Delhi High Court
Sanjay Bhandari vs Directorate Of Enforcement on 8 November, 2024
Author: Dinesh Kumar Sharma
Bench: Dinesh Kumar Sharma
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
RESERVED ON -20.09.2024
% PRONOUNCED ON -08.11.2024
+ CRL.M.C. 1002/2020, CRL.M.A. 4037/2020
SANJAY BHANDARI .....Petitioner
Through: Mr. Dayan Krishnan, Sr. Adv. with
Mr. Avneesh A. Mr. Abhishek
Nassing, Mr. Shantanu Parokar, Mr.
Shaurya Chourasiya, Mr. Shreedhar
Kale, Advs.
versus
DIRECTORATE OF ENFORCEMENT .....Respondent
Through: Mr. Zoheb Hossain, Special Counsel
(through VC), Mr. Anupam Sharma,
Mr. Vivek Gurani, Mr. Kartik
Sabharwal, Mr Vivek Gaurav, Ms.
Abhipriya Rai, Mr. Sanwir Singh,
Advs.
CORAM:
HON'BLE MR. JUSTICE DINESH KUMAR SHARMA
JUDGMENT
DINESH KUMAR SHARMA,J :
S. No Particulars Page Nos.
A. Brief facts 2-8
B. Submissions of Petitioner 8-12
C. Submissions of Respondent 12-16
D. Finding and Analysis 16-25
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BRIEF FACTS
1. The present petition has been filed under Section 482 Cr.P.C. seeking
quashing of the Miscellaneous Application No. 249/2019 dated
13.12.2019 filed under Section 4, 10 and 12 of the Fugitive Economic
Offenders Act before the Court of Ld. Special Judge, Rouse Avenue
Court Complex, Delhi, the summoning order dated 24.12.2019 and all
proceedings emanating therefrom.
2. The petitioner submitted that the material on record does not meet the
essential ingredients for declaring the petitioner herein as a Fugitive
Economic Offender, and thus the proceedings are not maintainable.
The petitioner has argued that the Fugitive Economic Offenders Act,
2018, can apply only in cases where a Non-Bailable Warrant is issued
against the accused person, and where the value involved in such
Scheduled Offence is one hundred crores rupees or more. The
petitioner contends that the impugned Miscellaneous Application
merely makes a bold averment that “the accused is covered under the
definition of Fugitive Economic Offender as defined under Section 2(f)
of the Act.” It further states that “the proceeds of crime in the
Scheduled Offence are in excess of Rs. 100 crores,” which has been
confirmed by the Income Tax Authorities via their communication
dated 09.07.2019 (Annexure A-6).
3. The petitioner has asserted that there is not a shred of evidence to show
that the proceeds of crime allegedly generated by the petitioner from
the Scheduled Offence are Rs. 100 crores or more. Furthermore, it has
been submitted that the Directorate of Enforcement has relied on the
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communication dated 09.07.2019 from the Income Tax Department to
claim that the alleged proceeds of crime are in excess of Rs. 100 crores.
However, the said communication itself states that the assessment
under the Black Money Act against the petitioner has not been
finalized. In the absence of any conclusive assessment against the
petitioner under the Black Money Act, there is no finding of tax
evasion; therefore, there is no basis to assert that the alleged proceeds
of crime are in excess of Rs. 100 crores.
4. The petitioner has argued that a mere communication from the Income
Tax Department to the Directorate of Enforcement cannot form the
basis for proving that the petitioner has committed a Scheduled
Offence where the proceeds of crime are in excess of Rs. 100 crores. It
has been submitted that the requirements under Section 2(1)(m) and the
evidentiary burden under Section 16 of the Fugitive Economic
Offenders Act are not satisfied, and thus the Complaint ought to be
quashed.
5. The petitioner has highlighted that the consequences of being declared
a Fugitive Economic Offender are severe, including the confiscation of
his property and barring him from defending any civil claims,
effectively amounting to an economic death penalty. The petitioner has
argued that it is essential for the assessing officer under the Black
Money Act to first establish the tax liability upon the assessee; only
then can the officer proceed to allege that such assessee willfully
attempted to evade tax. The petitioner contends that tax liability can
only arise after the completion of assessment, and therefore, no
prosecution for tax evasion can be initiated without completion of the
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assessment. Furthermore, the petitioner asserts that there is not even an
iota of evidence in the entire impugned Miscellaneous Application
indicating that the petitioner owns any of the assets referred to therein,
nor is there any document showing the ownership of any of the assets
attributed to the petitioner.
