N.Jayamurugan vs The Adjudicating Authority
2022 Latest Caselaw 5031 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM
                               PRESENT
                 THE HONOURABLE MR. JUSTICE K.HARIPAL
        THURSDAY, THE 5TH DAY OF MAY 2022 / 15TH VAISAKHA, 1944
                       WP(C) NO. 13990 OF 2021
PETITIONER:

            N.JAYAMURUGAN,
            S/O. S.NAGALINGAM,
            OLD NO. 47, NEW NO. 99,
            CANAL BANK ROAD,
            C.I.T. NAGAR,
            NANDANAM, CHENNAI 600 035,
            TAMIL NADU.

            BY ADVS.S.SREEKUMAR (SR.)
                    BIJU VARGHESE ABRAHAM
                    K.M.ANEESH
                    N.R.R. ARUN NATARAJAN
                    SHASHANK DEVAN


RESPONDENTS:

    1       THE ADJUDICATING AUTHORITY,
            (UNDER PREVENTION OF MONEY LAUNDERING ACT),
            REP BY THE CHAIRMAN,
            4TH FLOOR, JEEVAN DEEP BUILDING,
            PARLIAMENT STREET,
            NEW DELHI 110 001.

    2       THE DEPUTY DIRECTOR,
            DIRECTORATE OF ENFORCEMENT,
            COCHIN ZONAL OFFICE,
            "KANOOS CASTLE",
            A.K. SHESHADRI ROAD
            (MULLASSERY CANAL ROAD - WEST),
            COCHIN 682 011.

    3       THE ASSISTANT DIRECTOR,
            DIRECTORATE OF ENFORCEMENT,
            COCHIN ZONAL OFFICE,
            KANOOS CASTLE"
            A.K. SHESHADRI ROAD,
            (MULLASSERY CANAL ROAD - WEST),
            COCHIN 682 011.

            BY ADVS.SRI.P.VIJAYAKUMAR, ASG OF INDIA
                    SRI.SUVIN R.MENON, CGC
     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
11.02.2022, THE COURT ON 05.05.2022 DELIVERED THE FOLLOWING:
 W.P.(C.) No.13990 OF 2021                  2




                                 JUDGMENT

This is a writ petition filed under Article 226 of the

Constitution seeking the following reliefs:-

"a) Declare that the Respondents 2 and 3 herein have no jurisdiction to initiate proceedings as against the Petitioner under the provisions of Prevention of Money Laundering Act since the petitioner cannot be held to be in possession of any proceeds of crime within the meaning of Section 2(u) of the Prevention of Money Laundering Act, 2002 after the petitioner has been discharged in respect of alleged offences under Section 4(d) and 4(f) of the Lotteries Regulation Act and Rule 4(5) of the Lotteries Regulation Rules, by order dated 20.01.2018 by the Chief Judicial Magistrate, Ernakulam in C.C. No. 218/2015 and the same was confirmed by the order dated 26.02.2020 in R.P. No. 26 of 2018 and R.P.No. 27 of 2018 passed by the VI Additional Sessions Judge, Ernakulam and pass such further or other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justice.

b) to issue a writ of prohibition or any other writ, order or Direction prohibiting the Respondents 2 and 3 from summoning/taking any proceedings against the Petitioner under Section 50 (2) and (3) of the Prevention of Money Laundering Act, 2002 and by issuing any other summons under Section 50(2) and (3) of the Prevention of Money Laundering Act, 2002 and attach the properties of the Petitioner/his relatives or companies floated by the Petitioner under Section 5 of the Prevention of Money Laundering Act,

2002 and pass such further or other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justice.

c) to issue a writ of certiorari, calling for the records of the 3 rd respondent in ECIR/4/KCZO/2014 (AZ), dated 09.02.2017, in so far as the petitioner is concerned and also calling for the records of the 2nd respondent in the Provisional Attachment Order No. 2/2017 in ECIR/4/KCZO/2014(AZ), dated 09.02.2017 issued under Section 5(1) of the Prevention of Money Laundering Act, 2002 and the consequential original complaint in O.C. No. 695/2017 filed by the second respondent before the 1st respondent under Section 5(5) of PMLA and quash the same as without jurisdiction and ultra vires Section 5 of the Prevention of Money Laundering Act, 2002 and consequently forbear the 1st respondent from proceeding with the adjudication proceedings under section 8 of PMLA in O.C. No. 695/2017 and pass such orders as this Hon'ble Court may deem fit and proper in the circumstances

of the case and thus render justice."

2. Petitioner is the fifth accused in C.C. No. 218/2015

pending before the Chief Judicial Magistrate's Court,

Ernakulam which arose from the final report filed by the CBI

alleging offences under Sections 120B and 420 of the Indian

Penal Code, Sections 4(d), 4(f) and 9 read with 7(3) of the

Lotteries (Regulation) Act, 1998, for short 'LR Act' and Rules

3(5) and 4(5) of the Lotteries (Regulation) Rules, 2010, for

short 'LR Rules'. The petitioner is the partner of M/s. M.J.

Associates, Palakkad. At the instance of the State of Kerala, 32

crimes were registered against accused persons including the

petitioner in different police stations. Later, investigation of all

the crimes were handed over to the CBI at the instance of the

State. After investigation, the CBI referred 23 crimes, a

compiled final report was laid in seven crimes from which C.C.

No. 218/2015 arose. Investigation is yet to conclude in the

remaining two crimes.

3. According to the petitioner, on 06.08.1999 by an

agreement, the Government of Sikkim had appointed

M/s. Martin Lottery Agencies Limited, re-named as M/s.

