TaxTMI 
TaxTMI 
2021 (10) TMI 1176
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..... Mr. Varun Singh and Mr. Paras, Mr. Ritin Rai, Sr. Advocate with Ms. Petrushka Dasgupta, Ms. Nasrin Shaikh and Mr. Vidit Mehra. Mr. Ajay Bhargava, Mr. Aseem Chaturvedi, Mr. Arvind Kumar Ray and Mr. Karan Gutpa, Advocates. Mr. Vijay Kumar Aggarwal, Mr. Mudit Jain, Mr. Talib Khan, Mr. Yugant Sharma Mr. Hardik Sharma, Mr. Parth Parashar & Mr. Shekhar Pathak, Advocates. Dr. Surat Singh & Mr. Shobhit Pratap Singh, Advocates. Mr. Gaurav Nair and Ms. Pranati Bhatnagar, Advocates. (M:9810069969) Mr. Vivek Sharma, Advocate. Mr. Gaurav Gupta and Mr. Samyak Gangwal, Advocates. (M:9958444233) Mr. Rahul Jain and Mr. Shubankar Jha, Advocates. Respondent Through: Mr. Ravi Prakash, CGSC with Ms. Shruti Shiv Kumar and Mr. Varun Agarwal, Advocates. Mr. Amit Mahajan, CGSC with Ms. Ananya Khanna, Advocate. (M:9717866618) Mr. Abhay Prakash Sahay, CGSC, Mr. Mannu Singh, Ms. Swayamprabha & Mr. Kunal Dhawan Advocates for R-1. Mr. Deepak Singh, Advocate for ICICI Bank. Mr. Ravi Prakash, CGSC with Ms. Shruti Shiv kumar and Mr. Varun Agarwal, Advocates. Mr. Manish Mohan, CGSC with Ms. Manisha Saroha, Advocate for R-1. Mr. Ajay Digpaul, CGSC and Mr. Kamal R Digpaul, Advocate for UOI. W.P.(C) 5713/2020 & CM....
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....General relied upon the United Nations Convention against Transnational Organized Crime, 2000, also known as the Palermo Convention, to make various requests to the Indian authorities in respect of the companies alleged to have been involved in money laundering in relation to the case against the former Brazilian Governor. The Prosecutor General from Brazil sought freezing/seizure of the bank accounts of the Companies stated to be involved, as also digital copies of all the documents relating to the identified bank accounts. A letter of Request was sent to the Indian ED by the Prosecutor General on 26th September 2018. 4. Pursuant to this Letter of Request, the ED passed freezing orders under Section 17(1A) of the Prevention of Money Laundering Act, 2002 (hereinafter, "Act"), in July 2020, freezing various bank accounts of the Petitioners and other companies in India, and also commenced proceedings under the Act against all the 66 companies. 5. The matter was referred by the ED to the Adjudicating Authority (hereinafter, "AA") under section 17(4) the Act, pursuant to which, the AA issued notices to the Petitioner under Section 8(1) of the Act to show-cause as why their properties....
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.... not authorized in law to pass such order. 4. On the other hand, the learned counsel for the respondent submits that the Impugned action has been taken on the request received from the Government of Brazil under Section 60(6) of the Act. 5. In WP (C) 5235/2020, the learned counsel for the respondent has also filed on record, the application under Section 17(4) of the Act, filed by the respondent before the Adjudicating Authority. A perusal of the said application would reveal that the allegation against the petitioner(s) can, at best, be attributed to specific amounts as mentioned in paragraph 2.8 of the said application. Therefore, the action of freezing the entire bank accounts of the petitioner(s), prima facie, appears to be unreasonable and not authorized by law. 6. As an interim measure, therefore, on the petitioner(s) securing the amount as mentioned in paragraph 2.8 of the said application, copy whereof shall be supplied by the learned counsel for the respondent to the counsels appearing in the other petitions as well, by way of a Bank Guarantee/Fixed Deposit or by maintaining a deposit of an equivalent amount in their bank accounts in question, the operation of the Im....
