IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 29TH DAY OF AUGUST, 2019 BEFORE HON BLE MR. JUSTICE ARAVIND KUMAR WRIT PETITION NO.5299/2019 C/W W.P.NOs.5408/2019, 5420-5423/2019,5824/2019 & 6210/2019(GM-RES) IN W.P.NO.5299/2019: BETWEEN: SRI. SACHIN NARAYAN S/O LATE H.G. NARAYAN AGED ABOUT 40 YEARS R/AT NO.902, 9TH CROSS 6TH MAIN, 2ND STAGE WEST OF CORD ROAD BANGALORE 560 086. ... PETITIONER (BY SRI. KAPIL SIBAL, SRI. C.V. NAGESH, SRI. B.V. ACHARYA, SENIOR COUNSELS FOR SRI. SANDEEP PATIL, ADVOCATE) AND: 1. INCOME TAX DEPARTMENT BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV.) UNIT-3(1), C.R. BUILDING (ANNEXE), QUEENS ROAD BANGALORE 560 001. 2. ENFORCEMENT DIRECTORATE ENFORCEMENT DIRECTORATE 2 MINISTRY OF FINANCE GOVERNMENT OF INDIA 6TH FLOOR, LOK NAYAK BHAWAN, KHAN MARKET NEW DELHI 110 003 REP. BY SPECIAL PUBLIC PROSECUTOR. ... RESPONDENTS (BY SRI. PRABHULING K NAVADAGI, THEN ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) AND SRI. K.M. NATARAJ, ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) FOR SRI. JEEVAN J NEERALGI, ADVOCATE AND SRI. UNNIKRISHANAN, ADVOCATE FOR R-1 AND R-2 ) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH PRIVATE COMPLAINT DATED:13.06.2018 IN SPL.C.NO.759/2018 PENDING BEFORE LXXXI ADDITIONAL CITY CIVIL & SESSIONS JUDGE, BENGALURU (VIDE ANNEXURE-A). IN W.P.NO.5408/2019: BETWEEN: SRI. ANJANEYA HANUMANTHAIAH S/O HANUMANTHAIAH AGED ABOUT 44 YEARS R/O GOK QUARTERS NO.1, R.K. PURAM SECTOR 6 PHASE 2, NEW DELHI 110 022. ... PETITIONER (BY SRI. SHASHIKIRAN SHETTY, SR. COUNSEL FOR SMT. LATHA S SHETTY, ADVOCATE) 3 AND: 1. PRINCIPAL DIRECTOR OF INCOME-TAX (INV) 3RD FLOOR, C.R. BUILDING ANNEXE, QUEENS ROAD BENGALURU 560 001. 2. JOINT DIRECTOR OF INCOME-TAX (OSD) UNIT 1(1), OFFICE OF PRINCIPAL DIRECTOR OF INCOME-TAX (INVESTIGATION) 3RD FLOOR, C.R. BUILDING ANNEXE, QUEENS ROAD BANGALORE 560 001. 3. CENTRAL BOARD OF DIRECT TAXES THROUGH SECRETARY MINISTRY OF FINANCE NORTH BLOCK NEW DELHI 110 001. 4. DIRECTORATE OF ENFORCEMENT THROUGH ASSISTANT DIRECTOR, MINISTRY OF FINANCE DEPARTMENT OF REVENUE 6TH FLOOR, LOK NAYAK BHAWAN NEW DELHI 110 001. ... RESPONDENTS (BY SRI. PRABHULING K NAVADAGI, THEN ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) AND SRI. K.M. NATARAJ, ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) FOR SRI. JEEVAN J NEERALGI, ADVOCATE FOR R-1 AND R-2 SRI. UNNIKRISHANAN, ADVOCATE FOR R-3 AND R-4) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH SANCTION FOR PRESECUTION DATED:28.05.2018 PASSED BY RESPONDENT PRINCIPAL DIRECTOR OF 4 INCOME TAX [INV] BANGALORE AND CONSEQUENTLY QUASH ALL FURTHER PRCEEDINGS PURSAUNT TO SANCTION ORDER [ANENXURE-A]. IN W.P.NOs.5420-5423/2019: BETWEEN: MR. RAJENDRA N S/O KANDASWAMY AGED ABOUT 73 YEARS PERMANENTLY RESIDING AT NO.8B, DDA MG FLAT SARAI JULANA, OPP. ESCORT HEART RESEARCH INSTITUTTE SUKHDEV VIHAR NEW DELHI 110 001. ... PETITIONER (BY SRI. D.N. NANJUNDA REDDY, SR. COUNSEL FOR SRI. M.S. SHYAM SUNDAR, ADVOCATE) AND: 1. INCOME TAX DEPARTMENT BANGALORE OFFICE CENTRAL REVENUE BUILDING BENGALURU 560 001 BY COMMISSIONER OF INCOME TAX OF AUTHORIZED OFFICER. 2. PRINCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION) INCOME TAX DEPARTMENT CENTRAL REVENUE BUILDING BENGALURU 560 001. 3. DY. DIRECTOR OF INCOME TAX (INV) INCOME TAX DEPARTMENT 5 UNIT-3 (1), CENTRAL REVENUE BUILDING, BENGALURU 560 001. 4. DIRECTORATE OF ENFORECEMENT 6TH FLOOR, LOK NAYAK BHAVAN, KHAN MARKET NEW DELHI 110 003 BY ASSISTANT DIRECTOR. 5. DIRECTORATE OF ENFORCEMENT 3RD FLOOR, B BLOCK BMTC, SHANTHINAGAR TTMC SHANTHINAGAR BANGLAORE 560 027 REPRESENTED BY JOINT DIRECTOR, BANGALORE ZONE. ... RESPONDENTS (BY SRI. PRABHULING K NAVADAGI, THEN ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) AND SRI. K.M. NATARAJ, ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) FOR SRI. JEEVAN J NEERALGI, ADVOCATE FOR R-1 TO R-3 SRI. UNNIKRISHANAN, ADVOCATE FOR R-4 AND R-5) THESE W.Ps. ARE FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH ORDER OF SANCTION ISSUED BY PRINCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION), BENGALURU ON INCOME TAX DEPARTMENT BY ORDER DATED:28.05.2018 VIDE ANNEXURE-A TO ABOVE W.P. IN W.P.NO.5824/2019: BETWEEN: 6 SRI. SUNIL KUMAR SHARMA S/O D.P. SHARMA AGED 43 YEARS R/AT NO.328, SANGEETHA BHAVAN, TSP ROAD KALASIPALYAM BENGALURU 560 002. ... PETITIONER (BY SRI. A. SHANKAR, SR. COUNSEL FOR SRI. OMKARESHA, ADVOCATE) AND: 1. PRL. DIRECTOR OF INCOME TAX (INVESTIGATION) 3RD FLOOR, C.R. BUILDING (ANNEX), QUEENS ROAD BANGALROE 560 001. 2. INCOME TAX DEPARTMENT BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV) UNIT-3 (1) C.R. BUILDING (ANNEX), QUEENS ROAD BENGALURU 560 001. 3. ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT 6TH FLOOR, LOK NAYAK BHAVAN KHAN MARKET, NEW DELHI 110 003. 4. JOINT DIRECTOR ENFORCEMENT DIRECTORATE BENGALURU ZONAL OFFICE 3RD FLOOR, B BLOCK BMTC BUILDING, SHANTHINAGAR BENGALURU 560 027. ... RESPONDENTS (BY SRI. PRABHULING K NAVADAGI, THEN ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) AND 7 SRI. K.M. NATARAJ, ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) FOR SRI. JEEVAN J NEERALGI, ADVOCATE FOR R-1 AND R-2 & SRI. UNNIKRISHANAN, ADVOCATE FOR R-3 AND R-4) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH SANCTION ORDER ISSUED BY R-1 DATED:28.05.2018 PRODUCED AS ANNEXURE-B AND QUASH COMPLAINT REGISTERED IN CC.NO.129/2018 BEFORE SPECIAL COURT FOR ECONOMIC OFFENCES, BENGALURU NOW CONVERTED TO SPL.CC.NO.759/2018 BEFORE COURT OF HON'BLE 81TH ADDL. CITY CIVIL AND SESSIONS COURT AT BENGALAURU [CCH-82], BENGALURU, PRODUCED AS ANNEXURE-G FILED BY R-2 DATED:13.06.2018 AND COGNIZANCE TAKEN BY SPECIAL COURT FOR ECONOMIC OFFENCES UNDER ORDER DATED:18.6.2018 OF OFFENCES PUNISHABLE U/S.277 AND 278 OF INCOME TAX ACT, 1961 AND 193, 199, AND 120B OF IPC PRODUCED AS ANNEXURE-H IN W.P.NO.6210/2019: BETWEEN: SRI. D.K. SHIVAKUMAR S/O D.K. KEMPEGOWDA AGED ABOUT 57 YEARS R/AT NO.252, 18TH CROSS SADASHIVANAGAR BENGALURU 560 080. ... PETITIONER (BY SRI. KAPIL SIBAL, SR. COUNSEL FOR SRI. ARAVIND V CHAVAN, ADVOATE) AND: 1. PRL. DIRECTOR OF INCOME TAX (INVESTIGATION), 3RD FLOOR 8 C.R. BUILDING, (ANNEX) UEENS ROAD BANGALORE 560 001. 2. INCOME TAX DEPARTMENT BY ITS DEPUTY DIRECTOR OF INCOME TAX (INV) UNIT-3 (1), C.R. BUILDING (ANNXE) QUEENS ROAD BENGALURU 560 001. 3. ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT 6TH FLOOR, LOK NAYAK BHAVAN KHAN MARKET NEW DELHI 110 003. 4. JOINT DIRECTOR ENFORCEMENT DIRECTORATE BENGALURU ZONAL OFFICE 3RD FLOOR, B BLOCK BMTC BUILDING, SHANTHINAGAR BENGALURU 560 027. ... RESPONDENTS (BY SRI. PRABHULING K NAVADAGI, THEN ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) AND SRI. K.M. NATARAJ, ADDL. SOLICITOR GENERAL OF INDIA (KARNATAKA) FOR SRI. JEEVAN J NEERALGI, ADVOCATE FOR R-3 AND R-4 SRI. UNNIKRISHANAN, ADVOCATE FOR R-1 AND R-2) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH SANCTION ORDER ISSUED BY FIRST RESPONDENT DATED:28.05.2018 PRODUCED AS ANNEXURE-A. THESE PETITIONS COMING ON FOR FURTHER HEARING THIS DAY, COURT MADE FOLLOWING: 9 ORDER In these writ petitions though initially reliefs as set out in respective writ petitions was sought for, they have restricted to single prayer only by filing memos on 07.03.2019 stating thereunder that they would not press other prayers as indicated in respective memos and would restrict their prayer as indicated therein. In other words, prayer sought for in all these writ petitions relates to quashing of summons issued to petitioners by Enforcement Directorate (for short ED ) to appear before them for investigation. reliefs now sought for in respective writ petitions relates to quashing of summons issued by ED and for immediate reference prayer sought for in W.P.No.5824/2019 is extracted herein below: e. issue appropriate writ or order declaring that action of Enforcement Directorate Authorities registered ECIR/HQ/4/2018 for alleged offence under Prevention of Money Laundering Act, 2012, whereby 10 necessitating petitioner to appear for investigation and other proceedings as illegal and resultantly quash summons issued to petitioner dated 15.02.2019 vide Annexure-L and summons dated 25.02.2019 vide Annexure-M to writ petition and quash all further proceedings pursuant thereto. Hence, these writ petitions are examined in background of above prayer sought for which is identical in all these writ petitions. 2. I have heard arguments of Sri. Kapil Sibal, Sri.B.V.Acharya, Sri.A.Shankar and Sri. Shashikiran Shetty, learned Senior Advocates and Sri.Sham Sundar, learned Advocate appearing for petitioners and Sri.K.M.Nataraj, learned Additional Solicitor General of India, Sri.Prabhuling K Navadgi, then Learned Additional Solicitor General of India assisted by Sri.Unnikrishnan, learned Central Government Standing Counsel for Enforcement 11 Directorate and Sri.Jeevan Neeralagi, learned Standing Counsel appearing for Income Tax Department. 