TaxTMI 
TaxTMI 
2025 (7) TMI 1144
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....ds of crime or in the alternative restrict such investigation to matters connected with the coal block until its cancellation." Facts leading to the Writ Petition 2.A private company was incorporated in the year 1991. It was titled as 'R.K.Powergen Private Limited, Chennai' (hereinafter referred to as 'RKPP'). This was a venture by five women entrepreneurs. The primary business of the company was to set up and operate a Bio Mass Power Generation Plant in Karnataka. Subsequently, on 15.12.2004, this company and one Mudajaya Corporation, an entity based out of Malaysia, incorporated another company under the name and style of 'R.K.M.Powergen Private Limited' (hereinafter referred to as 'RKMP'). This entity was set up for the purpose of creating, establishing and operating coal powered electricity generation plant. 3.On 13.07.2005, a joint venture agreement was entered into between Mudajaya and RKPP. In terms of the agreement, Mudajaya agreed to invest in RKMP. Pursuant to this agreement, on 08.02.2007, a shareholders' agreement was entered into between RKPP and Mudajaya. Under this agreement, 26% of the equity shares of RKMP were to be all....
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....h Clause 8.1.0 of the said contract. Pursuant to the agreement so signed on 18.07.2007, RKMP also made payment of US $500,000 on the same day. 7.As stated in its letter to the Ministry of Coal on 26.05.2005, RKMP approached the Union of India for the allocation of a coal block. On 13.11.2006, the Ministry of Coal decided to make allocations for 38 coal blocks. Out of the 38 blocks, 15 blocks were reserved for power projects, and the remaining 23 blocks for steel and cement companies. Preferential allocation of coal blocks had been a policy decision taken by the Ministry of Coal from 1993 onwards. The Ministry of Coal, after consultation with Coal India Limited and other similar bodies, would allot coal blocks for captive mining for eligible end user companies. For this purpose, a screening committee was created by the Union of India. In order to guide the screening committee, as to how to identify the determining factors and for evaluation, the Ministry of Coal used to issue appropriate guidelines. The screening committee followed these guidelines and on that basis, granted allocation. The aforesaid advertisement in 2006, calling for allotment of coal blocks, in which the petiti....
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....urt, headed by Mr.Justice R.M.Lodha, CJ, heard the matter. Judgement was pronounced on 25.08.2014, holding that such allotments were illegal. The judgment is reported in [2014 (9) SCC 516]. At the time of disposal of this writ petition, taking into consideration the facts placed before the Court, the Supreme Court decided that an investigation / enquiry has to be ordered into the same. Accordingly, the Central Bureau of Investigation (hereinafter referred to as 'CBI') was called upon to investigate each of the allocations and take appropriate action. 13.Insofar as the case at hand is concerned, the CBI registered a case in FIR.RC.219 201 4E 0018 on 07.08.2014. FIR was registered for the offences under Sections 420 and 120B of the Indian Penal Code read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. 14.On the registration of the offences, the Enforcement Directorate (hereinafter referred to as 'ED') registered a case on 07.01.2015. Investigation was taken up under the provisions of the Prevention of Money Laundering Act, 2002 (Act 15 of 2003) [hereinafter referred to as 'PMLA']. The ED came to a prima facie conclusion that there appear....
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.... material to proceed further. Therefore, it filed a closure report as 'mistake of fact' before the Special Judge, CBI (Coal Blocks Allocation Cases), Patiala House Courts, New Delhi. The closure report was filed on 21.07.2017. 20.The CBI Court did not agree with the closure report. It queried with the Investigating Officer regarding the other claims made by the Government in the application submitted to the Ministry of Coal and also regarding land and water environmental clearance during the said process leading to the allocation of the coal block. As the investigation was silent on these aspects, the learned Judge referred the matter back to CBI for further investigation on the following aspects: ".... the claims made by applicant company M/s R.K.M. Powergen Pvt. Ltd qua all aspects / issues as were made in their application submitted to MOC or at any subsequent stage during the processing of their application in MOC leading to allocation of Fatehpur East Coal Block to it may also be properly investigated and the result thereof is duly reflected in the final report to be filed in the court." 21.The learned CBI Judge was cautious enough to hold that he would ....
