AI Structured Summary
Not yet generated for this judgment
Judgment
Calendar Year,"Amount paid by M/s. SMHPL to M/s PPL (Rupees i
Crore)",,,,,,,
2008 to 2010,20.34,,,,,,,
2011 to 2013,18.97,,,,,,,
Total,39.31,,,,,,,
Bank Name,Account Number,Amount attached (Rs.),,,,,,
State Bank of Mysore, Lokhandwala",00000054000110353,"12,09,61,770",,,,,,
Citibank, Mumbai",0343912005,"94,38,230",,,,,,
,,"13,04,00,000",,,,,,
The complaint of Mr. Sathi was converted into FIR No. 321 of 2014 at PS Sadar, Agra, and the Police Authorities commenced their investigation.",,,,,,,,
There is not a reference about M/s. PPL in the said FIR. The allegations are about his dealings with IPRS and not to the Respondent. Even the,,,,,,,,
Charge-Sheet filed pursuant to the FIR by the Agra Police contains no reference whatsoever to the Respondent. There is no privity of contract or,,,,,,,,
arrangement between the complainant Mr. Surendra Sathi and the respondents herein.,,,,,,,,
The Directorate has also not tried to ascertain the specific amount that may be due from IPRS to Mr. Sathi. This has been upheld by the finding of,,,,,,,,
the AA in para 15 of its Order dated 27.11.2016. Admittedly, even as per the ECIR and the PAO, the Crime whose proceeds are alleged to have",,,,,,,,
been in possession of the Respondents is that which is alleged in FIR 321/ 2014 is not described specifically.,,,,,,,,
The statements of the following persons were recorded under Section 50, PMLA.",,,,,,,,
a. Shri Surendra Singh Kalra alias Surendra Sathi dated 28.07.2015,,,,,,,,
b. Shri Omprakash Sonik dated 14.05.2015.,,,,,,,,
c. Mr. Nitin Ahuja dated 10.06.2015 and 11.03.2016,,,,,,,,
d. Shri Suresh Srinivasan dated 25.06.2015.,,,,,,,,
The Statement of Mr. Nitin Ahuja, Director of M/s. SMHPL was recorded on 10.06.2016, which is at Annexure I in the relied upon documents",,,,,,,,
before the Adjudicating Authority. It is important to note that in his Statement dated 10.06.2016, Mr. Ahuja clearly deposed that the monies to be paid",,,,,,,,
by M/s. SMHPL to M/s. PPL in lieu of the License was a lump-sum amount and not based on number of individual usages of each work.,,,,,,,,
In the subsequent Statement of Mr. Nitin Ahuja which was recorded on 11.03.2016, the Investigating Officer had specifically posed a specific",,,,,,,,
question to Mr. Ahuja as to how the amount paid by M/s. SMHPL to M/s. PPL (the Respondent No. 1 herein) was to be divided amongst M/s. PPL,,,,,,,,
and M/s. IPRS. Apparently, there was no such Term in the Agreement dated 29.01.2008 and MoU dated 29.12.2010 between M/s. PPL and M/s.",,,,,,,,
SMHPL. Further, M/s. SMHPL was not a party to the MoU between M/s. IPRS and M/s. PPL. Therefore, any reply to this on part of Mr. Ahuja",,,,,,,,
could at best be the guess work. In his statement in reply to the above question, Mr. Ahuja said that",,,,,,,,
“the share of M/s. PPL and M/s. IPRS could be construed as 50% each and thereby in general the share of M/s. PPL and M/s. IPRS be,,,,,,,,
construed as 50% each in the royalty/ license fee charged in totality from the TV Broadcastersâ€,,,,,,,,
(Emphasis supplied),,,,,,,,
Based on such a statement, the Investigating Officer came to the conclusion that out of the total sum of Rs. 39.31 crores paid by M/s. SMHPL to",,,,,,,,
M/s. PPL, 50 % i.e. Rs. 19.66 crores was payable by M/s. PPL to M/s. IPRS. Rs. 13.04 crores out of that amount still remained unpaid and",,,,,,,,
therefore, such amount was “proceeds of crimeâ€. SMHPL is not a party to the MoUs between IPRS and PPL and is not in a competent position",,,,,,,,
to interpret or speculate on or interject conjectures into the same; this has been upheld by the finding of the AA in para 11 of its Order dated,,,,,,,,
27.11.2016. PPL has neither acquired nor detained any proceeds of crime from the scheduled offences; this has been upheld by the finding of the AA,,,,,,,,
in para 12 of its Order dated 27.11.2016.,,,,,,,,
The statement of Mr. Suresh Srinivasan, COO of PPL was recorded on 25.06.2016 which is Annexure K in the relied upon documents before the",,,,,,,,
AA. In the said statement, it was specifically stated that-",,,,,,,,
“There was no specific amount collected on account of royalty/license fee payable to IPRS by PPL from M/s. SMHPL. It is a lumpsum,,,,,,,,
amount collected by PPL from M/s. SMHPL.â€,,,,,,,,
The Investigating Authority did not consider the same at all and blindly placed the material before the Complainant viz Deputy Director, Enforcement",,,,,,,,
Directorate. Even the Complainant did not consider this aspect and passed an Order under Section 5(1) of PMLA.,,,,,,,,
The Statement of Mr. Surinder Sathi was recorded under Section 50 of the PMLA on 28.07.2015 which was consistent with his complaint filed at,,,,,,,,
PS Sadar, Agra and nothing additional was added in his case. There is no reference to M/s. PPL whatsoever in the statement of Mr. Sathi.",,,,,,,,
Mr. Saurav Kirpal, learned counsel appearing on behalf of respondent submits that the disputes in the present case are purely of a civil nature. The",,,,,,,,
claim of the complainant was already time barred. He had filed the complaint in order to harass the respondent. He can recover the royalty amount if,,,,,,,,
so desired by taking recourse to civil remedy. As far as criminal remedy is concerned, the same is not tenable. Incase the complainant feels that his",,,,,,,,
name is wrongly deleted by the respondent, he can approach the writ court for revival of membership but no provisions of PMLA can be invoked in",,,,,,,,
the facts and circumstances of the present case. The attachment of movable property was bad on the face of record. The amount lying with the,,,,,,,,
respondent is not proceed of crime. It is clear retention money for the purpose of compliance to be made by the artists. The respondent is always,,,,,,,,
liable/open to pay the royalty amount once the compliance of law is made. He further submits that more than 90% artists have already received the,,,,,,,,
amount from IPRS. In the present case, IPRS is not a party. The impugned order does not suffer from any infirmity",,,,,,,,
We have gone through the impugned order and find that as a matter of fact, in the impugned order, the Adjudicating Authority in para 24-32 has",,,,,,,,
dealt with each and every aspect of the matter as well as the legal issue involved and raised by both parties and after carefully examining the entire,,,,,,,,
evidence has come to the conclusion against the appellant. The said paras are reproduced hereunder:-,,,,,,,,
RELATIONSHIP BETWEEN M/S PPL AND SURENDRA SATHI,,,,,,,,
It is submitted by the Defendants that M/s PPL was incorporated in the year 1941, being a company without share capital. PPL is an",,,,,,,,
association of its members who are owner of “sound recording worksâ€. The Membership is voluntary. PPL's members are only music,,,,,,,,
labels and / or a few film producers. No composer or lyricist or author has ever a member of M/s PPL. M/s PPL has no privity of contract,,,,,,,,
with any author. PPL has been regularly filing annual returns with the Government of India, disclosing the list of its members and",,,,,,,,
demonstrating that its members are only music labels. The Government of India, Ministry of HRD in its reply dated 17.12.2013 under RTI as",,,,,,,,
to which copyright society is entitled to collect royalty for communication to the public of musical and literary works as part of sound,,,,,,,,
recording under the copyright Act 1957 as amended by the copyright (amendment) Act 2012 have replied that the PPL was entitled to collect,,,,,,,,
royalty for communicating to the public of musical and literary works as part of sound recording under the Copyright Act 1957.,,,,,,,,
There is no privity of contract between the said Surendra Singh Kalra @ Surendra Sathi and M/s PPL. The said Surendra Singh Kalra @,,,,,,,,
Surendra Sathi is neither a member of PPL nor he has entered into any contract/ MOU with M/s PPL. There is no business relationship or,,,,,,,,
commercial activity between him and M/s PPL.,,,,,,,,
RELATIONSHIP BETWEEN M/S PPL AND M/S SMHPL,,,,,,,,
The privity of contract existed between M/s PPL and M/s SMHPL. There are two MOUs which are brought on record that shows that,,,,,,,,
contractual relationship existed between M/s PPL and M/s SMHPL. The said MOU has specifically spelt out and recited as under “The,,,,,,,,
Indian Performing Right Society (IPRS), the copyright society, in respect of musical & literary works whose principal place of business is at",,,,,,,,
2nd floor Golden Chambers, Off New link Road, Andheri (W) Mumbai whose members include the publishers. The list of IPRS members who",,,,,,,,
are owners of Musical and literary works and have assigned to IPRS their rights for performance of their works on Television medium is,,,,,,,,
attached as Schedule II. To facilitate Single Window License for ease of the licensees/users, IPRS vide a MOU dated 26th day of November",,,,,,,,
2007 with the licensor have authorized the licensor to issue licenses in respect of the Indian Musical and literary works owned by their,,,,,,,,