3. Sri Kapil Sibal, learned Senior counsel appearing for petitioner in W.P.No.6210/2019 would contend that basis on which Enforcement Directorate have issued summons to petitioner to appear before them is for purported investigation being carried, which is offshoot of search conducted by Income Tax Department and complaint having been filed before jurisdictional Court after purportedly obtaining sanction under Section 279(1) of Income Tax Act, 1961 (for short IT Act ) alleging thereunder, that accused No.1 i.e., Sri D K Shivakumar committed offence punishable under Sections 276C(I), 277 of IT Act and Sections 193 and 199 read with Section 120B of IPC and accused Nos.2 to 5 had committed offence punishable under Sections 278, 277 of IT Act and Sections 193 and 199 read with Section 120B of IPC and to take cognizance for which offences are not scheduled offences under 12 provisions of Prevention of Money Laundering Act, 2002 (for short PML Act ). He would contend that Section 120B of IPC cannot be invoked in absence of predicate offence and offence under IT Act not being scheduled offence, proceedings under PML Act cannot be continued. He would also contend that plain reading of definition clause of Section 2(p), 2(u) & Section 3 of PML Act would clearly indicate that it is only proceeds of crime if attempted to be ploughed into main stream of economy would attract definition of money laundering and offence alleged to have been committed by petitioner even according to respondents being under IT Act and same not being scheduled offence, which is sine qua non for provisions of PML Act being attracted, question of petitioner appearing before ED does not arise. He would elaborate his submission by contending that offence punishable under Section 276C(1) and Section 277 of IT Act are compoundable offences under Section 279(2) and stage has not come where 13 prosecution can be lodged and procedure adopted by enforcement authority is unknown to cannons of law. Hence, he seeks for quashing of summons issued to petitioner to appear for investigation and entire proceedings pending before ED. 4. Sri B.V.Acharya, learned Senior counsel appearing on behalf of petitioner in W.P.No.5299/2019 would submit that very initiation of prosecution against petitioner for alleged offences punishable under IT Act has been challenged by petitioner in W.P.No.32593/2018 by questioning validity of sanction order, contending interalia that said authority who had issued sanction order to prosecute petitioner did not possess authority and said order is without jurisdiction and he is not competent authority empowered to grant such sanction under Section 279(1) of IT Act, which fact had been taken note of by co-ordinate Bench and by order dated 30.07.2018 had granted stay of further proceedings pursuant to order passed by jurisdictional Court 14 taking cognizance of offence, which order of stay enures to benefit of petitioner and as such, Enforcement Directorate could not have issued impugned notice/summons calling upon petitioner to appear for investigation. He would draw attention of Court to Section 279(1A) of IT Act in respect of which, penalty is imposable for offence under Section 276C and 277 of IT Act and as such proceedings under PML Act cannot be continued against petitioner. He would contend that order of stay passed in W.P.No.32593/2018, in effect would mean that no proceedings can be taken or proceeded with against petitioner by Enforcement Directorate, inasmuch as, impugned notice is continuation of proceedings before Special Court which is offshoot of search made under provisions of IT Act. He would also draw attention of Court to sanction order dated 28.05.2018 (Annexure-G) to contend that Section 120B of IPC having been referred 15 to thereunder is also subject matter of stay order passed in W.P.No.32593/2018 on 30.07.2018. 5. Elaborating his submissions, Sri.B.V.Acharya, learned Senior Counsel would draw attention of Court to various provisions of PML Act to contend that if principle of interpretation is to be adopted, then there was no necessity for law makers to include expression conspiracy as found in several enactments as independent offence and if intent was to bring within sweep of expression conspiracy as defined under Section 120B IPC, which finds place in Part-A as stand-alone offence same expression as found in other paragraphs of Part-A, said expression would not have found entry. In this regard, he would submit that criminal conspiracy as found in Part refers to Indian Penal Code and specifically with reference to other references and relatable to IPC provisions indicated in schedule. 16 6. He would also contend that Section 120B cannot be applied independently under PML Act and it is always referable to predicate offence and to buttress his argument, he would draw attention of Court to column No.3 and 4 of First Schedule of IPC to contend that law makers while indicating as to whether said offence is cognizable or non-cognizable, bailable or non-bailable and by what court offence is triable has clearly indicated that insofar as offence under Section 120B is concerned, would be attracted if offence which is object of conspiracy or in other words, it is only predicate offence if cognizable, offence under Section 120B becomes cognizable as otherwise, if predicate offence is non-cognizable, it would also follow same. He would also contend that if predicate offence is bailable or non-bailable, then offence under Section 120B would also follow suit. Same principle is also applicable to court which can try said offence namely, if offence under Section 120B IPC hinges on predicate offence, then such 17 court which can try predicate offence would also be having jurisdiction to try offence of 120B IPC. Hence, he contends that on strength of Section 120B IPC having been included in Part of Schedule by itself would not partake character of same being as independent offence and it has to be necessarily read along with predicate offence. He would also contend that notice issued to petitioner is vague and nothing is indicated in notice namely, as to what is required to be answered by noticee/petitioner and as such, it is violation of principles of natural justice. In support of this proposition, he relies upon judgment of co-ordinate Bench rendered in matter of MR.S.N.SINHA vs STATE OF KARNATAKA, BY ITS SECRETARY, DEPARTMENT OF REVENUE AND OTEHRS reported in ILR 2012 KAR 448. He would submit that no particulars having been furnished under impugned notice and yet calling upon petitioner to appear for investigation is without any foundation or basis and as 18 such, it is in violation of principles of natural justice. Hence, he prays for allowing petition by granting prayer sought for in writ petition. 7. Sri Shashikiran Shetty, learned Senior Counsel appearing for petitioner in W.P.No.5408/2019 by adopting arguments advanced by learned Senior Counsel-Sri Kapil Sibal, Sri B.V.Acharya would add that under sanction order dated 28.05.2018 (Annexure-A), it is alleged that petitioner has aided and abetted and as such, Section 120B IPC is not attracted or it does not arise and until and unless petitioner is found guilty of offence under Section 277 and 278 of IT Act, Section 120B IPC cannot be invoked. Hence, he prays for allowing writ petition by quashing impugned notice. 8. Sri Shankar, learned Senior counsel appearing for petitioner in W.P.No. 5824/2019 would contend that none of provisions of IT Act are Schedule offences under Part-A to C of PML Act and 19 offence punishable under Section 277 and 278 of IT Act which is invoked for grant of sanction not being Scheduled offence under PML Act, very invoking of provisions of PML Act is bad in law. He would contend that third respondent has clearly admitted that ECIR has been registered against petitioner for offences under provisions of PML Act, pursuant to private complaint filed by first respondent, which is IT Department and as such proceedings under PML Act is liable to be quashed. 9. He would further contend that conjoint reading of Sections 3, 2(u) and 2(y) of PML Act, it would be very clear that occurrence of schedule offence is substratal condition for giving rise to any proceeds of crime and consequently application of Section 3 of PML Act. In other words, he would contend that commission of schedule offence is fundamental and essential pre-condition for any proceedings under PML Act and without schedule offence being there, question of proceeds of crime coming into existence 20 does not arise and consequently, proceedings under PML Act cannot be continued. 10. He would also contend that it is not open to tax authorities to invoke Section 120B IPC and Section 279 of IT Act which authorizes grant of sanction, does not authorize said authority to award sanction for prosecution of offence under Section 120B IPC. 11. He would further contend that Section 120B IPC deals with punishment with criminal conspiracy and definition of conspiracy can be found in Section 120A IPC and object of criminal conspiracy must be to do illegal act, which must be clear and Schedule I to Cr.P.C clearly indicates that to constitute offence under Section 120B, it would always relate to objective offence. On these amongst other grounds as urged in petition, he seeks for quashing of proceedings by allowing writ petition. 