Allahabad High Court
Smt. Kamla Devi Gupta And Ors. vs The Union Of India. Thru Dir., New Delhi ... on 30 January, 2015
Author: Ravindra Singh
Bench: Ravindra Singh, Vishnu Chandra Gupta
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No.14 AFR Judgment Reserved on 28.08.2014 Judgment Delivered on 30.01.2015 WRIT PETITION NO.4864 (M/B) OF 2012 Smt. Kamla Devi Gupta aged about 65 years Wife of Late Shri Om Prakash Gupta, Resident of 46, Jail Road, Sitapur, U.P. and 25 others ....... Petitioners Versus 1. The Union of India, through Director, Directorate of Enforcement, Ministry of Finance, Department of Revenue, 6th Floor, Lok Naik Bhawan, Khan Market, New Delhi. 2. Joint Director, Directorate of Enforcement, Lucknow Zonal Office 57-A, Meerabai Marg, Near Dainik Jagran, Lucknow. 3. Assistant Director, Directorate of Enforcement, Lucknow Zonal Office 57-A, Meerabai Marg, Near Dainik Jagran, Lucknow. 4. The State of U.P. through Principal Secretary (Home) U.P. Secretariat, Lucknow. 5. The Superintendent of Police, Central Bureau of Investigation /ACB, 7 Naval Kishore Road, Hazratganj, Lucknow. ...... Opposite parties. ____ Counsel for the Petitioners: Sri Nagendra Mohan & Sri P. Chakravarty Counsel for the Opposite Parties: Mohd. Amir Naqvi, AAG Hon'ble Ravindra Singh, J Hon'ble Vishnu Chandra Gupta, J.
Judgment Delivered by Hon'ble Vishnu Chandra Gupta, J By means of this writ petition, the petitioners, who are the relatives and the family members of late Om Prakash Gupta Ex-MLA, have sought the following reliefs:
"(i) To issue a writ, order or direction in the nature of certiorari quashing the Inquiry No.F-No:ECIR/06/PMLA/LZO/2011/ADSS/AHK/2096 dated 16.11.2011 arising out of the FIR No.RC-0062010A0013 of CBI/ACB, Lucknow conducted by the opposite parties no.2 and 3 contained as Annexures No.1 and 2 to the writ petition.
(ii) To issue a writ, order or direction in the nature of mandaus commanding the opposite parties no.1, 2 and 3 not to take any coercive measures/actions in a illegal inquiry and investigation conducted by the opposite parties no.2 and 3 No.F-No:ECIR/06/PMLA/LZO/2011/ADSS/AHK/2096 dated 16.11.2011 arising out of the FIR No.RC-0062010A0013 of CBI/ACB, Lucknow."
Brief facts necessary for deciding this writ petition are that a first information report in pursuance of order passed by this Court on 26.02.2010 in Writ Petition No.10503 (M/B) of 2009 (Vishwanath Chaturvedi Vs. Union of India and others) has been lodged on the basis of preliminary inquiry conducted by Special Investigating Team, constituted for detecting the fraud in public distribution system of the State of Uttar Pradesh, by Central Bureau of Investigation (hereinafter referred to as 'CBI') against unknown persons on 06.04.2010 under Sections 120-B,420, 467, 468, 471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act (hereinafter referred to as 'the PC Act') having FIR No.RC 0062010A0013, CBI/ACB, Lucknow.
The CBI investigated the matter which relates to the offences committed during financial years 2004-05 and 2005-06 in District Sitapur. The CBI investigated the case and submitted charge-sheet on 02.09.2011 against late Om Prakash Gupta and one Vinay Gupta under Sections 120-B, 420, 468, 471 IPC only, and did not file any charge-sheet under Section 467 IPC and under Section 13(2) read with Section 13(1)(d) of the PC Act. Om Prakash Gupta was under judicial custody in this case at that time. During judicial custody and after submission of the charge-sheet Sri Om Prakash Gupta sent a letter on 14.09.2011 through Superintendent District Jail Sitapur in respect of the alleged preliminary inquiry made by Directorate of Enforcement Department (in short ED) in pursuance of the abovementioned FIR. In reply thereof, vide letter dated 16.11.2011 (Annexure-1 to the writ petition), ED informed to Mr. Om Prakash Gupta that the investigation with regard to food scam is being conducted by this office in compliance of the directions issued by Hon'ble Allahabad High Court, Lucknow Bench on 26.02.2011 and 03.12.2010 in Writ Petition No.10503 (M/B) of 2009. It was also informed to Mr. Om Prakash Gupta that the law point raised by him shall be suitably addressed during investigation.
