Chennai- The Madras High Court on Monday said money laundering tends to affect the economic aspects leading to a vicious cycle, whereby its consequential ill-effects burden the common man. Hence, a free and fair investigation into these offences was a prerequisite.
Allowing a petition filed by Directorate of Enforcement, a division bench comprising Justices S M Subramaniam and V Sivagnanam set aside an order of a local court, accepting the closure report filed by Central Crime Branch(CCB) in the predicate offence against lottery baron S Martin and three others.
Following seizure of Rs 7 crore, the CCB filed a case against Martin and the others. Thereafter the ED filed case under PMLA.
“The facts established and the legal position considered made us to arrive at an irresistible conclusion that the Closure Report filed by the CCB dated November 14, 2022 accepted by the Judicial Magistrate-I, Alandur stands set aside”, the bench added.
The bench said it was important that the State and the central investigating agencies act in an unbiased, fair and cautious manner to ensure that the object of PMLA was preserved. Any prejudice or unfair investigation into such offences not only defeats the object of PMLA, but will prevent the course of a fair investigation, thereby saving the offenders from the clutches of PMLA.
Any legislation was ultimately for the benefit of the common citizen. The benefit of the legislation must serve the country and common man. The implementation of the legislation determines the effective functioning of the law. When execution was done in a fair and unbiased manner, it ensures that the fruits of the law reaches the common man. Even in PMLA, the object was to protect the economic strength of our nation.
Hence, it was essential the investigating agencies involved in the process of unearthing the offence pertaining to money laundering do so in a free and fair manner and work with an object to protect the interest of the common man, the bench added.
The bench said the closure report dated November 14, 2022 filed by the police in the predicate offence palpably appears to be wrong.
The State Investigating Officer callously comes to the conclusion that there was no evidence to prove the fabrication of the false document in the form of an ante dated sale agreement March 2, 2012. For the State Police to say so was least expected, when the alteration report was based on the State Government records. Assuming that they were available, even then, the State Government Treasury Records reveal the concerned stamp paper was issued only on March 9, 2012.
The bench said the stamp vendor and the buyer of the stamp paper were unavailable for examination, which would not justify for acceptance of the closure report by the Magistrate. The closure report of the State Police was filed on the findings from the judgment in a petition quashing the predicate offence, but the said judgment had been set aside by the Supreme Court. This renders the reliance on it improper and irrelevant, the bench added.
The bench said the Investigating Officer accepted that A3 paid the income tax on the alleged sale proceeds, overlooking the fact that such declarations could be based on self-assessment without verifying the legitimacy of the transaction. Further, paying income tax on proceeds of crime will not wipe off or erase the facts of illegal sale of lottery tickets, creation of a fabricated document and relying on a false document, as if it was genuine, which were penal offences.
The bench said the impugned order passed by the Magistrate accepting the further action dropped report seems to be a mechanical one, passed without taking note of all relevant facts and materials available on record. The Magistrate accepted the closure report, as if the Court was bound by the report. The Court has not exercised its jurisdiction to examine the materials available in the case and the earlier orders passed by the Supreme Court in the matter. Thus, the acceptance of closure report has resulted in miscarriage of justice happened, the bench added.
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