Future Gaming Hotels and Services India Private Limited,

presently known as M/s. Future Gaming Solutions India

Private Limited, as the distributor to market and sell lottery

tickets organized, conducted or promoted by the Government

of Sikkim. The agreement was periodically extended till

17.10.2014. The Sikkim Government is the organizing State as

provided under Rule 2(f) of the LR Rules and M/s. Future

Gaming Solutions India Private Limited falls under the

definition of distributor or selling agent under the Rules.

M/s. Megha Distributor was registered as a promoter under the

Kerala Tax on Paper Lotteries Rules, 2005 and they were liable

to pay tax on lotteries in the State of Kerala as per Kerala Tax

on Paper Lotteries Act. M/s. Megha Distributor was the Kerala

stockist of Sikkim lotteries. The petitioner entered into a

partnership agreement on 14.12.2017 with Mr. Martin and

formed a partnership firm by name M/s. M.J. Associates. An

agreement was entered into between M/s. Megha Distributor

and M/s. M.J. Associates by which M/s. M.J. Associates was

appointed as the sole stockist of the lottery tickets in Kerala.

M/s. M.J. Associates was only purchasing lottery tickets from

M/s. Megha Distributor which was the registered promoter and

they in-turn were selling lottery tickets through 73 stockists in

Kerala. The flow chart in the writ petition indicates that the

Sikkim Government, the organising State had appointed M/s.

Martin Lottery Agencies as the distributor who in-turn entered

into an agreement with M/s. Megha Distributor, the promoter

in Kerala; between M/s. Megha Distributor and M/s.

M.J.Associates, an agreement was executed on 15.12.2007 by

which M/s. M.J. Associates was appointed as the sole stockist

in Kerala. The latter was only purchasing lottery tickets from

M/s. Megha Distributor and was selling the tickets through 73

stockists who distributed lotteries through sub stockists and

then given to road side vendors and retail shops. While so,

some dispute arose between the partners of M/s. M.J.

Associates and the petitioner, thereafter, he had not involved in

any sale of Sikkim lotteries in Kerala. From 14.06.2010 to

31.08.2010 the sale of lottery tickets in Kerala was done

directly by M/s.Megha Distributor and legal proceedings were

initiated by the petitioner against Mr. Martin, M/s.Future

Gaming Solutions India Private Limited and M/s. Megha

Distributor. Alleging that there is conspiracy among the

petitioner and other accused persons and thereby defalcated

large sum of money, the said final report was laid in which

charge No. 1 is a general charge setting out criminal conspiracy

between the petitioner and M/s. Martin Lottery Agencies

Limited. According to him, no allegation of cheating

punishable under Section 420 of the IPC has been made against

the petitioner. The other specific charge against the petitioner

is in charge No. 8 where he had allegedly committed offence

punishable under Section 120B of the IPC besides under

Sections 4(d) and 4(f), 9 read with 7(3) of the LR Act and

Rules 3(5) and 4(5) of the LR Rules.

4. According to the petitioner, he had no role in the

alleged violation of the LR Act and Rules. Thus, the

Government of Sikkim refused to give consent under Section 6

of the Delhi Special Police Establishment Act to investigate

any case against him.

5. On the basis of the final report filed before the Chief

Judicial Magistrate, Ernakulam respondents have initiated the

following proceedings/orders against the petitioner:-

"a) ECIR.No.KCZO/4/2014 dated 19.08.2014 issued by the third respondent.

b) Provisional Attachment Order No. 2/2017 in ECIR/4/KCZO/2014(AZ) dated 09.02.2017 issued by the second respondent.

c) O.C. No. 695/2017 dated 23.02.2017 filed by the second

respondent pending on the file of the 1st respondent."

6. Now his properties have been provisionally attached

by the respondents, challenging the same, he had approached

the Madras High Court with W.P. No. 5160/2017. On

23.02.2017, the 2nd respondent filed Ext.P4 complaint in O.C.

No. 695/2017 under Section 5(5) of the Prevention of Money-

Laundering Act, for short 'PML Act' before the adjudicating

authority. However, Ext.P5 certificate issued by the

Directorate of Sikkim Lotteries indicates that the performance

of M/s. Future Gaming Hotels and Services India Private

Limited as the sole distributor, was satisfactory and no amount

is due to the Government upto 12.07.2015. In the writ petitions

filed before the Madras High Court, the petitioner could obtain

interim orders. Thereafter, petitioner moved an application for

discharge before the Chief Judicial Magistrate's Court,

Ernakulam. By Ext. P8 order dated 20.01.2018, the court ruled

that offence under Section 4(d) and 4(f) of the LR Act and Rule

4(5) of LR Rules are not attracted and he is liable to face trial

only for offence under Section 9 read with 7(3) of the LR Act

and Rule 3(5) of the LR Rules and Section 120B of the IPC.

At this juncture, he has been served with summons under

Section 50(2) and (3) of the PML Act. Challenging the same,

he filed W.P. No. 13589/2018 before the Madras High Court

and by Ext.P9 order dated 07.06.2018, the Madras High Court

directed the respondents to defer the hearing in the matter.

Meanwhile, revision was filed against Ext.P8 order before the

Sessions Court, Ernakulam. By Ext.P10 order dated

26.02.2020, the revision filed by the petitioner was dismissed

by the Additional Sessions Court and the revision filed by the

CBI was allowed in part by modifying the order of the Chief

Judicial Magistrate. Even though the petitioner had moved W.P.

No. 41924/2016 before the Madras High Court, it was

dismissed by Ext. P12 order dated 08.02.2021, in the light of

the order passed by the Division Bench in Ext.P11 order.

Challenging the correctness of Ext.P10 order, petitioner moved

Crl.M.C. No. 5809/2020 before this Court which was

dismissed by Ext.P13 order. However, he moved an SLP before

the Hon'ble Supreme Court and by order dated 29.06.2021, the

Apex Court stayed the further proceedings in the case pending

before the Chief Judicial Magistrate's Court. Pursuant to Ext.