21 12. Sri Shyamsundar, learned Advocate appearing for petitioner in W.P.Nos.5420-423/2019 would contend if particular act describes for confiscation of property, then, it stands excluded from purview of PML Act. He would contend that Section 120B which is included in Part of PML Act is relatable to offences under IPC provisions as morefully specified in Part-A Paragraph 1 of Schedule to PML Act. He would also contend that summons issued to petitioner is violative of Article 23 of Constitution of India and in support of his submission, he has relied upon judgment of Hon ble Apex Court in matter of STATE OF GUJARAT vs SHYAMLAL MOHANLAL CHOKSI, MANUBHAI PATEL reported in AIR 1965 SC 1251. 13. On behalf of respondents, initially arguments came to be commenced or advanced by Sri Prabhuling K Navadgi, then learned Additional Solicitor General of India appearing for respondents. He contended that where two or more persons come 22 together to do illegal act or in other words, act which is not illegal is sought to be done or caused to be done by illegal means and come together in this regard would be criminal conspiracy as defined under Section 120A IPC or it would fall within definition of criminal conspiracy . He would contend that irrespective of offence under IT Act, Enforcement Directorate is empowered to proceed to investigate and satisfaction of money being proceeds of crime would be sufficient to proceed. He would contend that writ petitions are premature and notice issued is in consonance with Section 50 of PML Act and he would rely upon following judgments: (i) (2011)1 SCC 74 IRIDIUM INDIA TELECOM LIMITED vs MOTOROLA INCORPORATED AND OTHERS (ii) (2011)8 SCC 1 RAM JETHMALANI V. UNION OF INDIA, 14. Sri K.M.Nataraj, learned Additional Solicitor General of India has appeared for respondents and has made submissions contending that challenge to 23 sanction made in these writ petitions having been withdrawn by petitioners, it would not be open to petitioners to raise any contention with regard to proceedings initiated under IT Act by Income Tax Department. 14.1. Further elaborating his submissions, he would contend that impugned summons issued by Enforcement Directorate against respective petitioners is for offence punishable under Section 120B IPC which is predicate, distinct and stand alone offence and when there is no challenge to inclusion of Section 120B in Part of PML Act, it would not be open for petitioners to contend that it is not independent offence. 14.2. He would also contend that summons issued under Section 50(2) of PML Act has nothing to do with Adjudicating Authority (Procedure) Regulations, 2013 which relates to procedure to be adopted by Regulating Authority after complaint 24 has been filed and not pre-investigation. He would submit that persons to whom summons are issued under Section 50 would not be accused. He would also contend that sanction issued under IT Act has nothing to do with proceedings under PML Act and for initiating proceedings under PML Act for offence punishable under Section 120B IPC, no sanction is required. He would also contend that under Section 24 of PML Act, presumption arises that money in question are proceeds of crime which is being laundered and it is for noticee to rebut such presumption. DISCUSSION AND FINDINGS: BRIEF BACKGROUND: 15. search action under Section 132 of IT Act came to be conducted by Income Tax Department at various premises in New Delhi, which is said to have resulted in seizure of more than 7 Crores in cash and statements recorded by Income Tax Department of some of persons has also resulted in 25 complaint being filed under Section 200 Cr.P.C. against petitioners for offences punishable under IT Act as morefully specified thereunder, after sanction alleged to have been accorded. jurisdictional Court is said to have taken cognizance of offences and further proceedings are on, which is not delved upon in these petitions or opinion expressed, since it is likely to prejudice rights of parties. 16. Be that as it may. This search proceedings has triggered ED Authorities to register ECIR against petitioners and investigation has been commenced and for said purposes summons under Section 50(2) and (3) of PML Act has been issued to petitioners. This fact is also admitted by ED in its statement of objections filed vide paragraph 4. For immediate reference said plea raised by ED is extracted herein below: averments regarding initiation of proceedings under Income Tax Act have been answered by First Respondent. This Respondent adopts same as they are part of 26 record. averments in petition that this Respondent had registered ECIR for offences under provisions of Prevention of Money Laundering Act, pursuant to private complaint filed by First respondent on basis of scheduled offence under Section 120B of Indian Penal Code is true and correct. 17. contention or plea has been raised by respondents that writ petition is not maintainable for quashing summons, as it is only show cause notice issued to respective petitioners to appear for investigation. There cannot be any dispute to proposition of law that judicial review of administrative action by this Court is part of basic structure of Constitution of India, as held by Hon ble Apex Court in case of L.CHANDRA KUMAR vs. UNION OF INDIA reported in (1997) 3 SCC 261. Hon ble Apex Court in case of SHALINI SHYAM SHETTY VS. RAJENDRA SHANKAR PATIL reported in (2010) 8 SCC 329 has held that power of superintendence available to High Court under Article 227 is extremely vast, but it cannot be exercised at drop of 27 hat. It is also held that it cannot be exercised to correct mere errors of law or fact only because another view is possible. It has been held: This reserve and exceptional power of judicial intervention is not to be exercised just for grant of relief in individual cases but should be directed for promotion of public confidence in administration of justice in larger public interest whereas Article 226 of Constitution is meant for protection of individual grievance. Therefore, power under Article 227 may be unfettered but its exercise is subject to high degree of judicial discipline pointed out above. 18. It is to be further observed that, no doubt would arise with regard to exercise of jurisdiction under Article 226 and 227 of Constitution of India by this Court and same cannot be curtailed. Yet, judicial restraint would be adopted where there is no allegation of fundamental right being violated or authority exercising jurisdiction is contended as not possessing jurisdiction. Though Article 226 of Constitution of India is repository of vast powers vested in this Court, yet, very vastness of 28 powers imposes responsibility to use them with circumspection and in accordance with well established principles. As held by Hon ble Apex Court in STATE OF MAHARASHTRA VS ABDUL HAMID HAJI MOHAMMAD reported in (1994) 2 SCC 664 exercise of power under Article 226 should be most sparingly used and only in rare and appropriate cases, that too in extreme circumstances it can be used. However, nagging question would be, what are those rare cases and in what circumstances Constitutional Court would justify entertaining of petitions under Article 226 of Constitution of India? Same cannot be defined by mathematical formula or with precision nor can it be put in straight jacket formula. It all depends on facts and circumstances obtained in each case or to put it differently, contours cannot be defined and it all depends on terrain such facts may travel. Where there is allegation of violation of Article 14, 19 or Article 21 or when vires of statute is under challenge or 29 where authority exercising power is alleged to have none, are some of circumstances which enable exercise of jurisdiction under Article 226 of Constitution of India and such power is sparingly used to do complete justice between parties. Hon ble Apex Court in case of GIRISH KUMAR SUNEJA Vs. CBI reported in (2017)14 SCC 809 has held to following effect: 58. It is no doubt true that words complete justice appearing in Article 142 of Constitution enable this Court to exercise extremely wide powers but there is also no doubt that power is ancillary and can be made use of only when it is not in conflict with substantive provisions of any law. This has been view expressed by several larger Benches of this Court including in Mirajkar and Antulay and was also settled in Supreme Court Bar Association vs. Union of India. It is not necessary for us to further elucidate this position or to elaborate on it. 59. While it is true that fundamental rights of citizen cannot be taken away even by order of court except where restriction is placed by statute such as remanding accused to judicial custody, no right of appellants has been curtailed by this Court by order under consideration. As repeatedly emphasized, it is only forum in which right to seek relief has been varied, 30 and not denied. We do not see how this is impermissible or contrary to any law or any fundamental right of appellants. 19. In these petitions, summons issued by ED and its power to issue same to petitioners to appear for investigation is under challenge contending their right to liberty under Article 21 of Constitution is being violated. Hence, this Court is of considered view that writ petitions cannot be thrown or nipped at bud on ground of same not being maintainable. Said contention stands rejected. 20. PML Act came to be enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money laundering and for matters connected therewith or incidental thereto. That illegal activities of money laundering posed great and serious threat not only to financial system of country, but also to integrity and sovereignty and therefore, international 31 communities including United Nations on different conventions recognized concerted efforts of all Member Countries to strictly deal with evil of money- laundering. object of Act is to prevent money- laundering and connected activities and confiscation of proceeds of crime and preventing legitimizing of money earned through illegal and criminal activities by investments in movable and immovable properties often involving layering of money so generated through illegal activities namely, by inducting and integrating money with legitimate money and its off-shoot like purchase of movable and immovable property. Therefore, expression proceeds of crime has to receive expansive interpretation so as to sub-serve broad objectives of Act. 21. object of PML Act as envisaged under statement of object and reasons would indicate that money laundering was posing serious threat not only to financial system of country but also to integrity and sovereignty and this has 32 lead to enactment of PML Act. It has been enacted to prevent money laundering and connected activities. statement of objects and reasons for such enactment as set out in Bill was to achieve objects envisaged thereunder and it reads: Statement of objects and reasons. It is being realised, world over, that money-laundering poses serious threat not only to financial systems of countries, but also to their integrity and sovereignty. Some of initiatives taken by international community to obviate such threat are outlined below:-- (a) United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is party, calls for prevention of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence. (b) Basle Statement of Principles, enunciated in 1989, outlined basic policies and procedures that banks should follow in order to assist law enforcement agencies in tackling problem of money laundering. (c) Financial Action Task Force established at summit of seven major industrial nations, held in Paris from 14th to 16th July,1989, to 33 examine problem of money- laundering has made forty recommendations, which provide foundation material for comprehensive legislation to combat problem of money-laundering. recommendations were classified under various heads. Some of important heads are- (i) declaration of laundering of monies carried through serious crimes criminal offence; (ii) to word out modalities of disclosure by financial institutions regarding reportable transactions; (iii) confiscation of proceeds of crime; (iv) declaring money-laundering to be extraditable offence; and (v) promoting international co- operation in investigation of money-laundering. (d) Political Declaration and Global Programme of Action adopted by United Nations General Assembly by its Resolution No. S-17/12 of 23rd February, 1990, inter alia, calls upon member States to develop mechanism to prevent financial institutions from being used for laundering of drug related money and enactment of legislation to prevent such laundering. (e) United Nations in Special Session on countering World Drug Problem Together concluded on 8th to 10th June, 1998 has made 34 another declaration regarding need to combat money-laundering. India is signatory to this declaration. 2. In view of urgent need for enactment or comprehensive legislation inter alia for preventing money- laundering and connected activities confiscation of proceeds of crime, setting up of agencies and mechanisms for co- ordinating measures for combating money-laundering, etc., Prevention of Money-Laundering Bill, 1998 was introduced in Lok Sabha on 4th August, 1998. Bill was referred to Standing Committee on Finance, which presented its report on 4th March, 1999 to Lok Sabha. recommendations of Standing Committee accepted by Central Government are that (a) expressions banking company and person may be defined; (b) in Part I of Schedule under Indian Penal Code word offence under section 477A relating to falsification of accounts should be omitted; (c) knowingly be inserted in clause 3(b) relating to definition of money- laundering; (d) banking companies financial institutions and intermediaries should be required to furnish information of transactions to Director instead of Commissioner of Income-tax (e) banking companies should also be brought within ambit of clause II relating to obligations of financial institutions intermediaries; (f) definite time-limit of 24 hours should be provided for producing person about to be searched or arrested person before Gazetted Officer or Magistrate; (g) words unless otherwise proved to 35 satisfaction of authority concerned may be inserted in clause 22 relating to presumption on inter-connected transactions; (h) vacancy in office of Chairperson of Appellate Tribunal, by reason of his death, resignation or otherwise, senior-most member shall act as Chairperson till date on which new Chairperson appointed in accordance with provisions of this Act to fill vacancy, enters upon his office; (i) appellant before Appellate Tribunal may be authorized to engage any authorized representative as defined under section 288 of Income-tax Act, 1961, (j) punishment for vexatious search and for false information may be enhanced from three months imprisonment to two years imprisonment, or fine of rupees ten thousand to fine of rupees fifty thousand or both; (k) word good faith may be incorporated in clause relating to Bar of legal proceedings. Central Government have broadly accepted above recommendations and made provisions of said recommendations in Bill. 3. In addition to above recommendations of standing committee Central Government proposes to (a) relax conditions prescribed for grant of bail so that Court may grant bail to person who is below sixteen years of age, or woman, or sick or infirm, (b) levy of fine for default of non-compliance of issue of summons, etc. (c) make provisions for having reciprocal arrangement for assistance in certain matters and procedure for attachment and confiscation of property so as to facilitate transfer of funds involved in money-laundering kept 36 outside country and extradition of accused persons from abroad. 4. Bill seeks to achieve above objects. 22. In all these writ petitions, summons issued by Enforcement Directorate under Section 50(2) and (3) of PML Act is called in question. person issued with summons under PML Act may or may not be offender of any scheduled offences. authorities are invested with power to investigate offence of money laundering. offence of money laundering under Section 3 of Act, involves attempting or indulging in or knowingly assisting or knowingly being party or being involved in any process or activity connected with proceeds of crime , including its concealment, possession, acquisition or use and projecting or claiming it as untainted property. In fact, it is offence independent of predicate offence and to launch prosecution under Section 3 of Act, it is not necessary that predicate offence should also have been committed. Section 3 of Act 37 clearly discloses that possession or conversion of proceeds of crime as untainted property would be criminal act. In fact, essential ingredient namely, mens rea is conspicuously found in Section 3 since it criminalises possession or conversion of proceeds of crime which includes projecting or claiming proceeds of crime as untainted property. Whereas under definition clause defining proceeds of crime i.e., Section 2(u), it does not and thereby it provides succor to innocent person. expression knowingly used in Section 3 of Act would indicate intent of keeping innocent out of purview of offence. offence indicated under Section 3 would surface when person knowingly attempts to indulge, assist or is party, or involved in any process or activity connected with proceeds of crime and thus would be guilty of offence under Act. person who is in possession of any proceeds of crime who might not be person, charged of having committed schedule offence would be liable to be proceeded under 38 PML Act for attaching his property came up for consideration before High Court of Bombay in matter of RADHA MOHAN LAKHOTIA vs. DEPUTY DIRECTOR, PMLA in First Appeal No.527/2010 decided