TaxTMI 
TaxTMI 
2025 (1) TMI 434
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.... registered Co-operative Society, namely, River Jehlum Co-operative House Building Society (for short 'the Society'), which Society had proposed to develop a satellite township at Shivpora, Srinagar on a big plot of land that was identified by the Society for the said purpose and the said land was proposed to be purchased by the Society from its land owners for the development of the said township. (ii) In furtherance of the aforesaid proposal, petitioner 1 herein claims to have approached the Jammu and Kashmir State Co-operative Bank (for short 'the Bank') for grant of financial assistance by way of loan of Rs. 300 crores in favour of the Society for enabling it to acquire the identified land from its owners and its subsequent development for establishment of the satellite township. A detailed project report is claimed to have been prepared and submitted to the Bank for consideration of the case of the Society for grant of loan. It is stated that the petitioner also filed an application to the Government of Jammu and Kashmir for facilitating early consideration of the said loan case. The Bank after considering the financial viability of the project and financial interests....
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.... on bail by the orders of the competent court of law and during the course of said investigation, the land in question is stated to have been attached and the bank accounts of 18 land owners frozen, so as to stop them from withdrawing the amount credited into their accounts against the land in question. (v) After completion of the investigation in the FIR supra, charge-sheet is stated to have been filed before the competent court against the petitioners herein along with the other accused persons, which charge-sheet is stated to be pending trial before the competent court. (vi) It is further stated that the attached Bank accounts of the land owners became subject matter of litigation before the Hon'ble Apex Court, wherein during the course of proceedings, Society volunteered to abide by its arrangement with the Bank and return the loan amount availed by it with interest, subject to the condition that the attachment order qua the land was lifted, whereupon the Apex Court is stated to have lifted the attachment order, however, in respect of the accounts of the land owners in order to facilitate them to withdraw the money that had been credited into their accounts in....
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....ituted by the above named Mohammad Shafi Dar and in furtherance of the said ECIR registered in 2021 started further proceedings in the month of November 2023 and in the course of said proceedings, on 14.12.2023, attached the land in question being 257 Kanal and 18 Marlas having been acquired in the name of the Society in lieu of the sanctioned amount of loan and subsequent thereto, the petitioners herein as also the above named Mohammad Shafi Dar were again arrested by the respondent-Directorate in connection with the investigation in the ECIR (Supra), but were subsequently released on bail pursuant to the orders passed by the competent court of law/High Court. (x) It is further stated that upon completing the investigation in the ECIR supra, the respondent-Directorate filed a complaint before the court of Special Judge, Anti Corruption Bureau (CBI) being Designated Court for the purposes of Prevention of Money-laundering Act, 2002 (for short PMLA), wherein the petitioners came to be arrayed as accused Nos. 2 and 3 and the above named Mohammad Shafi Dar as accused No. 1 and alleged to have committed offence under Section 44 and 45 read with Section 70 of the PMLA. 3. Th....
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....y-laundering and a person can be accused of offence of money-laundering only if he projects or uses such property by projecting it as untainted property. None of the conditions exist in the present case. The complaint is, thus, liable to be quashed. g) That the Hon'ble High Court has already taken cognizance of the matter and stayed the proceedings in the complaint at the behest of so-called main accused, Mr. Mohammed Shafi Dar. Under the circumstances, proceedings cannot be continued against petitioners, which is neither practicable nor feasible. Copy of the order passed by the Hon'ble High Court at the first instance as well as order whereby said order has been extended till further orders are annexed herewith and collectively marked as Annexure III. 4. Reply to the petition has been filed by the respondent-Directorate, wherein the petition is being opposed, inter alia, on the premise that the petitioners herein entered into a conspiracy with the then Chairman of the Bank besides others while creating a non-existent fictitious Society in the year 2018-19 for obtaining a loan of Rs. 300 crores from the Bank on a false pretext of developing and establishing a sa....
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....interference by this Court in the instant petition at this Stage will amount to abuse of process of law and will prove to be detrimental to the interest of the Bank and defeat the purpose of PMLA. B. CRM(M) No. 418/2024 (i) In the instant petition, the petitioner herein claims to have been elected as Chairman of the Bank in the month of December 2018 for a period of three years to expire in December 2021, however, alleges to have been dislodged on 15.05.2020 at the instance of a powerful team of bureaucrats working in the Government of J&K purportedly in exercise of its power under the J&K Co-operative Act, 1989 and got the FIR supra registered against the petitioner herein, in the capacity as Chairman of the Bank along with other accused persons for having sanctioned a loan allegedly in favour of a non-existent Society and that the removal of the petitioner and the elected board of Bank came to be questioned before the High Court in WP(C) No. 2775/2021, which came to be decided on 15.07.2022 holding that the nominated Board of Directors of the Bank is entitled to remain in position and legitimately run the affairs and management of the Bank till 04.10.2022 and that the nomin....
