AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 992
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....rties as per the Charge-sheet No. 04/2011, is that dated 07.07.2011 filed by Karnataka Lokayuktha Authorities under Section 173 of Code of Criminal Procedure (Cr. PC) in the Court of Learned XXII Additional City Civil & Sessions Judge & Special Judge for Lokayukta Cases at Bangalore. Various allegations against the alleged accused parties were made. The details of the same are mentioned in the order is being passed in the appeal filed by Mr. S.V. Srinivas (son of the appellant). 3. In the charge-sheet, it was alleged that the following accused persons have committed offences as mentioned below: SI. No Details of accused Sections invoked 1 Mr Katta Subramanya Naidu 7, 13(1)(d) r/w 13(2) Prevention of Corruption Act, 1988 (PC Act) and 465, 471 r/w 120(B) of Indian Penal Code(IPC) ; 2 Mr K.S.Jagadish @ Katta Jagadish Naidu 8, PC Act, 1988 and 420, 465,468,120(B) of IPC | 3 Mr S.V.Srinivas 12 PC Act, 1988, 420, 465, 468,506 r/w 120(B) of IPC, 4 Mr Jagaiah ( absconding at the time of filing chargesheet) 420, 465, 468 r/w 120(B) IPC 5 Mr Venkaiah (absconding at the time of filing chargesheet) 420, 465,468 r/w 120(B) of IPC 6 ....
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....the said proceedings are stayed by the Hon'ble High Court at Karnataka. 10. The reason for passing the order of provisional attachment attaching property mentioned in Sl. No. 29 in para 2 of the complaint was on the basis the statement given by this Appellant's son S.V Srinivas on 12.6.2012 who was interrogated by the respondent (who was arrayed as the 9th Defendant) in complaint No. 158/2012 dt: 05/10/2012. On the basis of which the above said property was attached. The relevant extract of his son statement is given below: "Question No.9: How much money you have derived from out of Rs. 317 crores received from UTL from the account of ITASCA? ANS: I have derived an amount of Rs. 25 lakhs (approx) from ITASCA account till date." "Question No.11: Where all you have invested the amount so derived from the account of M/s Itasca? ANS: I have utilized the money derived from M/s Itasca towards the following (i) Rs. 10 lakhs towards renovation of my house situated at No. 20, 18th Cross, Malleswaram, Bangalore (ii) Rs. 5 lakhs towards day-to-day expenses for a period of one year (iii) Rs. 8 lakhs towards hospitalization expenses to my wife......"....
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....o taxes is filed as ANNEXURE 'A-7'. 15. It has come on record that when the Appellant purchased the above said properties and constructed a building on the same by his own investment, his son S.V.Srinivas was not even born. The Appellant is an Income Tax assesse for the last 44 years and if the total income tax paid by the Appellant and his law firm is taken into consideration, at any particular point of time he was paying the taxes before the Income tax department. The copies of income tax returns of this Appellant are fixed as ANNEXURE 'A-8' at page 202. 16. The Appellant had also stated that during the year 1992, he had applied to Bruhat Bangalore Maha Nagar Palike (BBMP) for merger of two kathas i.e., for property No. 20 and 20/3 into a single Katha number. The BBMP by its endorsement dated 10/01/1992, merged Katha of the two properties and gave single Katha No.20 and assessed the building for an annual value of Rs. 10,000/- and revised the tax for properties by additional tax of Rs. 620/-. The BBMP thereafter called upon this Appellant to pay a tax of Rs. 2,620/- per year. The Copy of the said endorsement which is in Kannada are filed with English translation as ANNEXURE....
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....y. 21. In the facts of present case, even the question of part consideration at the time of purchasing the property does not arise as the same was purchased by the appellant many decades earlier even his son was not born at that time. 22. It is argued by the learned Counsel for the appellant that since S.V Srinivas during questioning stated that he received Rs. 25 lacs from M/s Itasca, it does not imply that he admitted receipt of proceeds of any crime. It is stated by the counsel for the appellant that S.V Srinivas received only a sum of Rs. 20 lakhs from M/s ITASCA which was by way of A/c payee cheques, in consideration for his services rendered to M/s ITASCA as an employee in the capacity of a Director. It is submitted by him that there is no allegation in the Charge Sheet submitted before the Prevention of Corruption Act Special Court by the Lokayuktha Police Wing that S.V Srinivas received amount from ITASCA by way of A/c payee cheques as a part of the alleged scheduled offences under PMLA. 23. It is submitted on behalf of appellant that once the payment made by ITASCA through A/c payee cheques is not alleged in the Charge Sheet to be related to the alleged offences, ....
