TaxTMI 
TaxTMI 
2024 (1) TMI 1454
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....der: 3. The Central Bureau of Investigation, Shimla, Railway Board Building, The Mall, Shimla (hereinafter referred to as 'CBI') had registered RC0962019A0002, dated 7th May, 2019, under Sections 409, 419, 465, 466, 467 read with Section 120-B of the Indian Penal Code (hereinafter referred to as 'IPC') and Sections 13(1) (c), 13 (1) (d) read with Section 13 (2) of the Prevention of Corruption Act (hereinafter referred to as 'PC Act'). 4. As per the case set up by CBI, the applicant, who is Vice Chairman of KC Group of Institutes, Pandoga, Una, H.P., has wrongly claimed the scholarship of the students belonging to certain class, who, without completing the concerned course, left the institute. After registration of the FIR by the CBI, the case was taken up by the Directorate of Enforcement (hereinafter referred to as 'ED'), on the basis of which ECIR/SHSZO/04/2019, dated 22nd July, 2019, was registered, under the provisions of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'PMLA'). 5. It is the further case of the applicant that on 29th August, 2023, raid was conducted by ED, in the premises of the applicant. Thereafter, summons were issued to the ....
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....at the alleged receipt of the scholarship amount cannot be called as proceeds of crime. 13. Not only this, according to the applicant, the land, which is stated to be purchased out of the proceeds of crime, was purchased on 8th September, 2017 and 8th December, 2017. 14. On the basis of the above facts, a prayer has been made to allow the bail application. 15. When put to notice, the status report/reply, on behalf of the Assistant Director, ED, Sub Zonal Office, Shimla, has been filed, mentioning therein that the applicant has been arrested, as per the procedure prescribed under Section 19 of the PMLA. 16. According to ED, the matter revolves around a scam, involving the allocation of scholarships to SC, ST and OBC students, under the Post Matric Scheme. In this fraudulent activity, officials from the Department of Higher Education, alongwith private Educational Institutions and Banks, were involved, which has resulted into misappropriation of scholarship funds of more than 200 Rs. crore. 17. The applicant, according to the stand taken by ED, alongwith others, has played a major role in the scam, wrongfully withholding the rightful scholarship entitlement of the scho....
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....rge scale, has also been alleged. The offences, under Sections 419 and 471 IPC, are also stated to be scheduled offences, mentioned in the schedule, appended to PMLA and as such, inquiry was initiated. 23. The applicant is stated to be the Vice Chairman of KC Group of Institutions at Pandoga, Una and Nawashehar, Punjab. According to the ED, during the course of investigation, it has been revealed that KC Group of Institutions, Pandoga and Nawashehar, in connivance with the officials of Directorate of Higher Education, Himachal Pradesh and Bank officials, have fraudulently availed the scholarship, under the Post Matric Scheme, for SC/ST/OBC of Himachal Pradesh. 24. According to the ED, the applicant has verified and claimed the scholarship under Post Matric Scheme, for the students, belonging to SC/ST/OBC, who were not enrolled in any course, with KC Group of Institutions Pandoga and who had left the institute without completing their studies. In order to grab more and more scholarship, false details of students were uploaded on scholarship portal, by changing the course of study in subsequent years, by changing the caste category of students and by showing the students as hos....
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....rectorate of Enforcement at Chandigarh, pursuant to which, the applicant appeared before the Directorate of Enforcement at Zonal Office, Chandigarh. After recording his statement and the reasons to believe, in writing, on the basis of material in possession, the applicant was arrested, under Section 19 of PMLA, on 30th August, 2023, at 09.24 a.m. According to ED, before his arrest, the applicant was informed about the grounds of his arrest, in writing. The applicant not only read the grounds of arrest, but, also signed each page of grounds of arrest in token of having read the same. 31. It is the further stand of the ED that the investigation conducted had revealed hat the applicant, through KC Group of Institutions at Pandoga and Nawashehar had obtained scholarship to the tune of Rs. 14,92,37,220/- illegally and fraudulently, in connivance with the officials of Directorate of Higher Education, Himachal Pradesh and the bank officials. This amount is stated to have been obtained by the applicant as a result of criminal activity of cheating and making false claims of students to obtain scholarship under Post Matric Scheme, in criminal conspiracy with public servant, between the ye....
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....es connected with proceeds of crime, namely:- (a) concealment; or (b) possession; or (c) acquisition; or (d) 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." 38. The term 'proceeds of crime' has been defined in Section 2 (u) of PMLA, as follows: 2. Definitions. * * * (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation.-For the removal of doubts, it is hereby clarified that "proceeds....
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.... in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given a opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government. (1....
