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Judgment
,,,,,,,,
FPA-PMLA-1302/MUM/2016,,,,,,,,
The appellant has filed the present appeal under section 26 of the Prevention of Money Laundering Act, 2002 against the order dated 23.03.2016",,,,,,,,
passed by the Adjudicating Authority in the Original Complaint No. 532 of 2015.,,,,,,,,
The brief facts are that the appellant is a company incorporated under the Companies Act, 1956 on 27th August, 1969 and has been carrying out",,,,,,,,
the business of licensing of the musical and literacy works since 1969. (Herein after referred as IPRS).,,,,,,,,
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 grants 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 till in 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 the members,",,,,,,,,
non-submission of the requisite mandate by the members and non-continuing of the membership by the members.,,,,,,,,
vii. The appellant has been unable to disburse royalties to its overseas copyright societies and other members of the appellant no. 1 on account of the,,,,,,,,
PAO.,,,,,,,,
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
Pending distribution
7213.19","Pending distribution
8549.38",-1336.1,,,,,,
% of amount
remaining
Undisbursed",34.01965%,25.33158%,,,,,,
of “Proceeds of crime†and attached amounts of Rs. 70,17,00,483/-alleging that the same were obtained from commission of the scheduled",,,,,,,,
offences, without providing any determination or calculation for the same.",,,,,,,,
The Adjudicating Authority further failed to observe that the appellant has been following international standards and norms of collection and,,,,,,,,
distribution of royalty and the pending distributions could in no manner be construed as cheating.,,,,,,,,
The Respondent have failed to consider and appreciate the legal position concerning ownership of copyright in musical and literary works prior to,,,,,,,,
the amendment of the Copyright Act, 1957 as detailed below;",,,,,,,,
i. Under the unamended Copy Act, 1957, Section 17 of the Act provided that the author shall be the first owner of the Copyright. On the basis of the",,,,,,,,
said provision, authors and copyright societies including the Appellant herein supported the position that he composers and authors were the first",,,,,,,,
owners of the copyright in musical and literary works incorporated in cinematograph films.,,,,,,,,
ii. However, in the year 1977, in Indian Performing Rights Society Limited vs. Eastern India Motion Pictures Assocation, AIR 1977 SC 1443, the",,,,,,,,
Supreme Court held that authors and composers of musical works incorporated into cinematograph films, the said authors and composers were not",,,,,,,,
owners of the said works. It is the producers fo the said cinematograph films that help the ownership fo the copyright that was as a matter of industry,,,,,,,,
practice transferred to the music production companies.,,,,,,,,
iii. Prior to 1993, Music Companies were predominantly members of the organization named Indian Phonographic Industry (hereinafter referred to as",,,,,,,,
“IPIâ€) and another company named Phonographic Performance Ltd. (hereinafter referred to as “PPLâ€).,,,,,,,,
With the objective of acquired right to license for playing of musical and literary works and collect royalties for such usage, the then management of",,,,,,,,
IPRS which was then only under control of authors and composers took a decision to enter into a Memorandum of Understanding with IPL and PPL.,,,,,,,,
Accordingly, Memorandum of Understanding dated 13-11-1993 came to be executed between IPRS, IPI and PPL, (hereinafter referred to as the",,,,,,,,
“MOUâ€) under which IPRS inter alia agreed to admit the members of IPI as members of IPRS. The said MOU incorporated a specific,,,,,,,,
statement to the effect that “IPRS†confirms that the record companies are owners of musical works as Publishers.,,,,,,,,
iv. By virtue of the said MOU, the music companies agreed to share 50% of royalties collected by IPRS with author/composer members and hence in",,,,,,,,
accordance with the said MOU, IPRS started licensing usage of music and collecting royalties from 1993 onwards and also distributed the royalties",,,,,,,,
amongst its members without and dispute till 2004.,,,,,,,,
v. Such owner members exercised complete control over the affairs of IPRS under section 35 of the Act. However, IPRS, with the help of the 1993",,,,,,,,
MOU endeavored to ensure that author /composer members received 50% royalties on the strength of their membership with IPRS. This 1993 MOU,,,,,,,,
also ensured that the Author/Composer members also got representation on the Governing Council of IPRS though the entire control of IPRS was,,,,,,,,
exercised by owner members.,,,,,,,,
vi. That dispute began to form between the music publisher companies and authors, wherein the music companies where facing claims as to",,,,,,,,
ownership of musical and literary works from authors and composers. As admittedly, the Appellant is a society representing the interests of the",,,,,,,,
