TaxTMI 
TaxTMI 
2026 (3) TMI 106
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....he allegation in the complaint lodged by Shri Souvik Chowdhury to the Judicial Magistrate led to registration of the case dated 19.04.2014 for the offence under Sections 420, 406 and 120B of the IPC following the Supreme Court order in WP (Civil) No. 401/2013. The CBI, EO-IV, Kolkata accordingly registered the FIR on 13.06.2017. The FIR was registered mainly against M/s Chakra Infrastructure Ltd. and its Directors, including Shri Partha Chakraborti. It is a fact that several cases were registered thereupon by the State Police involving similar allegations of inducing the public to invest in different schemes floated by the Company and subsequently misappropriating the funds of the investors. M/s Chakra Infrastructure Ltd. was, otherwise, to operate as Real Estate Developers as per the Memorandum of Association. It could have been even in the construction. However, the Company deviated from the objectives stated in Memorandum of Association and collected deposits from the public through agents after promising high-interest rates ranging from 13.4% to 78.5%. The agents were provided huge commissions to collect funds after giving assurances that their investments is secured out of Com....
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....l for the appellants did not raise any other argument on the ground that the relevant documents have not been submitted along with the appeals. He may yet be allowed to refer those documents even if the pleading to this effect has not been made. 9. The prayer made by the Ld. Counsel for the appellants could not be accepted because the appeal has to be decided based on the pleadings and if a document has been filed to support the pleadings then after considering those documents. The argument cannot travel beyond the pleadings to the appeal and the document produced before this Tribunal. It is more so when nobody prevented the appellant to produce all relevant documents and even pleadings while filing the appeal. Even for the sake of assumption, it is taken to be a case of bona fide mistake then also the appellant could have filed an application for amendment of the appeal at the earliest. The prayer for consideration of documents was made after raising the legal grounds for challenge to the impugned order, though, documents are not on record. In any case, the appeal cannot be decided beyond the pleadings, though the parties remain always at liberty to raise a legal issue even if ....
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.... facts pertaining to the case have been narrated in the opening paras of this order where serious allegations have been made against the appellant for causing predicate offence. The FIR was registered pursuant to the direction of ACJM and following the Apex Court's order in WP (Civil) No. 401/2023. After registration of the FIR, ECIR was recorded followed by investigation. The main allegations were levelled against the appellant, Shri Partha Chakraborti and his company for commission of predicate offence. The Counsel for the appellant did not raise any argument alleging innocence of the appellants in commission of offence. It is despite the detailed facts given in the Original Complaint sent by the competent authority after causing PAO. 16. The Adjudicating Authority issued show-cause notice under Section 8(1) of the Act of 2002 with the endorsement that the reasons to believe have been recorded in writing and a copy of the reasons to believe recorded under Section 8(1) was enclosed along with the said notice. It was with the arrangement that the appellant may obtain certified copy of reasons to believe by depositing the required fee to the Registrar, Adjudicating Authority. In ....
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.... has been relied by the Ld. Counsel for the appellant and is quoted hereunder:- vi) What is the level of satisfaction to be recorded by the Adjudicating Authority prior to issuance of show cause notice under section 8(1) of the PMLA? The Adjudicating Authority is an authority which adjudicates, i.e., which decides disputes between the parties on merits without bias or prejudice. It is independent and distinct from the ED. As per Section 8, upon receipt of a complaint/application filed by the ED under Section 17(4), the Adjudicating Authority has to record its 'reason to believe' that an act has been committed which constitutes money laundering under Section 3, or a person is in possession of 'proceeds of crime'. It has to record its satisfaction independent of the `reasons to believe' of the ED and only thereafter issue a show cause notice under Section 8(1) to be served upon the party/parties concerned. The said notice has to be issued in accordance with the Adjudicating Authority (Procedure) Regulations, 2013'. The Adjudicating Authority cannot mechanically go by the reasons recorded by the ED, and has to have separate and independent grounds to believe....
