M. Shobana vs The Assistant Director, Directorate of Enforcement Government of India

M. Venugopal, J.—The Petitioners have preferred the present Writ Petitions praying for issuance of Writ of Certiorari in calling for the

records in summons vide ECIR No. CEZO/2/2013 (KCM) dated 10.04.2013 issued by the Respondent and to quash the same. The Petitioners

were directed to appear on 09.05.2013, 07.05.2013, 08.05.2013 respectively by the Assistant Director, Directorate of Enforcement, Chennai

along with the documents mentioned in the Schedule. In the summons issued to the Writ Petitioners on 10.04.2013, the Respondent had stated

that in exercise of the powers conferred upon him as per Section 50(2) and (3) of the Prevention of Money-Laundering Act, 2002, he required the

presence of the Writ Petitioners at his office on the dates and time specified.

The Summation of Facts:

(i) According to the Petitioners, one Abinesha Babu through his brother Nagarajan in the capacity of Director to a Company called M/s. Al Tirven

Steels Limited, lodged a complaint against A.M. Mohan (husband of the Writ Petitioner in W.P. No. 14083/2013) and his friend Valluvan

(Petitioner in W.P. No. 14085/2013) before the Central Crime Branch, Egmore, Chennai with an allegation of impersonation and cheating and

also that the Central Crime Branch, Egmore registered a case in Crime No. 96 of 2010 under Sections 419, 420 r/w 34 I.P.C. on 25.02.2010.

During the investigation, the Investigation Officer came to a conclusion that the sister of the Petitioner''s husband N. Senthamarai (Petitioner in

W.P. No. 14084/2013), herself and A.M. Mohan (husband of the Petitioner in W.P. No. 14083/2013) committed the crime and filed a final

report in C.C. No. 88 of 2011 on the file of learned Chief Judicial Magistrate, Egmore, Chennai who took cognizance and charges were also

framed. In the meanwhile, A.M. Mohan (husband of the Petitioner in W.P. No. 14083/2005) filed O.P. No. 280 of 2010 before this Court

praying for appointment of an Arbitrator with reference to his claim of Rs. 82.5 Crores from the defacto complainant which was allowed on

01.04.2011 by this Court and the matter is now pending before the Hon''ble Supreme Court of India.

(ii) After framing of charges against the accused, the trial commenced and summons was issued to the witnesses P.W. 1 and P.W. 2 on the

beginning day of trial itself, an aggrieved party M/s. IVRCL Limited (formerly it was M/s. IVRCL Assets and Holdings Limited) along with

accused filed a permission petition and compound petition before the trial Court. The defacto complainant/informant filed Criminal O.P. No.

14032 of 2011 for further investigation which was allowed by this Court on 28.09.2011 where a direction was issued to the C.B.C.I.D., Chennai

to conduct further investigation. As against the said order passed in the Crl.O.P. No. 14032 of 2011, the Writ Petitioner in W.P. No. 14083 of

2013 along with two other accused preferred a petition to grant Special Leave to Appeal in SLP. Crl. No. 8160/2011, 8313/2011 and

8317/2011 before the Hon''ble Supreme Court of India wherein the Hon''ble Supreme Court was pleased to grant stay of operation of the

impugned order passed in the Crl.O.P. No. 14032 of 2011. As such, the trial in C.C. No. 88 of 2011 on the file of the Learned Chief

Metropolitan Magistrate, Egmore, Chennai is pending as on date.

(iii) Under the above background, a separate complaint was lodged by the husband of the Petitioner in W.P. No. 14083 of 2013 against the

defacto complainant and 21 others on 02.07.2010 before the Reserve Bank of India and various authorities including the Directorate of

Enforcement. Since no action was taken by the authorities concerned, Criminal Original Petition No. 19095 of 2010 was filed by A.M. Mohan

before this Court and this Court was pleased to allow the petition by making the following observations:

The disturbing factors in dealing with the property are as follows;

i. The sale agreement dated 22.6.1999 was in favour of M.S. Tirven Garments Private Limited represented by its Director L.S. Abinesh Babu.

ii. Without any benefit, a mortgage by deposit of title deeds was created by Mrs. Meerabai Dawson in favour of Global Trust Bank Limited for the

loan facilities of the agreement holder through a document dated 18.10.1999.

iii. A Power of attorney in favour of the above said person dated 18.8.2000 was also executed and on the basis of power of attorney, various

documents of the property were deposited by L.S. Abinesh Babu on 27.8.2000.

iv. A letter of confirmation dated 17.8.2001 was signed by Mrs. Meerabai Dawson.

All these documents are on India Non-Judicial Stamp Papers, but signed by Meerabai Dawson at Middlesex, London in the presence of a

Commissioner of Oath of England and Wales.

v. An affidavit of Meerabai was filed before this Court in OP No. 93/1975 (in the matter of grant of Letters of Administration of Vedamma

Rangachari mother of Meerabai Dawson). This affidavit was sworn on 21.8.2002 and was numbered as Application No. 3804 of 2002 on which

date Meerabai Dawson was not alive.

vi. The property was substituted in an auction sale which was purchased by A.R. Housing Private Limited represented by Govindarajulu.

Vii. One Sivananatha raj, Power of Attorney of Executors of the Will of Mrs. Meera Bai applied for Letters of Administration based on the Will

which specifically excludes her property in India.

Viii. A.R. Housing Private Limited filed an application for revocation of Letters of Administration and this Court dismissed the application as he

had no caveatable interest.

ix. In pursuant to the Letters of Administration, one Raghul Suresh Narvekar and Subash had sold the property for rupees 20 crores when the

market value of the property as per sale deed was rupees 64 crores.

x. A.R. Housing Private Limited is shown as confirming party.

xi. The financial arrangements are mind boggling.

Xii. Lastly, under FEMA and FEM Acquisition Regulation, the money which was actually payable to the tors in London, U.K. being the sale

consideration of the property of a non resident, can not be repatriated without the permission of The Reserve Bank of India.

(iv) Since even after the orders passed in Crl.O.P. No. 19095 of 2010 by this Court, the State Police had not initiated action to investigate in a

right direction, the said Mohan was forced to file a original petition before this Court seeking transfer of investigation to any other competent

agency or C.B.I. in Crl.O.P. No. 4739 of 2011. The State Police in their status report attempted to state that it is a fit case to try before a Civil

Court and this Court rejected the said view and passed the following interim order in Crl.O.P. No. 4739 of 2011 which runs as under:

Given the above, this Court considers it appropriate that the respondents strictly follow the orders of this Court, dated 08.12.2010 and in

keeping there with the enquiry order by this Court shall be conducted by the Deputy Commissioner of Police, Crime Branch, Chennai. Such

enquiry shall be completed within a period of three months from the date of a receipt of a copy of this order and to file the report before this Court

on or before 11.07.2011.

(v) Finally, the State Police registered a case in Crime No. 450 of 2011 and there is no progress in the investigation, except filing of status report

before this Court. Further, in one such status report filed by the State Police through its Assistant Commissioner of Police in the Crl.O.P. No.

4739 of 2011, it is admitted in para 11 as ''It is submitted that the violation of FEMA and FERA Acts should be enquired by the Directorate of

Enforcement and the respondents have no role to play''. The said Mohan applied before the various authorities to know the status of the said

complaint filed by him through Right to Information Act. In the letter of the Reserve Bank of India dated 26.07.2010, it is categorically stated that

''In this connection we advise that your complaint on the captioned subject has been forwarded to the Directorate of Enforcement, New Delhi for

investigation into the matter and necessary action at their end, if any''.

(vi) That apart, in another letter dated 25.02.2013, the Reserve Bank of India, stated as follows:

In this connection we invite your attention to our letter No. FE/Co. FID/2077/10.51.000/2010-11 dated July 26, 2010, and reiterate that the case

has been forwarded to the Director of Enforcement (DoE), New Delhi as RBI is not an investigating agency. We have no further information in the

case. Your are therefore advised to follow-up with DoE for further information/status of the case.

(vii) The said Mohan on the advise of the Reserve Bank of India sent various letters to the Directorate of Enforcement under the Right to

Information Act. In its reply dated 12.12.2012, the Directorate of Enforcement stated that they are exempted from Right to Information Act. The

enforcement directorate instead of investigating the criminal act of accused, annoyed over the letter of A.M. Mohan, with a mala fide intention and

ulterior motive diverted themselves and under the pretext of investigation in terms of the Prevention of Money-Laundering Act, 2002 are to drag

the Petitioners to their fold.

(viii) The contention advanced on behalf of the Petitioners is that the summons issued by the Respondent/Directorate of Enforcement dated

10.04.2013 are premature one because of the reason the scheduled offence in which charge framed is yet to be compounded on their petition

which were taken on file by the trial Court in CMP in C.C. No. 88 of 2011.

