TaxTMI 
TaxTMI 
2021 (11) TMI 21
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....Act, 2002. 2. The Applicant, at the relevant time, was the Home Minister in the State of Maharashtra. The then Commissioner of Police, Mr.Param Bir Singh, wrote a letter to the Chief Minister of Maharashtra on 20 March 2021 alleging that Applicant abused his position and powers to seek illegal monetary benefits. Writ Petition No.1541of 2021 was filed in this Court by one Dr. Jayashree Patil seeking a direction for investigation against the Applicant. Mr. Param Bir Singh filed a Public Interest Litigation No.6of 2021 on 24 March 2021, seeking a direction for investigation by the Central Bureau of Investigation (CBI). The Division Bench of this Court, by judgment and order dated 5 April 2021, disposed of these petitions and directed a preliminary enquiry into the complaint and allegations. The enquiry was directed to be concluded within fifteen days with liberty to the CBI to decide on further action to be taken. The Applicant challenged the order passed by the Division Bench in the Supreme Court by filing Special Leave Petition (Criminal) Diary No.9414/2021. The Supreme Court dismissed the petition by order dated 8 April 2021. 3. The preliminary enquiry was conducted. Upon this pr....
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....ng with his son in the Supreme Court. On 16 August 2021, the Supreme Court directed that this writ petition be listed along with matters raising identical legal issues. As regards interim relief, Supreme Court observed that it would be open to the Petitioners (Applicant) to take recourse to appropriate remedies available under the Code of Criminal Procedure, 1973, including by way of quashing petition in the High Court, if so advised. The challenge in the petition pending in the Supreme court was confined to the validity of the provisions in question. The Supreme Court observed that the order was passed in light of the observation made in the case Devendra Dwivedi v/s. Union of India 2021 SCC OnLine 221. The Directorate sent the fifth summons on 16 August 2021 to the Applicant, asking him to remain present, to which the authorized representative of the Applicant appeared and requested for time stating that the Applicant is taking recourse to the lawful remedies as per the liberty granted by the Supreme Court. 6. In this factual backdrop, the Applicant has approached this Court with this application with various reliefs. The reliefs sought are as follows: (a) Set aside/quash the ....
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....s(s) or directions(s) to Respondent No.2 in furtherance of the observations; order(s) and direction(s) issued by the Hon'ble Supreme Court inter alia, vide Order dated 02.12.2020 passed in SLP (Cri.) No. 3543 of 2020 titled as 'Paramvir Singh Saini vs. Baljit Singh & Ors.' to the effect that all proceedings carried out by Respondent No.1 & 2 including those in relation to the recording of statements etc. in terms of the Notice(s)/summons(s) issued under Section 50 of PMLA in ECIR MBZO-1/66/2021 to be audio/videographed in the presence of Applicant's lawyer at a visible distance (beyond audible range) inter-alia by way of installation of appropriate CCTV cameras; (i) In the peculiar facts and circumstances of the case, entrust the investigations into ECIR/MBZO-I/66/2021 dated 11.05.2021 to a Special Investigating Team (SIT) comprising of ED officers outside the Mumbai Zonal Office and monitor/supervise the same in terms of the ratio of law laid down by the Hon'ble Supreme Court in "Babu Bhai Jamna Das Patel v. State of Gujarat (2009) 9 SCC 610. Respondent Nos.1 and 2 have filed a preliminary reply. 7. We have heard Mr. Vikram Choudhary, learned Senior Advocate with Mr.Ashok Mund....
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....hat the offences under the Act are always deemed to be 'cognizable' is illegal, arbitrary and unconstitutional. (d) Issue appropriate writ(s), order(s) or direction(s) and hold that the insertion of "Explanation (i)" to Section 3 of Prevention Money Laundering Act, 2002, vide Section 193 of Finance Act (No.2) 2019 w.e.f. 01.08.2019, which requires reading the disjunctive 'or' instead of conjunctive 'and' in Section 3 before the words "projecting or claiming it as untainted property, renders Section 3 to be manifestly arbitrary, excessive, unreasonable, overbroad, and unconstitutional, by inter-alia altering the basis, pre-requisites & the very ambit as well as the scope of the offence contemplated under Section 3, contrary to the interpretation laid to rest by this Hon'ble Court in Nikesh Tarachand Shah v/s Union of India, (2018) 11 SCC 1; (e) Issue appropriate writ(s), order(s) or direction(s) to and hold that the insertion of "Explanation (ii)" to Section 3 of Prevention of Money Laundering Act, 2002, vide Section 193 of Finance Act (No.2) 2019 w.e.f. 01.08.2019 is absolutely vague, unconstitutional, arbitrary, manifestly illegal, capable of multiple inter....