members for any kind of usage on television medium a described more particularly in the MOU. Copy of the said MOU is attached as,,,,,,,,
Schedule III.â€,,,,,,,,
Thus agreement between M/s PPL and M/s SMHPL acknowledge the list of publisher members of IPRS (page 88 to 90 of RUD). The name of,,,,,,,,
Surendra Sathi does not figure therein. At the same time there is nothing bought on record that any of the publisher members specified in,,,,,,,,
Schedule II has raised any claim as against IPRS and whose rights can be said to be have been affected by PPL.,,,,,,,,
PRQCEEDS OF CRIME,,,,,,,,
The most vital and substantial question as to what constitutes proceeds of crime in relation to the said scheduled offences and / or,,,,,,,,
criminal activity relating to the scheduled offences, is a question required to be answered before confirming the provisional attachment",,,,,,,,
order in respect of properties of PPL. The Scheduled offences alleged are section 420, 471 r/w 120-B of IPC 1860 .Though the offences",,,,,,,,
specified under section 63, 63-A, 63-B and 68 A under the Copyright Act 1957, are scheduled offences; no such offences are alleged nor",,,,,,,,
for the same any FIR/ charge sheet is filed. Same is not made basis in the ECIR registered by the Enforcement Directorate. The initial,,,,,,,,
burden to show that prima facie scheduled offence is committed and in relation thereto, there exists proceeds of crime and its quantum,",,,,,,,,
emerging from the scheduled offence/s and criminal activities relating to the scheduled offence always rest with the Complainant i.e.,,,,,,,,
Enforcement Directorate. Once that is shown, the burden is to prove that they are untainted shifts on the Defendants/ Accused.",,,,,,,,
The proceeds of crime is defined as,,,,,,,,
under “proceeds of crime†means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity",,,,,,,,
relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the",,,,,,,,
property equivalent in value held within the country.,,,,,,,,
Thus the essence of the definition of the proceeds of crime is property derived or obtained directly or indirectly by any person as a result of,,,,,,,,
criminal activity relating to a scheduled offence or the value of any such property. Thus in the absence of any direct allegation, implication",,,,,,,,
and / or material to show that PPL has derived or obtained any property, directly or indirectly as a result of criminal activity relating to",,,,,,,,
schedule offence or by commission of the Scheduled offence, it also need to be examined whether any such proceeds of crime so earned by",,,,,,,,
other person/s i.e. IPRS, are transferred, siphoned or passed on to PPL. The allegations are made only against M/s IPRS. There is no",,,,,,,,
material to show that any property derived or obtained by IPRS, is transferred, passed on, siphoned or conveyed to M/s PPL. Thus there is",,,,,,,,
absence of material to justify that PPL is concerned with the scheduled offences or any criminal activity relating to the alleged scheduled,,,,,,,,
offences, and that PPL derived or obtained any property from such scheduled offences or criminal activity relating thereto. There is total",,,,,,,,
absence of material to show that IPRS having derived any proceeds of crime, if any; passed on, transferred, siphoned or conveyed etc, such",,,,,,,,
proceeds of crime or value thereof to M/s PPL and as such PPL being in possession of the proceeds of crime, the same are attachable in the",,,,,,,,
hands of M/s PPL. If there are no proceeds of crime in so far as PPL is concerned, the attachment properties in the hands of M/s PPL, as",,,,,,,,
being value of the proceeds of crime is not justified nor tenable.,,,,,,,,
The right to property is though not a fundamental right under the constitution, but the same is constitutional and vital right. Depriving a",,,,,,,,
person from a property when there is no justification and only for the purpose of withholding his properties till the ultimate conclusion of a,,,,,,,,
money laundering trial as against the other person/s facing such trial, if any, is not justifiable.",,,,,,,,
In the case of Tukaram Kanha Joshi and others v/s MIDC and others, (AIR 2013 SC 565) the Hon'ble Supreme Court has observed as",,,,,,,,
under, with regard to the right to property.",,,,,,,,
“The right to property is now considered to be, not only a constitutional or a statutory right, but also a human right.",,,,,,,,
Though, it is not a basic feature of the Constitution or a fundamental right. Human rights are considered to be in realm of individual rights,",,,,,,,,
such as the right to health, the right to livelihood, the right to shelter and employment etc. Now however, human rights are gaining an even",,,,,,,,
greater multi faceted dimension. The right to property is considered, very much to be a part of such new dimension.",,,,,,,,
(Vide: Lachhman Dass V/s Jagat Ram & ors, 2007 10 SCC 448; Amarjit singh & ors V/s State of Punjab & ors., 2010 10 SCC 43; Narmada",,,,,,,,
bachao Andolan V/s State of Madhya Pradesh & anr, 2011(SC) 1989; State of haryan V/s Mukesh Kr. & Ors, 2012 AIR (SC) 559 and Delhi",,,,,,,,
Airtech Services Pvt. ltd. V/s State of UP & anr., 2012 AIR (SC) 573)â€",,,,,,,,
The defendants have pointed out that the amounts standing to their credit in the said two banks accounts, constitutes the receipt of license",,,,,,,,
fees and from which the administrative expenses incurred and royalties are paid to its members.,,,,,,,,
The relevant issue, as to what amount constitutes the proceed of crime whether in relation to the Complaint of Mr. Surendra Sathi or any",,,,,,,,
other claimant/s, if an/ is also not depicted in this PAO and / or OC (including RUD).",,,,,,,,
The RUD also encloses at page no. 64 a letter dated 14.05.2015 written by the IPRS to Mr. H.S Mandlekar Assistant Director of DOE,",,,,,,,,
thereby enclosing Annexure A-l to A-8, thereto. A copy of the said letter consisting of 2 pages in annexed as aforesaid (at page 64 and 65",,,,,,,,
of RUD), but none of the Annexure accompanying the said letter, are filed in the compilation filed/ RUD filed, by the Enforcement",,,,,,,,
Directorate before this Authority. Similarly by letter dated 08.06.2015, address to Mr. H. S Mandlekar, Phonographic Performance limited",,,,,,,,
have submitted several documents described therein consisting of about 175 pages. But the letter is filed before this authority without the,,,,,,,,
said enclosures. Similarly a letter dated 19.06.2015 addressed to Sh. H. S. Mandlekar by Select Media Holdings is enclosed consisting of,,,,,,,,
two pages at 106 and 107. Apart from the said correspondence (without the Annexures) as aforesaid, few of the documents are annexed",,,,,,,,
namely, (1). MOU dated 02.01.2008 between IPRS and PPL (pages 66 to 68), (2). License agreement dated 29.01.2008 between PPL and",,,,,,,,
SMHPL, enclosing list of PPL's members of January 2008, list of members of IPRS, copy of MOU dated 26.11.2007 between IPRS and PPL",,,,,,,,
(pages 70 to 94), (3). Letter dated 29.12.2010 (MOU) between PPL and SMHPL (pages 97 to 102). SMHPL also given details of music",,,,,,,,
rights income (page,,,,,,,,
114). Apart from the said documents and the various statements recorded by officers of Enforcement Directorate, DOE, no other documents",,,,,,,,
either relied upon or referred are furnished. The fact remains that the Agreement/ MOU between the IPRS and PPL was for the period of,,,,,,,,
2nd January, 2008 to 1st January, 2011. No other agreement/MOU is shown to have been in existence between IPRS and PPL, subsequent",,,,,,,,
thereto.,,,,,,,,
STATEMENTS OF MR. NITIN AHUJA,,,,,,,,
The Complainant has relied upon the statements of Mr. Nitin Ahuja, Director of V/s SMHPL, which were recorded on 10.06.2016 and",,,,,,,,
11.03.2016, by the officers of Enforcement Directorate u/s 50 of PMLA.",,,,,,,,
In the Statement dated 10.06.2016, Mr. Ahuja inter-alia stated that money is to be paid by M/s SMHPL to M/s PPL in lieu of the license, was",,,,,,,,
a lumpsum amount and not based on no. of individual usages of each work and individual sub-licenses to be granted by M/s SMHPL. In the,,,,,,,,
statement recorded on 11.03.2016 while answering the question posed to him, as to how the amount paid by M/s SMHPL to M/s PPL was to",,,,,,,,
be divided amongst M/s PPL and M/s IPRS, Mr. Ahuja said that “the share of M/s PPL and M/s IPRS could be constructed as 50% each",,,,,,,,
and thereby in general the share of M/s PPL and M/s IPRS be construed as 50% each in the royalty/license fee charged in totality from the,,,,,,,,
TV broadcastersâ€,,,,,,,,
Based on the answer so elicited, the Enforcement Directorate drawn its own conclusions. There is nothing to show that M/s SMHPL was a",,,,,,,,
party to the MOU/ agreement between M/s IPRS and M/s PPL for the period of 2008 January - December 2011. There are well drawn,,,,,,,,
MOU's and agreements entered into between the parties i.e. IPRS and PPL. There are separate MOU's between PPL and SMHPL dated,,,,,,,,