(ix) Yet another submission advanced on behalf of the Petitioners is that the Hon''ble Supreme Court was pleased to stay the order passed by this

Court in Crl.O.P. No. 14032 of 2011 dated 28.09.2011 wherein this Court had directed further investigation by the CBCID and as such, the

issuance of summons is nothing but a colourable exercise of power by the authorities concerned.

(x) The Petitioners urges before this Court that when Section 320 of the Criminal Procedure Code enables an Accused to compound the charge

with the aggrieved/affected party and when a petition/application is pending in this regard. The proposed investigation with reference to crime

proceeds is unwarranted, illegal and against law.

(xi) The grievance of the Petitioners is that when the accused facing with criminal charge before the trial Court, they do have every right to remain

silent under Article 20(2) of the Constitution of India. Furthermore, it is pleaded on behalf of the Petitioners that if they are forced to give statement

before the Directorate of Enforcement and the statement so made by them would turn against them and the same would restrict their rights as

guaranteed under Article 20(2) of the Constitution of India and therefore, the summons are liable to be quashed.

(xii) Apart from the above, the Petitioners take a stand that the ingredients of Section 300 of Criminal Procedure Code and General Clauses Act,

Section 26 enjoin that the accused who are facing criminal charge with a privilege of not prosecuting twice as it amount to double jeopardy and it is

unjust on the part of the Respondent to issue summons to the Petitioners for conducting fresh enquiry that too in respect of the already pending

charge, a compound application is pending wherein only a formal order has to be passed by the trial Court.

Counter Averments of the Respondent:

(i) Pursuant to the complaint dated 25.02.2010 received from S. Nagarajan, Director, M/s. Al Tirven Steels Limited, Chennai, the First

Information Report in Crime No. 96 of 2010 dated 25.02.2010 was registered except of the alleged offences under Sections 419, 420 read with

Section 34 of I.P.C. 1860 as against A.M. Mohan (husband of the Petitioner in W.P. No. 14083 of 2013) and A. Valluvan (Petitioner in W.P.

No. 14085/2013) by the Sub-Inspector of Police, Central Crime Branch, EDF Wing, Team IV, Emgore, Chennai 600 008. Later, a charge sheet

was filed on 25.11.2010 before the Learned Additional Chief Metropolitan Magistrate Court, Egmore, Chennai.

(ii) In the aforesaid complaint, it was mentioned that they are engaged in the real estate business in India and in the course of their business, they

had entered into a Memorandum of Understanding with M/s. IVR Prime Urban Development Limited, for facilitating in the purchase of lands in

Sandavellore, Chittoor and Papankuzhi Villages in Sriperumbudur Taluk, Kancheepuram District. Further, A.M. Mohan, Lawyer, by Profession

and Valluvan (Petitioner in W.P. No. 14085/2013) engaged in real estate marketing business offered their services in purchase of lands on their

behalf for which they agreed and had entered into a Memorandum of Understanding dated 03.08.2007 with the said Mohan. The said two

persons collected the entire payment from them for all the lands on behalf of the land owners of Sandavellore, Chittoor and Papankuzhi Villages in

and thereby cheated them to the tune of Rs. 27 Crores. After completion of enquiries conducted by the Deputy Commissioner of Police, Central

Crime Branch, Chennai, a charge sheet was laid before the Additional Chief Metropolitan Magistrate, Egmore, Chennai on 25.11.2010.

(iii) It transpired from the perusal of the document that M/s. Al Tirven Steels, Chennai entered into a Memorandum of Understanding on

20.12.2006 with M/s. IVR Prime Urban Developers Limited for the procurement of lands situated at Sandavellore and Papankuzhi Villages in

Sriperambadur Taluk, Kancheepuram District, Tamil Nadu. The said two individuals viz., Mohan and Valluvan offered themselves that they could

facilitate in the purchase of lands that were required to M/s. IVR Prime Urban Developers Limited. As agreed, the complainant Company gave Rs.

5.09 Crores to A.M. Mohan through 28 demand drafts relating to the period from 29.11.2007 and 04.12.2007 towards the purchase of land

from one Sundarambal. The said Mohan and Valluvan paid only Rs. 2.65 Crores to P. Sundarambal for the purchase of 5.09 acres from her and

the balance amount viz., 2.44 Crores was drawn in the form of demand drafts favouring Sundarambal were credited by way of impersonation with

Karur Vysya Bank, Arumbakkam Branch, Chennai, with the assistance of Mohan''s sister, Senthamarai into the Savings Bank Account No.

128915500016195 and the said amount immediately transferred to the Current Account No. 128913100000022 with the same Bank in the name

of M/s. Sri Yaazhini Realtors (P) Limited, where Mohan and his wife (Petitioner in W.P. No. 14083/2013) are the Directors. Therefore, the

charge sheet was filed on 25.11.2010 against the accused Mohan, Valluvan, Senthamarai and Shobana for cheating a sum of Rs. 2.44 Crores and

in turn they made a wrongful gain to themselves and thereby attracted the ingredients of Sections 419, 420 read with 34 I.P.C.

(iv) The Police filed FIR in Crime No. 96 of 2010 on 25.11.2010 for an amount of Rs. 2.44 Crores against the amount of Rs. 27 Crores as

alleged by M/s. Al Tirven Steels India Limited, Chennai. Aggrieved of the same, M/s. Al Tirven Steels India Limited filed Crl.O.P. No. 14032 of

2011 before this Court u/s 482 Cr.P.C. 1973 with a prayer to order for further investigation in Crime No. 96 of 2010 by any other independent

agency or more specifically the C.B.I. other than the Police Authority and also consequently, to frame additional charge sheet in C.C. No. 88 of

2011.

(v) This Court in Crl.O.P. No. 14032 of 2011 on 28.09.2011 in para 18 has observed to the effect that ''Even according to the investigating

officer, the investigation being incomplete and as it is claimed by the defacto complainant that he has got sufficient materials, this Court is of the

view that further investigation must be ordered. At the same time, this Court feels that further investigation must be conducted by CBCID, Chennai,

and accordingly it is ordered. A competent officer from CBCID, Chennai may be nominated to investigate further and to file additional final

report''.

(vi) Being dissatisfied with the order passed in Crl.O.P. No. 14032 of 2011 on 28.09.2011 the Petitioners preferred Special Leave to Appeal

(Crl) No. 8160 of 2011 before the Hon''ble Supreme Court of India with prayer to stay and quash the order so passed. However, the Petitioners

obtained an order of interim stay on 14.11.2011 wherein it was observed that the Interim Order had not stayed the investigation but stayed only

the operation of the High Court''s order dated 28.09.2011 which issued direction to conduct further investigation by the C.B.C.I.D., Chennai and

to file additional final report. However, the main S.L.A. (Crl.) No. 8160 of 2011 is pending disposal before the Hon''ble Supreme Court of India.

(vii) The charge sheet laid on 25.11.2010 was filed against the Petitioners in respect of alleged offences under Sections 419, 420 read with Section

34 I.P.C. for criminal activities. Inasmuch as the charged offences u/s 419, 420 I.P.C. 1860 were the Scheduled Offences under clause (1) of sub-

section (y) of Section 2 of the Prevention of Money-Laundering Act, 2002, the Respondent/Directorate of Enforcement registered an Enforcement

Case Information Report (referred to ECIR) bearing No. CEZO/2/2013 dated 26.03.2013 to carry out the investigation under PMLA against the

Petitioners.

(viii) The objects of the Prevention of Money-Laundering Act are to ascertain the Proceeds of Crime which involved in Money-Laundering,

subsequent attachment and confiscation of the same and also to punish the Money Laundering offenders. The Respondent/Directorate of

Enforcement is the Investigation Agency authorised to enforce the PMLA. After filing the ECIR on 26.03.2013 as per Section 50(2) of the

Prevention of Money-Laundering Act, the Respondent issued summons dated 10.04.2013 to the Petitioners whose presence was considered

necessary for investigation purposes.

(ix) The Petitioners through their letter dated 22.04.2013 intimated about the Interim Stay granted by the Hon''ble Supreme Court of India vide

order dated 14.11.2011 and requested the Respondent to withdraw the summons issued to them. Otherwise, the same would amount to

Contempt of Court. There is no legal block for conducting investigation under PMLA by the Respondent, which is an independent process.

(x) The summons dated 10.04.2013 issued by the Respondent requiring the Petitioners to appear on 09.05.2013, 07.05.2013 and 08.05.2013

respectively is very well within the competence of the Respondent in terms of Section 50(2) and (3) of the Prevention of Money-Laundering Act,

2002 in and by which the presence of Petitioners were required to give evidence or to produce records required for the purpose of investigation to

ascertain the proceeds of crime under the Act.