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....eing opposed on almost same and similar premise and grounds on which the petition bearing CRM(M) No. 484/2024 supra has been opposed, as such, the same as well is not being reiterated for the sake of brevity. Heard learned counsel for the parties and perused the record. 8. Before proceeding further in the matter, it would be advantageous and appropriate to refer to the ambit and scope of inherent power vested in this Court saved under Section 482 Cr.P.C, qua the quashing of a complaint/FIR. A reference in this regard to the judgment of Apex Court passed in case titled State of Haryana and others vs. Bhajan Lal and others reported in 1992 Supp (1) SCC 335 would be relevant, wherein in para 102, following has laid down: "102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could b....
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....) SCC 89, at para 6 held as under: "6....All courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and ....
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....owered to take into account the overall circumstances leading to the initiation/registration of the case as well as the materials collected in the course of investigation." Thus, what emanates from the above principles of law is that the inherent power of this court saved under Section 482 Cr. P.C. does not confer any new power on the High Court, in that, it only saves the inherent power of this Court, which the court possessed before enactment of the Code of Criminal Procedure and it envisages three circumstances under which the inherent jurisdiction may be exercised, namely- a) To give effect to an order under the Code, b) To prevent abuse of process of court, and c) To otherwise secure the ends of justice. 9. It is also significant to mention here that the consistent view of the Constitutional Courts that it is neither possible not desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction and no legislative enactment dealing with procedure can provide for all cases that may possibly arise, thus suggesting that the courts have inherent powers apart from provisions of law which are necessary for proper disch....
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....quisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering." Explanation.-For the removal of doubts, it is hereby clarified that,- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with "proceeds of crime", namely- (a) concealment; or (b) possession; or (c) acquisition; or (a) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with "proceeds of crime" is a continuing activity and continues till such time a person is directly or indirectly enjoying the "proceeds of crime" by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.] Section 4. "Punishment for money-laundering.-Whoever commits the offence of money-launde....
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....y had approached the Bank headed by the petitioner in CRM(M) No. 418/2024 for grant of a loan to enable the Society to develop a satellite township on an identified piece of land situated at Shivpora, Srinagar, in order to enable the Society to purchase land from the land owners, in response whereof, the Bank though its Chairman agreed and provided loan to the Society to the tune of Rs. 250 crores and the land owners in furtherance thereof executed an irrevocable power of attorney in favour of the Chairman of the Society i.e. petitioner 1 in CRM(M) No. 484/2024 to facilitate the transfer of land in favour of the Society, who in turn executed a perpetual lease in favour of the Society represented by the petitioner 2 in CRM(M) No. 484/2024, whereafter, the said lease hold rights had been mortgage by the Society with the Bank in lieu of the loan of Rs. 223 crores sanctioned by the Bank through its Chairman being petitioner in CRM(M) No. 418/2024, which loan amount had been transferred/credited in the Bank accounts of 18 land owners whose land was proposed to be utilised by the Society for developing the satellite township by the Society. 13. Perusal of the record tends to show that....
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....aid position obtaining in the matter, inasmuch as the admitted facts noticed in the preceding paras, the alleged offence manifestly has not resulted in any "proceed of crime" in favour of the petitioners herein. A-fortiori, it cannot be said that the petitioners have indulged in any activity connected with the "proceeds of crime" for unless there are "proceeds of crime", there cannot be any activity about the "proceeds of crime", in that, existence of "proceeds of crime" pursuant to the predicate offence is sine qua non for commission of offence of money-laundering, to be precise that if there is no money or property, a question of money-laundering would not arise. A reference in this regard to the judgment of the Apex Court passed in case titled as Vijay Mananlal Choudhary and others vs. Union of India and others reported in 2022 SCC Online SC 929 would be relevant, wherein at para 283 and 284 following has been held:- "283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money-laundering, and for that, existence of "proceeds of crime" within the meaning of Section 2 (1) (u) of the Act is quintessential....