SUKESH GUPTA Vs. GOVERNMENT OFINDIA

JUDGEMENT

(1.) This Criminal Petition, under Sec. 482 of the Code of Criminal Procedure, 1973, is filed by the petitioner, seeking to quash the complaint and investigation in ECIR/05/HYZO/2014, dtd. 25/2/2014 on the file of Joint Director, Enforcement Directorate, Hyderabad Zonal Office, Hyderabad.

(2.) Heard the submissions of Sri M.P.Chandramouli, learned senior counsel and Sri Dil Jit Singh Ahluwalia, learned counsel, appearing on behalf of Sri H.Rajesh Kumar, learned counsel for the petitioner, Sri T.Surya Karan Reddy, learned Additional Solicitor General of India appearing on behalf of respondent No.1, Sri Manu, learned counsel for respondent No.2 and perused the record.

(3.) Learned senior counsel appearing on behalf of the petitioner would inter alia submit that the petitioner is the Director of M/s. MBS Group of companies. The subject ECIR registered against the petitioner and others is liable to be quashed, as the ingredients of Sec. 3 of Prevention of Money Laundering Act, 2002 (for short, 'PMLA') are not made out. Sine qua non for Sec. 3 of PMLA is, firstly, it has to be connected to 'proceeds of crime', as defined under Sec. 2(u) of PMLA and secondly, it has to be projected as 'untainted property'. Further, to constitute offence under PMLA, three ingredients should be satisfied - (i) Placement, which surreptitiously injects the 'dirty money' into the legitimate financial system; (ii) Layering, which conceals the source of the money through a series of transactions and bookkeeping tricks; and (iii) Integration, where the laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals intend. There is distinction between commission of offence under PMLA and commission of scheduled offence. In the instant case, the CBI, ACB, Hyderabad, registered a case in FIR No.RC.01(A)/2013, dtd. 3/1/2013, against the petitioner and others for the offences under Ss. 120B r/w 409, 420, 465, 471, 477A of IPC and Sec. 13(2) read with Sec. 13(1)(d) of The Prevention of Corruption Act, 1988 (for short, 'PC Act'), for allegedly causing wrongful loss to respondent No.2/MMTC Limited, a public sector enterprise, to a tune of Rs.194.00 crores. Though the CBI registered FIR against ten accused persons, the subject ECIR was registered against nine accused persons only. A perusal of the subject ECIR would show that there is no whisper about any property connected/acquired with 'proceeds of crime'. On 25/11/2005, MMTC sent the first MOU for signatures of MBS Impex Pvt. Ltd with the terms already agreed to be put into writing for its record. For the years 2005-11, gold was purchased by MMTC from foreign buyers in USD, with a credit period of 90/180 days. As per the bullion drill, MMTC was mandated to hedge its exposure, subsequently debiting the expenses from the account of the purchaser. It was also mandated to monitor all open rupee transactions on a daily basis and in case the margin is reduced from 5% to 2%, then to either take more margin or to close the transaction. From the Financial Year 2005-11 to 2010-11, MBS purchased gold amounting to over Rs.20,000.00 Crores from MMTC without any dispute, whatsoever. During July, 2011, Foreign Exchange fluctuation occurred and the rupee value suddenly crashed up to 27%, due to which the alleged liability arose. On 5/10/2012, the second MoU was signed between MBS and MMTC, whereby, the MMTC, after due diligence, fixed the total liability of MBS as Rs.181.39 crores as on 31/3/2012 and estopped itself from altering the said liability further. Thereafter, MMTC engaged M/s.KPMG to conduct forensic audit to ascertain liability of MBS. On 31/12/2012, the MMTC lodged a complaint with the CBI, which was registered as RC No.1(A)/CBI/Hyd, for the offences under Ss. 120B r/w 409, 420, 465, 471 and 477A of IPC and Sec. 13 of PC Act. Further, there was no rendition of accounts by MMTC. In fact, MMTC itself owes nearly Rs.270.00 crores to MBS, as per Project Flash Report submitted by M/s.KPMG. Default on the part of MBS in making payments to MMTC due to losses on account of rupee difference, does not, ipso facto, make its funds as 'proceeds of crime' under Sec. 3 of PMLA. Further, the amount derived by the petitioner by selling gold cannot be termed as 'proceeds of crime'. Further, the Enforcement Directorate has issued provisional attachment order, wherein, 45 items of immovable property are mentioned in the schedule, which are alleged to be 'proceeds of crime'. In fact, all the said properties were acquired by MBS prior to 25/4/2011, which is the starting point of the crime, according to the Enforcement Directorate. Further, it is brought to the notice of this Court that since the interim stay granted by this Court was not extended for some time, during the interregnum period, the Provisional Order of Attachment was passed. On extension of interim stay granted by this Court, the said Provisional Order of Attachment was kept in abeyance. Further, the role of the petitioner is in the capacity of representative of the MBS, but not in his individual capacity. MBS filed Arbitration Application No.5 of 2013 seeking appointment of Arbitrator for redressal of disputes with MMTC qua rendition of accounts, which is presently sub judice before the Hon'ble Supreme Court of India. Further, the subject ECIR was registered on 25/2/2014 and the CBI filed charge sheet on 27/11/2014, i.e., after lapse of 9 months. Since none of the alleged scheduled offences are prima facie made out against the petitioner, registration of the subject ECIR, which is based on the scheduled offences, is unsustainable. Further, except the offences under Ss. 120B, 420 and 471 IPC, none of the remaining offences alleged against the petitioner are scheduled offences. Further, this Court, vide order, dtd. 17/9/2019, was pleased to direct that no coercive steps shall be taken against the petitioner in the subject ECIR, including lookout circular. Further, this Court, by order, dtd. 30/9/2019, was pleased to grant stay of all further proceedings in the subject ECIR. The petitioner is innocent and did not commit any offence, much less offence under PMLA. Continuation of proceedings in the subject ECIR against the petitioner is nothing but abuse of process of law. Registration of the subject ECIR and investigating into the same is liable to quashed to secure the interests of justice and ultimately prayed to allow the Criminal Petition as prayed for. In support of his contentions, the learned senior counsel had relied on the following decisions.