TaxTMI 
TaxTMI 
2017 (2) TMI 1234
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....re-requisites for invoking Section 3 of PMLA 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 ....
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....filed fake bills of entry before the ICICI Bank for making 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 investigati....
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.... this purchase was yet to be made. On enquiries it revealed that 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 ....
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....e of receiving the proceeds of crime and its further transfer and thus knowingly 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 laye....
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....e purpose of laying the proceeds of crime with an intention to conceal the source of the 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 maintaina....
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.... revisional jurisdiction under Section 397 Cr.P.C. was available to Respondent 2 in challenging the order of the Magistrate directing issuance of summons. The first 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 ....
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.... a perusal of the order under challenge it is clear that the learned Single Judge disposed of the revision petition filed by the appellant for setting aside the cognizance order and for quashing the criminal proceedings without entering into the merits of the case. The learned 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...." ....
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....mons against all or any of the accused petitioners or whether the criminal law was set into motion as a matter of course without applying mind to the facts, nature of allegations, sufficiency of evidence both oral and documentary in bringing charge home to these accused petitioners and the law applicable 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. ....
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....anaged by Shri Madanlal Jain. It was further seen that on 17.02.2014 M/s. Gangeshwar Mercantile had made payments to M/s. Nile Trading Corporation proprietary concern of Shri Afroz Mohammed Hasanfatta as under: SR NO. DATE AMOUNT IN RS. 1 17/02/2014 1,71,90,517 2 17/02/2014 1,44,36,831 3 17/02/2014 1,44,98,627 4 17/02/2014 1,69,93,966 TOTAL 6,31,19,941 (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 ....
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....Jain. (xiv) Statement dated 05.05.2014 of Shri Madanlal Jain (at Page 281-282) contain the following relevant questions and answers- "(i) Q.2 Do you know Shri Hasan Fatta Afroj Mohammed, If so How? (i) A.2 In this regard, I Know Shri Hasan Fatta Afroj Mohammed since last 04 years, I was introduced to him by Shri Amratmadav Angadiya located at 4th Floor, Panchratna, Opera House, Mumbai. I further state that I do not have any official dealing with him. (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 m....
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....tements of Shri Afroz Mohammed Hasanfatta, nor those of the petitioners impute against any of the accused petitioners, any culpable knowledge of Scheduled Offence or proceeds of crime or motive to project proceeds of crime as untainted. (xx) On the basis of the above investigations, a Criminal Complaint No. 03/2014 dated 18.7.2014 was filed under PMLA inter alia against the petitioners herein. In the said criminal complaint the following is alleged against each of the petitioners: (a) Sh. Jafar Mohammed Hasanfatta (Petitioner No. 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 ....
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....y submitted that Shri Samir Godil admittedly had received the amount of Rs. 1,15,00,000/- which was claimed to be unsecured loan. However no supporting document could be produced by the said Shri Godil leaving no room for the doubt of the said amount forming part of the proceeds of crime...." (xxi) On the same date i.e. on 18.7.2014, the impugned Order was passed. Cognizance was taken and process by way of summons was issued against inter alia each of the accused petitioners." 35. The allegation against each of the petitioner is of commission of offence under Section 3 of PMLA, which is punishable under Section 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....
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....s fastened either on the ground of "intention" or "knowledge" or "reason to believe". We are now concerned with the expressions "knowledge" and "reason to believe". "Knowledge" is an awareness on the part of the person concerned indicating his state of mind. "Reason to believe" is another facet of the state of mind. "Reason to believe" is not the same thing as "suspicion" or "doubt" and mere seeing also cannot be equated to believing. "Reason to believe" is a higher level of state of mind. Likewise "knowledge" will be slightly on a higher plane than "reason to believe". A person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has sufficient cause 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, incl....
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....as a transit point for further transfer of the proceeds of crime. It shall thus be presumed that they have thus knowingly allowed the use of their bank accounts and knowingly involved themselves in this activity having full knowledge of the purpose and intent of the transactions and helped in the process of layering. Thereby they are involved in the process of money laundering. 42. I find no merit in this stand of the Respondent. I am of the view that this amended Section 24 shows legislative intent of attachment and confiscation of proceeds of crime by presuming involvement of proceeds of crime in money laundering irrespective of whether the person concerned is or not charged with the offence of money laundering. Thus, there shall be a legal presumption in any proceeding relating 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 ....
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....rmed by the Adjudicating Authority, PMLA vide orders date 07.11.2014 and 21.7.2015 respectively by holding that the, properties are involved in money laundering. Reliance was also placed on para 30 and 36 of Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1. 47. I am of the view that prima facie findings of adjudicating authority are not substitute for the requisite satisfaction required by the Special Court for taking cognizance. Final confiscation of proceeds of crime or value thereof under PMLA would always be subject to final outcome of trial and is not final merely by Adjudication. Moreover, the Respondent failed to point out any prima facie material against each of the petitioner even at this stage to show requisite knowledge with each of them, of commission of Scheduled offence to derive or 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 w....
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....a Constitution Bench of the Hon'ble Supreme Court in Haricharan Kurmi v. State of Bihar, (1964) 6 SCR 623 : AIR 1964 SC 1184 has clearly laid down the law in this regard with the following observations- "13. As we have already indicated, this question has been considered on several occasions by judicial decisions and it has been consistently held that a confession cannot be treated as evidence which is substantive evidence against a co-accused person. In dealing with a criminal case where the prosecution relies upon the confession of one accused person against another accused person, the proper approach to adopt is to consider the other evidence against such an accused person, and if the said evidence appears to be satisfactory and the court is inclined to hold that the said evidence may sustain the charge framed against the said 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 evidenc....
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....sequent to cognizance would be futile and abuse of process of law. In the material before the Special Court for PMLA, none of the statements of any witness even remotely referred to the petitioners. None of the statements either of the petitioners, or of any witness or even of any co-accused imputed on any of the petitioners even remote knowledge of commission of Schedule Offence and knowingly laundering of any 'Proceeds of Crime'. Moreover, there is not even any circumstantial evidence garnered in the entire investigation to remotely impute such pre-requisite knowledge or mens rea, existence of which is essential at least on prima facie basis for taking 'cognizance' of offence against the petitioners. 53. The Learned Senior Counsel for the petitioner has rightly pointed out that the judgment in Pepsi Foods Ltd. (supra), was applied in Rukmini 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 Satarde....
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....urt and the criminal appeal in which Vijaya Satardekar is the respondent is dismissed." "39. However, as indicated by my learned Brother, the complaint made does make out a prima facie case against accused Ranjit Satardekar and the cognizance taken by the learned Magistrate cannot be faulted and the appeal as far as he is concerned, must be allowed. However, even prima facie, none of the offences referred to in the charge-sheet can be made out against accused Vijaya Satardekar and she has been roped in only with the aid of Section 120-B which is also not substantiated. The appeal as far as she is concerned, must be dismissed." Thus, in a case of executing sale deed in favour of wife by deceit and misrepresentation, the Hon'ble Supreme Court upheld the interference with the cognizance order in Revision Jurisdiction as there was no material whatsoever either mentioned in the FIR 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 C....