TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 1144
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....ired 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 W.P.No.14083/2005) filed O.P.No.280 of 2010 before....
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.... 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. Viii. A.R. Housing Private Limited filed an application for revocation of Letters of Administration and this Court dismissed the....
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....'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. The enforcement directorate instead of investigating the criminal act of accused, annoyed over the letter of A.M. Mohan, with a malafide intention and ulterior motive diverted themselves and under the pr....
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....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 Sriperumbudur Taluk, Kancheepuram District. Further, A.M. Mohan, Lawyer, by Profession and Valluvan (Petitioner in W.P.No.14085/2013) engaged in real estate marketing business offered their services in purchase of lands on their behalf for which they agreed and had en....
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....d 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'. (vi)Being dissatisfied with the order passed in Crl.O.P.No.14032 of 2011 on 28.09.2011 the Petitioners preferred Special Leave to Appeal (Crl) No.8160 of 2011 before the Hon'ble Supreme Court of India with prayer to stay and quash the order so passed. However, the Petitioners o....
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....rds 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. The position of law is that when the investigation was not completed and also when once the order of this Court in Crl.O.P.No.14032 of 2011 was stayed by the Hon'ble Supreme Court, it tantamount to the investigation and the final report were stayed. (ii)The trial Court where the subject matter of criminal proceedi....
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....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 the person who can be said to be aggrieved viz., IVR Prime Urban Development Limited, in the charge sheet, as per the transaction in question, has admitted that the said amount became payable to the first accused as his facilitation charges and incidental expenses through one Sundarambal for the land transaction and other incidental expenses. (viii)In view of the facts set out he....
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....kkam 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 against the said persons and a case was registered by the Inspector of Police, Central Crime Branch Team IV, Egmore, Chennai in Crime No.96 of 2010. The said A.M. Mohan and other accused viz., Valluvan filed Crl.O.P.No.8575 of 2010 and 8580 of 2010 before this Court to quash the aforesaid FIR and this Court on 29.07.2010 was pleased to dismiss the said petitions. (ix)Subsequently, a charge sheet in C.C.No.88 of 2011 was also filed against the a....
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.... 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 Petitioner in W.P.No.14085 of 2013: 10.The Learned Senior Counsel for the Petitioner in W.P.No. 14085 of 2013 contends that the summon in question is to be quashed in so far as the Writ Petitioner in W.P.No.14085 of 2013 is concerned, since the same is premature and the Respondent cannot take cognizance under Section 45 of the Prevention of Money-Laundering Act, 2002 because there is no complaint. But the Respondent is entitled to take action based on suo moto complaint. ....
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....tention 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 Bank Account number as stated earlier and further, the amount was immediately transferred to the current account number with the same Bank in the name of M/s.Sri Yaazhini Realtors (P) Limited where Mohan and his wife Shobana are the Directors and Sundarambal recently died one year back and she had not given the complaint as an aggrieved person and the transaction related to the year 2007, she had not complained and in fact, IVCC like Sundarambal has not lodged the complaint. 17.Accor....
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....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 Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under Section 5 or frozen under sub-section (1A) of Section 17, in such manner as may be prescribed and after all, the Respondent/Directorate of Enforcement is only concerned with securing the property. Contentions of the Respondent: 22.Repudiating the submissions of the Learned Senior Counsel for the Petitioners, the Learned Counsel for the Respondent strenuously contends th....
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....arties 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.Visvanatha Sastry (1954) 26 ITR 1, at page 13 and pointed out the rights available to the assessee under the I.T.Act as contrasted with the rights available under the Taxation on Income (Investigation Commission) Act, 1947 (Act No.XXX of 1947). It was pointed out that while in the proceedings under Act No.XXX of 1947, the assessee would be entitled only to get copies of that portion of the materials, which were brought on record and which were going to be used against him, the portion of the material which was in his favour ....
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....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 necessary to refer to Section 13(2) of the FEMA. The explanation to Section 13(2) defines ''property" and Section 13(2)(c) deals with a property which has resulted out of the conversion of that property. Under the said sub-section, the adjudicating authority, adjudging the contravention under sub-section (1) to Section 13, if he thinks fit then in addition to any penalty, which he may impose for such contravention, direct the property in respect of which the contravention has taken place to be confiscated to the Central Government. T....
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....w 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 this stage unless the notice is shown to have been issued palpably without any authority of law. On the facts of this case, it cannot be said that these notices are palpably without authority of law. In that situation, the appellants cannot successfully challenge the refusal by the High Court of the writ of prohibition prayed for by them." 27. Therefore, the attempt by the petitioner to stall the summons issued by the respondent has to be necessarily rejected. Accordingly, the writ petition will stand dismissed. However, there will be no order as to ....
