AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (11) TMI 1228
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the recent judgment passed by the Hon'ble Apex Court in the case of Pankaj Bansal Vs. Union of India r reported in 2023 SCC online SC 1244, such grounds of arrest have to be furnished to the accused in writing against acknowledgment. He further submits that the expression "henceforth" employed in paragraph 35 of the aforesaid judgment does not mean that the judgment is prospective in nature. In this regard he referred another judgment delivered by the Division Bench of Punjab & Haryana High Court in the case of Roop Bansal Vs. Union of India (CWP 23005 of 2023). He contended that non-compliance of the mandate of Section 19 PMLA would vitiate the very arrest itself. On this issue he further relied the order passed in the case of V. Senthil Balaji Vs. State rep. by Deputy Director reported in 2023 SCC onLine SC 934 and reiterated that non-compliance of the mandate of Section 19 of the PMLA Act would vitiate the very arrest itself. 4. Learned senior counsel further draws attention of this court towards Section 45 of PMLA and submits that Section 45(1)(ii) stipulates that where the public prosecutor opposes the application, then if the court is satisfied that there are reasona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in the said FIR. As a matter of fact, after obtaining holding number in respect of the property in question, the said property was offered to M/s. Jagatbandhu Tea Estate Pvt. Ltd., of which the petitioner is a Director, and upon obtaining legal opinion with regard to due-diligence of the title documents of the said property, the said company purchased the said property for an agreed amount of Rs.7.00 crore. The price of the said property was negotiated for Rs.7.00 crore as against the prevailing value of over Rs.20.00 crore since there was ongoing litigation with regard to the said property with the Indian Army. Learned counsel strenuously contended that there is no mens rea on part of the petitioner while executing the sale-deed on behalf of M/s. Jagatbandhu Tea Estate Pvt. Ltd. being purchaser of the said property since neither the petitioner nor M/s. Jagatbandhu Tea Estate Pvt. Ltd. had any knowledge that the said Pradeep Bagchi was not the owner of the property and was claiming his ownership on the basis of forged documents. He further submitted that three cheques of Rs. 7.00 crore were issued by the company named M/s. Jagatbandhu Tea Estate Pvt. Ltd. in favour of ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to this petitioner. 7. Mr. Anil Kumar, learned ASGI vehemently opposed the prayer for bail and submits that the cases cited by learned Sr. counsel for the petitioner will not be applicable in the instant case, inasmuch as, in the case of Pankaj Bansal (Supra) at para-35, it has been directed by the Hon'ble Apex Court that henceforth, copy of such written grounds of arrest should be furnished as a matter of course and without fail. As such, the very word "Henceforth" & "Without Fail" indicates that the judgment passed by the Hon'ble Apex Court is prospective in nature. In support of his contention, he also relied upon the dictionary meaning of "Henceforth" and submits that this is a word of futurity. He further submits that Section 45 of PMLA starts with non-obstante clause which starts with the word notwithstanding anything contained in the Code of Criminal Procedure, no person accused of an offence under this Act shall be released on bail or on his own bond unless the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and the entire complaint case indicates that the petitioner was involved in the entire conspiracy a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the holding numbers. 3.2 Since offences under sections 420, 467 and 471 of IPC are scheduled offences under Part A of Schedule of PMLA, 2002, an ECIR bearing No. RNZO/18/2022 was therefore recorded on 21.10.2022 (RUD No. 1). and an investigation under the provisions of the Prevention of Money Laundering Act (PMLA) was initiated. 3.3 Investigation revealed that the above-stated two holding Nos. 0210004194000A1 and 0210004031000A were obtained for property - plot no. MS 557, Morabadi Mouza, ward no. 21/19, having an area of 455.00 decimals at Ranchi. It also revealed that the above-stated property was later Sold by the said Pradeep Bagchi (Aadhaar no. 511337882315, PAN (AMBPB1317J) to one company M/s Jagatbandhu Tea Estate Pvt. Ltd (PAN AABCJ3705F, represented by its Director Dilip Kumar Ghosh having Aadhaar no. 912605787465) and it is registered at the office of the SRO Ranchi, bearing deed No 6888, Vol No 919, Page No 525-576, year 2021. From the sale deed of this property registered on 01.10.2021 (RUD No. 7)., it is seen that the declared government value/Market value of the said property is Rs 20,75,84,200/whereas the said property has been sold for an amount ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour from the defence. Investigation reveals that all documents which helped Jayant Karnad to get land from defence and favourable orders from High Court were arranged and provided by an advocate. Jyant Karnad first time received the rent from the army, in the year 2008 amounting to Rs. 417 in his HUF Account 450110110002549 maintained in Bank of India. After this, he received Rs. 50,640/as an arrear of due rent from 1998 to 2008 in account number 4501101000299692204. He has been receiving rent from Defence Estate Office, till 28th December, 2021 in HUF account bearing no 450110110002549 held in Bank of India. Jayant Karnad finally sold the land to 14 different persons for a total sum of Rs. 2.55 crores which was received in his Bank of India account bearing no. 450110110002549 (RUD No. 11 & 12). 