GAUTAM KUNDU Vs DIRECTORATE OF ENFORCEMENT: SUPREME COURT OF INDIA (Dated: December 16, 2015)
Prevention of Money Laundering Act - Sections 44(1)(b), 45, 45A, 65, 71 - Securities and Exchange Board of India Act - Sections 3, 8(1), 11(C), 12A, 24 - Code of Criminal Procedure - Section 439 - Indian Penal Code - Section 405
Keywords - money laundering - IPO norms - economic offence - overriding effect - bail application
Whether bail can be rejected to a person accused of committing offence punishable under section 4 of the Prevention of Money Laundering Act, although the bail application would have been considered under the provisions of the Code of Criminal Procedure - YES - SC
Whether the provisions of Prevention of Money Laundering Act has an over-riding effect on the provisions of the Code of Criminal Procedure - YES - SC
Whether the issue of commission of offence under Section 24 of the SEBI Act could be decided on merits, when there is a criminal revision petition for quashing proceedings initiated u/s 24 of SEBI Act is pending before the High Court - NO: SC
The appellant is the Chairman of Rose Valley Real Estate Construction Ltd., a public company incorporated in the year 1999 and registered under the Companies Act, 1956. Certain non-convertible debentures were issued by the Rose Valley by 'private placement method.' No advertisements etc. were issued to the public. The said debentures were issued to the employees of the Company and to their friends and associates after fulfilling the formalities for private placement of debentures. Thus, the appellant collected money under the Ashirbad Scheme by issuing secured debentures by way of private placement in compliance with the guidelines issued by the SEBI from time to time. In 2013, SEBI imposed a penalty of Rs 1 crore upon the Rose Valley for violation of the provisions of Sections 11(C) of the SEBI Act which was reduced to Rs.10 lakhs by the SAT. Later, a letter was issued by SEBI to the appellant Rose Valley informing the appellant about the offences alleged to have been committed by it under the Companies Act, SEBI Act & Regulations, and Section 405 of the Indian Penal Code. The appeal filed by the appellant before the SAT was allowed holding that the appellant Company has repaid all the money collected from the investors. But then in 2013 the Enforcement Directorate based on the information provided by SEBI filed a report alleging commission of offence by the Rose Valley and its officers, punishable under Section 24 of the SEBI Act. The proceedings u/s 24 of the SEBI Act was challenged in the High Court by way of revision and the said revision is pending for hearing and further proceeding of the complaint case.
Thereafter, search and seizure was conducted at the offices of the Rose Valley. From the information provided by ROC, it was observed that Rose Valley had raised money lakhs from 2585 persons by issuing secured debentures to the general public without complying with the erstwhile SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the provisions of Section 117(A) of the Companies Act, 1956 and other provisions of SEBI Act which is a Scheduled Offence under PMLA. When SEBI ordered the Rose Valley to refund the money to the customers of the Ashirbad Scheme, the order was challenged before the SAT. Later in 2014, a Show Cause Notice u/s 8(1) of the PMLA was served upon Rose Valley and its officials. Rose Valley filed a writ petition before the High Court of Calcutta challenging the said Show Cause Notice. The said writ petition was dismissed by the Single Judge of the High Court and finally, the Division Bench also dismissed the said appeal. In the meanwhile, a complaint was filed by the Enforcement Directorate in the Sessions Court against the appellant u/s 4 of PMLA, though no offence was made out against the appellant under Section 3 of the PMLA. The appellant was arrested on 25.03.2015 on suspicion of having committed an offence punishable under the PMLA and is detained in custody since then. While the appellant was in custody, his father expired upon which he moved an application before the High Court for interim bail which was granted. Later in 2015, the appellant again filed a fresh bail application u/s 439 of the Code of Criminal Procedure before the High Court of Calcutta but this time it was rejected.