On 13.02.2012, the Assistant Director (ED), Government of India, Lucknow issued summons "No.46/11-12/PMLA Writ Petition No.10503 (M/B) of 2009/SS" in respect of Inquiry No.F-No.ECIR/06/PMLA/LZO/2011/AD(SS)/AHK/3066 dated 13.02.2014 wherein it has been mentioned that Sri Shashi Shekhar, Assistant Director is making investigation under the provisions of Prevention of Money Laundering Act, 2002 (in short 'PML Act') and he required the attendance of Sri Sanjay Kumar Gupta, Chartered Accountant of M/s Gupta Ahmed Shukla & Co., 55, Parade, Jail Road, Sitapur, U.P. necessary in connection with the said investigation. The aforesaid summon (Annexure-2 to the writ petition) has been issued after exercising powers alleged to have conferred upon him under Sections 2 and 50(3) of PML Act and directed Sri Sanjay Kumar Gupta to appear before him in person on 29.02.2012 at 13:30 hours along with the documents as per Schedule attached relating to the petitioners.
Aggrieved by the aforesaid letters dated 16.11.2011 issued by Joint Director, ED and on 13.02.2012 by Assistant Director, Directorate of Enforcement Government of India, Lucknow, this writ petition has been filed by the petitioners to quash the alleged initiated inquiry in pursuance of the provisions contained in PML Act on the following grounds:
(i) that; the investigation alleged to have conducted by ED, Lucknow must lead to the offence defined under Section 3 of the PML Act. For constituting an offence under Section 3, the investigation must lead to a scheduled offence shown in the schedule attached to PML Act in respect of whom a report under Section 173, Cr.P.C. must be forwarded to the competent court against the persons falling under the ambit for investigation or report.
(ii) that the CBI in respect of act or omission constituting offences during the period 2004-05 and 2005-06, and submitted the charge-sheet against Om Prakash Gupta and Vijay Kumar Gupta under Sections 120-B, 420, 468, 471 IPC only, which are not the schedule offences on the date of commission of the offence because the offences under which the charge-sheet has been filed were declared to be the schedule offences by making an amendment in the schedule with effect from 01.06.2009 and, therefore, the proceedings in respect of those offences, in which the charge-sheet has been submitted against Om Prakash Gupta, cannot be termed to be a schedule offences under the PML Act.
(iii) that the proceedings cannot be initiated against the petitioners and they could not be arrayed an accused under Section 3 of the PML Act for the offences alleged to have been committed by Om Prakash Gupta during the period of 2004-05 and 2005-06.
(iv) that; since the alleged scheduled offences under the PML Act were actually committed by Om Prakash Gupta during the period 2004-05 and 2005-06, and the petitioners were not arrayed as accused as such the proceedings under the provisions of PML Act cannot be initiated against them.
(v) that; ED cannot investigate or proceed against the petitioners under PML Act if the provisions of PML Act are not attracted. The investigation could be initiated in respect of proceeds of crime relating to scheduled offences and not otherwise under the garb of the orders passed by this Court in Writ Petition No.10503 (M/B) of 2009.
(vi) that; there cannot be two opinions about this proposition of law that provisions of criminal law for taking action against the person shall be applicable as on the date of commission of offence.
"(vii) that; the allegations levelled against Om Prakash Gupta for transporting the food grain through M/s Namish Oil Industries, an unregistered firm, alleged to have been run by Avinash Kumar Vaishya @ Piyush Gupta, proprietor, through railway for delivery of the same out of the country like Bangladesh is not correct. It has been alleged by the CBI that this firm actually belongs to late Om Prakash Gupta and not to Piyush Gupta @ Avinash Kumar Vaishya. Om Prakash Gupta is the sole proprietor of the firm, who was dealing with the affairs of the firm and getting monitory benefits in the fake name of Avinash Kumar Vaishya @ Piyush Gupta (who according to the petitioners was one of the real culprit).