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....ication and Writ Petition (Cri.) No.282/2021 pending in the Supreme Court. 9. Learned Counsel informs us that a group of a large number of matters is being heard by the Supreme court where various legal questions concerning the PMLA, including the applicability of provisions of Code of Criminal Procedure (CrPC), are being argued. The Counsel have also placed on record the questions of law circulated by the learned Solicitor General in this group of matters and questions of law circulated by the counsel for the Applicant in the Supreme Court. Various questions of law regarding the Prevention on Money Laundering Act are under consideration before the Supreme Court in the group of matters, including Criminal Writ Petition No.282/2021. The questions of law circulated before the Supreme Court by the learned Solicitor General relevant for the present case are- as to whether the offence under the PMLA is cognizable or non-cognizable, particularly in view of the Explanation inserted in 2019; whether the procedure contemplated under all provisions of Chapter XII of the Code of Criminal Procedure, 1973 is required to be followed while commencing and continuing investigation under the PMLA; ....
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.... now be considered by the Supreme Court is the challenge to the validity of the provisions. Even if some of the prayers made in the petition pending in the Supreme Court overlap with the present application, in view of the specific liberty, the relief prayed for can be considered. The reference to the observations made in the decision in the case of Devendra Dwivedi v/s. Union of India 2021 SCC OnLine 221 is significant and therefore, this Court can decide on the positions of law as well. In the case of Devendra Dwivedi, the Supreme Court had observed while relegating the parties to the High Court that it will benefit from the view of the High Court in respect of the matters that are to be considered by the Supreme Court. According to the learned Additional Solicitor General, the scope of the proceeding before us is narrow, and there is no mandate to consider the application filed by the Applicant, and the words used by the Supreme Court "if so advised" and the reference to the remedies under Cr.P.C. are meaningful. 11. We have considered the submissions and the record. The order passed by the Supreme court on 16 August 2021 in Writ Petition (Cri.) No. 282 of 2021 refers only to t....
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....ss orders regarding proceedings under an enactment, it is essential to keep in mind the object and purpose of such legislation. The legislative history and the intent of the Prevention of Money-Laundering Act, 2002 is significant. Large scale money laundering affects the economic interest of the country. Menace of money laundering has international ramifications. The Political Declaration and Global Programme of Action, annexed to the resolutions adopted by the General Assembly of the United Nations on 23 February 1990 and the Political Declaration adopted by the Special Session of the United Nations General Assembly in June 1998 called upon the Member States to adopt national money-laundering legislation and programme. The PMLA was enacted to prevent money laundering and to provide for confiscation of property derived from money laundering. Money-laundering, as defined under Section 2(p) read with section 3, takes place when 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 projects or....
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....ts, for examination of witnesses and documents etc. The authorities can summon any person to give evidence or to produce any records during the course of any investigation and to attend in person or through authorized agents, as such officer may direct. Section 50(3) also states that such person shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required. The impugned summons are issued under this provision. 16. Now, we will consider the stage at which the Applicant is before us. Section 2(na) defines 'Investigation' as including all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under the Act to collect evidence. The reference is to all Proceedings. It is quite clear that the search carried out under section 17 of the PLMA and impugned summons issued to the Applicant is "investigation" as defined under the PMLA. Thus, by the present application, the Applicant calls upon this court to interdict or interfere with the investigation under the PMLA. It is therefore imperative to prefix the discussion on the facts and the reliefs ....
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..... Criminal proceedings ought not to be scuttled at the initial stage. Even to proceed on the ground of malice or abuse of powers, the High Court must be convinced that there is a clear case of abuse of power. It is not the function of the court to monitor the investigation as long as the investigation does not violate any provision of law, and it must be left to the investigating authority to decide the course of the investigation. The court cannot interfere at every stage of investigation and interrogation as it would affect the normal course of the investigation. The investigating agency must be permitted to proceed in its own lawful methodology and the procedure. The High Court should not stifle legitimate prosecution, especially when entire facts are incomplete and hazy and also when the evidence has not been collected and produced. Thus save in exceptional cases where non-interference would result in a miscarriage of justice, the court and the judicial process should not interfere at the investigation stage of offences. With this position of law in mind, we now proceed to ascertain whether Applicant has made out any extraordinary case. 18. The Applicant's challenge before....
