Chattisgarh High Court
Babu Lal Agrawal vs Deputy Director, Enforcement ... on 23 February, 2022
1
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Order Reserved on : 05/01/2022
Order Delivered on : 23/02/2022
CRMP No. 1323 of 2021
Babu Lal Agrawal, S/o Shri Ram Kumar Agrawal, aged about
56 years, R/o Samarth, Opposite United Timbers, New Timber
Market, Fafadih, Raipur (C.G.)
---- Petitioner
Versus
1. Deputy Director, Enforcement Directorate, Raipur (C.G.).
2. Assistant Director and I.O., PMLA Enforcement Directorate,
Raipur (C.G.).
---- Respondents
For Petitioner : Mr. Abhimanyu Bhandari, Ms. Kartika
Sharma, Ms. Vidula Mehrotra and Mr.
Krishna Tandon, Advocates.
For Respondents : Dr. Saurabh Pandey and Mr. Anil S.
Pandey, Advocates.
Hon'ble Smt Justice Rajani Dubey
CAV ORDER
1. Heard on I.A. No.01/2021, for grant of interim relief.
2. The instant writ petition under Section 482 of the Code of
Criminal Procedure is filed for quashing the proceedings and
setting aside the ECIR bearing No. ECIR/01/NGR/2011 dated
10.01.2011 renumbered as ECIR/RPSZO/05/2013 and the
addendum to the ECIR dated 10.02.2020 (for short the
'impugned ECIR').
3. I.A.No.01/2021 has been filed by the Petitioner to set aside
the proceeding of impugned ECIR till final disposal of this
case.
4. The facts, in nutshell, are that on 04.02.2020 and
06.02.2020, the Income Tax Department, in exercise of power
conferred upon them by Section 132 of the Income Tax Act,
1961, not only conducted search at the residence of the
Petitioner but also at other premises terming it to be illegal
and the same put under challenge by the Petitioner in WP(T)
No. 1018/2011 before this High Court, which is pending
consideration. Since the Petitioner is in employment of
Chhattisgarh State Government, on 11.02.2010, an unverified
Preliminary Report with unverified facts was submitted by the
Income Tax Department to the State Government (C.G.)
about his family including the members of the extended
family of the petitioner. The said joint report of the search
conducted at various premises alleged to have been sent
before concluding the statutory assessment proceedings
without there being any provision in the law under the
Income Tax Act. On 19.02.2010, on the basis of Preliminary
Report dated 11.02.2010, Economic Offences Wings
Chhattisgarh ('EOW, Chhattisgarh) registered FIR bearing
No.06/2010 against the Petitioner under Sections 13(1) and
13(2) of the Prevention of Corruption Act. Pursuant to the said
EOW FIR dated 19.02.2010, the Sub Zonal Office Nagpur of
the Enforcement Directorate (ED), on 10.01.2011, registered
an Enforcement Case Information Report bearing No.
ECIR/01/NGR/2011. On 22.03.2010, a charge sheet was
issued to the Petitioner by the State Government framing
charges on the basis of Preliminary Report submitted by the
Income Tax Department. The Petitioner responded to the
charge sheet by way of filing requisite documents stating
factual position and on being satisfied and after careful
examination of law, on 13.03.2012, the State Government
dropped the departmental proceeding against the Petitioner
on same set of facts and allegation raised in the Preliminary
Report and exonerated him from all the charges.
5. On 11.01.2012, after completion of search assessment,
Assessing Officer, Income Tax, issued order/letter raising a
tax demand of Rs.13,464/- against the petitioner. This order
of the Assessing Officer was challenged by the
Petitionerbefore the Commissioner of Income Tax (Appeals)
and vide order dated 31.05.2012, the Commissioner of
Income Tax (Appeals) deleted the additions made by the
Assessing Officer from the income of the petitioner. The
Income Tax Department, being aggrieved by the order of the
Commissioner of Income Tax, filed an appeal before the
Income Tax Appellate Tribunal and vide order dated
09.01.2017 (Annexure A/9), the order of the Commissioner of
Income Tax was affirmed exonerating the Petitionerof all the
allegations made in the preliminary report.
6. After establishment of an independent office at Raipur (Sub-
Zonal Office) to deal with the cases arising out of the State of
Chhattisgarh, the impugned ECIR-I bearing No.
ECIR/01/NGR/2011 which was registered by the Sub-Zonal
Office at Nagpur, was transferred to Sub Zonal Office, Raipur
(C.G.) and was renumbered as ECIR/RPSZO/05/2013. On
04.04.2017, after a lapse of seven years of registration of
impugned ECIR, the respondent No.2 issued Provisional
Attachment Order (Annexure A/10) under Sub-section (1) of
Section 5 of the Prevention of Money Laundering Act, 2002
(for short 'the PMLA, 2002') and provisionally attached the
legally acquired properties of the Petitioner ignoring the fact
that EOW, Chhattisgarh has already filled a closure report on
08.011.2016 in FIR No.06/2010. On 03.05.2017, the
respondents authorities, in terms of Section 5(5) of the PMLA
2002, filed a Complaint bearing No.771/2017 (Annexure A-11)
before the Adjudicating Authority, who vide detailed order
dated 14.05.2018 (Annexure A/12), quashed the Provisional
Attachment Order of the Property of the Petitioner amongst
other holding that the Petitioner is not involved in the money
laundering. Thereafter, being aggrieved by the order of the
Adjudicating Authority, the respondent authorities preferred
an Appeal No.FPA-PMLA-2377 & 2472/RP/2018 before the
Appellate Tribunal, PMLA at New Delhi, which is still pending
consideration.
