Partly allowed

FPA-PMLA-1598/DLI/2017 of Manish Jain v. The Deputy Director, Directorate of Enforcement, Delhi

ATFP15 Apr 2024FPA-PMLA-1598/DLI/2017

Case brief

AI extract

What is this about?

The bench held that a police report under Section 173 Cr.P.C. is not mandatory for retention of seized documents under the PMLA; an FIR suffices. The appeal was partly allowed: incriminating material remains retained, but un-relied articles must be returned to the appellant after the investigation report is received.

What did the court decide?

Return of all un-relied and non-incriminating seized articles to the appellant as soon as the investigation report is received; incriminating documents to be retained.

FPA-PMLA-1598/DLI/2017 of Manish Jain Vs. The Deputy Director… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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MP-PMLA-3054/DLI/2017 Stay FPA-PMLA-1598/DLI/2017

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Manish Jain … Appellant

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Versus

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The Deputy Director, Directorate of Enforcement, Delhi … Respondent Advocates/Authorized Representatives who appeared For the Appellant : Mr. A.T. Patra, Adv. Mr. Shubham Jindal, Adv. For the Respondent : Ms. Nidhi Raman, for E.D. alongwithMr. Akash Mishra

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CORAM

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SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER 15.04.2024

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Present appeal is filed by the appellant against the impugned order dated 22.11.2016 in Original Application No. 59/2016 vide which Respondent-ED was permitted to retain one loose bunch of documents containing pages 1 to 169 and one sealed Dell laptop (latitude 3440) having Product Id 00371-OEM-8992671-00524 of black color as mentioned at page 19 of the impugned order.

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2. As per the facts of the case, Ministry of Defence filed a written complaint dated 12.02.2013 to CBI, New Delhi for registration of FIR against M/s Finmeccania, Italy in the matter of procurement of 12 VVIPs Helicopters from M/s Augusta Westland, UK, a subsidiary of M/s. Finmeccanica, Italy u/s 120(B), 420 IPC r.w.s. 7, 8, 9, 12, 13(2) r.w. 13(1)(d) of Prevention of Corruption Act, 1988. CBI registered FIR for commission of offences u/s 120B IPCr.w.s. 420 IPC, r.w.s. 7, 8, 9, 12, 13(2) r.w. 13(1)(d) of PC Act, against the accused persons. On the basis of the said FIR, ECIR was registered on 03.07.2013 against the suspected / accused persons. As per the allegation, in order to get the contract,

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Rajesh Malhotra

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Member

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FPA-PMLA-1598/DLI/2017

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Manish Jain Vs. The Deputy Director of Enforcement, Delhi

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kickbacks amounting to Euro 30 million were paid to Mr. Christian Michel James and his companies M/s. Global Services, FZE, Dubai and Global Trade and Commerce Limited, UK. For facilitating transfer of kickbacks, Shri Gautam Khaitan, Legal advisor of M/s. IDS Infotech, India introduced Mr. Guido Ralph Haschke and Mr. Carlo Gerosa to Shri Satish Bagrodia and Shri Pratap K Aggarwal, Chairman and Managing Director respectively of M/s IDS Infotech Ltd. India. During investigation, it was revealed that IDS Tunisia was incorporated as 100% subsidiary of M/s. IDS Infotech India, however, the Indian company sold M/s. IDS Tunisia to M/s. Euromed owned by Mr. Hschke and Mr. Gerosa after a few months of its incorporation.

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Another firm, namely, M/s. Aeromatrix was also incorporated with registered office at Delhi and the business of IDS Infotech, India was transferred to M/s. Aeromatrix through a Business Transfer Agreement.

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It is seen that M/s. IDS, Tunisia raised bills amounting to Euro 24.37 million on M/s. Agusta Westland. However, the money transferred to M/s. IDS Infotech, India and M/s. Aeromatrix was 1.88 million and 3.8 million respectively, for the same work for which IDS Tunisai got Euro 24.37 million.

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M/s. IDS, Tunisia inflated the invoice value by resorting to charging higher rates and showing extra man hours to M/s. Agusta Westland SpA and generated illegal funds. After generating money using inflated invoices, some of it was eventually brought to India using Mauritus route by Shri Gautam Khaitan in the garb of FDI.

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Out of 24.6 million Euro received by M/s. IDS, Runisia from M/s. Agusta Westland SpA through the inflated / increased invoices Euro 12.4 million were transferred to M/s Intersteller Technologies, Mauritus which

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Rajesh Malhotra

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Member

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FPA-PMLA-1598/DLI/2017 Manish Jain Vs. The Deputy Director of Enforcement, Delhi

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was controlled by Mr. Gautam Khaitan through M/s. M L Administrators, Mauritius and owned by Mr. Rajiv Saxena.

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During the search on Gautam Khaitan on 22.09.2014, invoices pertaining to the several Mauritius based companies as given in the complaint have been retrieved from the laptop of the present appellant Manish Jain i.e. one of the employee, of M/s. O P Khaitan & Co. at New Delhi, the company of the accused Gautam Khaitan. During investigation, he has not fully disclosed the details pertaining to the above-mentioned invoices and various e-mails recovered from his laptop.

