TaxTMI 
TaxTMI 
2020 (8) TMI 856
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....has filed a Statement of Objections resisting the writ petition. 2. In connected W.P. No. 8031/2020, the petitioner Mr. Vinod Ramnani who happens to be the first petitioner in the aforesaid writ petition, has invoked the writ jurisdiction seeking a writ of certiorari for the quashing of impugned communication dated 15.5.2020 whereby, the Bank Accounts of the accused Company have been freezed in view of ongoing investigation under the provisions of Prevention of Money Laundering Act, 2002 and in the light of criminal proceedings that are impugned in the above writ petition; the respondent-Directorate of Enforcement after service of notice, having entered appearance through the learned CGC, opposes the writ petition; since both the writ petitions are structured on a common fact matrix and involve common questions of law, the same are taken up for hearing together, as consensually suggested at the Bar. 3. Facts in brief: First petitioner is the husband of second petitioner; he was the Promoter, Chairman & Director of M/s. Opto Circuits India Ltd. (OCIL) which happens to be the first accused (hereafter "Company"); both the petitioners being US citizens, were carrying on ....
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....e quantum of upfront money. (iv) The Bank vide letter dated 18.1.2019 asked the Company to pay 15% of the upfront money as a precondition for considering the latest OTS offer; the Company vide letter dated 24.1.2019 having agreed to the said proposal, clarifying that it had already paid Rs. 7.5 crore and therefore, it would pay the remainder i.e., Rs. 4.95 crore which together constitute 15%; the Bank vide e-mail dated 23.10.2019 asked the Company to submit OTS proposal in the standard format and accordingly, the Company has submitted one on 9.11.2019, which is pending consideration by the Bank. (v) The second petitioner as on the date the Company was declared to be a willful defaulter and its account was branded as NPA, was no longer a director, she having resigned to the post a bit before and her resignation having been approved on 1.3.2013; that being the position, there was absolutely no justification for subjecting her to the criminal investigation at the hands of CBI. (vi) The Forensic Audit for the period between 1.4.2010 & 31.03.2016 having been accomplished vide report dated 27.6.2016, the criminal proceedings now initiated after long lapse of ti....
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....m the stage of applying for the loan to the stage of offering of final OTS, has only elements of civil dispute and therefore, initiation of criminal proceedings is unsustainable; it need not be stated that a same set of facts may constitute a civil wrong like a breach of contract and a crime, as well and that the legal proceedings concerning them may run concurrently, the nature, scope & object of one being miles away from the other; whether one should be halted till the other is accomplished because of the arguable prejudice that may be occasioned by the parallel process, has not fallen for consideration here; it is profitable to see the observations of the Apex Court in Vesa Holdings Pvt. Ltd. Vs. State of Kerala, (2015) 8 SCC 293, para 13: "it is true that a given set of facts may make out a civil wrong as also a criminal offence and only because a civil remedy may be available to the complainant, that itself cannot be a ground to quash a criminal proceeding. The real test is whether the allegations in the complaint disclose the criminal offence of cheating or not." The Apex Court granted relief to the accused stating "In our view the complaint does not disclose any criminal off....
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....for the petitioners is not right in selectively banking upon only two paragraphs i.e., 16.8 & 16.9 that broadly lay down the general principle; para 16.10 is carved out as an exception to the said principle; case of the petitioners squarely fits into this exception as rightly contended by learned CBI counsel; he has some justification for putting forth a passionate submission that swindling of public money at times in astronomical values, in the guise of serial borrowing from the banks & financial institutions has become rampant in the country and that the writ court should not readily interdict or interfere with the criminal investigation. (c) There is a lot of force in the vehement submission of the learned CBI counsel that the case of the petitioners does not fit into any of the seven broad parameters delineated by the Apex Court vide Bhajan Lal supra and therefore, there is no warrant for quashing the impugned proceedings; following are the two of them that are pressed into service by the learned counsel for the petitioners: "(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable....
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....in his complaint was that respondents have committed the offences punishable under Sections 323, 379 read with Section 34 IPC, then the question to be examined is as to whether there are allegations of commission of these two offences in the complaint or not. In other words, in order to see whether any prima facie case against the accused for taking its cognizable is made out or not, the Court is only required to see the allegations made in the complaint.... In our view, the High Court had no jurisdiction to appreciate the evidence of the proceedings under Section 482 of the Code." Similarly, what the Apex Court in the case of Mohd. Ibrahim Vs. State of Bihar, (2009) 8 SCC 751 observed, is also relevant: "8. This Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil dispu....