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....herein the freezing of amounts bad been limited in terms of the application for amendment of the attachment order filed by the ED before the Adjudicating Authority. 4. In the meantime, vide order dated 28th December 2020, the Adjudicating Authority has passed an order on the said application of the ED, continuing the freezing order with respect to the amounts mentioned in the application, subject to the orders of this court. 5. However, it is the grievance of the Petitioners that since the Enforcement Directorate has not written any further communications limiting the extent to which the Petitioners' bank accounts are frozen and hence the banks are not lifting the said freezing order. 6. Since there is no dispute that the initial freezing orders stand amended and limited the Petitioners in these cases are permitted to approach the banks with the present order, in order to ensure that their bank accounts are duly de-frozen, so long as the amounts, as contained in the amendment of attachment order dated 28th December 2020, are maintained either by way of a deposit or a bank guarantee or in any other manner. 7. The limitation period for challenging the order of the Adjudic....
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.... Regulations of 2013, which sets out a detailed procedure for receipt of papers, stamping of papers and retention of papers, etc. * That the manner in which inspection of records is given under Regulations 16 & 17 makes it extremely onerous for the requesting party, inasmuch as hourly charges are levied for inspection. The fee for photocopy is also extremely high and without going through this, the entire procedure of inspection and depositing of fee for copying, if the material is not supplied, reduces the efficiency of the process inasmuch as the recipient of the notice is unable to file a reply till the copies are obtained which itself is a very complicated process. * Reliance is placed upon the judgment of the Supreme Court in In Re: To Issue Certain Guidelines Regarding Inadequacies And Deficiencies In Criminal Trials, (Suo Moto Writ (Crl) No.(S) 1/2017), to argue that a similar parallel ought to be drawn, as held by the Supreme Court in the said judgment, to give all the material which are relied upon by the authority as also by the ED. * Reliance is also placed upon the judgment of the Supreme Court dated 3rd February 2021, in Opto Circuit India Ltd. v. Axis Bank and O....
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....akash, ld. CGSC, appearing for the ED has made the following submissions: * There is a two-level procedure which is to be followed and it cannot be that in all cases the 'reasons to believe', which has been recorded by the Enforcement Directorate for freezing of assets, has to be supplied to the parties. * There is a distinction between the meaning of 'reasons to believe' under Sections 17, and 'reason to believe' under Section 8 which is the Adjudicating Authority's domain. Relying upon Section 17 of the PMLA and the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the manner of forwarding the reasons and material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005, it is submitted that the ED is expected to record the reasons in terms of Section 17 and along with the material in possession, the same is to be transmitted to the AA in a sealed cover. Rule 8 of the said Rules, on the other hand, is a detailed Rule which stipulates various conditions as to the manner in which the documents are to be transmitted by the ED to the AA. * Accordingly, there is a distinction between the 'reasons to believe....
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....l Criminal Court, and the order passed by the said Court on 2nd October 2018; iv. Specific details of the suspect transactions qua each of the Petitioners; v. Copy of the ECIR or the equivalent documents of the investigating agency in Brazil; vi. Any other documents which are in the possession of the ED which form the basis of the 'reasons to believe' for the ED or of the Adjudicating Authority; vii. Order passed under Section 20(2) of PMLA for continuation of the freezing, if any." The Court had also asked ld. Counsels for the ED to furnish the said documents in a sealed cover before this Court. 18. Pursuant to the said order, the documents, as mentioned above, were produced before the Court in a sealed cover. The said documents have been perused by the Court. 19. Thereafter, on 2nd September 2021, the Registrar of the Adjudicating Authority under the PMLA as also the Deputy Director of the ED had appeared before this Court. This Court queried the officers on the procedure that was followed in these cases, to which, the following responses were received, as recorded in the order dated 2nd September 2021: "3. Mr. Amar Singh, Registrar of the Adjudicating Authority (he....
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....ptember 2021 is concerned, it is submitted by Mr. Chauhan, Deputy Director, ED, on instructions from the IO who is present in Court, that the Relied Upon Documents (RUDs) in these cases, were shown to the Adjudicating Authority. Accordingly, it is directed that an affidavit shall be specifically filed stating the stage at which the RUDs were shown to the Adjudicating Authority for its perusal. The affidavit shall specifically mention as to whether the RUDs were shown at the stage of issuance of notice to show cause dated 7th September 2020 or after replies etc. were received and at the stage of arguments before the Adjudicating Authority. The affidavit shall also specifically state as to whether the said documents were received by the Adjudicating Authority in Form 1 as per Rule 6 of The Adjudicating Authority (Procedure) Regulations, 2013." 21. Pursuant to the same, an affidavit dated 22nd September 2021, was placed on record stating that the documents, produced before the Court, in a sealed cover, were shown to the AA during the hearings. Mr. Luthra, ld. Senior Counsel, also relied upon a fresh affidavit filed by the Petitioners in WP(C) 5713/2020, as per which there is variance....