6. The petitioner has alleged that there is blatant arbitrariness and a lack
of application of mind behind instituting the present impugned
application. The petitioner has asserted that the agency has failed to
consider that the alleged proceeds of crime (i.e., the alleged foreign
assets of the petitioner) mentioned in the impugned Miscellaneous
Application existed prior to the commencement of the Black Money
Act. It has been submitted that the “proceeds of crime” must be
generated from the commission of the Scheduled Offence and cannot
predate it in any event. The petitioner claims to be facing consistent
harassment from the agency, as the properties of the petitioner were
seized under the PMLA via the First Provisional Attachment Order No.
3/2017 dated 01.06.2017. While adjudicating on this order, the
Adjudicating Authority categorically held that there are no cross-border
implications in the present case and that the Scheduled Offence under
the PMLA is not made out.
7. The petitioner further submitted that the agency had also attached the
assets of certain companies via an order dated 26.12.2017 under the
Foreign Exchange Management Act, in which the petitioner is a
shareholder. The assets of these companies were previously attached
under the First Provisional Attachment Order No. 03/2017 dated
01.06.2017 and later rejected by the judgment dated 17.11.2017 of the
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Learned Adjudicating Authority. The petitioner has challenged the
attachment made by the Respondent under the FEMA in WP(C) No.
4000/2018, and this Court, via order dated 12.07.2018, permitted the
said companies to operate their bank accounts, subject to maintaining
the balance as of that date. The petitioner claims that immediately
thereafter, on the very next day, the respondent issued Provisional
Attachment Order No. 5/2018 dated 13.07.2018 with biased and mala
fide intent solely to harass and intimidate the petitioner. This
Provisional Attachment Order dated 13.07.2018 was also challenged in
WP(C) No. 10106/2018, and this Court stayed the proceedings before
the Adjudicating Authority via order dated 04.10.2018.
8. The petitioner has submitted that the respondent has been continuously
harassing the petitioner with mala fide intent. It is submitted that the
impugned order dated 24.12.2019, summoning the petitioner, does not
disclose how the Learned Special Judge concluded that an offence
under the Fugitive Economic Offenders Act, 2018, is prima facie made
out, or how the petitioner is the owner of the alleged foreign assets in
question. The petitioner contends that the impugned order lacks
reasoning and is therefore liable to be set aside. It is also submitted that
at the summoning stage, the Magistrate is required to apply judicial
mind to take cognizance of the offence and determine whether a prima
facie case exists for summoning the accused.
9. The respondent has filed a counter affidavit denying all allegations
made in the petition. The respondent raised a preliminary objection that
the petitioner has not provided his residential address of United
Kingdom in the affidavit filed with the petition, suggesting that the
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petitioner has not approached the Court with clean hands and has
suppressed material facts. It is further submitted that a Look Out
Circular (LOC) was issued at the behest of the Income Tax Department
on 27.06.2016 and by the Directorate of Enforcement on 14.02.2017
against the petitioner. Despite this, the petitioner allegedly managed to
escape the country and is currently residing in the United Kingdom to
avoid actions initiated by various investigating authorities. The
respondent also submitted that the petitioner is residing in the UK
illegally, as his passport was impounded by the competent authorities
in India under the Passports Act, 1967, on 21.03.2018.
10. The respondent contended that the petitioner has shown utter contempt
for the law and has not cooperated with the investigation. It is further
submitted that the petitioner has been declared a “proclaimed person”
and a Red Notice has also reportedly been issued against the petitioner
by Interpol, and FIR No. 173 of 2016 has been registered under
Sections 3/5 of the Official Secrets Act and Sections 409, 379, and
120B of the Indian Penal Code against the petitioner. In light of this
background, the respondent submitted that the petitioner is not entitled
to the discretionary remedy under Section 482 Cr.P.C. Reliance has
been placed upon Wave Hospitality Private Limited vs. Union of India
& Ors. [WP C 5511/2019 dated 30.05.2019] and Parbatbhai
Bhimsinhbhai Karmur & Ors. vs. State of Gujarat & Anr. [(2017) 9
SCC 641].
11. The respondent further submitted that the petitioner is an Indian
resident as defined in Section 6 of the Income Tax Act, 1961, and is
thus legally obligated to declare all global income and assets to the
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Indian Tax Authorities. Consequently, the petitioner is liable to pay
taxes, interest, and penalties on global income under Sections 5 and 4
of the Income Tax Act, 1961. The respondent submitted that the Black
Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015 (referred to as the “Black Money Act”) was enacted to
address the issue of undisclosed foreign income and assets by residents,
as well as willful tax evasion, and provides prosecution and penalties
on such undisclosed foreign income and assets.
12. The legislature also provided a one-time compliance window to allow
residents to declare undisclosed foreign income and assets in Section
59 of the Black Money Act, 2015. Furthermore, it has been submitted
that Section 72(c) of the Black Money Act, 2015, provides that where
any asset has been acquired or made prior to the commencement of this
Act, and no declaration regarding such asset is made under this chapter
(i.e., Chapter VI “Tax Compliance for Undisclosed Foreign Income
and Assets,” Sections 59 to 72), such asset shall be deemed to have
been acquired or made in the year in which a notice under Section 10
of the Black Money Act, 2015, is issued by the Assessing Officer
(A.O.). In the present case, a notice under Section 10 of the Black
Money Act was issued on September 22, 2016.
13. It has further been submitted that the Income Tax Authorities
conducted a search and seizure operation on April 27, 2016, during
which the petitioner, in his statement on oath under Section 132(4) of
the Income Tax Act, admitted that he had not declared the foreign
assets and income in his income tax return. The petitioner also admitted
that he had not paid any tax, interest, or penalty on such undisclosed
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foreign income and assets. The respondent further submitted that a
complaint under Section 51(1) of the Black Money Act, 2015, bearing
No. 2121, has already been filed, in which Non-Bailable Warrants
(NBW) were issued dated October 31, 2019. It has also been submitted
that Section 51 of the Black Money Act, 2015, falls under the schedule
of the Fugitive Economic Offenders Act, 2018.
14. The respondent has further submitted that the Directorate of
Enforcement is the nodal agency for the enforcement of the Fugitive
Economic Offenders Act. The Income Tax Department requested the
answering respondent to have the petitioner declared a Fugitive
Economic Offender. The respondent submitted that under Section 11 of
the Fugitive Economic Offenders Act, if the individual to whom notice
has been issued under Sub-Section 1 of Section 10 appears in person at
the place and time specified in the notice, the Court may terminate the
proceedings under this Act. The respondent has further denied all the
averments made by the petitioner.
15. This Court, by order dated February 24, 2020, directed the petitioner to
file a response before the Learned Trial Court within a period of seven
days. However, it was directed that no coercive action be taken until
the next date of hearing. It was expressly made clear that the pendency
of the present proceedings would not be an embargo on the proceedings
being conducted by the Learned Trial Court.
SUBMISSIONS OF THE PETITONER
16. Sh. Dayan Krishnan, learned senior counsel for the petitioner,
submitted that the complaint filed and the impugned Miscellaneous
Application under Section 4 of the Fugitive Economic Offenders Act
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do not meet the requisite essentials as provided under Section 2(1)(f)
and Section 2(1)(m) of the Fugitive Economic Offenders Act. Learned
senior counsel submitted that Section 4 of the Fugitive Economic
Offenders Act lays down the procedure to be followed by the
Directorate of Enforcement. It has further been submitted that Sections
4(2)(a) and (c) require that the officer must be satisfied that a person
fulfills the criteria as laid down in Section 2(1)(f) read with Section
2(1)(m) in every aspect. The learned senior counsel further submitted
that bare reading of Section 4 of the Fugitive Economic Offenders Act
makes it clear that the officer concerned must form his reasons to
believe based on material that was in his possession on that day.
17. Learned senior counsel argued that Section 10 of the Fugitive
Economic Offenders Act mandates that upon receiving a duly filed
application under Section 4 of the Act, the Learned Special Court shall
issue notice to the person named in the application. It was submitted
that the Special Court is obligated to assess whether the application
before it fulfills the requirements under Section 4 of the Act.
Furthermore, it was argued that Section 12 of the Act requires that each
party be given an opportunity to be heard before a declaration of
“Fugitive Economic Offender” can be made. Learned senior counsel
emphasized that since there are serious consequences that follow if an
individual is declared a fugitive offender, the Court has to be very
careful before issuing notice under Section 10 of the FEO Act, 2018.
18. Learned senior counsel contended that the reasons recorded by the
Directorate of Enforcement in the application do not justify declaring
the petitioner as a fugitive offender, as the basis of such satisfaction
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relies solely on a letter from the Income Tax Department dated
09.07.2019. Learned senior counsel submitted that this letter shows that
no finalized assessment has established that the amount involved
exceeds Rs. 100 crores. Learned senior counsel argued that without a
completed assessment, the alleged tax evasion amount cannot be
conclusively determined. Learned senior counsel further submitted that
the threshold amount of Rs. 100 crores constitutes a jurisdictional fact
essential for the Court to assume jurisdiction in the matter. Reliance
was placed on Arun Kumar and Others vs. Union of India and Others
(2007) 1 SCC 732 and Carona Ltd. vs. Parvathy Swaminathan &
Sons (2007) 8 SCC 559.
