be affected should be provided with the information upon which the action is raised and the affected party should have reasonable notice of the case which he has to meet/face. Of course, an opportunity is to be provided to the affec....
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....g heard' is a cardinal Principal of Natural Justice and the authority is to take into account all relevant materials placed on record by the parties concerned before him. 41.The authority in a given case may come to a resultant conclusion that the property attached/retained is not the property involved in money-laundering, in which event, he is to vacate the order of attachment and order return of property. Aerial view of some provisions of Prevention of Money-Laundering Act: 42.A perusal of the ingredients of the Prevention of Money-Laundering Act, 2002 shows that the authority not below the rank of Assistant Director is enjoined to summon any person whose attendance such authority considers necessary for the purpose of giving evidence or to produce any records during the course of investigation or proceedings under this Act. The persons so summoned are not only bound to attend any person or to authorised agents if permitted but they are bound to state the truth upon any special representative or they are examined or furnished statements and also to produce such documents as may be required. Such proceedings shall be deemed to be a judicial proceeding within the meani....
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....it concerns the division of proceeds into smurfing so as to make movements thereof less suspectable. (b)In layering, the funds introduced in the financial system are rotated, transferred, remixed, retransferred in a repeated fashion. The purpose of 'laying' is to distance the fund from the origin so as to make it difficult to trace the origin difference. (c)In integration stage, the money-laundering is concerned itself with successful merging into the legitimate finance stream. 50.It is not out of place for this Court to make a significant mention that money-laundering offence primarily springs from 'Proceeds of Crime'. There is a predicate offence under each activity of money-laundering. Further, the Act speaks of the reporting authority to furnish information of such provided transactions to the Director within the prescribed time. Added further, the Prevention of Money-Laundering Act imposes an obligation on the reporting entity which term covers Banking, Country Financial Institutions, Intermediary and individual carrying on Designated Business or Profession to maintain record of transactions prescribed under the Act. The aforementioned measures are preventiv....
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....er the Prevention of Money-Laundering Act with a view to ascertain the proceeds of crime be involved in a Evil Act of 'Money-Laundering'. The charge sheet laid down by the Police in C.C.No.88 of 2011 relates to investigation in respect of predicate offences and not for the proceeds of crime. The competent and appropriate authority is the Respondent/Directorate of Enforcement who is authorised to trace and attach the proceeds of crime under the Prevention of Money-Laundering Act. 55.Also, a plea is taken on behalf of the Respondent that the predicate offences investigation cannot be compounded in regard to the investigation made under Prevention of Money-Laundering Act. The ultimate object of Prevention of Money-Laundering Act is only to ascertain the proceeds of crime involved in money-laundering and subsequent attachment and confiscation of the same. More importantly, Section 3 and 4 of the Prevention of Money-Laundering Act deal with 'Offence of Money-Laundering' and 'Punishment for Money-Laundering'. Furthermore, as per Section 48(c) of the Prevention of Money-Laundering Act, the Assistant Director is the proper authority to investigate the offences re....
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....travention of the provisions of Section 10 of FERA, 1947 and that penalty is attracted Under Section 23(1)(a) as soon as contravention of the statutory obligation contemplated by Section 10(1)(a) is established. The breach of a "civil obligation" which attracts "penalty" under Section 23(1)(a) FHRA, 1947 and a finding that the delinquent has contravened the provisions of Section 10 FERA, 1947 would immediately attract the levy of "penalty' Under Section 23, irrespective of the fact whether the contravention was made by the defaulter with any "guilty intention" or not. Therefore, unlike in a criminal case, where it is essential for the "prosecution" to establish that the "accused" had the necessary guilty intention or in other words the requisite "mens-rea' to commit the alleged offence with which he is charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of Section 10 of FERA, would be discharged where it is shown that the "blameworthy conduct" of the delinquent had been established by wilful contravention by him of the provisions of Section 10, FERA, 1947. It is the delin....
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....nto India without any permit from the Reserve Bank of India on which allegations alone the gold stood already confiscated by the authorities under the Sea Customs Act during the confiscation proceedings, he was being punished twice for the same offence which was not permissible in law in view of Article 20(2) of the Constitution. The High Court was of the opinion that the appellant could claim protection of Article 20(2) only if he was the owner of gold which had been confiscated. The Chief Presidency Magistrate was, therefore, directed to first determine the question of fact. After recording some evidence the Chief Presidency Magistrate returned a finding that the appellant was the owner of gold. The High Court, however, reversed the finding and sent the case back to the trial court for its trial in accordance with law after refusing the benefit to the appellant of the protection under Article 20(2) of the Constitution. By special leave the appellant filed an appeal in this Court. It was in this background that the Constitution Bench proceeded to determine whether the appellant could be said to have been prosecuted when proceedings for confiscation were taken by the Sea Customs Au....
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....es are not a judicial tribunal and the adjudging of confiscation, increased rate of duty or penalty under the provisions of the Sea Customs Act do not constitute a judgment or order of a Court or judicial tribunal' necessary for the purpose of supporting a plea of double jeopardy. It therefore follows that when the Customs Authorities confiscated the gold in question neither the proceedings taken before the Sea Customs Authorities constituted a prosecution of the appellant nor did the order of confiscation constitute a punishment inflicted by a Court or judicial tribunal on the appellant. The appellant could not be said by reason of these proceedings before the Sea customs Authority to have been "prosecuted and punished" for the same offence with which he was charged before the Chief Presidency Magistrate, Bombay in the complaint which was filed against him Under Section 23, Foreign Exchange Regulation Act." 11.The Constitution Bench then laid down that though the administrative authorities functioning under the Sea Customs Act had the jurisdiction to confiscate gold, illegally brought into the country, and levy penalty on the defaulter, none the less the auth....
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....f 'Double Jeopardy'. However, there should be not only a prosecution but also punishment in the initial stage in order to operate as a fetter to the second prosecution and punishment for the same offence, in the considered opinion of this Court. 58.Also that, the adjudication proceedings initiated against the Petitioners under the Prevention of Money-Laundering Act by requiring them to appear on the specified dates through summons cannot attract the ambit of Article 20(2) of the Constitution viz., the plea of 'Double Jeopardy' since the object of this Prevention of Money-Laundering Act is to ascertain the trail of Evil act of money laundering. 59.To put it succinctly, the initiation of proceedings like issuance of summons etc. in Prevention of Money-Laundering Act are self-contained, in-built and independent procedure mainly to prevent the act of money-laundering and connected activities. Furthermore, the Respondent has issued only summons dated 10.04.2013 to the Petitioners and the issuance of summons cannot be catagorised as an act of prosecuting the Petitioners twice. As such, the plea of 'double jeopardy' taken on behalf of the Petitioners is not a....