,
1. Heard Mr. A.R.L.Sundaresan, learned Additional Solicitor General of India for the appellants; and Mr. Dama Seshadri Naidu and Mr.",
B.Chandrasen Reddy, learned Senior Counsel for respondents No.1 to 4.",
2. This intra-court appeal under Clause 15 of the Letters Patent has been preferred by the appellants against the final order dated 11.01.2023 passed,
by the learned Single Judge allowing W.P.No.39378 of 2022 filed by respondents No.1 to 4 as the writ petitioners.,
3. Respondents No.1 to 4 had filed the related writ petition taking exception to the search and seizure conducted in their premises on 17.10.2022 by,
the appellants and the consequential panchanama as being contrary to Section 17 of the Prevention of Money Laundering Act, 2002 (for short, “the",
PMLA†hereinafter).,
4. Case projected by respondents No.1 to 4 in the writ petition was that respondents No.2 to 4 are Directors of respondent No.1 which is a private,
limited company incorporated under the Companies Act, 1956. Respondent No.1 is engaged in the business of buying and selling of jewellery.",
4.1. Respondent No.1 in the course of its business had availed credit facilities from Syndicate Bank vide sanction letter dated 26.09.2014 to the tune of,
Rs.25.00 crores. Subsequently, in the year 2021, respondent No.1 obtained credit facilities from Kotak Mahindra Bank vide sanction letter dated",
18.10.2021 to the tune of Rs.8.00 crores which was enhanced to Rs.12.50 crores in the year 2022. Respondent No.1 has obtained term loans, housing",
loans, car loans etc., from the said bank for which an amount of Rs.11.00 lakhs has to be paid each month towards interest only.",
4.2. Appellant No.1 informed respondents No.2 and 3 that he has issued search warrant No.42 of 2022 under Section 17(1) of PMLA authorising,
appellant No.2 to conduct search in the premises of respondent No.1 situated at Erramanzil, Somajiguda, Hyderabad. Respondents No.1 to 4 have",
alleged that the search warrant was not served upon them.,
4.3. Be that as it may, on the strength of the said search warrant, appellant No.2 along with other officials conducted search proceedings in the",
premises of respondent No.1 and seized gold and jewellery worth Rs.53,98,56,497.00 and cash to the tune of Rs.1,75,00,000.00 besides other",
documents. Thereafter, appellant No.2 issued panchanama dated 18.10.2022 as per which at around 10:30 am on 17.10.2022 officials of the",
Directorate of Enforcement, Hyderabad, had invited the panchas to witness certain official proceedings to be conducted at premises No.6-3-563,",
Banjara Hills Main Road, Erramanzil Colony, Hyderabad. Appellant No.2 along with the panchas had reached the premises and introduced themselves",
to respondents No.2 and 3. Appellant No.2 had also shown some document purporting to be the search warrant bearing No.42 of 2022 dated,
17.10.2022 issued by appellant No.1 under Section 17(1) of PMLA authorising appellant No.2 to conduct search in the above premises. In the course,
of the search proceedings, appellant No.2 seized the documents found in the premises as per Annexure-A to the panchanama.",
4.4. Appellant No.2 invited Mr. Satyanarayan Sharma, a government panel valuer, to carryout valuation of the stock of jewellery found in the",
premises. As per valuation report dated 17.10.2022, the government panel valuer valued the jewellery at Rs.53,98,56,497.00 which was seized by",
appellant No.2. Appellant No.2 has also seized two mobile phones belonging to respondents No.2 and 3 as per Annexure-B to the panchanama.,
Further appellant No.2 found one almirah in the premises wherein cash to the tune of Rs.48,13,000.00 was found in addition to cash amounting to",
Rs.1,35,00,000.00. Total cash amount of Rs.1,83,13,000.00 was found in the premises of respondent No.1 out of which Rs.1,75,00,000.00 was seized",
by appellant No.2 as per Annexure C to the panchanama. The balance amount of Rs.8,13,000.00 was returned to respondents No.1 to 4.",
4.5. Assailing such action of the appellants, the related writ petition came to be filed for declaring the search and seizure dated 17.10.2022 and",
panchanama dated 18.10.2022 to be illegal and arbitrary and sought for a direction to release the seized jewellery and cash.,
5. On behalf of respondents No.1 to 4 it was contended that the said search and seizure was made without any notice or hearing to respondents No.1,
to 4. All along respondents No.1 to 4 had been cooperating with the investigation. In fact, one Mr. Anurag Gupta, father of respondents No.2 and 3",
and husband of respondent No.4 had received summons from appellant No.2 pursuant to which he had appeared before the Enforcement Directorate,
authorities on 29.09.2022 and on 30.09.2022 when his statement was recorded. Be it stated that Mr. Anurag Gupta is the Director of M/s. Shroff,