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....seizure were released on 16th July, 2020. * The order under Section 20(1) of the PMLA was passed on 30th July, 2020, directing retention of the properties in the bank accounts which were frozen for a period of 180 days. * An application being OA No. 396/2020 was then filed by the ED before the Adjudicating Authority, under Section 17(4) of the Act praying for retention of the properties which were frozen under Section 17(1A) of the Act. * Along with the said application, copies of all the Panchnamas were communicated to the Adjudicating Authority. * On the basis of the said application, filed by the ED under Section 17(4) of the Act, the Adjudicating Authority issued show cause notice dated 7th September 2020 to the Petitioners, as to why their property/records ought not to be retained for the purpose of confiscation. * With this notice dated 7th September, 2020, the 'Relied Upon Documents' (RUDs) were not sent to the Petitioners. * However, a copy of the notice was marked to the Assistant Director, Directorate of Enforcement with a request to send the RUDs to the parties concerned. The Panchnamas were then sent by the ED to the Petitioners. * Thus, apart from the sho....
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....shown to the AA, during the course of hearing as per the affidavit dated 22nd September 2021, recently filed before this Court. This fact is disputed by Mr. Luthra, ld. Senior counsel, who has argued that during the course of hearing, none of these documents were perused by the AA or were shown to the AA by the ED. Thus, according to him it is inexplicable as to how these documents could have formed part of the AA's order, or its reasoning, on record. Ld. Senior Counsel for the Petitioners has also argued that if these documents were a part of the record, the Petitioners ought to have been given copies of the same. The same were not given, which according to ld. Senior Counsel, would clearly be a breach of the Principles of Natural Justice, and a violation of the express provisions in Sections 8, 20(2) of the Act and Regulation 13 of The Adjudicating Authority (Procedure) Regulations 2013. 27. Thus, there are various questions that arise in this matter, in respect of the procedure followed by the ED as also the AA. These are: i) What is the procedure to be followed by the ED when letters of request are received under Section 60 of the Act from a contracting state? ii) Whether ....
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....06) also known as the 'Merida Convention' and (b) United Nations Convention against Transnational Organized Crime (Decree No. 5015/2004), and Protocols thereto, also known as the 'Palermo Convention'. 29. The purpose of these Conventions is to create a mechanism for international cooperation and technical assistance in matters related to international crime. The purpose of these Conventions is also to prevent and combat corruption more efficiently with cooperation between nations and to promote integrity and accountability in the management of public affairs and public property. UN Convention against Corruption (Merida Convention) 30. This Convention sets out provisions w.r.t international collaboration for combating corruption. The Convention was signed on 9th December 2003, and has been effective since 14th December 2005. India ratified this Convention on 9th May 2011. 31. As per Article 31(10) of this Convention, the measures under the Convention are to be defined and implemented in accordance with the provisions of the domestic law of the state party. Thus, while freezing, seizure and confiscation of alleged proceeds of crime and property is contemplated under Article 31 ....
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....terferes in any ongoing investigation or prosecution or judicial proceeding in a country, the rendering of legal assistance can be postponed. The said provision reads: "Article 46. Mutual Legal Assistance xxx 25. Mutual legal assistance may be postponed by the requested State Party on the ground that it interferes with an ongoing investigation, prosecution or judicial proceeding. xxx" 36. Article 54 of this Convention permits the freezing and seizure of property, in order to provide mutual legal assistance to contracting states. Article 54(2) reads as under: "Article 54. Mechanism for recovery of property through international cooperation in confiscation. xxx 2. Each State Party, in order to provide mutual legal assistance upon a request made pursuant to paragraph 2 of article 55 of this Convention, shall, in accordance with its domestic law: (a) Take such measures as may be necessary to permit its competent authorities to freeze or seize property upon a freezing or seizure order issued by a court or competent authority of a requesting State Party that provides a reasonable basis for the requested State Party to believe that there are sufficient grounds for taki....