29.01.2008 and dated 29.12.2010. The reading of said MOU/ Agreement between IPRS and PPL does not show understanding with regard,,,,,,,,
to sharing as stated by Mr. Nitin Ahuja. Mr. Nitin Ahuja, who is a director of M/s SMHPL, who have entered into separate MOUâ€s with",,,,,,,,
PPL concerning their activities, had no basis available with him to speculate and furnishing guess work calculation that the share of M/s",,,,,,,,
PPL and M/s IPRS could be construed as 50% each in the royalty/ license fee charged in totality from the TV broadcasters. M/s S MHPL,,,,,,,,
has also failed to furnish the data concerning the actual broadcast; but no such statement was furnished by SMHPL citing the reason that it,,,,,,,,
was practically impossible for broadcaster to maintain such record. In view of the aforesaid factual position it would not be correct to rely,,,,,,,,
upon the statement of Mr. Nitin Ahuja to interpret the percentage regarding the sharing of royalty. The said statements do not throw any,,,,,,,,
light on the core issue, namely whether PPL is recipient of proceeds of crime from the scheduled offences or criminal activities thereto or by",,,,,,,,
way of siphoning from IPRS.,,,,,,,,
CONCLUSIONS DRAWN BY ED.,,,,,,,,
The belief is entertained that “further, the proceeds of crime generated out of criminal activity related to the said scheduled offence",,,,,,,,
of cheating which was acquired by M/s PPL and derived by them in their bank account with sole intention to conceal its tainted origin and,,,,,,,,
projecting the same as untainted property.â€,,,,,,,,
As herein above discussed, there is no material to show that M/s PPL acquired and detained proceeds of crime from the alleged scheduled",,,,,,,,
offences. PPL is not shown to have been in any way concerned with the scheduled offences or criminal activity relating to the scheduled,,,,,,,,
offences. There is no material to show that any proceeds are transferred, passed on siphoned or conveyed to PPL. The belief so formed",,,,,,,,
could not have been formed on the basis of material.,,,,,,,,
CHALLENGE TO SHOW CAUSE U/S 8(1),,,,,,,,
The assailing of the notice to show cause inter-alia on the grounds, including the non observance of the legal requirements under",,,,,,,,
section 8(1) of PMLA and non application of mind as to the nature and concept of the copyright, is unjustified and unwarranted. Upon",,,,,,,,
filing of the complaint, this Adjudicating Authority on 04.07.2016, was prima facie satisfied that a case for issuance of notice to show cause",,,,,,,,
was made out, upon satisfaction of requirement laid down u/s 8(1). The Defendants are thereby called upon to indicate the source of their",,,,,,,,
income, earning or assets, out of which or by means of which they have acquired the property attached under sub section 5(1) and further",,,,,,,,
to show cause why such properties should not be declared to be the properties involved in Money laundering. The section 8(1) which,,,,,,,,
relates to the issuance of the notice to show cause, does not require that the Adjudicating Authority should record reasons for the",,,,,,,,
entertainment of the reasonable belief. The reasonable belief is based on the PAO, Original Complainant and the relied upon documents",,,,,,,,
which referred to the proceeds of crime and prima facie commission of an offence under section 3. Hence there is nothing wrong in,,,,,,,,
formation of the reasonable belief and issuance of the notice to show cause by the Adjudicating Authority. It is a trite law that whenever a,,,,,,,,
statute provides for “reason to believe†either the reasons should, appear on the face of the notice or they must be available on the",,,,,,,,
materials which had been placed before the Authority.,,,,,,,,
The contention that the show cause notice issued under section 8(1) is without disclosure of any elaborate reasons, is also of no substance.",,,,,,,,
The reasonable belief as required under the Act is formed by Adjudicating Authority before ordering issuance of the notice to show cause.,,,,,,,,
Notice to show cause is issued in terms of the Adjudicating Authority (Regulation) 2013. It will not be a out of place to mention that in terms,,,,,,,,
of section 6(15), the Adjudicating Authority is not bound by the procedure laid down by the Code of Civil procedure, 1908 and that the",,,,,,,,
Adjudicating Authority shall have powers to regulate its own procedure. The Notice to show cause as issued cannot be therefore faulted,,,,,,,,
with.,,,,,,,,
FREEZING OF BANK ACCOUNT,,,,,,,,
The contention of the Defendants that there was a freezing of the bank accounts ordered by the Enforcement Directorate is erroneous.,,,,,,,,
There is no order of freezing produced or brought on record nor is the same indicated. The relevant part of section 17(1-A) is as under:-,,,,,,,,
“Where it is not practicable to seized such records or a property the Officer authorized under sub section 1 may make an order to freeze,,,,,,,,
such property where upon the property shall not be transferred or otherwise dealt with, except with prior permission of the officer making",,,,,,,,
such order, and a copy of such order shall be served on the person concerned.â€",,,,,,,,
It is thus mandated that if any property is frozen in terms of section 17(1-A), a copy of such order is necessarily to be served on the person",,,,,,,,
concerned. In the present case no such copy is produced at any stage. Even during the course of the hearing no such copy is brought to the,,,,,,,,
notice of Adjudicating Authority. The argument that the accounts were frozen is therefore on the face of it is incorrect and fails. The,,,,,,,,
question of therefore complying with the provisions of section 17(4) does not arise, which provides for making of an Application within the",,,,,,,,
period of 30 days from the date of freezing.,,,,,,,,
The contention that the bank accounts were frozen initially and then without making the necessary Application under section 17(4) of the,,,,,,,,
PMLA, the present adjudication is commenced is incorrect. It is also contended that during the course of the inspection of the present OC,",,,,,,,,
no “sealed envelope†containing the reasons is found. Both the said contentions are liable to be rejected. The sealed cover/envelope,,,,,,,,
containing reasons is received separately and registered and does not form part of OC, but the same are maintained in a separate register",,,,,,,,
and filed.,,,,,,,,
MONEY LAUNDERING,,,,,,,,
The Adjudicating Authority is required to record a finding that all or any of the properties referred in the Notice to Show Cause are/ is,,,,,,,,
involved in Money Laundering or not. The term Money-Laundering has the meaning assigned to it in section 3 of PMLA. Accordingly,,,,,,,,
“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 with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as",,,,,,,,
untainted property shall be guilty of offence of money-launderingâ€. In substance it is required to be considered whether the properties for,,,,,,,,
which notice to show cause is issued, firstly are/ is proceeds of crime or not and secondly when they can be said to have been projected/",,,,,,,,
claimed as untainted. Proceeds of crime is defined in section 2(u) of PMLA, which would include any property derived or obtained, directly",,,,,,,,
or indirectly by, any person as a result of criminal activity relating to a scheduled offence or the value of any such property.",,,,,,,,
IPRS and its directors are the accused persons in relation to the scheduled offences. Properties of IPRS to the extent of over Rs 70 crores,,,,,,,,
have been provisionally attached, which PAO is confirmed. It is alleged that the said Surendra Sathi has authored only 37 songs since the",,,,,,,,
year 1994 and was paid the due amount till the 2000 by IPRS. The allegations taking as they are is in respect of non-payment of royalty to,,,,,,,,
the said Surendra Sathi. With regard to his claim also no material is gathered to shown as to what amount of royalty was due to him.,,,,,,,,
Similarly though there are allegations that amounts were also due to other artists/ claimants, not a single claimant is show to have been",,,,,,,,
aggrieved by any such alleged non-payment. There is nothing to show that any specific amount of royalty remained unpaid to the aggrieved,,,,,,,,
artists/claimants. In such a situation and in view of the fact that an amount of Rs. 70 crores already stood attached based on the same FIR/,,,,,,,,
charge- sheet and in view of the absence of any material to show any criminal intent or involvement in commission of the scheduled offence,,,,,,,,
and/or in the criminal activity relating to the schedule offence of M/s PPL, it cannot be said that M/s PPL has derived/ obtained any",,,,,,,,
proceeds of crime. There is nothing to show that any amount at any point of time is passed on from M/s IPRS to M/s PPL. The criminal,,,,,,,,
activities are alleged as against IPRS and its directors. What is important is to show that such proceeds of crime have been passed on to M/s,,,,,,,,