Common Rejoinder contents of the Petitioner in W.P. No. 14085/2013 (for himself and on behalf of other Writ Petitioners in W.P. Nos. 14083

& 14084/2013):

(i) In the interim order passed by this Court in M.P. Nos. 1 and 1 of 2013 in W.P. Nos. 8383 and 8384 of 2013 dated 02.04.2013, the

prosecution itself was stayed and as such, the question of the authority under the Prevention of Money-Laundering Act, 2002 proceeding on the

basis of any crime or criminal proceedings would not arise. In the present case on hand also, already the investigation was completed and that was

questioned before this Court in Crl.O.P. No. 14032 of 2011 and this Court passed an order directing the conduct of further investigation by a

different agency viz., C.B.C.I.D. and to file additional final report. The position of law is that when the investigation was not completed and also

when once the order of this Court in Crl.O.P. No. 14032 of 2011 was stayed by the Hon''ble Supreme Court, it tantamount to the investigation

and the final report were stayed.

(ii) The trial Court where the subject matter of criminal proceeding is pending has rightly appreciated the order of the Hon''ble Supreme Court in

SLP (Crl.) Nos. 8313 and 8317 of 2011 dated 14.11.2011 and accordingly, the matter is being adjourned.

(iii) In the decision Indian Bank, represented by its Chief Manager, Chennai V. Government of India Ministry of Finance, Department of Revenue,

Chennai, 2012 (4) CTC 225, in paragraph 43, it is held as follows:

43..... The action of the Adjudicating Authority in proceeding with the hearing of the original Complaint despite being aware of the interim stay

order and also proceeding to pronounce a final order on 26.06.2012, is clearly in defiance of the interim stay order of this Court. Therefore, the

whole proceedings are vitiated and even the order dated 26.6.2012 passing during the pendency of these Writ Petitions is illegal and are liable to

be set aside as null and void.

(iv) In the aforesaid decision, the present Respondent is a party. Further, the summons issued by the Respondent to the Petitioners are clearly ultra

vires of Article 20(3) of the Constitution of India. In this regard, the Petitioners rely on the decision of the Hon''ble Supreme Court in

Bharathidasan University and Another Vs. All India Council for Technical Education and Others, .

(v) Before the Criminal Court, the compromise petition/application is still pending. The said petition/application has been filed by the aggrieved

party and the accused persons (Petitioners herein). The effect of compounding the offence as per Section 320(8) Cr.P.C. is that of an acquittal of

the accused with whom the offence has been compounded. The Petitioners/Accused and other accused have arrived at a compromise and

accordingly filed the petition for compounding. In view of the stay granted by the Hon''ble Supreme Court of India the trial Court is not taking up

the matter, notwithstanding the fact that the compounding petition is pending. When once the compounding petition is accepted and orders passed

on the said petition, then, acceptance of compounding is acquittal of the accused and there would be no question of any crime.

(vi) In P. Ramanatha Aiyar''s Advanced Law Lexicon, 3rd Edition, 2005, the term ''Laundering'' is described as follows:

term used to describe the investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into

legitimate channels so that its original source cannot be traced.

Method of disguising the origin of funds by moving them rapidly from one account or country to another. It thus becomes a complicated business

to trace their origins, movements and eventual destination. Counterfeit money, stolen money or money received for illegal activities laundered.

(vii) In the instant case, the original source of money traceable and identified. Therefore, the source of income cannot be said to be out of any

illegal business. Also, there is no concealment of source of income. Under these circumstances, there is absolutely no cause of action or jurisdiction

to proceed against the Petitioners under the Prevention of Money Laundering Act, 2002 and the Respondent is trying to harass the Petitioners.

Also the person who can be said to be aggrieved viz., IVR Prime Urban Development Limited, in the charge sheet, as per the transaction in

question, has admitted that the said amount became payable to the first accused as his facilitation charges and incidental expenses through one

Sundarambal for the land transaction and other incidental expenses.

(viii) In view of the facts set out herein there is no question of crime and as such, there is no question of proceeds of supposed crime. It is not a

case of money laundering at all in any event, the whole proceedings were stayed by the Hon''ble Supreme Court of India.

The short averments in M.P. No. 3 of 2013 in W.P. No. 14083 of 2013 filed by the Petitioner/Proposed 2nd Respondent:

(i) The Petitioner''s company entered into a Memorandum of Understanding with one IVR Prime Urban Developers Limited, for procurement of

600 Acres of land in Sandavellore Village and Papankuzhi village of Sriperambudur Taluk, Kancheepuram District dated 8.12.2006.

(ii) One A.M. Mohan (the husband of the Petitioner in W.P. No. 14083/2013) along with Valluvan (Petitioner in W.P. No. 14085/2013)

approached the Petitioner/Proposed 2nd Respondent and represented that they know the people of the village and offered to facilitate for

procuring the aforesaid 600 acres for the Petitioner/Proposed Respondent. Accordingly, the Petitioner/Proposed Respondent had entered into a

Memorandum of Understanding dated 03.08.2007 with the aforesaid A.M. Mohan.

(iii) Initially, the aforesaid persons brought the purchasers and as per the terms of the Agreement, the Demand Drafts were given in the name of the

owners/vendors of the land and obtained Power of Attorney in some cases and in other matters, the sale deed would be directly executed in

favour of the said IVR Developers

(iv) The aforesaid persons started bringing fictitious persons and obtained huge amounts from Petitioner''s company by stating that the amounts

were collected as advance. Since the amounts were issued by way of Cheques/Demand Drafts, the Petitioner/Proposed Respondent was in

confidence that the same could not be misused by the aforesaid persons.

(v) In one incident, the aforesaid persons received Rs. 5,09,00,000/-(Rupees Five Crores and Nine Lakhs only) through Demand Drafts issued in

favour of one Sundarambal who was the Vendor by stating that she possessed 20 acres of land. Though the said Sundarambal had only 5 acres in

her possession, A.M. Mohan (husband of the Petitioner in W.P. No. 14083/2013) falsely represented that she possessed 20 Acres of land and

obtained 5.09 Crores from the Petitioner/Proposed Respondent.

(vi) After obtaining the aforesaid Demand Draft, the said A.M. Mohan along with Valluvan opened an Account with Karur Vysya Bank,

Arumbakkam Branch, Chennai in Sundarambal''s name with false details by impersonating one Senthamarai who is the Petitioner in connected

Writ Petition No. 14084/2013 and she is none other than the said A.M. Mohan''s own sister.

(vii) Further the modus operandi is that immediately on realisation of the Demand Draft, the amount was transferred to the account of one SRI

YAAZHINI REALTOR, a company formed only for the purpose, in which the said A.M. Mohan and Mrs. Shobana, the Petitioner in the Writ

Petition No. 14083/2013 were the Directors of the company M/s. SRI YAAZHINI REALTOR.

(viii) When the above irregularities, forgeries and cheating committed by the aforesaid persons came to light, the Petitioner/Proposed Respondent

lodged a complaint against the said persons and a case was registered by the Inspector of Police, Central Crime Branch Team IV, Egmore,

Chennai in Crime No. 96 of 2010. The said A.M. Mohan and other accused viz., Valluvan filed Crl.O.P. No. 8575 of 2010 and 8580 of 2010

before this Court to quash the aforesaid FIR and this Court on 29.07.2010 was pleased to dismiss the said petitions.

(ix) Subsequently, a charge sheet in C.C. No. 88 of 2011 was also filed against the aforesaid persons by the Investigating Officer, Central Crime

Branch before the Chief Metropolitan Magistrate Court, Egmore, Chennai.

(x) Though the Petitioner/Proposed Respondent made all efforts effectively/legally against A.M. Mohan and the Writ Petitioners but still they were

freely enjoying the Proceeds of Crime. As such, if the proceedings of the 1st Respondent were not continued, the Petitioner/Proposed party would

be very much affected and prejudiced. Therefore, the Petitioner prays for allowing M.P. No. 3 of 2013 to implead it as the Proposed 2nd

Respondent in W.P. No. 14083 of 2013 as necessary party.

Contentions of Petitioners in W.P. Nos. 14083 & 14084 of 2013:

It is the submission of the Learned Senior Counsel for the Petitioners in W.P. Nos. 14083 and 14084 of 2013 that the object of the Prevention

of Money-Laundering Act, 2002 specifies that the proceeds will go to the Central Government and now the power is given to the Special Court

and that Court has to say now as to whom the amount should be paid and also there is a provision for passing an order of interim attachment and

notice is to be given and then only the attachment can be made absolute the Director has to file a complaint before the Adjudicating Authority and

if a person is acquitted the property would be returned to him as he belonged to him.

It is to be noted that the summons issued to the Petitioners under the Prevention of Money-Laundering Act, 2002 point out that the initial

jurisdiction of the authority is only to clutch at the purported amount of money involved arising out of the alleged crime for which the Petitioners and

others are accused. Further, in the case on hand, the person who had given the complaint viz., M/s. Al Tirven Steels Private Limited is one of the

facilitators and one A.M. Mohan along with the Company was facilitated and later he directly dealt with the matter and M/s. Al Tirven Steels who

filed the complaint is doing the mischief and there is an inter party rivalry and one endeavouring to clutch the other. Moreover, the purpose of

adjudication by the authority concerned under the Prevention of Money-Laundering Act, 2002 is to secure the property.