7. On 10.02.2020 i.e. after about 10 years, the respondent
authorities through Sub-Zonal Office, Raipur, filed an
addendum to the impugned ECIR registering predicate
offences via different FIRs, which was initially registered only
for the purpose of investigation for predicate offence by EOW
in Crime No.06/2010 (EOW FIR). Thereafter, on 27.11.2020
the respondent authorities again issued another Provisional
Attachment Order (Annexure A/17) under Section 5(1) of
PMLA, 2002, and on 18.12.2020, the respondents filed an
Original Complaint bearing OC No.1380/2020 (Annexure
A/18) under Section 5(5) of PMLA, 2002, before the learned
Adjudicating Authority. Further case of the prosecution is that
addendum ECIR has been registered for the predicate offence
registered by CBI, EOU-VII, New Delhi for commission of
offence under Section 120-B, 420 and 471 of IPC and Section
13(2) and 13(1)(d) of the P.C. Act, bearing RC No. RC-
1(E)/2010/EOW-VII dated 04.01.2010. After receiving the
Original Complaint dated 18.12.2020, the learned
Adjudicating Authority issued a Show Cause Notice dated
07.01.2021 to the Petitioner without referring its own order
dated 14.05.2018. On 14.09.2021, the High Court of Delhi
stayed the operation of the Provisional Attachment Order
dated 27.11.2020 in a Writ Petition (C) No.3938/2021
preferred by M/s Prime Ispat Ltd. which is also a party along
with the petitioner in the Provisional Attachment Order dated
27.11.2020 on the ground that PAO-II has been issued on the
same set of allegation and FIRs have already been
adjudicated by the Authority in Provisional Attachment Order
dated 04.04.2017.
8. Learned counsel for the Petitioner submits that after thorough
investigation for more than six years and after exonerating
by the CIT (Appeals) and ITAT in the Income Tax proceedings,
a closure report was filed on 21.11.2016 in the EOW FIR
No.06/2010 holding that no criminal offence is made out
against the Petitioner, inter-alia, stating that as per the
principle laid down by the Hon'ble Apex Court, the
disproportionate assets are only 5.95 % and as such, it is not
a fit case for the prosecution. However, the respondent No.1
for the reasons best known to it, wrote a letter to the EOW
seeking withdrawal of the closure report and the Special
Judge (PC Act), on 05.10.2017, without application of judicial
mind, allowed the application for withdrawal of closure
report, which is not permissible under the law. He also
submits that the order of withdrawal of closure report passed
by the Special Court (PC Act) and EOW FIR has been
challenged by the Petitioner in WA No.354/2020, which is still
pending consideration before this High Court. Further
submission of learned counsel for the Petitioner is that on
10.02.2020, after a lapse of about 10 years, an addendum to
the ECIR has been filed registering predicate offences against
the Petitioner via different FIRs which was initially registered
only for the purpose of investigation for predicate offence
registered by EOW in Crime No.06/2010 (EOW FIR). Learned
counsel also submits that even after exoneration of the
Petitioner by the Income Tax, State Government and
Adjudicating Authority, the respondents in absence of any
fresh/new material on record, without any cogent reason
issued another Provisional Attachment Order dated
27.11.2020 under Section 5(1) of PMLA, 2002 against the
petitioner. The respondent authorities have completely failed
to produce any material or facts to proceed with the
attachment order after the order of the learned Adjudicating
Authority not confirming the Attachment Order dated
04.04.2017. It has been submitted by learned counsel that
the POA-II issued by the Respondent No.1 and the
proceedings emanating therefrom are ex-facie perverse,
illegal and vitiated by non-application of judicial mind since
these proceeding are in breach of the provisions of the PMLA
and natural justice. It has been also submitted by learned
counsel that addendum to ECIR has been registered for the
predicate offence by CBI, EOU-VII, New Delhi for commission
of offence under Section 120-B, 420 and 471 of IPC and
Section 13(2) and 13(1)(d) of the P.C. Act, bearing number
RC-1(E)/2010/EOU-VII dated 04.01.2010, but no offence has
been made out in the said RC against the Petitioner. He
further submits that the prosecution launched under PMLA,
2002 is nothing but to harass the Petitioner for the reason
that the State of Chhattisgarh refused to grant sanction for
prosecution under Section 19 of the PC Act as well as under
Section 197 of Cr.P.C. vide letter dated 11.07.2014,
03.08.2016 and 04.10.2017. Further, the State of
Chhattisgarh, where the Petitioner was in employment, vide
letter dated 04.06.2019 informed the Central Government
that the Petitioner was neither having any financial power at
the relevant time nor he played any role in the alleged
irregularities, therefore, when no prosecution can be
launched in the predicate offence, the prosecution under
PMLA cannot be proceeded. Further submission of learned
counsel for the Petitioner is that addendum ECIR has been
registered for the predicate offence for RC No.2172017A0004
on 18.02.2017 by CBI, ACU-V, AC-II, New Delhi for
commission of offence under Section 120-B of IPC and
Section 8 of P.C. Act, and the said FIR was challenged before
this Hon'ble High Court in WP(Cr.) No.75/2017 and vide order
dated 19.12.2019, the Hon'ble High Court held that Section 8
of the P.C. Act cannot be invoked against the Petitioner and,
therefore, only section which survives against the Petitioner
is Section 120-B of IPC.
