Musaddilal Gems and Jewels (India) Private Limited Vs Union of India (Telangana High Court)
Telangana High Court held that issuance of search warrant without recording the ‘reasons to believe’ is against the provisions of section 17 of the Prevention of Money Laundering Act (PMLA), 2002 and accordingly the same is liable to be set aside.
Facts- Here, the petitioners are challenging the search and seizure conducted on 17.10.2022 and consequential panchanamas contrary to the Section 17 of the Prevention of Money Laundering Act
The petitioners submitted that the search warrant dated 17.10.2022 was only shown and signatures were forcefully taken and the petitioners could not read the contents of the search warrant. The respondents failed to provide the details of the date and time for the recording of the ‘reasons to believe’ as per the Section 17 (1) of PMLA, 2002 and also failed to provide the contents of the reasons and further the respondents also failed to provide the dispatch details of the postal acknowledgment through which the reasons were communicated and failed to meet the mandatory provisions of Secton-17 of PML Act. The Writ Petition is maintainable under Article 226 by virtue of the full bench judgment of Hon’ble Apex Court.
Conclusion- This Court is of considered view that the Additional Director of the Enforcement Directorate without recording the ‘reasons to believe” issued search warrant/authorisation to his subordinates and the Deputy Director of the Enforcement recorded the reasons to believe without any date and time, which clearly shows that without following the requirements under Section 17 (1) of PML Act conducted search and seizure and seized jewellery, cash and other articles belonging to the petitioners.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Sri B.Chandrasen Reddy, Learned Senior Counsel appearing for the petitioners and Sri T.Suryakaran Reddy, Learned Additional Solicitor-General, for the respondents.
2. The learned Senior Counsel for the petitioners submits that the petitioners are challenging the search and seizure conducted on 17.10.2022 and consequential panchanamas contrary to the Section 17 of the Prevention of Money Laundering Act (for brevity ‘PMLA’).
3. The learned Senior Counsel for the petitioner submits that the petitioner No.1-Company established in the year 2013 and commenced its business from October, 2016 and the petitioner Nos. 2 to 4 are the Directors of the petitioner No.1-Company. The Central Bureau of Investigation (CBI), Hyderabad registered a case against one Mr.Sukesh Guptha and the officials of MMTC for defrauding M/s MMTC Limited in purchase bullion under buyer’s credit scheme in F.I.R.No.RC01/(A)/2013 dared 03.01.2013 and also filed charge sheet No.25/2014 dated 27.11.2014. The petitioner No.1 being independent company, neither the petitioner No.1-company nor its directors are related to the alleged offences registered against Mr.Sukesh Guptha and others. The respondents assuming that there was connection between the petitioners and the above offences, have conducted search in the year 2019 at the premises of the petitioner No.1 company and even at the residence of petitioners No.2 to 4 and has not found any relevant documents and also has not seized any cash, gold or jewellery.
4. The learned Senior Counsel for the petitioners further submits that the petitioner No.1 Company is an independent company and the father of the petitioner No.2 i.e. Mr.Anurag Gupta is never the Director of the petitioner No.1 Company. The petitioner No.1 company is not the benami entity of Mr.Anurag Gupta. The Central Bureau of Investigation after due process and investigation did not make Mr.Anurag Gupta as accused in the offences in charge sheet No.25/21014 dated 27.11.2014.
5. The learned Senior Counsel for the petitioners further submitted that the search warrant dated 17.10.2022 was only shown and signatures were forcefully taken and the petitioners could not read the contents of the search warrant. The respondents failed to provide the details of the date and time for the recording of the ‘reasons to believe’ as per the Section 17 (1) of PMLA, 2002 and also failed to provide the contents of the reasons and further the respondents also failed to provide the dispatch details of the postal acknowledgment through which the reasons were communicated and failed to meet the mandatory provisions of Secton-17 of PML Act. The Writ Petition is maintainable under Article 226 by virtue of the full bench judgment of Hon’ble Apex Court.
6. The learned Senior Counsel for the petitioners submits that the petitioners are attacking the impugned action of the respondents, mainly two grounds viz., (i) the reasons are to be recorded in writing before issuing search warrant and (ii) the reasons are to be communicated immediately after the search and seizure.