3.6 As stated above that there were ongoing litigations regarding the possession of this property between Army and the purported claimant Jayant Karnad who had sold the land to 14 persons by way of 16 deeds (RUD No. 115 to KON 130) on strength of the order obtained from the High Court of Jharkhand by concealing and manipulating facts. The accused persons namely Afshar Ali Pradip ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ginal deeds for ascertaining actual owner of the property. Investigation has revealed that the original registers in the records of Registrar of Assurances, Kolkata were already forged/tampered with and falsified In favour of Pradeep Bagchi and the direction to visit Kolkata to verify the records available with Registrar of Assurances was a well-executed plan so that the property could be transferred to Amit Kumar Agarwal through his company Jagat Bandhu Tea Estates Pvt. Ltd. 3.7 The amount involved i.e.; proceeds of crime acquired by the above criminal activities can be summarized as follows :-................." Emphasis Supplied 9. Having perused the prosecution complaint quoted herein above now this Court will look into the contention raised by learned Sr. counsel for the petitioner which in substances are as follows:- (i) Non-compliance of section 19 of PMLA by the Enforcement Directorate; (ii) The Petitioner has satisfied both the conditions of section 45(1)(ii) of the PMLA. (iii) The petitioner had no knowledge that the accused Pradeep Bagchi committed forgery in order to impersonate himself as owner of the property in question.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble Apex Court has held as under:- "37. The second reason as to why this would be the proper course to adopt is the constitutional objective underlying such information being given to the arrested person. Conveyance of this information is not only to apprise the arrested person of why he/she is being arrested but also to enable such person to seek legal counsel and, thereafter, present a case before the Court under Section 45 to seek release on bail, if he/she so chooses. In this regard, the grounds of arrest in V. Senthil Balaji (supra) are placed on record and we find that the same run into as many as six pages. The grounds of arrest recorded in the case on hand in relation to Pankaj Bansal and Basant Bansal have not been produced before this Court, but it was contended that they were produced at the time of remand. However, as already noted earlier, this did not serve the intended purpose. Further, in the event their grounds of arrest were equally voluminous, it would be wellnigh impossible for either Pankaj Bansal or Basant Bansal to record and remember all that they had read or heard being read out for future recall so as to avail legal remedies. More so, as a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xception. 11. Now coming to the contention of learned ASGI that as to whether the said judgment is prospective in nature as the word "Henceforth" is used by the Hon'ble Apex Court or whether the direction of the Hon'ble Apex court is clarificatory in nature. In this regard, learned Sr. counsel for the petitioner has also relied upon the judgment passed in the case of Roop Bansal (Supra) wherein Punjab & Haryana High Court has clarified that since in the case of Pankaj Bansal (supra) the petitioners were not supplied with the document and petitioners of that case were granted relief then admittedly, the case of Pankaj Bansal (supra) has to be read as having retrospective effect. For brevity, para-28 of Roop Bansal (supra) is quoted herein below: "28. The argument of the respondents that since the grounds of arrest would be required to be supplied henceforth, the arrest in the present case would not be affected, is devoid of merit. No doubt, the Hon'ble Apex Court held that the grounds of arrest would "henceforth" be furnished in writing to the accused but at the same time, it declared the arrest and the consequential remand of Pankaj Bansal and Basant Bansal to be illega....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... would be rendered nugatory by permitting the authorities concerned to merely read out or permit reading of the grounds of arrest............... ..................... we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception." Having regard to the discussions made herein above, on this score alone, i.e. non-compliance of section 19(1) of PMLA by the Enforcement Directorate, the petitioner deserves to be enlarged on bail. 14. Now coming upon the merits of the case and the other contentions of learned counsel for the rival parties; after going through the prosecution complaint, relevant part of which is quoted in the preceding paragraph; prima facie it appears that the Enforcement Directorate have reason to suspect but not reason to believe that the petitioner is an accused of conspiracy in the instant case. For example; one of the allegations is that the property in question was of 20 Crore but the company through the petitioner has negotiated and purchased it in only 7 Crore. This allegation itself transpires that it is mere a suspicion as it is well....