Dismissed

FPA-PMLA-2527/CHN/2018 of Smt. C. Chandra v. The Deputy Director Directorate of Enforcement, Chennai

ATFP23 Sept 2024FPA-PMLA-2527/CHN/2018

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed appeals filed by directors of M/s Deepa Impex India Pvt. Ltd. against the confirmation of a Provisional Attachment Order under the PMLA. The court held that the appellants were validly caught under Section 3(1) of PMLA for wrongful gain from illegal mining by their sub-tenant.

What did the court decide?

The Provisional Attachment Order dated 16.02.2018 was confirmed, and the appeals were dismissed.

FPA-PMLA-2527/CHN/2018 of Smt. C. Chandra Vs. The Deputy Director… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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FPA-PMLA-2527/CHN/2018 Smt. C. Chandra

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FPA-PMLA-2528/CHN/2018 K.C. Kartik Madhav … Appellants

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Versus

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The Deputy Director Directorate of Enforcement, Chennai … Respondent

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Advocates/Authorized Representatives who argued For the Appellant : Mr. Prashant Pandey, Mr. S. Ravi, Mr. Nitin Verma, Ms. Akshita Chand, Advocates.

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For the Respondent : Mr. N.K. Matta, Adv. Mr. Aaditya Raj Sharma, Advocates

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CORAM SHRI V. ANANDARAJAN : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER

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23.09.2024

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Dictated by: Rajesh Malhotra

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Present appeals are filed by the appellants under Section 26

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of PMLA, 2002 against impugned order dated 26.06.2018 in Original Complaint No.899/2018 vide which the Provisional Attachment Order No. 03/2018 dated 16.02.2018 was confirmed

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qua the following property of the appellants.

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S. No.	Document No./Date and details of the Sub-Registrar	Description	Value o property	f the	Present market value as per the govt. guidelines value
1.	Document No. 1526/2010 dated 23.07.2010 registered in the O/o the Sub-Registrar, Periamet, Tamil Nadu	House with 3300 Sq. Ft. area situated at Old Door No. 2, New Door No. 67, Plot No. 2, Aspiran Garden 2^nd Street, Kilpauk, Chennai-600010 in the names of Smt. C. Chandra and Shri K.C. Karthick Madhav, purchased from M/s TTG Industries Ltd. Value	Rs.12,50, as per Deed market mentione the Documen of July, was 1,01,35,	000/- Sale (The value d in Regd. t as 2010 Rs. 000/-)	Rs.2,71,95,300/- Rs.2,71,95,300/-

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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As per the facts of the case, FIR No. 159/2012 Police Station Madurai dated 06.08.2012 was registered against the accused persons namely, M/s Deepa Impex India Pvt. Ltd., Shri K.C. Chandran, Smt. C Chandra and others. After investigation, police of District Madurai filed charge sheet before Hon’ble Judicial Magistrate against the accused persons for commission of offences under Section 120B IPC read with 447, 379, 114, 109, 511, 434, 465, 467, 468, 471, 304(ii) & 420 IPC and also read with Section 3(a) and 4(a) of Explosive Substances Act, 1908 and substantive offences thereunder. As per allegation against the accused persons, during the period from 1995 to August, 2012, in pursuance of a conspiracy, they unauthorizedly entered & encroached in the village communal lands pertaining to the Government in Survey No. 262/4 near the place where they have obtained on lease the land for quarrying; removed the survey boundary stones; unlawfully utilized the explosive substances to endanger the lives of others and to steal the multi-coloured granite stones; unauthorisedly entered, encroached and removed the boundary stones of the government lands in Survey No. 260, pathway Survey No. 261/1, Municipality Road in Survey No. 297/3, 262/3, government dry land in Survey No. 261/3(P) and Kallangutthu village communal land in Survey No. 261/2 (P) and therein they had conducted the mining and sold the granite stones of the government vacant lands, without any lease right, and thereby, caused the loss of Rs.261.89 crores to the State Government. Accordingly, the Superintendent of Police, Madurai District vide letter dated 04.10.2013 intimated Enforcement of Directorate regarding the said case.