Added further, instead of attachment and issuing of summons by the authority concerned, if a person gives security for one''s, then, the

provisions of the Prevention of Money-Laundering Act, 2002 are concluded and further, the investigation is not yet completed. Also that, if the

security furnished by the Writ Petitioner in W.P. No. 14083/2013 in respect of properties mentioned in the items 1 to 4 of the schedule of the

common affidavit filed is accepted, then, the same shall remain a security till the prosecution is over and depending on the result of the prosecution,

the Respondent, thereafter, can pass resultant orders. Therefore, in view of the Affidavit of Understanding furnished by the Petitioner in W.P. No.

14083 of 2013 giving the items of property mentioned in the schedule of the property of the common affidavit filed as security, there remains

nothing to be adjudicated in the Writ Petitions.

Submissions of the Petitioner in W.P. No. 14085 of 2013:

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 contends that the summon in question is to be quashed in so far as

the Writ Petitioner in W.P. No. 14085 of 2013 is concerned, since the same is premature and the Respondent cannot take cognizance u/s 45 of

the Prevention of Money-Laundering Act, 2002 because there is no complaint. But the Respondent is entitled to take action based on suo moto

complaint.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 submits that the original criminal case inter alia relates to the

complainant company paying Rs. 5.09 Crores to A.M. Mohan in the form of 28 demand drafts for the period relating to 29.11.2007 and

04.12.2007 for the purchase of land from one Sundarambal and that Mohan and Valluvan paid only Rs. 2.65 Crores to P. Sundarambal for the

purchase of her 5.09 acres of land and for the balance sum of Rs. 2.44 Crores demand draft was taken in favour of Sundarambal and in this

regard, the allegation is that it was not encashed by P. Sundarambal but it was encashed by Mohan''s Sister Senthamarai etc.

At this stage, the Learned Senior Counsel for the Petitioner in W.P. No. 14085/2013 makes a submission that normally the persons aggrieved

would be the person in whose favour the money was taken by way of demand draft and in the instant case, P. Sundarambal (aggrieved person)

had not given the complaint and instead, the complaint was made by a person who was remotely affected.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 brings it to the notice of this Court that A.M. Mohan earlier on

02.07.2010 gave a complaint to the authorities mentioned therein making a request to take action for recovery of the scheduled mentioned

properties from the hands of land grabbers mentioned and to take appropriate action against them.

Also that, Crl.O.P. No. 19095 of 2010 was filed by A.M. Mohan against 1. The Director General of Police, Chennai, 2. The Commissioner

of Police, Greater Chennai City, Chennai 600 002 3. L.S. Abinesh Babu wherein a relief was sought for issuance of a direction by the Court to the

2nd Respondent therein to register a case on the strength of the complaint dated 02.07.2010 which was pending with him and also with a

consequential prayer seeking issuance of direction to the 1st Respondent therein to monitor the case and file reports. This Court on 08.12.2010

passed an elaborate order while disposing of the original petition by giving direction to the Deputy Commissioner, City Crime Branch, Chennai to

conduct an enquiry on the complaint of A.M. Mohan pending with the CCB Team 1, Chennai and initiate action if any cognizable offence is made

out as per Section 154(1) of Cr.P.C.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 draws the attention of this Court to the order passed by this Court

dated 01.04.2011 in O.P. No. 280 of 2010 between A.M. Mohan V. Al Tirven Steels Limited, Chennai-40 and two others wherein this Court

has appointed Justice A. Ramamurthi, a retired Judge of this Court as the sole Arbitrator to hear the disputes and adjudicate the same by passing a

reasoned Award.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 submits that a case of impersonation was alleged to the effect that

for the balance of Rs. 2.44 Crores drawn in the form of demand drafts favouring Sundarambal were credited in Karur Vysya Bank, Arumbakkam

Branch with the assistance of Senthamarai, Mohan''s Sister into the Savings Bank Account number as stated earlier and further, the amount was

immediately transferred to the current account number with the same Bank in the name of M/s. Sri Yaazhini Realtors (P) Limited where Mohan

and his wife Shobana are the Directors and Sundarambal recently died one year back and she had not given the complaint as an aggrieved person

and the transaction related to the year 2007, she had not complained and in fact, IVCC like Sundarambal has not lodged the complaint.

According to the Learned Senior Counsel for the Petitioner, A.M. Mohan filed complaint on 02.07.2010 in which the Director of Enforcement

was shown as R.17 and Reserve Bank of India was arrayed as R.7 and from July 2010 till December 2010 they had not done anything in the

matter and therefore, A.M. Mohan was perforced to file Crl.O.P. No. 19095 of 2010 before this Court wherein this Court passed a detailed

order as stated supra.

The Learned Senior Counsel for the Petitioner submits that before the trial Court in C.C. No. 88 of 2011 the compounding application is

pending and at that time the Petitioner in W.P. No. 14085 of 2013 received the summons and when the order in Crl.O.P. No. 14032 of 2011

dated 28.09.2011 was stayed by the Hon''ble Supreme Court in the petition for Special Leave to Appeal (Crl) No. 8160 of 2011 with SLP (Crl)

No. 8313/2011 and SLP (Crl) No. 8317/2011 on 14.11.2011, then, it is open to the Respondent/Directorate of Enforcement to get impleaded

before the Hon''ble Supreme Court and in the teeth of the Hon''ble Supreme Court order (wherein the impugned order passed in Crl.O.P. No.

14032 of 2011 dated 28.09.2011 was stayed until further orders), no summons could be issued by the Respondent to the Petitioner in W.P. No.

14085 of 2013.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085/2013 submits that the summon issued to the Petitioner is a blanket one and

to issue summons u/s 50 of the Prevention of Money-Laundering Act, the Writ Petitioner in W.P. No. 14085/2013 must be a third party who is

unconnected with the criminal case or unconnected with the sale proceeds and in the summons, they have not specified any property and as per

Section 45 of the Prevention of Money-Laundering Act, 2002 the offences are cognizable and non-bailable one. Further, the Writ Petitioner in

W.P. No. 14085/2013 is an accused in a criminal case, the summons issued by the Respondent should mention the criminal case number and if

they mentioned the criminal case in the summons, then, it would be the stand of the Writ Petitioner that the matter was stayed by the Hon''ble

Supreme Court. Further, as per Article 20(3) of the Constitution of India, no one can self-incriminate himself and if a person is not named as an

accused, then, the summons can be issued but when he is named as an accused, then, the summons cannot be issued.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085/2013 contends that an offence u/s 420 I.P.C. can be compounded and if a

Court of Law allows the compounding application, then, as per Section 320(8) of Cr.P.C., it would have the effect of acquittal of the criminal main

case and if that would be the position then, no purpose would be served for issuance of summons by the Respondent.

The Learned Senior Counsel for the Petitioner in W.P. No. 14085 of 2013 submits that Section 8(4) of the Prevention of Money-Laundering

Act, 2002 refers to the situation where the provisional order of attachment made under sub-section (1) of Section 5 has been confirmed under

sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached u/s 5

or frozen under sub-section (1A) of Section 17, in such manner as may be prescribed and after all, the Respondent/Directorate of Enforcement is

only concerned with securing the property.

Contentions of the Respondent:

Repudiating the submissions of the Learned Senior Counsel for the Petitioners, the Learned Counsel for the Respondent strenuously contends

that the summons issued to the Writ Petitioners as per Section 50(2) and (3) of the Prevention of Money-Laundering Act, 2002 are deemed to be

judicial proceedings within the meaning of Section 193 and 228 of Indian Penal Code and the Petitioners instead of answering the summons have

rushed to this Court by filing the present Writ Petitions praying to quash the summons issued by the Respondent at the preliminary stage of

investigation under Prevention of Money-Laundering Act and that the Writ Petitions are not maintainable and in fact, they are to be dismissed.

At this stage, the Learned Counsel for the Respondent cites the decision of this Court reported in KA. Manshoor Vs. Assistant Director,

Enforcement Directorate, Government of India, (W.P. No. 2429 of 2009 decided on 24.11.2009) wherein in paragraphs 17 to 20, it is mentioned

as follows:

Once again another Division Bench of the Calcutta High Court in Income Tax Officer and Others Vs. James Joseph O''Gorman, , referred to

Dwijendralal Brahmachari''s case (cited supra) and in page 458, it was observed as follows:-

Under the circumstances, it appears that the issuance of such notice by the income tax Officer was without jurisdiction. It has been averred in

paragraph 10 of the writ petition that in respect of proceedings which were pending similar notices were issued by the income tax Officer and those

had been duly complied with. Under the circumstances, as very rightly observed by the learned court below, the income tax Officer was not

entitled to exercise such power as a mere cloak for the purpose of making a fishing investigation and a roving enquiry in order to take proceedings

u/s 147 of the Act.

But this line of reasoning did not find acceptance by this court. A Division Bench of this Court in V. Datchinamurthy and Another Vs. Asst.

