TaxTMI 
TaxTMI 
2019 (4) TMI 135
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....es in files and Soft copies in Pend drive besides financials for the period were seized/taken from the premises of Yash Raj Films Pvt. Ltd., (YRF), 5 Shah Industrial Estate, Veera Desai Road, Andheri (West), Mumbai - 400053 by the authorities. A Panchnama was also made. 3. The Director of the Appellant was summoned on 9th November, 2017 by the Asst. Director of ED, Ballard Estate, Mumbai to tender evidence. 4. The date was fixed for hearing on 16th November, 2017. The Appellant was asked to submit License/Agreement wise details of all revenues generated with regard to exploitation of music during the Financial Years 2012-13 to 2016-17. 5. The Appellant submitted the same duly classifying the same as - (i) Licensing Revenue with TV Channels (ii) Radio Stations and (iii)Telecom (Mobile) and Digital platforms. 6. Thereafter the Appellant requested the ED office to permit the Sr. General Manager at the Appellant, handling copyright and royalty related matters, to appear in the matter. Accordingly, he appeared on 16th November, 2017 and gave a statement pertaining to all questions raised by ED office. Thereafter, statements of the Director and Vice President & CF....
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.... been quashed in WP(Crl)1965/2017 by order dated 10.12.2018 with the consent of the complainant. ED was the party to the said proceedings. 15. REGISTRATION OF MULTIPLE ECIRs BY RESPONDENT TO HARASS THE APPELLANT: It is also a matter of record that the respondent had previously registered ECIR: MBZO/05/15 ("1st ECIR") dated 31.03.2015 on the basis of similar facts and circumstances and cause of action as the present ECIR against IPRS and others. The said earlier FIR No. 455 of 2014 ("1st FIR") (filed in Sadar Police Station, Agra at the instance of one Mr. Surendra Sathi) on which the aforesaid earlier 1st ECIR was lodged was u/s 420, 406, 468, 471, 506 and 120-B r/w 34 of the IPC. The 1st ECIR and 1st FIR which was previously registered by the Respondent against IPRS and others was based on similar facts and circumstances as the present 2nd FIR and 2nd ECIR respectively. 16. The same has already been decided by this Tribunal in the proceedings relating to aforementioned 1st ECIR: A. The Appeal No FPA-PMLA-1302/MUM/2016 titled "Indian Performing Rights Society Ltd (IPRS) Vs Deputy Director, Directorate of Enforcement" vide order dated 22.06.2017 qua ECIR NO MBZO/05/2015 ....
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....ime' and can be liable for provisional attachment or for any other purpose under the provisions of PMLA, 2002. If for the sake of argument if it was assumed that that the royalty collected was proceeds of crime then the amount which has been distributed also will amount to proceeds of crime and all those who have received the same will have to be booked for offence for money laundering along with the persons from whom the said sums of royalty had been collected. That the contention of the respondent that the royalties so collected in legal and lawful manner were 'proceeds of crime' was grossly wrong, baseless and without any logic." (emphasis supplied) 18. The Hon'ble High Court of Allahabad, after hearing the parties at length, vide its orders dated 07.11.17 in Criminal Misc. Application No. 22187-88 of 2015 had quashed the charge-sheet dated 04.05.15 filed in the afore-said 1st FIR. The said order has attained finality as it has not been challenged by any of the Respondent therein (including the investigating agency). The said disputes were also settled between the parties with regard to royalty towards the songs. 19. Subsequently, IPRS, PPL and its Committee appro....
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....Despite of observation made by the Hon'ble Division Bench of the High Court in its Order dated 27.02.2018, the respondent - ED has chosen to proceed further with the matter and pressed the impugned order on 10.4.2018 after the order of Division Bench. The observations made in the said order of the Division Bench have been ignored by both authorities. The respondent has proceeded with the matter. Admittedly, Adjudicating Authority has passed the impugned order after passing the order of Hon'ble Division Bench. 24. The Adjudicating Authority while passing the impugned order, without having any material/document before it, completely erred in concluding that: "I had gone through the original application and other documents received with the application carefully and had reasons to believe that the retention of the record/property seized may be required in connection with the offence of money laundering by the Respondent."(emphasis supplied) 25. It appears from the record that the relied upon documents included only the Original Application for retention of records, and the Panchnama attached thereto, the Adjudicating Authority did not have sufficient material, to even conside....