Apparels Private Limited. He was earlier a Director of M/s. MBS Jewellers Private Limited from the year 2008 onwards till his retirement in the year,
2013. There was a case against the said company represented by Mr. Sukesh Gupta in which Mr. Anurag Gupta was called for investigation. It was,
asserted that respondents No.1 to 4 have nothing to do with M/s. MBS Jewellers Private Limited Company or with Mr. Sukesh Gupta or with Mr.,
Anurag Gupta.,
5.1. Insofar the seized cash amount is concerned, respondents No.1 to 4 explained that an amount of Rs.1,35,00,000.00 was on account of sale",
proceeds of gold and jewellery, whereas an amount of Rs.48,13,000.00 belonged to the family members of respondents No.2 to 4 details of which",
were mentioned in paragraph 9 of the writ affidavit. Respondents No.1 to 4 had denied that they were involved in any offence, not to speak of the",
offence of money laundering. Impugned search and seizure was grossly arbitrary and even violative of the provisions of PMLA including Section 17.,
The jewellery seized are a part of the stock in trade of respondent No.1 and also the secured assets of financial institutions on the basis of which,
respondent No.1 had availed credit facilities. On the other hand, documents seized would be worth more than Rs.100.00 crores.",
6. The writ petition was contested by the appellants who were arrayed as respondents No.2 and 3 by filing a common counter affidavit along with,
Assistant Director of Enforcement Directorate who was arrayed as respondent No.4.,
6.1. Appellants contended that the writ petition was not maintainable as respondents No.1 to 4 had an alternative remedy under Section 8(1) of,
PMLA.,
6.2. Thereafter, background details of the case were mentioned. It was stated that FIR dated 03.01.2013 was lodged by Central Bureau of",
Investigation (CBI), Hyderabad, whereafter charge sheet No.25/2014 dated 27.11.2014 was filed by CBI before the CBI Court against Mr. Sukesh",
Gupta and officials of Minerals and Metals Trading Corporation Limited (MMTC) under Section 120-B read with Sections 409, 420, 465, 471 and 477-",
A of Indian Penal Code, 1860 (IPC) read with Section 13(2) and Section 13(1) of the Prevention of Corruption Act, 1988 (for short, “the PC Actâ€",
hereinafter). The allegation pertain to purchase of gold bullion under the Buyer’s Credit Scheme which resulted in wrongful loss of Rs.226.82,
crores (principal amount) to MMTC. Since the offences committed under Section 120-B read with Section 420 IPC and Section 13 of the PC Act are,
scheduled offences under the PMLA, appellants initiated investigation under the PMLA by registering Enforcement Case Information Report (ECIR)",
on 25.02.2014. Details of how and in what manner the MBS Group, including Mr. Sukesh Gupta had entered into criminal conspiracy and caused",
wrongful loss to MMTC have been narrated. Though Mr. Sukesh Gupta had filed criminal petition, being Crl.P.No.5196 of 2019, before this Court to",
quash ECIR dated 25.02.2014, the same was however dismissed by this Court.",
6.3. Provisional attachment order dated 26.08.2021 was issued under Section 5(1) of PMLA whereafter Enforcement Directorate provisionally,
1,"Panchanama drawn at M/s MBS Jewellers Private
Limited, Secunderabad
2,"Panchanama drawn at M/s Musaddilal Gems and Jewels
India Pvt. Ltd., 6-3-563, Banjara Hills Main Road,
Erramanjil Colony, Venkataraman Colony, Khairatabad,
Hyderabad
3,"Panchanama drawn at Residence of Shri Anurag Gupta,
Ex- Director of M/s MBS Jewellers Pvt. Ltd., 3-5-784/B
& C, 1st Floor, Musaddilal House, King Koti,
Basheerbagh, Hyderabad
4,"Panchanama drawn at MBS Jewellers Pvt. Ltd., D.No.3-
5-886/1 to 4A, 5th Floor, Ward No.3, Old MLA Quarters
Road, Himayathnagar, Hyderabad â€" 500 029
5,"Panchanama drawn at M/s MBS Jewellers Pvt Ltd.,
Show Room, 40- 1-40, Dutta Plaza, MG Road, Labbipet,
Vijayawada, Andhra Pradesh â€" 520 010
6,"Copy of “Reasons to Believe†forwarded to
Adjudicating Authority (PMLA)
7,"Authorization/Warrant for Search and Seizure in Form
No.I
8,"Forwarding letter and Index signed for forwarding reasons
to believe
9,1
10,Acknowledgment slip in Form No.IV (reasons to believe)
11,Dak Dispatch Register
12,Acknowledgment Slip Register
13,Retention of property order dated 07.11.2022
14,Acknowledgment Slip in Form No. I (Retention Order)
15,Acknowledgment Slip in Form No.II (Retention order)
subordinates and the Deputy Director of the Enforcement recorded the reasons to believe without any date and time, which clearly shows that without",
following the requirements under Section 17 (1) of PML Act conducted search and seizure and seized jewellery, cash and other articles belonging to",