19. In Arun Kumar (Supra), the Apex Court held that tax laws could not
be applied retrospectively unless expressly stated emphasizing that
ambiguities in tax statutes should favor the taxpayer. The Apex Court
underlined that legislative intent must be clear when imposing new tax
liabilities to avoid unexpected burdens on taxpayers. In Parvathy
Swaminathan & Sons (Supra), the Court addressed the principle of
lifting the corporate veil, ruling that it should only occur in cases of
fraud or misuse of corporate structure. In case of absence of evidence
of improper conduct, the corporate entity’s structure would be
respected, reinforcing the boundaries of corporate identity protection.
20. Learned senior counsel also submitted that the Directorate of
Enforcement’s satisfaction was entirely and exclusively based on the
letter dated 09.07.2019. Learned senior counsel argued that
independent reasons to believe must be established based on the
Enforcement Directorate’s own application of mind, rather than a
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“borrowed satisfaction.” Reliance was placed on King Emperor v.
Sibnath Banerji (1946) 48 BOMLR1. Furthermore, learned senior
counsel argued that the impugned summoning order dated 24.12.2019
is entirely unreasoned, lacking any application of judicial mind. It was
submitted that to meet the criteria under Section 4 of the Fugitive
Economic Offenders Act, the Enforcement Directorate officer must
independently form reasons to believe based on materials in their
possession to confirm that the stipulated requirements under the Act are
met.
21. Learned senior counsel argued that before the assessment order was
issued on 23.03.2020, the satisfaction recorded in the impugned
miscellaneous application dated 13.12.2019 and the summoning order
dated 24.12.2019 were both issued without sufficient reasons. Learned
senior counsel further submitted that “reasons to believe” as
determined by an authority cannot be justified by events that occur
afterward. Reliance has been placed upon Principal Commissioner of
Income Tax-6 vs. Meenakshi Overseas Pvt. Ltd. 2017 SCC OnLine
Del 8691 : (2017) 395 ITR 677, Best Cybercity (India) Pvt. Ltd. vs.
Income Tax Officer, Ward 4(3) and Another 2019 SCC OnLine Del
8670 : (2019) 414 ITR 385, Godrej Industries Ltd. vs. B.S. Singh,
Deputy Commissioner of Income-Tax and Others 2015 SCC OnLine
Bom 8420 : (2015) 377 ITR 1 and Mohinder Singh Gill and Another
vs. The Chief Election Commissioner, New Delhi and Others (1978) 1
SCC 405.
22. Learned senior counsel further submitted that several properties have
been incorrectly included in the calculation of the value of the
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scheduled offence against the petitioner, as these properties were not
owned by him at the time of the enactment of the Black Money Act.
Learned senior counsel argued that the Black Money Act, being a
criminal and taxation statute, cannot be applied retrospectively.
Additionally, the validity and interpretation of Section 51 read with
Section 72(c) of the Black Money Act, 2015, are pending adjudication
before the Division Bench in W.P.(C) 5294/2021.
23. Learned senior counsel emphasized that it is crucial for the
Enforcement Directorate officer to independently from their reasons to
believe based on the material in their possession. He further submitted
that the procedure prescribed under Section 11 of the Fugitive
Economic Offenders Act is summary in nature, without requiring both
parties to lead evidence, and therefore, the Court must exercise caution
before passing a summoning order.
SUBMISSIONS OF THE RESPODNENT
24. Sh. Zoheb Hossain, learned special counsel for the ED submits that at
the outset, the petition filed is defective as the petitioner has not
disclosed his present address of London in the memo of parties or in
the affidavit or in the vakalatnama. It has further been submitted that
even in the affidavit filed with the support of the present petition is
contrary to the Delhi High Court Rules, 2018 in Volume-4 Chapter-12
titled as “Oaths and Affirmations and Affidavits” as there is no
identification of the deposing the petitioner. It has been submitted that
in terms of Rule 11, the deponent has not been identified. It has further
been submitted that in term of Rule 9 of Volume 4 Chapter-12, Delhi
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High Court Rules, 2018, the petitioner has not provided the place of his
residence. Learned counsel further submitted that therefore the
petitioner has approached this Court with unclean hands. It has further
been submitted that LOC dated 27.06.2016 has already been issued by
the Immigration authorities in the behest of Income Tax authorities and
another LOC dated 14.02.2017 was issued against the petitioner by the
respondent. It has also been submitted that the petitioner is in accused
in FIR No.173/2016 under Section 3 and 5 of the Official Secret Act,
1923 and Section 409/ 379/ 120 B of the Indian Penal Code, PS Crime
Branch, New Delhi. It has further been submitted that trade notice has
also been issued against the petitioner by the Interpol for declaring the
petitioner as a fugitive.
