TaxTMI 
TaxTMI 
2022 (12) TMI 269
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....er: 2.1. In Kanchipuram, there was a person, by name, D.Sridhar, against whom the local police had registered 26 criminal cases covering almost all the provisions of the Penal Code, including murder, attempt to murder, abduction, extortion, criminal intimidation, kidnapping, cheating, etc. It appears that he had fled to the Middle East, but, the investigation of the cases against him proceeded and they are at various stages now. We are told at the bar that Sridhar died in Cambodia on 04.10.2017. 2.2. Since the cases registered against him disclosed the commission of scheduled offences under the Prevention of Money Laundering Act, 2002 [hereinafter referred to as 'PMLA'] viz., 120- B, 302, 307, 364, 384 and 385 IPC and section 3 r/w 25 of the Indian Arms Act, 1959, the Enforcement Directorate registered a case in ECIR No.CEZO/03/2016 on 09.03.2016 and took up investigation under the PMLA. 2.3. It is the case of the Enforcement Directorate that D.Sridhar, by committing various criminal activities, had acquired wealth and purchased various properties in and around Kanchipuram. During the course of investigation, the Enforcement Directorate identified a prope....
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....he name of anyone else. Now, the character of proceeds of crime has changed from "money" to "immovable property". When the same immovable property is sold, it cannot lose the characteristics of a proceeds of crime, though the purchaser may claim that he had legally purchased it through lawful sources. Of course, it is open for the purchaser to take a plea of lawful acquisition before the adjudicating authority and it is now too preposterous to hazard a guess on the outcome of such a plea.' 2.6. On 29.12.2016, the adjudicating authority confirmed the order of provisional attachment u/s.8(3) of the PMLA. Challenging the order of the adjudicating authority, the Pothy brothers approached the appellate Tribunal u/s.26 of the PMLA. The Pothy brothers contended that they were innocent purchasers and they did not know that their vendors had acquired the property via criminal activities of her father D.Sridhar. The Enforcement Directorate resisted the claim. However, the Tribunal, by order dated 11.01.2019, gave the following findings: '51. As mentioned earlier, the Appellants are bonafide purchasers and they have not done anything against law. Furthermore, the Appellants ....
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....ls on 25.09.2019 by a consent order, the terms of which are as under: '8. When the matter is taken up today for hearing, the following is agreed upon: (i) The respondents shall not alienate or encumber the property sought to be attached; (ii) The respondents are at liberty to use the property as a pathway; (iii)Any road is to be laid by them would be at their own cost, for which, no equity can be claimed; (iv)Any temporary shed put up by them also shall be at their own costs. 9. All these arrangements are subject to the result of the adjudication in S.C.No.74 of 2017 by the Special Court, Chennai. The respondents shall pay a sum of Rs.2 lakhs (Rupees two lakhs only) without prejudice to the contentions in the pending case. These arrangements also subject to the result in S.C.No.74 of 2017 on the file of the Special Court, Chennai. 10. It is made clear that all the issues are left open to be decided by the Special Court. The Special Court, viz., the Principal Judge, City Civil Court, Chennai, shall dispose of S.C.No.74 of 2017 within a period of six months from the date of receipt of a copy of this order. The common orde....
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....ue was not the criminal prosecution against the petitioner herein but the provisional order of attachment that was passed by the Enforcement Officer u/s.5(1) of the PMLA in respect of the impugned property. In that context, this Court had stated that the provisional attachment order cannot be quashed at the threshold as the said property prima facie appeared to have been acquired through proceeds of crime. However, the appellate Tribunal had set aside the attachment proceedings by rendering a finding of fact in paragraph No.51, extracted above, that the Pothy brothers were not involved in any crime or money laundering. 8. Mrs.G.Hema, learned Special Public Prosecutor [ED], further contended that in paragraph No.53 of the order of the appellate Tribunal, it is stated that the Pothy brothers have given an undertaking that they would have no objection for the criminal proceedings to continue as per law. In view of this undertaking, she stated that they cannot challenge the criminal proceedings in this petition u/s.482 Cr.P.C. 9. We are afraid, we cannot countenance this submission, because there cannot be any estoppel against statute. When a person has a statutory re....
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....es Act, 1956 and he is the one who had ultimate control over the affairs of the company. Since, the Accused 7 herein, was already known that the subject property was the part of proceeds of crime which involved in money laundering, he did not incline to settle the balance sale consideration to Ms.Dhanalakshmi Sridhar, who sold the subject property and for safer side, he has settled the balance sale consideration amount of Rs.5,00,00,000/- to Smt.S.Kumari, who was not a seller in the said transaction. Further, to escape from the clutches of law, he has misused the Company and made the payment in the name of "balance sale consideration" through the company that too, not to the seller, but to Smt.S.Kumari who is wife of Sridhar, the Accused 1 herein. The above narrated sale transactions made, within short span of time, between Sridhar, Smt.S.Kumari, Ms.Dhanalakshmi Sridhar, Shri S.Ramesh Pothy and his brothers and M/s.Pothys Private Ltd are very well within the ambit of the provision viz. "Interconnected Activities" under Section 23 of the PMLA, 2002. Keeping the above in view, it stands to reason that Shri S.Ramesh Pothy has indirectly involved and knowingly as a party in the offence....