authors, composers and music production companies.",,,,,,,,
vii. In light of the dispute around ownership, the Board of UPRs tool a decision in its GC meeting held on 8th August, 2005 to sent letters to members",,,,,,,,
calling them upon a provide documents establishing their ownership of copyrights in musical and literary works created/owned by them. However,",,,,,,,,
none of the author/composer members did submit such documents establishing or claiming ownership of copyrights.,,,,,,,,
viii. As a result of this, the Board of IPRS took a decision in its GC meeting dated 27th March, 2008 that IPRS as a Copyright Society should not",,,,,,,,
violate the provisions of the Copyright Act, 1957 namely 33, 34 & 35A conjoint reading of Section 34 (3) (iii) and section 35(2) of the Act read with",,,,,,,,
Rule 14i (4) demonstrates that fess 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 on 31.03.2014 : Rs. 85,82,29,782/-",,,,,,,,
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 Disbursement & Adjustments as at (ii) to (iv) above : Rs. 26,83,24,932/",,,,,,,,
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 till 31.03.2017 ; 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 contexts 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 Officer),,,,,,,,
â€,,,,,,,,
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.",,,,,,,,
It is also a matter of fact that in the written replies filed by the appellant during the course of adjudication proceedings, while furnishing information",,,,,,,,
and details in respect of issues as in the above the said notice to show cause, the attention of the Honâ€ble Adjudicating Authority was drawn towards",,,,,,,,
various misrepresentations, distortion, withholding and concealment of facts and documents in the O.C. 532 of 2015 made by the complainant in order",,,,,,,,
to prejudice the mind of the said Authority against the appellant. In the sub-para 9.1 to 9.21 of para 9 of the written replies dated 11.01.2016 filed by,,,,,,,,
appellant all such instances had been detailed for the perusal and consideration of Adjudicating Authority.,,,,,,,,
The Adjudicating Authority did not discuss the various reply filed by the appellant. In the entire impugned order, the submissions of the parties",,,,,,,,
were recorded and conclusion given. There is no discussion about the point raised by the appellant about the non-legal issues.,,,,,,,,
From the case of the appellant, it is evident that the appellant had not committed any offence in collection and distribution of royalties and that the",,,,,,,,
balance of the such amount pending distribution was on account of non-fulfillment of the formalities by the members for which all due efforts had been,,,,,,,,
made by the appellant. The plea raised were not considered and no reason to that effect is given in the entire impugned order dated 23.03.2016.,,,,,,,,
Whether innocent party whose properties i.e. movable or immovable are attached can approach the Adjudicating Authority for release of attached,,,,,,,,
property.,,,,,,,,
The Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating,,,,,,,,
Authority for the purposes of release of properties which have been attached in terms of the provisions of Section 5 of the Act. This can be seen by,,,,,,,,
reading Section 8(1) and the proviso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties,,,,,,,,
referred to in the notice are involved in money laundering or not.,,,,,,,,
“8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section",,,,,,,,
17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence",,,,,,,,
under section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to",,,,,,,,
indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-",,,,,,,,
section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information",,,,,,,,
and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-",,,,,,,,
laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being,,,,,,,,
held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that",,,,,,,,
where such property is held jointly by more than one person, such notice shall be served to all persons holding such property.",,,,,,,,
(2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under subsection (1); (b) hearing the",,,,,,,,
aggrieved person and the Director or any other officer authorised by him in this behalf, and (c)taking into account all relevant materials",,,,,,,,
placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-",,,,,,,,
section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice",,,,,,,,
had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-",,,,,,,,
laundering, section 58 B or sub-section (2 A) of section 60 by the Adjudicating Authority (4) Where the provisional order of attach""",,,,,,,,
There are judicial pronouncements whereby it has been laid down that the innocent parties can approach the Adjudicating Authority for release of,,,,,,,,
property by showing their bonafides in their dealings with the property. In the case of Sushil Kumar Katiyar (Appellants) Vs UOI and Ors.,,,,,,,,