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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After going through the FIR and the other material i.e. charge sheet etc., ED registered ECIR No. 12/CEZO/2015 dated 30.12.2015 and started enquiry against the suspects for commission of offences for money laundering under PMLA, 2002. During enquiry it was revealed that: -

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i. The complainant Shri Parthiban is working as Village Administration Officer of Keelavalavu Village, Melur Circle, Madurai District. A-1 viz., M/s Deepa Impex India Pvt. Ltd. is a firm functioning in No. 70/67, Aspiran Garden Colony 2^nd Street, Kilpauk, Chennai-600010 and its directors are Shri K.C. Chandran and his wife Smt. C. Chandra.

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ii. The Government of Tamil Nadu vide Order in GO No. (3D), No.244 Industry (MMB-1) Department dated 1.9.1995 issued an Order permitting A-1 viz., M/s Deepa Impex India Pvt. Ltd. to conduct mining activities in the quarry located at SF. No.297/5(P) to an extent of 1.5 acres in Keelavalavu Village, Melur. During the period from 2010 to August 2012, the Accused herein, jointly and in groups, criminally conspired to quarry in the land adjacent to the leased area viz., crossing the boundaries, removing the boundary stones, trespassed into the said land, used dangerous explosives illegally, with a malafide intention to illegally mine multi coloured granites, encroached upon Government Poramboke Land with an intent to destroy it and in order to make the Government of Tamil Nadu believe that they are going to conduct mining activities only in the leased area, they submitted an application on 09.08.1995, obtained a lease and after obtaining the lease, they conducted mining in the unleased areas belonging to the Government, removed such

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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mined granites and sold the same for wrongful gain for themselves and wrongful loss to the Government. The Accused fabricated a forged document by declaring that the conditions of lease have been fulfilled and wrongfully made the District Collector believe the same. The Accused, by conducting mining in the unleased lands belonging to the Government, quarried Granites and cheated the District Collector. The Accused also damaged the Boundary Stones, did not allocate the 10-meter width for safety, did not fence the area for safety, dug deep pits for mining, knowing fully well that persons employed in the mining area and general public would fall and lose their lives and cheated the Government with a wrongful intent to derive wrongful gain for themselves, and hence, all the above-mentioned accused, hatched the said criminal conspiracy.

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iii. In pursuance of the Criminal Conspiracy, all the accused persons from the year 1995 to August, 2012, illegally mined granite in the unleased area in Survey No.297/5(P) (to an extent of 1.5 acres) i.e. other than the permitted leased area and thereby violated the conditions of lease in the said Lease Order, removed the boundary marks installed by the Government, trespassed into the adjoined Government Poramboke Land in Survey No. 297/5 (P), used Explosives and Machines and without leaving the safety area as prescribed by the government, illegally quarried and mined granites and sold them and thereby caused wrongful loss of Rs.261.89 crores to the government, and accordingly, committed the offence of Section 447, 379, 434 of IPC, 1860 read with Section 109 & 114 of IPC.

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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iv. In pursuance of the said Criminal Conspiracy and as a part to proceed with the said Criminal Conspiracy, A-2 & A-3 had given an undertaking that they shall be mining only in the leased area and that on 02.10.1995, they undertook that they shall not do mining in the unleased area and made the government wrongly believe and gave a fabricated document to the District Collector that they have fulfilled all the leasing conditions and made the District Collector believe the same and executed the lease agreement with the District Collector and by mining in the unleased area, caused loss for Rs.261.89 crores to the government and derived wrongful gain for themselves and thereby A-1 to A-3 have committed an offence under Section 420, 467, 468, 471 of IPC, 1860.

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v. In pursuance of the said Criminal Conspiracy and to proceed with the said Criminal Conspiracy, the accused did not fence the leased area for safety purpose, caused deep pit due to mining in the adjoining government Poramboke Land in Survey No. 261/3 (P), knowing fully well that such deep pit would endanger the life of general public living in the villages around and also their employees, as there is a risk of falling into the deep pit and thereby A-1 to A-3, who had instigated to dig the deep pit, have committed an offence under Section 304 of IPC read with Section 511, 109 of IPC 1860 and accused No. 5 to 14, on the instructions of A-2 & A-3, dug the said deep pit and accordingly committed an offence under Section 304 read with Section 511 of IPC, 1860.