25. Sh. Zoheb Hossain, learned special counsel further submitted that the
passport of the petitioner has also been impounded and the petitioner is
residing in U.K. to in order to avoid/evade/avail prosecution in India. It
has further been submitted that the petitioner in criminal revision
petition number 223/2018 has already been declared as Proclaimed
Person. It has further been issued to the Non Bailable Offence issued
against the petitioner on 30.10.2019 in criminal complaint bearing
No.2121/2019 filed by the Income Tax Authority for the offence
punishable under 51(1) of Black Money Act.
26. Sh. Zoheb Hossain, learned special counsel submitted that all the
requirements required under Section 2 (f) and (n) of Fugitive Economic
Offenders Act, 2018 has been met. It has been submitted that the
application under Section 4 read with Section 10 and 12 of FEO Act
has duly been filed before the learned Special Judge and a notice has
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rightly been issued.
27. Sh. Zoheb Hossain, learned special counsel submitted that pursuant to
the search conducted on the premises of the petitioner by the Income
Tax Authorities on 27.04.2016 various incriminating materials with
respect to movable and immovable property owned by the petitioner
was recovered and seized and the ownership of the same was admitted
by the petitioner in his statement recorded by the Income Tax
Authorities. Learned special counsel submitted that the perusal of the
undisclosed bank accounts statement of the petitioner reveals that
credits in the companies in the UAE is way beyond of Rs.100 crores. It
has been submitted that the petitioner in involved in “scheduled
offence” within the definition of Section 2(1) (m). Sh. Zoheb Hossain,
learned special counsel submitted that all the pre-requisites for
declaration of fugitive economic offender are met and the procedure
has duly been followed.
28. Sh. Zoheb Hossain, learned special counsel submitted that the object
and purpose of the Black Money Act is to deal with the problem of
undisclosed foreign income and assets in possession of tax on the said
income and assets. The attention has also been invited to Section 2 (c)
of the Black Money Act which provides that where any asset has been
acquired or made prior to commencement of this Act and no
declaration in respect of such asset is made under Chapter-6 (section 59
to Section 72) such Acts shall be deemed to have been acquired on the
made in the year in which the notice under Section 10 of the Black
Money Act which is issued by the Assessing Officer.
29. In rejoinder, learned senior counsel argued that the judgments cited by
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the respondent are irrelevant and inapplicable to the present case. It
was further submitted that this Court’s decision in the instant petition
would primarily concern two issues: (1) Whether the respondent
independently formed reasons to believe, under Section 4 of the
Fugitive Economic Offenders Act, 2018, based on material in their
possession, and that the petitioner met the requirements under Section
2(1)(f) read with Section 2(1)(m) of the Act; and (2) whether the
Learned Special Court correctly assessed if the application under
Section 4 was “duly filed.”
30. The petitioner has filed the present petition challenging the impugned
the Miscellaneous Application No.249/2019 dated 13.12.2019 before
the Court of learned Special Judge and all proceedings emanating
therefrom filed.
31. Mr. Dayan Krishnan, learned senior counsel for the petitioner has
predominantly argued that the letter dated 07.02.2019 on which the
respondent based it’s case as nowhere states that the amount involved
in the contravention under Section 51 BMA will be at least Rs.100
Crores. The challenge has also been made that the assessment was yet
to be finalized and there were no independent reasons to believe under
Section of the FEO Act. The basis of the case of the petitioner is that
there has to be own reasons of the complainant to believe on the basis
of material in his possession. It has further been case of the petitioner
that the summoning order is required to show at least prima facie
satisfaction that the application under Section 4 (a) of FEO was duly
filed. It has further been submitted that complaint filed does not fulfill
the jurisdictional fact under Section 2 (1) (f) read with 2 (1) (m) of the
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FEO Act.
FINDING AND ANALYSIS
32. The Fugitive Economic Offenders Act, 2018 was enacted to provide for
measures to determine the economic offender from evading the process
of law in India by staying outside the jurisdiction of India, to preserve
the sanctity of the Rule of law in India and for matters connected there
whom or in severity there. The perusal of the statement of object and
reasons indicates that the legislature was conscious of the fact that in
several instances economic offenders have flee the jurisdiction of the
Indian courts anticipating the commencement of criminal proceedings
or some times during the pendency such proceedings. The statement of
object and reasons notes that the absence of such offenders from Indian
Courts has several deleterious consequences such as it obstructs
investigation in criminal cases and waste precious time of the Courts
and undermines the rule of law and India. The fugitive economic
offender Act, 2018 was enacted as it was felt that the existing
provisions of civil and criminal law are not adequate to deal with the
severity of a problem.
