TaxTMI 
TaxTMI 
2024 (12) TMI 470
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....ing therein for retention of jewellery items and cash seized vide Panchnama dated 29.09.2023 for further investigation in terms of section 17(4) of the PMLA, 2002. II. It is, inter-alia, pleaded in the said O.A that the Respondent ED registered ECIR vide F.No. ECIR/DLZO-I/43/2021 on the basis of scheduled offences registered vide RC221/2021/E/009 dated 17.05.2021 under section 120-B & 420 of Indian Penal Code & Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 against U.S Awasthi, MD & CEO, Indian Farmer Fertilizers Cooperative Ltd. (IFFCO), Pavinder Singh Gahlaut, MD, Indian Potash Ltd. (IPL), Anmol Awasthi, Anupam Awasthi, Vivek Gahlaut, Pankaj Jain, Promoter of M/s Jyoti Trading Corporation and Rare Earth Group, Dubai, Sanjay Jain, brother of Pankaj Jain, President of M/s Jyoti Trading Corporation, Rajiv Saxena, Chartered Accountant, Sushil, Sr. Vice President, Sushil Kumar Pachisia, an employee of Pankaj Jain, unknown Directors of IFFCO, IPL and unknown others, for criminal conspiracy, cheating and criminal misconduct. III. It is also revealed from the O.A that the above-named persons entered into criminal conspiracy during the period 2007-2014 ....
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....e between M/S Astra Global DMCC and Jordan Phosphate Mining Company, DAP to be supplied was to be in full conformity with Indian Fertilizer Control Order. This clearly demonstrated that the DAP being purchased was meant only for Indian purchasers. 3. Further, as per the said agreement the purchased fertilizer was shipped directly to India and it was not the case that M/s Astra Global DMCC took delivery first and later handed over the same to the Indian entities. 4. And that, it was further revealed that the agreements were signed within a span of 7 days and there was no major reason for such huge price variation in the absence of any value addition. 5. It is further alleged in the O.A. that the agreement dated 24.04.2007 between M/s Astra Global DMCC and JPMC was signed by Ajay Kumar Gupta as authorized signatory (though his name is not mentioned in the agreement to conceal his identity) on behalf of M/s Astra Global DMCC and that the agreement dated 30.04.2007 between M/s Astra Global DMCC and Indian Potash Limited was signed by Manoj Kumar, who is a close relative of Ajay Kumar Gupta. 6. It is also alleged in the O.A that the appellant was controlling and managing fun....
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....e as untainted. 11. Based on the above facts, search was conducted at Locker no. L195 in the name of Sh. Ajay Kumar Gupta at U & I vault, F-41, South Extension, Part-I, Ring Road, New Delhi-110049 on 29.09.2023 under section 17 (1) of the PMLA. 2002. Search of the above-mentioned locker resulted in recovery of jewelry and cash. The details of such recovery and seizure are as under: i. Cash i.e. Indian Currency amounting Rs. 16.5 Lakhs were recovered and seized during the search proceedings: Denomination Number of notes Amount in Rs. 2000 800 Rs. 16,00,000/- 500 100 Rs. 50,000/- Rs. 16,50,000/- (Rupees Sixteen Lakhs and Fifty Thousand only) ii. Jewellery items valued at Rs. 7,61,79,069/- as per valuation Report (having 33 serial no. in 3 pages) dated 14.02.2023 drawn by Sh. Kailas Chouhan, Govt. approved valuer. 12. Basing on aforesaid facts, the respondent ED is of the view that seized cash and jewellery items might have been acquired through funds obtained through criminal activity related to scheduled offences under PMLA, 2002, as the source of the same could not be explained during search proceedings and thus the same i....
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....e contents of locker were already in possession and control of ED by way of freezing order dated 15/16.10.2020. hence, being in its possession could not be seized as seizure means and involves taking over of possession. And that, the contents of locker could not be seized under PMLA, 2002, on 29.09.2023 without lifting seizure made under FEMA, 1999, on 14.02.2023. And that, for the purpose of retention of any property an order is required to be made in terms of section 20(2) of PMLA, 2002, in the absence of which further proceedings under PMLA, 2002, are erroneous and unsustainable. And that, the Ld. AA has not confirmed retention of seized jewellery and ED cannot continue to retain the jewellery as digital device and documents are only mentioned, the order is patently without application of mind. And that, the appellant has duly explained and reflected in ITRs and hence could not be in any manner the proceeds of crime or involve in money laundering. And that, there is no prima facie satisfaction recorded by the Ld. AA and in the absence of the same the impugned order is unsustainable. And that, procedure envisaged in terms of t....
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....#39; timeframe from the date of seizure as the search of locker took place on 29.09.2023 and the OA was filed on 17.10.2023 and prior seizure was carried under FEMA, 1999 and that it is a settled position of law that it is not a pre-requisite that a person accused of money laundering should also be accused of scheduled offence. The respondent ED has relied on the judgement in the matter of Radha Mohan Lakhotia v. the Deputy Director [2010 SCC OnLine Bombay 1116] 15. And submitted that, in the event the cash and jewellery, which are highly liquid in nature, are released, the investigation against the appellant and his companies namely M/s Tradex India Corporation Pvt. Ltd. and M/s Astra Global DMCC,will be frustrated. 16. The Ld. Counsel for the respondent reiterated the contentions made in the O.A which are already reflected in preceding paragraphs no. 1 to 9 and in the reply to the appeal. In addition to above, it was orally argued that the statement of objects and reasons of PMLA, 2002, are totally different from FEMA, 1999, and it was argued that the accused persons named in the CBI FIR had defrauded IFFCO as well as IPL, the general shareholders of these entities and the ....