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During investigation/enquiry under PMLA by ED, it is revealed that the experts from Department of Geology & Mining, based on Scientific and Systematic Study using ‘ Total Station

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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Survey ’ had furnished the ‘ Evaluation Report ’ for each quarry, which they have inspected and verified. The inspection team categorically quantified the following:

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		(Cub. Met)	(In Rs. Crore)
A	Total Volume of Granite Quarried in the lease hold area	57392.97	229.57
B	Total Stock available in the Leasehold Area	7906.17	31.62
C	Quantity of Granite Transported from the Leasehold Area(A-B)	49486.80	197.95
D	Allowance @ 10% for block dressing (Rejects)	4948.68	19.79
E	MarketableQuantity (C-D)	44538.12	178.16
F	Quantity for which transport permits obtained	791.49	3.16
G	Quantity of granite transported illegally (E-F)	43746.63	175.00
H	Quantity of granite illegally quarried in the non-lease area-Rate @ Rs.40000 per Cub. Met	65474.50	261.88
I	Total Volume of Granite transported illegally from the leasehold and from the unleased area(G+H)	109221.13	436.88
J	Value of Granite @ Rs.40000/- per M³ (Rs.40000X109221.13)	Rs.436.88 Crore	436.88

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During investigation ED also recorded the statements of many persons under Section 50 of PMLA, 2002. Shri K.C. Chandran and Smt. C Chandra, both Directors of M/s Deepa Impex Pvt. Ltd. in their statements admitted for having received Rs. 60 lakhs towards handing over their leased quarry to Shri P.R Palanisamy of M/s PRP Granites, which resulted in illegal quarry and earnings as mentioned in FIR No. 159/12 dated 06.08.2012 and the consequent charge sheets. The said amount was used by the appellants for purchasing the house confirmed for attachment (as mentioned in para no. 1 above).

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On the basis of material on record, Provisional Attachment Order No. 03/2018 dated 16.02.2018 was passed by ED and thereafter, Original Complaint No. 899/2018 was filed before the Adjudicating Authority for confirmation of PAO. The Adjudicating Authority being satisfied with the complaint and the relied upon documents, issued show cause notice to the appellants for filing

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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their respective replies. After going through the replies and considering the rival submissions, Ld. Adjudicating Authority passed the impugned order dated 26.06.2018 and aggrieved by the same, the appellants filed the present appeals.

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During the arguments, Ld. Counsel for the appellant submitted the appellant obtained the lease for quarrying of granite stones for the period of ten years, which expired on 01.10.2005. The work of said mining was managed by their Manager, Mr. Murugan. He argued that during the subsistence of period of lease, the appellants have already handed over the work of quarry of allocated lease to their neighboring quarry owner Shri P.R. Palanisamy. This fact is specifically told by the appellants and the former employees to ED during investigation/inquiry of this case. From the year 2000 onwards, the appellants have no control over the work of quarrying, and thus, question of any illegal extraction of granite stones on their part, does not arise. Accordingly, Ld. Counsel for the appellants stressed that they are not liable for causing any loss to the state exchequer, as alleged. He contended that the act of illegal quarrying, if any, was done by their sub-lessee Mr. PR Palanisami.

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He argued that sum of Rs.60 lakhs obtained by the appellants against the sub lease of quarrying right, in favour of Mr. P.R. Palanisamy does not amount to proceeds of crime by any stretch of imagination. He submitted that appellants paid sale consideration of 12,50,000/- for purchasing the property from the legitimate sources of income, which is

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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inadvertently/wrongly attached by ED, without appreciating the true facts that Sub-lease amount of Rs.60 lakh cannot be considered as proceeds of crime, and moreover, there is nothing on record that on the date of purchase in July, 2010 the value of said attached property was Rs.1,01,35,000/-, as alleged. Ld. Counsel for the appellant submitted that after giving their lease land on sub-lease to Mr. PR Palanisami, appellants never visited or supervised the work of quarrying and illegal mining, if any, by encroachment of any government land, or, remove the survey stones as alleged. The sub lessee PR Palanisami and his agents are liable for the same, in absence of any conspiracy between sub-lessee and the appellants, as alleged. In view of the above facts and circumstances prayer is accordingly made to allow the present appeals and thereby release the property confirmed for attachment, as mentioned in para 1.