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....ding due till date, payment of some frugal sum, notwithstanding; thus, case of the petitioners stands in bitter contrast with the one cited at the Bar. (g) The submission of learned Sr. Advocate Mr. Shetty that a mere failure to repay the debts does not justify initiation of criminal proceedings vide Sushil Sethi Vs. State of Arunachal Pradesh, (2020) 3 SCC 240, as a legal proposition is true; but the facts of these petitions repel the invocation of the said proposition; the case of the petitioners is not a mere non-payment of debts; there is a whole range of things that are allegedly perpetrated by them during the period between availing of huge loans and the same remaining as outstanding dues till date; there is sufficient material too accompanying the FIR namely Forensic Audit Report, the Resolution of Fraud Identification Committee, etc., which specifically mention fraudulent deals and fabrication of records; it is also alleged that the properties furnished by way of security having been gifted away by registered instruments, there are ingredients of offence of cheating, in addition to other; all this merits investigation at the hands of CBI. (h) The argument ....
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....mpany at the relevant period, again cannot be examined by this court in its restrictive jurisdiction since it is a fact to be probed into; the transactions as appearing from the records are allegedly spread over for a long period between 01.04.2010 and 31.03.2016; even going by the version of the counsel, the second petitioner who is none other than the spouse of the first, continued to be a Director of the accused company till March 2013 which falls within the Forensic Audit period; under the scheme of law relating to companies, a Director continues to be liable for the past acts as well, subject to all just exceptions; however, it is open to the second petitioner to seek her exculpation from the offence in the course of investigation, by showing the circumstances that may render her involvement improbable. 7. As to contentions in re Prevention of Money-Laundering Act, 2002 in connected W.P. No. 8031/2020: Learned Sr. Advocate Mr. Shetty vehemently argues that in the connected writ petition, there is absolutely no justification nor jurisdiction for initiation of proceedings under the provisions of PML Act in the absence of conviction of the offender for the "predicate offence" ....
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...., Mr. Prasanna Kumar appearing for the CBI is justified in submitting that the decision in "Sri. Sachin Narayan" having been affirmed by the Division Bench of this Court in W.A. No. 3611/2019, disposed off on 17.9.2019, the judicial propriety & discipline require the Co-ordinate Benches to follow the same. (c) Petitioner's argument that both the provisions of sections 3 & 5 of the Act employ the expression "proceeds of crime" and therefore, conviction of the offender is a sine qua non for invoking the same, again does not gain countenance; relevant parts of the said sections, are as under: Section "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 and projecting it as untainted property shall be guilty of offence of money-laundering." Section "5. Attachment of property involved in money-laundering-- (1) Where 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 reason for such be....
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....s knew or should have known that as a result of the contract, the State would be prejudiced in its ability to recover financial claims, e.g. through confiscation or collection of fines and penalties." (d) Under our constitutional scheme, the power to legislate in respect of matters concerning International Conventions/Conferences is exclusively vested with the Parliament vide Article 253 which has the following text: "253. Legislation for giving effect to international agreements Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body." The gist of Article 51 of the Constitution is succinctly put by the jurist, Mr. H.M. Seervai in his "Constitutional Law of India" Volume 2, 4th Edition; para 17.162 at page 2017, he writes: "Article 51 directs that the State shall endeavour to promote international peace and security, maintain just and honourable relations between nations, foster ....
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....e Act envisages two parallel streams of action which are distinguishable by their nature, scope & object; one stream is the criminal proceedings before the Special Courts for the trial of offences u/s. 3 r/w Sec. 4, that are governed by the provisions of Chapter VII, and the other stream is the departmental proceedings apparently civil in nature, instituted by the competent authorities, that are governed by the provisions of Chapter III; the object of former is punitive, whereas that of the latter is confiscatory; obviously, the proceedings under one chapter are independent of those under the other, and therefore, the determination of proceedings under one stream does not ipso facto affect or influence those in the other; thus, even the closure of criminal proceedings would not determine the departmental proceedings, the offence of money laundering u/s. 3 being completely a stand alone event; in other words, the departmental proceedings for the purpose of confiscating the proceeds of crime and the criminal proceedings for punishing the offender, can run concurrently and that they need not converge at any point. (f) "Offence of money laundering" is expansively defined u/s. ....