33. Section 2 (1) (f) defines fugitive economic offender which reads as
under;
(f) “fugitive economic offender” means any individual against
whom a warrant for arrest in relation to a Scheduled Offence has
been issued by any Court in India, who
(i) has left India so as to avoid criminal prosecution; or
(ii) being abroad, refuses to return to India to face criminal
prosecution
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34. Section 2 (1) (m) defined the “Scheduled Offence” which reads as
under;
(m) “Scheduled Offence” means an offence specified in the
Schedule, if the total value involved in such offence or offences is
one hundred crore rupees or more;
35. It is pertinent to mention here that Entry 30 of the Schedule provides
Section 15 of Black Money Act as “Scheduled Offence”.
36. Chapter -2 of Fugitive Economic Offender Act, 2018 deals with the
declaration of the fugitive economic offenders and confiscation of
Properties. Section 4 reads as under;
4. Application for declaration of fugitive economic offender and
procedure therefore
(1) Where the Director or any other officer not below the rank of
Deputy Director authorised by the Director for the purposes of
this section, has reason to believe (the reasons for such belief to
be recorded in writing), on the basis of material in his possession,
that any individual is a fugitive economic offender, he may file an
application in such form and manner as may be prescribed in the
Special Court that such individual may be declared as a fugitive
economic offender.
(2) The application referred to in sub-section (1) shall contain–
(a) reasons for the belief that an individual is a fugitive economic
offender;
(b) any information available as to the whereabouts of the fugitive
economic offender;
(c) a list of properties or the value of such properties believed to
be the proceeds of crime, including any such property outside
India for which confiscation is sought;
(d) a list of properties or benami properties owned by the
individual in India or abroad for which confiscation is sought;
and
(e) a list of persons who may have an interest in any of the
properties listed under clauses (c) and (d).
(3) The Authorities appointed for the purposes of the Prevention
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of Money-laundering Act, 2002 (15 of 2003) shall be the
Authorities for the purposes of this Act
37. Perusal of Section 4 has certain important words which includes
“reasons to believe”. “Such reasons to believe” have to be recorded in
the writing. It also provides that the officer concern must have reasons
to believe on the basis of material in his possession and if all these pre-
requisites are fulfilled then an application may be filed to declare such
person as a fugitive offender. The central government published “The
declaration of fugitive economic offender (forms and manner of filing
of application)” Rules, 2018. Rule 3 provides the form and manner of
the application for declaring any individual as fugitive economic
offender which reads as under;
“3. Form and manner of application for declaring an
individual as a fugitive economic offender. (1) The Director
or the authorised officer, as the case may be, shall prepare
an index containing the following materials, namely:-
(i) a copy of a warrant of arrest in relation to prosecution of
a Scheduled Offence against the individual believed to be a
fugitive economic offender issued by any Court in India;
(ii) a statement of reasons to believe that an individual is a
fugitive economic offender;
(iii) a statement on any information available as to the
whereabouts of the individual believed to be a fugitive
economic offender;
(iv) any proof of effort undertaken to bring the individual
believed to be a fugitive economic offender back to India;
(v) a list of properties or value of such properties believed
to be the proceeds of crime, including any such property
outside India for which confiscation is sought;
(vi) a list of properties or benami property owned by the
individual believed to be a fugitive economic offender in
India or abroad for which confiscation is sought;
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(vii) a copy of a confiscation order issued by the
Adjudicating Authority under the Prohibition of Benami
Property Transactions Act, 1988, if any;
(viii) a list of persons who may have an interest in any of the
properties listed under clauses (v) and (vi).
(2) The index and material prepared under sub-rule (1)
shall be signed on each page and forwarded to the Special
Court in a sealed envelope, indicating a reference number
and date of despatch.
(3) The Director or the authorised officer, as the case may
be, shall maintain registers and other records such as
acknowledgement slip register and dak register and shall
ensure that necessary entries are made in the register
immediately as soon as a copy of the application along with
the materials are forwarded to the Special Court.”
38. Section -4 sub Section (2) provides that the application filed in Section
4 (1) shall contain followings;
(2) The application referred to in sub-section (1) shall
contain–
(a) reasons for the belief that an individual is a fugitive
economic offender;
(b) any information available as to the whereabouts of the
fugitive economic offender;
(c) a list of properties or the value of such properties
believed to be the proceeds of crime, including any such
property outside India for which confiscation is sought;
(d) a list of properties or benami properties owned by the
individual in India or abroad for which confiscation is
sought; and
(e) a list of persons who may have an interest in any of the
properties listed under clauses (c) and (d).