the petitioners.,
10.3. After considering various decisions cited at the bar, learned Single Judge allowed the writ petition by interfering with the search and seizure",
further directing the appellants to release all the jewellery, cash and other articles seized in pursuance of the search warrant/authorisation dated",
17.10.2022. However, liberty was given to the appellants to take such steps as may be contemplated in law but by following the due procedure.",
Learned Single Judge held as follows:,
27. In view of the same, the action of the respondents in conducting search and seizure at the premises of the petitioner No.1-company and the",
residences of petitioners 2 to 4 and seizing of all the cash, jewellery and other articles in pursuance to the search warrant/authorization dated",
17.10.2022 is contrary to Section 17 of Prevention of Money Laundering Act, 2002 and accordingly the same is hereby set aside. The respondents are",
directed to release all the jewellery, cash and other articles seized in pursuance to the search warrant/authorization dated 17.10.2022. It is left open to",
the respondents to take any action, subject to compliance of the required procedure afresh, as contemplated under law.",
11. It is against the aforesaid order of the learned Single Judge dated 11.01.2023 that the present writ appeal came to be filed.,
12. In the proceedings held on 28.02.2023, this Court after adverting to paragraphs 16, 17, 19 and 21 of the judgment of the learned Single Judge,",
noticed from a perusal of the record in original which was produced that there is a handwritten note signed by the Additional Director on 16.10.2022,
recording his satisfaction for undertaking search and seizure action under Section 17 of PMLA. After referring to the discrepancy pointed out by the,
learned Single Judge, this Court directed both the appellants to file separate affidavits to explain the discrepancy and also to clarify whether as to how",
there can be two reasons to believe, one dated 16.10.2022 and the other dated 17.10.2022. While directing the two appellants to file separate affidavits",
within seven days, this Court ordered status quo as on 28.02.2023 to be maintained. Relevant portion of the proceedings dated 28.02.2023 is as under:",
In the admission hearing today, Mr. Anil Prasad Tiwari, learned Standing Counsel for Enforcement Directorate has produced before us the record in",
original which discloses a hand-written note signed by the Additional Director on 16.10.2022 recording his satisfaction for undertaking search and,
seizure action under Section 17 of PMLA. Learned Single Judge noted in paragraph 17 that Additional Director had recorded reasons to believe on,
17.10.2022 whereas the record discloses recording of reasons by the Additional Director on 16.10.2022. This discrepancy needs to be explained, more",
so in the light of the conclusions reached by the learned Single Judge in paragraph 19 as extracted above.,
We therefore direct both the appellants to file separate affidavits to explain the discrepancy and also to clarify as to how there can be two 'reasons to,
believe' of the Additional Director, one dated 16.10.2022 and the other dated 17.10.2022.",
Let the two affidavits be filed within seven days from today.,
In the meanwhile, status quo as on today till the next date shall be maintained.",
13. Pursuant to the aforesaid order dated 28.02.2023, the two appellants have filed separate affidavits.",
14. In the affidavit filed by Mr. Dinesh Paruchuri, Additional Director of Directorate of Enforcement, dated 04.03.2023 it is stated that on the basis of",
materials collected during investigation in ECIR/05/HYDO/2014 he had reasons to believe that respondent No.1 was in possession of proceeds of,
crime and therefore, in accordance with Section 17(1) of PMLA, he had recorded his reasons to believe on the note sheet of the office file on",
16.10.2022. After forming his reasons to believe and recording the same in writing on 16.10.2022, he had authorised the Deputy Director to conduct",
the search and seizure proceedings at the premises of respondent No.1 by issuing search warrant dated 17.10.2022. On the basis of the search,
warrant dated 17.10.2022 issued by him, search and seizure actions were carried out on 17.10.2022 and 18.10.2022 at the premises of respondent",
No.1. Thus, the reasons to believe were recorded on 16.10.2022 and the search warrant based on the said reasons to believe was issued on",
17.10.2022. Therefore, there were no two reasons to believe. He has also referred to the proceedings before the learned Single Judge in",
W.P.No.39378 of 2022. As per directions of the learned Single Judge, copy of authorisation/warrant for search and seizure dated 17.10.2022 which",