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....f action to be followed as a matter of principle. Firstly, in the event such grounds of arrest are orally read out to the arrested person or read by such person with nothing further and this fact is disputed in a given case, it may boil down to the word of the arrested person against the word of the authorized officer as to whether or not there is due and proper compliance in this regard. In the case on hand, that is the situation insofar as Basant Bansal is concerned. Though the ED claims that witnesses were present and certified that the grounds of arrest were read out and explained to him in Hindi, that is neither here nor there as he did not sign the document. Noncompliance in this regard would entail release of the arrested person straightaway, as held in V. Senthil Balaji (supra). Such a precarious situation is easily avoided and the consequence thereof can be obviated very simply by furnishing the written grounds of arrest, as recorded by the authorized officer in terms of Section 19(1) of the Act of 2002, to the arrested person under due acknowledgment, instead of leaving it to the debatable ipse dixit of the authorized officer. 33. The second reason as to why this....
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.... give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person 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. The decisions of the Delhi High Court in Moin Akhtar Qureshi (supra) and the Bombay High Court in Chhagan Chandrakant Bhujbal (supra), which hold to the contrary, do not lay down the correct law. In the case on hand, the admitted position is that the ED's Investigating Officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22(1) of the Constitution and Section 19(1) of the Act of 2002, we have no hesitation in holding that their arrest was not in keeping with the provisions of Section 19(1) of the Act of 2002. Further, as already noted supra, the clandestine conduct of the ED in proceeding against the appellants, by recording the second....
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....atory in nature. It clarifies the word "and" preceding the expression projecting or claiming as "or"; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise. (b) Independent of the above, we are clearly of the view that the expression "and" occurring in Section 3 has to be construed as "or", to give full play to the said provision so as to include "every" process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity. (c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected. (d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of moneylaundering. The Authorities under the 2002 Act cannot prosecute any pers....
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....with the aforesaid provision they could not be said to be in police custody. We see that Section 46 deals with 'Arrest how made'. We are of the opinion that word "arrest" used in Section 46 relates to a formal arrest whereas Section 27 of the Evidence Act talks about custody of a person accused of an offence. In the present case the appellants were undoubtedly put under formal, arrest on the 15th February 2005 whereas the recoveries had been made prior to that date but admittedly, also, they were in police custody and accused is an offence at the time of their apprehension on the 14th February 2005. Moreover, in the light of the judgment in the Constitution Bench and the observation that the words in Section 27 "accused of any offence" are descriptive of a person making the statement, the submission that this Section would be operable only after formal arrest under Section 46(1) of the Code, cannot be accepted. This argument does not merit any further discussion. * * * 16. It is also significant that Jasvir Singh also disclosed that he had kept concealed the dead body in the fields of village Daulatpur and that it had been removed from Darshan Kaur's h....
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.... that is to make information leading to a discovery relevant, even when it comes from an accused person who is in the custody of the police and thus subject to police influence. Ordinarily information coming from an accused person, who is liable to be influenced by the police will be open to suspicion. But if the information leads to the discovery of a relevant fact, that discovery is considered to be a guarantee of the truth of the information as has been pointed out already and hence such information is made relevant by Section 27. Now there can be little doubt, that even before his formal arrest, an accused person, who is detained by the police owing to suspicion against him, is liable to be influenced by the police. This Court has therefore put a wide interpretation on the word "custody" as used in Section 27. In AIR 1933 Lah 609, it was held by a Division Bench of this Court consisting of Sir Shadi Lal and Coldstream J. that 'police custody' does not necessarily mean custody after formal arrest and that it also includes 'some form of police surveillance and restriction on the movements of the person concerned by the police." 51. In view of the above, the applica....
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....Sub-article (5) says that when a person is detained in pursuance of an order under a law providing for preventive detention the grounds on which the order is made have to be communicated to the person concerned as soon as may be and he has to be afforded earliest opportunity to represent against the order. The object of communicating the grounds is to enable the detenu to make his representation against the order. The words "as soon as may be" in the context must imply anxious care on the part of the authority concerned to perform its duty in this respect as early as practicable without avoidable delay." 21. In view of the above, the expression "as soon as may be" contained in Section 19 of PMLA is required to be construed as- "as early as possible without avoidable delay" or "within reasonably convenient" or "reasonably requisite" period of time. Since by way of safeguard a duty is cast upon the concerned officer to forward a copy of the order along with the material in his possession to the Adjudicating Authority immediately after the arrest of the person, and to take the person arrested to the concerned court within 24 hours of the arrest, in our opinion, the reasonably....
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....ing the person arrested about the grounds of his arrest is a sufficient compliance of Section 19 of PMLA as also Article 22(1) of the Constitution of India, as held in Vijay Madanlal (supra). 24. In so far as the facts of the present case are concerned, it is not disputed that the appellant was handed over the document containing grounds of arrest when he was arrested, and he also put his signature below the said grounds of arrest, after making an endorsement that "I have been informed and have also read the above-mentioned grounds of arrest." The appellant in the rejoinder filed by him has neither disputed the said endorsement nor his signature below the said endorsement. The only contention raised by the learned Senior Counsel, Mr. Singhvi is that he was not furnished a copy of the document containing the grounds of arrest at the time of arrest. Since the appellant was indisputably informed about the grounds of arrest and he having also put his signature and the endorsement on the said document of having been informed, we hold that there was due compliance of the provisions contained in Section 19 of PMLA and his arrest could neither be said to be violative of the said p....