39. Section 10 of FEO provides that after an application under Section 4
has duly been filed, the Special Court shall issue a notice to an
individual who is alleged to be a fugitive economic offender.
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40. Learned senior counsel for the petitioner has argued in detail and
emphasize that the learned Special Court has fallen into a grave error
while issuing the notice mechanically without even being “ascertaining
the application under Section 4 has been duly filed”. The complainant
has duly stated the statement of reasons to believe which is as under;
8. STATEMENT OF REASONS TO BELIEVE THAT THE
ACCUSED IS A FUGITIVE ECONOMIC OFFENDER
a. The Income Tax Authorities have filed a Prosecution
Complaint dated 22.12.2018 in CC no 2121/2019 against
the said Accused under S. 51 of the Black Money Act.
b. An open ended NBW was issued against the Accused
person on 31.10.2019 in CC No. 2121/2019, on the
reasonable belief that the Accused deliberately evaded the
process of law. A copy of the said NBW is annexed herewith
as Annexure A-5.
c. The proceeds of crime in the Scheduled Offence are in
excess of Rs. 100 crores. The same has been confirmed by
the Income Authorities vide their communication dated
09.07.2019. A copy of the said communication is annexed
herewith as Annexure A-6. The undisclosed bank account
and properties held by Sh. Sanjay Bhandari outside India
are tabulated in the Para 2, (Page no.283) in the
Prosecution Complaint filed by the Income Tax Authorities
under Section 51 of the Black Money Act, 2015 against Shri
Sanjay Bhandari.
d. The material on record and reasons to believe to show
the complicity of the Accused regarding the commission of
the Scheduled Offence have been duly provided in the
Prosecution Complaint dated 22.12.2018 filed by the
Income Tax Department. The contents of the same may be
end as a part and parcel of the instant Application and the
………..
e. That the said Accused has left the country under
suspicious circumstances and evading the process of law in
India by staying outside the jurisdiction of Indian Court so
as not to face criminal prosecution. A Look Out Circular
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was issued at the instance of the Directorate of Enforcement
on 14.02.2017 against the said Accused. Further, a Red
Corner Notice (RGN) dated 16.10.2017 had been issued
against the said Accused in another case FIR No. 173/2016
being investigated by Crime Branch, New Delhi and he has
been declared a Proclaimed Person. A copy of the Order
dated 31.07.2018 of the Hon’ble High Court of Delhi in
Criminal Revision Petition 223/2018 is annexed as
Annexure A-7. Also, the Passport of the said Accused was
impounded by the Regional Passport Office, vide its order
dated 21.03.2018. The said Order is annexed as Annexure
A-8.
The Accused however evaded the process of law and despite
the instant developments being well in his knowledge, has
chosen to deliberately not return to the country and submit
to the jurisdiction of the Hon’ble Court.
41. It is also pertinent to mention here that the complainant has also given
the statement of information available on the whereabouts of the
accused. The complainant has filed list of properties connected to the
proceed of crime as Annexure-2 In the complaint, the complainant has
given a list of properties and benami properties owned by the accused
and the list of such properties has duly been filed as Annexure A-3. It
was stated that some of these properties are held by the petitioner
through his companies in which petitioner has substantial control or
through benami holders. The name of such companies/benami holders
have duly been given which is as follows;
a. OIS Aerospace Pvt. Ltd.
b. Santech Petro Global Pvt. Ltd.
c. Santech Energy System and Services P Ltd
d. Santech IT Services Pvt. Ltd.
e. OIS Advanced Technology Pvt. Ltd.
f. Offset India Solutions Pvt. Ltd
g. Santech Investment Pvt. Ltd.
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h. OIS Transport technology Pvt. ltd.
i. Avaana Software and Services Pvt. Ltd.
j. Niho Realtors (India) Pvt. Ltd.
42. The complainant has also stated that some of the properties are held
through companies whose shares were held by shell companies on
behest of the petitioner. The complainant has duly given the detail of
such companies and Shell companies holding which are as follows;
S.No. company Shell companies holding shares
1 Micromet ATI 1. SB Hospitality 85 Services Pvt. Ltd.
India Pvt. Ltd. (Majority shareholder- 46.67%)
2. Amaijit Motor Finance Pvt. Ltd.
3. Century Buildpro Pvt. Ltd.
4. Kaksh Impex Pvt. Ltd.
5. Madhur Buildcon Pvt. Ltd.
6. Saraswati Buildhome Pvt. Ltd.
7. Sunshine Infraprojects Pvt. Ltd.
2 S.B. 1.Amarjit Motors Finance Pvt. Ltd.
Hospitality (Majority Shareholder -23.7%)
Pvt. Ltd. 2. Surabhi Infraprojects Pvt. Ltd.