9. Further contention of learned counsel for the Petitioner is that
in absence of any consent by the State of Chhattisgarh to the
CBI to investigate the mater under the Provisions of Delhi
Special Police Establishment Act, 1946, the entire
investigation and prosecution of the Petitioner in the case is
void ab initio. There is neither allegation of generation of any
proceeds of crime in the matter nor there is any recovery
from the Petitioner during search or investigation and as
such, the entire case is devoid of mens rea. It is next
submitted that addendum ECIR has been registered for the
predicate offence for RC No.1242010A0009 on 31.12.2010 by
CBI, ACB, Bhilai for the offence punishable under Section
120B, 419, 466 and 477A of IPC. The charge sheet in the
said FIR has been filed by the CBI and co-accused namely
Pawan Kumar Agrawal, upon whom the identical allegations
were levelled, had preferred a WP(Cr.) No.201/2017 before
this Hon'ble High Court for quashment of said charge sheet,
wherein vide order dated 26.09.2019, the High Court was
pleased to quash the charge sheet of co-accused who is
brother of the Petitioner, but the petition [WP(Cr.)
No.1119/2019] filed by the Petitioner on the parity ground, is
pending consideration. He also submits that since the
income tax proceeding and PAO-I has culminated in favour of
the Petitioner, no offence under Section 3 of PMLA, 2002 is
made out against the Petitioner and in view of law laid down
by the Hon'ble Supreme Court in the matter of State of
Haryana and Ors. V. Bhajan Lal and Ors. 1, any further
prosecution is violative of Article 21 of the Constitution of
India. Further, in the matter of P.S. Rajya Vs. State of
Bihar2, Hon'ble Supreme Court held that an officer of the
Income Tax Department despite being exonerated by the
Central Vigilance commission was being prosecuted by the
CBI for offence under Section 13(2) & 13 (1) (b) of the
Prevention of Corruption Act and observed that the standard
of proof required to be established in a criminal case is far
higher than the standard of proof required to be established
the guilt in departmental proceedings. It is also submitted
that since the Petitioner has been exonerated from all the
charges in the proceedings before the ITAT vide order dated
09.01.2017, in departmental inquiry vide order dated
13.03.2021 and also by the Adjudicating Authority vide order
dated 14.05.2018, wherein degree of proof is much lesser
than that of criminal proceeding and when the Petitioner has
been found to be innocent, no proceedings on the same set
of allegations can be launched by the respondents.
In support of this contention, learned counsel referred the
decision of Honl'ble Apex Court in the matter of
Radheshyam Kejriwal V. State of West Bengal 3, wherein
the Appellant was exonerated under Section 51 of Foreign
Exchange Regulation Act, 1973. However, the Enforcement
Directorate on the same allegation filed complaint against
the Appellant therein for prosecution under Section 56 of the
Act before the Metropolitan Magistrate. The Hon'ble Apex
Court, in para 31 held that :
"31. It is trite that the standard of proof required in
criminal proceedings is higher than that required
1 1992 Supp (1) 335
2 (1996) 9 SCC 1
3 2011 3 SCC 581
before the adjudicating authority and in case the
accused is exonerated before the adjudicating
authority whether his prosecution on the same set
of facts can be allowed or not is the precise
question which falls for determination in this case."
10. It is also submitted that in view of exoneration of the
Petitioner by the Income Tax authority, State of Chhattisgarh
and also by the Adjudicating Authority, the impugned ECIR
and the Prosecution Complaint against the Petitioner is
absolutely illegal, non est in the eye of law and cannot be
sustained at all. Lastly, it is submitted that the provision of
Criminal Procedure Code are applicable for trial of offences as
held under Section 44(1)(d) of PMLA Act and as such, Section
218 of Cr.P.C. bars the joint trial and provides that for each
separate offence there shall be a separate charge and shall
be tried separately and prayed for staying impugned ECIR
and addendum to the ECIR dated 10.02.2020 and the entire
proceedings emanating therefrom, till the final disposal of the
case. In support of his submission, learned counsel placed
reliance on the decisions of Hon'ble Supreme Court in the
matter of Radheshyam (supra) and judgment dated
08.09.2020 passed in Criminal Appeal No.575/2020
(Ashoo Surendranath Tewari V. The Deputy
Superintendent of Police).