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....cused No.1 and Accused No. 8 in FIR 57/2010 resulting in charge sheet numbered as SPL CC 135/2011, i.e. Mr. Katta Subramnaya Naidu and M. Gopi respectively challenged FIR 57/2010 resulting in charge sheet numbered as SPL CC 135/2011 before the Hon'ble High Court of Karnataka in Criminal RP 432/2013 and CrlP 2313/2016 respectively. 27. Counsel for the appellant has referred the charge-sheet where it was admitted by the respondent that the following amounts are proceeds of crime in terms of Section 2(u) of PMLA. The details of the same which are mentioned in Para-8 of the complaint dated 5th October, 2012 reproduce as under:- S. No. Description Direct (Rs) Amounts withdrawn through bearer cheques (In the name of Land lords) (Rs.) Amount withdrawn through bearer cheques ( in the name of non existing land lords and their legal heirs (Rs.) Amount (Rs) 1 A/c INDU BUILDERS 16,03,07,700/- 37,23,29,000/- 32,02,27000/- 85,2863,700/- 2 A/c ITASCA MALLESHWARAM 5,77,00,000/- 33,87,18,000/- 30,90,33,178/- 70,54,51,178/- 3 A/c ITASCA BASAVESHWAR NAGAR 5,25,00,000/- 13,20,50,000/- 20,58,00,000/- 39,03,50,000/- ....
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....3/11/2016 allowed Criminal RP 432/2013 and CrlP 2313/2016 and quashed FIR 57/2010 resulting in charge sheet numbered as SPL CC 135/2011, as against Mr. Katta Subramnaya Naidu and M. Gopi. The prosecution has challenged the order of the Hon'ble High Court of Karnataka in Criminal RP 432/2013 and CrlP 2313/2016 before the Hon'ble Supreme Court in SLP (Crl) 1192-1193/2017. Notice is ordered in the said matters. 32. The appellant in appeal No. 447/2013 is Smt Reshma Srinivas. She is the wife of SV Srinivas. She is not accused in the schedule offence. She is an accused in the section 45 compliant filed by the Respondent herein numbered as SPL CC 124/2014 and is arrayed as accused No.22. The said SPL CC124/2014 was instituted on 24/03/2014 after the impugned order dt: 21/02/2013 passed by the Adjudicating authority in OC 158/2012. 33. The appellant was arrayed as part no. 36 in the provisional attachment order. When the complaint under section 5(5) was filed before the Adjudicating Authority who after receipt of complaint issued the direction to the respondent to issue the notice to all the defendants including the appellant bypassing two lines order that they have reason to believ....
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.... be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in [first proviso], any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non- attachment of the property is likely to frustrate any proceeding under this Act.]" 37. The first proviso of section 5(1) stipulates that no such order of attachments shall be made unless in relation to the schedule offence, a report has been forwarded to a magistrate under section 173 of the Code of Criminal Procedure, 1973. 38. However, as per second proviso, the respondent without filing the charge-sheet is empowered to attach the properties without filing the report under section 173 of Cr.R.C. on the basis of material in the possession of the respondent if it is appr....
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....t and for the same the impugned notice is bad in law and violative of Art 14 of the Constitution. 44. Adjudicating Authority while adjudicating the validity of the provisional attachment was bound to examine as to whether the value of such property has a direct relation to proceeds of crime, which is a condition prerequisite to constitute proceeds of crime in terms of section 2(u) under the PMLA. No case was brought out against the appellant either in the charge-sheet filed by the Lokayuktha Police Wing or the complaint filed by the Complainant and as such Section 2(u) of PMLA does not come into operation and as a consequence of the same Section 5 of PMLA. It has not established even prima facie that the appellant was aware that any alleged proceed of crime is spent on renovation. There is no evidence available on record. In the absence of that, the property of innocent party cannot be attached when admittedly when he party is not charged with schedule offence and in the prosecution complaint. 45. The Adjudicating Authority is bound to go through reason to believe recorded before passing the provisional attachment order while coming to the conclusion to issue a notice under s....