SOUBHIK CHATTOPADHYAY ALIAS SAUBHIK CHATTOPADHYAY V. UNION OF INDIA THROUGH THE DIRECTORATE OF ENFORCEMENT

Cr.M.P./1861/2019

AI Insights

The case involves multiple petitioners, including individuals and companies, challenging the supplementary complaints and cognizance orders issued by the court under the Prevention of Money Laundering Act, 2002. The complaints alleged that the petitioners were involved in channeling illegally earned properties into various assets, constituting proceeds of crime. The petitioners argued that there was no direct involvement or knowledge of the proceeds of crime, and the roles of the directors were not adequately disclosed. However, the Enforcement Directorate provided evidence suggesting that the proceeds of crime were transferred to the petitioners through complex financial transactions. The court dismissed the petitions, allowing the proceedings to continue.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 677217 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 19-09-2022
• Assessment Year: misc
• Other Referred Cases: Dayle De'souza v. Government of India, Through Deputy Chief Labour Commissioner, M/s Maithon Power Limited v. The State of Jharkhand and Another, Narendra Mohan Singh v. Director, Directorate of Enforcement, Vijay Madanlal Choudhary v. Union of India
• Laws Referred To: Prevention of Money Laundering Act, 2002
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AMIT KUMAR DAS; SAHAY GAURAV
• Assessee Lawyers: PANDEY NEERAJ RAI; ROHIT RANJAN SINHA
• Keywords: Accommodation entries; Cognizance; Prevention of Money Laundering; Proceeds of Crime; Supplementary Complaint
• Section: 23; 50; 24; 44; 45

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND, RANCHI ---- Cr.M.P. No. 2503 of 2019 ---- 1.Sanjay Rungta, aged about 47 years, son of Sri Ram Swarup Rungta 2.Ram Swarup Rungta, aged about 82 years, son of late Ram Kumar Rungta Both residents of Pushpanjali, Karam Toli Chowk, P.O.-Ranchi University, P.S. Lalpur, District Ranchi, Jharkhand ….. Petitioners -- Versus -- Union of India, through the Directorate of Enforcement, having its office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-G.P.O., P.S.-Lower Chutia, District Ranchi (Jharkhand) …... Opposite Party With Cr.M.P. No. 779 of 2019 ---- M/s Quantum Power Tech Private Limited, a company duly incorporated under the Companies Act, 1956, having its registered office at B-271, Greater Kailash, P.O. and P.S. Greater Kailash, District New Delhi, through its Director Sri Brajesh Kumar Singh, aged about 47, son of late M.P.Singh, having address as B-271, Greater Kailash, P.O. and P.S. Greater Kailash, District New Delhi ….. Petitioner -- Versus -- Union of India, through the Directorate of Enforcement, having its office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-G.P.O., P.S.-Lower Chutia, District Ranchi (Jharkhand) …... Opposite Party With Cr.M.P. No. 1861 of 2019 ---- Soubhik Chyattopadhyay @ Saubhik Chattopadhyay, aged about 44 years, son of late Sushil Kumar Chattopadhyay, resident of G-724, Orchid Residency, Sonari, P.O. and P.S. Sonari, Jamshedpur, District Singhbhum East ….. Petitioner -- Versus -- Union of India, through the Directorate of Enforcement, having its office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-G.P.O., P.S.-Lower Chutia, District Ranchi (Jharkhand) …... Opposite Party With Cr.M.P. No. 2507 of 2019 ---- Khalari Cements Limited, a company duly incorporated under the Companies Act, 1956, having its registered office at 301, Mangalam Apartment, 24, Hemanta Basu Sarani, P.O. and P.S. Hare Street, District Kolkata (West Bengal) through its authorized representative Mr. Firoz Abdi, aged about 55 years, son of late Wahajur Rahman Abdi, resident of Edalhatu, Near Maszid, P.O. Ranchi University, P.S. Bariatu, District- Ranchi(Jharkhand) ….. Petitioner -- Versus -- Union of India, through the Directorate of Enforcement, having its office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-G.P.O., P.S.-Lower Chutia, District Ranchi (Jharkhand) …... Opposite Party 2 ---- CORAM: HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI --- For the Petitioners :- Mr. Pandey Neeraj Rai, Advocate Mr. Rohit Ranjan Sinha, Advocate For Enforcement Directorate:- Mr. Amit Kumar Das, Advocate Mr. Sahay Gaurav Piyush, Advocate Mrs. Swati Shalini, Advocate Mr. Shvam Utkarsh Sahay, Advocate Mr. Saurav Kumar, Advocate ---- 6/19.09.2022 Heard Mr. Pandey Neeraj Rai, the learned counsel appearing for the petitioners in all the cases and Mr. Amit Kumar Das, the learned counsel appearing on behalf of the respondent-Enforcement Directorate in all the cases. It appears that inadvertently Cr.M.P.No.2670 of 2019 has been tagged with all these petitions. Let Cr.M.P.No.2670 of 2019 be detached from this batch of analogous petitions, which will