TaxTMI 
TaxTMI 
2017 (2) TMI 1234
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....A against them and essential for taking cognizance and proceeding against each of the petitioners. The PMLA Complaint, subsequently filed two Supplementary Complaints Nos. 4/2014 and 9/2015 dated 29.10.2014 and 27.08.2015 respectively, Charge-Sheet filed against others in the Scheduled Offence and statements recorded under PMLA before and even after cognizance are placed by the petitioners on record amongst other documents to buttress this position. 2. It is undisputed fact that none of these petitioners are arraigned as accused in the Scheduled Offences in which after investigations Charge Sheet has been filed. Therefore, trial of each of these accused petitioners is sought only on the alleged commission of the offence of money laundering as prescribed under Section 3 of PMLA. Now, it is settled position of law that offence under PMLA is a distinct offence as compared to the Scheduled Offence as held by a Division Bench of this Court vide Judgment dated 16.1.2016 in Rakesh Manekchand Kothari v. Union of India in SCRA 4496 and 4672 of 2014. Whereas the generating or deriving "proceeds of crime" from the Scheduled offence is not offence punishable under PMLA, but knowingly projecti....
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....aking foreign remittance through bank accounts with ICICI Bank, Surat. From the information so received it has come to the notice that within a span of two months i.e. January and February, 2014 remittance worth more than Rs. 1000/- crores against fake import documents viz. bills of entry and invoices were made from the said accounts to Hongkong and Dubai. The customs Department, Surat have confirmed that the bills of entry in question did not originate from their offices. Thus, the said bills of entry etc., against which the said remittance were attached were apparently fake. 7. He has also submitted that initially investigation was carried out under the FEMA, 1999. Enquiries revealed that Shri Afroz Mohammed Hasanfatta alongwith Shri Madanlal Jain and Shri Bilal Haroon Gilani are involved in this racket of sending remittances outside India on the basis of forged bills of entry. 8. He has further submitted that from Shri Madanlal Jain's whatsapp message to Shri Afroz Mohammed Hasanfatta is about the companies, namely, "Aarzoo Enterprises, Vandana & Co., M.D. Enterprises, Millenium & Co., Maruti Trading. The investigation has revealed that the said companies were used in this....
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....t M/s. Natural Trading Company and M/s. Gangeshwar Mercantile Pvt. Ltd., did not exist at the given addresses. 12. He has further submitted that Shri Madanlal Jain his statement has denied having arranged any unsecured loan to Shri Afroz Mohammed Hasanfattaor Shri Jafar Mohammed Hasanfatta from M/s. Natural Trading but stated that the amounts were paid to them for their role in the illegal foreign remittances sent abroad. Out of this amount of Rs. 16.31 crores some amounts were transferred by Shri Afroz Mohammed Hasanfatta to his family members and others for the purpose of investment. 13. He has also submitted that Shri Jafar Mohammed Hasanfatta has given instructions to Shri Madanlal Jain for transferring funds to the ICICI Bank accounts from which funds were ultimately remitted to UAE and Hong Kong on the basis of forged bills of entry. He has received the proceeds of crime in his bank account and made investments in the stock market. He has He has also made two payments of Rs. 55,68,750/- each on 5.2.2014 and 6.2.2014 to M/s. Aalay Developers as advance for books of two flats in Mumbai. He has made payment of Rs. 30 lacs to Shri Abdul Karim Jaka on 24.3.2014. Thus, he has kno....
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....ingly involving himself in the process of money laundering. 18. He has submitted that provisional attachment Order (PAO) No. 1 of 2014 dated 17.7.2014 was issued whereby properties worth Rs. 8.35 crores belonging to Shri Afroz Mohammed Hasanfatta and his family members were attached including those of the present applicant Nos. 1 to 4. He has submitted that another PAO No. 4 of 2015 dated 31.3.2015 was issued whereby property valued at Rs. 1.39 crores in the name of applicant No. 2 Ahmed Mohammed Hasanfatta was attached. Both these PAOs have been confirmed by the adjudicating authority, PMLA vide orders dated 7.11.2014 and 21.7.2015 by holding that the properties are involved in money laundering. 19. He has submitted that bank accounts in which the petitioners received payments and made further payments were all in their names and they were signatories having power to operate the accounts. It is worthwhile to note that none of them had slightest hesitation in allowing their accounts to be used as a transit point for further transfer of the proceeds of crime. Thus they have helped in the process of layering and thereby they are involved in the process of money laundering. 20. He ....