Director of Inspection, (Intelligence), I.T. Dept. and Another, , set out the purpose of the power conferred on an income tax Officer under

Sections 131 and 132 of the Income Tax Act. In page 356, V. Sethuraman, J. speaking for the Bench, had observed as follows:-

It is thus manifest that there is great latitude allowed to the ITO in the collection of materials and he does not act as a court at that stage. There are

no two parties before him, and the procedure in the adversary system of proceedings cannot be applied to him. However, the ITO, before he uses

the materials so collected, is bound to give the necessary opportunity to the assessee to test the evidence, to adduce any evidence in rebuttal and

to explain the facts that appear against him. Thus, it is clear that the ITO cannot be asked to put on, or be thrust with, the garb of a court, even at

the stage of collection of evidence. There can be no reasonable apprehension of the ITO not utilising the favourable materials appearing in such

evidence. The Supreme Court has examined this aspect in Suraj Mall Mohta and Co.-vs-A.V. Visvanatha Sastry (1954) 26 ITR 1, at page 13

and pointed out the rights available to the assessee under the I.T. Act as contrasted with the rights available under the Taxation on Income

(Investigation Commission) Act, 1947 (Act No. XXX of 1947). It was pointed out that while in the proceedings under Act No. XXX of 1947, the

assessee would be entitled only to get copies of that portion of the materials, which were brought on record and which were going to be used

against him, the portion of the material which was in his favour and which had not been brought on record may not be available to him. In contrast,

it was observed that there was fullest right of inspection under ordinary law and the CPC available to an assessee in order to meet the case made

against him. We cannot assume that the ITO is not likely to act in accordance with law and give directions to him. Therefore, the apprehension of

the Federation at this stage appears to be absolutely misconceived.

Mr. M. Dhandapani, learned special counsel for Enforcement Directorate submitted that the provisions of FEMA cannot be compared with

the provisions of other enactments. Here the question of application of Article 20(3) or Article 21 of the Constitution does not arise. A person who

is summoned to appear before the Enforcement Directorate is not an accused in a criminal case. The Supreme Court in Poolpandi Vs.

Superintendent, Central Excise and others etc. etc., in dealing with the analogous provision of the Customs Act, held that the purpose of Customs

Act or similar statute will be completely frustrated, if whims of the person in possession of useful information for the Department are allowed to

prevail. The relevant provisions of the Constitution have to be construed in the spirit in which they were made and the benefits thereunder should

not be expanded to favour the exploiters engaged in tax evasion at the cost of public exchequer and, therefore, such persons do not have the

protection of Article 20(3) of the Constitution.

He also referred to the judgment of this Court in T.T.V. Dinakaran Vs. Enforcement Officer, Enforcement Directorate, for the purpose of

stating that under the earlier enactment, viz., FERA, 1973, the attempt to challenge the summons served u/s 40 was repelled by this Court. In

paragraph 11, it was stated as follows:- Para 11.. ""....... Moreover, if the summons is taken into consideration it is stated therein that the

petitioner''s attendance is necessary to give evidence and/or to produce documents in an investigation being made by the respondent under the

FERA Act. So far as the documents mentioned are concerned, it is mentioned the petitioner''s passport, petitioner''s account books relating to his

accounts in India and abroad and his property details. If we take into consideration the required documents mentioned in the schedule, the enquiry

relates only to the petitioner in respect of his involvement in some transaction under the FERA Act. If the investigation relates to any other person,

then the authorities would have mentioned the documents relating to the concerned third parties or the transaction between the petitioner and those

third parties. Hence, I am of the view that the non-mentioning of the (nature) of investigation and the purpose of the requirement of documents do

not vitiate the summons in any manner.

Also in the aforesaid Judgment, in paragraph 24 to 27, it is mentioned and laid down as follows:

In this context, it is necessary to refer to Section 13(2) of the FEMA. The explanation to Section 13(2) defines ""property"" and Section 13(2)

(c) deals with a property which has resulted out of the conversion of that property. Under the said sub-section, the adjudicating authority,

adjudging the contravention under sub-section (1) to Section 13, if he thinks fit then in addition to any penalty, which he may impose for such

contravention, direct the property in respect of which the contravention has taken place to be confiscated to the Central Government. Therefore,

the petitioner cannot contend that he has no obligation to inform the authorities about the nature of properties possessed by him.

The Supreme Court in C. Sampath Kumar Vs. Enforcement Officer, Enforcement Directorate, Madras, , while deciding the case in respect of

Section 40 of the FERA, held that when a person is summoned and examined u/s 40, it cannot be presumed that a statement will be obtained

under pressure or duress. In fact it was held in that case that such a statement obtained does not infringe the constitutional guarantee of protection

against self-incrimination under Article 20(3) of the Constitution. Therefore, the concept of applying the theory of self-incrimination even at the

stage of investigation in case of violation of FEMA cannot be raised to the level of an investigation of a criminal offence protected by Articles 20(3)

and 21 of the Constitution.

If it is seen in this context, then the attack made against the summons issued by the Department cannot be countenanced by this Court. The

petitioner in essence seeks for a writ of prohibition against the department for having issued the summons by the exercise of the powers vested on

them u/s 37 read with section 131 of the Income Tax Act. In Standard Chartered Bank and Others Vs. Directorate of Enforcement and Others,

which arose out of the FERA violation, the Supreme Court spelt out the parameters in entertaining a writ petition against initiation of adjudication

proceedings. Para 25 of the said decision may be usefully extracted below:-

The prayer for the issue of a writ of prohibition restraining the authorities under the Act from proceeding with the adjudication and the

prosecution is essentially based on the constitutional challenge to the relevant provisions of the Act on the ground that they violate Articles 14 and

21 of the Constitution. Once we have held, as the High Court did, that the provisions are constitutional, the basis on which the writ of prohibition is

sought for by the appellants disappears. It is settled by the decisions of this Court that a writ of prohibition will issue to prevent a tribunal or

authority from proceeding further when the authority proceeds to act without or in excess of jurisdiction; proceeds to act in violation of the rules of

natural justice; or proceeds to act under a law which is itself ultra vires or unconstitutional. Since the basis of the claim for the relief is found not to

exist, the High Court rightly refused the prayer for the issue of a writ of prohibition restraining the authorities from continuing the proceedings

pursuant to the notices issued. As indicated by this Court in State of Uttar Pradesh Vs. Brahm Datt Sharma and Another, when a show-cause

notice is issued under statutory provision calling upon the person concerned to show cause, ordinarily that person must place his case before the

authority concerned by showing cause and the courts should be reluctant to interfere with the notice at this stage unless the notice is shown to have

been issued palpably without any authority of law. On the facts of this case, it cannot be said that these notices are palpably without authority of

law. In that situation, the appellants cannot successfully challenge the refusal by the High Court of the writ of prohibition prayed for by them.

Therefore, the attempt by the petitioner to stall the summons issued by the respondent has to be necessarily rejected. Accordingly, the writ

petition will stand dismissed. However, there will be no order as to costs. Consequently, the connected miscellaneous petition is also dismissed.

The Learned Counsel for the Respondent relies on the decision in State of Uttar Pradesh Vs. Brahm Datt Sharma and Another, , wherein it is

observed that ''when a show cause notice is issued under statutory provision calling upon the person concerned to show cause, but ordinarily that

person must place his case before the authority concerned by showing cause and the Courts should be reluctant to interfere with the notice relative

at this stage unless the notice is shown to have been issued palpably without any authority of law''.

The pith and substance of the submission of the Learned Counsel for the Respondent is that the summons to the Petitioners were issued as per

Section 50(2) and (3) of the Prevention of Money-Laundering Act for the avowed object of gathering evidence during the investigation to ascertain

the Proceeds of Crime be involved in Money-Laundering. Further, the charge sheet laid by the Police in C.C. No. 88 of 2011 relates to the

investigation for predicate offences committed for criminal acts and it does not relate to the ''Proceeds of Crime''. In effect, the contention of the

Learned Counsel for the Respondent is that the Respondent/Authorised Investigating Agency is empowered to trace and attach the proceeds of

crime under Prevention of Money-Laundering Act and in this regard, there is no prohibition for the Respondent to proceed further in the matter in

issue.

During the last leg of the argument, the Learned Counsel for the Respondent contends that the act of the Money-Laundering poses a grave

economic threat not only to the financial system of our country but also to its integrity and sovereignty and only to obviate such threats the

Prevention of Money-Laundering Act was promulgated in the year 2002 to prevent money-laundering and to provide for attachment and

confiscation of property derived from or involved in money-laundering and for other incidental matters connected thereto.

The Learned Counsel for the Respondent aptly points out the order in W.P. No. 530 of 2011 dated 05.04.2011 between G. Srinivasan V.

The Chairperson, Adjudicating Authority under PMLA, New Delhi and three others whereby and whereunder, in paragraphs 18, it is observed as

follows:

Before parting with the case, it is necessary to refer to the observations made by the Supreme Court in K.K. Baskaran''s case (cited supra),

where the Supreme Court emphasized the necessity to have laws to protect the people from money laundering and swindlers.