(Respondents) MANU/UP/0777/2016 decided on 10.05.2016 by Allahabad High Court, it has been observed by the Ld. Single Judge after noticing the",,,,,,,,
judgment of Karnataka High Court that the element of knowingly or mens rea have been provided under the Act so that the aspect of implicating any,,,,,,,,
innocent person can be ruled out. Relevant para 26 of judgment is reproduced below:-,,,,,,,,
“26. Thus, upon consideration of the law laid down by the Hon'ble Karnataka High Court, it is clear that the amendment incorporated in",,,,,,,,
the Money Laundering Act was not held unconstitutional and ultra virus, but it was observed by the Karnataka High Court that the property",,,,,,,,
of a person can be attached without there being any prosecution for the offence of Money Laundering, but so far as the prosecution of a",,,,,,,,
person for the offence of money laundering is concerned, the proceedings under section 3 of the PML Act can be initiated only in case the",,,,,,,,
person is held guilty of receiving proceeds of crime as a result of commission of scheduled offence. The Karnataka High Court has also held,,,,,,,,
that the complainant in such a case is not required to wait for the result of trial being held for the scheduled offence. A complaint can still be,,,,,,,,
filed against such person, but if ultimately the person is acquitted of the charge for the scheduled offence, his prosecution under section 3 of",,,,,,,,
the Act for the offence of Money-Laundering would also come to an end. It has also been kept open by the Karnataka High Court that a,,,,,,,,
person against whom complaint under section 3 of the PML Act has been filed and he is being prosecuted for the offence of money-,,,,,,,,
laundering, he can show before the court that he is innocent and has not received any proceeds of crime.â€",,,,,,,,
It is clear that innocent person can approach the Adjudicating Authority of any competent court to demonstrate his innocence that he has not received,,,,,,,,
any proceeds of crime. The consequence of this is that while considering whether all or any of the properties provided under notice issued u/S 8(1) are,,,,,,,,
involved in money laundering, the Adjudicating Authority can take into consideration the plea of innocence raised by any person and also the fact as to",,,,,,,,
whether the property which has been attached has any nexus whatsoever with that of money laundering or not if the person before the Tribunal/,,,,,,,,
Adjudicating Authority is able to demonstrate that he neither directly nor indirectly has attempted to indulge nor with knowledge or ever assisted any,,,,,,,,
process or activity in connection with proceeds or crime and the question of his involvement does not arise as he is third party, then the Tribunal/",,,,,,,,
Adjudicating Authority can consider the said plea depending upon whether there exist bona fide in the said plea or not and proceed to adjudicate the,,,,,,,,
plea of innocence of the said party.,,,,,,,,
This is due to the reason that Section 8 allows the Adjudicating Authority to only retain the properties which are involved in money laundering,,,,,,,,
which means as to whether properties attached are involved in money laundering or not is a pre-condition prior to confirming or attachment by,,,,,,,,
Adjudicating Authority. Therefore, at that time, if the plea is raised that the party whose property is attached is innocent or is without knowledge of",,,,,,,,
any such transaction with respect to money laundering, then the Tribunal can consider the said plea and proceed to release the said property out of the",,,,,,,,
properties by holding that the said property is not involved in money laundering.,,,,,,,,
For the purposes of determining whether the property is involved in money laundering, the Court may consider the ingredients of Section 3 which",,,,,,,,
define offence of money laundering. The aspect of knowledge or involvement has been discussed by Ld. Single Judge of Gujarat High Court in the,,,,,,,,
case of Jafar Mohammed Hasanfatta and Ors (Appellants) Vs Deputy Director and Ors. (Respondents) MANU/GJ/0219/20 1w7herein Ld Single,,,,,,,,
Judge has observed as under:-,,,,,,,,
“37. A holistic reading of this definition of 'proceeds of crime' and the penal provision under Section 3 of PMLA, which uses conjunctive",,,,,,,,
'and', makes it luminous that any persons concerned in any process or activity connected with such ""proceeds of crime"" relating to a",,,,,,,,
scheduled offence"" including its concealment, possession, acquisition or use can be guilty of money laundering, only if both of the two",,,,,,,,
prerequisites are satisfied i.e.-,,,,,,,,
“(i) Firstly, if he-",,,,,,,,
(a) directly or indirectly 'attempts' to indulge,",,,,,,,,
(b) “knowingly†either assists or is a party, or",,,,,,,,
(c) is “actually involved†in such activity; and,,,,,,,,
(ii) Secondly, if he also projects or claims it as untainted property;""",,,,,,,,