was issued by him was submitted before the learned Single Judge in a sealed cover. On examining the said authorisation/warrant for search and,
seizure dated 17.10.2022 learned Single Judge had noted in paragraph 17 of his order dated 11.01.2023 that on 17.10.2022 the Additional Director had,
reasons to believe that respondent No.1 committed the offence of money laundering and therefore authorised the Deputy Director to conduct the,
search and seizure by issuing search warrant dated 17.10.2022. Thus, observations made by the learned Single Judge in paragraphs 17 and 19 of the",
order dated 11.01.2023 are referable to the date of issuance of the search warrant and not the date of recording of reasons to believe. It was,
contended that no two reasons to believe were recorded. A copy of the authorisation (search warrant) dated 17.10.2022 has been annexed to the said,
affidavit.,
15. Appellant No.2 has also filed an affidavit through Mr. Rahul Singhania serving as Deputy Director in the Enforcement Directorate. In his affidavit,
also he has reiterated what has been stated by appellant No.1. According to him, Additional Director had formed his reasons to believe under Section",
17(1) of PMLA on 16.10.2022 that respondent No.1 was in possession of proceeds of crime. Additional Director thereafter authorised the Deputy,
Director to conduct search and seizure proceedings in the premises of respondent No.1 by issuing search warrant dated 17.10.2022. It was on the,
basis of the search warrant dated 17.10.2022 that search and seizure action was carried out in the premises of respondent No.1 on 17.10.2022 and on,
18.10.2022. Thus, reasons to believe were recorded on 16.10.2022 whereafter search warrant based on the said reasons to believe was issued on",
17.10.2022. On the above basis, he submits that no two reasons to believe were recorded. He has also annexed a copy of the authorisation (search",
warrant) dated 17.10.2022 with his affidavit.,
16. Respondents No.1 to 4 have filed counter affidavit to the affidavits filed by the appellants. It is reiterated that learned Single Judge had gone,
through the record which was produced before him and thereafter had recorded a finding that the Additional Director had not recorded any reasons to,
believe; but it was the Deputy Director who was authorised to conduct search and seizure who had recorded the reasons to believe without any date,
and time.,
Thus, apart from the search warrant dated 17.10.2022 another document was produced before the learned Single Judge where reasons to believe",
were recorded by Mr. Rahul Singhania, the Deputy Director, without any date and time. Respondents No.1 to 4 have raised doubts about the",
genuineness of the handwritten note dated 16.10.2022 signed by Mr. Dinesh Paruchuri, Additional Director which was produced before the Court on",
28.02.2023 which is an afterthought and a fabricated piece of document.,
17. Mr. A.R.L.Sundaresan, learned Additional Solicitor General of India representing the appellants submits that learned Single Judge was not at all",
justified in reaching the conclusion that Additional Director of Enforcement Directorate without recording the reasons to believe had issued the search,
warrant and thereafter in quashing the search and seizure action as well as the authorisation.,
17.1. He submits that it is evident from the record that Additional Director had recorded the reasons to believe for conducting search and seizure,
under Section 17(1) of PMLA on 16.10.2022 whereafter the search warrant/authorisation was issued authorising the Deputy Director to conduct the,
search and seizure on 17.10.2022. Therefore, learned Single Judge had fallen in error in holding that Additional Director had not recorded the reasons",
to believe but instead the officer authorised to conduct search and seizure had recorded the reasons to believe, that too without any date and time. He",
submits that the aforesaid finding of the learned Single Judge is contrary to the materials on record and has vitiated the order passed by the learned,
Single Judge.,
17.2. Further submission of learned Additional Solicitor General of India is that pursuant to the order of this Court dated 28.02.2023, two separate",
affidavits have been filed by the Additional Director and by the Deputy Director. In their respective affidavits they have clearly mentioned that the,
reasons to believe were recorded by the Additional Director on 16.10.2022 whereafter warrant of authorisation was issued on 17.10.2022. It was on,
the basis of such search warrant that the search proceedings were conducted on 17.10.2022 and 18.10.2022 in the premises of respondent No.1. The,
entire operation was carried out strictly in conformity with Section 17 of PMLA. Therefore, on this ground itself order of the learned Single Judge is",