be decided separately. In all these petitions, challenge has been made for setting aside the supplementary complaint under sections 44 and 45 of the Prevention of Money Laundering Act, 2002 dated 3.5.2019 in E.C.I.R 02/PAT/2009/AD, order taking cognizance dated 3.5.2019, and the cognizance order with regard to supplementary complaint dated 17.7.2018 whereby cognizance has been taken against the companies in connection with E.C.I.R 02/PAT/2009/AD, pending in the court of learned Additional Judicial Commissioner-XVI-cum- Special Judge, PMLA, Ranchi. The complaint has been filed alleging therein that the story projected by the Enforcement Directorate in the said supplementary complaints is that after the investigation of the Vigilance Bureau and then by the CBI into commission of offences, the Enforcement Directorate made further investigation and found that illegally earned properties were 3 channelized into various assets and it became proceeds of crime. It is alleged that the proceeds of crime generated by Sri Madhu Koda were concealed, transferred and invested by his accomplices in various companies. One of his accomplices was Binod Sinha, who was also charged with commission of scheduled offences. His brother Vikas Sinha disclosed in statements made under section 50 of the PMLA that certain properties were purchased out of Biond Sinha’s money, thereby investing proceeds of crime. The modus operandi for investing such proceeds of crime was that Vikas Sinha used to deliver cash himself or through his employees or through the employees of his Chartered Accountant- one S.K.Naredi. The cash was handed over to certain persons like Mr. Chandra Bhushan Jha, Sri Mridul Bhowmick, Mr. Vivek Kumar Goenka and Mr. Pradeep Kumar Paramsukha, who, in turn, would arrange for accommodation entries through certain companies engaged in the business of investment, trading and non-banking financial transaction with certain other companies. Such latter set of companies who were dealing with investment, non-banking finance, etc. provided accommodation entries by issuing cheques in the name of former set of companies connected with these four individuals named above. The companies receiving cheques would then issue cheques in the name of those companies where investments were intended to be made by Vikas Sinha, through share capital or otherwise. These companies who were ultimate recipient of these cheques would receive them as share application or unsecured loan. The companies issuing cheques at the behest of the individuals like Sri Chandra Bhushan Jha and others were doing so as against a 4 small percentage of the money that come from Vikas Sinha by keeping some percentage as what was called as service charge. Mr. Pandey Neeraj Rai, the learned counsel appearing on behalf of the petitioners took the Court to page 35 of the complaint. He submits that there is no allegation with regard to the petitioners that knowingly or they were knowing about the proceeds of the crime and in that view of the matter, the case under the Prevention of Money Laundering Act is not attracted so far the petitioners are concerned. He submits that there is no mens rea of the crime, however, the learned court has taken cognizance by the impugned orders and there is non- application of judicial mind. According to him, the petitioners purchased the share of the company and purchasing the share is not coming under the purview of the Act. He draws the attention of the Court to paragraph no.3.4 of the complaint contained at page 74. He further submits that there is no allegation with regard to the scheduled offence is made out and there is no allegation to that effect. He submits that what is the role of the Directors in the said crime has not been disclosed. According to him, once the company is made accused what are the role of the Directors are required to be disclosed which is lacking in the respective cases. To buttress his such argument, he relied in the case of Dayle De’souza v. Government of India, Through Deputy Chief Labour Commissioner, reported in 2021 SCC OnLine 1012. Paragraph nos.15, 16 and 17 of the said judgment are quoted below: “15. Unlike sub-section (2) to Section 22C, sub-section (1) conspicuously does not use the term ‘director, manager, secretary or other officer of the company’ to bring them within the ambit of the vicarious liability provision, albeit every person in-charge of and responsible to the company for the conduct of its business at the time of the commission of the offence in question is deemed to be additionally liable. The words ‘in-charge of the company’ and ‘responsible to the company’ are pivotal to sub-section (1). This requirement has to be satisfied for the deeming effect of subsection (1) to apply 5 and for rendering the person liable to be proceeded against and, on such