AI Structured Summary
Not yet generated for this judgment
Judgment
,,
FPA-PMLA-1529 & 1533-1538/COCHIN/2016,,
The above mentioned appeals have been filed u/s 26 of Prevention of Money Laundering Act-2002 against the order dated 22nd September, 2016",,
passed by the Adjudicating Authority in O.C. no. 573/2016. By this order, the tribunal proposes to decide the above mentioned appeals. In para 1 of",,
the impugned order, it shows that the various properties were attached owned by the appellants . It is an admitted position that the writ petition which",,
was earlier pending before the Honâ€ble Kerala High Court is withdrawn after the hearing continued in the present appeals.,,
SCHEDULED OFFENCE.,,
The superintendent of Police, Central Bureau of Investigation, ACB, Cochin vide letter no. 827/3/11(S)/2011/SPE/KER dated 26.02.2014 forwarded",,
the consolidated Final Report under Section 173 (2) Cr. PC no. DV1/04 dated 03.02.2014 filed before the Honâ€ble Chief Judicial Magistrate,",,
Ernakulam in respect of the FIRs RC 11 (S)/2011-CBI/ACB/Cochin, RC 13 (S)/2011-CBI/ACB/Cochin, RC 16 (S)/2011-CBI/ACB/Cochin, RC 20",,
(S)/2011-CBI/ACB/Cochin, RC 21 (S)/2011-CBI/ACB/Cochin, RC 22(S)/2011-CBI/ACB/Cochin, RC 09 (S)/2011-CBI/ACB/TVPM for offences",,
punishable under Sections 120B, 420 IPC, 1860 read with Sections 4(d), 4(f). 7(3), 9 of Lotteries (Regulation)Act, 1988 and 3 (5)m 4(5) of Lotteries",,
(Regulation) Rules, 2010 against Shri. S. Martin and others. The case has now been numbered by the Honourable Chief Judicial Magistrateâ€s Court,",,
Ernakulam as CC no. 218/2015.,,
The accused persons are Shri. S. Martin (A-1), Managing Director of Future Gaming Solutions (India) Pvt. Ltd. (Formerly Martin Lottery Agencies",,
Ltd. and presently Future Gaming and Hotel Service Pvt. Ltd.) Shri P. John Britto, (A-2) Director, Future Gaming Solutions (India) Pvt. Ltd.,",,
represented by Shri. S. Martin (A-3), Shri John Kennedy (A-4), Shri N. Jayamurugan (A-5), Shri A. Sakthivel (A-6) and Shri. V. Selvaraj (A-7). The",,
charges pertains to non-remittance of sale proceeds to the Sikkim Government, non-remittance of unclaimed/undisbursed prize money back to the",,
Sikkim Government, printing of Sikkim Lottery tickets from a non-security press not empanelled by RBI/IBA, not returning the unsold tickets back to",,
the Sikkim Government, not returning undisbursed prize amounts to the Sikkim Government and manipulation of date showing unsold prize winning",,
tickets as sold and claiming the same from Sikkim Government , and cheating the Government of Sikkim by entering into an agreement containing",,
covenants contrary to the LR Act and Rules and thus deceiviens the Sikkim Government in not receiving the full sale proceeds of the lottery tickets,,
and A-1 of practically conducting the Sikkim Govt. Lotteries in the name of M/s FGSIPL.,,
REGISTRATION OF ECIR,,
In view of the information aforesaid, it prima-facie appeared to be a case of money laundering offence under section 3 of PMLA, therefore, an",,
Enforcement Case Information Report (ECIR) no. ECIR/04/KCZO/2014 was registered on 19.08.2014 and investigation under PMLA was initiated,,
by the Directorate of Enforcement against Shri. S. Martin, Shri P. John Britto, M/s Future Gaming Solutions India Pvt. Ltd. (Formerly Martin Lottery",,
Agencies ltd and presently Future Gaming and Hotel Services Pvt. Ltd) represented by its managing Director, Shri. John Kennedy, Shri. N.",,
Jayamurugan, Shri. N. Selvaraj and M/s Martin Property Developers Pvt. Ltd.",,
On 29.01.2016, the Joint Director brought on record additional list of suspect persons in ECIR no. 04/KCZO/2014 dated 19.08.2016. It is observed",,
that on the basis of investigation conducted in the case, the following persons have been included at Sr. No. 8,9,10,11 and the details of",,
known/suspected persons with full particulars. The Sr. No. 8 in the ECIR i.e. “persons to be identified†is renumbered as Sr. No. 12.,,
Daison Land and Development Pvt. Ltd., 54, Mettupalayam Road, G.N. Mill Post, Coimbatore 641029 represented by its Director Sh. S. Martin",,
Charles Realators Pvt. Ltd., 54, Mettupalayam Road, G.N. Mill Post, Coimbatore 641029 represented by its Director Shri S. Martin.",,
Martin Multi Projects Pvt. Ltd., 54, Mettupalayam Road, G.N. Mill Post, Coimbatore 641029 represented by its Director Shri S. Martin.",,
Daison Luxury Villas Pvt. Ltd., 54, Mettupalaym Road, G.N. Mill Post, Coimbatore 641029 Represented by its Director",,
The case was, therefore, registered against the said persons and was taken up for investigation under the provisions of PMLA 2002 and the rules",,
framed therein.,,
Directorate of Enforcement Cochin commenced an investigation under PMLA, 2002 by virtue of the powers conferred under section 48 and 49 of",,
the Act read with Government of India Notification No. GSR 441 (E) dated 01.07.2005 against the petitioner and other persons on the basis of Final,,
Report filed by CBI, Cochin under section 173 (2) CrPc, 1973 as no. DV1/04 dated 03.02.2014 before the Honâ€ble Chief Judicial Magistrate,",,
Ernakulam for committing the offences punishable under section 120B, 420 IPC r/w Section 4(d), 4(f), 7(3), 9 of Lotteries (Regulation) Act. 1998 (in",,
short LR Act) and 3(5), 4(5) of Lotteries (Regulation) Rules, 2010. The Honâ€ble Chief judicial Magistrate, Ernakulam has taken cognizance and has",,
numbered the case as CC No. 218/2015,,
PMLA investigation,,
On the basis of investigation under PMLA, 2002 provisional attachment order no. 02/2016 dated 31.03.2016 was issued by the respondent. The",,
appellant Santiago Martin filed the WP(C) No. 22327/2016 before the Honâ€ble High Court of Kerala with prayer to quash provisional attachment,,
order passed under section 5(1) and original complaint under section 5(5) and notice issued under section 5(1) and original complaint under section,,
5(5) and notice issued under section 8(1) and also with prayer to restrain the Enforcement Directorate from proceedings under section 5 and 8 of,,
PMLA, 2002. Kerala High Court passed an interim order dated 04.08.2016 with the direction that proceedings initiated against the petitioner is",,
permitted to be continued, the adjudicating authority to consider the question of jurisdiction raised by petitioner against the proceedings after affording",,
the petitioner and opportunity for hearing.,,
5.1 Honâ€ble Kerala High Court also ordered that if PAO is confirmed further proceedings under section 8(4) of the act shall not be taken till further,,
order are received from the Honâ€ble Court. The above said Writ Petition (C) No. 22327/2016 is withdrawn from the Honâ€ble High Court of,,
Kerala. The prosecution complaint under section 45(1) PMLA, 2002 was filed against the appellant and others before the Principal Sessions Court,",,
Ernakulam on 11.06.2018.,,
5.2 It is alleged that the Sikkim State Lotteries were sold and marketed in the State of Kerala by violating the Lotteries Act and Rules against which,,
and at the insistence of the Government of Kerala who is also a Lottery Organizing State has filed 31 FIRs against this appellant and others.,,
5.3 It is submitted that the lack of complaint from the part of State of Sikkim is not an issue in the proceedings under PMLA. This PMLA investigation,,
was started on the basis of the CBI charge sheet that the accused therein including the Martin has caused wrongful loss to the government of Sikkim,",,
which is pending trial before the Chief Judicial Magistrate, Ernakulam. As to why the State of Sikkim is not aggrieved is only a matter of speculation.",,
The Sikkim State Lottery Amendment Rules was issued on 03.03.2016 with retrospective effect from 02.07.2007. These rules were issued at a time,,
when the investigation under PMLA, 2002 looking into the aspect of non-payment of sales proceeds to the Government of Sikkim, was at an advanced",,
stage. These rules seeks to restrict the liability of the sole distributor of Sikkim State Lottery with regard to the payment of paper lottery sold to the,,
sole distributor. During the time period covered in the CBI final report, the sole distributor was required to pay the invoices raised on them by the",,
Government of Sikkim subject to the set off in respect of the prize money up to Rs. 5000/- paid to the prize winner directly by the sole distributor or,,
other entities below him in the marketing chain.,,
5.4 The clean chit said to have been given by the Sikkim government to its sole distributor is apparently without being aware of the manipulations in,,
prize winning tickets done at M.J. Associates. With regard to the averment in paragraph 16 and 20 it is submitted that as per charge no. 1 of the CBI,,
charge sheet filed before the Chief Judicial Magistrate, Ernakulam in CC No. 218/2015 the accused persons A1-A7 including the petitioner, by way of",,
non-remittance of sales proceeds of Sikkim government, non-remittance of unclaimed/undisbursed prize money back to the Sikkim Government",,
printing of Sikkim Lottery Tickets from a non-security press not empanelled by RBI/IBA, not returning the unsold tickets back to the Sikkim",,
Government, not returning undisbursed prize amounts to the Sikkim Government and showing unsold the prize-winning tickets as sold and claiming the",,
same from Sikkim Government, and cheating the government of Sikkim by entering into an agreement containing covenants contrary to the LF Act",,
and rules and thus deceived the Sikkim Government in not receiving the full sale proceeds of lottery tickets and A-1 by practically conducting the,,
Sikkim Government Lotteries in the name of M/s FGSIPL, committed the offence punishable under Section 120B, 420 IPC r/w section 4(d), 4(f), 7(3),",,
9 of Lotteries (Regulation )Act, 1998 and 3(5), 4(5) of Lotteries (Regulation) Rules, 2010.",,
5.5 It is submitted that the Chief Judicial Magistrate, Ernakulam by order dated 20.01.2018 disposed the discharge petition filed by order partner of the",,
applicant in M/s. M.J. Associates Mr. N. Jayamurgan in CMP no. 2201/2016 in CC no. 218 of 2015 by holding that the charges in respect of section,,
4(d) and 4(f) of the Lotteries (Regulation) Act and Rule 4(5) of the Lotteries (Regulation) Rules are not attached and will not lie as against the,,
appellant Martin. But the Chief Judicial Magistrate, Ernakulam by the order held that the appellant should stand trial with regard to Section 9 read with",,
Section, 7(3) of the lotteries (Regulation) Act and Rule 3(5) of the Lotteries (Regulation ) Rules, 2010 and Section 120(B) of IPC. CBI has filed",,
revision petition against the said order in CMP No. 2201/2016 in CC 218/2015 dated 20.01.2018 before the Honâ€ble District and Sessions Court,,
Ernakulam with prayer to set aside the said order dated 20.01.2018 of the Honâ€ble CJM, Ernakulam and issued appropriate order in accordance with",,
law. The revision petitions till under consideration of Honâ€ble session Court, Ernakulam.",,