on 5th August, 2010 and it came to be held as follows: 13. Appellants however, have placed emphasis on expression "such person" used in clause (b) of section 5(1) of Act. According to them, word "such" is prefix to word "person" in clause (b). That is not superfluous, but is ascribable to person referred to in clause (a). Which means that even clause (a) deals with person who has been charged of having committed scheduled offence. It is not possible to countenance this submission. We are conscious of fact that penal provisions should be strictly construed. At same time, we cannot overlook language of section 5 as applicable at relevant time. In our opinion, clause (a) refers to "any person"- whether he has been charged of having committed scheduled offence "or otherwise". only requirement is that that person should be in possession of any proceeds of crime. governing factor is possession of any proceeds of crime by person. Taking any other view may defeat legislative intent. In as much as, person who has been charged of having committed scheduled offence can successfully defeat object of enactment of attachment and confiscation of proceeds of crime by transferring it to some other person who is not so involved with him in commission of 39 stated scheduled offence. In our opinion, on fair reading of section 5 (1) read with section 8 of Act, it postulates two categories of persons against whom action of attachment of property can be proceeded with. first category is any person who is in possession of any proceeds of crime. person falling in this category need not be person, charged of having committed scheduled offence. second category is of person who has been charged of having committed scheduled offence. Besides, being charged of having committed scheduled offence, that person is found to be in possession of any proceeds of crime. In either case, it is open to take recourse to section 5 of Act if specified Authority has reason to believe and reason for such belief is recorded in writing that proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. Indeed, proviso to subsection (1) as was applicable at relevant time envisaged that no order of attachment can be made unless, in relation to offence under paragraph 1 of Part and Part B of Schedule, report has been forwarded to Magistrate under section 173 of Code of Criminal Procedure, 1973; or paragraph-2 of Part of Schedule, police report or complaint has been filed for taking cognizance of offence by Special Court constituted under section 36(1) of NDPS Act, 1985. This proviso essentially is directed against second category of person covered by sub-section (1), namely, person who has been charged of having committed schedule offence. In other words, action of attachment of proceeds of crime in possession of person charged of scheduled offence can be proceeded only on forwarding of report to Magistrate 40 under section 173 of Code or complaint has been filed for taking cognizance of offence by Special Court constituted under NDPS Act. In so far as person who is not named in scheduled offence, there can be no question of filing of any report or complaint for taking cognizance. That stipulation has no application to person who is not person having been charged of scheduled offence. view that we propose to take is reinforced from purport of section 3 and 4 of Act of 2002. same deal with offence of money-laundering and punishment for money-laundering respectively. Both these provisions, even on strict construction, plainly indicate that person to be proceeded for this offence need not necessarily be charged of having committed scheduled offence. For, expression used is "whosoever". offence of money-laundering under section 3 of Act of 2002 is independent offence. It is committed if "any person" directly or indirectly attempts to indulge or knowingly assists or knowingly is party or is actually involved in any process or activity connected with proceeds of crime and projecting it as untainted property. Further, it would create piquant situation as person who is not charged of having committed scheduled offence even if can be proceeded for offence of money laundering and even if such person is in possession of any proceeds of crime, no action of attachment and confiscation of proceeds of crime can be resorted to qua himalbeit proceeds of crime are in his possession. If argument of appellants were to be accepted, even expression "whosoever" appearing in section 3 and 4 of Act will have to be limited to person who has been charged of having committed scheduled offence. object of enactment of 2002 would be completely 41 defeated by such approach. Besides, view that we propose to take is reinforced also from purport of section 8 of Act of 2002. It provides that Adjudicating Authority if has reason to believe that "any person" has committed offence under section 3, may serve notice upon such person calling upon him to indicate his source of his income, earning or assets, out of which or by means of which he has acquired property attached under section 5(1) of Act. Once again, legislature has unambiguously used term "any person" and not person charged of having committed scheduled offence. Indeed, any person referred to in this provision is person who has committed offence under section 3 of Act of 2002. He may not necessarily be person charged of having committed scheduled offence. proviso to sub-section (1) thereof stipulates that where notice under said sub-section specifies any property as being held by person on behalf of any other person, copy of such notice shall also be served upon such other person. Suffice it to observe that even section 8 contemplates adjudication to be done by Adjudicating Authority after provisional attachment order is passed under section 5 of Act and upon receipt of complaint under section 5(5) of Act. We are not referring to other provisions mentioned in said section 8(1), as we are dealing only with case arising under section 5 of Act. Considering above, we are of considered opinion that there is no merit in argument of appellants that action under section 5 of Act could not have proceeded against them, as they were not charged of having committed scheduled offence. 42 Same accordingly deserves to be extended to Section 3 for its interpretation inasmuch as, expression used in Section 5(1)(a) is any person , whereas, expression used in Section 3 is whosoever and in Section 2(u) again expression used is any person . Thus, person who might not be accused of scheduled offence, if he has deprived or obtained, directly or indirectly any property i.e., corporeal or incorporeal, movable or immovable i.e., as described under definition clause 2(u) which is result of criminal activity, that would be sufficient for authorities under PML Act to proceed against such person. 23. In other words, proceedings under PML Act are independent, separate, distinct and different from proceedings initiated for scheduled offences by other law enforcement agencies. PML Act is stand alone enactment which differentiates Schedule offence and money laundering offence separately. To put it differently, if investigation for predicate offence is conducted by authorities so empowered 43 under enactments and if for various reasons such proceedings were to be closed or dropped, then, proceedings under PML Act would not automatically disappear or is not required to be dropped. 24. Even in case of proceeds of crime not being in possession of alleged offenders, but if it is sought to be projected as untainted money and sought to be ploughed into economy, which ultimately derails economy of country, then, authorities under PML Act would be empowered to proceed under provisions of PML Act. As to whether it is proceeds of crime or its use or concealment or acquisition is to be decided only by adjudicating authority after verifying facts and circumstances that would be unraveled by verifying relevant records and documents during course of investigation. mere suspicion of authorities that proceeds of crime is being ploughed into main stream of economy as untainted money is sufficient enough for authorities to investigate and examine and this can be done only by 44 collecting information, recording statements who might not be offender also. 25. PML Act being special enactment contemplates distinct procedure at initial stage and thereafter provide for initiation of prosecution in order to achieve special purpose envisaged under Act and as such, it cannot be construed that proceedings under PML Act is to be equated with prosecution initiated under criminal proceedings for offence punishable under Indian Penal Code. Thus, initiation of action under PML Act cannot have any implication or impact in respect of registration of other cases either under Indian Penal Code or any other penal laws. 26. offence of money laundering under Section 3 of Act is independent offence. reference to criminal activity relating to schedule offence has wider connotation and it may extend to person, who is connected