P15 order, petitioner sought adjournment of the proceedings in

OC No. 695/2017 pending before the first respondent. By Ext.

P17, the first respondent has informed that there is no stay of

proceedings initiated by the respondents under the PML Act

and there is no impediment in continuing the proceedings

before the adjudicating authority.

7. According to the petitioner, by the order of

discharge passed by the Chief Judicial Magistrate, proceeds of

crime stand totally eliminated. The Chief Judicial Magistrate

has clearly found that offence under Sections 4(d) and 4(f) of

the LR Act and Rule 3(5) of the LR Rules are not maintainable.

That means, the petitioner is not in possession of any proceeds

of the crime within the meaning of Section 2(u) of the PML

Act. Therefore, it is idle for the respondents to proceed with the

adjudicatory process and orders of attachment of properties

which have no connection whatsoever with the alleged

commission of crime. Hence, he has approached this Court

with the aforestated reliefs.

8. The learned Central Government Counsel appearing

on behalf of respondents 2 and 3 filed a statement seeking to

dismiss the writ petition. According to him, seeking almost the

very same relief, the petitioner had approached the Hon'ble

High Court of Madras in W.P. No. 41924/2016; by Ext.P11

judgment the court found that the writ petitions are not

maintainable, since the petitioner has efficacious alternative

remedy before the statutory authority. The Court further found

that the High Court of Madras is not inclined to entertain the

writ petition on the ground of jurisdiction also. The petitioner

has challenged the provisional order of attachment issued under

Section 5(1) of the PML Act. The Director or Deputy Director

is empowered to issue provisional attachment orders for a

period of 180 days pending adjudication before the

adjudicating authority. Section 8(1) of the PML Act enables

the adjudicating authority to decide the question. Aggrieved

person can prefer appeal before the Appellate Tribunal under

Section 26 of the PML Act; again Section 42 of the PML Act

provides for preferring appeal to the High Court. In the

circumstances, such a writ petition is not maintainable at all.

9. The petitioner filed a reply affidavit reiterating the

contentions and also producing Exts. P19 and P20 documents.

At the time when the matter came up for admission, before

admitting the writ petition, this Court stayed the adjudication,

pending disposal of the writ petition, allowing the attachment

to continue.

10. I heard Sri. S. Sreekumar, learned Senior Counsel

assisted by Adv. Sri. N.R.R. Arun Natarajan for the petitioner

and Sri. Suvin R. Menon, the learned Central Government

Counsel very elaborately. The learned counsel reiterated the

contentions. The learned counsel on both sides filed respective

argument notes also.

11. The learned Senior Counsel pointed out that the

petitioner was only a stockist under M/s. Megha Distributor

and the fifth accused in the crime. He had no occasion to

transact with the Sikkim Government. The partnership firm in

which he was a partner had done the business of stocking

tickets only for less than three years, from 31.12.2007 to

13.06.2010; thereafter, disputes arose between himself and the

other partner and thereafter, they parted company. The lottery

was organized on the basis of the agreement executed between

the first accused and the Sikkim Government, the Sikkim

Government has made it abundantly clear that they have not

sustained any loss, so that offence under the LR Act or LR

Rules will not lie against him. Moreover, offences under the

LR Act are not scheduled offences. According to the learned

counsel, Sections 120B and 420 of the IPC were incorporated

in the statute only on 01.06.2009, so that the petitioner cannot

be made liable for any predicate offence and assets proceeded

against are not proceeds of the crime. Inviting my attention to

Ext.P8 order, he pointed out that the Chief Judicial Magistrate

has discharged him of offences under the LR Act and LR

Rules, which means the allegation against him that his assets

are proceeds of the crime is completely unfounded.

12. According to the learned counsel, even though the

Madras High Court had dismissed the writ petition, it is evident

that it had no jurisdiction to deal with the matter. Once it is

found that it had lacked territorial jurisdiction to entertain the

writ petition, a finding rendered regarding the maintainability

of the writ petition also vanishes. Referring to the decisions

reported in Arun Kumar Mishra v. Directorate of

Enforcement [2015 SCC OnLine Del 8658], Sushil Kumar

Katiyar v. Union of India [2016 SCC OnLine All 2632],

Rajeev Chanana v. Deputy Director, Directorate of

Enforcement [2014 SCC OnLine Del 4889], the learned

counsel said that once the court found that there is no basis in

the allegations touching the predicate offence, proceedings

under the PML Act do not have independent existence.

13. On the other hand, the learned Central Government

Counsel for the respondents stressed that in the light of the

judgment rendered by the Division Bench of Madras High

Court such a writ petition is barred by principles of issue

estoppel and cause of action estoppel. According to him, the

finding of the Madras High Court that in the light of the

existence of efficacious alternative remedies available to the

petitioner under the PML Act, the petitioner cannot insist the

High Court to conduct a roving enquiry. The decision of the

Madras High Court has become final and the petitioner has not

taken care to challenge its correctness before the Apex Court.

According to him, the decisions relied on by the learned Senior

Counsel for the petitioner are not applicable to the facts of the

case. Moreover, the question whether offence under the PML

Act will lie independently against the petitioner dehors

predicate offence is a matter being considered by the Apex

Court. There are contra views taken by other High Courts. The

decision in Arun Kumar Mishra, quoted supra, stands stayed

by the Apex Court. Therefore, he pressed for dismissing the

writ petition. According to him, it has been filed on

experimental basis, that the petitioner and his co-accused want

to drag the proceedings one way or the other.

