TaxTMI 
TaxTMI 
2022 (5) TMI 309
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.... the schedule offence because the PMLA deals with the process or activity with respect to the proceeds of crime including concealment, possession, acquisition or use, however in the light of the explanation of Section 44(1) of PMLA, the argument of the appellant was repelled. The High Court further held that if any observation has come in the bail application, having no material to connect with the commission of any offence, would not be enough to quash the proceedings. The Court relied upon the seizure made by the I.T. Department including that of the currency notes of denomination of Rs. 2000 in the context that the currency notes of denomination of Rs. 500 and Rs. 1000 ceased to be legal tender by order of the Government at the time of demonetization and the people were in queue to exchange those old currency notes for new ones. As the seizure of currency notes of Rs. 33 crores in the denomination of Rs. 2000 was made, therefore, the closure report made by Central Bureau Investigation (in short 'CBI') in schedule offence cannot be relied upon. 2. Briefly, the facts relevant for the purpose of the appeal are that the appellant J. Sekar Reddy is the Managing Partner of M/s SRS Mi....
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..... In the order, the Adjudicating Authority stated that the description of the bank or bank officers is not on record. In absence of any identification, who were the bank officers who converted the denomination of old currency notes into new and that too from which bank, there was no material with the Deputy Director for making a reasonable belief for change of old into new currency notes through the bank officers and observed that the said allegation is based on speculations, which are not legally tenable. 7. It is relevant to note that RCMA1 2016 A0051 and RCMA1 2016 A0052 were challenged by the appellant as well as other coaccused before the Madras High Court by filing Crl. O.P. Nos. 24200 and 24202 of 2017 invoking the power under Section 482 Cr.P.C., which were decided by a common order dated 27.6.2018 and the High Court in para 32 quashed the RC MA1 2016 A0051 and RC MA1 2016 A0052 against the appellant and other coaccused giving liberty to the CBI to treat the allegations made in FIRs as supplementary allegations or to merge the same in first FIR RC MA1 2016 A0040. 8 It is most relevant to note that CBI after investigation in the main case in RC MA1 2016 A0040 submitted the....
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....r invocation of PMLA, preexisting occurrence of the scheduled offence is required because the proceeds of crime are essential property derived from criminal activity of the said offence. The Adjudicating Authority dealt with the order of the Deputy Director (ED) and for lack of evidence refused to pass an order for attachment. As per the material available on record, the offence of money laundering specified in Section 2(1)(p) and also in Section 3 of PMLA is not made out. It is further urged that as per Section 8(1) of PMLA, a show cause notice may be issued regarding the attached property if the said Authority is having reason to believe that any person has committed an offence under Section 3 or is in possession of proceeds of crime. The adjudication proceedings and criminal proceedings are independent to each other but the material for commission of offence recorded by the authorities in those proceedings may be a relevant factor, in particular when for lack of evidence, the Authority itself is satisfied that the attachment of the proceedings in PMLA case cannot be continued. Reliance has been placed on the judgments of this Court in Radheshyam Kejriwal Vs. State of West Bengal....
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.... the residence of Shri J.Sekar cash of Rs. 12,00,000/- in old currencies was seized (iv) The details of seizure of new currencies of Rs. 2000 notes made in the various premises are given below:- S. No. Name and address of the assessee New Denomination Rs. 2000 seized (in Rs.) 1 M/s SRS Mining, No.36, Sudhamma Building, Flat No. 1, First Floor, Rear Block, Vijayaragava Road, T. Nagar, Channai - 600 017 8,00,00,000 2 M/s SRS Mining, 26/14, Yogammbai Street, T Nagar, Chennai - 600 017 1,63,06,000 3 M/s SRS Mining, 3rd Floor, VBC Solitaire, No. 47 & 49, Bazullah Road, T Nagar, Chennai - 600 017 13,16,000 4 G.Venkatesh, Venu Jewellers, No. 127, shop No. 18, NSC Bose Road, Adinath complex, Sowcarpet, Chennai - 600 079 11,86,000 5 K. Umapathy, Royal India Gems & Jewels P Ltd., No. 226, Old No. 124, Shop No. 18,19,20 4th Floor, Adinath Complex, Chennai - 600 079 1,00,000 6 M/s SRS Mining, Tata Ace Vehicle TN23 BC 5757 24,00,00,000 Total 33,89,08,000 The new currencies belong to M/s SRS Mining and they were recorded in the parallel cash book of M/s SRS Mining. (v) As per the seized documents, the source of new currencies seized ....
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....to A6 for lack of sufficient Evidence. There was nothing incriminating surfaced on the part of accused persons, as these accused 1 to 6 had in conspiracy with unknown bank officials and public servants cheated the Government of India. 4. The evidence on record is not adequate to launch prosecutable case against the accused persons beyond reasonable doubt to establish that they fraudulently converted the unauthorised cash held by them in old currency notes in to NHD, thereby depriving the public, in enforcing their right and thus the accused 1 to 6 had in conspiracy with unknown bank officials and public servants cheated the Government of India. 6. The investigation has not established the allegations levelled against A1 to A6. On the basis of statement of witnesses of LW1 to 170 and documents D1 to D879 and M.O.I to 8 collected during the investigation, there is no sufficient evidence to launch prosecution against the accused 1 to 6 persons, for the offences of Criminal Conspiracy, Cheating, Criminal misconduct. 7. As per the oral and documentary evidence, the allegations in the FIR to the effect that the accused persons have caused wrongful loss to the Government of India....
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....hat the accused persons have laundered their unaccounted money in conspiring with the bank officials of various banks who helped them laundering the unaccounted money. There is nothing on record which reveals the name of even single bank, much less, the various banks as stated by the Deputy Director. Similarly not a single bank official is identified or named and there is nothing on record which reveals any such detail. Consequently the Reasonable Belief becomes baseless and is mere speculation of the Deputy Director. Such a belief can not be justified and sustained. The aspect concerning nonidentification and/ or nonavailability of any bank and bank officials, goes to the root of the formation of the entire Reasonable Belief. The Additional Director/ Joint Director/ Deputy Director ought to have directed the Enforcement Directorate Officers to investigate or cause to be investigated the aspect concerning the bank or bank officers. The Deputy Director ought to have deliberated on the issue and proceeded, which is not done. In the absence of such basic material the Reasonable Belief entertained by the Deputy Director specifically forming the Reasonable Belief that the accused launde....
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....t from these decisions can broadly be stated as follows: (i) Adjudication proceedings and criminal prosecution can be launched simultaneously; (ii) Decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) Adjudication proceedings and criminal proceedings are independent in nature to each other; (iv) The finding against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cann....
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....preponderance of probabilities. On perusal of the statement of Objects and Reasons specified in PMLA, it is the stringent law brought by Parliament to check money laundering. Thus, the allegation must be proved beyond reasonable doubt in the Court. Even otherwise, it is incumbent upon the Court to look into the allegation and the material collected in support thereto and to find out whether the prima facie offence is made out. Unless the allegations are substantiated by the authorities and proved against a person in the court of law, the person is innocent. In the said backdrop, the ratio of the judgment of Radheshyam Kejriwal (supra) in paragraph 38 (vi) and (vii) aptly applicable in the facts of the present case. 19. As discussed above, looking to the facts of this case, it is clear by a detailed order of acceptance of the closure report of the schedule offence in RC MA1 2016 A0040 and the quashment of two FIRs by the High Court of the schedule offence and of the letter dated 16.5.2019 of I.T. Department and also the observations made by the Adjudicating Authority in the order dated 25.2.2019, the evidence of continuation of offence in ECR CEZO 19/2016 is not sufficient. The Dep....