11. Par contra, learned counsel for respondents opposing the
prayer of interim relief submits that the Economic Offence
falls in the category of offences which travels far ahead of
personal or private wrong, having the potential to usher in
economic crisis. The present criminal proceedings have been
initiated against the Petitioner under PMLA, 2002, and burden
of proof under Section 24 of the PMLA, 2002 with regard to
the said tainted money is upon the accused persons to prove
it otherwise. He further submits that in the instant case the
main contention of the Petitioner that the investigation is
pending for more than 11 years, is imprecise and the
Petitioner has a long history of non-cooperation in the
investigation proceedings and filling of frivolous
petitioners/applications in various judicial forums around the
country. Right from the inception of investigation by the
respondents, the modus operandi of the Petitioner has been
to dodge the investigation by filing frivolous litigations and
then withdrawing them in order to affect the investigation of
the respondent authorities. The Petitioner and his family
members have a chequered history of continuous non-
cooperation during the investigation by not appearing
against Letters and Summons issued to him by respondent
authorities under Section 50(2) & (3) of PMLA, 2002 on one
pretext or the other.
12. Learned counsel, referring to the recent judgment of High
Court of Madras passed on 24.09.2021 in the matter of S.S.
Govindaraj V. State bearing Crl. O.P. No.28796/2015,
submits that the accused has a right to speedy trial, but must
face consequences if responsible for delay. Learned counsel
also submits that granting any interim relief to the Petitioner
in the instant case would amount to Appellate Court
evaluating the material and evidences before the registration
of the Prosecution Complaint and the same would be against
the view taken by Hon'ble Supreme Court in the matter of
State of Rajasthan V. Ashok Kumar Kashyap 4. It is also
pointed out by learned counsel for the respondents that
during the course of investigation, from 2006-2007 to 2009-
2010, the Petitioner (I.A.S.) abused his position and power
and in connivance with his Chartered Accountant namely
Sunil Agrawal (proposed accused in the PC) opened as many
as 446 accounts in the name of gullible villagers of Kharora,
Motimpur Kala, Chingaria and Mandheipur, Chhattisgarh in
Union Bank of India, Pandri and Ramsagarpara, Branch Raipur
(C.G.). Furthermore, the money dishonestly and fraudulently
earned by the Petitioner was deposited in the above said
accounts of the villagers, and subsequently, it was laundered
through different shell companies operated by his C.A. Sunil
Agrawal and others, and then the tainted money of the
Petitioner was moved and integrated to M/s Prime Ispat Ltd,
Raipur (C.G.) (proposed accused Company in the PC owned
and controlled by the immediate brothers of the Petitioner
4 2021 SCC Online 314
namely Ashok Kumar Agrawal and Pawan Kumar Agrawal)
and other related entities controlled by family members of
the Petitioner. It has been also submitted that in the financial
year 2010-2011, the shares invested by the 13-Shell
company at huge premium were transferred to the sister
concerns of M/s Prime Ispat Ltd. at highly discounted prices
i.e. at Rs.5/- and Rs.10/- only, thereby large amount of cash
to the tune of Rs.46 Crores was infused into the banking
system by way of cash deposit in the benami accounts of the
Petitioner, and thereafter an amount totaling to Rs.36.09
Crores were invested in the Equity Shares of M/s Prime Ispat
Ltd which is a family concern of the Petitioner. Thus, from the
aforesaid facts, it is clear that the said Rs.36.09 Crores is
unaccounted and tainted money belonging to the Petitioner,
which was laundered by investing in Equity Shares of M/s
Prime Ispat Ltd. and the same should be termed/treated as
proceeds of crime. Learned counsel further added that the
investigation in the matter is continued in relation to other
FIRs and from 2015 to 2020 various Letters and Summons
were issued to the proposed accused to co-operate in the
investigation but the Petitioner gave various frivolous replies
to the said letters and summons and did not join the
investigation. Subsequently, due to non co-operation in the
investigation conducted by the Directorate of Enforcement,
the Petitioner was arrested by the Investigating Agency on
09.11.2020 and on 12.11.2020 he was sent to judicial
custody by the learned 4th Additional Sessions Judge (Special
Judge, PMLA), Raipur (C.G.).