The first of the two pre-requisite to attract Section 3 of PMLA shall thus satisfy any of the following necessary ingredients-,,,,,,,,
“A. RE: DIRECT OR INDIRECT ATTEMPT:,,,,,,,,
In State of Maharashtra v. Mohd.Yakub, MANU/SC/0239/1980 : (1980) 3 SCC 57, the Hon'ble Supreme Court observed that-",,,,,,,,
“13. Well then, what is an “attempt� ...In sum, a person commits the offence of ""attempt to commit a particular offence"" when (i)",,,,,,,,
he intends to commit that particular offence and (ii) he, having made preparations and with the intention to commit the offence, does an act",,,,,,,,
towards its commission; such an act need not be the penultimate act towards the commission of that offence but must be an act during the,,,,,,,,
course of committing that offence.""",,,,,,,,
Thus, an “attempt to indulge†would necessarily require not only a positive ""intention"" to commit the offence, but also preparation for",,,,,,,,
the same coupled with doing of an act towards commission of such offence with such intention to commit the offence. Respondent failed to,,,,,,,,
produce any material or circumstantial evidence whatsoever, oral or documentary, to show any such 'intention' and 'attempt' on the part of",,,,,,,,
any of the petitioners.,,,,,,,,
B. RE: KNOWINGLY ASSISTS OR KNOWINGLY IS A PARTY:,,,,,,,,
In Joti Parshad v. State of Haryana, MANU/SC/0161/1993 : 1993 Supp (2) SCC 497 the Hon'ble Supreme Court has held as follows-",,,,,,,,
“5. Under the Indian penal law, guilt in respect of almost all the offences is fastened either on the ground of ""intention"" or ""knowledge""",,,,,,,,
or ""reason to believe"". We are now concerned with the expressions ""knowledge"" and ""reason to believe"". ""Knowledge"" is an awareness on",,,,,,,,
the part of the person concerned indicating his state of mind. “Reason to believe†is another facet of the state of mind. ""Reason to",,,,,,,,
believe"" is not the same thing as “suspicion†or “doubt†and mere seeing also cannot be equated to believing. “Reason to",,,,,,,,
believe†is a higher level of state of mind. Likewise “knowledge†will be slightly on a higher plane than “reason to believeâ€. A,,,,,,,,
person can be supposed to know where there is a direct appeal to his senses and a person is presumed to have a reason to believe if he has,,,,,,,,
sufficient cause to believe the same.â€,,,,,,,,
The same test therefore applies in the instant case where there is absolutely no material or circumstantial evidence whatsoever, oral or",,,,,,,,
documentary, to show that any of the petitioners, 'Knowingly', assisted or was a party to, any offence.",,,,,,,,
C. Actually involved:,,,,,,,,
Actually involved would mean actually involved into any process or activity connected with the proceeds of crime and thus scheduled,,,,,,,,
offence, including its concealment, possession, acquisition or use. There is absolutely no material or circumstantial evidence whatsoever,",,,,,,,,
oral or documentary, to substantiate any such allegation qua the petitioners,",,,,,,,,
D. Neither any of the petitioners is arraigned as accused in the 'Scheduled Offences' punishable under Indian Penal Code for direct or,,,,,,,,
indirect involvement, abetment, conspiracy or common intention, nor is any such case made out even on prima facie basis against any of",,,,,,,,
them.""",,,,,,,,
The second of the two pre-requisite to attract Section 3 of PMLA would be satisfied only if the person also projects or claims proceeds of,,,,,,,,
crime as untainted property. For making such claim or to project 'proceeds of crime' as untainted, the knowledge of tainted nature i.e. the",,,,,,,,
property being 'proceeds of crime' derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence,",,,,,,,,
would be utmost necessary, which however is lacking in the instant case.""",,,,,,,,
These are four ingredients which are determinative factors on the basis of which it can be said that whether any person or any property is involved,,,,,,,,
in money laundering or not. If there is no direct / indirect involvement of any person or property with the proceeds of the crime nor there is any aspect,,,,,,,,
of knowledge in any person with respect to involvement or assistance nor the said person is party to the said transaction, then it cannot be said that the",,,,,,,,
said person is connected with any activity or process with the proceeds of the crime. The same principle should be applied while judging the,,,,,,,,
involvement of any property of any person in money laundering. This is due to the reason that if the property has no direct involvement in the proceeds,,,,,,,,
of the crime and has passed on hands to the number of purchasers which includes the bona fide purchaser without notice, the said purchaser who is",,,,,,,,
not having any knowledge about the involvement of the said property with the proceeds of the crime nor being the participant in the said transaction,,,,,,,,
ever, cannot be penalized for no fault of his. Therefore, it cannot be the Scheme of the Act whereby bona fide person without having any direct/",,,,,,,,
