TaxTMI 
TaxTMI 
2023 (1) TMI 694
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....0-I/2022 dated 14th February, 2022, 17/KLZO-I/2022 dated 20th June, 2022, issued by the Directorate of Enforcement (ED) under section 5 of the Prevention of Money Laundering Act, 2002 (hereinafter 'PMLA') and all consequent proceedings arising therefrom against the following Petitioners: Writ Petition Number Petitioners W.P.(C) 3821/2022 & W.P.(C) 12437/2022 • M/s Emta Coal Limited • Shri Ujjal Kumar Upadhaya • Mrs. Sangeeta Upadhaya W.P.(C) 14530/2022 • Mr. Sujit Kumar Upadhaya • Mr. Dev Jyoti Upadhaya • Ms. Neeta Upadhaya • Ask Family Trust • M/s Midwest Hospital and Medical Institute Pvt. Ltd. • M/s Pacific Mines and Construction Pvt. Ltd. • M/s Panorama Country Club Resorts Pvt. Ltd. • M/s Ujjal Transport Agency 4. The background of the matters is that vide judgment dated 24th September, 2014 passed in Manohar Lal Sharma v. Principal Secretary, & Ors. (2014) 9 SCC 614, the Supreme Court had de-allocated and cancelled various captive coal blocks which were allocated to West Bengal State Electricity Board (hereinafter 'WBSEB....
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.... statement has also been recorded and he has left it to the court to decide it on merits of the case. 15. The investigation has been concluded on the basis of the available records/documents. Various important documents could not be obtained by the Investigating Officer despite his best efforts. The documents are missing. This has been a genuine handicap in the investigation. 16. From the available record/documents, it cannot be ascertained that there was any criminality in allocation of coal blocks and/or their mining. Further, it cannot be ascertained that there was any foul play in formation of JV company namely BECML. As already mentioned in the beginning, this case pertains to allocation of coal blocks through GDR some of which were allotted way back in 1995. There appears to be no chance of getting the relevant documents. The recording of statements of various officials has also not yielded any results. 17. The allocation of coal blocks to PSUs of WB Govt. by MoC, Govt. India has already been cancelled by the Hon'ble Supreme Court vide its judgment dt. 24.09.2014 [(2014) 9 SCC 614]. The manner of processing the request of PSUs of WB Govt. is not....
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....I has resulted in that investigating agency itself submitting a closure report. The matter requires consideration. Till the next date of listing, there shall be stay of further proceedings pursuant to the impugned O.A of 14 February 2022 bearing no. 01/KLZ0-I/2022. List again on 18.04.2022." 10. In view of the stay granted in W.P.(C) 3821/2021, the Court vide order dated 29th August, 2022, also stayed further proceedings under section 8 of the PMLA in W.P.(C) 12437/2022. The said order reads as under: "W.P.(C) 3821/2022 and CM No. 37473/2022 (direction) and W.P.(C) 12437/2022, CM No. 37384/2022 (stay) Learned counsel representing the Enforcement Directorate prays for and is granted time to file a supplementary counter affidavit bearing in mind the fresh disclosures that have been made. Additionally, a counter affidavit may be filed on or before the next date fixed in connected W.P.(C) 12437/2022. The Court takes note of the submission of Mr. Bhandari, learned counsel appearing for the petitioner who contends that once the closure report has come to be accepted by the competent court, further proceedings under the Prevention of Money L....
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....3 of the PMLA contemplates that a predicate offence is a necessary precondition for any assets to be considered as 'proceeds of crime'. Various paragraphs of Vijay Madanlal Choudhary (supra) are placed before this Court in support of this submission. It is thereafter submitted that post the judgment in Vijay Madanlal Choudhary (supra), the Supreme Court has, accepted this proposition in - i. Parvathi Kollur v. Enforcement Directorate [Criminal Appeal No. 1254/2022, decided on 16th August, 2022], ii. Adjudicating Authority v. Shri Ajay Kumar Gupta & Ors. [Criminal Appeal Nos. 391-392/2018, decided on 2nd December, 2022], iii. Directorate of Enforcement v. M/s Obulapuram Mining Company Pvt. Ltd [Criminal Appeal No.1269/2017, decided on 2nd December, 2022]. The ratio of Vijay Madanlal Choudhary (supra) has been followed in the abovementioned cases and the Supreme Court has quashed the ECIRs in the respective matters. 15. It is the further submission on behalf of the Petitioners that the reasons given in the order accepting the closure report would have no bearing on whether the attachment can continue or not. The attachment cannot continue indefinitely....
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....t be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter. xxx xxx xxx 290. As a matter of fact, prior to amendment of 2015, the first proviso acted as an impediment for taking such urgent measure even by t....
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.... Inasmuch as Section 5(1) envisages that such an action can be initiated only on the basis of material in possession of the authorised officer indicative of any person being in possession of proceeds of crime. The precondition for being proceeds of crime is that the property has been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. The sweep of Section 5(1) is not limited to the accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. Such a person besides facing the consequence of provisional attachment order, may end up in being named as accused in the complaint to be filed by the authorised officer concerning offence under Section 3 of the 2002 Act. xxx xxx xxx 300. The procedural safeguards provided in respect of provisional attachment are effective measures to protect the interest of the person concerned who is being proceeded with under the 2002 Act, in the following manner as rightly indicated by the ....
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....f money laundering cannot be a standalone offence. The relevant portion of the said judgment reads as under: "44. The first issue which merits consideration is the question of the provisions of the Act being interpreted as creating a stand-alone and independent offence. This issue assumes significance in the facts of the present case especially since the proceedings relating to the first chargesheet stand quashed. As this Court construes the provisions of the Act it is manifest that an offence of money laundering is founded on the commission of a predicate offence. The issue which arises is what would be the consequential impact, if any, of a predicate offence and proceedings in relation thereto coming to be quashed or even compounded and the accused discharged. In the considered opinion of this Court once it is found by the competent authority that a predicate offence is either not evidenced or on facts it is held that no offence at all was committed, proceedings under the Act would necessarily have to fall or be brought to a close. The Court bears in mind the language of Section 3 of the Act which links the activities and processes of money laundering to proceeds of crim....
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....f which attachment was effected, does not exist. In absence of a scheduled offence, the question of existence of any proceeds thereof, do not arise." 20. Subsequent to the judgment of the Supreme Court in Vijay Madanlal Choudhary (supra), the ld. Division Bench of this Court, in Harish Fabiani and Ors. v. Enforcement of Directorate and Ors., 2022 SCC OnLine Del 3121 has also taken a similar view. The relevant portion of the said judgment is set out below: "22. The Hon'ble Supreme Court has been clear and categorical in its reasoning as evident from the para extracted above. The undeniable sequitur of the above reasoning is that firstly, authorities under the PMLA cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed; secondly, the scheduled offence must be registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum; thirdly, in the event there is already a registered scheduled offence but the person named in the criminal activity relating to a scheduled offence is finally absolved by ....