TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 694
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..../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') and West Bengal Power Development Corporation Ltd. (hereinafter 'WBPDCL'). 5. An FIR being RC 2202015 E 0013 dated 22nd September, 2015 was registered by the Centr....
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....uments 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 ascertainable as relevant documents are not available. From the documents that are available, responsibility for any offence for allocating the coal blocks cannot be fixed. Further, the irregularities regarding aspect of mining the coa....
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.... 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 Laundering Act 2002 [2002 Act] would not sustain bearing in mind the decision rendered by this Court in Prakash Industries Limited & Anr. vs. Directorate of Enforcement [2022 SCC OnLine Del 2087] as well as by three learned Judges of the Supreme Court in Vijay Madan Lal Chaudhary & Ors. vs. Union of India & Ors. [2022 SCC OnLine SC ....
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....oposition 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 and since the Trial Court has already accepted the closure report and has closed the criminal complaints against the Petitioners in the predicate offence, the impugned attachment orders deserve to be quashed. 16. On the other hand, Mr. Sharma, ld. Counsel appearing for the Enforcement Directorate relies upon paragraphs 281, 290 and 295 of the Vijay Madanlal Choudhary (supra) judgment to argue that....
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....lly 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 the authorised officer, who is no less than the rank of Deputy Director. We must hasten to add that the nuanced distinction must be kept in mind that to initiate "prosecution" for offence under Section 3 of the Act registration of scheduled offence is a prerequisite, but for initiating action of "provisional attachment" under Section 5 there need not be a pre-registered criminal case in connection with scheduled offence. This ....
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....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 Union of India: xxx xxx xxx xiii. However, under Section 8(6) if the Special Court on the conclusion of the trial finds that no offence of money-laundering has taken place or the property is not involved in money-laundering it will release the property which has been attached to the person entitled to receive it. xxx xxx xxx 307. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his....
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....ering 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 crime. Section 2(1)(u) creates an indelible link between property derived or obtained and criminal activity relating to a scheduled offence. It is only when it is found that a person has derived property as a result of criminal activity that the offence of money laundering can be said to have been committed. Absent the element of criminal activity, the provisions of the Act itself would not be attracted. The offence of money laundering is essentially aimed at depriving persons of the fruits and benefits that may have bee....
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....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 a Court of competent jurisdiction owing to an order of discharge, acquittal or quashing of the criminal case of the scheduled offence, there can be no action for money laundering against not only such a person but also any person claiming through him in relation to the property linked to the stated scheduled offence. In other words no action under PMLA can be resorted to unless there is a substratum of a scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not quashed) criminal complaint/inquir....