14. There is no dispute on the factual matrix. Petitioner

is the fifth accused in C.C. No. 218/2015 on the file of the

Chief Judicial Magistrate's Court, Ernakulam which is the

culmination of investigation by the CBI in seven crimes;

offence under Sections 120B, 420 of the IPC besides under

Sections 4(d), 4(f), 9 read with 7(3) of the LR Act and Rules

3(5) and 4(5) of the LR Rules are alleged against the petitioner

and others. Charge Nos. 1 and 8 are alleged against the

petitioner, the 5th accused. The relevant portion of charge No.

1 reads thus:-

"xxxxxx Thus the accused persons A-1 to A-7 by way of non- remittance of sale proceeds to the Sikkim Government, non- remittance of unclaimed/undisbursed prize money back to the Sikkim Government, printing of Sikkim Lottery tickets from a non security press not empanelled by RBI/IBA, not returning the unsold tickets back to the Sikkim Government, not returning undisbursed prize amounts to the Sikkim Government and manipulation of data showing unsold prize winning tickets as sold and claiming the same from Sikkim Government, and cheating the Government of Sikkim by entering into an agreement containing covenants contrary to the LR Act and Rules and thus deceived the Sikkim Government in not receiving the full sale proceeds of the lottery tickets and A-1 by practically conducting the Sikkim Government Lotteries in the name of M/s.FGSIPL, committed the offence punishable U/s 120B, 420 IPC read with Section 4(d), 4(f), 7(3), 9 of the Lotteries (Regulation) Act, 1998 and 3(5), 4(5) of Lotteries(Regulation) Rules, 2010."

15. Charge No. 1 is generally against all accused

persons, seven in number. As regards the petitioner, charge No.

8 reads thus:-

"CHARGE - 8 That A-5 Shri N. Jayamurugan, Partner of M/s. M.J. Associates, Palakkad during 2007 to 2010 in furtherance of the Criminal Conspiracy narrated in Charge No. 1, sold and distributed Sikkim Lottery tickets violating Section 4(d) of the Lotteries (Regulation) Act, 1998; Section 4(f) of the Lotteries (Regulation) Act, 1998 that the prize money unclaimed within such time as may be prescribed by the State Government or not otherwise distributed, shall become the property of that Government; during 1-4-2010 to 31.08.2010 Rule 3(5) of the Lotteries (Regulation) Rule, 2010 that the paper lottery tickets and the stationery on which the online lottery tickets are issued shall be printed by the organising state at a Government press or any other high security press included in the panel of Reserve Bank of India or The Indian Banks' Association, Mumbai; during 1.4.2010 to 31.08.2010 Section 4(5) of the Lotteries (Regulation) Rule that the distributors or selling agents shall return the unsold tickets to the Organising States with full accounts along with the challans of the money deposited in the Public Ledger Account or in the Consolidated Fund of the Organising State through the sale of tickets and thereby committed offence punishable Section 7(3) of Lotteries (Regulation) Act, 1998."

16. The petitioner had moved C.M.P. No. 2201/2016 in

C.C. No. 218/2015 under Section 239 of the Cr.P.C. seeking

discharge. After hearing counsel on both sides and perusing the

documents, by Ext.P8 order dated 20.01.2018, the learned

Chief Judicial Magistrate found that offence under Sections

4(d) and 4(f) of the LR Act and Rule 4(5) of the LR Rules will

not lie against the petitioner. The court also made clear that the

petitioner will have to face the ordeal of trial with respect to the

remaining part of the charge. Challenging the correctness,

legality and propriety of the order, the petitioner as well as the

Union of India through the CBI, filed separate revision

petitions before the Sessions Court. The learned Additional

Sessions Judge dismissed Crl.R.P. No. 27/2018 filed by the

petitioner and allowed in part Crl.R.P. No. 26/2018 filed by the

CBI and modified the order to the extent that charge will have

to be framed under Section 9 read with 7(3) of the LR Act and

Rule 3(5) of LR Rules besides under Sections 120B and 420 of

the IPC. The correctness of the decision of the Sessions Court

was canvassed by the petitioner before this Court in Crl.M.C.

No. 5809/2020; the learned Single Judge of this Court by

Ext.P13 order dismissed the revision and upheld the views

expressed by the learned Additional Sessions Judge. It is true

that the petitioner had preferred Special Leave to Appeal (Crl.)

No. 3521/2021 against Ext.P13 order before the Hon'ble

Supreme Court and obtained an interim stay of further

proceedings of C.C.No.218/2015 pending before the Chief

Judicial Magistrate. However, the learned Central Government

Counsel has produced a copy of the order dated 08.11.2021 in

Special Leave to Appeal (Crl.) No. 3521/2021 whereby the

Special Leave stands dismissed. In other words, the finding of

the learned Additional Sessions Judge holds the field.

17. It is also the common case that pursuant to the filing

of Ext.P1 charge sheet before the Chief Judicial Magistrate by

the CBI, Ext.P2 ECIR was launched against the petitioner and

others where he is the fifth accused. Following the same,

Ext.P3 order of attachment has been passed on 09.02.2017

whereunder numerous items of properties of the petitioner

stands attached provisionally. Thereafter, original complaint

has been preferred before the adjudicating authority under the

PML Act, Ext.P4, seeking adjudication under Section 8 of the

PML Act. While so, the fourth accused, John Kennedy

approached the Madras High Court seeking to quash the

proceedings with W.P. Nos. 25177 and 25231 of 2019,

following which petitioner filed W.P. No. 41924/2016 before

the Madras High Court. By the detailed judgment, Ext.P11, the

writ petition filed by the fourth accused was dismissed on the

following lines:-

"25. On the whole, we are of the considered view that, first of all, the Writ Petitions are not maintainable before this Court, when there is an efficacious alternative remedy available for the petitioners to approach the concerned authority under the PMLA; secondly, only a small fraction of cause of action had arisen before this Court and the larger and substantial part of cause of action had arisen only in the State of Kerala, where the FIRs have been registered and the trial is pending before the Special Court at Kerala. Therefore, this Court is not the appropriate Court to entertain the present Writ Petitions. Hence, on these two grounds, the present Writ Petitions are liable to be dismissed."