5.6 It is submitted that the calculation of amount of prize-winning tickets illegally claimed for setting off the bills raised by the Government of Sikkim is,,
not a theoretical calculation. This calculation has been made after the investigation unearthed evidence that the lottery stockiest while settling their bills,,
raised by M.J. Associates, a partnership firm comprising of the petitioner and Sri Jayamurugan, had paid money in cash apart from cheques/bank",,
transfers and the money paid in cash was accounted as prize-winning tickets. Shri J. Jayakumar, the partner of JK Enterprises, the largest stockists of",,
M.J. Associates in terms of the value of tickets sold through them had clearly admitted to have given huge amounts of cash apart from payments,,
made through bank transfers/cheques as per the instructions received from M.J. Associates and these were accounted as Prize-Winning Tickets. He,,
also admitted that he was maintained 2 ledgers for prize-Winning Tickets and they named as Prize-Winning Tickets-1 and Prize and Prize-Winning,,
Tickets 2. He also stated that the amount paid in cash was being accounted as prize-winning tickets in the ledger Prize-Winning Tickets.-2. The,,
statement of Shri Jayakumar has been corroborated by the sub stockists of J.K. Enterprises. They have stated before the investigating officer that,,
they were paying cash which was accounted as prize-winning tickets. Apart from this, an employee of M.J. Associates Smt. Indra Gupta in her",,
statement had stated that the Stockists settled the Bill by making bank transfers, cash payments and prize-winning tickets. The payment section",,
verifies this and sent it to audit section and after the audit, the settlement statement is given to them for date entry. The stockists are informed in",,
advance as to how much money is to be paid in cash. In the settlement statement, the details given are cash, Prize Winning Ticket-1 and Prize",,
Winning Ticket-2. The Prize Winning Ticket-1 is the actual prize-winning tickets and Prize Winning Ticket-2 s the payment made in cash directly.,,
While they enter the data, the prize winning Ticket-1 and Prize Winning Ticket-2 and added together and show as prize winning Ticket only. On the",,
basis of this data,the stock ledger is prepared. On being asked Smt. Indra Gupta also said that the average prize-winning tickets is sold tickets are",,
around 50-60%. The above evidence clearly indicates that receipts in cash was suppressed and shown as prize-winning tickets to make inflated claims,,
of reimbursement before the Government of Sikkim and thereby causing loss to the Government and corresponding unlawful gain to the petitioner and,,
his partner. Exhibit P-16 certificate from the Government of Sikkim is apparently issued without being aware of the above-mentioned mischief. It is,,
also submitted that the methodology adopted in calculation of proceeds of crime is based on the principles of averages. In the peculiarity of this case,,
were the generation of proceeds of crime is on account of wrongful claim of crores of lottery tickets claimed to have been prize winning tickets and,,
was handled and destroyed by the firm partnered by the petitioner. Calculation can be done only through certain formula. The principles adopted for,,
calculation is also on the basis of the testimony of the lottery stockists on the average maximum prize winning. The respondent need to adduce proof,,
beyond reasonable doubt only during the trial of offence of money laundering.,,
CASE OF THE APPELLANTS,,
i) B. R Enterprises vs. State of UP (1999) 9 SCC 700 (para 87), holds that a State Organising Lotteries cannot restrict another State from selling its",,
lotteries within that State. State of Kerala is a lottery selling State and therefore, it cannot ban Sikkim lotteries in Kerala. The FIRs filed in Kerala by",,
State of Kerala officials, were aimed at achieving the ban of Sikkim Lotteries while selling its own lotteries. Thus, the FIRs are unconstitutional, having",,
no legal effect.,,
ii) Since the FIRs were forwarded to CBI, State of Sikkim refused sanction to CBI under Section 6 of the Delhi Special Police Establishment Act,",,
1946.,,
iii) Offences alleged under Lotteries Regulation Act 1998 or its Rules, are not scheduled offences under PMLA Act.",,
iv) The Appellant's. Company - Future Gaming & Hotel Service Private Limited was appointed as a Distributor of Lotteries through a tender process.,,
The following chart explains the selling chain of the Sikkim Lotteries in the State of Kerala:,,
Govt. of Sikkim,,
Future Graming & Hotel,,
Service Private Limited,,
(Sole Purchaser),,
Megha Distributors,,
(Promoters of Kerala),,
M.J. Associates,,
(Super Stockiest for Kerala),,
(Partnership firm of S.Martin and N Jayamurgan),,
Stockists,,
Sub-Stockist,,
Retailers,,
v) Appellant's Company continues to be a Distributor of the Sikkim Lotteries.,,
vi) 31 FIRs were filed of which 24 were closed. Remaining 7 FIRs were all filed by Officers of the State of Kerala. Each of the FIRs allege non-,,
compliance of the Lotteries Act and its Rules by the State of Sikkim. The Complainants do not allege any misfeasance qua the State of Kerala but,,
allege that the State of Sikkim has been cheated.,,
vii) The State of Sikkim is not the Complainant. Section 420 IPC cannot be invoked unless the “person deceivedâ€, comes forward.",,
viii) The State of Sikkim has issued two No Dues and Work Satisfaction Certificates to Future Gaming and Hotel Services Private Limited dated,,
19.10.2015 and 11.04.2016. The ED in its reply filed before this Tribunal, has, in para 53, stated as follows:",,
“53. With regard to paragraph BB it is submitted that the no dues certificate issued by the State of Sikkim is apparently on the basis of a,,
reconciliation of accounts between the State and its sole distributor in respect of invoices issued. This reconciliation has been done taking,,
into account the payments made by way of challans and the amount of set off claimed as prize-winning tickets disbursed to the public given,,
on the strength of prize-winning ticket verification report sent by the resident Assistant Director (Lotteries), Government of Sikkim. It has",,
come out ln evidence that the said verification was a mere formality which can in no way detect the malpractices that has been brought out,,
in the investigation.â€,,
ix. It is stated on behalf of the appellants that Partner of the Appellant, N. Jayamurugan through order dated 20.01.2018 in CMP No. 2201/2016 in CC",,
218/2015 passed by the Ld. Chief Judicial Magistrate, Ernakulam has been exonerated of any allegation regarding cheating the State of Sikkim by the",,
following findings:-,,
“35. Going by Section 4(d), the proceeds of sale of the lottery tickets shall be credited into the public account of the State. Here, the",,
Government of Sikkim or Buttan have no complaint against the petltionerl5'h accused alleging that the petitioner failed to credit the sale,,
proceeds of the lottery tickets. So it is impossible to sustain the charge against the petitioner u/s4(d) in the absence of a complaint from a,,
complaint authority; Therefore Section 4 (d) has no application. Here, the written complaint was filed by the Head of the Lottery Monitoring",,
Cell, Kerala State who has no locus standi •to raise the allegation that the petitioner has not remitted the sale proceeds that is due to the",,
Government of another State.,,
The next point is whether Section 4(j) is attracted? Going by the Section 4 (j), the prize money unclaimed within such time or not",,
otherwise distributed shall become the property of the Government and that an allegation is seen made to the effect that the petitioner failed,,
to remit the prize and unclaimed and thereby Section 4(f) is attracted. This court is to the firm opinion that Section 4(/) has no application,,
since there was no complaint from the Government of Sikkim and Buttan as against the petitioner that accused No.5 had misappropriated,,
the unclaimed prize money or prize money covered by lottery tickets that were not sold or distributed. Here also the head of Lottery,,
Monetary Cell, Kerala State has no cause of action on this point.",,
As far as Rule 4 (5) is concerned, distributors or selling agents shall return the unsold tickets to the Organising State with full accounts",,
along with the challans of the money deposited in the Public ledger Account or in the Consolidated Fund of the Organising State through,,
the sale of tickets. In the instant case, I reiterate here that the Government of Sikkim or Buttan has no complaint as against the petitioner",,
stating that he failed to return unsold tickets to them nor submitted fully account as contemplated under Rule 4(5).â€,,
x. Under S. 25 of the Partnership Act, 1932, the reasoning of Ld. CJM shall equally apply to the Appellant is the invocation of PMLA against the",,
Appellant and N. Jayamurugan as Partners of M.J. Associates is undisputed, as stated in the complaint filed under S.45 of PMLA on 11.6.2018,",,
stating as follows, in paragraph 7.7.3:",,
“7.7.3. Had the cash collected by MJ. Associates was not shown as prize winning tickets, it would have resulted in a higher payment to",,
Government of Sikkim since the amount that was actually eligible for set off towards up to Rs. 10000/- prize winning tickets would have,,
been lesser. By this manipulation, that was possible due to the criminal activity mention in the CBJ charge sheet, the partners of MJ.",,
Associates Shri S. Martin and Shri N. Jayamurughan made unlawful fain with a corresponding loss to the Government of Sikkim.â€,,
Thus, the above allegation in the complaint under S.45 of the PMLA does not remain valid.",,
xi. It is submitted that the offence of Section 420 to be made out it is crucial that there has to be an aggrieved party who was induced to part with her,,
property and to consequentially have suffered a loss.,,
xii. A SPECIAL Lottery Ticket is provided to the Bulk purchaser who has purchased 100 normal tickets. If there is no bulk purchaser of such number,,
of tickets then the SPECIAL ticket is retained by the Retailer himself. Similarly, SUPER Lottery ticket is provided when 1000 tickets are purchased.",,
Both tickets are so mentioned in the Notification of the State of Sikkim.,,
xiii. Admittedly, the ED has on their own assumed that these two prizes will not be taken into account as stated in para 38 of their reply before this",,
Tribunal. The relevant extract of the reply tiled by the ED before this Hon'ble Tribunal is reproduced hereunder:,,
“38. With regard to paragraph L(xiii) to (xv) it is true that the element pertaining to super and special tickets has been ignored while,,
calculating the possible prize-winning ....â€,,
xiv. As per the Order of the High Court of Kerala in CWP No. 22327 of2016 dated 4.8.2016(Pg No. 319-330 ofVol2) it was directed to Ld.,,
Adjudicating Authority as follows:,,
“(ii) The proceedings initiated against the Petitioner is permitted to be continued. The Second Respondent shall consider the question of,,