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....ny person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: [Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.] [(1A) Where it is not practicable to seize such record or property, the officer authorised under subsection (1), may make an order to....
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....y proceedings under this Act: [Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be.] (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate: Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to t....
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.... (2) The officer authorized by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in sub-section (1), to the Adjudicating Authority, in a sealed cover, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. 31. Section 21 of PMLA reads as under:- "21. Retention of records. - (1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, suc....
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....dering, or is in possession of any records relating to money-laundering, then any authorised officer can enter and search any building, place, vessel, vehicle or aircraft where that such records or proceeds of crime are kept, who is also empowered to break open the lock of any door, box, locker, safe, almirah or other receptacle where the keys thereof are not available and seize any record or property found as a result of such search, place marks of identification on such record or make or cause to be made extracts or copies therefrom; make a note of an inventory or such record or property and to examine on oath any person who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation. However, the said action is sustainable subject to conditions stipulated in the proviso of Section 17(1) of the Act, which says that the search and seizure shall not be conducted unless - • in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973, (2 of 1974) or • a complaint has been filed by a person....
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....uation of the same for a period not exceeding one hundred and eighty days from the day the such property was seized or frozen as the case may be. The officer authorised immediately after he has passed the order of retention or continuation of freezing of property for the purpose of adjudication under Section 8, has to forward a copy of the order along with the material in his possession to the Adjudicating Authority in a sealed cover within the meaning of Subsection (2) of Section 20. Sub-section (3) of Section 20 mandates that on the expiry of 180 days, the property shall be returned to the person concerned from whom such property was seized and whose property was ordered to be frozen unless the Adjudicating Authority permits retention or confirmation thereof of such property beyond the said period. 37. It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property is 180 days from the date of seizure of any property or records. The said period is not extendable as per the scheme of the Act, unless the prayer for retention is allowed and subject to filling of prosecution complaint within 90 days from the d....
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....re is no requirement to record the reason to believe in writing within the meaning of Sub-section (1) of Section 20, read with Sub-section (2) of Section 20. It appears that all these provisions mandatory in nature. These have to be complied as it is, otherwise if any order is contrary passed without compliance, the said may not be substantiable in law. 43. It is rightly held in the case of Hussein Ghaidially v. State of Gujrat [(2014) 8 SCC 425], the Hon'ble Supreme Court held that- "21.3 If the statute provides for a thing to be done in a particular manner, then it must be done in that manner alone. All other modes or methods of doing that thing must be deemed to have been prohibited." The same proposition was recognized by the Court in Nazir Ahmed v. King Emperor, 1936 SCC Online PC 41 and State of Rajasthan v. Mohinuddin Jamal Alvi (2016) 12 SCC 608. 44. Reason to believe The guidelines of recording the reason to believe have been laid down in various judgements of Apex Court and High Courts. It is held time and again by the said Hon'ble Courts directing that the approach should be not the subjective satisfaction of the officer concerned. Such power given to t....
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....pugned order that the Respondent has not placed the copy of 'reason to believe' for seizure of the records in the present appeal nor any copy was served to the appellant. 47. In the case of C.B. Gautam vs. Union of India (1993(1) SCC 78), a Constitution Bench of the Hon'ble Supreme Court of India held that the reasons to be recorded in writing shall not only be incorporated in the order but also shall be communicated to the affected parties. The relevant extract from the judgement is as under: "Sec. 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purchase of the property for reasons to be recorded in writing'. Sec. 269UD(2) casts an obligation on the authority that it "shall cause a copy of its order under sub-s. (1) in respect of any immovable property to be served on the transferor". It is, therefore, inconceivable that the order which is required to be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an i....
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....ent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process. m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harvard Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law....
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....ard- "5. ...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. Section 26 IPC explains the meaning of the words 'reason to believe' thus: 26. Reason to believe - A person is said to have 'reason to believe' a thing, if he has sufficient cause to believe that thing and not otherwise." 49. In paras 74 to 77, the Double Bench of Hon'ble High Court of Delhi in its judgement J. Sekar v. Union of India and Ors. 2018 SCC Online Del 6523, has held that: 74. The Court, therefore, holds as under as regards the submissions of the learned counsel for the Petitioner....