18. By separate order dated 08.02.2021, the writ petition

filed by the petitioner was also dismissed as not maintainable.

In the short order, the Division Bench of the Madras High

Court held that 'in view of the order passed by a Division

Bench in John Kennedy and Others v. Joint Director

(Ext.P11), this writ petition is dismissed as not maintainable.

Liberty is given to the petitioner to work out his remedy in the

manner known to law before the appropriate forum.'

Thereafter, the petitioner approached this Court with the above

stated Writ Petition.

19. I have already set out the major contentions urged

by the learned counsel on both sides. The petitioner wanted to

say that by virtue of the order of discharge passed by the Chief

Judicial Magistrate, the substratum of the case has been lost

and that he is not in possession of any proceeds of crime within

the meaning of Section 2(u) of the PML Act. He wanted to

make this Court believe that on account of the order of

discharge, charge of generation of proceeds of crime is totally

eliminated and he is not liable to be proceeded against.

20. But after having gone through the materials on

record and the detailed and erudite arguments of learned

counsel on both sides, I have no doubt in mind that the

petitioner is not entitled to get any relief in his favour. Even

though the learned Chief Judicial Magistrate granted only

partial discharge of the charges levelled against the petitioner,

he has stated that by virtue of the order, the substratum of

proceedings initiated by the respondents against him has been

lost. There is no legal or factual basis in the contention.

21. As mentioned earlier, in Ext.P8 order, the learned

Chief Judicial Magistrate had found that offence under

Sections 4(d), 4(f) of the LR Act and Rule 4(5) of the LR Rules

will not lie against him. It is made absolutely clear that the

petitioner will have to face the ordeal of trial with respect to the

remaining part of the charge. There are offences under

Sections 120B, 420 of the IPC, Section 9 read with 7(3) of the

LR Act and Rule 3(5) of the LR Rules remaining against the

petitioner which has been made clear by the learned Additional

Sessions Judge in revision. This order has been confirmed by

this Court when a Crl.M.C. was moved by the petitioner

challenging the correctness of the order of the Court in

revision. The Special Leave to Appeal filed against that order

stands dismissed.

22. It is true that offences under the Lottery

(Regulation) Act or Lottery (Regulation) Rules are not

predicate offences under the PML Act. Similarly, offences

under Sections 120B and 420 of the IPC were inserted by

amendment dated 01.06.2009. It is also clear that the

partnership firm in which the petitioner was a partner had been

in the lottery business for the period from 31.12.2007 to

13.06.2010. That means, at the time when he had left the

lottery business on 13.06.2010, offence under Sections 120B

and 420 of the IPC were brought in as scheduled offences

under the PML Act. During the period of business itself, before

he had parted company with the first accused on 13.06.2010,

those offences were brought into the purview of the PML Act

by way of amendment. After the amendment, for more than

one year, the petitioner was admittedly part of the partnership

business which had run the lottery business. The specific case

of the CBI is that the first accused Santiago Martin, the

proprietor of Future Gaming Solutions India Private Limited

had sold tickets to the third accused, M/s. Future Gaming

Solutions India Private Limited (formerly Martin Lottery

Agencies,) during the period from 31.12.2007 to 04.04.2010;

M/s. Future Gaming Solutions India Private Limited owned by

the first accused in-turn sold tickets to M/s. Megha Distributor

who in-turn sold tickets to M/s. M.J. Associates in which

petitioner and the said Martin were partners and M/s. M.J.

Associates had sold tickets to 73 stockists in Kerala. During

the period of 2009, the above firms had allegedly received

Rs. 1,723 crores as sale proceeds in respect of sale of Sikkim

lottery, but the Government of Sikkim was paid only Rs. 59

crores. Similarly, it is alleged that during the period from

19.10.2009 to 31.03.2010, they had received Rs.1,801 crores

by sale proceeds of lotteries, but the Sikkim Government was

paid only Rs. 45 crores; from 01.04.2010 to 31.08.2010, an

amount of Rs. 1,227 crores were obtained by sale of lotteries,

but the Sikkim Government was paid only Rs. 38 crores. In

other words, by sale proceeds, they obtained a total amount of

Rs. 4752 crores, but paid only Rs.142 crores to the Sikkim

Government and defalcated the balance amount. (see paragraph

11 of Ext.P10).

23. Highlighting Ext.P5 letter dated 19.10.2015, it was

pointed out that no amount is due to the Sikkim Government

from the petitioner. This aspect has been considered by the

learned Additional Sessions Judge as well as this Court in

Ext.P13 order. In Ext.P10, the learned Additional Sessions

Judge has noticed that the business was being done by the

petitioner in the State of Kerala, that public money had gone

into the hands of the petitioner, that cheating was ultimately

done against the public who paid for the lottery tickets, that all

these aspects are matters of evidence to be considered at the

time of trial. The learned Single Judge of this Court has

observed as follow:-

"15. I find it difficult to accept the contention. Other than the Government of Sikkim, the Government of Kerala and the accused, the major stakeholders are the public who have purchased the tickets under the belief that the lottery was being conducted strictly in accordance with the provisions of the Act and the Rules. By conducting the lottery in violation of the provisions, the public, who spent money for purchasing the lottery tickets, was deceived. Therefore, irrespective of the fact that the Government of Sikkim has no complaint, the offence under Section 420 is attracted. Moreover, if during the course of trial, it is found that the officials with the Government of Sikkim are also part of the conspiracy, the trial court can exercise its power under Section 319 to proceed against those persons also."