jurisdiction raised by the Petitioner against the proceedings, after affording the Petitioner an opportunity for hearing untrammelled by the",,
prima facie findings rendered in this Order, while passing orders under S. 8(2) of the Act.â€",,
xv. It is submitted that the Adjudicating Authority was obligated to decided jurisdiction. But, the Ld. Adjudicating Authority has left the reasons to",,
believe as stated in the following paragraph of the Impugned Judgment:,,
“though there is no material brought on record regarding prosecution launched under section 3 of FMLA against the Defendants as of,,
now. The fact remains that a reasonable belief is entertained that Defendants have committed an offence under section 3 of PMLA or are in,,
possession of proceeds of crime.â€,,
xvi. The proof of rubber stamping the Provisional Attachment is the non-consideration of the following:,,
a. While the allegation is as regards sale in State of Kerala, all India revenues have been treated as proceeds of crime.",,
b. No complaint by Sikkim.,,
c. All prizes disbursed as per Sikkim Lottery Rules which are statutory.,,
d. Prizes disbursed on Super and Special tickets ignored.,,
e. Arbitrary fixation of prize disbursal.,,
f. Mala fide nature of the complaints of the State of Kerala.,,
g. Lotteries Act is not a scheduled offence.,,
h. No connection of proceeds of crime with the purchase of properties by other appellants.,,
i. Chain of accounts of the lottery proceeds totally ignored. The chain begins from Retailer and ends at the State of Sikkim MJ Associates being only,,
an intermediary could not have been chosen. The first handling of cash is by retailer. No deficiency of amount shown at the Retailer level. Thus, the",,
allegation is clearly wrong.,,
In reply, the respondent in appeals submitted as under:-",,
(a) It is submitted that the lack of complaint from the part of State of Sikkim is not an issue in the proceedings under PMLA.,,
This PMLA investigation was started on the basis of the CBI charge sheet that the accused therein including the Martin has caused wrongful loss to,,
the government of Sikkim, which is pending trial before the Chief Judicial Magistrate, Ernakulam. As to why the State of Sikkim is not aggrieved is",,
only a matter of speculation. The Sikkim State Lottery Amendment Rules was issued on 03.03.2016 with retrospective effect from 02.07.2007.,,
(b) These rules were issued at a time when the investigation under PMLA, 2002 looking into the aspect of non-payment of sales proceeds to the",,
Government of Sikkim, was at an advanced stage. These rules seek to restrict the liability of the sole distributor of Sikkim State Lottery with regard to",,
the payment of paper lottery sold to the sole distributor. During the time period covered in the CBI final report, the sole distributor was required to pay",,
the invoices raised on them by the Government of Sikkim subject to the set off in respect of the prize money up to Rs. 5000/- paid to the prize winner,,
directly by the sole distributor or other entities below him in the marketing chain but no action was taken by the officials of Directorate of Sikkim,,
Lottery.,,
(c ) It is submitted that the Chief Judicial Magistrate, Ernakulam by order dated 20.01.2018 disposed the discharge petition filed by order partner of the",,
applicant in M/s. M.J. Associates Mr. N. Jayamurgan in CMP no. 2201/2016 in CC no. 218 of 2015 by holding that the charges in respect of section,,
4(d) and 4(f) of the Lotteries (Regulation) Act and Rule 4(5) of the Lotteries (Regulation) Rules are not attached and will not lie as against the,,
appellant Martin. But the Chief Judicial Magistrate, Ernakulam by the order held that the appellant should stand trial with regard to Section 9 read with",,
Section, 7(3) of the lotteries (Regulation) Act and Rule 3(5) of the Lotteries (Regulation ) Rules, 2010 and Section 120(B) of IPC. CBI has filed",,
revision petition against the said order in CMP No. 2201/2016 in CC 218/2015 dated 20.01.2018 before the Honâ€ble District and Sessions Court,,
Ernakulam with prayer to set aside the said order dated 20.01.2018 of the Honâ€ble CJM, Ernakulam and issued appropriate order in accordance with",,
law . the revision petitions till under consideration of Honâ€ble session Court, Ernakulam.",,
(d) It is submitted that the calculation of amount of prize-winning tickets illegally claimed for setting off the bills raised by the Government of Sikkim is,,
not a theoretical calculation. This calculation has been made after the investigation unearthed evidence that the lottery stockiest while settling their bills,,
raised by M.J. Associates, a partnership firm comprising of the petitioner and Sri Jayamurugan, had paid money in cash apart from cheques/bank",,
transfers and the money paid in cash was accounted as prize-winning tickets.,,
(e ) Shri J. Jayakumar, the partner of JK Enterprises, the largest stockists of M.J. Associates in terms of the value of tickets sold through them had",,
clearly admitted to have given huge amounts of cash apart from payments made through bank transfers/cheques as per the instructions received from,,
M.J. Associates and these were accounted as Prize-Winning Tickets. He also admitted that he was maintained 2 ledgers for prize-Winning Tickets,,
and they named as Prize-Winning Tickets-1 and Prize and Prize-Winning Tickets 2.,,
(f) It is also stated that the amount paid in cash was being accounted as prize-winning tickets in the ledger Prize-Winning Tickets.-2. The statement of,,
Shri Jayakumar has been corroborated by the sub stockists of J.K. Enterprises. They have stated before the investigating officer that they were,,
paying cash which was accounted as prize-winning tickets. Apart from this, an employee of M.J. Associates Smt. Indra Gupta in her statement had",,
stated that the Stockists settled the Bill by making bank transfers, cash payments and prize-winning tickets. The payment section verifies this and sent",,
it to audit section and after the audit, the settlement statement is given to them for date entry. The stockists are informed in advance as to how much",,
money is to be paid in cash. In the settlement statement, the details given are cash, Prize Winning Ticket-1 and Prize Winning Ticket-2.",,
(g) The Prize Winning Ticket-1 is the actual prize-winning tickets and Prize Winning Ticket-2 s the payment made in cash directly. While they enter,,
the data, the prize winning Ticket-1 and Prize Winning Ticket-2 and added together and show as prize winning Ticket only. On the basis of this data,",,
the stock ledger is prepared. On being asked Smt. Indra Gupta also said that the average prize-winning tickets is sold tickets are around 50-60%. The,,
above evidence clearly indicates that receipts in cash was suppressed and shown as prize-winning tickets to make inflated claims of reimbursement,,
before the Government of Sikkim and thereby causing loss to the Government and corresponding unlawful gain to the petitioner and his partner.,,
Exhibit P-16 certificate from the Government of Sikkim is apparently issued without being aware of the above-mentioned mischief. It is also submitted,,
that the methodology adopted in calculation of proceeds of crime is based on the principles of averages.,,
(h) In the peculiarity of this case were the generation of proceeds of crime is on account of wrongful claim of crores of lottery tickets claimed to have,,
been prize winning tickets and was handled and destroyed by the firm partnered by the petitioner. Calculation can be done only through certain,,
formula. The principles adopted for calculation is also on the basis of the testimony of the lottery stockists on the average maximum prize winning. The,,
respondent need to adduce proof beyond reasonable doubt only during the trial of offence of money laundering.,,
(i) The respondent has submitted that the Martin is also accused of committing an offence under section 420 IPC along with section 120(b) IPC and,,
various provisions of Lotteries Regulation Act & Rules. It is submitted that Lotteries Regulations Act, 1998 not being a schedule offence under",,
PMLA does not affect the registration of money laundering case. There is no requirement that all the offences alleged in the charges pressed by law,,
enforcement agency should be a schedule offence. It is clear from the charge sheet filed by the CBI that floating the provisions of lottery regulations,,
act and rules made their under was the result of criminal conspiracy with the intent to cheat the Government of Sikkim.,,
(j) It is submitted that though the commission of the scheduled offence is the pre-condition for initiating proceeding under the act, the money laundering",,
is independent of the scheduled offences. The scheme of the act indicates that it deals only with the laundering of money acquired by committing the,,
scheduled offence. The Act deals only with the process or activity with the proceeds of the crime including its concealment, possession, acquisition",,
our use.,,
(k) It is submitted that investigation under PMLA is independent of the schedule offence. It is not at all necessity that the person who is being,,
investigated under PMLA should be an accused in the schedule offence. The purpose of the PMLA investigation is to identify the proceeds of crime,,
generated out of the schedule offence.,,
In reply to the submission made on behalf of the respondent, it is stated that the whole motive and rationale behind the cases is to put blanket ban on",,
the other State Lotteries by barricading them. Since the allegation in place is concerned with two Governments, the case was investigated by the",,
Central Bureau of Investigation against which no consent was obtained from the Government of Sikkim as the allegations are pursuant to the Sikkim,,
State Lotteries and not with respect to the Kerala State Lotteries. Section 6 of the Delhi Special Police Establishment Act, 1946 (subsequent",,
amendment therewith) is reproduced herein:-,,
“6. Consent of State Government to exercise of powers and jurisdiction. _ Noting contained in section 5 shall be deemed to enable any,,
member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in 5[a State not being a Union Territory,,
or railways area], Without the consent of the Government of that State (Government of Sikkim.]â€",,
It is stated on behalf of the appellants that it is the admitted fact and well established that no consent or permission was sought from the Government,,
of Sikkim, hence, no investigation shall be carried out as malum in se Since the Lottery tickets involved in the present case are belong to Government",,
of Sikkim and the presumptive allegations of short revenue also the revenue receivable by the Government of Sikkim.,,
It is submitted that any case to be made out under the provisions of Prevention of Money Laundering Act, 2002, it can be done only as per the",,
offences or classification of offences as detailed in the Schedule therein (hereinafter Scheduled Offences). Wherein the Lotteries (Regulation) Act,,