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....funds and thus the provisions of Sections 23 and 24 of the PMLA, 2002 will apply. Lastly he has prayed to dismiss the revision application. 25. Both sides have made lengthy arguments on factual and legal issues including the issue of maintainability of the instant Revision Petition. I have carefully perused the records and have considered the rival submissions. 26. Delay in invoking Revisionary Jurisdiction has already been condoned in the interest of justice after hearing both sides on that aspect. 27. Before adverting to the oral and written submissions on facts and merits, on the issue of maintainability an objection was raised by the Respondent by placing reliance on the following decisions- "(i) Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324, (ii) Bholu Ram v. State of Punjab, (2008) 9 SCC 140 : 2009 (1) GLH 39, and (iii) Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338." It was contended that in view of these judgments the impugned Order shall be considered as an interlocutory order and hence the Revision Petition is not maintainable and shall not be entertained. 28. Mr. Vikram Chaudhary, learned Senior Counsel appearing on behalf of the petitio....
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.... question is answered against the appellant accordingly." 23. Therefore, the position has now come to rest to the effect that the revisional jurisdiction under Section 397 Cr.P.C. is available to the aggrieved party in challenging the order of the Magistrate, directing issuance of summons." 30. I have also considered the following judgments of the Hon'ble Supreme Court in the matters concerning challenge in a Revision Petition to the order taking cognizance and issuing process. When the concerned High Court had declined to interfere in Revision Petition, the Hon'ble Supreme Court had observed as follows- (i) Suresh v. Mahadevappa Shivappa Danannava, (2005) 3 SCC 670 "2. The present appeal was filed against the final judgment and order dated 17-2-2004 passed by the High Court of Karnataka at Bangalore in Criminal Revision Petition No. 932 of 2000 dismissing the said petition filed by the appellant herein (Accused 1)." "6. ...On 4-8-2000 the IVth Additional Chief Metropolitan Magistrate passed the following order: "Perused the record. Cognizance of the offence alleged against the accused is taken under Section 190(1)(b) Cr.P.C. Office to register the case in CC reg....
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....Single Judge did not consider the nature of the contract between the parties, the arrangement for payment of dues by the accused persons to the complainant, nor did he record a finding that the ingredients of the offence of cheating defined under Section 415 IPC were prima facie made out from the averments in the complaint petition and the statement on oath by the complainant before the learned Magistrate.... While judging the question whether the cognizance order passed by the learned Magistrate was sustainable in law it was incumbent for the learned Single Judge to go into the question whether the complainant has been able to make out a prima facie case for the offence of cheating on the averments in the complaint petition and his statement on oath. The matter should have been examined in the light of the contentions raised by the accused applicant in the revision petition and finding recorded...." "9. We are constrained to observe that there has been an avoidance of the function of judicial determination of the question of acceptability or otherwise of the plea raised by the accused persons for setting aside the cognizance order and for quashing the criminal proceedings...." ....
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....licable in context of the facts. 34. The brief facts of the case which led to the issuance of the impugned Order are as follows- "(i) Crime Branch, Surat registered two FIRs No. I/16/2014 dtd. 11.04.2014 and I/17/2014 dtd. 13.04.2014 under Sections 120(B), 420, 465, 467, 468, 471, 477 A of IPC on receipt of Complaint from IClCI bank against certain Companies (Indian Entities) and their directors alleging preparation of fake bills of entry and making outward remittances from ICICI Bank to Hong Kong and Dubai on the basis of the such fake Bills of Entry. After investigations Charge Sheet has been filed against several persons. The main accusations in the Scheduled Offence are inter alia against Shri Madanlal Jain, Shri. Afroz Mohammed Hasanfatta and Shri Bilal Haroon Gilani and others. However, none of the petitioners are arraigned as accused in the said Scheduled Offence. (ii) Since the Offences under Section 420, 467, 471 and 120(B) of IPC are scheduled offences in terms of Section 2(1)(v) of the PMLA, upon scrutiny of the said two FIRs, investigation under PMLA, 2002 was initiated by the office of the Respondent vide ECIR 1/SRT/2014-15 dated 17.04.2014. (iii) The investigat....