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....admissible copy of an order of confiscation upon which the request is based issued by the requesting State Party, a statement of the facts and information as to the extent to which execution of the order is requested, a statement specifying the measures taken by the requesting State Party to provide adequate notification to bona fide third parties and to ensure due process and a statement that the confiscation order is final; (c) In the case of a request pertaining to paragraph 2 of this article, a statement of the facts relied upon by the requesting State Party and a description of the actions requested and, where available, a legally admissible copy of an order on which the request is based. xxx" 38. Further, bonafide third parties and their rights are protected under the provision of Article 55(9) of the Convention, and adequate provisions have to be made for return of confiscated property if rights of bonafide third parties are affected in any manner, as stipulated in Article 57 (2) of the Convention. UN Convention against Transnational Organised Crime and the Protocols thereto (Palermo Convention) 39. This convention deals with issues relating to transnational organised c....
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.... request for mutual legal assistance shall contain: (a) The identity of the authority making the request; (b) The subject matter and nature of the investigation, prosecution or judicial proceeding to which the request relates and the name and functions of the authority conducting the investigation, prosecution or judicial proceeding; (c) A summary of the relevant facts, except in relation to requests for the purpose of service of judicial documents; (d) A description of the assistance sought and details of any particular procedure that the requesting State Party wishes to be followed; (e) Where possible, the identity, location and nationality of any person concerned; and (f) The purpose for which the evidence, information or action is sought. xxx" 46. A perusal of the above provision, clearly shows that all the relevant facts qua the investigation and proceedings, have to be specified in the request. 47. The country to whom the request is sent also has the power to refuse mutual legal assistance under circumstances as contemplated under Article 18(21). Such circumstances could be if the requested State is of the opinion that the execution of the same would prejudice....
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.... 50. An analysis of the Merida Convention and the Palermo Convention, and a perusal of their provisions, clearly shows that while it is essential to provide legal assistance and extend cooperation in response to requests received from the contracting States, the same would have to be within the four corners of domestic law and cannot be beyond what is contemplated under the domestic law. It cannot result in any contradiction thereof, and in cases where contradictions arise, it is the domestic law that prevails. 51. In the present case, a request was received from the Brazilian authority, which was based on a judgment passed by the 7th Federal Criminal Court of the Judicial Division Rio De Janeiro, Brazil. The said decision was communicated to the Indian ED with a request for legal assistance. It is trite to note that Brazil is a party to both Merida and Palermo conventions. 52. As per Chapter IX of the PMLA, Indian authorities can make requests to foreign countries, and similarly, Indian authorities can receive requests from contracting states. Whenever a letter of request is received by the Central Government from a Court or Authority in the contracting state, it is for the purp....
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.... in Central Government contained in Chapter III and survey, searches and seizures contained in Chapter V shall apply to the property in respect of which letter of request is received from a court or contracting State for attachment or confiscation of property. xxx" 55. This, in effect, means that the requisite safeguards contained in the provisions of Chapters III and V of the Act, for the purpose of attachment, confiscation, search, freezing/seizure etc., would undoubtedly apply even in respect of requests received from contracting states under Section 60 of the Act. Thus, requests from contracting states cannot be treated at a higher threshold. 56. Thus, the ED/ Adjudicating Authority, would have to adhere to all the provisions in respect of recording the 'reasons to believe', supplying the 'Relied Upon Documents' etc., as is required to be done in the case of domestic enquiries, investigations, surveys, searches and seizures under the provisions of the PMLA, and the Rules and Regulations. II. Procedure to be followed while passing orders of search and seizure under Section 17 of the PMLA, when letters of request are received under Section 60 of the PMLA 57. The procedure t....
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.... the foregoing provisions, the following aspects emerge: firstly, the provisions of CrPC relating inter alia to seizure and attachment apply to proceedings under the PMLA but only insofar as they are not inconsistent with the provisions of the PMLA; secondly, the power conferred on an officer under section 17 of the PMLA inter alia for seizure of property must be exercised on the basis of information in the possession of the officer, if founded on such information the officer has reason to believe that a person has committed any of the acts specified in the provision; with the reason for such belief to be recorded in writing. Section 17 also mandates that upon seizure or upon issuance of a 'freeze' order, a copy of the reasons recorded by the officer alongwith material in his possession is required to be forwarded to the Adjudicating Authority in a sealed envelope. xxx 24. As noted in the impugned order, a single Judge of the Gujarat High Court has taken a contrary view on the issue in a case titled Paresha G. Shah vs. State of Gujarat & Ors. reported as 2016 GLH(1) 329 holding that it may happen that initially the authority may be in possession of some material, which ma....