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.... is defined under the Act, by Section 2(1)(u) thereof, to mean any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence (which is referred to in our judgment as the predicate offence). Thus, whosoever is involved as aforesaid, in a process or activity connected with "proceeds of crime" as defined, which would include concealing, possessing, acquiring or using such property, would be guilty of the offence, provided such persons also project or claim such property as untainted property. Section 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. ' (emphasis supplied) 13. A reading of the above clearly shows that for mulcting criminal liability u/s.3 and 4 of the PMLA, the prosecution should place materials before the Court to show that the person has not only acquired the property by committing a scheduled offence, but, he should have projected that prope....
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....umari, as desired by the VENDOR, on 23.02.2016 in reference No.CIUBH16054302426 d) Rs.5,30,745/- (Rupees Five Lakhs thirty thousand seven hundred and forty five only) deducted being 1% TDS of the sale consideration. e) Rs.25,43,755/- (Rupees Twenty Five Lakhs Forty three thousand seven hundred and fifty five only) paid by the PURCHASERS to the VENDOR at the time of registration. 16. This sale deed is a registered document, which the prosecution themselves rely upon. At this juncture, pertinent it is to point out that as per the judgment of the Supreme Court in State of Orissa vs. Debendranath Padi (2011) 3 SCC 351, u/s.482 Cr.P.C., documents of unimpeachable character of sterling quality can be looked into and relied upon by the Court for the purpose of deciding a quash petition in order to secure the ends of justice. A perusal of the above averments in the sale deed shows that the petitioner had paid various amount by RTGS to Kumari, the mother of Dhanalakhmi Sridhar on 31.12.2015, 13.01.2016 and 23.02.2016 and has also deducted TDS for that. This payment to the mother of Dhanalakshmi Sridhar, which has been reflected in the sale deed itself, cannot amou....
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....late Tribunal, the Enforcement Directorate and the Pothys approached this Court under Section 42 of the PMLA by filing 12 Civil Miscellaneous Appeals (six each) in C.M.A.Nos.2904, 2912, 2917, 2918, 2930, 2932, 2938, 3336 to 3342 of 2019, in which, final orders were passed on 25.09.2019, which has been referred to in paragraph No.2.8 of the order dated 18.02.2022 and the same has also been extracted supra. The order dated 25.09.2019 in the 12 Civil Miscellaneous Appeals were further modified on 11.11.2019 and the Pothys were directed to deposit Rs.10,00,000/- instead of Rs.6,47,25,000/- in S.C.No.74 of 2017, which they have complied with. 6. Since the prosecution against Ramesh Pothy in S.C.No.74 of 2017 was quashed by this Court in Crl.O.P.No.2342 of 2022 by order dated 18.02.2022, Ramesh Pothy filed a petition in Crl.M.P.No.9157 of 2022 in S.C.No.74 of 2017 u/s.8 (7) of the PMLA before the trial Court for releasing his property from attachment. After hearing either side, the trial Court, by the impugned order dated 14.07.2022, has dismissed the same, aggrieved by which, the present revision has been filed. 7. Heard Mr.Nithyaesh Natraj, learned counsel appearing for the petit....
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....ropriate orders regarding confiscation or release of the property, as the case may, involved in the offence of money-laundering after having regard to the material before it." (emphasis supplied) 15. Section 8(7) of the PMLA came up for consideration before a Division Bench of this Court in Crl.R.C.No.448 of 2020 dated 16.08.2021 (The Assistant Director v. Canara Bank), wherein, this Court has held that Section 8(7) of the PMLA is a stand alone section and is not governed by the proviso to Section 8(8) of the PMLA, as the latter would come into effect only after the culmination of the trial, but, whereas the former could be invoked during the pendency of the trial, if it is found that the trial is not progressing "for any other reason". In this case, there was no progress in the trial from 2017 onwards for various reasons. 16. That apart, as alluded to above, the property in question, which belongs to the Pothys cannot be confiscated in lieu of Rs.5,30,74,500/- in the hands of their vendors, to wit, Kumari and Dhanalakshmi. Of course, it would be open to the Enforcement Directorate to attach other properties of Kumari and Dhanalakshmi, if they are not able to trace the sum....