PPL or it must be shown that M/s PPL was a party involved in the criminal activity of M/s IPRS regarding the commission of the scheduled,,,,,,,,
offence, in the absence of any material showing flow of money from M/s IPRS to M/s PPL there cannot be any justification in involving M/s",,,,,,,,
PPL in relation to the proceeds of crime or money laundering.,,,,,,,,
There is nothing to show that PPL is involved in any of the activities relating to the proceeds of crime in any of the manner laid down in,,,,,,,,
section 3 of the PMLA. It cannot be therefore concluded that the properties of PPL are involved in money laundering. As the said,,,,,,,,
conclusion cannot be arrived at, the PAO cannot be confirmed.",,,,,,,,
In B. Ramalinga Raju v. Union of India [2011 (164) CompCas 149] it has been held that “........where a person satisfies the Adjudicating,,,,,,,,
Authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value",,,,,,,,
paid therefore, the Adjudicating Authority must carefully consider the material and evidence on record (including the reply furnished by a",,,,,,,,
noticee in response to a notice issued under Section 8(1) and the material or evidence furnished along therewith to establish his earnings,",,,,,,,,
assets or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property,",,,,,,,,
relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment; either in,,,,,,,,
respect of the whole or such part of the property provisionally attached in respect whereof bona fide acquisition by a person is established,",,,,,,,,
at the stage of the Section 8(2) process.â€,,,,,,,,
CONCLUSIONS,,,,,,,,
I have considered the reply filed by the Defendants to the notice issued under sub-section 1 of Section 8 and the rejoinder of the,,,,,,,,
Complainant as well written submissions of the Defendants. I have heard the Defendants through their Counsel and also the Counsel for the,,,,,,,,
Enforcement Directorate/Complainant. Taking into account the said replies, rejoinder and written submission, arguments and all the",,,,,,,,
relevant materials placed on record before me, I find that the property provisionally attached, movable property at page no. 10 of PAO, i.e.",,,,,,,,
Rs 12,09,61,770 lying in the Account no. 00000054000110353 (current) with State Bank of Mysore Lokhandwala, Mumbai and amount of",,,,,,,,
Rs. 94,38,230 in the account no. 0343912005 with Citibak Mumbai, aggregating to Rs. 13,04,00,000/- are not involved in money",,,,,,,,
laundering. Hence the Provisional Attachment Order dated 02.06.2016 made under sub-section (1) of section 5, for the aforesaid movable",,,,,,,,
property is not confirmed.â€,,,,,,,,
The essential ingredients of the offence under Section 3 of PMLA i.e. “criminal activity†and “proceeds of crime†resulting from such,,,,,,,,
criminal activity, have not even been attempted to be established by the Directorate in the present case. Section 5 of the PMLA permits attachment of",,,,,,,,
the property which are the proceeds of crime. Proceeds of crime are defined in Section 2 (u) as property derived or obtained, directly or indirectly, by",,,,,,,,
any person as a result of criminal activity. The money sought to be attached were generated through legal commercial transactions entered into by the,,,,,,,,
Respondents.,,,,,,,,
It is pertinent to mention here that on the basis of same FIR an O.C was filed against IPRS on similar allegations for non-payment wherein the,,,,,,,,
provisional attachment order was confirmed by order dated 23.03.2016 in O.C. No. 532/2016 passed by the Adjudicating Authority.,,,,,,,,
The said order was challenged by the appellant i.e. IPRS (there-in) by filing an appeal under section 26 of the PMLA being appeal no. FPA-,,,,,,,,
PMLA-1302/MUM/2016. The facts and legal issues are common in both the cases. The only distinction between the two appeals is that while in the,,,,,,,,
present appeal, the PAO was not confirmed and in the other appeal no. FPA-PMLA-1302/MUM/2016 pertaining to IPRS the provisional order was",,,,,,,,
not confirmed by the Adjudicating Authority (and Department is in appeal), and in the other appeal pertaining to IPRS, the provisional order was",,,,,,,,
confirmed by the Adjudicating Authority and the appellant had filed the appeal.,,,,,,,,
In the said appeal filed by M/s IPRS namely FPA-PMLA-1302/MUM/2016, the entire matter was discussed and the impugned order therein dated",,,,,,,,
23.03.2016 was set-aside by the order dated 23.06.2017 allowing the appeal.,,,,,,,,
In order to avoid repetition of facts and details of pleading and documents, we intend to refer relevant paras of the said judgment passed on",,,,,,,,
22.06.2017 in appeal no. FPA-PMLA-1302/MUM/2016, paras 3-51 and 61-66. The same are reproduced hereunder:-",,,,,,,,
One Mr. Surender Sathi becomes a member of IPRS, with membership no. N/FA/SO19 CAI no. 254.2452.82 in 1994 who is a lyric writer.",,,,,,,,
Mr. Surendra Sathi from the year 1995 to 2004 has been receiving the royalty from the appellant regularly on 25.09.95, 02.09.96,",,,,,,,,
29.09.1997, 24.03.2000, 10.07.2000, 21.09.2000,20.09.2001,23.03.2000,25.03.2000, 18.03.2002,25.06.2002,19.09.2002,15.03.2003,",,,,,,,,
22.09.2003, 23.09.2003, 12.04.2004, 29.09.2004.",,,,,,,,
In pursuance of the amendments to the copyright Act, 1957 made in 1994, it has been additionally recognized as a registered Copyright",,,,,,,,
Society in 1996.,,,,,,,,
In view of amendment, the IPRS addresses letter dated 29.08.2005 to Mr. Surendra Sathi, in order to undertake verification of the",,,,,,,,
register of owners in furtherance of the Rule 14I of the Copyright Rules, for verification and attestation of the Agreements entered into",,,,,,,,
between Mr. Sathi and IPRS in order to remove ownership issues. Copy of letter is already placed on record at page no. 655.,,,,,,,,
Despite of the said letter Mr. Surrender Sathi did not respond.,,,,,,,,
On 9.11.2009 IPRS sent another letter to Surender Sathi to sign Assignment deeds for continuance of membership. Vide the said letter,",,,,,,,,
IPRS clearly conveys that if there is no response from Mr. Sathi in seven days, his membership with IPRS would stand cancelled. The",,,,,,,,
contents of the said letter is re-produced hereunder:-,,,,,,,,
“The India Performing Right Society Limited Regd Office: 208, Golden chambers, 2nd Floor, New Andher Link Road, Andhari (W),",,,,,,,,
Mumbai -400053,,,,,,,,
Tel: (022) 26733748/49/50/6616, Fax : (022) 2673 6658",,,,,,,,
Fax No. (022) 2673 6658,,,,,,,,
E-mail â€"[email protected] Visit us at : www.iprs. Org.,,,,,,,,
Ref: IPRS:RK:PK: 1118:2009,,,,,,,,
9th November, 2019",,,,,,,,
SURENDER SAATHI,,,,,,,,
Sub:- Assignment Deed not signed,,,,,,,,
Dear Member,",,,,,,,,
This is in reference to the above subject matter.,,,,,,,,
While going through our records we have noticed that you have not yet signed the Assignment Deed which is long pending and the,,,,,,,,
Governing Council has asked that the Assignment Deed needs to be signed by every member for continuance of membership which is,,,,,,,,
required for effective governance under the law.,,,,,,,,
Hence we request you to kindly visit our office and sign the Assignment deeds to enable us to distribute the royalties to you.,,,,,,,,
If we do not hear from you within 7 days from the receipt of this letter than your membership with IPRS will stand CANCELLED.,,,,,,,,
Hence we request you to kindly do the needful at the earliest.,,,,,,,,
Thanking you with Musical regards,,,,,,,,
Yours sincerely,",,,,,,,,
For the Indian Performing Right Society Limited.,,,,,,,,
Pravin Kapoor,,,,,,,,
Asst. Manger â€" Membership,,,,,,,,
Even, he did not reply to the said letter and consequently his membership was treated as terminated. The termination order had never",,,,,,,,
been challenged by him in any court of law. Rather on 29/05/2014 the Complaint lodged by Surender Sathi against IPRS, Hasan Kamal, Om",,,,,,,,
Prakash Sonik wherein it was alleged that the management of IPRS, Mr. Hasan Kamal and Mr. Omprakash Sonik were guilty of non-",,,,,,,,
payment of royalties to Mr.Sathi from the year 2000 onwards despite him having been a member of IPRS since 1994. The Complaint further,,,,,,,,
alleged that after years of non-payment of royalties thereafter, on enquiry with the officers of IPRS found that his name was deleted from",,,,,,,,
the register of members and hence alleged that IPRS was guilty of having committed the offences under section 406,420,468,471 and 506",,,,,,,,
read with section 34 and120 B of the Indian Penal Code (“IPCâ€).,,,,,,,,
On 2nd June, 2014, the Sadar Police Station, Agra registered FIR 455 of 2014 under section 420, 406, 468, 471, 506 and section 120 B",,,,,,,,
or /w 34 of the IPC against Om Prakash Sonik and Hasan Kamal, the directors of IPRS on the basis of a complaint made by Shri Surender",,,,,,,,
Sathi.,,,,,,,,
In a petition seeking quashing of the FIR, the Honâ€ble Allahabad High Court granted interim relief to the Appellants. The issue of",,,,,,,,
territorial jurisdiction is also raised in the said petition. Copy of the order dated 25.8.2014 reproduced below.,,,,,,,,