24. Further, in Ext.P11, a Division Bench of the Madras

High Court also noticed that there is clear allegation of

conspiracy between the accused and unknown officials of the

State of Sikkim, which had resulted in cheating the people of

Kerala who had purchased lottery tickets in wholesale and the

draws were manipulated. In the circumstance, a

communication issued by the Director of Sikkim Lotteries that

no amounts are due to the Sikkim Government, is of no

consequence for the present proceedings.

25. As rightly pointed out by the learned Standing

Counsel for the respondents, the decision in Arun Kumar

Mishra, quoted supra, and other decisions relied on by the

learned Senior Counsel for the petitioner are of no avail. In

those decisions, the courts have quashed the proceedings in

respect of all the predicate offences so that the position as to

whether proceedings under the PML Act will stand alone was

considered and upheld the contention of the petitioners that so

long as the courts had found that predicate offences will not lie,

proceedings under the PML Act alone will not stand.

According to the learned Standing Counsel, this matter has

already been taken up with the Supreme Court and an order of

stay has been granted. But according to the learned counsel for

the petitioner, in the light of the decision of this Court in Abdul

Rahiman v. District Collector, Malappuram and Others

[ILR 2009 (4) Kerala 513] the fact that the Supreme Court has

granted an order of stay cannot lose the binding precedent. All

the same, it must be pointed out that the decisions in Arun

Kumar Mishra, Sushil Kumar Katiyar, Rajiv Chanana etc.,

quoted supra, have turned on its own facts, which are quite

distinguishable on facts.

26. Here the petitioner has been discharged by the

learned Chief Judicial Magistrate only partially, in respect of

offence under Sections 4(d), 4(f) of the LR Act and Rule 4(5)

of the LR Rules alone. In other words, he will have to face

trial in respect of the remaining offences.

27. The argument that there is alternative efficacious

remedy available to the petitioner also is really formidable.

The Division Bench of the Madras High Court, after elaborate

discussion and basing on authorities, found that a Writ Petition

is not maintainable on that count. Paragraph 13 of Ext.P11

reads thus:

"13. It is trite law that when an alternative and appellate remedy is in- built in the statute, resorting to invoke the inherent and discretionary jurisdiction conferred upon this Court under Article 226 of The Constitution of India, is not proper. As mentioned above, there is an alternative remedy provided under Section 8 of the PMLA before the Adjudicating Authority. The writ petitioners ought to have approached the Adjudicating Authority and questioned the validity and/or correctness of the PAO passed by the respondent. Further, this Writ Court, under Article 226 of the Constitution of India, is not conducting any roving enquiry on the disputed questions of facts to render a finding as to whether the reasons assigned in the impugned PAO are valid or not. Therefore, we are of the opinion that when alternative remedy is available, the present Writ Petitions are not maintainable. The hastiness with which the petitioners have filed the present writ petitions before this Court, is not proper, when there is an alternative remedy provided under Section 8 of PMLA."

28. It is the well settled proposition of law that when an

alternative and equally efficacious remedy is open to a litigant,

he should be requested to pursue that remedy and not to invoke

the extraordinary jurisdiction of the High Court to issue a

prerogative writ. It is true that existence of a statutory remedy

does not affect the jurisdiction of the High Court to issue a writ.

But, as observed by the Hon'ble Supreme Court in Rashid

Ahmed v. The Municipal Board, Kairana [AIR 1950 SC

163] "existence of an adequate legal remedy is a thing to be

taken into consideration in the matter of granting writs" and

where such a remedy exists, it will be a sound exercise of

discretion to refuse interference in a Writ Petition unless there

are good grounds therefore. But it should be remembered that

the rule of exhaustion of statutory remedies before a writ is

granted is a rule of imposed limitation, a rule of policy and a

discretion rather than a rule of law and the court may, therefore,

in exceptional cases, grant reliefs.

29. Further, as held by the Apex Court in Harbanslal

Sahnia and another v. Indian Oil Corporation Ltd. and

others [(2003) 2 SCC 107], the rule of exclusion of writ

jurisdiction by availability of an alternative remedy is a rule of

discretion and not one of compulsion. In an appropriate case, in

spite of availability of alternative remedy, the High Court may

still exercise its jurisdiction in at least three contingencies: (i)

where writ petition seeks enforcement of any of the

fundamental rights; (ii) where there is failure of principles of

natural justice, or (iii) where the orders or proceedings are

wholly without jurisdiction or the vires of an Act is challenged.

This principle has been reiterated by the Supreme Court in

Assistant Commissioner of State Tax v. Commercial Steel

Ltd. (MANU/SC/0801/2021) where it has been held that the

existence of an alternate remedy is not an absolute bar to the

maintainability of a writ petition under Article 226 of the

Constitution. But a writ petition can be entertained in

exceptional circumstances where there is :

i. a breach of fundamental rights;

ii. a violation of the principles of natural justice; iii. an excess of jurisdiction; or iv. a challenge to the violation of the statute or delegated legislation.

Here, the petitioner does not claim any such exception. In fact,

as noticed earlier, the Division Bench of the Madras High Court

considered this matter in proper perspective and held that the

petitioner has an effective alternative remedy which ought to

have been availed before rushing to the court with Writ

Petition.

30. The PML Act is a self contained code. It provides

sufficient safeguards preventing excessive acts from the side of

the Director. If prima facie materials are made out, the

appropriate authorities can be approached with a provisional

order of attachment as provided under Section 5 of the PML

Act followed by adjudication for confiscation of the proceeds

of the crime. Section 8 provides for adjudication of complaint

preferred under Section 5(5) or applications made under

Section 17(4) or Section 18(10) of the PML Act. Section 26

provides for examining the legality and correctness of the order

passed by the Adjudicating Authority. Section 42 of the PML

Act ensures further appeal to the High Court. The petitioner

has no case that procedural safeguards are violated and he is

being proceeded against arbitrarily. Thus he has approached

the Madras High Court at the threshold hastily, overlooking the

procedures provided in the PML Act. When the Writ Petition

was dismissed finding that it is not maintainable, he has

approached this Court a second time, almost on the same lines.

