AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 1862
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..... Anupam Sharrma, Special counsel-ED with Ms. Harpreet Kalsi, Mr. Vashisht Rao, Mr. Vishesh Jain, Ms. Riya Sachdeva, Mr. Anant Prakash Mishra, Advs. for ED. JUDGMENT PER ANIL KSHETARPAL, J. 1. The present Petitions have been filed challenging the proceedings initiated by the Directorate of Enforcement [hereinafter referred to as 'the Directorate'], the Respondent herein. In particular, the Petitioners assail the validity of the issuance of the Provisional Attachment Order ('PAO') passed under Section 5(1) of the Prevention of Money Laundering Act, 2002 [hereinafter referred to as 'PMLA'] along with the Original Complaint filed under Section 5(5) of the PMLA and Show Cause Notice ('SCN') issued under Section 8 of the PMLA thereof. 2. At the threshold, it is noted that the present batch of petitions arises out of a similar Enforcement Case Information Report [hereinafter referred to as 'ECIR'] registered by the Directorate, thereby challenging the proceedings initiated under the provisions of PMLA on substantially similar factual matrix with the Petitioners advancing largely analogous submissions. Therefore, in order to maintain clarity and continuity in the adjudication ....
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.... through the facilitators, submitted falsified proforma invoices and mandatory declarations. The purported importers, acting through the facilitators, submitted falsified pro forma invoices and mandatory declarations, including Form A-1, fraudulently misrepresenting that the goods would be imported within a stipulated time, and undertaking to repatriate funds if no genuine import occurred. On the basis of these fabricated representations, and notwithstanding the lack of real trade, the bank wired substantial sums abroad to the companies controlled by the facilitator in Dubai and Hong Kong. Once the funds were received in those overseas accounts, they were further transferred either to companies under the control of the facilitators or to complicit exporters in India, who either over-invoiced exports or under-invoiced imports, thereby siphoning off monies under the guise of genuine international commerce. 7. Resultantly, based on the cumulative evidence, including RCBD1/2015/E/0009, ECIR/20/DLZP/2015, documents recovered and seized from the digital devices and emails and statements of the suspects and statements recorded under Section 50 of the PMLA, the Directorate on 10.02.2015....
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....y days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in 1[first proviso], any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.] ....
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....ther law for the time being in force, the offences specified in sub-section (1) of section 3 shall be tried by special Judges only. (2) Every offence specified in sub-section (1) of section 3 shall be tried by the special Judge for the area within which it was committed, or, as the case may be, by the special Judge appointed for the case, or where there are more special Judges than one for such area, by such one of them as may be specified in this behalf by the Central Government. (3) When trying any case, a special Judge may also try any offence, other than an offence specified in section 3, with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial. [(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the trial of an offence shall be held, as far as practicable, on day-to-day basis and an endeavour shall be made to ensure that the said trial is concluded within a period of two years: Provided that where the trial is not concluded within the said period, the special Judge shall record the reasons for not having done so: Provided further that th....
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.... considers necessary after allowing the company to take copies of, or extracts from, such books or papers at its cost. (2) The Registrar or inspector shall return the books and papers seized under sub-section (1), as soon as may be, and in any case not later than one hundred and eightieth day after such seizure, to the company from whose custody or power such books or papers were seized: Provided that the books and papers may be called for by the Registrar or inspector for a further period of one hundred and eighty days by an order in writing if they are needed again: Provided further that the Registrar or inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from them or place identification marks on them or any part thereof or deal with the same in such other manner as he considers necessary. (3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures shall apply, mutatis mutandis, to every search and seizure made under this section. 212. Investigation into affairs of Company by Serious Fraud Investigation Office.-(1) Without prejudice to the provisio....
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.... [435. Establishment of Special Courts.- (1) The Central Government may, for the purpose of providing speedy trial of [offences under this Act, except under section 452, by notification] establish or designate as many Special Courts as may be necessary. (2) A Special Court shall consist of- (a) a single judge holding office as Session Judge or Additional Session Judge, in case of offences punishable under this Act with imprisonment of two years or more; and (b) a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of other offences, who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.] 436. Offences triable by Special Courts.-(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) [all offences specified under sub-section (1) of section 435] shall be triable only by the Special Court established or designated for the area in which the registered office of the company in relation to which the offence is committed or where there are more Special Courts....