Court NO.-29,,,,,,,,
Case :- Criminal Misc. Writ Petition No. 14342 of 2014,,,,,,,,
Petitioner:- Hasan Kamal,,,,,,,,
Respondent :- State of U.P. and 2 Others,,,,,,,,
Counsel for Petitioner:- Manu Khare,,,,,,,,
Counsel for the Respondent:- Govt. Advocate, Manish Tiwari",,,,,,,,
Honâ€ble V.K. Shukla J.,,,,,,,,
Honâ€ble Shashi Kant,J.",,,,,,,,
Learned A.G.A. has accepted notice on behalf of the opposite party nos. 1 and 2. Sri S.M.A. Qazmi, Senior Advocate assisted by Sri Manish",,,,,,,,
Tiwari has entered appearance on behalf of opposite party no. 3.,,,,,,,,
Each one of the respondent is accorded six weeks time to file counter affidavit. Rejoinder affidavit may also be filed within two weeks,,,,,,,,
thereafter.,,,,,,,,
List after eight weeks.,,,,,,,,
It has been sought to be contended that in the case in hand criminal forum is being misused and his submission is that in case any royalty is,,,,,,,,
due to be paid to opposite party no. 3, he should pursue the civil forum which is available to him and invoking of criminal forum, in the",,,,,,,,
facts of the case, cannot be said to be justifiable. Petitioner submits that as far as membership of the petitioner in the institution is",,,,,,,,
concerned, the same has been cancelled, in such a situation and in this background if he has any grievance to be redressed on the said",,,,,,,,
score also then he should avail the proper forum. Petitioners have submitted that IPRS is a Company incorporated under Indian Companies,,,,,,,,
Act, and Companies Act in itself is self contained Act, but the petitioner has chosen to ledge F.I.R at a convenient Police Station whereas no",,,,,,,,
offence worth name has been committed within the territorial limits of Agra.,,,,,,,,
Prima facie argument advanced appears to have some substance and requires consideration by this court as such pursuant to impugned,,,,,,,,
F.I.R. dated 02.06.2014 registered as Case Crime No. 455 of 2014 under section 420, 406, 468, 471, 506, 120-B and 34 I.P.C., S.S. Sadar,",,,,,,,,
District Agra, petitioner may not be arrested till submission of police report under section 173(2) Cr.P.C. and the petitioner shall extend full",,,,,,,,
cooperation in the investigation and shall not interfere with the ongoing investigation.,,,,,,,,
Order dated:- 25.8.2014,,,,,,,,
YK,,,,,,,,
Despite of order passed in favour of appellant its advocates of the appellants address a letter dated 4.02.2015 to Mr. Sathi stating that,,,,,,,,
they were always ready and willing to pay royalties but the same could not be paid because he had not completed the requisite formalities.,,,,,,,,
On the basis of aforesaid allegations of the Complainant thereafter, the Directorate of Enforcement, Mumbai Zonal Office on 31.3.2015",,,,,,,,
registered a case bearing no. ECIR MBZO 05/15 (ECIR) dated 31.03.2015 against IPRS, Hasan Kamal, Omprakash Sonik and other",,,,,,,,
unknown persons for offence under section 471 and 420 of the IPC read with section 120 B of the IPC which fall within the scheduled,,,,,,,,
offence under Part A, Schedule I of the Prevention of Money Laundering Act.",,,,,,,,
On 23.05.2015, the charge sheet was filed by the police authorities on completion of investigations before by the Chief Judicial",,,,,,,,
Magistrate, Agra. It is pertinent to note that the charge sheet fails to mention appellants, Kumar Taurani and Ganeshmal Jain. The Charge-",,,,,,,,
Sheet did not elaborate as to the role of the directors, Om Prakash Sonik, Hasan Kamal and Rakesh Nigam in the commission of t he",,,,,,,,
alleged offence.,,,,,,,,
In an application filed on 4.8.2015 under section 482 Cr.P.C. seeking quashing of the proceedings, the Honâ€ble Allahabad High",,,,,,,,
Court stays further proceedings in the case. This stay subsists still in. The operative copy of the order is re-produced hereunder:-,,,,,,,,
Court no. 49,,,,,,,,
Case no:- Application u/s 482 no. 22187 of 2015,,,,,,,,
Applicant :- Hasan Kamal,,,,,,,,
Opposite Party :- State of U.P. & 2 others,,,,,,,,
Counsel for applicant :- Manu Khare, A.K.Awasthi, Prazan Sharma",,,,,,,,
Counsel for Opposite Party:- Govt. Advocate, Manish Tiwary With",,,,,,,,
Case no:- Application u/s 482 no. 22189 of 2015,,,,,,,,
Applicant :- Om Prakash Sonik,,,,,,,,
Opposite Party :- State of U.P. & 2 others,,,,,,,,
Counsel for applicant :- Manu Khare, A.K.Awasthi, Prazan Sharma",,,,,,,,
Counsel for Opposite Party:- Govt. Advocate, Manish Tiwary",,,,,,,,
With,,,,,,,,
Case no:- Application u/s 482 no. 22189 of 2015,,,,,,,,
Applicant :- Rakesh Radheyshyam Nigam,,,,,,,,
Opposite Party :- State of U.P. & 2 others,,,,,,,,
Counsel for applicant :- Manu Khare, A.K.Awasthi, Prazan Sharma",,,,,,,,
Counsel for Opposite Party:- Govt. Advocate, Manish Tiwary Honâ€ble Pankaj Naqvi. J.",,,,,,,,
Heard Sri G.S. Chaturvedi, learned Senior Counsel, assited by Sri Manu Khare/Sri Pragyan Sharma, for the applicants in all the three",,,,,,,,
connected applications, Sri Imran Ibrahim, holding brief of Sri Manish Tiwari, learned counsel for O.P. No. 3 and the learned A.G.A.",,,,,,,,
All the three applications under section 482 Cr.P.C. have been filed for quashing the proceedings of case crime no. 455/2014, under",,,,,,,,
sections 420/406/468/471/506/120- B/34 IPC, P.S. Sadar, Agra, pending in the court of C.J.M., Agra.",,,,,,,,
The contention urged is that the allegations made in the FIR dated 2.6.2014 and the charge-sheet dated 4.5.2015 with accompanying,,,,,,,,
materials, only alleges non-payment of agreed royalty, which in any view, would not attract criminal liability under section 406 IPC and the",,,,,,,,
remedy, if any, for the applications, is to initiate proceedings for recovery of royalty before the appropriate forum, thus the present",,,,,,,,
proceedings being an abuse of the process of the Court are liable to be quashed.,,,,,,,,
Sri Ibrahim, learned counsel appearing for O.P. NO. 3 has vehemently opposed the contention.",,,,,,,,
Notice need not be issued to O.P. No. 3 as he stands represented.,,,,,,,,
Counter affidavit may be filed within a month. Rejoinder, if any, may be filed, within two weeks thereafter.",,,,,,,,
List in the week commencing 26.10.2015 before the appropriate court.,,,,,,,,
Assignment, if any, stands discharged.",,,,,,,,
Till the next date of listing, further proceedings of case crime No. 455/2014, under Sections 420/406/468/471/506/120-B/34 IPC, P.S.",,,,,,,,
Sadar, Agra, pending in the court of C.J.M., Agra, shall remain stayed in respect of the applicants in all the three connected cases.",,,,,,,,
Order dated :- 4.8.2015,,,,,,,,
Chandra,,,,,,,,
In the meanwhile during the period of 15.05.2015, 14.05.2015,28.05.2015,30.07.2015,10.08.2015, 12.08.2015, the statement of Hasan",,,,,,,,
Kamal, OP Sonik, Raja B Singh, Rakesh Nigam, Kumar Taurani, Ganeshmal Jain recorded by Directorate of Enforcement pursuant to",,,,,,,,
registrar of ECIR.,,,,,,,,
On 20.10.2015, the provisional attachment order (“PAOâ€) is issued by the Directorate of Enforcement holding that the royalties",,,,,,,,
which were invested in various mutual funds amounts to Rs. 70, 17,00,483/- by IPRS are “proceeds of crime†generated through",,,,,,,,
criminal activity related to the scheduled offences which was layered by IPRS through an investment in the mutual funds of financial,,,,,,,,
institutions with sole intention to conceal its tainted origin.,,,,,,,,
The respondent filed Original Complaint No. 532 of 2015 (OC) on 18.11.2015 against the Appellants under section 5(5) of the PMLA,,,,,,,,
Act on the basis of the FIR 455 of 2014.,,,,,,,,
The Adjudicating Authority issued showcause notice to the appellant on 23.11.2015 to disclose the source of income or earning of the,,,,,,,,
property attached vide the PAO and show cause as to why the said properties should not be declared to be properties involved in money,,,,,,,,
laundering under the PMLA.,,,,,,,,
That the Appellant filed its reply to the OC, taking inter alia the following objections:",,,,,,,,
i. The Honâ€ble High Court of Judicature at Allahabad stayed the arrest of Om Prakash Sonik, Hasan Kamal and Rakesh Nigam till a",,,,,,,,
report under section 173 of the CrPC is submitted vide order dated 25.08.2014 and 22.09.2014 in CrlMsc. 16675 of 2014.,,,,,,,,
ii. The present case was tried before the Honâ€ble Adjudicating Authority despite the fact that the FIR was registered in Agra and hence the,,,,,,,,
Directorate of Enforcement, Mumbai Zonal Office had no territorial jurisdiction.",,,,,,,,
iii. There is no specific royalty mentioned at any place in the whole body of the FIR made by Surender Sathi.,,,,,,,,
iv. Even assuming that Mr. Surender Sathi were entitled to a royalty of Rs. 47,000/- during the period of 2007 to 2015, there is no",,,,,,,,
justification for attachment of Rs. 70 crores.,,,,,,,,
v. That the royalties collected by IPRS from various persons do not amount to “proceeds of crimeâ€,,,,,,,,
vi. The accumulation of the royalty collected and delay in its distribution was on account of non-furnishing of the required information by,,,,,,,,
Sr.