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On the other hand, Ld. Counsel for the respondent ED submitted that present appellants were part and parcel with Mr. PR Palanisami for encroachment of government land, removal of survey stones and illegally quarrying of granite. He argued that even otherwise, Mr. Palanisami being a sublessee and thereby agent of the appellants, the appellants are liable for the act of sub-lessee Mr. P.R. Palanisami and cannot escape from the liability in this regard. He further pointed out that present appellants filed an application for discharge before Ld. Additional District & Sessions Judge CBI Court, Madurai, on the same grounds as mentioned in the

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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appeal, but the said application was dismissed by Trial Court vide detailed order dated 19.03.2024. Ld. Counsel for the respondent ED contended that this Appellate Court cannot re-appreciate the quality of evidence and outcome of investigation conducted by CBI and ED, or to re-appreciate the facts and allegations against the appellants, as their application for discharge is already dismissed vide detailed order on 19.03.2024. Prayer is accordingly made to dismiss the present appeals, and thereby, uphold the impugned order passed by Ld. Adjudicating Authority.

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After hearing the rival submissions, we have given our thoughtful consideration to the same. We are not satisfied with the contention of Ld. Counsel for the appellant, in view of reasoning given by Ld. Special Judge CBI Court in para no. 8 to 10 of order dated 19.03.2024, vide which the application for discharge was dismissed. The said paras are reproduced as under: -

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The Special Public Prosecutor appearing for the complainant has submitted that these petitioners have originally taken lease of the lands for mining purpose and later they allowed the other accused to do mining work and the other accused were doing illegal mining works and they dug in many pits nearing the lease areas to these petitioners. There was a large-scale illegal mining business done by the other accused for charging in this case. These petitioners were originally the lease holders and subsequently, they gave work to the other accused and they have wrongfully conducted illegal mining, which caused wrongful loss of huge amount. Thereafter, a public interest litigant filed a Writ Petition by way of Public Interest Litigation, in which the Hon'ble Madras High

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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Court appointed one Sagayam IAS to conduct a thorough enquiry and file the report. The said Sagayam IAS conducted various enquiries and received reports from the District Superintendent of Police and the Collector and found that there was illegal mining in the said village and also the Government Poramboke land Survey No.261(3)(P), knowing fully well that such deep pit would endanger the life of general public living in the nearby villages. Already the criminal case has been registered U/s 447, 379, 420, 430, 434, 465, 468, 471, 304(ii) r/w 109, 114, 511 of IPC and Section 3(1) & 4(1) of TNP (PD & L) Act and Section 3(a), 4(a) and 6 of Explosive Substances Act, 1908 and also an offence r/w 120(B) IPC on the file of this Court. They have also stated in the final report that the loss of 261.89 crores has been caused to the Government against the wrongful gain made to themselves. These petitioners are also arrayed as accused in the above criminal case pending before Melur, Judicial Magistrate.

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The Special Officer Thiru. Sagayam filed the detailed report before the Hon'ble High Court, Chennai on 24.11.2015 and also sent a copy to the Directorate of Enforcement. The Special Officer has probed the mining activities of 12 sample cases which includes the above said case, relating to M/s Deepa Impex India Pvt. Ltd. and others. The accused in this case, were charged U/s 3 of Prevention of Money Laundering Act and are alleged to have committed the offence and named as accused in the FIR/Final Report in FIR No.159/12 dated: 06.08.2012 and also in an Enforcement Case Information Report (ECIR) No.12/15 dated: 30.12.2015. Thereafter, the investigation under the provision of PMLA, 2002 was initiated. On the investigation, the respondent/complainant found that experts from the Government Geology and Mining based on the scientific and systematic study using "Total Station Survey" had furnished a report, named as “Evaluation Report”, for each quarry they have inspected and verified. With regard to the quarry of M/s Deepa Impex India Pvt. Ltd. at Survey