indirect involvement in the proceeds of the crime or its dealings can be made to suffer by mere attachment of the property at the initial stage and later,,,,,,,,
on its confirmation on the basis of mere suspicion when the element of mens rea or knowledge is missing.,,,,,,,,
Similar principle has been laid down by Chennai High Court in the case of C. Chellamuthu (Appellants) Vs The Deputy Director, Prevention of",,,,,,,,
Money Laundering Act, Directorate of Enforcement (Respondent) MANU/TN/4087/2015 decided on 14.10.2015, relevant portion of which are",,,,,,,,
reproduced below:-,,,,,,,,
“ 20. The said sections read as follows:--,,,,,,,,
“23. Presumption in inter-connected transactions Where money-laundering involves two or more interconnected transactions and one or,,,,,,,,
more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation (under",,,,,,,,
section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or",,,,,,,,
the Special Court), be presumed that the remaining transactions form part of such inter-connected transaction.",,,,,,,,
Burden of proof,,,,,,,,
In any proceeding relating to proceeds of crime under this Act,",,,,,,,,
(a) in the case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is",,,,,,,,
proved, presume that such proceeds of crime are involved in money-laundering; and",,,,,,,,
(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.",,,,,,,,
In the present case, one G. Srinivasan is accused of having played fraud and obtained a loan of Rs. 15,00,00,000/- by producing bogus",,,,,,,,
and fabricated documents. From and out of the said amount, the property in question was purchased by him in the names of his Benamies.",,,,,,,,
One Ayyappan was appointed as their Power Agent. One Gunaseelan purchased the property through the Power Agent Ayyappan. The said,,,,,,,,
Gunaseelan was examined and his statement was recorded Under Section 50 of the Act. He had stated that he purchased the property for,,,,,,,,
cultivation. He developed the property but geologist gave opinion that property will not yield proper income. In the circumstances, he sold",,,,,,,,
the property to appellants. The respondent has not produced any document or material to disprove the statement of Gunaseelan. There is,,,,,,,,
nothing on record to show that the transaction in favour of the said Gunaseelan, is not genuine. It is not the case of respondent that the said",,,,,,,,
Gunaseelan is a Benami or employee of G. Srinivasan and that Gunaseelan did not pay any amount as sale consideration or the sale,,,,,,,,
consideration paid by Gunaseelan was not legitimate money. There is no material to show nexus and link of Gunaseelan with G. Srinivasan,,,,,,,,
and his Benamies. In the absence of any verification or investigation by respondent with regard to genuineness or otherwise of the purchase,,,,,,,,
by Gunaseelan; whether he was connected with G. Srinivasan or the sale consideration is legitimate or not the property in the hands of,,,,,,,,
Gunaseelan cannot be termed as proceeds of crime.,,,,,,,,
Further, the appellants have given statements under Section 50 of the Act. They have categorically stated that they possess agricultural",,,,,,,,
lands, cultivate GloriosaSuperba seeds and sell the same and derive considerable income. They have named the persons to whom they have",,,,,,,,
sold the GloriosaSuperba seeds and produced Bank statements. Some of the Appellants have stated that they sold their lands and borrowed,,,,,,,,
monies to purchase the property in question. There is nothing on record to show that the respondent had verified these statements.,,,,,,,,
Especially, the respondent has not verified the Bank statement produced by the Appellants to ascertain the genuineness of the same and",,,,,,,,
whether the money deposited came from genuine purchasers or from the persons involved in fraud and Money Laundering. The respondent,,,,,,,,
does not allege that Appellants are Benamies of G. Srinivasan or no sale consideration passed to the vendor.,,,,,,,,
Considering the materials on record and judgments reported in MANU/MH/1011/2010: 2010 (5) Bom CR 625 [supra] and : [2011] 164,,,,,,,,
Comp Cas 146 (AP) [supra], I hold that appellants have rebutted the presumption that the property in question is proceeds of crime. The",,,,,,,,
respondent failed to prove any nexus or link of Appellants with G. Srinivasan and his benamies. Once a person proves that his purchase is,,,,,,,,
genuine and the property in his hand is untainted property, the only course open to the respondent is to attach sale proceeds in the hands of",,,,,,,,
vendor of the appellants and not the property in the hands of genuine legitimate bona fide purchaser without knowledge.,,,,,,,,
Before the Adjudicating Authority it was admitted by complainant that appellants had no knowledge that properties in the hands of their,,,,,,,,
vendor was proceeds of crime. It was also not disputed by complainant that the appellants did not have financial capacity to buy properties.,,,,,,,,
Paragraphs 21, 22, 23 and 24 of order of Adjudicating Authority is extracted herein for better appreciation.",,,,,,,,