(viii) that; on the basis of statement of Piyush Gupta, late Om Prakash Gupta was involved in this case.
(ix) that; actually the firm belongs to Avinash Kumar Vaishya @ Piyush Gupta, who purchased huge properties in his name including six trucks, Indica Car and landed property in between 2004 to 2006. Piyush Gupta also sold a land and building for Rs.10 lac through a sale deed though the valuation of the said property has been mentioned in the sale deed as Rs.23,08,000/-.
On the basis of these submissions, the authority to issue letter dated 16.11.2011 by Joint Director, ED and letter dated 13.02.2012 by Assistant Director, Directorate of Enforcement Government of India, Lucknow dated have been challenged and sought to be quashed.
The petition was contested by Deputy Director, Directorate of Enforcement, Lucknow on behalf of ED by filing counter affidavit on behalf of opposite parties no.1, 2 and 3.
According to the pleadings of opposite parties no.1, 2 and 3, CBI registered the aforesaid FIR on 06.04.2010 against certain unknown officials/officers/persons of State Food & Civil Supply Department, Food Corporation of India, Central Ware Housing Corporation, State Ware Housing Corporation, Railways of District Sitapur, Transporters, Exporters and certain unknown persons in pursuance of the order dated 26.02.2010 passed by this Court in Writ Petition No.10503 (M/B) of 2009. It is alleged in the counter affidavit that as per the FIR, substantial quantity of food grain (wheat) under various Government schemes such as 'Sampoorna Gramin Rojgar Yojna' and 'Public Distribution System' did not reach to the actual beneficiaries and was diverted out of India mainly to Bangladesh by way of goods trains from various railway stations of District Sitapur. The quantity of food grains as alleged was 7,52,081 quintals during 2004-05 and 2,40,069 quintals during 2005-06 and the same was allegedly sent out of India. By the aforesaid act several crore of rupees are said to have been involved in diversion of food grains during the aforesaid period. On the basis of the aforesaid facts recorded in the FIR, a regular case was registered for investigation under the provisions of the PML Act vide ECIR No.ECIR/06/LZO/2011/AD(VPG) dated 20.06.2011 by the Lucknow Zone Office of the Directorate of Enforcement for the offences of money laundering as defined under Section 3 of the PML Act, which is punishable under Section 4 of the said Act.
Counter affidavit on behalf of CBI has also been filed reiterating the contents of the charge-sheet filed by him against Om Prakash Gupta and Vinay Gupta.
The investigation made by CBI reveals that accused Om Prakash Gupta entered into a criminal conspiracy with Vinay Gupta and Avinash Kumar Vaishya @ Piyush Gupta during the period of 2004-05 and 2005-06 at District Sitapur with intent to cheat the Government by way of causing wrongful loss to the Government and wrongful gain to themselves. In pursuance of the said criminal conspiracy late Sri Om Prakash Gupta got opened a firm, namely, M/s Naimish Oil Industries on paper only though there was no such firm in existence, whose proprietor was shown as Avinash Kumar Vaishya @ Piyush Gupta and sold/supplied the illegal wheat to four parties of Kolkata and Raipur and raised bills through said Vinay Gupta on behalf of M/s Naimish Oil Industries and supplied 1,76,262 quintals wheat to the said parties and obtained payment in the name of the said firm in banks account of the said firm with Oriental Bank of Commerce and Central Bank of India at Sitapur and got transferred money from such account to his own savings account and accounts of his family members. By the aforesaid act/omission of Om Prakash Gupta, Vinay Gupta and Pyuish Gupta they committed the offence under Section 120-B read with Sections 420, 468, 471 IPC and consequently causes wrongful losses to the Government and wrongful gain to themselves amounting to Rs.11.73 crores. Thus, charge-sheets has been filed under the aforesaid sections against Om Prakash Gupta (who died during the pendency of trial) and Vinay Gupta in respect of aforesaid offences.
Para 16.27 of the said charge-sheet filed by CBI reveals that Om Prakash Gupta and Vinay Gupta both entered into criminal conspiracy with each other and actively engaged in diversion of food grain meant for distribution through Public Distribution System.