7. The learned Senior Counsel for the petitioners, in support of his contention, relied upon the following judgements:
1. Opto Circuit India Limited Vs. Axis bank and others 1
2. M/s Rashmi Metaliks Ltd & Another Vs. Enforcement Directorate & and others 2
3. The State of Maharashtra Vs. B.B.Kothavade 3
4. Sony Music Entertainment India Pvt. Ltd., Vs. The Asst. Director, 4
5. CIT, West Bengal-III and others Vs. Oriental Rubber Works and batch (1984) 5
6. Vijay Madan LalChoudary and others Vs. Union of India 6
8. Sri T.Suryakaran Reddy, the Learned Additional Solicitor General of India, appearing for the respondents, submits that the writ petition filed by the petitioners is not maintainable. The writ petition is filed against the search action dated 17.10.2022 conducted under Section 18 (1) of PMLA, 2002 and subsequent seizures made as per panchanamas. An alternative remedy is available to the petitioners under Section 8 (1) of PMLA, 2002 before the Adjudicating Authority, PMLA, New Delhi. The PML Act itself provides the remedy to the petitioners before the Adjudicating Authority, instead of approaching this Court, as such the Writ Petition is not maintainable.
9. The learned Additional Solicitor General further submits that an FIR No.RC01(A)/2013 dated 03.01.2013 and charge sheet No.25/2014 dated 27.11.2014 was filed by the CBI, Hyderabad against Mr.Sukesh Gupta and officials of MMTC for defrauding M/s MMTC Limited in purchase of gold bullion under Buyer’s Credit Scheme and during the course of investigation it was revealed that MMTC Limited imports bullion from Foreign Suppliers on consignment basis and sells to local customers through its billion centres located at Regional/Sub-Regional Offices including office at Hyderabad. A Provisional Attachment Order (PAO) bearing No.07/2021 dated 26.08.2021 was issued in the subject case under Section 5 (1) of PMLA, 2022 and Enforcement Directorate has provisionally attached movable and immovable properties belonging to MBS Group of companies.
10. The Learned Additional Solicitor General submits that father of the petitioner No.2 Mr.Anurag Gupta is a director of M/s.Shroff Apparels Private Limited which is a shell company and Mr.Anurag Gupta was also Director in M/s. MBS Jewellers Private Limited. The said company and M/s. MBS Impex Private Limited which had defrauded MMTC. Mr.Anurag Gupta was one of the directors of M/s MBS Jewellers Private Ltd., and M/s. MBS Impex Pvt Ltd., during the relevant period when the offences of defrauding MMTC had taken place.
11. The learned Additional Solicitor General further submits that the search action dated 17.10.2022 under Sections 17 and 18 of PMLA, 2002 had been conducted on the basis of ‘Reasons to believe’, duly recorded in writing. The petitioner No.2 had himself acknowledged by signing on the Authorization/Warrant along with the independent panchas/witnesses. The petitioners will have an opportunity of being heard and present their case before the Adjudicating Authrotty, New Delhi in terms of Section 8 of PMLA, 2002.
12. The learned Additional Solicitor General further submits that the respondents are duty to collect evidence and summons were issued to record the statements and collect documents from the witnesses and suspects. The statements were recorded in a professional manner and under Section 50 of PMLA, 2002 and Section 50 (2) of PMLA, 2002 empowers the authorities to summon any person whose attendance considers necessary whether to give evidence or to produce any records during the course of any investigation proceedings under the Act. The petitioners were given an opportunity to appear before summoning authority to adduce evidence as per the principles of natural justice, but instead of cooperating with the authority, the present writ petition is filed questioning the issuance of summons, which is not maintainable.
13. The learned Additional Solicitor-General submits that a writ petition cannot be entertained during summons stage and writ petition is deserves to be dismissed.
14. The learned Additional Solicitor General relied upon the following judgments:
7. Principal Director of Income Tax (Investigation) and others Vs. Laljibhai Kanjibhai Mandalia 7
8. Biswanth Bhattacharya Vs. Union of India 8
15. At the time of hearing, the Learned Senior Counsel appearing for the petitioners mainly argued that the respondents without following the procedure as contemplated under Section 17 of the PML Act conducted search and seizure and even after completion of search also not followed the procedure as contemplated under PML Act.
16. In view of the above submissions made by the learned Senior Counsel appearing for the petitioners, this Court directed the respondents to produce all the relevant records. Accordingly, the respondents have shown the original record to the Court and submitted photo copies of the said record in two (2) sealed covers to the Court. The index of photo copies of the record in two (2) sealed covers are as follows:
