TaxTMI 
TaxTMI 
2024 (12) TMI 160
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....471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. 3. It was alleged that the Directors and Promoters of M/s Moser Baer India Ltd. including Ratul Puri forged and fabricated the documents and induced the Central Government of India to release public funds. It is said to have caused wrongful loss to the bank to the tune of Rs. 354.51 Crores. 4. M/s Moser Baer India Ltd. was classified as Non-performing Asset on 29.11.2014 with an outstanding amount of Rs. 354.51 Crores. It was then declared to be fraud by the complainant bank on 20.04.2019. 5. After registration of the FIR and investigation as a consequence thereof, it was revealed that M/s Moser Baer India Ltd. and its subsidiaries have taken loan in a fraudulent manner and defaulted in making the payment. The ECIR was recorded by the respondents finding a scheduled offence and a case of money laundering under Section 3 of the Act of 2002.It is a case where during the course of search and seizure, the documents and devices were recovered from the appellant and have been allowed to be retained in view of the confirmation of seizure order. Arguments of the appellant 6. The l....
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....nt &Ors. reported in MANU/DE/2870/2021 has been given. Specifically, Paras 72 and 100 of the said judgment were referred where the High Court gave interpretation to the provision and held that whatever material is recovered and thereupon seized and retained by the ED is required to be transmitted to the Adjudicating Authority in the sealed cover. The respondents made violation of the aforesaid and failed to send the key of the locker to the Adjudicating Authority and thereby their action becomes illegal. 11. The further argument is that apart from the key, the hard disk recovered from the appellant was also not sent to the Adjudicating Authority for confirmation of seizure and for further retention. It is despite the mandate of law and thereby the impugned order deserves to be set aside on the aforesaid grounds also. 12. The learned counsel made a reference of Section 20(1) and (2) of the Act of 2002 to indicate that if any property is to be retained, it can be only for a period not exceeding 180 days from the date of which such property was seized or frozen. In the instant case, the freezing and retention order is in effect even though a period of 180 days have already passe....
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...., whatever was seized and mentioned in Panchnama had been transmitted and thereupon only the Adjudicating Authority passed a detailed order. The appellants should not be allowed to raise new pleas without raising it in the appeal when it is factual in nature. The prayer was accordingly made to dismiss the appeal. 17. We have considered the rival submissions of the parties and perused the record. 18. The counsel appearing for Abhinav Saxena shown him to be innocent and, therefore, the prayer was made to release the documents. The issue aforesaid was contested by the respondents. 19. To analyze the issue, we find that the offence has been committed by M/s Moser Baer India Ltd. with the active support of Rajiv Saxena and Shivani Saxena. Abhinav Saxena was supporting them and for that reason alone, the incriminating documents were found in his possession. It is a fact that during the pendency of the appeal, all the documents and the gadgets recovered during the course of search have been filed along with the PC. It is after showing relevance of the documents with the commission of crime. Hence, we do not find any reason to order for release of documents. It would not be even i....
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....- section (1) shall, immediately after search and seizure or upon issuance of a freezing order, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub- section (1) shall be required for search under this sub-section. (4) The authority seizing any record or property under sub- section (1) or freezing any record or property under sub- section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuatio....
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.... (4) The Adjudicating Authority, before authorising the retention or continuation of freezing of such property beyond the period specified in sub-section (1), shall satisfy himself that the property is prima facie involved in money-laundering and the property is required for the purposes of adjudication under section 8. (5) After passing the order of confiscation under sub-section (5) or sub-section (7) of section 8, ^2[Special Court], shall direct the release of all property other than the property involved in money-laundering to the person from whom such property was seized or the persons entitled to receive it. (6) Where an order releasing the property has been made by the ^3[Special Court] under sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60, the Director or any officer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of ^4[receipt of] such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act". 21. Sub-section 3 of Section 20 authorizes the Adjudicating Authority for con....
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....well as the procedure mentioned in the Rules and Regulations framed under the Act have to be followed. The said requests cannot be treated at a higher threshold. The ED and the Adjudicating Authority, would have to adhere to all provisions relating to recording the 'reason(s) to believe' and supplying the 'Relied Upon Documents', as is required to be done in the case of domestic proceedings under the PMLA. ii) Whether the ED is duty bound to provide the 'reasons to believe' while passing orders under Section 17 of the PMLA, to the concerned parties? * The said question is pending for determination before the Supreme Court in SLP(C) No. 12865/2018 titled Union of India and Ors. vs. J. Sekar. iii) What is the procedure to be followed by the ED while forwarding the 'reasons to believe' and the application under Section 17(4) of the PMLA to the Adjudicating Authority seeking continuation of the freezing orders and confiscation? * Immediately upon a search and seizure/freezing order being passed, the Director ED, or the person authorized has to forward a copy of the 'reasons to believe' recorded by the ED along ....
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.... Adjudicating Authority has to record its 'reason to believe' that an act has been committed which constitutes money laundering under Section 3, or a person is in possession of 'proceeds of crime'. It has to record its satisfaction independent of the 'reasons to believe' of the ED and only thereafter issue a show cause notice under Section 8(1) to be served upon the party/parties concerned. The said notice has to be issued in accordance with the Adjudicating Authority (Procedure) Regulations, 2013'. * The Adjudicating Authority cannot mechanically go by the reasons recorded by the ED, and has to have separate and independent grounds to believe that such an offence has been committed. The fact that the Adjudicating Authority is again required to have 'reason to believe' as per the provisions of the Act shows that there is a two-tier process which is to be followed prior to the issuance of the show cause notice, namely-satisfaction by the ED and thereafter, independent satisfaction by the Adjudicating Authority. vii) Whether while issuing the show cause notice, all the 'Relied Upon Documents' have to be supplied to the par....
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....earch or seizure/confiscation/freezing, after reaching a conclusion that the defendant(s) is involved in the offence of money laundering under Section 3 of the Act, or is in possession of proceeds of crime. It would not be permissible for the complainant-ED to show any documents or material to the Adjudicating Authority outside of the hearing being given, or behind the back of the parties concerned. The hearing has to also be transparent and in the presence of the parties concerned. Unilateral hearings in the absence of the opposing party would not be permissible before the AA". 25. The reference of paras quoted above has been given to show illegality in the action of the respondents when they failed to send the key of the locker and hard disk to the Adjudicating Authority for its confirmation. The counsel for the appellants, however, failed to refer any pleading and the ground on the aforesaid issue. The respondents contested the issue on the ground that it has not been pleaded despite factual in nature. It was with a further submission that whatever was recovered from the appellant had been recorded in the Panchnama. It was then sent to the Adjudicating Authority for its confi....