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During initial investigation of Augusta Westland Helicopter Scam, statements of various persons including Mr. Manish Jain, the employee of Sh. Gautam Khaitan, on 04.10.2014 were recorded wherein he surrendered his official laptop for the purpose of investigation from which various incriminating documents relating to M/s. Intersteller Technologies Ltd., M/s. M L Administrators Ltd. and other companies (involved in money laundering) were found. Further, in his statement recorded u/s 50 of PMLA, he admitted that all these documents / information belonged to Sh. Gautam Khaitan.

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Pursuant to the above, search was conducted at his residential premises on 15.06.2016 in which a bunch of documents (loose sheets) containing 169 pages containing activities relating to Sh. Gautam Khaitan and one Laptop “DELL” was seized from the residential premises of appellant, Manish Jain as mentioned at page 19 of the impugned order. Thereafter, Original Application No. 92/2016 was moved before Adjudicating Authority for permission to retain the said articles till conclusion of investigation. The said application was allowed by Learned

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Rajesh Malhotra

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Member

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FPA-PMLA-1598/DLI/2017

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Manish Jain Vs. The Deputy Director of Enforcement, Delhi

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Adjudicating Authority vide impugned order dated 22.11.2016. Aggrieved by the said order, appellant filed the present appeal.

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3. During the arguments, Learned Counsel for the Appellant submitted that there was „no reason to believe‟ by the Adjudicating Authority u/s 8(1) of PMLA that appellant has committed an offence u/s 3 of PMLA or he is in possession of any proceeds of crime, before issuing the notice, in absence of any police report u/s 173 Cr.P.C. He argued that in absence of police report, there is no ground to presume „reason to believe‟ for commission of scheduled offence and thus, there is no question of proceeds of crime. He further contended that Adjudicating Authority can confirm retention only if an order of retention has been passed u/s 20(1) of PMLA. There is no question of confirmation of retention u/s 8(3) in absence of order of retention u/s 20(1). He further stressed that scheduled offences came into effect w.e.f. 01.07.2005, whereas, the alleged instance was committed on 07.03.2005. He further submitted that seized properties are not recovered within the definition of proceeds of crime and thus, there is no question of retaining the same. He further argued that retention can continue u/s 8(3) of PMLA for period not later than 365 days. He pointed out that Respondent-ED has not filed any complaint on the PMLA against the present appellant, but against accused person. Prayer is accordingly made to set aside the impugned order and thereby release the seized articles in favor of the appellant.

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4. On the other hand, Learned Counsel for the Respondent strongly opposed the contention of Learned Counsel for the Appellant on the ground that after the registration of FIR and investigation, it was revealed that there are numerous mails retrieved from the laptop which reflects that Gautam Khaitan alongwith his employee Mr. Manish Jain were used

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Rajesh Malhotra

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Member

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FPA-PMLA-1598/DLI/2017 Manish Jain Vs. The Deputy Director of Enforcement, Delhi

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to send instructions to many Mauritius based companies as mentioned in the complaint on the basis of invoices retrieved from the laptop recovered from the possession of Manish Jain. Accordingly, she submitted that these e-mails clearly show that appellant is part and parcel of the conspiracy with other accused persons in commission of crime. She further pointed out that complaint case is already filed against the main accused persons and most of the seized articles are cited as relevant material in the said case. She further stressed that e- mails retrieved from the laptop is secondary evidence and the primary source of the said printout needs to be retained for proving the prosecution case against the accused persons. She further argued that many Letters of Rogatoryare still pending with various countries and after receiving the report on the said Letters of Rogatorythe role of present appellant will become more specific and he is also likely to be impleaded as accused along with other co-accused persons in supplementary complaint. Prayer was accordingly made to dismiss the present appeal being devoid of any merits.

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5. After hearing the rival submissions, I have given my thoughtful consideration to the same.Para 9 of the Original Application No. 59 of 2016 clearly reflects the role of Manish Jain and the purpose for retaining the seized material recovered from his premises which formed the basis for issuing notice to show cause u/s 8(1) of PMLA Act against appellant Manish Jain. Filing of charge-sheet u/s 173 Cr.P.C. is not mandatory before allowing the application for retention of seized documents. FIR is sufficient for the same. Retention of seized material can be pressed for purpose of investigation under PMLA. The plea of prospective application of amended provision is also not sustainable in view of judgment of Hon‟ble Supreme Court of India in case Vijay

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Rajesh Malhotra

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Member

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FPA-PMLA-1598/DLI/2017 Manish Jain Vs. The Deputy Director of Enforcement, Delhi

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Mandanlal Chaudhary Vs. U.O.I. The relied upon and incriminating

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material seized from the possession of present appellant cannot be returned to him at this stage, as the same will be required during recording of prosecution evidence as primary evidence in the criminal trial to prove the allegations and retrieved printout from the same. Moreover, report onLetters of Rogatoryis yet to be received by the Respondent-ED and after receiving the said report, appellant is likely to be arrayed as an accused person in supplementary complaint as pointed out by Learned Counsel for the Respondent-ED. Hence, question of returning the relied upon and incriminating record at this stage does not arise.

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6. However, Respondent-ED is hereby advised to return all un-relied and non-incriminating seized articles, if any, to the present appellant as soon as report from the various countries is received, if the same are not required for any purpose, instead of dumping the same in its yard. The appeal is disposed of accordingly.

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Appeal disposed of .

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Pronounced in Open Court on this 15^th day of April, 2024.

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(Rajesh Malhotra)

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„AB‟

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Member

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Rajesh Malhotra