position being proved, punished. Interpreting an identical expression used in Sections 23-C(1) and 23-C(2) of the Foreign Exchange Regulation Act, 1947, this Court in Girdhari Lal Gupta v. D.H. Mehta, has held: “6. What then does the expression “a person in- charge and responsible for the conduct of the affairs of a company” mean? It will be noticed that the word “company” includes a firm or other association, and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. It seems to us that in the context a person “in-charge” must mean that the person should be in over-all control of the day to day business of the company or firm. This inference follows from the wording of Section 23-C(2). It mentions director, who may be a party to the policy being followed by a company and yet not be in-charge of the business of the company. Further it mentions manager, who usually is in charge of the business but not in over-all charge. Similarly, the other officers may be in-charge of only some part of business. Xxxxxxxxx 8. In R.K. Khandelwal v. State D.S. Mathur, J., in construing Section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed: “There can be directors who merely lay down the policy and are not concerned with the day to day working of the company. Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offence committed by the Company unless the other ingredients are established which make him criminally liable.”” 16. Those not in overall control of the day to day business of the company or the firm are not deemed to be constructively liable under Section 23-C(1) of the Foreign Exchange Regulation Act, 1947. 17. This exposition on the meaning of the term ‘in-charge and responsible for’ was referred to with approval in State of Karnataka v. Pratap Chand. This decision relates to the prosecution of the partner of a firm under the Drugs and Cosmetics Act, 1940. The judgment referred to the explanation to Section 34 in the said Act (which is pari materia with the explanation in Section 22C of the Minimum Wages Act, 1948) to observe that for the purpose of imposing liability on the company under the said Section, a company includes a body corporate, a firm or an association of individuals. A director in relation to a firm means a partner in that firm. Therefore, even 6 in the case of partners, when a firm commits an offence, the requirement of either sub-section (1) or sub-section (2) to Section 22C must be satisfied. This means that in terms of sub- section (1), the partner should be “in-charge of” and “responsible to” the firm for the conduct of its business as per the dictum in Girdhari Lal Gupta (supra). Further, as per sub- section (2), a partner may also be liable, just as a director is liable for the conduct of the business of a company, if the offence is committed with the consent or connivance of, or is attributable to any neglect on the part of the partner concerned.” He further relied in the case of M/s Maithon Power Limited v. The State of Jharkhand and Another decided by this Court vide order dated 14.02.2022 in Cr.M.P.No.2193 of 2018. Relying on these cases, he submits that the Directors are not the overall in-charge. Mr. Rai, the learned counsel for the petitioners further submits that the case of the co-accused was dismissed by the court at pre-investigation stage. Per contra, Mr. Amit Kumar Das, the learned counsel appearing on behalf of the respondent-Enforcement Directorate (ED) in all the cases submits that there are materials on record which suggest that the proceed of crime has been transferred by the accused company in favour of the petitioners. He further submits that the argument as has been advanced by the learned counsel for the petitioners that the share has been purchased by the petitioners and are not the proceeds of crime is not sustainable in view of the fact that the witnesses who have been disclosed in the complaint petition have submitted that they were not knowing as to whether the share has been transferred or not. He further submits that the section 23 of the Prevention of Money Laundering Act, 2002 prescribes of presumption in interconnected transactions. He further submits that the presumption is required to be proved by the accused in light of section 24 of the said Act in course of the trial. He submits that this section has recently been considered by the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary v. Union of 7 India, reported in 2022 SCC OnLine 929 paragraph nos.279 to 284 and at paragraph nos.327 to 335. Mr. Das, the learned counsel appearing for the Enforcement Directorate further submits that so far other accused persons are concerned Binod Kumar Sinha, Vijay Joshi and Vikash Kumar Sinha @ Vikash Sinha; they have moved before this Court for quashing of entire proceeding in their respective cases wherein, the case of Binod Kumar Sinha in W.P.