13. Further submission of learned counsel for respondents is that
PAO-II bearing No.03/2020 dated 27.11.2020 issued by the
respondents is pending adjudication before the learned
Adjudicating Authority. The argument of learned counsel for
the Petitioner to the extent that the Petitioner has been
exonerated from various offences, is not correct as all the
orders are pending consideration before the Appellate
Authority. The Petitioner is not at all entitled for any relief
whatever prayed by him in the application under Section 482
of Cr.P.C. The PMLA is a special Act and certain provisions of
PMLA Act are under consideration before the Hon'ble
Supreme Court and there is no direction/stay/any adverse
finding by it in this regard. It has been also submitted by
learned counsel for respondents that the Petitioner was given
ample amount of opportunities during investigation and
otherwise but his non co-operation throughout the
investigation and when he was summoned for statement
under Section 50 of PMLA, 2002, very clearly established the
modus operandi of the Petitioner to delay the proceedings
and then approaching various judicial forums to take benefit
on the ground of delay in criminal proceedings, as in the
present case. The statement of the Petitioner under Section
50 of the PMLA, 2002 got recorded only on two instances,
once when he was in judicial custody in Tihar Jail, New Delhi
(In CBI case), and secondly when the was in the custody of
the respondents authorities. The investigation of the
respondent authorities is independent and stand-alone. The
Petitioner tried to mislead this Hon'ble High Court by stating
that he has been exonerated by the Income Tax Appellate
Tribunal (ITAT) and by other Adjudicating Authority.
Therefore, looking to the allegation and the position of the
Petitioner, the investigation by the respondent authorities is
significant as the offence under PMLA, 2002 is grievous in
nature and the Petitioner is not entitled for any stay or any
other relief. In support of submission, learned counsel placed
reliance on the decisions of Hon'ble Supreme Court in the
matter of Central Bureau of Investigation Vs. Maninder
Singh5, Rohit Tandon V. Directorate of Enforcement 6,
Y.S. Jagan Mohan Reddy V. Central Bureau of
Investigation7, State of Gujarat V. Mohanlal Jitamalji
Porwal8 and decision of High Court of Madras in the matter
of S.S. Govindaraj V. State represented by the
Inspector of Police9.
14. I have heard learned counsel for the parties and have
carefully gone through the material available on record.
5 CRA 1496/2009, order dated 28.08.2015
6 2018 11 SCC 46
7 2013 7 SCC 439
8 1987 2 SCC 364
9 Crl O.P. No.28796/2015 order dated 24.09.2021
15. In the instant case, the question for consideration before this
Court is that whether the Petitioner is entitled for interim
relief based on any distinct circumstances or as an
exceptional case, much particular that since he has been
exonerated by the Income Tax authority, by the Adjudicating
Authority and by the State of Chhattisgarh where the
Petitioner is in employment ?
16. The Prevention of Money Laundering Act, 2002 was
introduced as its statement of objects and reasons
mentioned, to make money laundering an offence and to
attach property involved under money laundering, so that
serious threat to the financial system of India is adequately
dealt with. It is worth setting out the statement of objects
and reasons of the Act in full. Some of the important
provisions, with which this Court directly concerned, are set
out herein below:
"Section 3. Offence of money-
laundering.- Whosoever directly or indirectly
attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any
process or activity connected [proceeds of crime
including its concealment, possessions, acquisition
or use and projecting or claiming] it as untainted
property shall be guilty of offence of money-
laundering.
Section 4. Attachment of property involved in
money-laundering. - [(1) where the Director or
any other officer not below the rank of Deputy
Director authorised by the Director for the
purposes of this section, has reason to believe (the
reason for such belief to be recorded in writing), on
the basis fo material in his possession, that -
(a) any person is in possession of any proceeds of
crime; and
(b) such proceeds of crime are likely to be
concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings
relating to confiscation of such proceeds of crime
under this Chapter, he may, by order in writing,
provisionally attach such property for a period not
exceeding one hundred and eighty 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 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
9 attached immediately under this Chapter, the
non-attachment of the property is likely to frustrate
any proceeding under this Act.
(2) The Director, or any other officer not below the
rank of Deputy Director, shall, immediately after
attachment under sub-section (1), forward a copy
of the order, along with the 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 order and
material for such period as may be prescribed.
(3) Every order of attachment made under
subsection (1) shall cease to have effect after the
expiry of the period specified in that sub-section or
on the date of an order made under sub-section (2)
of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person
interested in the enjoyment of the immovable
property attached under sub-section (1) from such
enjoyment.
Explanation. For the purposes of this sub-section,
person interested ﾵ , in relation to any immovable
property, includes all persons claiming or entitled
to claim any interest in the property.
(5) The Director or any other officer who
provisionally attaches any property under
subsection (1) shall, within a period of thirty days
from such attachment, file a complaint stating the
facts of such attachment before the Adjudicating
Authority.
Section 24. Burden of Proof. - in any
proceeding relating to proceeds of crime under this
Act,-
(a) in the case of a person charged with the
offence of money-laundering under section 3, the
Authority or Court shall, unless the contrary is
proved, presume that such proceeds of crime are
involved in money-laundering; and
(b) in the case of any other person the Authority
or Court, may presume that such proceeds of crime
are involved in money-laundering.
17. The "PMLA", being a Special Act, has provided certain
mandatory provisions in order to ensure the effective
investigation of the offence of money laundering.