It is further mentioned in the counter affidavit that Section 5 of the PML Act authorizes the Director to resort for the action of 'attachment of properties' if he has reason to believe and reason for such belief has been recorded in writing on the basis of material in his possession. It is also mentioned that in Section 5 of the PML Act, every property involved in money laundering may be attached irrespective of whether it is in possession of the person charged of having committed a schedule offence or any other person who have driven such property from the criminal activity relating to such scheduled offence directly or indirectly and should project it as untainted property in the hands of or in possession of any person other than the person charged of having committed a schedule offence. That proceeds of crime which likely to be concealed, transferred or dealt with in any manner, which may result in frustration of any proceedings relating to confiscation of such proceeds of crime, may attached under Section 5 of PML Act. It is pleaded that vide second amended in the PML Act with effect from 03.06.2009, the provisions of PML Act were amended and in pursuance thereof, the ED is competent to initiate proceedings under PML Act and to investigate under Section 5 by issuing summons under Section 50 of PML Act.
The letter dated 16.11.2011, which has been challenged in this writ petition, is virtually the reply of the letter of Om Prakash Gupta dated 14.09.2011. The Investigating Officer exercising powers under Section 50(2) of the PML Act has rightly issued summons. The ED is investigating the entire transactions on the basis of evidence collected so far. The ED in the matter of money laundering during the course of investigation could examine the role of each and every accused and the proceeds of the crime generated by them. The ED is also examining the properties and ownership of the trucks owned by Pyuish Gupta. The offence under which the CBI filed charge-sheet against Om Prakash Gupta and Vinay Gupta came under the purview of the schedule offences of PML Act and moreover the Hon'ble High Court in Writ Petition No.10503 (M/B) of 2009 issued directions to the ED to investigate the matter. It is also pleaded that ED can investigate the offences relating to 2004-05 and 2005-06 since the offence of money laundering is a continuing offence and the period of commission of schedule offence is not relevant for the purpose of money laundering if the petitioners/accused of the aforesaid crime are projecting the said proceeds of crime as untainted property.
By means of an application being Criminal Misc. Application No.54601 of 2013 filed on behalf of the petitioners, it has been informed to the Court that the proceedings pending against Om Prakash Gupta have already abetted vide order dated 12.07.2012 passed by Special CJM, CBI.
A rejoinder affidavit in reply to the counter affidavit filed by opposite parties no.1, 2, 3 and 5 has been filed. In reply to the rejoinder affidavit, another supplementary affidavit has been filed by ED in order to demonstrate that though Sanjay Kumar Gupta, Chartered Accountant of Late Om Prakash Gupta appeared on 10.12.2012 but he failed to produce any documents as required as per schedule attached to summons. The other persons either refused the summon or failed to appear. The ED also annexed the assets declared by some of the petitioners.
We have heard Sri Nagendra Mohan and Sri P. Chakravarty, learned counsel for the petitioners, Mohd. Amir Naqvi, learned counsel for the Enforcement Department and learned A.G.A. for the State and also gone through the record of this case as well as the written synopsis supplied by the counsels for the parties.
Investigation as defined under Section 2(na) and includes all the proceedings under PML Act conducted by Director or by any authority authorised by the Central Government under PML Act for the collection of evidence, is a process of collecting evidence by authorities under PML Act for purpose of prosecution under section 4 for commission of offence of ' Money-Laundering' under section 3 of PML Act. Money-laundering is defined under section 2 (p) and has meaning assigned to in section 3 of PML Act.
The proceeding under Sections 5 (Attachment) or 17 (search and seizure) or 18 (Search of persons) of Chapter V of PML Act, is a mode to collect the evidence and also to protect the property and further to get the same adjudicated as connected with proceeds of crime. After adjudication of such property connected with proceeds of crime within the meaning of Section 3, the authorities may confiscate the same under sub section (6) of Section 8 of PML Act subject to final out come of the trial of person under Section 4 for the offence of Money Laundering, as contained in sub-section (3) or (5) of section 8 of PML Act, as the case may be. After confiscation of such property under Sub-section 6 of section 8, the same is vested in Central Government under Section 9 of PML Act. This adjudication made under Section 8(6) and affirmed under Section 25 by the Appellate Tribunal and under Section 42 by the High Court would become final subject to further directions issued by the trial court after conclusion of the trial in view of sub-sections (3) and (5) of Section 8 of PML Act.