and Rules are not under the purview of Scheduled Offences, any allegation with respect to the same can be initiated only by the respective Organizing",,
Government or the Central Government and no other State is empowered do otherwise unless its own tickets are involved or it has suffered any loss.,,
The case in hand is clear case in nature as the Lottery tickets are belong to Government of Sikkim who has not suffered any revenue as supported by,,
the documents as well as settled in law. No due process of law or procedures as prescribed was followed in this case before making a conclusion by,,
the Adjudicating Authority. Cheating is an offence but where does it come from and the whole cause of action is purported to come from Lotteries,,
Act and Rules against which no investigation can be carried out under the PMLA and not maintainable under the law.,,
It is alleged that admittedly, the entire case arises out of the “State Organized Lottery†business which is regulated under the Lotteries",,
Regulation Act,1998 (“Lotteries Actâ€). State Organized Lottery means that the entire lottery business is organized, promoted and conducted by",,
the States and not by anyone else at any point of time. The Organizing State only under section 4 of the Lotteries act, has the right to appoint a",,
“distributors or selling agents†only for selling or marketing the lotteries of the respective organizing State in accordance to the terms and,,
conditions as envisaged in the distributorship Agreement. Admittedly, the Lotteries Act and the offences thereunder are not “Scheduled",,
Offences†under the PMLA as detailed supra.,,
It is stated that the State of Sikkim through a tender process had appointed body corporate namely “M/s. Martin Lottery Agencies Limited†as,,
its sole distributor/selling agent vide a Distributorship Agreement dated 26.07.1999. Whereas, M/s. Martin Lottery Agencies Limited is now known as",,
M/s. Future Gaming and Hotel Services Private Limited (“Future Gamingâ€). The present case relates to the subject period 01.04.2009 to,,
29.08.2010 (“Subject Periodâ€). It is undisputed that this agreement was valid and subsisting during the Subject Period. None of the covenants,,
were challenged or disputed hence those terms and conditions are legally protected.,,
It is also alleged, as under:-",,
12.1 Under the terms of the Distributorship Agreement, M/s. Future Gaming had appointed Megha Distributors, a sole proprietorship of A. John",,
Kennedy as its Kerala Promoter on 05.05.2005. Under that agreement, Megha Distributors had appointed M/s MJ Associates (partnership of the",,
Appellant-51% and one Mr. N Jayamurugan-49%) as a super Stockist for the State of Kerala with effect from 31.12.2007. Under MJ Associates,",,
there were 72 Stockists, under whom there were more than 700 Sub-Stockists, under whom there were more than 7000 agents, under whom there",,
were at least 1,00,000 retailers/hawkers who had been selling/marketing the Sikkim State Lotteries, only in the State of Kerala during the subject",,
period and through these retailers/hawkers the Sikkim State lotteries are ultimately sold to the buyers (“Lottery Buyersâ€) on behalf of the,,
Government of Sikkim. The tickets are the exclusive properties of the Government of Sikkim and any revenue generated through it will be the revenue,,
of Government of Sikkim and no share of revenue or responsibility was casted upon Government of Kerala. The Distributor/Kerala Promoter is liable,,
to pay only draw charges (Levy of Tax) to the Government of Kerala against which no default was alleged by the Government of Kerala as the,,
Distributor has paid the same appropriately right from the beginning. The entire allegation as raised by the Government of Kerala is only for,,
barricading the other State Lotteries in the guise of default to the third person who is factually having no such allegation at all.,,
12.2 It is submitted on behalf of appellant that right from the lottery buyers, winners till the State of Sikkim, there is no complaint of non-payment of",,
any prizes admittedly. There is no complaint of the State of Sikkim of any breach of any agreement and the intermediate agreements between the,,
various links in the above chain have also not been alleged to have been breached. Thus, no complaint under Section 420 was filed since no person",,
was deceived.,,
12.3 The allegation however, against the Appellant, stems out of the provisions of the Lotteries Act although the State of Sikkim, who is the organizer",,
of such lottery, is not the complainant. Yet on complaints of third parties, an allegation is sought to be made that the State of Sikkim short received",,
revenues under the above agreements for the lotteries sold in Kerala through the above chain of distributors and on that basis, 31 FIRs were",,
registered. Out of these 31 FIRs, closure reports have been filed in 24 FIRs and in 7 FIRs a consolidated charge sheet was filed on 03.02.2014. In the",,
said charge sheet, in column no.11, against the Appellant, the Sections invoked are Section 120(B) IPC read with Section 4(d),4(f),9 read with 7(3) of",,
the Lotteries (Regulation) Act and Rule 3(5) & 4(5) of the Lotteries (Regulation) Rules. There being no Section 420 in column 11 against the,,
Appellant, the present case is not maintainable and bad in law.",,
12.4 The offence of cheating under section 415 of IPC requires a person who has been “deceivedâ€. The entire case made out against the,,
Appellant is of the Appellantâ€s partnership firm “MJ Associates†having deceived the State of Sikkim, in short paying the revenues to that State.",,
12.5 The State of Sikkim in this regard has given a “no dues certificate†on 19.10.2015 and 19.11.2018 and has neither filed a complaint nor,,
cancelled the agreement nor raised any dispute whatsoever as regards any short deposit of the revenues to the State of Sikkim.,,
In the reply to the Appeal, the Respondent has stated as follows in this regard:",,
“5. With regard to paragraph 2 it is submitted that the appellant attempts to water down the rigors of finding made in the CBI,,
investigation and the PMLA investigation by projecting the issue as a mere contractual relationship between the appellant’s company,,
and the State of Sikkim so that it enable him to argue that a 3rd party has no say in the relationship between him/his company and the State,,
of Sikkim. The investigation conducted by CBI revealed the hatching of a conspiracy to cheat the State of Sikkim by violating the provisions,,
of Lotteries Regulation Act and rules and the investigation conducted under PMLA revealed the generation of proceeds of crime. The,,
findings in the investigation is conducted by the CBI as well as the Enforcement Directorate are not mere technical or venial breaches. The,,
lack of complaint from the part of State of Sikkim is not an issue in the proceedings under PMLA. This PMLA investigation was started on,,
the basis of the CBI chargesheet that the accused therein including the petitioner had caused wrongful loss to the government of Sikkim.,,
This charge sheet is pending trial before the Chief Judicial Magistrate, Ernakulam. As to why The State of Sikkim is not aggrieved is only a",,
matter of speculation.â€,,
It is alleged, under these circumstances that the case in PMLA cannot be made out in absence of a crime and accordingly, when the Claimant to",,
such proceeds of crime itself has clarified that such proceeds have no relationship to the alleged crime, the Respondent could not have unilaterally",,
considered the same to be a “proceeds of crimeâ€.,,
On behalf of appellants, it is also submitted that even in case of non-payment of loans to banks, the Honâ€ble Supreme Court of India has held in",,
the case of Satishchandra Ratanlal Shah vs State of Gujarat and Another, 2019 SCC Online SC 19,6 that the mere inability of the borrower to return",,
the loan amount cannot give rise to a criminal prosecution for cheating. In the present case, the State of Sikkim has not even alleged that it has been",,
cheated, which goes to the root of the matter and none can allege cheating by stepping into the shoes of a third party only who should be the",,
complainant factually.,,
The appellant further submits that even the ingredients of conspiracy under Section 120B ought to be apparent from the prima facie reading of the,,
complaint. In this regard, the Appellant seeks to rely on the following judgments: -",,
i) CBI, Hyderabad vs. K. Narayana Rao (2012) 9 SCC 512. Relevant paras â€" 10, 15, 24, 27-28, 32.",,
ii) KC Builders & Anr. Vs. Assistant Commissioner of Income Tax, (2004) 2 SCC 731. Relevant paras 26-31.",,
iii) Hira Lal Panna Lal Mahi vs. State of Gujarat, 1969(3) SCC 756. Relevant paras 4-6",,
iv) D.P. Gulati, Manager Accounts, Jetking Infortrain Limited vs. State of U.P. &Anr., (2015) 11 SCC 730. Relevant paras 7-10.",,
17 The Appellant also submits that there being absence of ingredients of Section 420 & 120B of IPC and the entire case being related to the Alleged,,
breaches of Lotteries Act which is controlled and governed only by the Organizing State, i.e., the State of Sikkim, in absence of any allegation of",,
breach the Respondent cannot unilaterally assume jurisdiction to first allege a breach, calculate on its own surmises and conjectures, the so called",,
“proceeds of crime†and then seek to attach the same under PMLA.,,
A. The Enforcement Directorate (“EDâ€) on its own has created a short deposit of revenues to the state of Sikkim where there was none, by",,
using a hypothetical mathematical formula. The lotteries are a game of chance and there cannot be a mathematical formula for determining the prize,,
distribution.,,
The State of Sikkim lotteries are conducted under the Lotteries Act and the Sikkim State Lottery Rules, 2003. Under the said Rules, every lottery",,
scheme of the State of Sikkim is first notified in the Official Gazette making it law by itself under the General Clauses Act, 1897.",,
The lottery scheme notified by the State of Sikkim contains the following information:,,
i) Total Number of tickets printed,,
ii) Price of each ticket,,
iii) Number of Prizes in every rank.,,
iv) Prize amount includes Super and Special ticket prize amount.,,
v) Types of Prizes in each rank, namely, normal prize, super ticket prize and special ticket prize.",,
vi) Prize pool i.e., the total amount which would be ultimately distributed as prizes from the sale proceeds of the tickets.",,
It is stated that for example, the Appellant has produced before the Adjudicating Authority various notifications of the Government of Sikkim notifying",,
the above during the subject period which have not been taken into consideration. The most important feature relevant for the present case was the,,
prize pool as notified in the notifications prescribing a prize pool of 76.63% & to 79.69%.,,
It is stated on behalf of appellant, the prize pool is on the basis as if all tickets have been ultimately sold to the general public. It being a lottery",,
business there can be a situation that the sale proceeds from the sale of lotteries is lesser than the prizes distributed, thus, resulting in loss. However, in",,
case, all the tickets are sold and the tickets containing the prize, the prizes are distributed, then only amount then remaining in the hands of the State of",,
Sikkim, Distributor, promoter, Super Stockiest, Stockiest, Sub Stockiest, Agent, retailer and hawkers, would be the balance percentage being 23.37%",,
to 20.31%. The State of Sikkim has not complained that its revenues have not been paid, the Appellant stated before the Adjudicating Authority that",,
despite State of Sikkim accounts having been audited, no dispute has ever been raised.",,
The Appellant submits that the Respondent has ingeniously created a shortfall of revenue from the chain of distributors to the State of Sikkim.,,
Under Rule 13(2) of the Sikkim State Lottery Rules, 2003, all prizes upto the sum of Rs 10,000/- (increased from Rs 5,000/- pursuant to an",,
amendment to the Income Tax Act, 1961 in the year 2010) were to be disbursed to the winning ticket holder directly by the retailer/hawker on behalf",,
of the Government of Sikkim.,,
It is alleged that the Respondent has accordingly considered all the prize amounts above Rs.10,000, being disbursed by the Government of Sikkim",,
and had purposefully ignored and not considered the prize amount which were disbursed by us upto Rs. 10,000/-, or any of the prizes disbursed against",,
Super Tickets and Special Tickets mentioned in the Notification of State of Sikkim and the Appellant have disbursed the prize amount only on behalf,,
of the Government of Sikkim as authorized by virtue of the Agreement. By This payment of prizes, an artificial shortfall in revenue distribution is",,
created by the Respondent. In the circumstances, the Respondent has artificially reduced the prize pool to 65% instead of 76.63% to 79.69%. Thus,",,
the Respondent has unilaterally alleged that this difference of 65% and 78% has been retained by the Appellant.,,
In the response to the present appeal in the above regard, the Respondent admits that Super and Special Tickets have not been considered. The said",,
reply is as follows:,,
“38. With regard to paragraph L(xiii) to (xv) it is true that the element pertaining to super and special tickets has been ignored while,,
calculating the possible prize-winning. ...â€,,
It is alleged that the Adjudicating Authority has initiated the entire case only on the basis of CBI charge sheet which itself done at the insistence of the,,
Government of Kerala only. The, said Adjudicating Authority had admittedly submitted that, the entire sale of Kerala including the other State have",,
also been taken into account for arriving to their calculation. In such a case, the Adjudicating Authority on their own surmises and conjectures have",,
arrived to the conclusion without application of mind as accounting other state Sale will ultimately inflate the sale of a particular State i.e. State of,,
Kerala which should only be the concern and the case we have in our hand. Entire allegation is with respect to the sale only in the State of Kerala,,
during the subject period thus the sale of in other States cannot be brought into the picture. The Adjudicating Authority has not considered the Super,,
and Special ticket prize amount while admittedly accounting the sales done in other State and arrived to the presumptive outcome which alone have,,
inflated the liability.,,
The Appellant submits that the above statement destroys the entire case of the Respondent because the Notification of the State of Sikkim,,
propagating the lottery scheme contains the above prizes, and the State of Sikkim not having complained as regards non-payment of above prizes,",,
assumptions made by the Respondent cannot lead to an assumption of proceeds of crime. On this basis alone, the present appeal deserves to be",,
allowed. The tickets are the exclusive property of the Government of Sikkim which have official notified in its gazette including Super and Special,,
ticket prizes, upon which the Adjudicating Authority has been relying on the notification partially and ignoring the remaining portion of the Gazette",,
Notification. The Appellant is completely being abused merely because of acting as a Distributor of the Government of Sikkim.,,
As far as charge-sheet submitted by the CBI and other agencies as well as investigation is done, this Tribunal does not wish to express any opinion",,
as the same have to be tried as per merit of the case.,,
With regard to PMLA investigation, Mr. Mukul Rohtagi, ld. senior counsel after making the submission on merit has argued the attachments in the",,
present case have already lapsed under section 8(3) (a) of the Act. It is insisted by him that the respondent has to cross the legal hurdle of section,,
8(3)(a) where it is evident that charge-sheet was not filed within the prescribed period of time i.e. before passing the confirmation of order. Therefore,,
the said legal aspect be considered at the first instant. Mr. Matta, ld. counsel appearing on behalf of the respondent submits that let the appeals be",,
decided on merits. The prosecution complaint has been filed in time and even no objection is raised by the appellant in their appeals. It is stated by Mr.,,
Rohtagi that it is the jurisdictional issue and it can be decided at any stage. If the attachment lapses under the operation of law, where is the question",,
to hear the appeals on merit, even the appellants have excellent case on merit also. It is stated by him that it was for the respondent to inform the",,
tribunal about said serious lapses. The respondent has failed to do, now the respondent cannot say the issue raised should not be decided. It is stated",,
by him that it is an independent act, independent offence, independent mechanism and independent agency. Therefore, the prescribed period of time is",,
the essence of the case, it had to be done in such manner.",,
It is stated that as on the date of the passing of the confirmation order by the Adjudicating Authority i.e. 22.09.2016, the Prevention of Money",,
Laundering Act, 2002 amended in 2013, held the field. Section 8(3)(a) provided that a confirmation order would continue only during the pendency of",,
“proceedings†under the Prevention of Money Laundering Act, 2002. The relevant portion of the same is excerpted below for ready reference:",,
“(3) Where the Adjudicating Authority decides under subsection (2) that any property is involved in money-laundering, he shall, by an",,
order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized",,
or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the",,
seized or frozen property] or record shallâ€",,
(a) continue during the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law,,
of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; andâ€",,
Mr. Mukul Rohtagi, ld. counsel appearing on behalf of appellants has submitted that the above Section 8(3)(a) of the Prevention of Money",,
Laundering Act, 2002 has been the subject matter of interpretation by this Tribunal in S.V. Srinivas v. Joint Director of Enforcement FPA-PMLA-",,
446/BNG/2013.,,
Mr. Rohtagi and Dayan Krishan, ld. senior counsel have referred the judgement this Tribunal was pleased to note that the phrase “pendency of",,
the proceedings relating to any offence under this Act†necessarily contemplates the existence of a Complaint before the Special Court, and thus no",,
attachment can be confirmed under Section 8(3)(a) without a Complaint under Section 45 of the Prevention of Money Laundering Act, 2002 being",,
pending before the Special Court as on the date of such confirmation). This Tribunal held as follows:,,
“57. At the time of confirmation order, no proceedings under this Act was pending. It is also not the case of the respondent that some",,
investigation was on therefore the proceedings could be filed. The charge sheet was filed in the year 2011-12. It is true that no time limit is,,
provided to file the prosecution complaint under Section 45 of the Act. But merely readings Section 8(3)(a) amended an inference can he,,
drawn very easily that the attachment shall continue during the proceedings relating to any offence under this Act. Under the unamended,,
act the attachment comes to end once the accused is acquitted in the schedule offence. I am of clear in mind that the said provision of,,
section 8(3) (a) was incorporated on 15.02.2013 with the intention that at the time of confirmation order of attachment, the prosecution",,
complaint along with evidence collected after independent investigation must be pending so that tire Adjudicating Authority should consider,,
the same before passing the confirmation order.,,
Titus. I am of view that prior to confirmation of the provisional attachment under section 8(3) of PMLA, a proceeding for the offence",,
under PMLA in terms of section 45 has to be initiated, failing which, no confirmation can be made and the confirmation may become non est",,
in the eye of law. The expression continue during proceedings to any offences indicates that the prosecution complaint must he pending,,
otherwise, there were no proceedings left under this Act. There is also a logic behind it that once the confirmation is passed, nothing",,
remains left under this Act after continuation of attachment orders, except tire prosecution complaint if filed by the respondent before the",,
Special Court.â€,,
It is argued by both senior counsels that in the present case, as on the date of the passing of the Impugned Order i.e.22.09.2016, since no",,
Complaint had been filed or was pending, the provision of Section 8(3)(a), remained unsatisfied and therefore the attachment was non est in law and",,
without any effect Thus the continuation of the attachment by impugned order dated 22.09.2016 was a dead letter, and the right to confirm the",,
provisional attachment stood extinguished. Admittedly, the complaint has been filed more than a year and eight months. It is stated by Mr. Mukul",,
Rohtagi, Senior Advocate that on the date of confirmation of attachment, no charge-sheet under PMLA was filed/pending. It is also stated by Mr.",,
Rohtagi that the respondent wishes to continue the attachment on that day but no proceedings under PMLA by the respondent were pending,",,
therefore, it is apparent that the respondent has forgotten to file the charge-sheet since criminal liabilities are involved at the culminated of the",,
proceedings. The said serious lapses cannot be condoned.,,
It is argued that through the subsequent Amendment of 2018, a substantive amendment was made to Section 8(3)(a) of the PMLA, 2002 to",,
include for the first time, the pendency of investigation for a period of 90 days which mandates that even after confirming the attachment, still 90 days",,
period is quashed to further investigate the matter and file the charge-sheet. This provision, however, did not affect previous cases. Thus, the",,
amendment cannot be availed of by the Respondent because the impugned confirmation is dated 22.9.2016, which is much prior to the amendment, the",,
un-amended Section 8 (3)(a) of the PMLA, 2002 is to applied in the present case. The Appellant's rights stood vested as per the un-amended Section",,
8 (3)(a) of the PMLA, 2002 especially on the passing of the Impugned Order, i.e., 22.9.2016.",,
It is submitted by senior counsel that such similar situation has arisen for consideration before in the context of the Income Tax Act, 1961 In the",,
case of SS Gadgil v. Lal and Co. (AIR 1965SC 171 )[Paragraph 5,6, 12, and 13], the Honourable Supreme Court was concerned with Section 34 of",,
the Income Tax which prior to its amendment provided that assessment could be reopened within one year of the assessment. Subsequent to its,,
amendment, the period for reopening of assessment was extended to two years. In that case, the notice for reopening the assessment was sent",,
subsequent to the amendment, and within 2 years from the date of assessment. However, before the coming into force of the amendment; the period",,
of one year, which had been prescribed by the unamended section admittedly stood expired and thus on the date that the amendment came into force",,
the right to reopen the assessment was already barred. The Honourable Supreme Court while setting aside the impugned notices held that an,,
extension of a period of limitation by way of an amendment cannot result in the revival of an action, that stood barred on the date of such amendment,",,
in the following terms•:,,
“6. The power to issue a notice under the unamended Act came to an end on March 31, 1956. Under that Act no notice could thereafter",,
be issued. It is true that by the amendment made by Section 18 of the Finance Act, 1956, a notice could be issued within two years from the",,
end of the year of assessment. But the application of the amended Act is subject to tire principle that unless otherwise provided if the right to,,
act under the earlier statute has come to an end, it could not be revived by tire subsequent amendment which extended the period of",,
limitation. The right to issue a notice under the earlier Act came to an end before the new Act came into force. There was undoubtedly no,,
determinable point of time between the expiry of the earlier Act and the commencement of the new Act; but that would not, in our judgment,",,
affect the application of this rule.â€,,
It is always the case of the respondent that PMLA is Special Act and all the provisions and rules are to be complied strictly. It is also claimed by,,
the respondent that they have their own independent mechanism regarding the investigation as well as for all investigations. As far as the mandatory,,
provisions are concerned, it is settled law that the scheme of the Act has to be taken into consideration while interpreting the statute and different",,
words should not be construed in isolation of the other sections of the statute, as well as the scheme of the statute. The Appellant has relied upon the",,
following cases in support of its submissions. Since, it is a jurisdictional issue; the objection of Mr. N.K. Matta has no force. Mr. N.K. Matta has been",,
given full opportunity to argue the appeals on this issue and as a matter of fact, he has fully argued",,
The following are few decisions about interpretation of statute:-,,
a) Darshan Singh vs. State of Punjab, (AIR 1953 SC 83) at Paragraph 10 (Pg. 4 of Vol. I)",,
“10. These arguments though somewhat plausible at first sight, do not appear to us to be sound or convincing. It is a cardinal rule of",,
interpretation that the language used by the Legislature is the true depository of the legislative intent, and that words and phrases occurring",,
in a statute are to be taken not in an isolated or detached manner disassociated from the context, but are to be read together and construed",,
in the light of the purpose and object of the Act itself.â€,,
b) Mangoo Singh vs. Election Tribunal (AIR 1957 SC 871) at Paragraph 9 (Pg. 10A of Vol. I),,
“…9. When the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning",,
out of the diverse meanings a word is capable of according to lexicographers.â€,,
Sl.no.,Date,Particulars
1.,3.2.2014,Charge sheet filed in CBI court.
2.,31.3.2016,Provisional Attachment Order (Section 5(1) PMLA)
3.,22.09.2016,Confirmation of attachment order (Section 8 PMLA) by Adjudicating Authority
4.,11.06.2018,Complaint filed under Section 45 of PMLA.
When the matter was taken up for argument on 11.2.2019, Mr. Mukul Rohtagi, learned counsel has also raised the objection about the late filing of",,
the charge-sheet and merit of the case and concluded his submissions. The written submissions on behalf of the appellant were also filed raising the,,
said jurisdictional issue. Mr. Matta, learned counsel on behalf of the respondent has made his submission on the jurisdictional issue also as raised by",,
Mr. Rohtagi and seeks time to produce the compilation of the documents. Thereafter, copy of the prosecution complaint/charge-sheet under section 45",,
of PMLA was filed before this Tribunal.,,
The issue now before this Tribunal is to decide whether the attachment lapses in the absence of non-filing of the charge-sheet at the time of,,
passing the confirmation order before the Adjudicating Authority. As already mentioned that the impugned order in the above said matter was passed,,
on 22.9.2016 and the charge-sheet was filed on 11.6.2018.,,
It is admitted position that various amendments have been made inter-alia in the provision of Section 8(3)(a) of the Act.,,
a) In the provision of the Prevention of Money Laundering Act, 2002 (15 of 2003) as amended by The Prevention of Money-Laundering Act, 2009",,
(21 of 2009), w.e.f. 01.06.2009, the language of the Section 8(3)(a) reads as under:-",,
(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order",,
in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or l[record seized or",,
frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or",,
frozen property or record shall-,,
(a) Continue during the pendency of the proceedings relating to any scheduled offence before a court;,,
It is evident from the language of Section 8(3)(a) of the Prevention of Money-Laundering Act, 2009 (21 of 2009) that the attachment shall continue",,
during the pendency of the proceedings relating to any scheduled offence before a court must exist in order to continuation of the attachment,",,
otherwise attachment under PMLA stand lapsed, however, the proceedings under schedule offence shall continue.",,
b) The amendment of provision of the Prevention of Money Laundering Act, 2002 (15 of 2003) as amended by The Finance Act, 2016 ( 28 of",,
2016),the language of Section 8(3)(a) of The Finance Act, 2016 (28 of 2016), the language of Section 8(3)(a) is read as under;_",,
(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order",,
in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or l[record seized or",,
frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or",,
frozen property or record shall-,,
(a) continue during the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of,,
any other country, before the competent court of criminal jurisdiction outside India, as the case may be;",,
It is evident that the language of Section 8(3) (a) of The Finance Act, 2016 (28 of 2016) is that the attachment will continue during the pendency of",,
the proceedings relating to any offence under this Act before a court; meaning thereby the confirmation order passed by the Adjudicating Authority,,
confirming the attachment will continue during the pendency of the proceedings relating to offence under this Act.,,
It is pertinent to mention that the PMLA, 2009 (21 of 2009) and, the Finance Act, 2016 (28 of 2016), the distinction was that the attachment will",,
continue during the pendency of the proceedings relating to scheduled offence and The Finance Act, 2016 (28 of 2016) is that during the pendency of",,
the proceedings relating to any offence under this Act. In case. Act of 21 of 2009 and 28 of 2016 are read in meaningful manner, it is evident that at",,
the time of passing the confirmation order, there must be pending proceedings either under the scheduled offence as provided in the Act of 21 of 2009",,
and under Act of 28/2016 (PMLA proceedings) if the attachment proceedings are to be continued. Admittedly, in the present case, there were no",,
pending proceedings under PMLA by the respondent.,,
c) Yet, another amendment in the provision of Section 8(3)(a) of the Act as amended by The Finance Act, 2018 (13 of 2018), where the same reads",,
as under:-,,
(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order",,
in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized or frozen",,
under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen",,
property] or record shall-,,
(a) continue during (investigation for a period not exceeding ninety days or) the pendency of the proceedings relating to any [offence under,,
this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India,",,
as the case may be;,,
Under amended provision, it is clear that after passing the confirmation order by the Adjudicating Authority, the attachment shall continue during",,
investigation for a period not exceeding ninety days, meaning thereby additional period of ninety days for investigation is granted to the respondent",,
irrespective of the earlier investigation is conducted before passing the provisional attachment order. In a way by virtue of the new amendment, ninety",,
days period further granted for investigation, if so required, even without filing the charge-sheet. The said period is granted apart from the investigation",,
already conducted by the respondent before passing the PAO. However, by reading of this provision, it is clear that after the expiry of ninety days, the",,
charge-sheet is to be filed from the date of confirmation of order by the Adjudicating Authority, whether further investigation is done or not, but during",,
90 days period, attachment shall continue irrespective of any Act.",,
d) There is further amendment in the said provision of section 8(3)(a) by The Finance Act, 2019 (7 of 2019). The said amendment reads as under:",,
(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order",,
in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized or",,
frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized",,
or frozen property] or record shall-,,
(a) continue during (investigation for a period not exceeding [three hundred and sixty-five days] or] the pendency of the proceedings,,
relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of",,
criminal jurisdiction outside India, as the case may be;",,
Under amended provision, it is clear that after passing the confirmation order by the Adjudicating Authority, the attachment shall continue during",,
investigation for a period not exceeding 365 days, meaning thereby additional period of 365 days for investigation is granted to the respondent",,