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.... engaged in a clandestine deal with Mudajaya. On the contrary, these facts were fully reported to the Reserve Bank as statutorily required under Rule 9 of the 2000 Regulations. 27.It is necessary to point out that the case of the Enforcement Directorate in the ECIR is grounded on the twin allegation that RKM Company had obtained the allocation of Fatehpur East Coal Block by resorting to misrepresentation of facts. However, it is an undisputed fact that there was no mining from the said coal block with the result that RKM Company did not derive any benefit from the same. The Enforcement Directorate admits to this factual position as is evident from paragraph 18 of its counter affidavit wherein it is stated thus: "Admittedly, the evidences available on record implied that no mining activity was carried out by M/s Fatehpur East Coal Private Limited, the joint venture created by the joint allottees of the subject Coal Block and no mine land was even purchased, but the entity had incurred expenditure on mine development activities." It is, therefore, clear that even according to the Enforcement Directorate, no mining was carried out and on the other hand, RKM ....
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....vestigations will proceed in terms of the directions/orders of the Supreme Court in Manohar Lal Sharma v Union of India9, unhindered, and uninfluenced by any of the observation(s)/direction(s) made in this order." 26.Aggrieved by this order, ED preferred a Special Leave Petition to the Supreme Court. This was in S.L.P.(Criminal).Nos.8975 - 8976/2022. 27.Pending the appeal before the Supreme Court, the CBI filed a supplementary final report on 30.08.2023. This supplementary final report found that there are sufficient incriminating materials warranting prosecution under Section 120-B read with 420, 471 of IPC, Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. As the final report had been filed, ED withdrew its SLP before the Supreme Court. The order of the Supreme Court dated 19.11.2024 is extracted as hereunder: "The learned Additional Solicitor General, who appears on behalf of the petitioners, states that the petitioners will not press the present special leave petitions in view of subsequent developments and as the Central Bureau of Investigation has filed the charge sheet. While relying on the observations made in the impugned judgment, ....
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....late Tribunal at Chennai. The Tribunal analysed all the issues and came to the conclusion that the order of the lower authorities cannot be sustained and partly allowed the appeal. This order is reported in [(2024) 160 Taxmann.com 480]. Similarly, the Assistant Commissioner of Income Tax had also preferred an appeal before the Tribunal which came to be dismissed in Assistant Commissioner of Income Tax Vs. RKM Power Limited, [(2024) 169 Taxmann.com 692]. Therefore, Mr.B.Kumar pleads the differences in pricing that is relied upon by the respondents cannot be valid, as the very order has been set aside by the jurisdictional Tribunal. (iii)The investments that had been made by the foreign entities had approval from the Reserve Bank of India. Therefore, those amounts cannot be treated as "proceeds of crime". (iv)"Round tripping", which is the basis on which ED has commenced enquiry, cannot be a subject matter of investigation, since the CBI in its final report had stated that it has to be looked into by the aforesaid Directorate under The Foreign Exchange Management Act, which is not a scheduled offence. (v)The reason for leaving it to the ED is because it is ....
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....relation to the fixed deposits. (iii) With respect to the order passed in W.P.No.24700 of 2021, he points out that this Court had not restrained the ED from proceeding further with respect to the coal allocation cases, and since the CBI had subsequently filed a charge sheet, the ED can pass the present order. (iv)He points out the correctness of the allegations made by the CBI cannot be examined by this Court in this writ petition challenging an order under Section 17. It would have to be dealt with independently, by the jurisdictional Special Court in Delhi. (v)He refers to para.Nos.16.45, 16.48, 16.53 to 16.57 of the chargesheet filed by the CBI, to urge that the ED has jurisdiction to pass the impugned order. (vi)He points out that the net worth of the company was puffed up, which resulted in the detailed project report to be submitted to the Power Finance Corporation and other financial institutions, on which basis, loans had been availed. This attracts the provisions of Section 471 & 420 of IPC, which are scheduled offences, and therefore, the ED has jurisdiction to deal with the matter. (vii)He points out, it is not a case of total....
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....nment of India Vs. M/s.Indian Bank, Egmore, Chennai, W.A.Nos.2614 and 2615 of 2012. *Respondent's side: (i)Special Director and another Vs. Mohd. Ghulam Ghouse and another, 2004 SCC OnLine SC 57; (ii)United Bank of India Vs. Satyawati Tondon and others, 2010 SCC OnLine SC 776; (iii)Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and another, 2010 SCC OnLine SC 459; (iv)Vijay Madanlal Choudhary and others Vs. Union of India and others, 2022 SCC OnLine SC 929; (v)South Indian Bank Ltd. and others Vs. Naveen Mathew Philip and another, 2023 SCC OnLine SC 435; (vi)Santiago Martin and another Vs. Union of India, 2023 SCC OnLine Ker 6259; (vii)Santiago Martin and another Vs. Union of India, W.A.No.1450 of 2023 dated 21.09.2023; (viii)V.R.Balamurugan Vs. Union of India and others, W.P.Crl.No.871 of 2024 dated 07.08.2024 and (ix)Enforcement Directorate & Ors. Vs. Satish Motilal Bidri, Special Leave to Appeal (Crl.) No.13429 of 2024. 36.We have heard the counsels in detail and have gone through the records. I ssue No.I - Maintainability of writ petition: 37.As an issue of ma....