The entire scheme under PML Act clearly indicates that if an offence under Section 3 is said to have been committed the provisions contained in PML Act can put into action to punish the offender under Section 4 of PML Act. But when there is no likelihood of commission of offence under Section 3 against the person, the authorities under PML Act would have no jurisdiction to initiate and to proceed with investigation against such person.
From this point of view it has to be looked into:
Whether on fact mentioned herein above the alleged investigation as stated in reply letter dated 16.11.2011 given by ED and summon issued on 13.2.2012 (Annexure 1 and 2 to the writ petition) could be quashed?
For constituting an offence of Money Laundering under Section 3, the following ingredients must exist to punish any person under Section 4 of PML Act:
"(i) Whosoever
(ii) -directly or indirectly attempts to indulge, or
-knowingly assists ,or
-knowingly is a party, or
-is actually involved in
(iii) any process or activity
(iv) connected with the proceeds of crime and,
(v) projecting it as untainted property.
To constitute an offence under Section 3 of PML Act, the prime and foremost requirement is 'Proceeds of Crime'.
What is 'Proceeds of Crime'? The Proceeds of crime has been defined under Section 2(u) which reads as under:-
"proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property;
means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to 'Schedule offence' or value of any such property.
What is 'Schedule Offence'? Schedule offence is defined under Section 2 (y) which reads as under:-
(y) "scheduled offence" means--
(i) the offences specified under Part A of the Schedule; or [(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; or
(iii) the offences specified under Part C of the Schedule.](Substituted by Act No.21 of 2009,w.e.f 1.6.2009) means the offence specified under part 'A' or 'B' or 'C' of schedule of PML Act. However for offences falling under Part 'B' of the schedule, if total value involved in such offence is thirty lakh or more would be taken into consideration.
This schedule has been amended after commencement of PML Act 2002, for fist time vide Act No. 21 of 2009 w.e.f. 1.6.2009. There after the schedule was further amended by Act No. 2 of 2013 w.e.f 3.1.2013. Prior to amendment by Act 21 of 2009, Schedule read as:
"The Schedule [See Section 2(y)] PART A PARAGRAPH 1 OFFENCES UNDER THE INDIAN PENAL CODE Section Description of offence
121. Waging, or attempting to wage war or abetting waging of war, against the Government of India.
121-A Conspiracy to commit offences punishable by Section 121 against the State.
PARAGRAPH 2 OFFENCES UNDER THE NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES ACT, 1985 Section Description of offence 15 Contravention in relation to poppy straw.
18 Contravention in relation to opium poppy and opium.
20 Contravention in relation to cannabis plant and cannabis.
22 Contravention in relation to psychotropic substances.
23 Illegal import into India, export from India or transshipment of narcotic drugs and psychotropic substances.
24 External dealings in narcotic drugs and psychotropic substances in contravention of Section 12 of the Narcotic Drugs and Psychotropic Substances Act, 1985.
25-A Contravention of orders made under Section 9-A of the Narcotic Drugs and Psychotropic Substances Act, 1985.
27-A Financing illicit traffic and harbouring offenders.
29 Abetment and criminal conspiracy.
PART B PARAGRAPH 1 OFFENCES UNDER THE INDIAN PENAL CODE Section Description of offence 302 Murder.
304 Culpable homicide not amounting to murder, if act by which the death is caused is done with the intention of causing death.
307 Attempt to murder.
308 Attempt to commit culpable homicide.
327 Voluntarily causing hurt to extort property, or a valuable security, or to constrain to do anything which is illegal or which may facilitate the commission of the offence.
329 Voluntarily causing grievous hurt to extort property, or a valuable security, or to constrain to do anything which is illegal or which may facilitate the commission of the offence.
364-A Kidnapping for ransom, etc. 384 to 389 Offences relating to extortion.
392 to 402 Offences relating to robbery and dacoity.
467 Forgery of a valuable security, will or authority to make or transfer any valuable security, or to receive any money, etc. 489-A Counterfeiting currency notes or bank notes.
489-B Using as genuine, forged or counterfeit currency notes or bank notes."