No",Name of the Financial Institution,Folio Number,"Amount of
Investment",,,,,
1.,"Birla Sun Life Asset Management
Company Ltd.",1014364096,15000000,,,,,
,,1014364097,186687013,,,,,
,,Total,"20,16,87,013",,,,,
2.,"Franklin Asset Management
(India) Pvt. Ltd.",7029903807626,20000000,,,,,
,,4009903807626,48500000,,,,,
,,,,,,,,
,,1049903807626,57500000,,,,,
,,Total,"12,60,00,000",,,,,
3.,"HDFC Asset Management
Company Ltd.",103546/53,"3,00,00,000",,,,,
4.,"ICICI Prudential Asset
Management Company Ltd.",6073554/12,146013469,,,,,
,,5597091/09,19927212,,,,,
,,5815691/26,10072789,,,,,
,,Total,"17,60,13,470",,,,,
5.,Kotak Mahindra Mutual Fund,1386414/21,7500000,,,,,
,,1386415/18,25000000,,,,,
,,Total,"3,25,00,000",,,,,
6.,"Reliance Capital Asset
Management Ltd.",49040703976,43000000,,,,,
,,404136109594,40000000,,,,,
,,TOTAL,"8,30,00,000",,,,,
7.,"IDFC Asset Management Company
Limited.",33569/76,"5,25,00,000",,,,,
Total,,,"70,17,00,483",,,,,
,2006-07,2007-08,2008-09,2009-10,2010-11,2011-12,2012-13,2013-14
all figures in
lacs (Rs.)",,,,,,,,
Amount of
Royalty
collected
25130.71",1494.54,2210.96,2241.74,3668.89,4009.12,3710.1,3827.93,3967.43
Amount
Disbursed
16581.33",448.13,1886.09,1313.14,2622.86,2211.7,3937.56,2848.65,1310.07
Amount
Pending
distribution
8549.38",1046.41,324.87,925.6,1046.03,1797.38,-227.55,979.28,2657.36
34.01965%,,,,,,,,
Amount of royalty
Collected 28475.09",Collected 25130.71,3344.38,,,,,,
Amount of royalty
Disbursed 21261.9",Disbursed 16581.33,4680.57,,,,,,
Amount of royalty
Pending distribu(cid:28)on
7213.19","Pending distribution
8549.38",-1336.1,,,,,,
% of amount
remaining Undisbursed",34.01965%,25.33158%,,,,,,
of the Act read with Rule 14i (4) demonstrates that fees collected will be disbursed only amongst the owners of copyright whose names are,,,,,,,,
on its register of members.,,,,,,,,
ix. IPRS as a copyright society had a uphold the interests of the owners and distribute royalties as per 34(3)(iii) and 35 to owners or obtain,,,,,,,,
their approval to distribute royalty to non-owners viz. authors/ composers. Considering the same, the GC decided to call upon the non-",,,,,,,,
owner members to sign and submit letter confirming the terms of MoU dated 12.11.1993 acknowledging the ownership of copyrights in,,,,,,,,
musical and literary works by the music companies or that the author/composer could claim ownership by submitting documents proving,,,,,,,,
copyright retained by them.,,,,,,,,
As a matter of fact, the Adjudicating Authority has come to the conclusion that the attached assets involved in money laundering are",,,,,,,,
“proceeds of crime†under the PMLA without considering the submission of the appellant and the Impugned order is liable to be set,,,,,,,,
aside on this ground.,,,,,,,,
In Ramani Mistry Vs Deputy Director, PMLA, FPA-PMLA/296/KOL/2015, (At paragraphs 22 to 27 ) upon dealing with a case of",,,,,,,,
attachment of properties disproportionate to the crime committed by the appellant, the Honâ€ble Tribunal held that the term “reason to",,,,,,,,
believe†is not same as suspicion or doubt and that when it is said that a person has reason to believe a thing, it means that the",,,,,,,,
circumstances and facts known to him are such that a reasonable man, by probable reasoning, can conclude or infer regarding the nature",,,,,,,,
of the thing concerned.,,,,,,,,
It appears from the order of provisional attachment order as well as from the impugned order that nothing has been discussed and only,,,,,,,,
the pleadings are referred and the only reason recorded before the Adjudicating Authority is that the Appellants are in possession of,,,,,,,,
“proceeds of crime†must have a rational nexus to the formation of the belief and the materials placed before the Adjudicating,,,,,,,,
Authority.,,,,,,,,
In the present case, there were no materials before the Adjudicating Authority to adjudge that Rs. 70,17,00,483/-invested in various",,,,,,,,
mutual funds amounted to proceeds of crime. It is stated that the Respondent has not explained the attachment of the aforesaid amounts in,,,,,,,,
its complaint, hence there was no basis or reason to believe for attaching the amounts mentioned vide the PAO and Impugned Order.",,,,,,,,
During the course of hearing, as Mr. Nitesh Rana, learned counsel has disputed the issue of disbursement of Royalties to the artists, an",,,,,,,,
affidavit of Shri Rakesh Nigam, Chief Executive Officer, M/s Indian Performing Right Society Ltd., Mumbai, Indian, aged 52 yrs., having",,,,,,,,
office at 208, Golden chambers, 2nd floor, New Andheri Link Road, Andheri (West) Mumbai-400053 was filed with an advance copy to Mr.",,,,,,,,
Nitesh Rana. In the said affidavit, it was disclosed that as on 31.03.2017, the status of the royalty of Rs. 85,82,29,782/-which was pending",,,,,,,,
distribution as on 31.03.2014, is as under:",,,,,,,,
“i) Total royalty pending distribution as 31.03.2014 : Rs. 85,82,29,782/- on 31.03.2014",,,,,,,,
ii) Distributed out of (i) above,,,,,,,,
a. In F.Y. 2014-2015 : Rs.46,87,99,952/-",,,,,,,,
b. In F.Y. 2015-2015 : Rs. 3,19,02,952/-",,,,,,,,
c. In F.Y. 2016-2017 : Rs.3,00,99,329/-",,,,,,,,
iii) Cheques issued, not presented for payment by Members:",,,,,,,,
a. As on 31.13.2014 : 1,18,00,000/-",,,,,,,,
b. (Less) Reissue of Rs. 95,06,537/-",,,,,,,,
c. Pending as on 31.03.2017,,,,,,,,
iv) Benevolent Fund : Rs. 22,93,462/-",,,,,,,,
v) Amount Pending due to unidentified works/song etc. : Rs.1,61,16,144/-",,,,,,,,
vi) Transfer to fund for exceptional Legal Expenses (stated in 2014-15 Annual accounts in Note 5 of “Royalties of Members†: Rs.,,,,,,,,
2,97,55,756/-",,,,,,,,
vii) “Royalty as on 31-3-2014†pending Distribution after : Rs. 26,83,24,932/ Disbursement & Adjustments as at (ii) to (iv) above",,,,,,,,
viii) “Royalty a on 31-3-2014†which could not be distributed as detailed at (a) to (c) below,,,,,,,,
a) Due to members on account of Disputing & Non-fulfillment of Conditions as approved in the governing Council/Board & Annual,,,,,,,,
General Meeting by the Owners for the period prior to June, 2012. : Rs. 16,53,62,345/-",,,,,,,,
b) Due to members on account of Disputing & Non-fulfillment of Conditions as approved in the governing Council/Board & Annual,,,,,,,,
General Meeting by the Owners for the period prior to June, 2012 : Rs. 1,21,94,504/-",,,,,,,,
c) Royalty pending due to Member deceased â€",,,,,,,,
No legal Heir, Members not traceable, Statutory Compliance Legal Disputes. Etc. : Rs. 5,23,13,807/-",,,,,,,,
As pm 31.03.2014 : Rs. 5,34,98,874/-",,,,,,,,
(less) distributed till31.03.2017 Rs. 11,85,067/-",,,,,,,,
Mr. Nitesh Rana, Advocate time and again in order to stress his arguments and submitted that the appellant has not paid the royalty to",,,,,,,,
Ms. Shubha Mudgal who is well-known artist and her compliant is also pending. Counsel for the appellant has filed letter dated 29.05.2017,,,,,,,,
issued by her. Copy of the same was handed over by Mr. Nitesh Rana, Advocate. The contents of the letter reads as under:-",,,,,,,,
“ The Spcial Commissioner of Police (Crime),,,,,,,,
Police Headquarters Delhi Police New Delhi-110001.,,,,,,,,
Ref: My complaint dated 12th May, 2016 filed with the Delhi EOW by the undersigned",,,,,,,,
Respected Sir,",,,,,,,,
I, the undersigned had lodged the above referred to complaint with the EOW of Delhi Police. The Complaint adverted against the Indian",,,,,,,,
Performing Right Society Limited (IPRS) and its Music Company members, Officers and Directors of IPRS and Phonographic Performance",,,,,,,,
Limited (""PPL"") on various grounds and various other issues including non-payment of royalties and other acts perceived as being criminal",,,,,,,,
offences.,,,,,,,,
Pursuant to my complaint, F.I.R. No. 167 dated 26th October, 2016 was registered at PS: EOW (“F.I.R.†and the same is currently",,,,,,,,
pending investigation.,,,,,,,,
In view of IPRS addressing the concerns of authors and composers to their satisfaction and in their welfare, I have issued the present letter",,,,,,,,
for withdrawing the F.I.R. Some of the prominent steps undertaken by IPRS for the welfare of the Author/ Music Composer Community are,,,,,,,,
enumerated as under:,,,,,,,,
IPRS's Board has approved amendments to its Articles of Association to bring them in line with the Copyright Act 1957 as amended in,,,,,,,,
2012 and the Copyright Rules, 2013, a copy of which approved by the Authors and Composers, has been made available to me;",,,,,,,,
All current Music Company Owner Publisher Members of IPRS have withdrawn all the Cases against IPRS including those against any,,,,,,,,
author/ composer members in reference to complaints against IPRS;,,,,,,,,
IPRS has held a proper AGM and after causing necessary amendments in the Articles of Association in the AGM;,,,,,,,,