18. The Petitioner, referring to the decision of Radheyshyam
(supra), is seeking interim relief in the instant case mainly on
the ground that since the Petitioner has been exonerated in
the Income Tax cases and respondent authorities did not
success before the learned Adjudicating Authority and in Anti
Corruption Cases, the impugned ECIR and addendum to ECIR
has been registered against him without producing any
material to show that there is any change of circumstances
or facts.
19. In Radheyshyam (supra), it was held that the standard of
proof required in criminal proceedings is higher than that
required before the adjudicating authority and in case the
accused is exonerated before the adjudicating authority then
his prosecution before a criminal court on the same set of
facts cannot be allowed.
20. The submission of learned counsel for the Petitioner is that
the respondent authorities have dragged this case for more
than 11 years since the registration of the impugned ECIR
only to harass the Petitioner. The complaint of the
prosecution is not maintainable against the Petitioner in the
light of fact that in the Income Tax proceedings on the basis
of which the ECIR was filed, the Petitioner has been
exonerates. Further submission is that Section 4(2) of Cr.P.C.
states that the Code applies with respect to the special
statutes as well, unless the applicability of the Code is
expressly barred. Moreover, Sections 44 to 46 of PMLA,
2002, specifically incorporate the provisions of Cr.P.C. to the
trials under PMLA. Thus, it is clear that not only there is no
provision in the PMLA excluding the possibility of Cr.P.C, but
also provisions of Cr.P.C have been incorporated under PMLA
by specific inclusion.
21. Both the parties have filed various documents which
demonstrate that various complaints have been registered
against the Petitioner and his family members. In para-wise
reply, the respondent authorities stated that how
proceedings started against the Petitioner and his family
members.
22. In case of converse situation namely where the accused
persons are exonerated by the competent authorities/Tribunal
in adjudication proceedings, one will have to see the reasons
for such exoneration to determine whether these criminal
proceedings could still continue. If the exoneration in
departmental adjudication/Tribunal is on technical ground or
by giving benefit of doubt and not on merits or the
adjudication proceedings were on different facts, it would
have no bearing on criminal proceedings. If, on the other
hand, the exoneration in the adjudication proceedings is on
merits and it is found that allegations are not substantiated
at all and the concerned person(s) is/are innocent, and the
criminal prosecution is also on the same set of facts and
circumstances, the criminal prosecution cannot be allowed to
continue. The reason is obvious that criminal complaint/case
is filed by the departmental authorities alleging
violation/contravention of the provisions of the specific Act on
the part of the accused persons. However, if the
departmental authorities themselves, in adjudication
proceedings, record a categorical and unambiguous finding
that there is no such contravention of the provisions of the
Act, it would be unjust for such departmental authorities to
continue with the criminal complaint and say that there is
sufficient evidence to foist the accused persons with criminal
liability when it is stated in the departmental proceedings
that ex-facie there is no such violation. The yardstick would,
therefore, be to see as to whether charges in the
departmental proceedings as well as Income Tax proceeding
are identical and the exoneration of the concerned person in
the departmental proceedings is on merits holding that there
is no contravention of the provisions of any Act. However,
the same is subject matter for adjudication at the final
hearing of the petition.
23. This Court may now refer to and rely upon the decision of
Rohit (supra), wherein Hon'ble Apex Court held in para 18,
which reads thus:-
"18. The consistent view taken by this Court is
that economic offences having deep rooted
conspiracies and involving huge loss of public
funds need to be viewed seriously and considered
as grave offences affecting the economy of the
country as a whole and thereby posing serious
threat to the financial health of the country.
Further, when attempt is made to project the
proceeds of crime as untainted money and also
that the allegations may not ultimately be
established, but having been made, the burden of
proof that the monies were not the proceeds of
crime and were not, therefore, tainted shifts on the
accused person under Section 24 of the Act of
2002."
24. Further, Hon'ble Supreme Court in the in matter of
Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra,
reported in AIR 2021 SC 1918, laid certain guidelines with respect
to grant of the interim relief. For ready reference, paras 36 and 37
of the judgment are extracted hereinbelow.
"36. So far as interim relief is concerned, the
investigation is in progress and the record would
demonstrate that Rs. 6.41 crore disproportionate
income has already been identified by the State,
the Hon'ble Supreme Court in Neeharika
Infrastructure (Supra) has issued certain
guidelines for granting interim protection while
hearing petition under Article 226 of the
Constitution of India or Section 482 of Cr.P.C. The
Hon'ble Supreme Court has held in para 15 to
18, which read as under:-
"15. As observed hereinabove, there may be some
cases where the initiation of criminal
proceedings may be an abuse of process of law.