liable to be set aside.,
17.3. Further submission of Mr. A.R.L.Sundaresan, learned Additional Solicitor General of India is that immediately after the search and seizure",
operation, appellants had made an application under sub-section (4) of Section 17 of PMLA before the adjudicating authority who will now carry out",
the adjudication in terms of Section 8 of PMLA and thereafter pass necessary order in accordance with law. In the proceedings under Section 8 of,
PMLA, respondents No.1 to 4 would have ample opportunity to put forward their case that the properties seized are not involved in money laundering.",
Therefore, respondents No.1 to 4 have adequate and efficacious remedy under the statute. In any view of the matter, he submits that learned Single",
Judge had erred in entertaining the writ petition and therefore the order of the learned Single Judge dated 11.01.2023 should be set aside.,
18. Per contra, Mr. Dama Seshadri Naidu, learned Senior Counsel for respondents No.1 to 4 submits that learned Single Judge had meticulously",
perused the record and thereafter had come to the conclusion that appellants had conducted the search and seizure operation under Section 17 of,
PMLA without recording the reasons to believe which is the sine qua non for invoking jurisdiction under sub-section (1) of Section 17 of PMLA. He,
submits that respondents No.1 to 4 would be justified in taking the view that presentation of reasons to believe dated 16.10.2022 has been done,
subsequently to cover up the lacuna pointed out by the learned Single Judge. It is therefore clearly an afterthought.,
18.1. He submits that when law requires a thing to be done in a particular manner, it has to be done in that manner. When Section 17 of PMLA lays",
down the manner in which the power of search and seizure has to be exercised, it is not open to the appellants to short circumvent the procedure",
prescribed thereunder and in the process cause enormous harassment to respondents No.1 to 4, besides violating their valuable rights. He therefore",
submits that the appeal filed by the appellants should be dismissed.,
18.2. Learned Senior Counsel further submits that merely because respondents No.1 to 4 would be in a position to contest adjudication proceedings,
under Section 8 of PMLA, it cannot be a ground to overlook lack of jurisdiction on the part of the appellants in taking action against respondents No.1",
to 4 under Section 17 of PMLA.,
19. Supporting the submissions advanced by Mr. Dama Seshadri Naidu, learned Senior Counsel, Mr. B.Chandrasen Reddy, learned Senior Counsel",
also representing respondents No.1 to 4 submits that there is no criminal case or scheduled offence against respondents No.1 to 4. In the absence of,
any predicate offence, no action can be taken against respondents No.1 to 4 under PMLA. The predicate offence which is being highlighted by the",
appellants is of the year 2014 wherein respondents No.1 to 4 are not the accused. Nine years thereafter respondents No.1 to 4 cannot be harassed in,
this manner by the appellants.,
20. At the end of the hearing, Mr. Anil Prasad Tiwari, learned Standing Counsel for Enforcement Directorate has submitted a sealed envelope",
containing the record which we have opened and perused.,
21. Submissions made by learned counsel for the parties have received the due consideration of the Court.,
22. Since Section 17 of PMLA is central to the discourse, the same is extracted in its entirety as under:",
17. Search and seizure:- (1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of,
this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person--",
(i) has committed any act which constitutes money-laundering, or",
(ii) is in possession of any proceeds of crime involved in money-laundering, or",
(iii) is in possession of any records relating to money-laundering, or",
(iv) is in possession of any property related to crime,",
then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to--",
(a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;",
(b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys",
thereof are not available;,
(c) seize any record or property found as a result of such search;,
(d) place marks of identification on such record or property, if required or make or cause to be made extracts or copies therefrom;",
(e) make a note or an inventory of such record or property;,
(f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the",
purposes of any investigation under this Act:,
(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze such",
property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order,",
and a copy of such order shall be served on the person concerned:,
Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of Section 8 or Section 58-B or sub-section (2-A) of",
Section 60, it becomes practical to seize a frozen property, the officer authorised under sub-section (1) may seize such property.",
(2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure or upon issuance of a freezing order,",
forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a",
sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may",
be prescribed.,
(3) Where an authority, upon information obtained during survey under Section 16, is satisfied that any evidence shall be or is likely to be concealed or",
tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that",
evidence:,
Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section.,
(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1-A) shall, within a period",
of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under",
sub-section (1) or for continuation of the order of freezing served under sub-section (1-A), before the Adjudicating Authority.",
23. From the above it is seen that where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of,
Section 17 of PMLA, on the basis of information in his possession, has reason to believe which has to be recorded in writing that any person",
â€" i) has committed any act which constitutes money laundering, or ii) is in possession of any proceeds of crime involved in money laundering, or iii)",
is in possession of any records relating to money laundering, or iv) is in possession of any property related to crime, then subject to the rules made in",
this behalf, he may authorise any officer subordinate to him to â€" a) enter and search any building, place, vessel, vehicle or aircraft where he has",
reason to suspect that such records or proceeds of crime are kept;,
b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys",
thereof are not available; c) seize any record or property found as a result of such search; d) place marks of identification on such record or property,",
if required, or make or cause to be made extracts or copies therefrom; e) make a note or an inventory of such record or property; f) examine on oath",
any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any",
investigation under PMLA.,
24. Pausing here for a moment, we find that sub-section (1) of Section 17 of PMLA deals with two stages: one is at the stage of pre-authorisation and",
the next is the stage of post-authorisation.,
24.1. In the first stage, the Director or any other officer authorised by him not below the rank of Deputy Director must have in his possession certain",
information; on the basis of such information in his possession, he must form reason to believe which must be recorded in writing that any person has",
committed any act of money laundering etc. Therefore, the information in his possession must have a causal relation with the recording of reasons",
which in turn must be the basis for forming the belief that any person has committed an act which constitutes money laundering. Therefore, possession",
of information, derivation of reason from such information and thereafter formation of belief on the basis of the reasons that any person has committed",
an act which constitutes money laundering etc., are the sine qua non or conditions precedent for invoking the power under sub-section (1) of Section",
17 of PMLA.,
24.2. Insofar the second stage is concerned, once the Director or the authorised officer has come to the above conclusion, he may authorise any",
officer subordinate to him to enter and search any building etc., where he has reason to suspect that records or proceeds of crime are kept; break",
open the lock of any door etc; seize any record or property found as a result of such search etc. Insofar the second stage is concerned, the authorised",
officer must have reason to suspect that in any building etc., records relating to money laundering or proceeds of crime are kept etc.; he can enter and",
search such building and seize any record or property found as a result of such search. As opposed to recording of reasons to believe by the Director,
or by the subordinate officer whereafter he can authorise any subordinate officer to enter into and search any building, search any record or property",
etc., provided he has reason to suspect that in such building records or proceeds of crime are kept. Reason to suspect is not equivalent to reason to",
believe. While in the case of reason to believe, there must be objectivity, reason to suspect is subjective.",
25. Be that as it may, under sub-section (2), the authorised officer under sub-section (1) shall immediately after search and seizure forward a copy of",