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....1 (vii) The said amount is also reflected in the Charge Sheet for the Scheduled Offence in Para (8) at Page 356, however, merely on that basis none of the accused petitioners have been arraigned as a co-accused in the Scheduled Offence. (viii) In PMLA proceedings this total amount of Rs. 16,31,19,941/- is alleged as proceeds of crime relatable to Shri Afroz Hasanfatta and the petitioners, and laundering thereof is alleged by the petitioners. (ix) One Shri Trivedi, an accountant of Shri. Madanlal Jain, has on 28/03/2014, during the search operations, stated that he had frequently seen Shri Afroz Mohammed Hasanfatta visiting the office of Shri Madanlal Jain at 416A & 417A, Panchratna Tower, Opera House, Mumbai in the last couple of months. He however has not implicated any of the accused petitioners including Shri Jafar Mohammad Hasanfatta. Some further evidence was gathered against Shri Afroz Mohd Hasanfatta. (x) All the petitioners are admittedly close relatives of said Shri Afroz Mohd. Hasanfatta. Shri Afroz Hasanfatta is real brother of Petitioner No. 1 and 2. Other petitioners are also amongst his close relatives. It is alleged that from his Bank Accounts, Shri Afroz Has....
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....(ii) Q.5 Whether you had arranged loan from M/s. Natural Trading Co. And M/s. Gangeshwar Mercantile Pvt. Ltd. For Shri Hasan Fatta Afroj Mohammed, Shri Jafar Mohammed Hasanfatta, Nile Trading Co. or family members of Shri Hasan Fatta Afroj Mohammed? (iii) A.5 In the regard, I state that neither I had arrange any fund as lone from M/s. Gan Gangeshwar Mercantile Pvt. Ltd. and M/s. Natural Trading Co. nor from Shri Pukhraj Anandmal Mutha. I further state that I am not aware whether Shri Hasan Fatta Afroj Mohammed has taken any loan from M/s. Natural Trading Co. and M/s. Gangeshwar Mercantile Pvt. Ltd. and Shri Pukhraj Anandmal Mutha. Thus, although in the question No. 5 reference was made to accused petitioner No. 1 or family members of Shri Afroz Hasanfatta, in his answer Shri Madanlal Jain had neither shown any acquaintance nor alleged any dealings with any of the accused petitioners. (xv) That the petitioner No. 2 in his statement had stated that he had an account with Union Bank of India, Nanpura, Surat and the transactions were made on the directions of his brother Shri Afroz Mohamed Hasanfatta. He further stated that payments made to Shri Abdul Karim Jaka and M/s. Fancy Bu....
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....1): "62. ...Shri Jafar Mohamed Hasanfatta has knowingly involved himself in the process and the activity connected with the proceeds of crime including its concealment and possession and has therefore projected the same as untainted. It is apparent from the fact that he had received Rs. 3 Crore from M/s. Natural Trading Co and has invested the same on the directions of his brother Shri. Afroz in the Stock Market and Real estate...." (b) Ahmed Hasanfatta (Petitioner No. 2): "62. ...Shri Ahmed Hasanfatta, brother of Shri Afroz Mohamed Hasanfatta has knowingly involved himself in the process and activity connected with the proceeds of crime including its concealment and possession and has therefore projected the same as untainted. He received the funds from Shri Afroz Mohamed Hasanfatta and Shri Jafar Mohamed Hasanfatta and has invested Rs. 2,00,00,000/- with Fancy Builders Pvt. Ltd., Mumbai. The flat at 1101 on the 11th floor at Hicon Grande, Bandra (W) was purchased on 6/3/2014 with the amount so received from his two elder brothers. In this case, the POC has been invested in an immovable property thereby projecting the same as untainted. Shri Ahmed fatta, therefore, is also g....
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....tion 4 of PMLA. Section 3 of PMLA reads as under: "3. Offence of money-laundering.--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 with the 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." 36. The 'proceeds of crime' is defined in Section 2(u) of PMLA as under- "(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property;" 37. A holistic reading of this definition of 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive 'and', makes it luminous that any persons concerned in any process or activity connected with such "proceeds of crime" relating to a "scheduled offence" including its concealment, possession, acquisition or use can be guilty of money laundering, only if both of the two prerequisites are satisfied i.e.- "(i) Firstly, if he- ....
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....ause to believe the same." The same test therefore applies in the instant case where there is absolutely no material or circumstantial evidence whatsoever, oral or documentary, to show that any of the petitioners, 'Knowingly', assisted or was a party to, any offence. C. Actually involved: Actually involved would mean actually involved into any process or activity connected with the proceeds of crime and thus scheduled offence, including its concealment, possession, acquisition or use. There is absolutely no material or circumstantial evidence whatsoever, oral or documentary, to substantiate any such allegation qua the petitioners. D. Neither any of the petitioners is arraigned as accused in the 'Scheduled Offences' punishable under Indian Penal Code for direct or indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of them." 39. The second of the two pre-requisite to attract Section 3 of PMLA would be satisfied only if the person also projects or claims proceeds of crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowl....