IPRS has also conducted an extraordinary general body meeting was held to conduct free & fair elections to the entire Governing,,,,,,,,
Council / Board by virtue of which authors and composers have equally participated along with the owners in the governance of the,,,,,,,,
Society. I am aware a truly representative Governing Council has now been elected during the EGM;,,,,,,,,
IPRS has assured that royalties will be paid to the authors and composer members as per the Copyright Act, 1957(as amended);",,,,,,,,
IPRS has assured that it shall continue to work in the interest of Author/ Music Composer members.,,,,,,,,
Accordingly, I hereby agree to extend necessary support for Quashing of the F.I.R. No. 167 dated 26th October, 2016 by signing the",,,,,,,,
documents required as per law.,,,,,,,,
I have signed the present letter out of my own freewill and without any force, coercion or threat.",,,,,,,,
Yours Sincerely,",,,,,,,,
Sd/- Subha Mudgal,,,,,,,,
Cc: Mr. Satya Prakash (Investigating Officerâ€,,,,,,,,
It is also pertinent to mention here that during hearing Mr. Pragyan Sharma leaned counsel for appellant has informed us that the,,,,,,,,
complainant Mr. Surender Sathi has agreed to settle the disputes and to give his co-operation to quash the F.I.R. and he would file the,,,,,,,,
confirmation letter within one week. On 2nd June, 2017 the copy of the letter dated 29.05.2017 has been filed.",,,,,,,,
It is also pertinent to mention here that during hearing, Mr. Pragyan Sharma learned counsel for appellant has informed us that the",,,,,,,,
complainant Mr. Surendra Sathi has agreed to settled the disputes and to give his co-operation to quash the FIR and he would file the,,,,,,,,
confirmation letter within one week. On 2nd June, 2017 the copy of the letter dated 29.05.2017 has been filed. The same is reproduced as",,,,,,,,
under:-,,,,,,,,
“The Senior Superintendent of Police,,,,,,,,
Agra,,,,,,,,
Uttar Pradesh,,,,,,,,
Ref: My Complaint filed before the Office of the SSP, Agra, Uttar Pradesh",,,,,,,,
Respected Sir,",,,,,,,,
I, understand had lodged the above referred to complaint with the office of the SSP, Agra, U.P. The Complaint adverted against the Indian",,,,,,,,
Performing Right Society Limited (IPRS) and its Music Company members, Officers and Directors of IPRS and Phonographic Performance",,,,,,,,
Limited (“PPLâ€) on various grounds and various other issues including non-payment of royalties and other acts perceived as being,,,,,,,,
criminal offences.,,,,,,,,
Pursuant to my complaint, F.I.R. No. 455 of 2014 was registered at PS: Sadar Bazar, Agra (“F.I.R.â€) and charge-sheet has been filed in",,,,,,,,
the said F.I.R.,,,,,,,,
In view of IPRS addressing the concerns of authors and composers to their satisfaction and in their welfare, I have issued the present letter",,,,,,,,
for withdrawing the F.I.R. Some of the prominent steps undertaken by IPRS for the welfare of the Author/Music Composer Community are,,,,,,,,
enumerated as under:,,,,,,,,
IPRSâ€s Board has approved amendments to its Articles of Association to bring them in line with the Copyright Act 1957 as amended in,,,,,,,,
2012 and the Copyright Rules, 2013, a copy of which approved by the Authors and Composers, has been made available to me;",,,,,,,,
All current Music Company Owner Publisher Members of IPRS have withdrawn all the Cases against IPRS including those against any,,,,,,,,
author/composer members in reference to complaints against IPRS;,,,,,,,,
IPRS has held a proper AGM and after causing necessary amendments in the Articles of Association in the AGM;,,,,,,,,
IPRS has also conducted an extraordinary general body meeting was held to conduct free & fair elections to the entire Governing,,,,,,,,
Council/Board by virtue of which authors and composers have equally participated along with the owners in the governance of the Society.,,,,,,,,
I am aware a truly representative Governing Council has now been elected during the EGM;,,,,,,,,
IPRS has assured that royalties will be paid to the authors and composer members as per the Copyright Act, 1957 (as amended);",,,,,,,,
IPRS has assured that it shall continue to work in the interest of Author /Music Composer members.,,,,,,,,
Accordingly, I hereby agree to extend necessary support for Quashing of the F.I.R. No. 455 of 2014 by signing the documents required as",,,,,,,,
per law.,,,,,,,,
I have signed the present letter out of my own freewill and without any force, coercion or threat.",,,,,,,,
Yours Sincerely,",,,,,,,,
Surendra Saathi,,,,,,,,
Complainant and First Informant,,,,,,,,
Cc: Investigating Officer,",,,,,,,,
PS: Sadar Bazar, Agra",,,,,,,,
In the present case, the appellant has admitted that in its letter dated 9.11.2015, the appellant herein had inter alia made the submission",,,,,,,,
with regard to the provisional Attachment order no. 20 of 2015 dated 20-10-2015 as under:,,,,,,,,
“For justice at your hands it is most humbly submitted for your kind consideration that the above cited PAO No. 20 of 2015 dated 20-10-,,,,,,,,
2015 issued by the Directorate of Enforcement, Mumbai Zonal Office in the ECIR 05/MZO/2015, against us is issued mala fide without",,,,,,,,
jurisdiction at Mumbai on the basis of a frivolous FIR no. 455 of 2014 dated 02.06.2014 registered by the Sadar Police Station, at a for",,,,,,,,
place in Agra, Uttar Pradesh wherein the said plice Authorities filed a perfunctory Charges Sheet no. 30526/2015 on 23.05.2015 before the",,,,,,,,
Honâ€ble Chief Judicial Magistrate, Agra in Derogation of the order of the High Court which on finding the allegations misconceived and",,,,,,,,
untenable stayed the Charge Sheet and all proceedings in the criminal proceedings.,,,,,,,,
Sir, passing of a PAO is not a routine matter but a serious exercise and cannot be passed when the very basis of it is under scrutiny of",,,,,,,,
Court and that too with a stay to allegations and proceedings. This PAO is mala fide passed to over reach the order of the Honâ€ble High,,,,,,,,
court of the Allahabad dated 04.08.2015 in Writ Petitions. No. 22187-88-89 of 2015 filed under section 482 of Cr.P.C. staying the whole,,,,,,,,
criminal proceedings to the knowledge of the authority issuing the said provisional attachment order. This stay order of the Honâ€ble High,,,,,,,,
Court of Allahabad does not find even mention in the said Provisional Attachment Order.,,,,,,,,
In the absence of any subsisting Scheduled Offence, there is no scope to issue the Provisional Attachment Order against the company and",,,,,,,,
its director more so when the property attached has no nexus whatsoever with the allegations in the FIR.,,,,,,,,
We are shocked to find that PMLA authorities at a different corner of the Country have to proceed under PMLA in petty private disputes of,,,,,,,,
civil nature, contrary to the very object and purpose of PMLA and in the process stall and harass law abiding citizens.",,,,,,,,
Regrettably, the PMLA authority in the utter disregard of law, regulations and territorial jurisdiction passed the said PAO Order while",,,,,,,,
suppressing most relevant material and documents.,,,,,,,,
The PMLA authority is likely to approach you with a complaint for notice for confirmation of the said PAO passed illegally and utter,,,,,,,,
disregard of law and Rule of Law, hence this petition to you to kindly go through the material and call for the records and refuse to",,,,,,,,
entertain the complaint on such PAO without a Scheduled Offence.,,,,,,,,
We Shall be ready to tender any clarification and documents to prevent injustice to usâ€,,,,,,,,
The said submissions of the appellant were disregarded to the principles of natural justice as without any reference in respect of receipt,,,,,,,,
of the above said letter dated 9.11.2015, the Adjudicating Authority issued the notice to Show Cause dated 23.11.2015 to the appellant.",,,,,,,,
The Adjudicating Authority did not mention any reason as to why while passing the impugned order dated 23.03.2016, selective",,,,,,,,
approach was adopted in considering and discussing the grounds submitted by the appellant in its written reply dated 11.01.2016 and on,,,,,,,,
what basis the 14 ground. The said biased approach has caused severe prejudice and resulted in miscarriage of justice.,,,,,,,,
The Adjudicating Authority despite submissions of documentary evidence by the appellant that the respondent had misrepresented the,,,,,,,,
facts and had distorted the same in the Original Complaint for prejudicing the mind of the Adj. Authority accepted the same distorted,,,,,,,,
version as the “Facts & circumstance of the case†in the impugned order.,,,,,,,,
It is evident from the record that the appellant had been following the international standards and norms of collection and distribution,,,,,,,,