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....atute where stringent procedures have been laid down. 28. We see no reason why the essence of the definition contained in section 26 of the IPC should not inform the interpretation of the same phrase in section 17 of the PMLA. It is noteworthy that the phrase 'reason to believe' has a specific connotation in criminal jurisprudence and is not merely an ordinary and colloquial phrase. 29. Besides, we must never forget the venerated principle of law laid down by the Privy Council in the case of Nazir Ahmad vs. Emperor reported as AIR 1936 PC 253, that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all; and other methods of performance are necessarily forbidden. In our view this principle must a fortiori apply to a special statute such as PMLA. 30. In light of the above discussion, we find no infirmity in the impugned judgment on the issue. We hold that ingredients of section 17 of PMLA must be scrupulously complied with and it is impermissible for seizure to be made by relying instead upon the provisions of section 102 of the CrPC." 60. In a recent judgement titled OPTO Circuit India Ltd. v. Axis Bank and Ors.....
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....llowed. In fact, the impugned communication does not even refer to the belief of the Authorised Officer even if the same was recorded separately. It only states that the Officer is investigating the case and seeks for relevant documents, but in the tabular column abruptly states that the accounts have to be 'debit freeze/stop operations'. It certainly is not the requirement that the communication addressed to the Bank itself should contain all the details. But what is necessary is an order in the file recording the belief as provided under Section 17(1) of PMLA before the communication is issued and thereafter the requirement of Section 17(2) of PMLA after the freezing is made is complied. There is no other material placed before the Court to indicate compliance of Section 17 of PMLA, more particularly recording the belief of commission of the act of money laundering and placing it before the Adjudicating Authority or for filing application after securing the freezing of the account to be made. In that view, the freezing or the continuation thereof is without due compliance of the legal requirement and, therefore, not sustainable. xxx 15. This Court has time and again emphasize....
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...., and the same cannot, purely, be based on the orders, or the material received from the contracting State. In other words, the authority cannot simply and mechanically follow the rationale and logic of the material received, but has to also, independently, satisfy itself that an illegal act has been committed under the provisions of the Act. 64. After arriving at that satisfaction, the Director ED, or the person authorized has to record the same as the 'reasons to believe' and thereafter, pass orders directing search or seizure, as also freezing of accounts, under Section 17(1A) of the PMLA. 65. Both parties have made detailed submissions on the question whether the 'reasons to believe' recorded by the Director ED, or the person authorized, at the time of search and seizure have to be provided to the parties concerned or not. On behalf of the Petitioners, the judgment in J. Sekar vs. Union of India 246 (2018) DLT 610 is relied on to argue that the 'reason to believe' recorded by the Director ED, or the person authorised under Section 5(1) has to be given to the party concerned, and therefore similarly 'reasons to believe' recorded by the person authorised under Section 17(1A) al....
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....ion 157of the Code of Criminal Procedure, 1973 (2 of 1974) or a complaint filed before a Magistrate or a court by a person authorized to investigate the scheduled offence for taking cognizance of such 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 submitted by an officer authorized 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 maybe authorized by the Central Government, by notification, for this purpose;" xxx "8. Manner of forwarding of a copy of the reasons and the material relating to search, seizure and freezing under sub-section (2) of section 17 and sub-section (1A) of section 17 of the Act and search of persons under sub-section (2)of section 18 and sub-section (2) of section 20 of the Act to the Adjudicating Authority: (1) The authority, as the case may be, shall prepare an index of a copy of the reasons recorded along with the material in his possession and sign each page ....
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....k register and register showing details of receipt of a copy of the reasons recorded along with the material for the purposes of this rule and shall ensure that necessary entries are made in the register immediately on receipt of such copy of the reasons and the material." [xxx 10. Period of retention of copy of the reasons and the material relating to search, seizure and freezing and search of persons by the Adjudicating Authority: (1) The Adjudicating Authority shall retain copy of the reasons and the material relating to search and seizure and search of persons for a period of ten years or if, before the expiry of the said period of ten years,- (i) any proceedings under section 8 of the Act have been commenced, until the disposal of such proceedings, or (ii) where an appeal has been preferred to the Appellate Tribunal under section 26 of the Act, until the disposal of such appeal by the Appellate Tribunal, or (iii) where an appeal has been filed in the High Court under section 42 of the Act, until the disposal of such appeal by the High Court; whichever is later." 68. A perusal of the Section 17(2) of the PMLA, as also the 2005 Rules, clearly show that the Director/....