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....vailable only on 9 August 2021 by appending to the proposed attachment order under section 5 of the PMLA. It was contended that ECIR has been given even at the stage of remand in some cases; and in the Applicant's case, it is deliberately withheld. Learned Senior Advocate for the Applicant clarified during the submissions that since the issue of applicability of Chapter-XII of Cr.P.C. to the PMLA is pending before the Supreme Court, the question of ECIR be equated with FIR will be decided in the Applicant's writ petition pending in the Supreme Court, and the aspect of ECIR should be considered here as a ground of legal malice. 21. The Division Bench of this Court in the judgment and order dated 29 July 2015 in the case of Charu Kishore Mehta v. State of Maharashtra WP No.2961/2015 decided on 29 July 2015 has held that ECIR is an internal document of the Enforcement Directorate, and unlike an FIR, it is not a public document, and at the investigation stage, the copy of the same cannot be furnished as a right. Second, now the copy of ECIR is available with the Applicant. On the facts of this case, the learned ASG pointed out that a search was carried out of the Applicant's p....
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....he investigation, it may be discovered that the affairs of the company not only disclose irregularity but commission of the offence, the prosecution will not retrospectively change the complexion or character of the proceeding. 23. According to us, this aspect need not detain us. The legal questions as regards section 50(3) of the PMLA offending constitutional guarantee under Article 20(3) is being considered by the Apex Court in the Applicant's petition, and the stage of Applicant's arrest under section 19 has not yet reached. We have to keep in mind the stage at which the Applicant has approached before us. The stage at which the Applicant has approached before us is only under section 50 of the PMLA. This facet is relevant for other prayers of the Applicant as well. 24. Now, we come to the main contention of the Applicant. On law, it was contended by the Applicant that section 50(2) of the PMLA gives discretion to the officer to call the summoned person to appear through representative or in person. It was argued that this discretion must not be abused, and reliance was placed on the decision in the case of Barium Chemicals Ltd. v. Sh.A.J.Rana (1972) 1 SCC 240. It was cont....
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....de and Personal Assistant, Mr. Kundan Shah, were arrested. b) Immediately thereafter, on 28 June 2021, again, a summons was issued by Respondent No.2. This time the Applicant was asked to appear in person on 29 June 2021 in connection with the evidence collected and statements recorded during the investigation in respect of the concerned ECIR. This summons was issued without giving a copy of the ECIR to the Applicant. On 29 June 2021, the Applicant co-operated through the authorized representative and again asked for the documents and ECIR. The Applicant also requested for recording his statement through Video Conference. c) The third summons was received by the Applicant on 2 July 2021. This summons directed the Applicant to appear on 5 July 2021. There was no other reference to the documents and schedule. The letter annexed to the summons stated that ECIR being an internal document, cannot be shared with the Applicant. The Applicant replied to this summons on 5 July 2021, stating that the Applicant was committed to rendering co-operation; however, the manner in which the investigation was being conducted was giving rise to an apprehension that it was not impartial and transpa....
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....s not given to the Applicant. This was calculated to embarrass the Applicant, and it cannot be considered as a bona fide approach of the Authority. The Applicant in the first summons was asked to appear in person or through his representative, and even after his authorized representative attended, this option was not given in the subsequent summons, and the Applicant was asked to remain present. The social standing of the Applicant in public, his age and health condition ought to have been considered. The Applicant was forced to appear in person without any reason, and selected news items were released to media tarnishing his image. This is a complete abuse of discretion under section 50(2) of the PMLA. i) The summonses were issued to exactly coincide with the proceedings in the Court. For instance, when the Applicant's petition was listed before the Supreme Court on 3 August 2021 for interim relief, the Applicant was directed to appear on 2 August 2021. j) After issuing summons on 2 July 2021, nothing was done by the Respondent- Directorate and just a day before the hearing on interim relief in the Supreme Court, the Applicant was directed to appear; k) A series of searches ....
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.... the ECIR. The reply was also under the belief that once his statement was recorded on 25 June 2021 during the search, it need not be recorded again, which is an incorrect position. Thereafter two persons were arrested after the search, and they had given their statements. Therefore, the matter had travelled beyond the ECIR, which is only a document at the inception. The third summons issued on 2 July 2021 was accompanied by a detailed letter. This letter clarified that the Applicant's presence is required to confront the evidence collected, including the statements recorded. The Respondent- Directorate informed the Applicant that he was adopting dilatory tactics, the ECIR is only an internal document, and it is a settled position that the investigating agency will decide the mode and manner of investigation, and it cannot be dictated. Pursuant to this summons also, the Applicant did not appear and sent a reply running into 20 paragraphs. By that time, the Applicant had become a defaulter, having not produced documents and not having appeared pursuant to the summons, yet the Respondent- Directorate showed restraint and did not immediately take action under section 174 of IPC or....