Having heard the parties, the Supreme Court held that,
++ since the matter is pending before a Division Bench of the High Court in writ jurisdiction, any observation or remarks made here may cause prejudice to the case of both the sides. Therefore, it would be proper only to deal with the matter concerning bail. The contention raised on behalf of the appellant that no offence under Section 24 of the SEBI Act is made out against the appellant, which is a scheduled offence under the PMLA, needs to be considered from the materials collected during the investigation by the respondents. There is no order as yet passed by a competent court of law, holding that no offence is made out against the appellant under Section 24 of the SEBI Act and it would be noteworthy that a criminal revision praying for quashing the proceedings initiated against the appellant under Section 24 of SEBI Act is still pending for hearing before the High Court. It is noted that Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of the PMLA imposes two conditions for grant of bail, specified under the said Act. The proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is a sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45A of the PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of the PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure;
++ the High Court at the time of refusing the bail application, duly considered this fact and further considered the statement of the Assistant General Manager of RBI, Kolkata, seizure list, statements of directors of Rose Valley, statements of officer bearers of Rose Valley, statements of debenture trustees of Rose Valley, statements of debenture holders of Rose Valley, statements of AGM of Accounts of Rose Valley and statements of Regional Managers of Rose Valley for formation of opinion whether the appellant is involved in the offence of money laundering. Therefore, in these circumstances, the High Court has not exercised its discretion capriciously or arbitrarily. Further, it is noted that the High Court has called for all the relevant papers and duly taken note of that and thereafter after satisfying its conscience, refused the bail. Therefore, the High Court has not committed any wrong in refusing bail in the given circumstances.
Appellant's appeal dismissed
2015-TIOL-2707-CESTAT-MUM
NARESH JAISINGH Vs CC: MUMBAI CESTAT (Dated: 16.10.2015)
Cus - Whether appeal lies before the Tribunal against the order by which the application for new Customs House Broker Licence was rejected? No, says CESTAT. [para 6, 6.1]
Appeals dismissed
Held:
+ Working of Custom House Agent/Customs Broker is regulated under self-contained regulation i.e. Customs House Agent Licensing Regulation, 2004 and from 2013, Customs Broker Licensing Regulations, 2013 - These regulations made u/s 146 of the Customs Act, 1962 provides even for appeal provision also - Section 146 in particular clause (g) of sub-section (2) provides that the regulation which is made by the Board may provide for the appeals if any against order of suspension or revocation of licence - In the present case order is neither for suspension nor revocation of license, therefore, under this provision of Section 146 there is no provision for appeal against rejection of application for New Custom House Broker.
+ In CHALR, 2004, in terms of Regulation 22(8), appeal lies against any decision or order passed either for suspension of the licence or revocation of Custom House Agent Licence under Regulation 20 or sub regulation (7) of Regulation 22 - In the present case order against which appeals are filed are not the order(s) passed either under Regulation 20 or 22(7) - however, only Custom House Agent can file appeal under Section 129A of the Customs Act, 1962 - appellant is also not a Custom House Agent.
+ Under CBLR, 2013 there is specific provision for appeal according to which only 'Custom Broker' who is aggrieved by any order passed by Principal Commissioner of Customs or Commissioner of Customs as the case may be under Regulations can file appeal before the Tribunal.
+ Since the appellant's application for New Custom Broker Licence has been rejected, appellant has not attained the status of Custom Broker, therefore appellant is not eligible to file appeal before the Tribunal under Section 129A.
+ As regard the contention of the appellant that Section 129A does not prohibit from filing appeal and according to which any person aggrieved by any decision or order of the Commissioner can file appeal, Tribunal is of the view that once under Section 146 of the Customs Act, specific regulation was framed, the provision of said regulation will prevail over the general provisions under Section 129A.
+ Legislature, while framing regulations has very consciously given right only to Custom Broker for filing appeal as against terms "any person" provided under Section 129A.
+ If "any person" is allowed to act under the Regulation then whole purpose of CBLR shall be redundant, therefore, Tribunal is of the view that when Regulation 21 of CBLR, 2013 and also Regulation 22(8) of CHALR, 2004 person has specified who is eligible to file the appeal i.e. Custom House Agent/Custom Broker, then any person other than such status holder is not eligible for filing appeal against any order.
+ In the present case the appellants have applied for New Custom Broker Licence, the competent authority, i.e. Commissioner granted Custom Broker licence to some of the applicants and applications of some applicants were rejected for one or other reason.
+ Since no appeal provision is provided under law to the person other than Custom House Agent/Custom Broker, the only remedy lies is writ under Article 226/227 of Constitution of India.
+ There is no appeal remedy provided against the rejection of application for New Custom Broker Licence - Appeals dismissed as not maintainable: CESTAT [para 6, 6.1]
Appeals dismissed; Early hearing application dismissed as infructuous
NOTIFICATIONS
it15not093
Rule 37BB on Payment to Non Residents Amended
PMLA_Not_15
National Intelligence Grid and Central Vigilance Commission now entitled to receive information under PMLA
CIRCULAR
dgft15cir004
Relief in Average Export Obligation in terms of Para 5.19 of Hand Book of Procedures of FTP 2015-20.
MIXED BUZZ
Rule 37BB on Payment to Non Residents Amended
CBEC Enhances Monetary Limits for filing appeals to Reduce Backlog