irrespective of the earlier investigation is conducted before passing the provisional attachment order. In a way by virtue of the new amendment, 365",,
days period further granted for investigation even without filing the charge-sheet. The said period is granted apart from the investigation already,,
conducted by the respondent before passing the PAO. However, by reading of this provision, it is clear that after the expiry of 365 days, the charge-",,
sheet is to be filed from the date of confirmation of order by the Adjudicating Authority.,,
It is admitted on behalf of respondent in its written-submission that the amendment dated 19.04.2018 amending section 8(3) of PMLA, 2002 brings",,
into the effect that order confirming the attachment passed under section 8(3) would only subsist during the period of investigation for a period not,,
exceeding 90 days. In other words prosecution complaint shall be filed under 45(1) PMLA, 2002 within 90 days of confirmation of provisional",,
attachment order. This amendment is prospective in nature and not retrospective. Following the amendment, prosecution complaint under section 45(1)",,
PMLA, 2002 was filed on 11.06.2018 which is within the time limit of 90 days prescribed by the amendment from the date it became effective.",,
Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 was amended through Section 207-208 of the Finance Act, 2018. As per",,
Section 207 of the Finance Act, 2018, the Central Government was required to notify the date for coming in to force of Section 208 of the said Act.",,
Notification bearing no. G.S.R.383(E) dated19.4.2018 issued by the Department of Revenue, Ministry of Finance, Government of India, appointed",,
“19.04.2018†as the date for coming into force of Section 208of the Finance Act,2018 which amended Section 8(3)(a) of the PMLA.",,
Through Section 208(c) of the Finance Act, 2018, the following amendment was made:",,
“(c) in section 8,-",,
(i) in sub-section (3), in clause (a), after the words “'continue duringâ€, the words “investigation for a period not exceeding ninety days orâ€",,
shall be inserted;,,
(ii) in sub-section (8), after the proviso, the following proviso shall be inserted namely:-",,
“Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties",,
during the trial of the case in such manner as may be prescribed.â€;â€,,
Section 45 of PMLA provides that special courts shall not take cognizance of any offence under PMLA, except upon a complaint in writing made",,
by â€",,
(i) The Director; or,,
(ii) Any officer of the Central Government or State Government authorized in writing in this behalf by the Central Government by a general or a,,
special order made in this behalf by that Government.,,
Therefore, criminal complaint before court for punishing offence u/s 3 & 4 of PMLA has to be by way of a complaint in writing by the Director or any",,
other officer authorized by the Central/State Government.,,
Section 44(1)(b) of PMLA underwent an amendment where the words “upon perusal of police report of the case(s) which constitute an,,
offence†was deleted and thus by deletion, it is clear that cognizance of offence u/s 3 PMLA can be taken only upon a complaint in writing and not",,
on a Police report, i.e. charge sheet filed by Police u/s 173(5) Cr.PC. PMLA does not define “complaint†but “complaint†is defined under",,
Section 2(d) CrPC as allegation made orally or written to be Magistrate for taking action against the persons who have committed the offence.,,
Applicabilities of Police Investigation,,
The counsel for the respondent does not dispute that the proceedings of PMLA are independent proceedings. It is a Special Act. ED has its own,,
mechanism who investigate the matter other than the investigation conducted by the Police, CBI and other agencies. It is always the stand of ED that",,
even if the accused is acquitted or discharged from the schedule offence, PMLA proceedings will still continue as the respondent has its own",,
procedure of investigation and recoding the evidence. It is also not denied that Section 8(3)(a) has prescribed period of time to complete the,,
investigating and to file the prosecution complaint.,,
Even otherwise, after hearing ED and other agencies, the Honâ€ble Delhi High Court has dealt with the same issue recently in the case of",,
“Omar Ali Obaid Balsharaf v/s. ED’ wherein it is held that the investigation under schedule offence is independent. The paras 56 to 74 of the,,
judgement where the said issues were discussed and decided, are reproduced below:-",,
“56. It is clear from the aforesaid scheme of the PMLA that any property can be provisionally attached under Section 5 or be seized,,
under Section 17 or be frozen under Section 17(1A) of the PMLA. However, any such order can be passed only if the necessary checks and",,
balances are complied with; namely, that the seizure or attachment is preceded by the concerned authority having reason to believe that",,
such properties are proceeds of crime or are otherwise related to crime. Further, such reasons to believe must be formed on the basis of",,
material in possession of the concerned officer and must be recorded in writing. In addition, such orders cannot be extended beyond the",,
period of one hundred and eighty days, within which the Adjudicating Authority has to examine the matter and pass an order after issuing",,
notice to the concerned persons and after affording the concerned person full opportunity to be heard. Any person aggrieved by any such,,
order of the Adjudicating Authority is entitled to prefer an appeal to the appellate tribunal constituted under Section 25 of the Act.,,
It is axiomatic that no order of freezing can be passed except in accordance with the provisions of Section 17(1A) of the PMLA.,,
In terms of Section 73 of the PMLA, the Central Government is empowered to make rules for carrying out the provisions of the PMLA. In",,
exercise of such powers, the Central Government has notified the Prevention of Money-Laundering (Forms, Search and Seizure or Freezing",,
and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the",,
Period of Retention) Rules, 2005. Rule 4 of the said Rules also provides for the procedure related to freezing of any property found as a",,
result of search of any building, place, vessel, vehicle or aircraft.",,
It is relevant to note that an order of provisional attachment or an order of seizure is not an end in itself and does not stand in isolation.,,
The said orders are passed in aid of the provisions to confiscate properties, which are found to be proceeds of crime.",,
The scheme of seizure made under Section 102 of the Cr.P.C. is materially different as held by Hon’ble Delhi High Court. Section,,
102 of Cr.P.C. is set out below:-,,
“102. Power of police officer to seize certain property.,,
(1) Any police officer, may seize any property which may be alleged or suspected to have been stolen, or which may be found under",,
circumstances which create suspicion of the commission of any offence.,,
(2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.",,
(3) Every police officer acting under sub- section (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the,,
property seized is such that it cannot be conveniently transported to the Court, he may give custody thereof to any person on his executing a",,
bond undertaking to produce the property before the Court as and when required and to give effect to the further orders of the Court as to,,
the disposal of the same.â€,,
It is clear from the plain reading of Section 102 Cr.P.C. that any police officer may seize the property, which may be alleged or",,
suspected to have been stolen or which is found in circumstances which create suspicion of the commission of any offence. However, the",,
said order of seizure is only a temporary order and in terms of sub-section (3) of Section 102 of Cr.P.C., the police officer seizing any",,
property on the grounds of suspicion of an offence is required to forthwith report the seizure to the Magistrate having jurisdiction.,,
The said property seized is required to be produced before a Court and/or reported to a Magistrate. In such cases, the court would",,
have the power to pass necessary orders with regard to the said property. In terms of Section 457 of the Cr.P.C., whenever a property is",,
seized by any police officer and is reported to the Magistrate, the Magistrate is empowered to make such orders as he thinks fit in respect of",,
disposal of the property or the delivery of such property to the person entitled to the possession thereof. In cases where such person cannot,,
be ascertained, the Magistrate can pass orders in respect of the custody and production of such property.",,
It is at once clear that scheme of seizure, including the checks and balances in exercise of such power, as contemplated under the",,
Cr.P.C. is wholly inconsistent with the scheme of the provisions under the PMLA.,,
Powers of seizure of properties is a draconian power. Grant of such authoritarian and drastic powers, without commensurate checks",,
and balances, would militate against the principle of rule of law engrafted in the constitution of India. A police officer does not possess",,
unfettered rights to freeze any asset without the same being reported immediately to a Magistrate. The party aggrieved, thus, has immediate",,
recourse in respect of the said action of freezing the property. As observed above, the scheme of provisional attachment or seizure of a",,
property, as contemplated under the provisions of the PMLA is materially different. The PMLA has separate checks and balances to ensure",,
that such powers are exercised in aid of the object of confiscating or vesting such proceeds of crime with the Government. The power to,,
provisionally attach or seize or freeze a property can be exercised only (a) if the specified officer has material in his possession, which",,
provides him reason to believe that the property sought to be attached or seized is proceeds of crime or related to a crime; and (b) after,,
recording the reasons in writing.,,
In the aforesaid view, the reliance placed on provisions of Section 65 of the PMLA is misplaced. By virtue of Section 65, the provisions",,
of Cr.P.C. apply only insofar as they are not inconsistent with the provisions of the PMLA. There can be little doubt that scheme of seizure,,
under Section 102, Cr.P.C. is inconsistent with the provisions relating to attachment and seizure of property under the PMLA.",,
What is sought to be canvassed on behalf of the Enforcement Directorate is a devised scheme under which the Enforcement Directorate,,
refers to the provisions of Section 102(1) of Cr.P.C. for drawing the power to issue orders for immediately seizing the property on mere,,
suspicion but at the same time ignores the provisions of Section 102(3) of Cr.PC which requires such seizure to be reported to a Magistrate.,,
There is clearly no principle of law that would permit such interpretation, where officers can draw the power under a statute and yet not be",,