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....f doubt that the copy of the reasons and all the material available with the ED, in relation to the investigation in terms of Section 60 of the Act, and the request received from the contracting state, has to be sent to the Adjudicating Authority. 75. The material in possession would mean and include all material in possession, in respect of the investigation, which is to be forwarded by the ED to the AA, irrespective of whether the same have been referred to in the 'reasons to believe' or not. 76. On the basis of these "reasons to believe" and the "material in possession" of the ED, the ED has to then move an Application under Section 17(4) of the PMLA before the Adjudicating Authority, for retention of the record or the property seized, or for continuation of the freezing order, as applicable. III. Procedure to be followed by the Adjudicating Authority, upon receipt of an Application under Section 17(4) of the PMLA from the ED 77. As per Section 8 of the PMLA, when the Adjudicating Authority receives a complaint or an application filed by the ED under Section 17(4), if the Adjudicating Authority has `reason to believe' that an act has been committed which constitutes money la....
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....ved upon such other person. Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after: (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering." 80. In order to streamline the procedure of the Adjudicating Authority, detailed Regulations titled `The Adjudicating Authority (Procedure) Regulations, 2013' have been enacted. The relevant provisions of the said Regulations read: Regulation 13. Issues of summons and notices: (1) Every summon or notic....
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....he time for filing of reply ought to be fixed by the Adjudicating Authority keeping in mind the time that may be consumed in service of the RUDs, after the issue of the show cause notice under Section 8(1). 86. Under Section 8(2) of the PMLA, the Adjudicating Authority is duty bound to provide a hearing to the defendants. Such a hearing ought to be a meaningful one, and a proper hearing where the complainant i.e., the ED, as also the Defendant(s), are able to place their respective stands before the Adjudicating Authority ought to be given. The complainant cannot be given any preferential treatment by the Adjudicating Authority. 87. The Adjudicating Authority, as the name suggests, is an authority which adjudicates, i.e., which decides disputes between the parties on merits without bias or prejudice. 88. The records that are relied upon by the Complainant are to be properly marked as C-1 series of exhibits, and the documents filed by other Applicants are to be marked as A-1 series of exhibits, under Regulation 25 of the Adjudicating Authority (Procedure) Regulations, 2013. Further, all documents relied upon by the Defendants are to be marked as D-1 series of exhibits. This shows....
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....nder Section 8(3) of the Act. 95. The order passed by the Adjudicating Authority would then be communicated to all the parties concerned. Thereafter, remedies can be availed of by the parties concerned, in accordance with law. IV. Procedure to be followed for inspection of records 96. After receiving the show cause notice and the 'Relied Upon Documents' if the defendant(s) concerned is of the opinion that the material forwarded by the ED to the Adjudicating Authority could include documents/material beyond the documents relied upon by the AA, inspection can be sought by the defendant(s) of the said records. 97. An application for inspection has to be filed, by the party concerned, in terms of Form 7 and Regulation 16 of the Adjudicating Authority (Procedure) Regulations, 2013, and a fee, in respect thereof, has to be deposited as per Regulation 17 of the said Regulations. After inspection, the Defendant may request for copies of the documents as per Regulation 18, after paying the stipulated fee. 98. Thus, the provisions relating to inspection and fees for inspection and copying, are in respect of records which are beyond the 'Relied Upon Documents' which may be part of `mater....
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.... detailed procedure provided under the said Rules has to strictly be complied with to ensure that there is no tampering in the material sent by the ED to the Adjudicating Authority. iv) Whether the ED ought to transmit all the documents, which are in its possession, to the Adjudicating Authority while sending the same in a sealed cover under Rule 8 of The Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the manner of forwarding the reasons and material to the Adjudicating Authority, impounding and custody of records and the period of retention) Rules 2005? * Along with the application under Section 17(4), The Director ED or the person authorized has to transmit all the material in the possession of the ED in respect of the said case, to the Adjudicating Authority, in accordance with the procedure stipulated in Rule 8 of the 2005 Rules. It would not be permissible for the ED to retain some part of the material, and send partial documents to the Adjudicating Authority, at this stage, in as much as the statute contemplates sending of `the material in possession of the authority' and NOT 'material forming the basis of the 'reasons to believe''. No documents....