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....elating to proceeds of crime under PMLA that such proceeds of crime are involved in money-laundering. Burden would be on the person concerned to show to the contrary. However, as rightly pointed out by the Learned Senior Counsel for the petitioners, there is no legal presumption in this Section 24 that - "(a) The concerned property is "proceeds of crime", (b) The person accused has knowledge that the property is "proceeds of crime", and (c) The person is involved in or is guilty of "money-laundering" merely for possessing or having any concern with the proceeds of crime." In fact this Section 24 clearly indicates that even a person in possession or connected with any proceeds of crime may or may not be charged with the offence of money laundering. Whether a person shall be charged with money laundering or not shall thus depend only upon satisfying the requirements of Section 3 of PMLA as already explained above. 43. In the instant case, neither there is anything to raise a presumption of fact or law that any of the petitioners was aware that the monies received in their bank accounts through banking channels were 'proceeds of crime' derived from any 'scheduled o....
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....r generate any proceeds of crime and of knowingly attempting or indulging in projecting the same as untainted. 48. So far as the judgment in Gautam Kundu (supra) is concerned, the observations regarding Section 45 and limitations in grant of bail do not help the Respondent in the instant petition where challenge is against the Order taking cognizance and issuing process by way of summons. 49. On behalf of the Respondent great emphasis was laid on the statements of main accused Shri Madanlal Jain recorded under Section 50 of PMLA on 22.7.2014 (Page 287 to 297), 23.07.2014 (Page 283 to 286) and 24.7.2014 (Pages 298 to 300) i.e. after taking cognizance of the offence vide the impugned Order. It was submitted that in view of these statements of the co-accused, though recorded subsequent to taking cognizance, there is sufficient evidence against the petitioner No. 1 Shri Jafar Hasanfatta to bring home the charge against him. The Learned Senior Counsel appearing for the petitioners have fairly shown the said statements annexed with the petition even before the said contention was advanced on behalf of the Respondent. 50. I am not impressed with this stand taken by the Respondents. In ....
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....aid accused person, the court turns to the confession with a view to assure itself that the conclusion which it is inclined to draw from the other evidence is right.... The result, therefore, is that in dealing with a case against an accused person, the court cannot start with the confession of a co-accused person; it must begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence...." "15. The statements contained in the confessions of the co-accused persons stand on a different footing. In cases where such confessions are relied upon by the prosecution against and accused person, the court cannot begin with the examination of the said statements. The stage to consider the said confessional statements arrives only after the other evidence is considered and found to be satisfactory. The difference in the approach which the court has to adopt in dealing with these two types of evidence is thus clear, well understood and ....
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....kmini Narvekar v. Vijaya Satardekar, (2008) 14 SCC 1, and the Hon'ble Supreme Court while upholding the Order passed by the High Court which allowed a petition against dismissal of Criminal Revision Petition filed against order taking cognizance and issuing process, observed in favour of Respondent accused Smt. Vijaya Satardekar as follows - "7. The allegation in the FIR was that Ranjit Satardekar had falsely misrepresented to the complainant and her husband that the document which was being executed by them was for enabling Ranjit to represent them in the inventory proceedings in progress on the death of Andre Andrade, although what was actually executed by them was a power of attorney. This power of attorney was used by the accused for executing a sale deed in favour of his wife Vijaya Satardekar and Sadiq Sheikh in the year 1991, but the said sale deed was presented for registration only in the year 2001. It is alleged that the complainant came to know only in August 2001 for the first time about the execution of the sale deed in 1991. Thus it is alleged that the property of the complainant was purported to have been sold away by Ranjit Satardekar, Advocate, by deceit and ....
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....or produced by the prosecution to show that the wife Vijaya Satardekar was in any way involved in the alleged criminal offence committed by her husband Ranjit Satardekar. The only allegation against her was that the sale deed was in her favour, which in the opinion of the Hon'ble Supreme Court did not prima facie make out any offence. 54. The same test is applicable in the facts of the instant case. By the impugned order dated 18.7.2014, the Special Court for PMLA mechanically took 'cognizance' of the alleged offence punishable under Section 4 of PMLA qua each of the accused petitioner, without even prima facie material showing existence of any 'mens rea' or culpable 'knowledge' with all or any of them, of the subject Scheduled Offence investigated separately by Crime Branch, Surat in FIR Nos. I-16/2014 dated 11.04.2014 and I-17/2014 dated 13.4.2014, or of any 'proceeds of crime' emanating from the said scheduled offences. Neither there is any tangible evidence, nor even any circumstantial material to impute culpable knowledge on the petitioners and to even prima facie conclude that they were either aware of the commission of the Schedule Offenc....