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.... crime. Unless this condition precedent is complied with, the adjudicating authority would have no jurisdiction to issue notice under sub- section (1) of Section 8 upon receipt of complaint under sub-section (5) of Section 5. This reason to believe under sub-section (1) of Section 8 must be that of the adjudicating authority who must form his own reason to believe independent of the reason to believe formed by the attaching authority while carrying out provisional attachment under sub- section (1) of Section 5. Therefore, the reason to believe must be present at both the stages and that reason to believe at the stage of Section 5(1) would not suffice for invoking jurisdiction under Section 8(1) for which the adjudicating authority must form its own independent reason to believe having regard to the two aspects mentioned in Section 8(1) of PMLA 21. In para 55, quoted above, the High Court of Telangana held that while attaching the property under Section 5(1) of the Act of 2002, the authority must have reason to believe and is to be recorded in writing on the basis of the material in his possession that the person is in possession of the proceed of crime and such proceed of crime ....
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....P(C) No. 5320/2017. The operation of the said judgment has been stayed by the Supreme Court. In any case, the issue has been raised by the Ld. Counsel for the respondent whether this Tribunal or Courts are having powers to rewrite the provision and accordingly entered into legislative domain. Ld. Counsel for the respondent has cited the judgment of Supreme Court where it has been held that the Courts are not having powers to rewrite the provisions or insert/add a procedure. Even while referring to the Doctrine of Reading Down, the same was not permitted. The reference of the judgment in the case of Union of India versus Deoki Nandan Aggarwal reported in 1992 Suppl(1)SCC 323 would be relevant. The para no. 14 of the said judgment is quoted hereunder: 14. We are at a loss to understand the reasoning of the learned Judges in reading down the provisions in paragraph 2 in force prior to November 1, 1986 as "more than five years" and as "more than four years" in the same paragraph for the period subsequent to November 1, 1986. It is not the duty of the Court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is p....
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....endent reason to believe under Section 8(1) of the Act of 2002. The judgment in the case of Vanpic Ports Private Limited (supra) does not direct reason to believe to be recorded in writing while causing notice under Section 8(1) of the Act of 2002 and to be served to the noticee. 29. Contrary to the judgment of High Court of Delhi, the Ld. Counsel for the respondent cited the judgment in the case of G. Gopalakrishnan versus The Deputy Director, Directorate of Enforcement reported in MANU/TN/2019. The relevant paras of the said judgment are quoted hereunder for ready reference:- 76. As regards the legal contention of not providing reasons recorded by the Adjudicating Authority under Section 8(1) of PMLA, show cause notice issued by the Adjudicating Authority which is one of the impugned orders in the Writ Petitions, can be referred to. In the show cause notice itself, it is clearly mentioned that the Adjudicating Authority recorded satisfaction in terms of Section 8(1) of PMLA and a copy of the order can be applied by making an application to the Registry. Once it is clearly mentioned in the show cause notice itself that the Authority is satisfied about the complaint and....
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....e proceedings initiated under PMLA by stalling due process of law which was duly set in motion. 96. The above arguments may appear to be quite attractive, but looking at the entire scenario pragmatically, such proviso became necessary ostensibly in view of large scale incidence of the alleged money-laundering offenders approaching the Courts during initial stage of action under PMLA. Such insertion is definitely cannot be construed to be a recognition of right of persons like these writ petitioners who approached this Court at the very initial stage, but it is only a recognition of the ground reality by the Parliament. Therefore, these Writ Petitioners cannot take advantage of insertion of 3rd proviso to Section 5 of PMLA in order to bolster the case for intervention of this Court at the stage of initiating action under Section 5 of PMLA. 97 In the conspectus of above discussion, this Court would sum up the following, viz., i) That the absence of recording of reasons to believe under Section 5(1) of PMLA, does not result in violation of constitutional right to property of the citizens since it was only a provisional attachment which would be valid only fo....