In such cases, and only in exceptional cases and
where it is found that non interference would
result into miscarriage of justice, the High Court,
in exercise of its inherent powers under Section
482 Cr.P.C. and/or Article 226 of the Constitution
of India, may quash the FIR/complaint/criminal
proceedings and even may stay the further
investigation. However, the High Court should be
slow in interfering the criminal proceedings at
the initial stage, i.e., quashing petition filed
immediately after lodging the FIR/complaint and
no sufficient time is given to the police to
investigate into the allegations of the
FIR/complaint, which is the statutory right/duty
of the police under the provisions of the Code of
Criminal Procedure. There is no denial of the fact
that power under Section 482 Cr.P.C. is very
wide, but as observed by this Court in catena of
decisions, referred to hereinabove, conferment
of wide power requires the court to be more
cautious and it casts an onerous and more
diligent duty on the court. Therefore, in
exceptional cases, when the High Court deems it
fit, regard being had to the parameters of
quashing and the self-restraint imposed by law,
may pass appropriate interim orders, as thought
apposite in law, however, the High Court has to
give brief reasons which will reflect the
application of mind by the court to the relevant
facts.
16. We have come across many orders passed by the
High Courts passing interim orders of stay of
arrest and/or "no coercive steps to be taken
against the accused" in the quashing
proceedings under Section 482 Cr.P.C. and/or
Article 226 of the Constitution of India with
assigning any reasons. We have also come
across number of orders passed by the High
Courts, while dismissing the quashing petitions,
of not to arrest the accused during the
investigation or till the chargesheet/final report
under Section 173 Cr.P.C is filed. As observed
hereinabove, it is the statutory right and even
the duty of the police to investigate into the
cognizable offence and collect the evidence
during the course of investigation. There may be
requirement of a custodial investigation for
which the accused is required to be in police
custody (popularly known as remand). Therefore,
passing such type of blanket interim orders
without assigning reasons, of not to arrest and/or
"no coercive steps" would hamper the
investigation and may affect the statutory
right/duty of the police to investigate the
cognizable offence conferred under the
provisions of the Cr.P.C. Therefore, such a
blanket order is not justified at all. The order of
the High Court must disclose reasons why it has
passed an ad-interim direction during the
pendency of the proceedings under Section 482
Cr.P.C. Such reasons, however brief must
disclose an application of mind.
The aforesaid is required to be considered from
another angle also. Granting of such blanket
order would not only adversely affect the
investigation but would have far reaching
implications for maintaining the Rule of Law.
Where the investigation is stayed for a long
time, even if the stay is ultimately vacated, the
subsequent investigation may not be very
fruitful for the simple reason that the evidence
may no longer be available. Therefore, in case,
the accused named in the FIR/complaint
apprehends his arrest, he has a remedy to apply
for anticipatory bail under Section 438 Cr.P.C.
and on the conditions of grant of anticipatory
bail under Section 438 Cr.P.C being satisfied, he
may be released on anticipatory bail by the
competent court. Therefore, it cannot be said
that the accused is remediless. It cannot be
disputed that the anticipatory bail under Section
438 Cr.P.C. can be granted on the conditions
prescribed under Section 438 Cr.P.C. are
satisfied. At the same time, it is to be noted that
arrest is not a must whenever an FIR of a
cognizable offence is lodged. Still in case a
person is apprehending his arrest in connection
with an FIR disclosing cognizable offence, as
observed hereinabove, he has a remedy to apply
for anticipatory bail under Section 438 Cr.P.C. As
observed by this Court in the case of Hema
Mishra v. State of Uttar Pradesh, (2014) 4 SCC
453, though the High Courts have very wide
powers under Article 226, the powers under
Article 226 of the Constitution of India are to be
exercised to prevent miscarriage of justice and
to prevent abuse of process of law by the
authorities indiscriminately making pre-arrest of
the accused persons. It is further observed that
in entertaining such a petition under Article 226,
the High Court is supposed to balance the two
interests. On the one hand, the Court is to
ensure that such a power under Article 226 is
not to be exercised liberally so as to convert it
into Section 438 Cr.P.C. proceedings. It is further
observed that on the other hand whenever the
High Court finds that in a given case if the
protection against pre-arrest is not given, it
would amount to gross miscarriage of justice and
no case, at all, is made for arrest pending trial,
the High Court would be free to grant the relief
in the nature of anticipatory bail in exercise of its
powers under Article 226 of the Constitution of
India, keeping in mind that this power has to be
exercised sparingly in those cases where it is
absolutely warranted and justified. However,
such a blanket interim order of not to arrest or
"no coercive steps" cannot be passed
mechanically and in a routine manner.
17. So far as the order of not to arrest and/or "no
coercive steps" till the final report/chargesheet is
filed and/or during the course of investigation or
not to arrest till the investigation is completed,
passed while dismissing the quashing petitions
under Section 482 Cr.P.C. and/or under Article
226 of the Constitution of India and having
opined that no case is made out to quash the
FIR/complaint is concerned, the same is wholly
impermissible.
18. This Court in the case of Habib Abdullah Jeelani
(supra), as such, deprecated such
practice/orders passed by the High Courts,
directing police not to arrest, even while
declining to interfere with the quashing petition
in exercise of powers under Section 482 Cr.P.C.
In the aforesaid case before this Court, the High
Court dismissed the petition filed under Section
482 Cr.P.C. for quashing the FIR. However, while
dismissing the quashing petition, the High Court
directed the police not to arrest the petitioners
during the pendency of the investigation. While
setting aside such order, it is observed by this
Court that such direction amounts to an order
under Section 438 Cr.P.C., albeit without
satisfaction of the conditions of the said
provision and the same is legally unacceptable.