From the perusal of the aforesaid schedule it is crystal clear that Section 120-B,420,468 and 471 I.P.C were not the offences under the schedule of PML Act.{under which sections charge sheet has been filed against Late Om Prakash} Only after amendment by Act No.21 of 2009 w.e.f.-1.6.2009 Section 489A and 498B of IPC were added in Part 'A' after deleting it from paragraph 1 of Part 'B' and new paragraph 1 of Part 'B' was substituted by inserting Sections 120B, 255 to 260, 302, 304, 307, 308, 327, 329, 364A, 384 to 389, 392 to 402, 411 to 414, 417 to 424, 467, 471, 472, 473, 475, 476, 481, 482 to 488. This shows that Sections 120-B, 420 and 471 of IPC were declared to be schedule offences under PML Act w.e.f. 1.6.2009. Some other paragraphs and Part C was also added in the schedule by Act No.21 of 2009, which are not relevant for this case.
By another amendment by Act No.2 of 2013, the schedule was further amended w.e.f.-3.1.2013. In Part ' A' Paragraph 1 to paragraph 28 were substituted. However from Paragraph 1 to 25 of Part 'B 'were omitted. In Part 'C' serial No.(2) and entries relating thereto were also omitted. This amendment is also not relevant for deciding the case in hand.
The investigation conducted by CBI in respect of food scam covering period 2004-2005 and 2005-2006 and not beyond that. Though the FIR was lodged under Sections 120-B, 420, 467, 468, 471 IPC and Section 13(2) read with Section 13(1)(d) of PC Act against unknown person and public servant, but the charge sheet was filed only against Late Om Prakash Gupta and Vinay Gupta under Sections 120-B, 420, 468 and 471 only who are private persons.
In this case, according to ED the alleged proceeds of crime are said to be connected with those offences alleged to have been committed by Late Om Prakash after hatching criminal conspiracy with Vinay Gupta and Avinash Kumar Vaishya @ Piyush Gupta. Piyush Gupta during investigation become approver and arrayed now as witness in the charge sheet submitted by CBI. These offences were admittedly committed in between year 2004 to 2006. The learned Counsel for the petitioners submitted that offence under section 120-B,420,467 and 471 IPC were not schedule offences under PML Act when they were said to have been committed. In other words, the crime was committed when it was not connected with any of the schedule offences under PML Act , therefore, proceed of such crime would not fall with in the purview of Section 3 of PML Act. If any person is connected with the proceeds of such crime could not be arrayed as an accused for offence under Section 3 of PML Act.
Learned counsel for the Union of India relied upon the judgment of Division Bench of this Court rendered in Writ Petition No.3817 (M/B) of 2011 (Sayyed Kazim Raza Vs. Union of India and others) decided on 25.04.2011 wherein the writ petition filed by the petitioner for quashing the notice/summon dated 21.03.2011 issued under the powers conferred upon the authorities under Sub-section (2) or/and (3) of Section 50 of PML Act, was dismissed.
In reply, learned counsel for the petitioners has submitted that in the aforesaid case, this Court considered the fact that FIR has been lodged in pursuance of the directions of this Court and the show case notice given by the authority cannot be quashed. In this case, the question involved in the present writ petition was not considered at all.
Learned counsel for the Union of India also relied upon a judgment of learned Single Judge of Jharkhand High Court in W.P. (Cr.) No.325 of 2010 (Hari Narayan Rai Vs. Union of India and others) decided on 06.08.2010 wherein the learned Single Judge held that the relevant date for Section 3 of PML Act is not the date of acquisition of elicit money but the date, on which, the money is being processed for projecting it untainted. On this score, it has been stated that it is irrelevant as to when the offence is committed or when the money was acquired. Therefore, the petition filed by the present petitioners deserves to be dismissed.