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....s placed on record. 77. Although at the stage of issuance of notice under Section 8(1) PMLA all the relevant material on record which constituted the basis for reasons to believe may not be made available, if the noticee demands to see those materials on record, the AA is bound to make available all those materials on record to them. It is most likely that without such access to such material on record, the noticee will be unable to file an effective reply. Therefore, there cannot be any denial of access to the noticee of the materials on record. If there is any sensitive material, it can probably be redacted before issuing copies thereof, after nothing the reasons for such redaction in writing in the file. But even such redacted material will have to be nevertheless shown to the noticee. Though the operation of the aforesaid judgment has been stayed by the Hon'ble Supreme Court, the above dicta cannot cease to be law of precedential value and binding in other matters i.e. third parties, in view of settled law. One of such decision reported as vide Shree Chamundi Mopeds Ltd. v. Church of South India Trust Assn., (1992) 3 SCC 1 (para 10). 50. A division bench of the Hon'....
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....thing on record on behalf of respondent that any royalty is payable to any artist or author as the appellant has made statement that after compliance under the amended provisions, no royalty is pending nor the appellant has any intention not to pay in future. The present case is also a case of registering multiple ECIR. 53. In the impugned order, main plea raised by the appellant has not been discussed. In the impugned order, main reason is given that the appellant has not given any solid reason as to why not to retain the records seized by the respondent. 54. Section 17 and 25 of PMLA, 2002 and Section 6 of SAFEMA are read as under:- PMLA SAFEMA "Sec.17 Search and seizure. (1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person - (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to....
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.... as may be prescribed and such Adjudicating Authority shall keep such reason and material for such period, as may be prescribed. (3) Where an authority upon information obtained during survey under section 16, is satisfied that an evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence. Provided that no authorization referred to in subsection (1) shall be required for search under this sub-section. (4) The authority seizing any record or property under sub- Section (1) or freezing any record or property under sub-Section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-Section (1) or for continuation of the order of freezing served under sub-Section (1A), before the Adjudicating Authority.]. Section -25 Appellate Tribunal "The Appellate Tribunal constituted under sub-section(1) of section 12 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act,1976 ( 13 of 1976....
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....itor by quoting the reasons somewhere in the counteraffidavit. Alternatively, if the notice itself contains the reason ofbelief, that notice can be annexed to the counter-affidavit orquoted in it. However, all that has not been done in this case." 56. The intent of the judgement of Supreme Court in the case of P.P.Abdulla (Supra) was that at least at the stage of counter-affidavit, theperson concerned must be aware about the case made against him by thedepartment. Following the judgments of the Apex Court and Division Bench ofHigh Court, I direct that Adjudicating Authority shall communicate thereasons to believe recorded and orders passed at the stage of issuing thenotice in the application for retention of property or documents by therespondent to the person concerned who may aware about the allegationsand material against him for the purposes of defense to be put up in itsreply to the application for retention of property and records. 57. The word 'Adjudication' means a legal process reasoning set by theopposing party to come to a decision which determines right andobligations between the parties. It is known that the parties in every caseare entitled to apply the pr....
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....t the'person concerned' has committed an offence under Section 3 of the Act;and the 'person concerned' has derived and obtained proceeds of crimeand as a result of criminal activities relating to a schedule offence oragainst third party who is in possession of any proceeds of crime and it islikely to be concealed, transferred or dealt with which may frustrate anyproceedings under this Act within the meaning of Sections 5, 17 to 21read with definition of Section (u) of the Act. 63. The Respondent proceedings under the provisions of PMLA forsecuring "proceeds of crime" does not arise at all and the presentproceedings are completely abuse of process of law. The continuation ofproceedings are just for harassment and nothing else. The complainanthas already deposed her statement who raised no-objection to quash thesaid F.I.R. before the Hon'ble Delhi High Court. She has settled thedisputes prior to registering the ECIR, search and seizure, on the date offiling of application under Section 17(4) for retaining the records andpassing the impugned order, the respondent was party to the saidproceedings but still the Respondent has chosen to conduct the searchand seized several important a....