He has neither resorted to the remedies available under the

PML Act nor chose to approach the Apex Court, challenging

the correctness of that decision.

31. There was a contention that the alleged proceeds of

the crime are not from the offence under Section 120B or

Section 420 of the IPC but from the offence alleged under the

LR Act. But, as rightly submitted by the learned Standing

Counsel, it is basically a question of fact, which cannot be

decided by this Court.

32. It was also urged by the learned counsel that the

PML Act was amended only from 01.06.2009 which does not

have retrospective operation so that the very Ext.P2 ECIR is

bad; when Ext.P2 goes, Exts.P3 and P4 are also bound to go.

As stated earlier, whether the petitioner has been proceeded

against under the Lotteries Act or whether the proceeds of the

crime had generated from the offence under Section 120B or

Section 420 of the IPC are questions of fact. Even though the

amendment does not have retrospective operation, at least till

13.06.2010 the petitioner had been part of the lottery business

in his capacity as the partner of M/s.M.J. Associates from

31.12.2007 to 13.06.2010. There are reasons to believe that the

petitioner had indulged in the acts of committing scheduled

offences after the inclusion of these offences after the

amendment on 01.06.2009. The specific case of the

respondents is that all the accused persons are party to the

conspiracy, offences under Sections 420 and 120B IPC are

alleged against all. An offence under Section 120B IPC, in the

nature of the allegations, is a continuing offence. Merely for

the reason that he had withdrawn from the business on

13.06.2010, it cannot be thought that he is not in possession of

the proceeds of crime which were committed during the period

from 01.06.2009 to 13.06.2010. Moreover, the learned

Additional Sessions Judge has found that he has to face trial for

offences under Sections 120B and 420 IPC as well. Materials

are wanting to say that the assets were acquired prior to

01.06.2009. The learned Standing Counsel asserted that

proceeds of the crime were derived from acts attracting offence

under Sections 120B and 420 IPC. Once it is found that the

assets were acquired after 01.06.2009. Similarly, the question as

to when the offence was committed, etc. are matters which can

be decided only at the time of taking evidence.

33. There is also force in the contention that when

offence under Section 420 IPC is charged, it presupposes

existence of property; without any property, such an offence

will not lie. The proceeds of crime ought to have been attached

by the respondents. The Additional Sessions Judge in revision

found that the offence under Section 420 IPC is also attracted,

which has been considered and confirmed by this Court in

Ext.P13 order. That order stands confirmed by the Apex Court.

Once this Court held that Section 420 IPC is attracted, now, in

this Writ Petition, it cannot be said that that offence was

committed only prior to the amendment.

34. To put it in other words, predicate offence under

Sections 120B and 420 of the IPC continues even after

withdrawal of the petitioner from business deals. Persons

cheated include general public. As far as act of cheating is

concerned, there is no distinction between the general public

and the Government.

35. Referring to the decisions reported in Municipal

Corporation of Greater Mumbai v. Pankaj Arora

(Secretary) and Others [(2018) 3 SCC 699], Whirlpool

Corporation v. Registrar of Trade Marks, Mumbai and

others [(1998) 8 SCC 1] etc, the learned counsel for the

petitioner wanted to say that the judgment rendered by the

Madras High Court in Ext.P11 cannot be given any importance

so long as its own finding indicates that it does not have

jurisdiction to go into the questions. As mentioned earlier, in

Ext.P11 there is no finding that there is total lack of inherent

jurisdiction. In paragraph 18, the Court has observed that there

is only a small fraction of cause of action that had arisen within

the jurisdiction of that Court, which is not sufficient to maintain

the Writ Petitions; there is only a minuscule cause of action

arose within that jurisdiction, but a larger and substantial part of

cause of action had arisen within the State of Kerala where

most of the occurrence alleged to have been committed by the

petitioner had taken place. Thus the court thought that it is not

appropriate to entertain the Writ Petition. It is evident that all

the properties which are the proceeds of crime situate within

Tamil Nadu, within the territorial jurisdiction of the Madras

High Court. But cause of action for the commission of crime

which led to the filing of final report had arisen in State of

Kerala. The Court was thus refusing to exercise its

discretionary jurisdiction by invoking the doctrine of "forum

conveniens". Therefore, the decision in Municipal

Corporation of Greater Mumbai, quoted supra, is not

applicable to the facts of the case.

36. There is also considerable force in the submission

that the petitioner has not approached this Court with clean

hands. On initiation of proceedings under Exts.P2 to P4, he

had hurriedly approached the Madras High Court and obtained

interim orders in 2015. The Writ Petition was dismissed on

08.02.2021. Immediately thereafter he approached this Court

without realising or conveniently ignoring the message given

by the Hon'ble Madras High Court. Even though it was made

clear that he is bound to face trial in respect of the remaining

offences, he has approached the court as though entire proceeds

of the crime are wiped out by the order of discharge, which is

unfounded. Even now he has not prepared to resort to the

remedies available under the PML Act, which is not

understandable. Entire materials indicate that it was an

organised crime committed by the accused persons. It is

intriguing to notice that, at first the 1st accused enters into an

agreement with the Sikkim Government; then he himself acts as

the distributor and nominates another as stockist; again a

partnership is created himself acting as one of the partners.

After large sum of money was siphoned off, when proceedings

are initiated, challenges are being made in different High

Courts. Resultantly, they could successfully stall the

proceedings for over six years. Malpractices and fraud have

been committed on a massive scale involving huge sum of

money. There are reasons to believe that they have acted hand

in glove with unknown employees of the Sikkim Government.