accountable for the checks and balances enacted therein.,,
Mr Singh had contended on behalf of the Enforcement Directorate that the PMLA does not contain any provision regarding seizure on,,
mere suspicion, therefore the power to make such seizure can be drawn from Section 102 of Cr.P.C. He contended that the provisions of",,
Section 102(1) of Cr.P.C. are, therefore, not inconsistent with the provisions of the PMLA with regard to seizure of property. The said",,
contention is unmerited. The question whether an enactment is repugnant to another is not determined on whether two provisions can be,,
simultaneously obeyed but is determined in the context of thescheme of the legislative enactment. The question to be asked is whether the,,
schemes of the two enactments can subsist and be implemented simultaneously. It is apparent that the scheme of effecting provisional,,
attachment and seizure of property under the PMLA is wholly inconsistent with the one as enacted under the Cr.P.C.,,
In Innoventive Industries Ltd. v. ICICI Bank and Anr.: (2018) 1 SCC 40,7 the Supreme Court had examined the question of repugnancy",,
between two enactments, namely, the Maharashtra Relief Undertakings (Special Provisions Act), 1958 and the Insolvency and Bankruptcy",,
Code, 2016 in the perspective of the Constitution of India. The Supreme Court had referred to various decisions and culled out the",,
principles with regard to repugnancy between two enactments. Although the decision was rendered in an altogether different context,,
â€"whether the provisions of the central legislation would override a state enactment â€" the principles of inconsistency between two,,
enactments as noticed by the Supreme Court would be equally applicable to determine whether the provisions of Section 102 Cr.P.C. are,,
inconsistent with the provisions of the PMLA. In that case, the Supreme Court has referred to various decisions to set out the principles on",,
the anvil of which the question whether two enactments are inconsistent are to be tested. In the aforesaid context, the Supreme Court had,",,
inter alia, observed as under:-",,
“51.7. Though there may be no direct conflict, a State lawmay be inoperative because the Parliamentary law is intended to be a complete,",,
exhaustive or exclusive code. In such a case, the State law is inconsistent andrepugnant, even though obedience to both laws is possible,",,
because so long as the State law is referable to the same subject-matter as the Parliamentary law to any extent, it must give way. One test of",,
seeing whether the subject-matter of the Parliamentary law is encroached upon is to find out whether the Parliamentary statute has adopted,,
a plan or scheme which will be hindered and/or obstructed by giving effect to the State law. It can then be said that the State law trenches,,
upon the Parliamentary statute. Negatively put, where Parliamentary legislation does not purport to be exhaustive or unqualified, but itself",,
permits or recognises other laws restricting or qualifying the general provisions made in it, there can be said to be no repugnancy.â€",,
As is clear from the above, one of the tests for determining whether there is repugnancy between two statutes is to find out where one of",,
the statutes has adopted a plan or a scheme, which will be hindered or obstructed by giving effect to the other statute. This principle to",,
determine whether there is repugnancy between two enactments is of universal application. If one applies the aforesaid test, it is at once",,
clear that the PMLA has set out a separate scheme with a separate set of safeguards for ensuring that properties of parties are not attached,,
or seized without the authorities effecting such actions having reason to believe that such properties are proceeds of crime or are related to,,
a crime.,,
If the contention as advanced on behalf of the Enforcement Directorate is accepted, it would mean that whereas the property cannot be",,
provisionally attached under Section 5(1) of the PMLA and/or seized or frozen under Section 17 of the PMLA without (a) theDirector,,
having a reason to believe, on the basis of material available with him, that the properties are proceeds of crime and (b) recording such",,
reasons in writing; the same officer can on mere suspicion pass orders for freezing the properties without recording reasons. Further, there",,
are strict timelines provided under the PMLA. The orders of provisional attachment and/or seizure and/or freezing cannot extend beyond,,
the period of 180 days. The Director of the Enforcement Directorate (or the officer authorized by him) is required to file a complaint by,,
seeking extension of the period of retention from the adjudicating authority within a period of thirty days from passing such order.,,
However, this safeguard would also be rendered meaningless if the Enforcement Directorateâ€s contention is to be accepted; the",,
Directorate could â€" as has been done in this case â€" freeze the assets without recording reasons and without making any application or,,
complaint to the Adjudicating Authority. This Court is unable to accept that even in cases where the Director of the Enforcement Directorate,,
has reasons to believe that the property is proceeds of crime, he can provisionally attach the same only for a period of one hundred and",,
eighty days, but in cases where he has mere suspicion that the property in question is proceeds of crime, he can without recording any",,
reasons, without issuance of any notice and without any obligation to make a complaint/ application in this regard to the Adjudicating",,
Authority, pass an order freezing the property for an indeterminate period. This interpretation would militate against the scheme of the",,
PMLA as enacted by the Parliament.,,
With much respect to the view of the Honâ€ble Gujarat High Court, this Court is unable to agree with the view as expressed inParesha",,
G. Shah v. State of Gujarat and Ors. (supra). An order offreezing under Section 102 of Cr.P.C. cannot be considered to be in aid of order,,
of provisional attachment passed under Section 5(1) of the PMLA or an order of seizure and/or freezing of property under Section 17(1A),,
of the PMLA. Both the orders under Section 5(1) and under Section 17 of the PMLA are orders of interim nature and are operative for a,,
limited period till pending adjudication under Section 8 of the Act and further confiscation of the property. Orders of freezing of property,,
passed under section 17(1A) of the PMLA or provisional attachment are by their nature provisional orders that require confirmation. Such,,
powers are exercised in emergent situations warranting passing such orders. The contention that an order of provisional freezing is in aid,,
of provisional attachment is plainly unpersuasive.,,
It is possible that prior to acquiring any material providing the Enforcement Directorate any reason to believe that any property is a,,
proceed of crime, the concerned officers may entertain a suspicion that property in question represents proceeds of crime; but that does not",,
entitle them to freeze the property, interdict transactions and perhapsbring a personâ€s business to a standstill. The nature of the power of",,
seizure contemplated under the provisions of Cr.P.C. is drastic and exercise of such powers is likely to have severe adverse effects on the,,
person concerned; thus, the parliament in its wisdom did not confer upon the Enforcement Directorate, any powers to attach or freeze",,
assets on a mere suspicion.,,
The learned counsel appearing for the Enforcement Directorate has also referred to the decision of the Supreme Court in V.T.Khanzode,,
and Ors. v. Reserve Bank of India and Anr.: (1982) 2 SCC The said decision has no application in the facts of the present case. In that,,
case, the petitioners had challenged the circular issued by the Reserve Bank of India whereby it had decided to combine the seniority of all",,
officers. The petitioners had contended that such conditions of service could not be framed by administrative circulars but necessitated,,
framing Regulations under Section 58 of the Reserve Bank of India Act, 1934. The Supreme Court repelled the said contention and held that",,
under Section 7(2) of the Act, the Central Board had the power to provide for service conditions of the bank staff by issuing administrative",,
circulars as long as they did not impinge upon the Regulations made under Section 58 of the said Act. The power of an employer to fix,,
service conditions cannot be equated to police powers.,,
In view of the above, the contention that officers of the Enforcement Directorate could issue orders of freezing under Sectionof Cr.P.C.",,
is rejected and the communications issued by the Enforcement Directorate to BSE are, plainly, without authority of law.â€",,
The said judgement has been upheld by the Division Bench of Honâ€ble Delhi High Court at New Delhi.,,
Thus, it is clear after going through the scheme of the Act that being a Special Act, all PMLA proceedings are to be conducted within the four",,
corners of Act. These are stringent provisions. Criminal liabilities are involved at the end of the day if the charges are proved. Different meaning or,,
interpretation cannot be given if the language of the said provisions are simple and understandable.,,
A plain reading, it is clear that amendments do not provide any indication that the same was meant to have any retrospective effect. It is a settled",,
proposition that retrospectively cannot be read into a statute and the same must be evidenced from a plain reading of the statute. It is further submitted,,
that the amendment in question is substantive in nature and not procedural. In the written submission filed by the respondent, it is admitted that the said",,
amendments were prospective in nature.,,
In the context of the Prevention of Money Laundering Act, 2002, it has been held by the Honourable High Court of Telangana and Andhra",,
Pradesh in Satyam Computer Services Limited v. Directorate of Enforcement (W.P. No. 37487of 2012) that since the Prevention of Money,,
Laundering Act, 2002 is an Act which affects substantive rights of parties, amendments thereto would have to be ordinarily construed as having",,
prospective effective. In these circumstances the amendments must be construed as having only prospective effect and thus not impacting the,,
impugned order dated 22.09.2016.,,
Since the charge-sheet/prosecution complaint has not been filed under the provision of Section 8(3)(a) of the Act within the prescribed period of,,
time, the attachments stand lapsed, thus, the same are released. Therefore, there is no need to go into the merit of the case.",,
The appeals are allowed accordingly. It is cleared that the proceedings pending under the schedule offence shall continue as per law. No opinion is,,
expressed. The same will be decided without any influence of this order.,,
No costs.,,