The learned Counsel for the petitioner would submit that it might be correct that date of laundering of money is material but at the same time, the money should be of the proceeds of some crime constituted of schedule offences. If the money is not related to proceeds of such crime, Section 3 of PML Act could not be attracted. The proceeds of crime should be understood in terms of the Act itself. It is well settled principle of criminal law that a person could be convicted in respect of an offences, having penal consequences in terms of offence defined at the time of commission of the crime and not otherwise. The amendment in the penal statute providing penalty for an offence cannot be made applicable retrospectively and while dealing with the liability of a person under the penal statute for an offence, the same should strictly construe in accordance with the provisions contained in the Act itself. If the analogy projected in Hari Naraya Rai's case (Supra) taken to be correct, then the scheduled attached in PML Act will have no meaning and would become redundant. The statutory provisions of PML Act has taken drastic changes by Act No.21 of 2009 w.e.f. 01.06.2009 and again by Act No.2 of 2013 w.e.f. 03.01.2013. The scheduled was amended and several other offences were included in the schedule. The proceeds of such crime constituting the offences of which occurred prior to inclusion of those offences in the schedule, can be actionable under Section 3 of PML Act. Here in the case in hand, the accused who were charged for commission of the crime by CBI are not the present petitioners but are Om Prakash and one another. No evidence was found by the CBI for the abatement or of hatching criminal conspiracy of the crime against the present petitioners. The present petitioners were not arrayed as accused in the charge-sheet filed by the CBI. According to the CBI, the alleged money acquired by Om Prakash Gupta out of the offences committed by him and his associate, the transactions alleged to have been done by him till 2006 and not by the petitioners.
The Counsel for the petitioners further contended that section 5 of PML Act specifically provides that before initiation of proceedings for attachment of property, the authority concerned must have reason to believe on the basis of material in his possession, that such person has been charged under the scheduled offences and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. The section further requires that the authorities not only have reason reasons for such believe but it should be recorded in writing before initiating the proceedings or investigation.
The Counsel for the petitioners further contended that section 50 of PML Act is a tool to such authorities to summon and production of documents and to give evidence during investigation. This provisions can be exercised in terms of Section 12 of the Act. Section 12 of the PML Act deals with Banking Companies, Financial Institutions and Intermediaries and not in respect of private individuals. The petitioners and the person to whom summons were issued are not the Banking Companies nor Financial Institutions nor Intermediaries as defined in that section. Section 2 (e) of the PML Act defines the Banking Company, Section 2(l) defines Financial Institutions and Section 2 (n) defines Intermediaries, which reads as under:-
"(e) "banking company" means a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in Section 51 of that Act;
(l)"financial institution" means a financial institution as defined in clause (c) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) and includes a chit fund company, a housing finance institution, an authorised person, a payment system operator, a non-banking financial company and the Department of Posts in the Government of India;
(n) "intermediary" means,--
(i) a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser or any other intermediary associated with securities market and registered under Section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); or
(ii) an association recognised or registered under the Forward Contracts (Regulation) Act, 1952 (74 of 1952) or any member of such association; or
(iii) intermediary registered by the Pension Fund Regulatory and Development Authority; or
(iv) a recognised stock exchange referred to in clause (f) of Section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);]"
As such it makes no room to doubt that the summons (Annexure-2 to the writ petition) issued do not relate to any Banking Company or Financial Institution or Intermediary. The Chartered Accountant virtually is a professional and a facilitator in submitting the account to the Tax Authorities on behalf of any firm or company or of individual. A Chartered accountant can not be categorized as an intermediary as defined in Section 2 (n) of PML Act. Moreover nothing has been brought on record by ED that ED had material in the possession of the authority concern against the petitioners before initiating the investigation as contemplated under Section 5 of PML Act. ED has also not brought on record or even pleaded that the authority concern had recorded in writing the reasons to believe to initiate the investigation as contemplated under PML Act. Only, it has been contended by counsel for ED that proceedings under Sections 5, 17, 18 may be initiated by the ED. Therefore, the action cannot be said to be within the competence of the alleged authorities by issuing notice/summon or by initiating the investigation as contemplated in Annexure-1 to the writ petition. In the facts and circumstances of the case, the action initiating the investigation as alleged by issuing summons cannot be allowed to sustained.
Learned counsel for the Union of India relying upon the judgment of the Apex Court delivered in The Special Director and another Vs. Mohd. Ghulam Ghouse and another,(2004) 3 SCC 440 has submitted that this petition is not maintainable against the show cause notice /summons as held by the Apex Court in this case.