with criminal activity relating 45 to schedule offence, but may not be offender of schedule offence. It is in this background, it has to be necessarily held that money laundering is stand alone offence under PML Act. In this background, when Section 44 of PML Act is perused, it would clearly indicate that special court may take cognizance of offence upon complaint by authorized signatory, which means cognizance will be taken of offence which is separate and independent. object of issuance of summons is to trace or ascertain proceeds of crime if any and to take steps in that regard like attaching proceeds of crime if proved in given case. 27. Even in case of person who is not booked for scheduled offence but is later booked and subsequently acquitted for offences punishable under different enactments, prescribed under Part to Part C of Schedule, still such person can be proceeded under PML Act. In other words, proceedings can be against persons who are accused of scheduled 46 offence or against persons who are accused of having committed offence of money laundering and also persons who are found to be in possession of proceeds of crime . It is not necessary that person has to be prosecuted under PML Act only in event of such person having committed schedule offence. prosecution can be independently initiated only for offence of money laundering as defined under Section 3 read with section 2(p) which provides that money laundering having meaning assigned to it under Section 3 of Act. 28. person issued with summons in proceedings initiated under PML Act, may or not be offender of scheduled offence. authorities under PML Act can initiate investigation on any of scheduled offences stipulated under Section 2(1)(x) and 2(1)(y) of Act. predicate offence may be trigger for initiating prosecution under PML and investigation can be relatable predicate offence or for offence of money laundering as defined under 47 Section 3 of PML Act, which investigation is normally conducted by authorities invested with power under such enactment and may for various reasons drop or close proceedings and thereby it cannot be contended that investigation or prosecution commenced under PML Act would ipso facto fall. Even in cases of proceeds of crime, if any, not being in possession of alleged offender, even then authorities under PML Act are empowered to proceed under PML Act since possession of proceeds of crime or its concealment or acquisition would fall within mischief of money laundering and this aspect will have to be unearthed by investigating authority in background of facts and circumstances that may be obtained in given case, which can be done only after verifying documents and statements, if any during course of investigation. 29. It is trite law that at stage of show cause notice, charge sheet, summons or notice to appear, constitutional courts would not interfere so as to 48 interject proceedings and thereby prevent authorities from proceeding with. 30. Ordinarily writ petition would not lie against show cause notice for reason that it does not give raise to any cause of action. It does not amount to adverse order which affects right of party unless same having been issued by person who does not possess jurisdiction or competent to do so. In other words, writ lies only when some right of party is infringed or violated. Even in case of applicant/petitioner disputing jurisdiction of competent authority, which involves disputed question of fact, then in such circumstances it would not be appropriate to entertain writ petition. Where show cause notice has been issued and writ petition is filed under Article 226 of Constitution of India against such show cause notice, it would be incumbent upon petitioner to show to such authority that he has no power or jurisdiction to enquire into show cause notice so issued. In such circumstances, it 49 would be appropriate to direct parties to approach said authority and take all such contentions including objection relating to jurisdiction and only in event of adverse decision being rendered, it would be certainly open to petitioner to assail same by invoking appropriate appellate or revisional jurisdiction and in appropriate cases by invoking jurisdiction of this Court under Article 226 of Constitution of India. mere issuance of show cause notice or notice to appear for purposes of investigation does not infringe right of party, as it does not affect right of such party. Thus, question of fundamental right guaranteed under Article 21 of Constitution of India cannot be held to have been infringed by petitioners on account of they having been summoned for investigation by issuance of impugned summons by ED. 31. Hon ble Apex Court in case of SPECIAL DIRECTOR AND ANOTHER vs. MOHAMMED GULAM GHOUSE AND ANOTHER 50 reported in AIR 2004 SC 1467 while examining correctness of interim order passed by Division Bench staying show cause notice issued by Enforcement Directorate for alleged large scale financial irregularities, which came to be challenged by petitioner therein as same being illegal, null and void, which had found favour by Division Bench came to be reversed by Apex Court by arriving at following conclusion: 5. This Court in large number of cases has deprecated practice of High Courts entertaining writ petitions questioning legality of show cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with participation and in presences of parties. Unless, High Court is satisfied that show cause notice was totally non est in eye of law for absolute want of jurisdiction of authority to even invent gate into facts, writ petitions should not be entertained for mere asking and as matter of routine and writ petitioner should invariably be directed to respond to show cause notice and take all stands highlighted in writ petition. Whether show cause notice was founded on any legal premises is jurisdictional issue which can even be urged by recipient of notice and such issues also can be adjudicated by 51 authority issuing very notice initially, before aggrieved could approach Court. Further, when Court passes interim order it should be careful to see that statutory functionaries specially and specifically constituted for purpose are not denuded of powers and authority to initially decide matter and ensure that ultimate relief which may or may not be finally granted in writ petition is accorded to writ petitioner even at threshold by interim protection, granted. 32. As already observed herein above, notice/summons has been issued to respective petitioners and same would clearly disclose that in exercise of power vested under Section 50(2) and 50(3) of PML Act, same has been issued. There being no challenge to constitutional validity of these provisions and jurisdiction of authority not being in serious dispute, entertaining of writ petition on ground of investigation being hit by Article 20 of Constitution of India cannot be entertained at this stage and it would not be appropriate for this Court to express any opinion as it may prejudice rights of parties. 52 33. Though Mr. B.V.Acharya, learned Senior Counsel appearing for petitioner in W.P.No.5299/2019 has sought for quashing of proceedings by raising 2 additional grounds, namely; (1) there has been stay of further proceedings passed in W.P.No.32593/2018 on 30.07.2018 and thereby impugned summons could not have been issued calling upon petitioner to appear for investigation; and, (2) impugned notice issued to petitioner by Enforcement Directorate to appear for investigation is bereft of material particulars and lack of clarity. Though at first blush said arguments would look attractive, it is not factually so, for reasons indicated herein below. 34. issue involved in W.P.No.32593/2018 relates to order passed by Principal Director of Income Tax (Investigation), who by said impugned order dated 28.05.2019 had accorded sanction to initiate criminal prosecution against petitioner therein and authority for granting such sanction being under challenge, has to be necessarily confined to 53 proceedings arising out of Income Tax Act, 1961. Said order of interim stay of further proceedings arising out of IT Act cannot take within its sweep proceedings initiated or to be initiated under different enactments by different authorities. Though in statement of objections filed by Enforcement Authority at paragraph 4 it has been admitted that: averments in petition that this respondent had registered in ECIR for offences under provisions of Prevention of Money Laundering Act, pursuant to private complaint filed by first respondent on basis of scheduled offence under Section 120B of Indian Penal Code is true and correct , fact remains that Section 120B is predicate offence by itself or in other words, it is stand alone offence and as such said argument would not be of any avail to petitioner to assail summons issued under Section 50(2) and 50(3) of Act. That, I have already held, money laundering is offence independent of predicate offence and to launch prosecution under Section 3 of Act, it would not be 54 necessary that predicate offence should also have been committed. 