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Income Tax Act, 1961 that income chargeable to tax has escaped assessment inter alia by the omission or failure of the assessee to disclose fully and truly all material facts necessary for the assessment of that year, held that the power to reopen an assessment must be conditioned on the existence of "tangible material" and that "reasons must have a live link with the formation of the belief". This principle was followed subsequently in a two-Judge Bench decision in CIT v. Techspan (India) (P) Ltd. While adverting to these decisions we have noticed that Section 83 of the HPGST Act uses the expression "opinion" as distinguished from "reasons to believe". However for the reasons that we have indicated earlier we are clearly of the view that the formation of the opinion must be based on tangible material which indicates a live link to the necessity to order a provisional attachment to protect the interest of the government revenue." 15. Applying the above principle to the facts of the present case, the following would appear: - (i) There is no document/material on record to implicate the petitioner in forging and manipulating the title deeds being Deed of Sale No. 4369....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Adjudicating Authority. (vi) There is no material on record to show, even remotely, that any proceeds of crime have been generated by the petitioner. The amount of Rs.25.00 lakh paid by M/s. Jagatbandhu Tea Estate Pvt. Ltd. to Mr. Pradeep Bagchi was not secured by committing any offence but the same was paid out of sale of tea leaves from the tea garden of M/s. Jagatbandhu Tea Estate Pvt. Ltd. and the account of the company was duly audited. 16. Even otherwise, for any offence mensrea has to exist unless the statute expressly excludes the same {Refer People's Union for Civil Liberties v. Union of India; (2004) 9 SCC 580 (para 48)}. The PMLA does not expressly exclude mensrea and hence it has to be present to make a person liable to be punished thereunder. Moreover, the amount of Rs.25 Lakh was debited by the company and there is no whisper in the allegation that the said amount has not been shown in its books of account. It is well settled that in absence of any proceeds of crime, there cannot be any allegation of laundering thereof. Reference in this regard may be made to the judgment of Vijay Madanlal Choudhary (supra), at Paragraph 467(d)]. For better apprecia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that Government." At this stage it is profitable to refer to the judgment passed in the case of Vijay Madanlal Choudhary (supra); wherein the Hon'ble Apex Court has clarified the intent as well as the effect of Section 45 of PMLA Act. For brevity para400 to 403 is quoted herein below: "400. It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. While dealing with a similar provision prescribing twin conditions in MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma, held as under: "44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are "reasonable grounds for believing" which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt. 402. Sub-section (6) of Section 212 of the Companies Act imposes similar twin conditions, as envisaged under Section 45 of the 2002 Act on the grant of bail, when a person is accused of offence under Section 447 of the Companies Act which punishes fraud, with punishment of imprisonment not less than six months and extending up to 10 years, with fine not less than the amount involved in the fraud, and extending ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he factual scenario that there is no document on record, at least at this stage, to implicate the petitioner in forging and manipulating the title deed being Deed of Sale No. 4369 dated 11.10.1932 of the property in question in the office of Registrar of Assurances at Kolkata and doing conspiracy of laundering out of proceeds of crime; hence this Court is of the opinion that at least at this stage, the allegations fall short of essential ingredients of offence of money laundering under section 3 of the Act which clearly states that the proceeds of crime has been used in any manner; however, in the case at hand Rs. 25 lakhs which was paid by the company was out of sale of Tea leaves from the Tea Garden and the account of the company was duly audited. 19. Thus, on both the counts; i.e., with regard to noncompliance of section 19 of PMLA by the Enforcement Directorate and also on merits of the case, prima facie with the available records produced before this court it does not transpire that the petitioner has committed the crime under the Act and/or is likely to commit any offence while on bail as the prosecution has not produced any material which would impress this Court that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tizens, observed that arrest infringes the fundamental right to life. This Court referred to Section 19 of the PML Act, for the in-built safeguards to be adhered to by the authorised officers to ensure fairness, objectivity and accountability.Vijay Madanlal Choudhary (supra), also held that Section 436A of the Code can apply to offences under the PML Act, as it effectuates the right to speedy trial, a facet of the right to life, except for a valid ground such as where the trial is delayed at the instance of the accused himself. In our opinion, Section 436A should not be construed as a mandate that an accused should not be granted bail under the PML Act till he has suffered incarceration for the specified period. This Court, in Arnab Manoranjan Goswami v. State of Maharashtra, held that while ensuring proper enforcement of criminal law on one hand, the court must be conscious that liberty across human eras is as tenacious as tenacious can be. 29. Detention or jail before being pronounced guilty of an offence should not become punishment without trial. If the trial gets protracted despite assurances of the prosecution, and it is clear that case will not be decided within a f....