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....ng to us, this argument does not lead the case of the Applicant any further. Section 63 of the PMLA provides for punishment for false information or failure to give information. Section 63(c) states that if a person to whom a summon is issued under section 50 either to attend to give evidence or produce books of account or other documents at a certain place and time, omits to attend or produce books of account or documents at the place or time does not do so, he is liable for penalty. Section 63(4), however, states that, notwithstanding anything contained in clause (c) of sub-section (2), a person who intentionally disobeys any direction issued under section 50 shall also be liable to be proceeded against under section 174 of the IPC. From section 63(4), it is quite clear that notwithstanding anything with sub-section (2)(c), a person who is intentionally disobeying any direction issued under section 50 is also liable to be proceeded against section 174 of IPC. We are not considering the legal challenge to the action under section 174 of IPC. The Applicant has failed to demonstrate any malice from this action. 30. The Applicant's argument is that Enforcement Directorate is act....
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....tter of fact, nothing was argued in that regard. That an FIR is registered against the Applicant by the Central Bureau of Investigation under the provisions of the Prevention of Corruption Act is an admitted position. Also that the offence under the Prevention of Corruption Act is a part of the schedule appended to PMLA, which sets out the predicate offences. In the absence of any factual particulars placed before us demonstrating from the FIR such finding that in fact, the investigation is proceeding beyond the scope of the predicate offence, cannot be rendered in abstract. Suffice it to note that the Applicant is one of the main accused in the FIR filed under the Prevention of Corruption Act. 33. On the ground of illegality, nothing is pointed out to us as to how the summonses are illegal or beyond the powers of the authority. The search was conducted under section 17 of the PMLA. Statements have been recorded, and the Applicant is called under section 50 in respect of certain information. Though the matter has been elaborately argued, neither any legal bar for issuing summons under section 50 nor any absence of power to issue summons has been pointed out. The entire focus has b....
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.... Cr.P.C. The Directorate of Enforcement has challenged the decision in the case of Vakamulla Chandrashekar in Special Leave Petition (Cri.) Diary No.36918/2017 and while issuing notice on 4 January 2018, the Supreme Court has stayed the operation of the impugned order of the Delhi High Court. The learned counsel for the parties have sought to advance arguments on the implication of the order passed by the Supreme Court staying the operation of the order of the Delhi High Court. Based on the decision of the Supreme Court in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI CINOD Secretariat. Madras (1992) 3 SCC 1, it was sought to be contended by the Applicant that the stay order of the Supreme Court does not mean that the impugned order has been wiped out from existence. According to us, once the order passed by the Delhi High Court in the case of Vakamulla Chandrashekar has been stayed by the Supreme Court, it will not be proper for us to rely on and follow the said decision. The learned ASG argued that all the safeguards in the decision of Arnesh Kumar v. State of Bihar followed by the Delhi High Court in Vakamulla Chandrashekar are already imp....
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....ies. Thereafter, after almost a year, multiple FIRs were filed. The Supreme Court had clubbed the multiple FIRs against the appellant, and then at the instance of the home department of the State, the matter was reopened. The appellant was then arrested. These facts, on the face of it, were striking, and the Supreme Court found that the Petitioner made out a case before it. Quite clearly, the case at hand does not have the features as in the case of Arnab Goswami, which on the face of it, demonstrated the need for intervention. It is equally important to note that the Supreme Court in this decision also emphasized the need to ensure proper enforcement of criminal law, and both ends of the spectrum need to be balanced. Therefore facts of each case will have to be looked at. The decision in the case of Arnab Goswami thereafter has been referred and explained by the decision of the three Judges of the Supreme Court in the case of Neeharika Infrastructure Pvt.Ltd. 40. The Applicant relied upon various orders wherein it is directed that no coercive steps be taken against the parties approaching the Supreme Court. Copies of such orders are placed on record. In the decision of Neeharika ....