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....tition, where an effective and efficacious alternative remedy is available. At the same time, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". In a long line of decisions, this court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. Though elementary, it needs to be restated that "entertainability" and "maintainability" of a writ petition are distinct concepts. The fine but real distinction between the two ought not to be lost sight of. The objection as to "maintainability" goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of "entertainability" ....
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....een entertained by this Court and orders have been passed in favour of the writ petitioner. 43.At the first instance, the ED did not choose to file an appeal, and at the second instance, it chose to file an appeal, but it withdrew the SLP. Furthermore, being a complicated issue of law, we feel that this Court has jurisdiction to deal with the issue. 44.Even the alternate remedy that Mr.AR.L.Sundaresan refers to is the appeal under Section 42 of the PMLA. Under Section 42, the High Court has jurisdiction over the orders passed by the Appellate Tribunal. The Appellate Tribunal exercises jurisdiction as against any orders passed by the adjudicating authority, or under any authority under this Act. The adjudicating authority passes an order, in terms of Section 8 of the Act. It is true that an application had been filed under Section 17(4), which can be adjudicated upon by the authority under Section 8. While these authorities deal with law and facts, we confine ourselves only with the aspect of jurisdiction. 45.We have set forth the facts in detail. CBI enquiry commenced due to the order passed by the Supreme Court in Manoharlar Sharma's case. CBI had originally filed a f....
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....n of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58-B or sub-section (2-A) of section 60, it becomes practical to seize a frozen property, the officer authorised under subsection (1) may seize such property. (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, 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 subsect....
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.... case. However, in the impugned order, nowhere has the authority stated that the fixed deposits are the result of proceeds of a crime. The conclusion portion is a mere extract of the provisions of Section 17(1-A). Such a reproduction does not pass ouster. Definition of Jurisdiction: 49.Before we proceed to the merits of the case, we would like to discuss the meaning of jurisdiction. Jurisdiction has its origin in Latin. It is a mixture of two words: 'juris', which means law, and 'dictio' which means speaking. In conjunction, it means "speaking of the law". Jurisdiction is defined as the territory within which a Court or Government Agency may properly exercise its powers. [See, Ruhrgas AG Vs. Marathon Oil Company, ETAL 526 US 574 (1999)]. 50.Having stated what jurisdiction means in law, we will now proceed to refer to a few authorities which deal with jurisdictional error. The High Court of Australia, in LPDT Vs. Minister for Immigration, Citizenship, Migration services and multi cultural affairs, [2024] HCA 12 has given an indication on jurisdictional errors and the principles to be applied in such cases. The Court held: "jurisdictional error can r....
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.... as approved by the Supreme Court during the course of discussion in this case. 55.Though there are several precedents of the Supreme Court, we refer only a couple of them, namely, Central Potteries Ltd. Nagpur v. State of Maharashtra, AIR 1966 SC 932 and P.Dasa Muni Reddy Vs. P.Appa Rao, AIR 1974 SC 2089. The Supreme Court, in Central Potteries pointed out the difference between want of jurisdiction and irregular assumption to jurisdiction. The said portion is extracted hereunder: "In this connection it should be remembered that there is a fundamental distinction between want of jurisdiction and irregular assumption of jurisdiction, and that whereas an order passed by an authority with respect to a matter over which it has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity. It may be liable to be questioned in those very proceedings, but subject to that it is good, and not open to collateral attack." 56.In P.Dasa Muni Reddy Vs. P.Appa Rao, AIR 1974 SC 2089, the Court held: "12. ..... Want of ju....
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....quo for the ED to commence its duties and exercise its powers is the existence of a predicate offence. Once there exists a predicate offence, and the ED starts investigation under the PMLA, and file a complaint, then it becomes a stand alone offence. As long as there is no predicate offence, ED cannot plead that since no one set up the criminal law into motion, it will rely on that doctrine and commence proceedings under the PMLA. 60.It is too well settled that where an act has to be done in a particular way, it must be done in that way and in no other way. The PMLA demands the existence of a predicate offence. When there is no predicate offence, initiation of proceedings under PMLA is a non starter. If the arguments of the Additional Solicitor General is accepted, then the ED on registration of an ECIR can conduct a roving enquiry with respect to other aspects also. That is not the position of law. To put it pithily, no predicate offence, no action by ED. 61.A careful perusal of Section 66(2) of PMLA points out that if during the course of investigation, the ED comes across violations of other provisions of law, then it cannot assume the role of investigating those offences ....