Even though it was necessary that the lottery should have been

printed either in Government press or in presses recognised by

Indian Bank Association, all lotteries were printed in some

private press in Sivakasi in Tamil Nadu for sale by the 1 st

accused Santiago Martin and his aids. It may be true that the

petitioner had been in the field only for three years, the

respondents have reasons to believe that he was part of the

larger conspiracy at least during the period between 31.12.2007

to 13.06.2010. By that time, the offences under Sections 120B

and 420 IPC were incorporated in the schedule of offence. It

appears that the petitioner wants to prolong the matter one way

or the other. After failing to get any relief from the Madras

High Court he has approached this Court raising almost same

contentions, which are barred by principles of issue of estoppel

and cause of action estoppel.

The petitioner is not entitled to get any relief from this

Court. The Writ Petition is dismissed, with costs.

Sd/-

K.HARIPAL JUDGE DCS/okb/19.04.2022

APPENDIX

PETITIONER'S ANNEXURE

EXHIBIT P1 TRUE COPY OF THE FINAL REPORT FILED BEFORE THE CHIEF JUDICIAL MAGISTRATE COURT, ERNAKULAM.

EXHIBIT P2 TRUE COPY OF THE PROCEEDINGS ECIR/4/KCZO/2014 INITIATED BY THE 3RD RESPONDENT UNDER THE PREVENTION OF MONEY LAUNDERING ACT (PMLA).

EXHIBIT P3 TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER IN REF. 2-/ 2017 IN ECIR/4/KCZO/2014 (AZ) DATED 09.02.2017 ISSUED BY THE 2ND RESPONDENT.

EXHIBIT P4 TRUE COPY COMPLAINT DATED 23.02.2017 IN O.C. NO. 695/2017 UNDER SECTION 5(5) OF PMLA FIELD BEFORE THE IST RESPONDENT.

EXHIBIT P5 TRUE COPY OF THE LETTER DATED 19.10.2015 ISSUED BY THE DIRECTORATE OF SIKKIM STATE LOTTERIES.

EXHIBIT P6 TRUE COPY ORDER DATED 07.05.2017 PASSED BY THE HONBLE HIGH COURT OF MADARS IN W.M.P.

NO. 12606 TO 12610 OF 2017 IN WP NOS 11599 AND 11600.

EXHIBIT P7 TRUE COPY OF THE INTERIM ODER DATED 01.08.2017 PASSED BY THE HOBBLE HIGH COURT OF MADRAS IN WP NO. 19611 OF 2017.

EXHIBIT P8 TRUE COPY OF THE ORDER DATED 20.01.2018 PASSED BY THE CHIEF JUDICIAL MAGISTRATE ERNAKULAM IN CMP NO. 2201/2016 IN CC NO.

218 OF 2015.

EXHIBIT P9 TRUE COPY OF THE INTERIM ORDER DATED 07.06.2018 PASSED BY HON'BLE MADRAS HIGH COURT IN WP NO. 13589 OF 2018.

EXHIBIT P10 TRUE COPY OF THE ORDER DATED 26.02.2020 PASSED BY THE VI ADDITIONAL DISTRICT AND SESSIONS COURT, ERNAKULAM IN CRL.R.P. NO.

26 & 27/2018.

EXHIBIT P11 TRUE COPY OF THE JUDGMENT DATED 17.12.2020 PASSED BY THE HON'BLE HIGH COURT OF MADRAS IN WP NO. 25177 & 25231/2019.

EXHIBIT P12 TRUE COPY OF THE JUDGMENT DATED 08.02.2021 PASSED BY THE HONBLE HIGH COURT OF MADRAS IN THE WRIT PETITION NO. 41924/2016.

EXHIBIT P13 TRUE COPY OF THE JUDGMENT DATED 23.02.2021 IN CRL. MC. NO. 5809/2020.

EXHIBIT P14 TRUE COPY OF THE ORDER DATED 17.06.2021 PASSED BY THE HONBLE HIGH COURT OF MADRAS IN REVIEW APPLICATIONS NOS. 21 AND 22 OF 2021 IN THE MATTER OF JOHN KENNEDY AND OTHERS Vs. JOINT DIRECTORATE, COCHIN

EXHIBIT P15 TRUE COPY OF THE ORDER DATED 29.06.2021 PASSED BY THE HONBLE SUPREME COURT OF INDIA I SPECIAL LEAVE PETITION (CRIMINAL) NO.3521 OF 2021.

EXHIBIT P16 TRUE COPY OF THE EMAIL DATED 01.07.2021 ISSUED BY THE PETITIONERS COUNSEL COMMUNICATING THE EXHIBIT P15 ORDER TO THE IST RESPONDENT.

EXHIBIT P17 TRUE COPY OF THE LETTER DATED 02.07.2021 ISSUED BY THE 2ND RESPONDENT ADDRESSED TO THE IST RESPONDENT.

EXHIBIT P18 TRUE COPY OF THE SUMMONS DATED 03.09.2021 UNDER SECTION 50(2) AND (3) OF THE PMLA ACT CALLING UPON THE PETITIONER TO APPEAR IN PERSON BEFORE THE SECOND RESPONDENT.

EXHIBIT P19 TRUE COPY OF THE LETTER DATED 14.09.2021 ISSUED BY THE PETITIONER'S COUNSEL ADDRESSED TO THE SECOND RESPONDENT

EXHIBIT P20 TRUE COPY OF THE SECOND SUMMONS IN REF. NO.

ECIR/KCZO/04/2014/DD(VM)/4521 DATED 24.09.2021 ISSUED BY THE SECOND RESPONDENT.