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....ess, and the facts are not clear, the High Court should restrain itself from passing interim order of not to arrest or "no coercive steps to be adopted" and should relegate the Applicant to apply Section 438 Cr.P.C. before the competent court. 42. The learned ASG contended that when the Applicant has invoked section 482 of Cr.P.C., a discretionary relief, the Applicant's conduct will also have to be seen. Learned ASG submitted that while the Applicant keeps on proclaiming that he is ready and willing to co-operate, his conduct is entirely otherwise. For some reason or other, the Applicant is avoiding attending pursuant to the summons. We find this submission as justified. If there are no mala fides and no illegality, then there is no question of not attending and cooperating with the investigation. The learned ASG also pointed out that the search was carried out under section 17 of the PMLA on 25 June 2021 at the Applicant's residence, and his statement was recorded. There is no challenge at this stage to the initiation of investigation as per section 2(na) of the PMLA. It was contended that the Applicant can be considered at the most as a suspect and is given a chance to ....
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.... We conclude that no case is made out by the Applicant for the exercise of our jurisdiction under Section 482 Cr. P.C to restrain Respondent No.1 and Respondent No.2 from taking any penal/coercive action against the Applicant. If the applicant has apprehension of arrest, he has the statutory remedy under section 438 of Cr. P.C by approaching the competent court. 46. Grant of prayer clause (c) to direct recording of Applicant's statement through electronic mode and not to compel his presence will amount to interfering with the discretion of the investigating authority as to the manner in which they intend to carry out the investigation. The Supreme Court in the case of P. Chidambaram v. Directorate of Enforcement (2019) 9 SCC 24 in paragraph-64, it is observed thus: "64. As held by the Supreme Court in a catena of judgments that there is a well-defined and demarcated function in the field of investigation and its subsequent adjudication. It is not the function of the court to monitor the investigation process so long as the investigation does not violate any provision of law. It must be left to the discretion of the investigating agency to decide the course of investigation. ....
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....to our notice the decision of a Three Judges Bench in the case of Poolpandi and Others v. Superintendent, Central Excise and Others (1992) 3 SCC 259. Mr. Malhotra pointed out that the very first paragraph of the said judgment mentions that the common question arising in the said case before their Lordships was the stand taken by the petitioners that they were entitled to-the presence of their lawyers when they were being questioned during the interrogation under the provisions of the Customs Act, 1962, or the Foreign Exchange Regulation Act, 1973. Their Lordships had noticed the difference of opinion of different High Courts in this connection and had rejected the submission made on behalf of the petitioners therein, that they were entitled to have their lawyers present at the time of interrogation. Such prayer, therefore, was disallowed. Mr. Malhotra has also drawn our attention to the decision in Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra (2011) 12 SCC 362, wherein the decision in Poolpandi's case (supra) was also referred to and, ultimately, having regard to the facts of the of the case, a two-Judge Bench of this Court directed as f....
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....uest for presence of the lawyer was rejected. The learned ASG submitted that the decision in the case of Poolpandi was followed in the case of Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra (2011) 12 SCC 362: (2012) 1 SCC (Cri) 573. The learned ASG submitted that the decision in the case of Birendra Kumar Pandey incorrectly records that Poolpandi was a case of direct involvement during actual interrogation and, thus, the decision in the case of Poolpandi being of three learned Judges, this Court should follow the same. It is, however, needs to be noted that the decision in the case of Birendra Kumar Pandey has referred to the decision of three learned Judges in Poolpandi and the judgment in the case of Jugal Kishore Samra. After considering both the decisions, the Supreme Court, in the case of Birendra Kumar Pandey, has directed that the advocate for the petitioner therein should be allowed to remain present during the questioning, but he will be made to sit at a distance beyond the hearing range but within a visible range. 49. Further, we note that in various cases of the Enforcement Directorate under the PMLA, the counsel for PMLA Directo....
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....A, and the prayer deserves to be grated. 51. To recapitulate, under the provisions of PMLA, the issuance of summons is part of the investigation. The High Courts would not interfere and interdict a lawful investigation under its powers under section 482 of Cr.P.C. unless exceptional circumstances as per the settled law are present. None of these grounds exists in the present case. There is no jurisdictional error in the issuance of summonses as they have been issued by the officers duly authorized under the PMLA. The object and purpose of PMLA show that it not only confers powers on the authority to investigate the offence of money laundering but a duty to investigate it in the larger public interest. The Applicant, without any valid reason, has refused to cooperate with the investigation by not attending the summonses issued by the authorities. The Applicant has failed to establish the case of legal and factual malice on the part of the RespondentDirectorate in proceeding with the investigation in question. As regards the merits of the factual aspect, in oral argument, nothing is shown to us as to why we should hold in favour of the Applicant. Suffice it to note that the predicat....