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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No.26/4, Keelavalavu Village, the above Director reported a quantified loss to the tune of Rs.436.88 crores. Therefore, the complainant during investigation, issued notice for appearance to accused K.C.Chandran and C.Chandra, Directors of M/s Deepa Impex India Pvt. Ltd., and K.C. Chandran has appeared before the investigation team and submitted the statement, stating that the house property with 3300 Sq. Ft. area situated at Old Door No.2 New Door No.67, Plot No.2 Aspiran Garden 2nd Street, Kilpauk, Chennai was registered in the name of Chandra and son K.C.Karthick Madhav, which was purchased during the year 2010 for a sale consideration of Rs.12,50,000/- vide Sale Deed No.1526 of 2010 and another property Office Mookambiga Complex No.4 Lady Desikachari Road, Mylapore, Chennai 600004 in the name of M/s Deepa Impex Pvt. Ltd., purchased during the year 1994 for a sale consideration of Rs.25,500/- vide sale deed No. 2007 of 1994. But the property was mortgaged to Central Bank of India, Chennai Main Branch after releasing the registered mortgage and the company was registered in his wife and son's name in the year 2010. The said document was registered in the year 2010 in Periamet Sub Registrar Office. The respondent/complainant has also investigated Ravi Srinivasan and A5 M. Edward. They have also stated about the work done by the M/s Deepa Impex Pvt. Ltd., Chennai. The respondent/ complainant also obtained statement from all the accused persons namely Selvam, Balaji both employees of M/s Deepa Impex Pvt. Ltd. Murugan, Mohan and also Chandra W/o K.C. Chandran Directors of M/s Deepa Impex Pvt. Ltd. They were all summoned and their statements were recorded U/s 52 and 53 of PML Act. In the statement given by Chandra, she has stated that her husband left the quarry business and handed over the quarry to their adjacent quarry owner P.R.Palamsamy and vacated the quarry site. With regard to specific query about accepting Rs.60,00,000/- by her husband from the said P.R.Palanisamy to hand over their quarry, she

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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had gone through the statement dated: 03.04.2017 given by her husband K.C.Chandran and endorsed that she had completely agreed with her husband's statement dated: 03.04.2017. The respondent/complainant has also recorded the statement of K.C.Karthick Madhav son of the Directors of M/s Deepa Impex Pvt. Ltd.

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Considering the statement and the report filed by the Special Officer and the other documents there is prima facie case that these petitioners/accused have been involved in the wrongful gain made by the other accused and also as per the statement of the 2nd accused, it is stated that her husband Chandran had received Rs.60,00,000/- from the said P.R. Palanisamy for giving the quarry site. Therefore, there are many material evidences to link the petitioners A1 to A3 with other accused who are alleged to have been involved in a large-scale wrongful gain. Therefore, there are plenty of material evidence available in the charge sheet. Therefore, minor discrepancies submitted by the petitioner's counsel will not throw away the guilt of the accused. Only after conducting the elaborate trial, the truth will come to light. Therefore, on perusing the records and reports filed by the Special Officer and the pendency of the criminal cases in which the petitioners are arrayed as accused and other documents and the wrongful gain by the accused, this Court is of the view that there is prima facie case to proceed against the petitioners. Further, as per Section 3A if any person directly or indirectly involved in the proceeds of crime they cannot be presently discharged. Therefore, the reasons stated by the petitioners in the discharge petition is not sustainable and the petition under Section 227 is liable to be dismissed. For the above said reasons and discussions this Court is not inclined to allow this petition.

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In view of the detailed reasoning given in the discharge order dated 19.03.2024 by Ld. Trial Court, we are not

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FPA-PMLA-2527-2528-CHN-2018 Smt. C. Chandra & K.C. Kartik Madhav. v. ED, Chennai

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inclined to interfere with the impugned order passed by Ld. Adjudicating Authority by re-appreciating the quality of evidence collected during investigation by CBI and the enquiry conducted by respondent ED.

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In sequel to our discussion in preceding para, the present appeals are hereby dismissed being devoid of any merits. Pending applications, if any, stand disposed of accordingly, copy of this order be sent to both the parties.

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Appeals Dismissed.

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Pronounced on this 23^rd Day of September, 2024.

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(Rajesh Malhotra) Member

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(V. Anandarajan) Member

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‘PS’

FPA-PMLA-2527/CHN/2018 of Smt. C. Chandra v. The Deputy Director Directorate of Enforcement, Chennai

Case brief

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FPA-PMLA-2527/CHN/2018 of Smt. C. Chandra v. The Deputy Director Directorate of Enforcement, Chennai

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