35. That apart, plain reading of Section 3 of PML Act would disclose that whosoever directly or indirectly, attempts to indulge or knowingly assess or knowingly is party or is actually involved in any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property, would be punishable for offence of money laundering. expression of proceeds of crime has been defined under Section 2(u) of Act which means any property derived or obtained directly or indirectly, by any person as result of criminal activity relating to scheduled offence xxxxx within country and expression scheduled offence has been defined under Section 2(y) to mean offences specified under Part-A or offences specified in Part-B (the total value in such offences is 1 Crore rupees or more); or offences specified under Part-C of schedule. 55 expression Scheduled is defined under Section 2(x) of PML Act to mean offences specified in Schedule to Act. Under Part-A, Paragraph-1 offences under Indian Penal Code, as morefully described thereunder has been described as offences constituting Schedule offence under PML Act. Likewise, under Part at Paragraphs 2 to 29 offences under different enactments have been specified to be offence attracting provisions of PML Act. In other words, offences which are specified in Part or Part B or Part C would automatically attract offence punishable under PML Act. Under Part of Schedule, Section 120B of IPC has been incorporated to be offence for provisions of PML Act. 36. In case of YOGESH ALIAS SACHIN JAGDISH JOSHI vs STATE OF MAHARASTRA reported in (2008) 10 SCC 394 it has been held by Hon ble Apex Court that offence of conspiracy is substantive offence and renders mere agreement to commit offence punishable, even if offence does not take 56 place pursuant to such illegal agreement. It came to be held: 25. Thus, it is manifest that meeting of minds of two or more persons for doing illegal act or act by illegal means is sine qua non of criminal conspiracy but it may not be possible to prove agreement between them by direct proof. Nevertheless, existence of conspiracy and its objective can be inferred from surrounding circumstances and conduct of accused. But incriminating circumstances must form chain of events from which conclusion about guilt of accused could be drawn. It is well settled that offence of conspiracy is substantive offence and renders mere agreement to commit offence punishable, even if offence does not take place pursuant to illegal agreement. 37. Hon ble Apex court in case of SUDHIR SHANTILAL MEHTA Vs. CENTRAL BUREAU OF INVESTIGATION reported in (2009) 8 SCC 1 has held that criminal conspiracy is independent offence and punishable independent of other offences. Explaining ingredients of offence under criminal conspiracy, it came to be held: 113. Criminal conspiracy is independent offence. It is punishable 57 independent of other offences; its ingredients being: (i) agreement between two or more persons. (ii) agreement must relate to doing or causing to be done either (a) illegal act; (b) act which is not illegal in itself but is done by illegal means. It is now, however, well settled that conspiracy ordinarily is hatched in secrecy. court for purpose of arriving at finding as to whether said offence has been committed or not may take into consideration circumstantial evidence. While however doing so, it must bear in mind that meeting of minds is essential; mere knowledge or discussion would not be. As question has been dealt with in some detail in Criminal Appeal No.76 of 2004 (R. Venkatakrishnan vs. CBI12), it is not necessary for us to dilate thereupon any further. 114. We may, however, notice that recently in Yogesh v. State of Maharashtra13 Division Bench of this Court held: (SCC p.402, para 25) "25. Thus, it is manifest that meeting of minds of two or more persons for doing illegal act or act by illegal means is sine qua non of criminal conspiracy but it may not be possible to prove agreement between them by direct proof. Nevertheless, existence of conspiracy and its objective can be inferred from surrounding 58 circumstances and conduct of accused. But incriminating circumstances must form chain of events from which conclusion about guilt of accused could be drawn. It is well settled that offence of conspiracy is substantive offence and renders mere agreement to commit offence punishable even if offence does not take place pursuant to illegal agreement." 115. Yet again in Nirmal Singh Kahlon v State of Punjab14 this Court following Ram Lal Narang v. State (Delhi Adm.)15 held that conspiracy may be general one and separate one meaning thereby larger conspiracy and smaller which may develop in successive stages. For aforementioned purpose, conduct of parties also assumes some relevance. (See also Chaman Lal v. State of Punjab16.) 116. In K.R. Purushothaman v. State of Kerala17 this Court held: (SCC pp.636- 38, paras 11 & 13) "11. Section 120-A IPC defines 'criminal conspiracy'. According to this Section when two or more persons agree to do, or cause to be done (i) illegal act, or (ii) act which is not illegal by illegal means, such agreement is designed criminal conspiracy. In Major E.G. Barsay v. State of Bombay18 Subba Rao J., speaking for Court has said: (AIR p.1778, para 31) 31. gist of offence is agreement to break law. parties to such agreement will be guilty of criminal conspiracy, 59 though illegal act agreed to be done has not been done. So too, it is not ingredient of offence that all parties should agree to do single illegal act, It may comprise commission of number of acts. 13. To constitute conspiracy, meeting of mind of two or more persons for doing illegal act or act by illegal means is first and primary condition and it is not necessary that all conspirators must know each and every detail of conspiracy. Neither it is necessary that every one of conspirators takes active part in commission of each and every conspiratorial acts. agreement amongst conspirators can be inferred by necessary implications. In most of cases, conspiracies are proved by circumstantial evidence, as conspiracy is seldom open affair, existence of conspiracy and its objects are usually deducted from circumstances of case and conduct of accused involved in conspiracy. While appreciating evidence of conspiracy, it is incumbent on Court to keep in mind well-known rule governing circumstantial evidence viz., each and every incriminating circumstance must be clearly established by reliable evidence and circumstances proved must form chain of events from which only irresistible conclusion about guilt of accused can be safely drawn, and no other 60 hypothesis against guilt is possible. criminal conspiracy is independent offence in Penal Code. unlawful agreement is sine qua non for constituting offence under Penal Code and not accomplishment. Conspiracy consists of scheme or adjustment between two or more persons which may be express or implied or partly express and partly implied. Mere knowledge, even discussion, of plan would not per se conspiracy. offence of conspiracy shall continue till termination of agreement. 38. expression criminal conspiracy has been subject matter of interpretation by Apex Court in its authoritative pronouncement in matter of R VENKATKRISHNAN vs CENTRAL BUREAU OF INVESTIGATION reported in AIR 2010 SC 1812 whereunder it came to be held in unequivocal terms that Section 120B of IPC is independent offence and it is punishable separately. It has been further held that prosecution, must prove same by applying legal principles which are applicable for purpose of proving criminal misconduct on part of accused. It has been held: 61 78. Criminal conspiracy in terms of Section 120B of Code is independent offence. It is punishable separately. Prosecution, therefore, must prove same by applying legal principles which are applicable for purpose of proving criminal misconduct on part of accused. 79. criminal conspiracy must be put to action and so long crime is merely generated in mind of criminal, it does not become punishable. Thoughts, even criminal in character, often involuntary, are not crimes but when they take concrete shape of agreement to do or cause to be done illegal act or act which is not illegal but by illegal means then even if nothing further is done, agreement would give rise to criminal conspiracy. ingredients of offence of criminal conspiracy are: (i) agreement between two or more persons; (ii) agreement must relate to doing or causing to be done either- (a) illegal act; (b) act which is not illegal in itself but is done by illegal means. 80. Condition precedent, therefore, for holding accused persons guilty of charge of criminal conspiracy must, therefore, be considered on anvil of fact which must be established by prosecution, viz., meeting point of two or more persons for doing or causing to be done illegal act or act by illegal means. 