J. SEKAR @SEKAR REDDY versus DIRECTORATE OF ENFORCEMENT

Citation: [2022] 3 S.C.R. 698 · Decided: 05-05-2022 · Supreme Court of India · Bench: VINEET SARAN, J.K. MAHESHWARI · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
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J. SEKAR @SEKAR REDDY
v.
DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 738 of 2022)
MAY 05, 2022
[VINEET SARAN AND J. K. MAHESHWARI, JJ.]
Prevention of Money Laundering Act, 2002: ss. 3 and 4 – On
facts, seizure of large amount of currency notes and gold from the
appellant – Registration of FIR against the appellant under the
provisions of PMLA in addition to schedule offences under the Penal
Code and Prevention of Corruption Act – Petition seeking quashing
of proceedings – Dismissed by the High Court – On appeal, held:
Chances to prove the allegations in the court are very bleak – CBI
filed closure report in respect of the FIR registered with respect
scheduled offence – Schedule offence not made out because of
lack of evidence – In cases of PMLA, allegations must be proved
beyond reasonable doubt, the the court cannot proceed on the basis
of preponderance of probabilities – Order of attachment of property
not confirmed by the adjudicating authority holding that the said
allegations based on speculations and not on any specific material
– For the currency seized, the tax is already paid – Department
unable to collect any incriminating material and also not produced
before this Court even after a lapse of 5 1D 2 years to prove its
case beyond reasonable doubt – From the material collected by the
Agency, they themselves not satisfied that the offence under PMLA
could be proved beyond reasonable doubt – High Court recorded
the finding without due consideration of the letter of the I.T.
Department and other material in right perspective – Thus, the
findings of the High Court cannot be sustained and the order is set
aside – Code of Criminal Procedure, 1973 – s. 482.
Allowing the appeal, the Court
HELD: 1.1 The I.T. Department made search in the official/
commercial premises of the appellant and other connected
persons. Later, I.T. Department vide communication dated
16.5.2019 which was issued in response to the letter of the
appellant dated 13.5.2019 was satisfied that the cash which was
[2022] 3 S.C.R. 698
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recovered from the officials/commercial premises of the appellant
is explained and tax was paid in the self-assessment for the
Financial Year 2016-17. Therefore, the proceedings started on
the basis of intriguing recovery of cash and other items in fact,
does not exist and the I.T. Department itself was satisfied with
the recovery after investigation in the year 2019. Therefore, the
finding recorded in the impugned order by the High Court with
regard to recovery of new currency notes of denomination of
Rs. 2000 cannot be accepted. [Para 14][705-F-G; 708-C-D]
1.2 It is clear that the FIR with respect to schedule offence
registered by the CBI with respect to proceeds of the crime
including property attached has been closed. On the basis of the
intimation given by the I.T. Department and registration of the
FIR by the CBI which was closed, the Directorate of ED
registered ECIR/CEZO/19/2016 under Sections 3, 4 & 8(5) of
PMLA. After the said FIR, Deputy Director (ED) passed an order
under Section 5(1) of PMLA on 1.6.2017 attaching the property.
For confirmation of attachment, OC No. 785 of 2017 was filed by
the Department which is rejected by the Adjudicating Authority
while exercising the power under Section 5(5) of PMLA. [Paras
15, 16][709-G; 710-A-B]
1.3 In view of the legal position that when chance of
conviction in a criminal case appeared to be bleak, the accused
may be exnoerated and on analysing the report of I.T. Department
and the reasoning given by CBI while submitting the final closure
report in RC MA1 2016 A0040 and the order passed by the
Adjudicating Authority, it is clear that for proceeds of crime, as
defined under Section 2(1)(u) of PMLA, the property seized would
be relevant and its possession with recovery and claim thereto
must be innocent. In the instant case, the schedule offence has
not been made out because of lack of evidence. The Adjudicating
Authority, at the time of refusing to continue the order of
attachment under PMLA, was of the opinion that the record
regarding banks and its officials who may be involved, is not on
record. Therefore, for lack of identity of the source of collected
money, it could not be reasonably believed by the Deputy Director
(ED) that the unaccounted money is connected with the
J. SEKAR @SEKAR REDDY v. DIRECTORATE OF
ENFORCEMENT
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SUPREME COURT REPORTS
[2022] 3 S.C.R.
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