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....he 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 any process or activity connected (Subs. By Act 2 of 2013, sec. 3, for "with the proceeds of crime and projecting" (w.e.f. 15.2.2013, vide S.O. 343(E), dated 8.2.2013) [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." 29.From the aforesaid definition of 'Offence of Money-Laundering' mentioned in Section 3, the terms 'Money Laundering' can be said to be any process or activity connected with the proceeds of crime and projecting or claimi....
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.... 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 affected party which must be real, reasonable and substantial too. (iii) The affected party should have the opportunity of letting in/adducing all manner of evidence which he relies upon. 38.At the stage of adjudication 'Reason to believe' required to be entertained is that only any individual has committed an offence under Section 3 of Preventive of Money-Laundering Act or is in possession of the proceeds of crime the adjudication authority is required to be satisfied that in respect of the Proceeds of Crime, Offence of Money-Laundering is committed or a person is in possession of proceeds of c....
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....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 meaning of Section 193 and 228 I.P.C. 43.Section 23 of the Prevention of Money-Laundering Act speaks to the effect that 'If there are two or more inter-connected transactions and atleast one is proved to be involved in money-laundering, it shall presume that the remaining transaction or transaction form part of such inter-connections. In fact, the term 'inter-connected transactions' is not defined under the Prevention of Money-Laundering Act, 2002. 44.Section 24 of the Prevention of Money-Laundering Act, throws a burden on the accused in respect of the defence that may be projected like that the proper....
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....rime'. 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 preventive in character with a view to get hold of the 'Proceeds of Crime' etc. 51.Money laundering is global phenomena that affects all countries in various degrees. The presumption can be employed in adjudication proceedings mentioned in Section 8 of the Prevention of Money-Laundering Act as well for the trial of the money-laundering offences. As such, the presumption is attracted in regard to the trial proceedings before the Special Court for an offence under Section 3 of the Act. The Adjudicating Authority or the Court will have to first come to the conclusion that atleast one of the inter-connected transactions is proved by....
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....tion 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 relating to prevention of money-laundering. 56.At this stage, this Court pertinently points out the decision of the Hon'ble Supreme Court in Director of Enforcement V. M/s.MCTM Corporation Private Limited and others, AIR 1996 Supreme Court 1100 wherein it is held as follows: "The proceedings under Section 23(1)(a) FERA, 1947 are "adjudicator" in nature and character and are not 'criminal proceedings'. The officers of the Enforcement Directorate and other administrative authorities are expressly empowered by the Act to "adjudicate' only. Indeed they, have to act "judicially" and follow the rules of natural justice to the extent applica....
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....hat 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 delinquency of the defaulter itself which establishes his "blameworthy" conduct, attracting the provisions of Section 23(1)(a) of FERA, 1947 without any further proof of the existence of "mens-rea". Even after an adjudication by the authorities and levy of penalty Under Section 23(1)(a) of FERA, 1947, the defaulter can still be tried and punished for the commission of an offence under the penal law, where the act of the defaulter also amounts to an offence under the penal law and the bar under Article 20(2) of the Constitution of India in such a case would not be attracted. The failure to pay the penalty by itself attracts 'prosecution' under Section 23F and on conviction ....
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....wner 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 Authorities for if it was found that the appellant had been prosecuted when proceedings were taken by the Sea Customs Authorities to confiscate gold, there was no scope left for the argument that he had not been punished by the confiscation of gold and the option given to him to pay fine in lieu of such confiscation. The Court examined in detail the ambit, scope and applicability of the principle of "double jeopardy" in the light of the fundamental right guaranteed under Article 20(2) of the Constitution. The Court opined (para 12 of AIR): "it is clear that in order that the protection of Article 20(2) be invoked by a citizen there must have been a prosecution and punishment in respec....
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....osecuted 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 authorities were not trying a criminal case but deciding only the effect of a breach of the obligations by the defaulter under the Act. On a parity of reasoning what holds true for the adjudicator machinery under the Sea Customs Act holds equally true for the administrative or adjudicator machinery, designed to adjudge the breach of a civil statutory obligation and provide penalty for the said breach, under the FERA, 1947, whether the breach was occasioned by any guilty intention or not is irrelevant. 12.In "Corpus Juris Secundum" volume 85, at page 580, paragraph 1023, it is stated thus : "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the ....
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....tc. 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 acceded to by this Court. Final Disposition: 60.In the light of foregoing detailed discussions and on appreciation of the entire gamut of the facts and circumstances relating to the subject matters in issue, this Court comes to an inevitable conclusion that the present Writ Petitions filed by the Writ Petitioners are not maintainable because of the simple reason that through the summons dated 10.04.2013 they were directed to appear before the Respondent/Assistant Director, Directorate of Enforcement, Chennai with records mentioned therein for the purpose of enquiry/ investigation under the Prevention of Money-Laundering Act to ascertain the proceeds of crime, in the considered opinion of this Court. The proceedings under the Prevention of Money....