(Cr.) No.257 of 2012 with Cr.Rev.920 of 2012 with Cr.Rev.699 of 2011 which has been dismissed, the case of Vijay Joshi in Cr.M.P.No.1283 of 2010 which has been dismissed as withdrawn and in the case of Vikash Kumar Sinha @ Vikash Sinha in W.P.(Cr.) No.349 of 2010, which stood dismissed. He submits that supplementary complaint is maintainable as has been held by the Hon’ble Jharkhand High Court in the case of Narendra Mohan Singh v. Director, Directorate of Enforcement reported in 2014 SCC OnLine Jhar 2861. In the light of the above submissions of the learned counsels appearing on behalf of the parties, the Court has gone through the materials on record and finds that there are allegations against the petitioners, the company as well as the Directors who are the petitioners in the respective petitions. In paragraph no.17 of the complaint it has been disclosed that their transactions were limited to provide accommodation entries in lieu of cash only that on receipt of cash, cheques were issued to the companies either as share application or loan. One of the witness Shri Mridul Bhowmick at paragraph no.18 of the complaint has stated that he is not knowing that whether any share certificate is in possession and he was not aware whether any share certificate has been issued at all. Vivek Kumar Goenka has said so in paragraph no.19 of the complaint. Thus, prima-facie it appears that intentionally the proceed of the crime has been transferred in the name of share to the petitioners and the petitioners’ firm. So far as the 8 contention of Mr. Roy, the learned counsel for the petitioners with regard to mens rea is concerned that can only be decided at the time of trial.. It is well settled that when the prosecution relies upon the materials, strict standard of proof is not to be applied at the stage of issuance of summons nor to examine the probable defence which the accused may take and all that the court is required to do is to satisfy itself as to whether there are sufficient grounds for proceeding before summoning the accused and the facts stated will have to be accepted as they appear on the very face of it. For issuance of process against the accused it has to be seen only whether there is sufficient ground for proceeding against the accused and for that the Court is not required to weigh the evidentiary value on the basis of materials on record and the only thing the Court is required is to apply its judicial mind and in the case in hand the learned court has taken cognizance by a speaking order. There is no illegality in the order taking cognizance. In the case of Dayle De’souza v. Government of India, Through Deputy Chief Labour Commissioner(supra) relied by Mr. Roy, the learned counsel for the petitioners that case was arising out under the Minimum Wages Act and considering section 22 of Minimum Wages Act, the Hon’ble Supreme Court has held at its paragraph nos.15, 16 and 17 which have been referred hereinabove. In the case in hand, some of the petitioners are Directors and the companies are also the petitioners and hence that judgment is not helping to the petitioners. In Cr.M.P.No.2193 of 2018 the facts and circumstances of that case was different in which section 276(B) of the Income Tax Act was the subject matter for consideration. Admittedly, section 23 of the Prevention of Money Laundering Act, 2002 speaks of presumption in interconnected transactions and the burden of proof is on the accused in light of section 9 24 of the said Act which can be proved in the trial. These two sections have been held to be legal in the case of Vijay Mondal Choudhary and Ors. V. Union of India by the Hon’ble Supreme Court. The Court is not required to examine such factual submissions which may be led by Mr. Rai, the learned counsel appearing on behalf of the petitioners, at this premature stage that the prosecution evidence is yet to be led in the trial. The complaint does base on the certain statement, evidence of certain persons it is not necessary to obey the factual prosecution which is said out of running proceeds of crime and the Court is not required to go into the details of that statement while will hamper or embarrass the learned trial court. Moreover, the quashing application of the co-accused have been dismissed by this Court as discussed (supra). In view of the above facts and the submissions of the learned counsels for the parties as well as the reasons and the analysis, the Court is not willing to quash the entire proceeding including the order taking cognizance. Accordingly, Cr.M.P. No.2507 of 2019, Cr.M.P. No.779 of 2019, Cr.M.P. No.1861 of 2019 and Cr.M.P. No.2503 of 2019 stand dismissed. Interim orders granted earlier in the respective cases are hereby vacated. I.A., if any, also stands disposed of. ( Sanjay Kumar Dwivedi, J.) SI/; "