Definition of Money-Laundering:

It is to be noted that Section 2(p) of the Prevention of Money-Laundering Act, 2002 defines ''Money-Laundering'' has the meaning assigned to

it in Section 3 of the Act. Section 3 of the Act speaks of ''Offence of Money-Laundering'' which runs as follows:

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 (Subs. By Act 2 of 2013, sec. 3, for ""with the proceeds of crime and projecting"" (w.e.f. 15.2.2013, vide S.O. 343(E), dated 8.2.2013)

[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-laundering.

From the aforesaid definition of ''Offence of Money-Laundering'' mentioned in Section 3, the terms ''Money Laundering'' can be said to be any

process or activity connected with the proceeds of crime and projecting or claiming proceeds of crime as an untainted property. In plain language,

it can safely be stated that ''Money-Laundering'' is projection of the proceeds of the crime as an untainted property.

Also that, the words ''Proceeds of Crime'' are defined u/s 2(u) of the Act. ''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.

The ''Offence of Money-Laundering'' relates to proceeds of crime derived from a scheduled offence. Scheduled Offences are mentioned under

Part A of the schedule of the Prevention of Money-Laundering Act, 2002 and (2) for offences specified under Part C of the Schedule viz., having

cross border implications etc.

Indeed, the ''Offence of Money-Laundering'' as defined under the Prevention of Money-Laundering Act, centres around the ''Proceeds of

Crime''.

Money Laundering is the illegal practice of filtering ''Dirty Money'' or Ill-gotton gains through series of transactions until the funds are ''clean'' or

appear to be the proceeds from legal activities (vide U.S. Comptroller of Currency September 2000).

The Vienna and Council of Europe Conventions suggest that the physical element of a money-laundering offence should be based on three

factors: 1. The conversion or transfer of property for the purpose of concealing or disguising the illicit origin of the property or assisting any person;

To evade the legal consequences of his actions; 3. The concealment or disguise of true nature source, location, disposition movement, rights with

respect to or ownership of property; The acquisition, possession or use of property, knowing at the time of receipt, that such property was

proceeds [vide Review of FATE Anti-Money-Laundering Systems and mutual evaluation procedures 1992-1999.

The money laundering involves disguising financial assets so that they can be used without deduction of illegal activity that produced though

money laundering, the launderer transforms the money proceeds derived from criminal activity into funds with an apparently legal source (vide

Finance Intelligence unit, in India).

Procedure to be adopted by an Adjudicating Authority:

Adjudicating Authority is to adopt the procedure of following the Principles of Natural Justice. Only to prevent miscarriage of Justice, the

purpose of following Principles of Natural Justice is emphasised, as opined by this Court.

As a matter of fact, (i) A quasi-judicial authority ought not to make any decision adverse to a party without affording an opportunity of meeting

the allegations made against him. (ii) The party whose rights are to be affected should be provided with the information upon which the action is

raised and the affected party should have reasonable notice of the case which he has to meet/face. Of course, an opportunity is to be provided to

the affected party which must be real, reasonable and substantial too. (iii) The affected party should have the opportunity of letting in/adducing all

manner of evidence which he relies upon.

At the stage of adjudication ''Reason to believe'' required to be entertained is that only any individual has committed an offence u/s 3 of

Preventive of Money-Laundering Act or is in possession of the proceeds of crime the adjudication authority is required to be satisfied that in

respect of the Proceeds of Crime, Offence of Money-Laundering is committed or a person is in possession of proceeds of crime, in the considered

opinion of this Court.

For the purpose of Adjudication, the Adjudicatory Authority is required to serve a notice of not less than thirty days to the concerned person

by requiring him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property

provisionally attached under sub-section (1) of Section 5, or, seized or frozen u/s 17 or Section 18 of the Act, the evidence on which he relies and

other relevant information and particulars. In fact, the show cause which asked for the aforesaid details may specify 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.

Indeed, the Adjudicating Authority Regulations, 2006 have been now replaced by the Adjudicating Authority (Procedure) Regulations, 2013

which specifies to whom the notice is given viz., (a) to an individual in respect of whom the Adjudicatory Authority has reason to believe that he

has committed an offence u/s 3 of the Prevention of Money-Laundering Act, 2002; (b) In case of any property held by a person on behalf of any

person or such other person also; (c) In case of any property held jointly by more than one person who all the persons holding such property.

Before passing an order, the Adjudicating Authority is necessarily to consider the reply, if any, filed by any of the individuals to whom the notice is

issued. An opportunity of hearing is to be provided to the affected/aggrieved person and the Director or the Authorised Officer concerned. Also,

an opportunity of being heard is also given to an individual claiming the property though not issued with the notice. After all, ''opportunity of being

heard'' is a cardinal Principal of Natural Justice and the authority is to take into account all relevant materials placed on record by the parties

concerned before him.

The authority in a given case may come to a resultant conclusion that the property attached/retained is not the property involved in money-

laundering, in which event, he is to vacate the order of attachment and order return of property.

Aerial view of some provisions of Prevention of Money-Laundering Act:

A perusal of the ingredients of the Prevention of Money-Laundering Act, 2002 shows that the authority not below the rank of Assistant

Director is enjoined to summon any person whose attendance such authority considers necessary for the purpose of giving evidence or to produce

any records during the course of investigation or proceedings under this Act. The persons so summoned are not only bound to attend any person

or to authorised agents if permitted but they are bound to state the truth upon any special representative or they are examined or furnished

statements and also to produce such documents as may be required. Such proceedings shall be deemed to be a judicial proceeding within the

meaning of Section 193 and 228 I.P.C.

Section 23 of the Prevention of Money-Laundering Act speaks to the effect that ''If there are two or more inter-connected transactions and

atleast one is proved to be involved in money-laundering, it shall presume that the remaining transaction or transaction form part of such inter-

connections. In fact, the term ''inter-connected transactions'' is not defined under the Prevention of Money-Laundering Act, 2002.

Section 24 of the Prevention of Money-Laundering Act, throws a burden on the accused in respect of the defence that may be projected like

that the properties sought to be attached and confiscated under the Prevention of Money-Laundering Act are untainted. Also his defence may

depend upon establishing a fact which fall within his knowledge and domain as per Section 106 of the Indian Evidence Act, 1872.

Section 26(3) of the Prevention of Money-Laundering Act, 2002 speaks of filing of an Appeal by the Director or any person aggrieved by an

order made by the Adjudicating Authority under this Act, save as otherwise provided in sub-section (3).

Section 42 of the Prevention of Money-Laundering Act provides an opportunity to any person aggrieved by any decision or order of the

Appellate Tribunal to file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate

Tribunal to him on any question of law or fact arising out of such order etc.

Section 47 of the Act says that the High Court may exercise, so far as may be applicable, all the powers conferred by Chapter XXIX of

Chapter XXX of the Code of Criminal Procedure, 1973 (2 of 1974), on a High Court, as if a Special Court within the local limits of the

jurisdiction of the High Court were a Court of Session trying the cases within the local limits of the jurisdiction of the High Court.

The Prevention of Money-Laundering (Amendment) Act, 2012 has come into force with effect from 15.02.2013 as per the Central

Government Notification in the Official Gazette.

Impact of Money Laundering:

The Evil act of money-laundering may create a parallel economic system in a particular country controlled by few persons. Undoubtedly, this

will result in destabilisation and also affect the prevailing economy. The act of ''money-laundering'' has three ingredients. (a) In placement, it

concerns the division of proceeds into smurfing so as to make movements thereof less suspectable. (b) In layering, the funds introduced in the

financial system are rotated, transferred, remixed, retransferred in a repeated fashion. The purpose of ''laying'' is to distance the fund from the origin

so as to make it difficult to trace the origin difference. (c) In integration stage, the money-laundering is concerned itself with successful merging into

the legitimate finance stream.

It is not out of place for this Court to make a significant mention that money-laundering offence primarily springs from ''Proceeds of Crime''.

There is a predicate offence under each activity of money-laundering. Further, the Act speaks of the reporting authority to furnish information of

such provided transactions to the Director within the prescribed time. Added further, the Prevention of Money-Laundering Act imposes an

obligation on the reporting entity which term covers Banking, Country Financial Institutions, Intermediary and individual carrying on Designated

Business or Profession to maintain record of transactions prescribed under the Act. The aforementioned measures are preventive in character with

a view to get hold of the ''Proceeds of Crime'' etc.

Money laundering is global phenomena that affects all countries in various degrees. The presumption can be employed in adjudication

proceedings mentioned in Section 8 of the Prevention of Money-Laundering Act as well for the trial of the money-laundering offences. As such,

the presumption is attracted in regard to the trial proceedings before the Special Court for an offence u/s 3 of the Act. The Adjudicating Authority

or the Court will have to first come to the conclusion that atleast one of the inter-connected transactions is proved by the investigating agency to be

involved in money-laundering.

