New Delhi, May 23 : The Supreme Court has quashed the Enforcement Directorate complaint in connection with the Prevention of Money Laundering Act (PMLA) case against industrialist J.Sekar Reddy, noting that the chance to prove the allegations in the court are “bleak”.
A bench of Justices Vineet Saran and J.K.Maheshwari said: “Looking to the facts as discussed hereinabove and the ratio of the judgments of this court in Radheshyam Kejriwal (supra) and Ashoo Surendranath Tewari (supra), the chance to prove the allegations even for the purpose of provisions of PMLA in the court are bleak.”
“Therefore, we are of the firm opinion that the chances to prove those allegations in the Court are very bleak.It is trite to say, till the allegations are proved, the appellant would be innocent.” Justice Saran retired earlier this month.
The bench noted that the ED could not collect any incriminating material and also did not produce it before the court, even after a lapse of five and a half years, to prove its case beyond reasonable doubt.
“From the material collected by the agency, they themselves are prima facie not satisfied that the offence under the PMLA can be proved beyond reasonable doubt.,” it said, adding that argument by the ED counsel regarding the pendency of the appeal against the order of adjudicating authority is also no help because against the order of the appellate authority also, remedies are available.
The bench emphasised that the allegation must be proved beyond reasonable doubt in the court and also, it is incumbent upon the court to look into the allegation and the material collected in support thereto and to find out whether the prima facie offence is made out.
The bench set aside a Madras High Court order, which dismissed the appellant’s plea seeking quashing of proceedings connected with the PMLA complaint.”The High Court by the impugned order has recorded the finding without due consideration of the letter of the Income Tax Department and other material in the right perspective.Therefore, in our view, these findings of the High Court cannot be sustained,” it said, while setting aside the high court order.
The bench noted that in the present case, the schedule offence has not been made out because of lack of evidence.”The Adjudicating Authority, at the time of refusing to continue the order of attachment under the PMLA, was of the opinion that the record regarding banks and its officials who may be involved, is not on record,” it said.
It added therefore, for lack of identity of the source of collected money, it could not be reasonably believed by the Deputy Director, ED that the unaccounted money is connected with the commission of offence under the PMLA.
“Accordingly, we set aside the impugned order passed by the High Court.Consequently, this appeal is allowed.ECR CEZO 19/2016 including Complaint bearing No.2 of 2017 stands quashed.”
The Income Tax Department, Chennai, in December 2016, conducted a search of Reddy’s official premises and seized a large amount of currency and gold.The CBI registered a case against him and two others.
Later, the ED said the case also attracted the provisions of the PMLA.
The ED allegedly found new Rs 2000 currency notes of a total value of over Rs 33 crore in a search operation conducted at his official and commercial premises.
In March 2017, the appellant secured bail from the special court.Later, the CBI FIRs were quashed by the high court.
The IT department closed the investigation saying it is accounted money and there were records of taxes paid by him.Reddy then moved the high court seeking quashing of the PMLA proceedings.
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