reasons so recorded along with material in his possession to the adjudicating authority in a sealed envelope and such adjudicating authority shall keep,
such reasons and material for such period as may be prescribed.,
26. Under sub-section (4), the authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1-",
A) shall within a period of thirty days from such seizure or freezing, as the case may be, file an application requesting for retention of such record or",
property seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1-A) before the adjudicating authority.,
27. From the sealed envelope which we have opened, it is seen that a detailed note was prepared by the investigating officer dated 16.10.2022 stating",
that from the materials available it is abundantly clear that the initial and subsequent source of finance of M/s. Musaddilal Gems & Jewels India,
Private Limited is the proceeds of crime acquired by Mr. Anurag Gupta and Mr. Sukesh Gupta. The company was initiated and is thriving on the,
proceeds of crime only. M/s. Musaddilal Gems & Jewels India Private Limited was incorporated by Mr. Anurag Gupta with an ulterior motive to,
show his disassociation from MBS Group and also from Mr. Sukesh Gupta to conceal the proceeds of crime. It is recorded that there is suspicion that,
the accused persons are in possession of documents and properties related to the scheduled offence. It is likely that if summoned, the suspects would",
not disclose the documents and may take steps to further conceal the trail of documents and other evidence. Therefore, it was necessary to conduct",
search under Section 17 of PMLA in the premises mentioned in the note; to identify and seize available incriminating record/documents relating to the,
predicate offence and to the offence of money laundering; relating to the whereabouts of the proceeds of crime; to identify and trace the proceeds of,
crime; to recover incriminating documents relating to commission of the offence of money laundering. This was agreed upon by the Deputy Director,
on 16.10.2022 whereafter the note was put up for perusal and approval of the Additional Director.,
Additional Director recorded his satisfaction on 16.10.2022 as under:,
I have perused the above note and facts and the material placed before me on the file. On the basis of the same, I have reasons to share that the",
above suspect persons and entities are involved in the offence of money laundering and are in possession of records, documents and proceeds of",
crime involved in the offence of money laundering. I agree that search and seizure action under Section 17 of PMLA is required to trace the records,",
documents and proceeds of crime involved in the offence of money laundering. Hence, I hereby authorise the following officers to conduct search and",
seizure at the above mentioned four (4) premises in terms of Section 17 of PMLA. Search warrants issued accordingly.,
1) Benjamen Chettiar, D.D.",
2) Sumit Goyal, A.D.",
3) Rahul Singhania, D.D.",
4) B.S.Saravana Kumar, D.D.",
28. The reasons to believe have been given in detail by the investigating officer which were considered and approved by the Additional Director.,
Therefore, he recorded his satisfaction as extracted supra.",
29. On the above basis, search warrant was issued on 17.10.2022 whereafter search action was conducted on 17.10.2022 in the case of M/s.",
Musaddilal Gems & Jewels India Private Limited. Copy of reasons to believe, copy of search warrant and panchanama, copy of FIR No.01(A)/2013",
dated 03.01.2013 registered by CBI, copy of charge sheet No.25/2014 dated 27.11.2014 filed by CBI and copy of ECIR/05/HYZO/2014, dated",
25.02.2014, were forwarded to the adjudicating authority by the Deputy Director vide forwarding letter dated 21.10.2022.",
30. Since the case is at the very preliminary stage, we have consciously not extracted the entire note prepared, but only extracted the note of the",
Additional Director, lest it causes prejudice to respondents No.1 to 4 in subsequent proceedings. Further the substance of the note is already on record",
in the counter affidavit filed by the appellants before the learned Single Judge.,
31. That being the position, we are of the view that learned Single Judge had erred in holding that no reasons to believe were recorded by the",
Additional Director which vitiated the search action carried out in the premises of respondents No.1 to 4 on 17.10.2022 and in setting aside the search,
action including the search warrant/ authorisation dated 17.10.2022, further directing the appellants to release the seized jewellery, cash etc., to",
respondents No.1 to 4.,
32. Consequently, we set aside the order of the learned Single Judge dated 11.01.2023.",
33. Writ appeal is accordingly allowed.,
Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.",