Recalling and Recollecting the Decision:

At this stage, this Court recalls and recollects the decision In Re Exp Sidebotham (1880) 14 Ch D 458 (which was relied upon decision 2001

Crl. J. 2853) wherein it is held as follows:

But the words ''person aggrieved'' do not really mean a man who is disappointed of a benefit which he might have received if some other order had

been made. A ''person aggrieved'' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which

has wrongly deprived him of something, or wrongfully refused him something or wrongfully affected his title to something.

Attachment and Confiscation:

No wonder, the term ''Attachment and Confiscation'' is a proceeding ''In Rem and not in Personam''. Section 9 of Prevention of Money-

Laundering Act, 2002 provides that once a crime relating to property is proved in Competent Court of Law, the Adjudicating Authority shall pass

an order in ordering confiscation of such property after hearing the concerned persons. The onus of adducing evidence during trial in respect of the

offences under the Prevention of Money-Laundering Act is on the prosecution.

Analysis:

As far as the present cases are concerned, the Petitioners have been issued with the summons dated 10.04.2013 requiring them to appear

before the Respondent on the dates mentioned therein. Further, they have been directed to produce the documents mentioned in the Schedule of

the Summons. The summons issued by the Respondent u/s 50(2) and (3) of the Prevention of Money-Laundering Act to the Petitioners are for the

purpose of gathering evidence under the Prevention of Money-Laundering Act with a view to ascertain the proceeds of crime be involved in a Evil

Act of ''Money-Laundering''. The charge sheet laid down by the Police in C.C. No. 88 of 2011 relates to investigation in respect of predicate

offences and not for the proceeds of crime. The competent and appropriate authority is the Respondent/Directorate of Enforcement who is

authorised to trace and attach the proceeds of crime under the Prevention of Money-Laundering Act.

Also, a plea is taken on behalf of the Respondent that the predicate offences investigation cannot be compounded in regard to the investigation

made under Prevention of Money-Laundering Act. The ultimate object of Prevention of Money-Laundering Act is only to ascertain the proceeds

of crime involved in money-laundering and subsequent attachment and confiscation of the same. More importantly, Section 3 and 4 of the

Prevention of Money-Laundering Act deal with ''Offence of Money-Laundering'' and ''Punishment for Money-Laundering''. Furthermore, as per

Section 48(c) of the Prevention of Money-Laundering Act, the Assistant Director is the proper authority to investigate the offences relating to

prevention of money-laundering.

At this stage, this Court pertinently points out the decision of the Hon''ble Supreme Court in Director of Enforcement V. M/s. MCTM

Corporation Private Limited and others, AIR 1996 Supreme Court 1100 wherein it is held as follows: ""The proceedings u/s 23(1)(a) FERA, 1947

are ""adjudicator"" in nature and character and are not ''criminal proceedings''. The officers of the Enforcement Directorate and other administrative

authorities are expressly empowered by the Act to ""adjudicate'' only. Indeed they, have to act ""judicially"" and follow the rules of natural justice to

the extent applicable but, they are not ""Judges'' of the ""Criminal Courts"" trying an ""accused'' for commission of an offence, as understood in the

general context. They perform quasi-judicial functions and do not act as ""Courts"" but only as ""administrators'' and ""adjudicators''. In the

proceedings before them, they do not try ""an accused"" for commission of ""any crime"" (not merely an offence) but determine the liability of the

contravenor for the breach of his ""obligations"" imposed under the Act. They impose ""penalty'' for the breach of the ""civil obligations'' laid down

under the Act and not impose any ""sentence"" for the commission of an offence. The expression ""penalty'' is a word of wide significance. Sometime,

it means recovery of an amount as a penal measure even in civil proceedings. An exaction which is not compensatory in character is also termed as

a ""penalty''. When penalty is imposed by an adjudicating officer, it is done so in ""adjudicator proceedings'' and not by way of fine as a result of

prosecution"" of an ""accused'' for commission of an ""offence"" in a criminal Court. Therefore, merely because ""penalty'' clause exists in Section

23(1)(a), the nature of the proceedings under that Section is not changed from ""adjudicator'' to ""criminal'' prosecution. An order made by an

adjudicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender.

Also, in the aforesaid decision, at page Nos. 1100 and 1101, it is observed as follows:

Mens rea (as is understood in criminal law) is not an essential ingredient for holding a delinquent liable to pay penalty u/s 23(1)(a) of FERA 1947

G for contravention of the provisions of Section 10 of FERA, 1947 and that penalty is attracted u/s 23(1)(a) as soon as contravention of the

statutory obligation contemplated by Section 10(1)(a) is established.

The breach of a ""civil obligation"" which attracts ""penalty"" u/s 23(1)(a) FHRA, 1947 and a finding that the delinquent has contravened the

provisions of Section 10 FERA, 1947 would immediately attract the levy of ""penalty'' u/s 23, irrespective of the fact whether the contravention was

made by the defaulter with any ""guilty intention"" or not. Therefore, unlike in a criminal case, where it is essential for the ""prosecution"" to establish

that the ""accused"" had the necessary guilty intention or in other words the requisite ""mens-rea'' to commit the alleged offence with which he is

charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of

Section 10 of FERA, would be discharged where it is shown that the ""blameworthy conduct"" of the delinquent had been established by wilful

contravention by him of the provisions of Section 10, FERA, 1947. It is the delinquency of the defaulter itself which establishes his ""blameworthy

conduct, attracting the provisions of Section 23(1)(a) of FERA, 1947 without any further proof of the existence of ""mens-rea"". Even after an

adjudication by the authorities and levy of penalty u/s 23(1)(a) of FERA, 1947, the defaulter can still be tried and punished for the commission of

an offence under the penal law, where the act of the defaulter also amounts to an offence under the penal law and the bar under Article 20(2) of

the Constitution of India in such a case would not be attracted. The failure to pay the penalty by itself attracts ''prosecution'' u/s 23F and on

conviction by the ''court'' for the said offence imprisonment may follow.

Apart from the above, in the aforesaid decision, at page 1104 to 1106, in paragraphs 9 to 13, it is laid down as follows:

In Maqbool Hussain Vs. The State of Bombay, , a Constitution Bench of this Court while considering the nature of proceedings under the Sea

Customs Act and FERA, 1947 dealt with the principle and scope underlying Article 20(2) of the Constitution. In that case gold was found in

possession of the appellant therein when he landed at the Santa Cruz Airport. The appellant was detained and searched by the Customs

Authorities and gold was seized from his possession. Proceedings u/s 167(8) of the Act were taken by the Customs Authorities and after recording

evidence, an order was passed confiscating gold and giving an option to the owner to pay fine in lieu of such confiscation u/s 188 Sea Customs

Act. Since nobody came forward to redeem the gold, a complaint was filed in the Court of the Chief Presidency Magistrate, Bombay against the

appellant charging him with having committed an offence u/s 8 FERA, 1947. The appellant thereupon filed a petition in the High Court of Bombay

under Article 226 of the constitution seeking quashing of the complaint by contending that his prosecution in the Court of the Chief Presidency

Magistrate was in violation of his fundamental right guaranteed under Article 20(2) of the Constitution. It was the case of the appellant before the

High Court that since the complaint before the Chief Presidency Magistrate also proceeded on the footing that the appellant had committed an

offence insofar as he brought gold into India without any permit from the Reserve Bank of India on which allegations alone the gold stood already

confiscated by the authorities under the Sea Customs Act during the confiscation proceedings, he was being punished twice for the same offence

which was not permissible in law in view of Article 20(2) of the Constitution. The High Court was of the opinion that the appellant could claim

protection of Article 20(2) only if he was the owner of gold which had been confiscated. The Chief Presidency Magistrate was, therefore, directed

to first determine the question of fact. After recording some evidence the Chief Presidency Magistrate returned a finding that the appellant was the

owner of gold. The High Court, however, reversed the finding and sent the case back to the trial court for its trial in accordance with law after

refusing the benefit to the appellant of the protection under Article 20(2) of the Constitution. By special leave the appellant filed an appeal in this

Court. It was in this background that the Constitution Bench proceeded to determine whether the appellant could be said to have been prosecuted

when proceedings for confiscation were taken by the Sea Customs Authorities for if it was found that the appellant had been prosecuted when

proceedings were taken by the Sea Customs Authorities to confiscate gold, there was no scope left for the argument that he had not been punished

by the confiscation of gold and the option given to him to pay fine in lieu of such confiscation. The Court examined in detail the ambit, scope and

applicability of the principle of ""double jeopardy"" in the light of the fundamental right guaranteed under Article 20(2) of the Constitution. The Court

opined (para 12 of AIR):

it is clear that in order that the protection of Article 20(2) be invoked by a citizen there must have been a prosecution and punishment in respect of

the same offence before a Court of law or a tribunal, required by law to decide the matters in controversy judicially on evidence on oath which it

must be authorised by law to administer and not before a tribunal which entertains a departmental or an administrative enquiry even though set up

by a statute but not required to proceed on legal evidence given on oath. The very wording of Article 20 and the words used therein: ""convicted"",

commission of the act charged as an offence"" ""be subjected to a penalty"", ""commission of the offence"", ""prosecuted and punished"" ""accused of

any offence"", would indicate that the proceedings therein contemplated are of the nature of criminal proceedings before a Court of law or a judicial

tribunal and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a Court of law or a

judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure.