3. Eace Exim Pvt. Ltd.
4. Jasihine Soft Solutions Pvt. Ltd.
5. Mystic Fashions Pvt. Ltd.
6. Paksh Marketing Pvt. Ltd.
7. Toor Finance Company.
8. Bhola Motor Finance Pvt. Ltd.
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9, Vimuri Finance Pvt. Ltd.
10. Cygnet Relator Pvt. Ltd.
43. The petitioner in the present case has challenged the summoning order
and has sought the quashing of the miscellaneous application. Before
proceeding any further, it is crucial to examine the scope of the
jurisdiction exercised by the learned Special Judge at the time of
issuing the summons. This examination involves a detailed analysis of
the legal framework and principles guiding the judge’s discretion, the
procedural aspects involved in issuing summons, and the relevant
precedents that outline the limits and boundaries of such jurisdiction. It
is essential to ensure that the summoning order complies with the
established legal standards and does not infringe upon the rights of the
petitioner.
44. The complainant has specifically and categorically stated that the
accused is the owner of the properties listed in Annexure A to
Annexure A3, which were acquired by him and are involved in the
commission of the scheduled offence. The complainant has further
asserted that, based on the available material, it is abundantly clear that
the proceeds of crime in the present case exceed Rs. 100 crores as of
date, and that Non-Bailable Warrants have been issued against the
accused. Therefore, the petitioner falls within the scope of Section
2(1)(f) of the Act.
45. A combined reading of Section 4 and Section 10 leads to the
conclusion that, if an application under Section 4 has been filed in
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accordance with “The Declaration of Fugitive Economic Offenders
(Forms and Manner of Filing the Application) Rules, 2018,” the
Special Court is required to issue a notice to any individual alleged to
be a fugitive economic offender. The jurisdiction exercised under this
Act is distinct from the summoning of an accused for other criminal
offences. The Fugitive Economic Offenders Act, 2018 is a special
statute enacted for a specific purpose, and the legislature, in its
wisdom, has provided that upon filing a complaint application in
accordance with the aforementioned Rules, the Special Court shall
issue a notice. The argument regarding “duly filed” is liable to be
rejected, as the concept of “duly filed” must be understood in
accordance with the above-said Rules.
46. Furthermore, the petitioner’s argument that the complaint has been
filed solely on the basis of the Income Tax authorities’ letter dated
09.07.2019 is also liable to be rejected. The complainant, in its
complaint, has provided detailed information regarding the properties
and has submitted supporting documents in its possession. The “reason
to believe” has also been recorded in writing. In these circumstances,
none of the petitioner’s arguments can be accepted.
47. Furthermore, the present petition is liable to be outrightly rejected, as
the respondent/agency has pointed out that the petitioner has not
disclosed his address in the United Kingdom. A person who invokes
the jurisdiction of the Court must come with clean hands, as stated by
the respondent in the affidavit; the petitioner is also required to disclose
his current address. The exercise of jurisdiction under Section 482 of
the Cr.P.C. is intended to prevent the abuse of the process of law and to
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secure the ends of justice. These are extraordinary reliefs, which can
only be granted to individuals who approach the Court with clean
hands. In the present case, the petitioner is absconding and seeks to
invoke the Court’s discretionary power without disclosing his current
whereabouts.
48. The petitioner could have appeared before the learned Special Judge as
provided under Section 11 of the FOE Act and could have filed the
reply. However, instead of that the petitioner has invoked the
jurisdiction of this Court by filing the petition under Section 482 Cr.
PC. It may again be repeated event at the cost of brevity that
discretionary jurisdiction can be invoked only in the sparing
circumstances. It has also kept in mind that the petitioner seems to be
fighting a proxy war as he has chosen not to give his address and
complete particulars in the petition.
49. The present petition involves peculiar facts and circumstances, and this
Court is of the considered view that it is inappropriate to interfere in the
matter and exercise extraordinary jurisdiction. It is also relevant to note
that Section 11 of the Act provides that, if a notice has been issued
under Section 10 (1), the individual may appear in person, and the
Special Court may terminate the proceedings.
50. Under these circumstances, the present petition along with all pending
applications stands dismissed.
DINESH KUMAR SHARMA, J
NOVEMBER 8, 2024
Pallavi/Ankit/NA
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