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.... complaint and the supplementary complaint have already been filed and that since further oral and documentary information revealed regarding the prima facie complicity of the present appellant and his companies therefore the words "further investigation" has been used. It was further argued, that the investigation is still going on for which the seized items are very much required. 20. With regards to the question raised by the appellant for non-filing of O.A within 30 days from the date of original seizure under FEMA, 1999 is concerned, the O.A was to be filed within 30 days from the date of seizure made under PMLA, 2002, not under FEMA, 1999. The jewellery and cash under PMLA, 2002 was seized on 29.09.2023 and O.A was filed on 27.10.2023 and thus the OA has been filed within the stipulated period of 30 days. So, the argument of the Ld. Counsel for the appellant is not acceptable. 21. The Ld. counsel for the appellant argued challenging that procedure of seizing the cash and jewellery under PMLA, 2002, was illegal as these were already under the possession of ED after seizure under FEMA, 1999. So far as the question submitted by the appellant that the respondent authority w....
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....f freezing orders. Further under sub-section (4) thereof, the Seizing Authority is obliged to file an application within the period of 30 days of seizure or freezing requesting for retention of such record or properties seized, as the case may be. Thus, sufficient safeguards with time bound schedule are provided under Section 17. 29. As per Section 12 of the P.M.L. Act, reporting entity is obliged to maintain the records and furnish the information to the Director and perform such other acts as are contemplated therein and as per Section 12A, the Director can have access to the information with the reporting entity. It is also noticed that the Adjudicating Authority under Section 6(15) is not bound by the Code of Civil Procedure, 1908. From the aforesaid provisions of P.M.L. Act, it can be noticed that the main purpose and object is to contain money-laundering activities. Other purpose of the Act is to prevent the moneylaundering activities by attaching, confiscating and freezing the properties involved in such activities. As can be seen from proviso to Section 17, a report or a complaint under Section 157 of Cr.P.C. may be necessary where prosecution is contemplated and m....
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....ating Authority to enable it to adjudicate upon such attachment. It is pertinent to note that the legislative intent insofar as powers of the Adjudicating Authority are concerned, is made clear under Section 6(15) by clarifying that it is not bound by the procedure laid down by the Code of Civil Procedure. Thus, if the Adjudicating Authority was intended to be an authority dealing with the criminal acts, the proviso dispensing with Code of Civil Procedure would not have been made. Instead, proviso dispensing with Cr.P.C. would have been made. These facts thus sindicate that the Adjudicating Authority under Section 8 is authorized to undertake civil proceedings and adjudicate thereupon as rightly argued by the learned counsel for the respondents. 32. True that the first proviso to Section 5(1) and Section 17(1) requiring the compliance of the aforementioned provisions before embarking upon the exercise under Section 5 of P.M.L. Act but that would be the basis for proceedings to make attachment or passing of various other orders as contemplated under the Act particularly Section 5 so far as present case is concerned. 33. The contention of the respondents is that the....
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....ation under the Act to be restrained from allowing normal operations in respect of a property suspected to be involved in the offence of money laundering. It is therefore, crucial to achieve the objectives of the Act that the authorities under PML. Act are empowered to collect and if need be, compel disclosure of relevant facts including specific details of the suspected properties, movable or immovable, liable to be attached in the course of investigation. The challenge mounted by the petitioners on such powers of the authorities is therefore, erroneous. The term investigation as defined in section 2 (na) of PML Act has to be read in consonance with the provisions of section 65 which empowers the authorities under PML Act to issue such directions/prohibitory orders. Therefore, any such direction issued in the course of investigation is within the four walls of law and in consonance with the object and reasons of the Act 10 ensure that the proceed of crime do not change hands making it impossible for authorities to trace and recover such proceeds of crime. 6. The provisional order of attachment of property suspected to be proceeds of crime in terms of section 2(u) of the A....
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....ive remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statue to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up. 10. *****" 35. True that the said FFR Software Private Limited (supra) deals with the case pursuant to registration of the FIR. In the instant case also, two FIRs though not naming the petitioners but on the same subject have been lodged and thus legal proposition as discussed in the aforementioned authority can as well be applied to the facts of the present case. The contention of the learned counsel for the petitioners to the contrary thus cannot be accepted. 36. As noticed above, inquiry, investigation, etc., are permissible under Cr.P.C. by the authorities or officers exercising the jurisdiction under P.M.L. Act. It therefore goes without saying that on noticing an offence under P.M.L. Act again....
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....ment however is that in such a case, mandatory provisions of FEMA were required to be complied with. Such an argument is misconceived for the simple reason that so far as present cases are concerned, the respondents after noticing the incriminating material which may lead to the crime under Section 3 of the Act, did not proceed further under FEMA but have chosen to proceed under P.M.L. Act. That apart, the question as regards compliance of mandatory provisions can be raised at appropriate stage of the proceedings and not at the threshold as interference by the Court at the threshold may frustrate the very purpose and object of P.M.L. Act." .............................................................. ............................................................. And held as below: "Subject to the aforementioned observations, no substance is found in the petitions. Special Criminal Application No.1725 of 2014 is thus disposed of with the aforesaid observations and Special Criminal Application No.1748 of 2014 fails and is dismissed. There shall be no order as to costs." 23. Therefore, the contention of the appellant that the procedure provided u....