“21. The CBIBS & FC (BLR) has filed a charge sheet in the court of Spl. Judge for CBI cases Coimbatore, against Sh. Arivarasu, Sh. R.",,,,,,,,
Manoharan, Sh. R. Selvakumar, Sh. G. Srinivasan, Sh. K. Martha Muthu, Sh. V. InduNesan, Sh. K. Vignesh, Sh. A. Sainthil Kumar, Sh. M.",,,,,,,,
Ram Krishnan, for the offences punishable under Section 120-B read with 420, 467, 471 IPC and section 13(2) read with 13(1)(d) of PC",,,,,,,,
Act 1988. The offences punishable under section 120-B, 420, 471 are schedule offence under Section 2(1)(y) of the PMLA and therefore on",,,,,,,,
of the condition for issuing provisional attachment order is satisfied. The other important point to be determined is whether the properties,,,,,,,,
attached vide Provisional attachment order are involved in money-laundering. The only defense or explanation raised by Defendants,",,,,,,,,
particularly Def No. 2 to 8 is that the landed properties attached by the complainant are not proceeds of crime. These properties were,,,,,,,,
purchased by these defendants without having any knowledge, whatsoever, that these properties were derived or obtained through criminal",,,,,,,,
activities relating to schedule offence. It has been demonstrated by them that they verified the title deeds relating to the properties and after,,,,,,,,
due verification of every details entered into the sale transactions as such these are bona fide deals entered by them against proper sale,,,,,,,,
consideration and the money paid to the seller is also well explained.,,,,,,,,
Against the above arguments vehemently raised by the defendants, the complainant without disputing that the deals are bona fide",,,,,,,,
heavily relied on the judgment of the Bombay High Court, dated 05.08.2010 in Mr. Radha Mohan Lakhotia Vs. Deputy Director, PMLA,",,,,,,,,
Directorate of Enforcement, Mumbai in first appeal No. 527/2010. In this case it held by the Bombay High Court that the property bought",,,,,,,,
without the knowledge that the same is tainted could be subjected to Provisional Attachment Order.,,,,,,,,
In the instant case the only point to be decided is whether the properties bought by any person against clean money and without any,,,,,,,,
knowledge that properties have been acquired directly or indirectly through scheduled offence could be subject matter of provisional,,,,,,,,
attachment order.,,,,,,,,
It is an admitted position that the Defendants (D-2 to D-8) had no knowledge that the properties in the hands of the vendor was proceeds,,,,,,,,
of crime. They have also verified the papers relating to these properties before the deal. No point has been raised with regard to the,,,,,,,,
financial capability of these Defendants to buy these properties. However, the Bombay High Court decision in Radha Mohan Lakhotia has",,,,,,,,
been pressed into service to make out a plea that the properties could be attached in such circumstances under the PMLA.""",,,,,,,,
Provisional attachment was sought to be continued only based on the judgment of Bombay High Court in Radha Mohan Lakhotia's case.,,,,,,,,
A reading of paragraphs 21 to 24 clearly reveals that both the Adjudicating Authority as well as Appellate Authority failed to properly,,,,,,,,
appreciate the facts and findings in Radha Mohan lakhotia's case. In that case, the Department had placed substantial and acceptable facts",,,,,,,,
to prove that the property in the hands of third party was proceeds of crime. It is pertinent to note that in Mr. Radha Mohan Lokatia's case,",,,,,,,,
Department had proved the nexus and link between the person possessing the property and person accused of having committed an offence.,,,,,,,,
All the persons involved in that case were close relatives.,,,,,,,,
In the present case, the respondent failed to prove that the appellants did not have sufficient financial capacity to buy the property or",,,,,,,,
that the money paid by them as sale consideration was not legitimate money derived by agricultural activities. No material was produced to,,,,,,,,
show that the appellants are close relatives of person, who involved in criminal activities and the person, who sent monies to purchase the",,,,,,,,
property did not possess financial capacity to provide such huge amounts and that they are not genuine purchasers of agricultural products,,,,,,,,
of appellants. The respondent has not made any such investigation and has not produced any such material. Further, the Appellate",,,,,,,,
Authority in fact considered the additional documents produced before it, but rejected the same on the ground that Appellants have not given",,,,,,,,
any valid reasons for not filing the same before the Adjudicating Authority. Having considered the Additional documents, the appellate",,,,,,,,
authority failed to give any finding on merits after verifying with the concerned Bank.""",,,,,,,,
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 crimeâ€,,,,,,,,
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.,,,,,,,,
No cost.,,,,,,,,