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....onment shall not be less than three years. [Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to 3 [fifty lakh rupees] or with both.] Explanation.-For the purposes of this section- (i) "fraud", in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss; (ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) "wrongful loss" means the loss by unlawful means of property to which the person losing is legally entitled. 12. Learned Coun....
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...., since no finding to this effect has been recorded either in the PAO or the order passed by the AA, specifying on what basis the Designated/ Authorised Officer [hereinafter referred to as 'D/AO'] formed the belief that the property is involved in money laundering, and how non-attachment would frustrate the proceedings under the PMLA. 12.6 Lastly, reliance has also been placed on Order dated 31.01.2025 in SLP(Crl.) Diary No. 59099/2024 captioned Sanjay Aggarwal v. Directorate of Education to submit that there is no order of cognizance on record till date in view of the Supreme Court Order. 13. Per contra, the learned counsel representing the Directorate, while controverting the submissions advanced by the Petitioner, has made the following submissions: 13.1 At the outset, it is the case of the Directorate that the present petition is rendered infructuous in view of the confirmation of the PAO by the AA vide its Order dated 29.08.2016. The learned counsel for the Directorate has also pressed the fact that the Petitioners have already availed the remedy of filing an appeal under Section 26 of the PMLA, against the order dated 29.08.2016. In view of the aforestated, it has be....
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....itioner on the judgment of Ashish Bhalla (Supra), it has been contended that the said reliance is misplaced, since the case did not address offences relating to PCA or PMLA. Moreover, the judgment has been challenged before the Supreme Court vide SLP (Crl) 327/2024 titled Vishvendra Singh v. State of NCTD & Anr., wherein the Supreme Court, while dismissing the petition, has left open the relevant question of law. 13.6 Controverting the argument raised by the Petitioner, that the SFIO lacks power to investigate offences outside the Act of 2013, the Directorate has referred to Section 435 of the Act of 2013, which limits the Special Court to try only offences under that Act; while Section 436(2) allows the said Court to try other offences, it does not confer any power on SFIO to investigate or inquire the offences not covered under the Act of 2013. Similarly, reference was also made to Section 43(2) of the PMLA and Section 4(3) of the PCA to state that the said provisions merely enable the court to try additional offences; however, they do not vest any jurisdiction in the agencies to investigate the matter. 13.7 Learned Counsel for the Directorate, while controverting the argum....
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....pendent investigative and prosecutorial machinery. A similar view has also been taken by the Supreme Court in Vijay Madan Lal Chaudhary (Supra). In respect thereof, reliance is also placed on the usage of phrase "under any other law" in Section 212(17)(b) of the Act of 2013. This phrase recognises the statutory implication and intention implying that parallel proceedings/investigation under different statutory regimes is permissible under the Act of 2013. A similar view has also been taken by Punjab and Haryana High Court in Vinod Kumar v. State of Haryana & Ors 2024:PHHC:059827. The said provision merely acts as information sharing provision or mechanism that pre-supposes that multiple agencies may simultaneously investigate different aspects of the same factual matrix under different statutory regimes. 16. Importantly, if the practical application of the entire dispute is taken into account, it would become crystal clear that the Act of 2013 only deals with violations of corporate governance, norms, fraudulent conduct by the officers of the company and irregularities in the administration of the said company. However, the PMLA, penalises the process or activity connected with ....
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....sary, the authority has relied upon the following documents: i. Copy of RC No. registered by the CBI under Section 420 read with Section 120B of the IPC and Section 13 of the PCA; ii. ECIR No. ECIR/20/DLZO/2015 dated 09.10.2015 registered in Directorate of Enforcement, New Delhi; iii. Documents recovered and seized from various premises and digital devices and emails recovered; iv. Statements of the suspects and witnesses, recorder under Section 50 of the PMLA and documents tendered by the said witnesses. 20. Moreover, a perusal of Section 50 statements recorded from other accused persons, as also attached under the PAO forming part of this Petition, discloses that, the Petitioner, between January 2015 to July 2015, made advance remittances upto Rs.450 Crore. These remittances are not isolated; they are embedded within a broader network of transactions. The Petitioner is shown to have established a web of companies in the names of different individuals, ostensibly to channel forex abroad under the pretext of advance import payments. The shell companies alleged to have been set up by the Petitioner, having no genuine business substance, operate....