In reply to the argument of Counsel for ED in this respect the learned Counsel for petitioners has contended that the Apex Court has categorically observed that in a large number of cases the Hon'ble Supreme Court has deprecated the practice of High Courts entertaining writ petitions questioning legality of the show cause notices stalling inquiries as proposed and retarding investigative process to find out the actual facts with the participation and in the presence of the parties. But at the same time The Supreme Court has observed that if the High Court is satisfied that the show cause notice was totally non est in the eye of law by absolute want of jurisdiction by the authority to even investigate into the facts the High Court may entertain the petition.
On the basis of aforesaid submissions the learned Counsel for the petitioners contended that impugned summons issued by the authority was totally non est in the eye of law and is a case of absolute want of jurisdiction of the authority to even investigate into the facts.
Learned counsel for the Union of India has further submitted that the contemplated inquiry was initiated in the light of the directions issued by this Court in the case of Vishwanath Chaturvedi Vs. Union of India and others; 2011 (1) ESC 637 on 3.12.2010 and, therefore, the petitioners cannot challenge the competence of the authority concerned to issue impugned notice/summon.
The learned Counsel for the petitioners further submitted that this Court in Vishwanath Chaturvedi's case (Supra) has taken a strict view against lethargic approach of the functionaries of the State and Union of India. The Court simply issued directions on 3.12.2010 to take steps in streamlining rule of law. The direction issued in para 154(vi) is hereinbelow:
"(vi) Directorate of Enforcement, Ministry of Finance, Government of India shall also proceed with search and seizure of assets, property, cash or kind earned under food scam under the Prevention of Money Laundering Act and Foreign Exchange Management Act or any other law time being in force expeditiously."
On perusal of the aforesaid direction makes it clear that it does not given any authority to act beyond the provisions contained in the statute book and direct ED to act in accordance with PML Act or FEMA or any other law time being in forced expeditiously to unscrew the scam. In view of above, ED cannot take advantage of the direction issued by this Court in Vishwanath Chaturvedi's case (Supra) especially when the authorities has no competence to proceed under the provisions of PML Act.
We have considered the submissions of the Counsel for the parties and perused the record.
Letter Dated 16.11.2011(Annexure-1) is very important in the light of submissions raised by the parties . The ED in its letter has categorically mentioned as follows:-
" Investigation into the food scam are being conducted by this office in terms of directions given by the Hon'ble High Court, Allahabad vide order dated 26.2.2010 and 3.12.2010 in W.P.No. 10503 of 2010.(correct year 2009) The Law points raised by you shall be suitably addressed during investigations in the light of provisions under PMLA and the judicial pronouncements."
The Hon'ble Supreme Court in Special Director v. Mohd. Ghulam Ghouse, (2004) 3 SCC 440, at page 442 has observed :
"5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show-cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection granted.
The Supreme Court categorically held that the issue of lack of jurisdiction can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court.
In View of the above without entering into the merit and commenting on any issue in between the parties we are of the firm view that ED before issuing summons (Annexure-2) must have adjudicated upon its own authority to act under PML Act in the light of all the legal pleas including the plea of absolute want of jurisdiction of the authority to even investigate into fact. In view of the aforesaid declaration of Apex Court in Mohd. Ghulam Ghouse's case (Supra), the authority concerned before issuing the summons dated 13.2.2012 (Annexure-2) must have decided all such legal pleas including plea of absolute want of jurisdiction of authority . The issuing of summon (Annexure-2), if allowed to sustain, will amount to rejection of all the pleas raised by Late Om Prakash and after his death by the petitioners, for which no reasoned order after hearing seems to have been passed by the authorities of ED dealing with the matter.
Further, we are of the view that the directions issued by this Court in Vishwanath Chaturvedi's case(supra) do not empower the authorities to act beyond the provision of PML Act or FEMA or any other law for time being in forced.
Hence, the summons (Annexure-2) issued on 13.2.2012 along with schedule attached with the summons is hereby quashed.
Consequently, the writ petition is partly allowed with direction to Opposite Parties specially the Authorities under PML Act shall decide expeditiously all legal pleas touching to the jurisdiction of authorities including the plea of absolute want of jurisdiction to even investigate into fact as raised herein above in this matter and incorporated in this judgment, after giving the opportunity of being heard to the petitioner in person/through the Advocate/Counsel of their choice by speaking and reasoned order under communication to the petitioner in writing before further proceeding under the provisions of PML Act.
The interim order granted by this Court is hereby vacated.
Dated:30.01.2015 akverma