In the aforesaid decision, it is specifically
observed and held by this Court that "it is
absolutely inconceivable and unthinkable to pass
an order directing the police not to arrest till the
investigation is completed while declining to
interfere or expressing opinion that it is not
appropriate to stay the investigation". It is
further observed that this kind of order is really
inappropriate and unseemly and it has no
sanction in law. It is further observed that the
courts should oust and obstruct unscrupulous
litigants from invoking the inherent jurisdiction
of the Court on the drop of a hat to file an
application for quashing of launching an FIR or
investigation and then seek relief by an interim
order. It is further observed that it is the
obligation of the court to keep such unprincipled
and unethical litigants at bay.
In the aforesaid decision, this Court has further
deprecated the orders passed by the High
Courts, while dismissing the applications under
Section 482 Cr.P.C. to the effect that if the
petitioner-accused surrenders before the trial
Magistrate, he shall be admitted to bail on such
terms and conditions as deemed fit and
appropriate to be imposed by the Magistrate
concerned. It is observed that such orders are de
hors the powers conferred under Section 438
Cr.P.C. That thereafter, this Court in paragraph
25 has observed as under:
25. Having reminded the same, presently we can
only say that the types of orders like the present
one, are totally unsustainable, for it is contrary
to the aforesaid settled principles and judicial
precedents. It is intellectual truancy to avoid the
precedents and issue directions which are not in
consonance with law. It is the duty of a Judge to
sustain the judicial balance and not to think of
an order which can cause trauma to the process
of adjudication. It should be borne in mid that
the culture of adjudication is stabilised when
intellectual discipline is maintained and further
when such discipline constantly keeps guard on
the mind."
37. It is pertinent to mention here that the
Petitionerhas not filed bail application under
Section 438 of Cr.P.C. for grant of anticipatory
bail, therefore, grant of any protection would
override the provisions of Section 438 of Cr.P.C.
as such, considering the overall material placed
before this Court, diary of the case, I am of the
considered opinion that the Petitioneris not
entitled to get any interim relief as prayed for by
the Petitionerand the interim application is liable
to be dismissed. Accordingly, the same is
dismissed.
25. Further, Hon'ble Apex Court in the matter of State of T.N. V.
N. Suresh Rajani reported in (2014) 11 SCC 709, held in
para 29 as under:-
"29. ... At this stage, probative value of the
materials has to be gone into and the court is
not expected to go deep into the matter and
hold that the materials would not warrant a
conviction. In our opinion, what needs to be
considered is whether there is a ground for
presuming that the offence has been
committed and not whether a ground for
convicting the accused has been made out.
To put it differently, if the court thinks that the
accused might have committed the offence on
the basis of the material on record on its
probative value, it can frame the charge;
though for conviction, the court has to come
to the conclusion that the accused has
committed the offence. The law does not
permit a mini trial at this stage."
26. The economic offences not only affect individuals alone but
damage the economy as well. Chanakya once said that the
king who steals from the Rajkosh (treasury-public money)
should be punished by the harshest sentence for he not only
steals from an individual but the citizens of the Nation. It is
high time where we as a society should take charge of it and
sharp tools like PMLA to eradicate corruption once and for all.
It is our responsibility that no one can take advantage of grey
areas and loopholes. The provisions of the PMLA indicate that
it is a Special Act and is a complete code itself, which does
not come into the purview of other criminal law statutes. The
provision of Code of Criminal Procedure do not prevail over
the PMLA except in exceptional circumstances.
27. The documents on record would show that the investigation
under PMLA, 2002, is at very initial stage and, though, the
Petitioner has been exonerated in other proceeding, but, at
this stage, it would not be proper to arrive at conclusion that
no offence under PMLA, 2002 is made out. The reply filed by
the respondent authorities would show that under the PMLA,
they have only got two opportunities to inquire from the
Petitioner. The Petitioner is bound to submit his statements,
documents to the respondent authorities to establish his
innocence at the first instance, so as to avoid further
proceedings under the provisions of the PMLA, 2002.
28. The judgments cited by the learned counsel for the Petitioner
with reference to the interim relief deserves no consideration
in view of the fact that the exoneration of the Petitioner in
other proceeding is entirely different than that of the case of
PMLA, 2002. Thus, all those judgments referred by the
learned counsel for the Petitioner are distinguishable on the
ground of facts.
29. This being the view of the Court and in the light of Niharika
(Supra), and Rohit (supra), this Court does not find any
sufficient ground where further proceeding of the impugned
ECIR and addendum to the ECIR can be stayed. The Petitioner
is not entitled to get any interim relief as prayed for.
30. Accordingly, I.A.No.01/2021, for grant of interim relief stands
rejected.
31. All the contentions raised by the parties are left open which
may be decided at the time of final hearing.
Sd/-
(Rajani Dubey)
Judge
pekde