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....Adjudicating Authority has to ensure that the said service has been effected. A simple service of the show cause notice, without the RUDs would not be sufficient. The 30-day period notice would naturally have to be thus counted from the date when the complete RUDs are supplied to the parties concerned/ Defendants, as no effective opportunity to reply would be possible unless all the RUDs are received. viii) What is the procedure to be followed for providing inspection of records, and for giving a reasonable hearing to the parties, prior to passing of orders by the Adjudicating Authority under the PMLA? * No fee can be charged for supplying the 'Relied Upon Documents' by the Adjudicating Authority directly, or through the ED. Insofar as inspection is concerned it is clarified that the provisions relating to inspection and fees for inspection and copying, are in respect of records which are beyond the RUDs which may be part of `material in possession'. Inspection of such documents can only be given to the party concerned and not to any third parties. Strict confidentiality ought to be maintained. For obtaining inspection, parties may file an application in terms of Form 7 and Reg....
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.... any of the said material at that stage. 104. Replies were then filed by the Petitioners, merely on the basis of the Panchnamas and the allegations in the show cause notice as also the application under Section 17(4). None of the other relevant material, which was the basis of the seizure under Section 17(1A) and the complaint under Section 17(4) of the PMLA were supplied to the Petitioners, as the same were not even supplied by the ED to the AA. 105. The other aberration in this case was that the documents forming the basis of the 'reasons to believe' of the ED at the stage of Section 17 of the PMLA, were stated to have been shown to the Adjudicating Authority exclusively, of which the Petitioners had no knowledge/notice. The same were shown in non-compliance of the 2005 Rules, and were shown post the issuance of the show cause notice, as is evident from the affidavit filed by the ED. Paragraphs 5.3 to 5.6 of the affidavit filed by the ED dated 22nd September 2021, claims that the ED showed the said documents to the AA at the time of hearing. This, however, has been disputed by all Counsels for the Petitioners who state that during the hearing, the documents were not shown to th....
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....an Authorities restricted the freezing amounts, which in their opinion were the amounts involved in the commission of offences. This action was several months after the initial freezing order. 108. These cases afford a stark example of mechanical execution of a letter of request received from a contracting state, which would not be permissible under the scheme of PMLA, and would also be contrary to the provisions of the Merida and the Palermo Conventions. 109. However, no orders, in respect thereof, are being passed, in view of the statements made by Mr. Amit Mahajan, ld. CGSC, appearing on behalf of the ED, on instructions from Mr. Deepak Chauhan, Deputy Director, ED. The said statement has been recorded in the order dated 7th October 2021, reads as under: "However, without going into this, it is submitted by both ld. CGSC's appearing on behalf of the ED, under instructions, that since these are one of the first set of matters that have arisen under Section 60 of the Prevention of Money Laundering Act, 2002, the ED would be willing to have a fresh look at the freeing orders dated that have been passed, and any other proceedings pursuant thereto based on the averments made in t....
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.....P.(C) 4680/2021 titled Alok Industries Limited v. Directorate of Enforcement 114. In respect of WP (C) 4680/2021, related to M/s Alok Industries, the case of the Petitioner was that it underwent insolvency proceedings before the NCLT. The Corporate Insolvency Resolution Process commenced on 18th July 2017 and the NCLT approved the Resolution plans vide orders dated 8th March 2019 and 26th July 2019. Vide Board Resolution dated 14th September 2020, a new management has taken overt he said company. Thus, Mr. Ritin Rai, ld. Senior Counsel appearing for the Petitioner, submits that these alleged offences, being prior to the date of commencement of Insolvency proceedings, the company which is now being run by the new management would have to be given the benefit of Section 32A of the Insolvency and Bankruptcy Code 2016. 115. In response, Mr. Amit Mahajan, ld. CGSC has submitted that the ED is willing to take a fresh look, as to whether the Petitioner satisfies the pre-conditions under Section 32A of the IBC, and if so, on the basis of the facts pleaded in the writ petition and any other submissions made by the Petitioner, the ED would pass fresh orders within a period of three months....