The Court then laid down various tests for determining when a tribunal can be considered to be a judicial tribunal and after referring to a catena

of authorities relevant provisions of the Sea customs Act, 1878 and the nature of the adjudicator proceedings as contained in that Act, opined that

an adjudicator authority functioning under the Act was merely an administrative machinery for the purpose of adjudging confiscation, determination

of duty or the increased rate of duly and for imposition of penalty as prescribed under the Act and not a judicial tribunal. The Court opined (

Maqbool Hussain Vs. The State of Bombay, ):-

We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudging of confiscation, increased rate of duty or

penalty under the provisions of the Sea Customs Act do not constitute a judgment or order of a Court or judicial tribunal'' necessary for the

purpose of supporting a plea of double jeopardy.

It therefore follows that when the Customs Authorities confiscated the gold in question neither the proceedings taken before the Sea Customs

Authorities constituted a prosecution of the appellant nor did the order of confiscation constitute a punishment inflicted by a Court or judicial

tribunal on the appellant. The appellant could not be said by reason of these proceedings before the Sea customs Authority to have been

prosecuted and punished"" for the same offence with which he was charged before the Chief Presidency Magistrate, Bombay in the complaint

which was filed against him u/s 23, Foreign Exchange Regulation Act.

The Constitution Bench then laid down that though the administrative authorities functioning under the Sea Customs Act had the jurisdiction to

confiscate gold, illegally brought into the country, and levy penalty on the defaulter, none the less the authorities were not trying a criminal case but

deciding only the effect of a breach of the obligations by the defaulter under the Act. On a parity of reasoning what holds true for the adjudicator

machinery under the Sea Customs Act holds equally true for the administrative or adjudicator machinery, designed to adjudge the breach of a civil

statutory obligation and provide penalty for the said breach, under the FERA, 1947, whether the breach was occasioned by any guilty intention or

not is irrelevant.

In ""Corpus Juris Secundum"" volume 85, at page 580, paragraph 1023, it is stated thus:

A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or

a fine or forfeiture provided as punishment for the violation of criminal or penal laws.

We are in agreement with the aforesaid view and in our opinion, what applies to ""tax delinquency"" equally holds good for the ""blameworthy

conduct for contravention of the provisions of FERA, 1947. We, therefore, hold that mens-rea (as is understood in criminal law) is not an essential

ingredient for holding a delinquent liable to pay penalty u/s 23(1)(a) of FERA 1947 G for contravention of the provisions of Section 10 of FERA,

1947 and that penalty is attracted u/s 23(1)(a) as soon as contravention of the statutory obligation contemplated by Section 10(1)(a) is established.

The High Court apparently fell in error in treating the ""blameworthy conduct"" under the Act as equivalent to the commission of a ""criminal offence,"",

overlooking the position that the ""blameworthy conduct"" in the adjudicator proceedings is established by proof only of the breach of a civil

obligation under the Act, for which the defaulter is obliged to make amends by payment of the penalty imposed u/s 23(1)(a) of the Act irrespective

of the fact whether he committed the breach with or without any guilty intention. Our answer to the first question formulated by us above is,

therefore, in the negatives.

It is to be remembered that in terms of Article 20(2) of the Constitution of India no person shall be prosecuted and punished for the same

offence more than once. As a matter of fact, Article 20(2) of the Constitution of India takes within its umbrage the plea of ''Autrefois Convict'' or

the plea of ''Double Jeopardy''. However, there should be not only a prosecution but also punishment in the initial stage in order to operate as a

fetter to the second prosecution and punishment for the same offence, in the considered opinion of this Court.

Also that, the adjudication proceedings initiated against the Petitioners under the Prevention of Money-Laundering Act by requiring them to

appear on the specified dates through summons cannot attract the ambit of Article 20(2) of the Constitution viz., the plea of ''Double Jeopardy''

since the object of this Prevention of Money-Laundering Act is to ascertain the trail of Evil act of money laundering.

To put it succinctly, the initiation of proceedings like issuance of summons etc. in Prevention of Money-Laundering Act are self-contained, in-

built and independent procedure mainly to prevent the act of money-laundering and connected activities. Furthermore, the Respondent has issued

only summons dated 10.04.2013 to the Petitioners and the issuance of summons cannot be catagorised as an act of prosecuting the Petitioners

twice. As such, the plea of ''double jeopardy'' taken on behalf of the Petitioners is not acceded to by this Court.

Final Disposition:

In the light of foregoing detailed discussions and on appreciation of the entire gamut of the facts and circumstances relating to the subject

matters in issue, this Court comes to an inevitable conclusion that the present Writ Petitions filed by the Writ Petitioners are not maintainable

because of the simple reason that through the summons dated 10.04.2013 they were directed to appear before the Respondent/Assistant Director,

Directorate of Enforcement, Chennai with records mentioned therein for the purpose of enquiry/investigation under the Prevention of Money-

Laundering Act to ascertain the proceeds of crime, in the considered opinion of this Court. The proceedings under the Prevention of Money-

Laundering Act are deemed to be judicial proceedings within the meaning of Section 193 and u/s 228 of the Indian Penal Code. However, the

charge sheet filed by the Police in C.C. No. 88 of 2011 relates to investigation for predicate offences under Sections 419, 420 read with Section

34 I.P.C. for criminal offences. However, since the charged offences under Sections 419 and 420 I.P.C. are the Scheduled Offences under clause

1 of sub-section (y) of Section 2 of the Prevention of Money-Laundering Act 2002, the Respondent registered an Enforcement Case Information

Report (ECIR) bearing No. CEZO/2/2013 dated 26.03.2013 to carry out the investigation under the Prevention of Money-Laundering Act

against the Petitioners. Moreover, the summons issued to the Petitioners is a preliminary one relating to the investigation under the Prevention of

Money-Laundering Act by the authority concerned. The fact of the matter is that the Adjudicating Authority/machinery under the Prevention of

Money Laundering Act is designated to adjudge the breach of any statutory obligation and it is not a Court of Law or a Judicial Tribunal, in the

considered opinion of this Court. Moreover, the Adjudicating Authority under the Prevention of Money Laundering Act is not trying a criminal

case. But only decides the effect of breach of obligations by the concerned.

As a matter of fact, the proceedings initiated under the Prevention of Money-Laundering Act by the Respondent through issuance of summons

dated 10.04.2013 to the Petitioners is an Independent Process and where the ultimate object of the Respondent is to trace/ascertain the proceeds

of crime and to attach the proceeds of crime if proved in a given case. In this connection, it may not be out of place for this Court to point out that

the Hon''ble Supreme Court in S.L.A. (Crl) No. 8160 of 2011 with SLP (Crl.). Nos. 8313/2011 and 8317/2011 on 14.11.2011 has only stayed

the operation of the impugned order dated 28.09.2011 in Crl.O.P. No. 14032 of 2011 [wherein a direction has been issued to nominate a

competent officer from CBCID, Chennai to investigate further and to file additional final report].

It is to be pointed out that the order of interim stay in M.P. Nos. 1 and 1 of 2013 in W.P. Nos. 8383 and 8384 of 2013 (between Smt.

Soodamani Dorai and another V. 1. The Joint Director of Enforcement (PMLA), Directorate of Enforcement, Chennai and 2 others) dated

02.04.2013 relates to the relief of an order of ad-interim stay of entire proceedings of the Respondents pursuant to the 2nd Respondent''s

Enforcement Case Information Report No. 03/2012 dated 12.04.2012 including the 1st Respondent''s provisional attachment order No. 1 of

2013 dated 14.02.2013 and the 3rd Respondent''s consequential Notice in Original Complaint No. 178 of 2013.

Also, it transpires that the Respondent has issued show cause notices/summons dated 10.04.2013 to the Petitioners in question based on

authority in terms of Section 50(2) and (3) of the Prevention of Money-Laundering Act and ordinarily, the parties are to project their case or place

their case before the authority. Viewed in that perspective, this Court is not inclined to interfere with the issuance of summons dated 10.04.2013

by the Respondent to the Petitioners. Consequently, the Writ Petitions fail. In the result, the Writ Petitions are dismissed, leaving the parties to bear

their own costs. In view of the fact that this Court has dismissed the Writ Petitions today, M.P. No. 3 of 2013 filed by M/s. Al Tirven Steels

Limited, Chennai Petitioner praying to implead it as 2nd Respondent in W.P. No. 14083 of 2013 is also dismissed. Consequently, connected

M.P. Nos. 1, 1, 1, 2, 2 and 2 are also dismissed.