of royalty. The amounts of the royalty collected and pending distribution could in no manner be construed as proceeds of cheating. The,,,,,,,,
appellant had been filing all the statutory returns under the Income Tax Act and the Companies Act on time and never ever an iota of,,,,,,,,
suspicion has ever been raised by any of the Statutory Authority in respect of the working of the Appellant or with regard to its financial,,,,,,,,
statements and returns.,,,,,,,,
The balance amount of royalty lying in the investment portfolios in the name of Appellant can in no way be construed as “proceeds of,,,,,,,,
crime†and can be liable for provisional attachment or for any other purpose under the provisions of PMLA, 2002. If for the sake of",,,,,,,,
arguments if it was assumed that that royalty collected was “proceeds of crime†then the amount which has been distributed also will,,,,,,,,
amount to proceeds of crime and all those who have received the same will have to be booked for offence for money laundering along with,,,,,,,,
the persons from whom the said sums of royalty had been collected. That the contention of the respondent that the royalties so collected in,,,,,,,,
legal and lawful manner were “proceeds of crime†was grossly wrong, baseless and without any logic.",,,,,,,,
The Adjudicating Authority failed to appreciate the order of the Honâ€ble Bombay High Court dated 22.12.2015 passed in the Notice of,,,,,,,,
Motion (L) no. 3620 of 2015 in SUIT (L) no. 1345 of 2015 wherein it had been held that the operations of the appellant are lawful and,,,,,,,,
legitimate.,,,,,,,,
Accordingly, the impugned order dated 23.03.2016 passed by Adjudicating Authority in confirmation of the PAO no. 20 of 2015 dated",,,,,,,,
20.10.2015 passed in O.C. No. 532 of 2015 being not sustainable, is liable to be set-aside as the same was passed contrary to facts and",,,,,,,,
against the law. We may clarify here that during the course of the hearing, the learned counsel for the appellant has confirmed to us to pay",,,,,,,,
the Royalty to the unpaid Artist without any condition as per law. Under these circumstances, we are of the view that unpaid artists will also",,,,,,,,
be entitled to claim the interest on the amount of Royalty,,,,,,,,
In the present case, the Adjudicating Authority has considered each and every aspect of the case. Most of the facts are common in the present",,,,,,,,
case as well as appeal no. FPA-PMLA-1302/MUM/2016.,,,,,,,,
It is also matter of fact that before “cancellation of membership of the complainant, proper notice was served. The said cancellation has not",,,,,,,,
been challenged by the complainant. His contentions that other artists have not been paid royalty cannot be the subject of PMLA proceedings. The,,,,,,,,
said alleged offences are allegedly committed during the said period.,,,,,,,,
Further, as noted during the proceedings in respect of appeal no. FPA-PMLA-1302/MUM/2016 in the case of IPRS-refer 49 of this Tribunalâ€s",,,,,,,,
order dated 22.06.2016 in the said case which is produced in para 30 above, (internal page no. 39-40 of this order refers), he (i.e. Surendra Sathi) is",,,,,,,,
now agreeable to extend support to quash the FIR filed consequent to his complaint.,,,,,,,,
Even in the absence of the vital missing links between the alleged crime and the amount in possession of the Respondents, the Complainant",,,,,,,,
proceeded to issue the Provisional Attachment Order contrary to the statutory mandate. The said order suffered from many infirmities as the money,,,,,,,,
sought to be attached have been generated through legal commercial transactions entered into by the Respondent. The same were not generated,,,,,,,,
through the commission of any scheduled offence. The assets, as thus, are not liable for attachment under the terms of the PMLA itself.",,,,,,,,
Therefore there is no nexus whatsoever between the alleged crime and the Respondents herein, and thus no case of money laundering is made out",,,,,,,,
at all.,,,,,,,,
The Complainant seeks to attach property which has not been generated through proceeds of crime. Merely retaining money legally obtained is not,,,,,,,,
the same as deriving or obtaining the same through a criminal activity. Any other interpretation would render the ED liable to mandatorily prosecute,,,,,,,,
every case of cheating where one party fails to pay another like in recovery of money cases and the lakhs of cases pending under section -138 of,,,,,,,,
Negotiable Instrument Act where the cheques issued by the borrowers are dishonored.,,,,,,,,
The balances of the credit of PPL in the provisionally attached bank accounts are other proceeds from its legitimate licensing activities, and",,,,,,,,
represent licence fees to be distributed to PPLâ€s owner-members, after recouping PPLâ€s operating and administrative costs. This has been upheld",,,,,,,,
by the finding of the AA in para 10 of its Order dated 27.11.2016.,,,,,,,,
No allegation of criminal activity against the Respondents at any stage can be considered appropriate as the respondents have been ready to pay,,,,,,,,
the royalty after due compliance of law in view of amendment of Copyright Act. The complainant was reminded several times to receive the royalty,,,,,,,,
subject to execution of relevant documents as per law.,,,,,,,,
We have also gone through the grounds of appeal as mentioned in the present appeal. We find that practically all the grounds are those as figuring,,,,,,,,
in the related provisional attachment order and the original complaint and are already dealt with in the impugned order with which we agree. One of,,,,,,,,
the grounds mentioned is that the learned Adjudicating Authority erred in not appreciating that the primary object of the section 8 of the PMLA i.e. of,,,,,,,,
the Adjudication Proceedings is to take prima facie view on available material and evidence produced and that the trial of the PMLA is jurisdiction of,,,,,,,,
the special court. The said contention is clearly without any basis. The proceedings before the Adjudicating Authority are for confirmation of the,,,,,,,,
provisional attachment order. If in a particular case, as is the situation in the present matter, the very basis of the respondentâ€s case that the property",,,,,,,,
attached is proceeds of crime or that involved in money laundering is found to be unsustainable, no fault can be found with the subject decision of the",,,,,,,,
adjudicating authority not to confirm the adjudication order,,,,,,,,
We may add that it is settled law that the allegations in the FIR and the Charge-Sheet have to be specific, clearly stating the role of the accused",,,,,,,,
persons. However, in the present case, there has been no allegation whatsoever against the Respondents in the FIR or the Charge-Sheet.",,,,,,,,
In Hira Lal Bhagwati V. CBI, New Delhi (2003) 5 SCC 257, the Honâ€ble Supreme Court, in respect of the essence of specific allegations in the FIR",,,,,,,,
and Charge Sheet has held as under:,,,,,,,,
“It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had",,,,,,,,
fraudulent or dishonest intention at the time of making promise of representation. From his making failure to keep promise subsequently, such a",,,,,,,,
culpable intention right at the beginning that is at the time when the promise was made cannot be presumed,,,,,,,,
………………………………………………………………………………,,,,,,,,
……………………………………………………………………………… ………………………………. As there was absence of,,,,,,,,
dishonest and fraudulent intention, the question of committing offence under Section 420 of the Indian Penal Code does not arise. We have read the",,,,,,,,
charge-sheet as a whole. There is no allegation in the first information report or the charge-sheet indicating expressly or impliedly any intentional,,,,,,,,
deception or fraudulent/dishonest intention on the part of the appellants right from the time of making the promise or misrepresentation………,,,,,,,,
In the present case, the respondents herein are on a better footing than the appellants in the case referred above, as the appellants therein were at",,,,,,,,
least named as accused in the proceedings but there was no allegation to establish the offence of “cheatingâ€, use of forged documents†or",,,,,,,,
“criminal conspiracy†in the FIR and the Charge-Sheet in the present case, even the respondent no. 1-5 herein have not even been arrayed as",,,,,,,,
accused in the criminal proceedings at Agra nor is there any allegation against them.,,,,,,,,
The learned Adjudicating Authority has already dealt with all the relevant issues involved in the matter in detail. There is no infirmity in impugned,,,,,,,,
order. The appeal is, accordingly, dismissed.",,,,,,,,
No cost.,,,,,,,,
Copy of judgment of communicated to the parties by the Registry forthwith.,,,,,,,,