TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 779
X X X X Extracts X X X X
X X X X Extracts X X X X
....FFECTS OF CORRUPTION IN THE ECONOMY OF A COUNTRY:. .22 VIII. CONCLUSION:.........................................................................................23 Under assail in the present Writ Petition is the order passed by the Directorate of Enforcement Government of India under Section 17(1A) of the Prevention of Money Laundering Act, 2002 (herein after referred as PMLA). I. BRIEF FACTS OF THE CASE: 2. Central Authority of India (MHA), Government of India, received a Letter of Request (LoR) dated 12.11.2018 from the Central Authority of Brazil (Office of the Prosecutor General of the State of Rio de Janeiro, through Federal Prosecutors) addressed to the Central Authority of India, seeking Legal Assistance in a criminal matter. The stated offences included that of breach of bank secrecy and the collection of financial information of accounts, which were used for money laundering in benefit of a transnational criminal organization, in addition to the freezing of corresponding assets and later repatriation, aiming at future confiscation of objects, products and instruments of crime related to corruption and money laundering, as well as the assurance of award of damages caus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....garding the payment received from third parties. II. CONTENTIONS OF THE PETITIONER: 7. Mr.P.Ananthakrishnan, the learned counsel for the petitioner, would mainly raise three grounds to assail the impugned order dated 29.04.2022. (1) Firstly, under Section 56 of PMLA, there is no Government notification issued in respect of an agreement, if any, between the Indian Government and Brazilian Government. In the absence of any such Government notification, Section 56 of PMLA cannot be invoked against the petitioner. (2) Secondly, under Section 58 of PMLA, an ECIR must be filed and in the present case, no ECIR has been filed. Thus, the Writ Petition is to be considered. (3) Thirdly, the order of seizure/attachment has been made by the Assistant Director, the Enforcement Directorate, who is an incompetent authority. As per the petitioner, the competent authority would be the Deputy Director and on that ground also, the impugned order is liable to be set aside. 8. The learned counsel for the petitioner would rely on the order passed by Hon'ble Delhi High Court on 27.10.2021. We are unable to consider the findings in the said order passed by the Hon'ble Delhi High Court, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....implications", means- (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person transfers in any manner the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime, or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India. Explanation.- Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-laundering (Amendment) Act, 2009 (21 of 2009)." Therefore, the respondent have rightly acted on the LOR received from Brazil Government. IV. DISCUSSIONS: 13. With reference to the 1st ground raised by the petitioner, Section 56(2) of PMLA states that, "The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed as a 'complaint', as they are both mutually exclusive terms. It is further submitted that a police officer cannot submit a complaint and an ED officer cannot file a chargesheet. Otherwise, Section 155(4) and Section 155(2) would be rendered otiose, as in a case falling under Section 155(4) of the Cr.P.C., if the police officer after investigation forms an opinion that only non-cognizable case is made out, then in such a situation he is required to file a police report in view of provision of Section 155(4), but due to the operation of Section 2(d), the same will be treated as a complaint and the police officer would be treated as a complainant. Also, in a case where Magistrate orders the police officer to investigate a non cognizable offence under Section 155(2) of the Cr.P.C., then in view of operation of Section 155(3) of the Cr.P.C., the police officer would necessarily file a chargesheet. However, due to the operation of Section 2(d), the chargesheet will be treated as a complaint and he will be treated as a complainant. It is submitted that in case where a police officer investigates a non-cognizable offence, the Legislature has, by way of a deeming fiction, treated the cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2002 and the bank accounts of the Petitioner was frozen U/s. 17(1A) of the PMLA, 2002. Funds to the tune of USD 3,35,774 was received by M/s Royal Impex and Shri Gulab Punwani is a sole proprietor of M/s Royal Impex since inception of the said firm, therefore concerned accounts were frozen. 19. Subsequently, the Assistant Director, Directorate of Enforcement, Delhi Zonal Office II, on 26.05.2022 filed an application before the Adjudicating Authority, PMLA U/s. 17(4) of the PMLA in O.A.No. 661 of 2022 for continuation of freezing of bank accounts frozen U/s. 17(1A) of the PMLA. 20. M/s Royal Impex vide its letter dated 15.02.2022 submitted that it is a sole proprietorship concern and that it is completely manged by Shri Gulab Punwani, further, it is evident that M/s Royal Impex has received fund to the tune of USD 3,35,774/- out of the aforesaid, US $13,249,403.49/- was transferred to India in respect of crime of corruption committed at Brazil. During the course of action under PMLA, amounts available in the account of M/s Royal Impex bearing A/c. No. 416584722, and account of Shri Gulab Punwani who is a sole proprietor of M/s Royal Impex bearing account No. 6831682031 were froze....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or Assistance in Certain Matters and Procedure of Attachment and Confiscation of property' deals with reciprocal arrangement with a contracting state. The term 'contracting state' is defined U/s. 55 (a). Section 55(a) of the PMLA is extracted hereunder: "55 (a). contracting State means any country or place outside India in respect of which arrangements have been made by the Central Government with the Government of such country through a treaty or otherwise." 24. Every country with whom arrangements have been entered into by the Central Government, through treaty or otherwise, would be a contracting state. The two International Conventions / Treaties to which India is a party are: (a) United Nations Convention Against Corruption (Decree No. 5687/2006) also known as the Merida convention and (b) United Nations Convention against Transnational Organized Crime (Decree No. 5015/2004), and protocols thereto, also known as the Palermo convention. 25. Further, the above-mentioned conventions are binding on India by effect of Article 253 of the Constitution of India. Article 253 of the Constitution of India is extracted hereunder: "253. Notwithstanding anything in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o require financial institutions, including money remitters: (a) To include on forms for the electronic transfer of funds and related messages accurate and meaningful information on the originator, (b) To maintain such information throughout the payment chain; and (c) To apply enhanced scrutiny to transfers of funds that do not contain complete information on the originator. 4. In establishing a domestic regulatory and supervisory regime under the terms of this article, and without prejudice to any other article of this Convention, States Parties are called upon to use as a guideline the relevant initiatives of regional, interregional and multilateral organizations against money-laundering. 5. States Parties shall endeavour to develop and promote global, regional, subregional and bilateral cooperation among judicial, law enforcement and financial regulatory authorities in order to combat money-laundering..." VII. EFFECTS OF CORRUPTION IN THE ECONOMY OF A COUNTRY: 27. When corruption increases, businessmen are forced to provide an initial bribe before making any investment, and is made to think that corrupt officials may later demand a share of the investment's profi....