81. courts, however, while drawing inference from materials brought on record to arrive at finding as to whether charges of criminal 62 conspiracy have been proved or not, must always bear in mind that conspiracy is hatched in secrecy and it is, thus, difficult, if not impossible, to obtain direct evidence to establish same. 82. manner and circumstances in which offences have been committed and level of involvement of accused persons therein are relevant factors. For said purpose, it is necessary to prove that propounders had expressly agreed to or caused to be done illegal act but it may also be proved otherwise by adduction of circumstantial evidence and/ or by necessary implication. [See Mohammad Usman Mohammad Hussain Maniyar & Ors. v. State of Maharashtra (1981) 2 SCC 443: AIR 1981 SC 1062)] 83. following passage from Russell on Crimes (12th Edn. Vol 1) referred to by Jagannatha Shetty, J. in Kehar Singh and Ors. v. State (Delhi Administration), [1988 (3) SCC 609 at 731] AIR 1988 SC 1883) brings out legal position succinctly: "The gist of offence of conspiracy then lies, not in doing act, or effecting purpose for which conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in forming of scheme or agreement between parties. Agreement is essential. Mere knowledge, or even discussion, of plan is not, per se enough" 84. It was further noted in that case that to establish offence of criminal conspiracy [i]t is not required that single agreement should be entered into by all conspirators at one time. Each conspirator plays his separate part in one 63 integrated and united effort to achieve common purpose. Each one is aware that he has part to play in general conspiracy though he may not know all its secrets or means by which common purpose is to be accomplished. 85. Dr. Hari Singh Gour in his Commentary on Penal Law of India, (Vol. 2, 11th Edn. p. 1138) elaborates: In order to constitute single general conspiracy there must be common design. .... evil scheme may be promoted by few, some may drop out and some may join at later stage, but conspiracy continues until it is broken up. conspiracy may develop in successive stages. There may be general plan to accomplish common design by such means as may from time to time be found expedient. 86. In some cases, intent of unlawful use being made of goods or services in question may be inferred from knowledge itself. This Court in State of Maharashtra v. Som Nath Thapa [(1996) 4 SCC 659]: (AIR 1996 SC 1744: 1996 AIR SCW 1977) opined that it is not necessary for prosecution to establish that particular unlawful use was intended, so long as goods or services in question could not be put to any lawful use, stating: ...to establish charge of conspiracy knowledge about indulgence in either illegal act or legal act by illegal means is necessary. In some cases, intent of unlawful use being made of goods or services in question may be inferred from knowledge itself. This apart, prosecution has not to establish that particular unlawful use was intended, so 64 long as goods or service in question could not be put to any lawful use. Finally, when ultimate offence consists of chain of actions, it would not be necessary for prosecution to establish, to bring home charge of conspiracy, that each of conspirators had knowledge of what collaborator would do, so long as it is known that collaborator would put goods or service to unlawful use." [See also K.R. Purushothaman v. State of Kerala (2005) 12 SCC 631]: (AIR 2006 SC 35: 2005 AIR SCW 5437). 87. We may also notice decision of this Court being State (NCT) of Delhi v. Navjot Sandhu @ Afsan Guru [(2005) 11 SCC 600]: (AIR 2005 SC 3820: 2005 AIR SCW 4148), commonly known as Parliament Attack case, wherein upon taking note of various earlier decisions of this Court, it was opined that as conspiracy is mostly proved by circumstantial evidence, usually both existence of conspiracy and its objects have to be inferred from circumstances and conduct of accused, stating : 101. One more principle which deserves notice is that cumulative effect of proved circumstances should be taken into account in determining guilt of accused rather than adopting isolated approach to each of circumstances. Of course, each one of circumstances should be proved beyond reasonable doubt. Lastly, in regard to appreciation of evidence relating to conspiracy, Court must take care to see that acts or conduct of parties must be conscious and clear enough to 65 infer their concurrence as to common design and its execution. In Ram Narayan Popli (AIR 2003 SC 2748: 2003 AIR SCW 3119) (supra), this Court noted: Law making conspiracy crime is designed to curb immoderate power to do mischief which is gained by combination of means. encouragement and support which co-conspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish ground for visiting conspirators and abettors with condign punishment... {See also Esher Singh v. State of A.P. [(2004) 11 SCC 585]: (AIR 2004 SC 3030: 2004 AIR SCW 1665)}: 88. Recently, in Yogesh @ Sachin Jagdish Joshi v. State of Maharashtra [(2008) 6 SCALE 469] : (AIR 2008 SC 2991 : 2008 AIR SCW 5043), Division Bench of this Court held: 23. Thus, it is manifest that meeting of minds of two or more persons for doing illegal act or act by illegal means is sine qua non of criminal conspiracy but it may not be possible to prove agreement between them by direct proof. Nevertheless, existence of conspiracy and its objective can be inferred from surrounding circumstances and conduct of accused. But incriminating circumstances must form chain of events from which conclusion about guilt of accused could be drawn. It is well settled that offence of conspiracy is substantive offence and renders mere agreement to commit offence 66 punishable even if offence does not take place pursuant to illegal agreement. 39. As to whether by criminal conspiracy offences indicated in schedule to PML Act is made out or not would be issue which can be unearthed only after investigation. During course of investigation, authorities may arrive at conclusion that there is no necessity to further investigate matter and it may drop investigation or in event of authorities finding there is some material, it may then proceed to adjudicate. It all depends on circumstances emerging from investigation in given case. 40. If principles of interpretation is adopted, then, there was no necessity for expression conspiracy being indicated in several enactments as found in schedule to PML Act. Section 120B of IPC found in part-A of schedule to PML Act refers to IPC offences only and if it was referable to other 67 offences, framers of law would not have incorporated expression conspiracy under Part-A Paragraph -1 as defined under other enactments. Section 120B is predicate, distinct and stand alone offence. inclusion of said offence under schedule is not under challenge in these writ petitions. 41. As rightly contended by Sri K M Nataraj, learned Additional Solicitor General of India that summons issued under Section 50(2) of PML Act has nothing to do with regulations as defined under Regulatory Rules and said rules is referable only to proceedings for adjudication and not to pre- adjudication proceedings. In fact, Section 50(2) does not refer to accused at all. 42. It is contended that summons issued under Section 50(2) is contrary to Adjudicating Authority Procedure Regulation, 2013 and it does not contain material particulars nor details which is required to be furnished by petitioner. plain reading of 68 said Regulation would indicate that same has been enacted in exercise of power conferred by sub- section (15) of Section 6 of Act. Section 6 of Act relates to power of adjudicating authorities and composition of such adjudicating authority. Section 2(a) defines Adjudicating Authority to mean authority appointed under sub-section (1) of Section 6. Section 2(na) defines Investigation so as to include all proceedings under Act conducted by Director or by authority authorized by Central Government under Act for collection of evidence. 43. Section 6(15) provides method of adjudication to be followed by adjudicating authority and it does not refer to any procedure to be adopted by investigating authority. definition clauses as noticed herein above viz., sections 2(a) and 2(na) is relatable to adjudicating authority and not to investigation and they are separate, distinct and independent. Hence, mere mention of Section 50(2) or 50(3) in summons issued, it cannot be contended 69 by petitioners that even at pre-adjudication stage i.e., during investigation stage, authorities are required to state or reveal nature of material upon which they intend to rely upon for summoning person for investigation. If same is accepted, it would defeat purpose of investigation itself. 44. In light of aforestated discussion and for reasons indicated hereinabove, this Court is of considered view that there is no merit in these writ petitions and accordingly, they are hereby dismissed. SD/- JUDGE sp/DR Sachin Narayan v. Income-tax Department, Bangalore / Enforcement Directorate