In a scam of Huge transaction through induced investment in Cloud particles, the High Court of Punjab and Haryana has refused to de-freeze bank account of Vuenow Infotech Pvt. Ltd and directed the assessee company to present case before concerned adjudicating authority.The Adjudicating Authority under the Prevention of Money Laundering Act ( PMLA ) 2002 is entitled to adjudicate the matter on receipt of a complaint.
Vuenow Infotech Pvt. Ltd., the petitioner (company) seeks direction to the Enforcement Department (ED) to produce all the records as regards purported inquiry being conducted under the Foreign Exchange Management Act, 1999 (“the 1999 Act”), the read down and/or read into Section 37 of the 1999 Act in tandem, sync and harmony with Section 132 of the Income Tax Act, 1961 ( “the 1961 Act”) and to also hold that the powers of search, seizure etc. vested in the 1999 Act are circumscribed, confined and limited to the contravention referred to Section 13 of the 1999 Act. Certain other connected reliefs have also been sought.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The search and seizure proceedings conducted by the ED on 26.11.2024 and the quashing of the illegal act of freezing of the bank account of the petitioner company have been sought. The ED initiated inquiries/investigation under the 1999 Act in respect of the group companies, namely Ms/ Vuenow Infotech Pvt. Ltd. (M/s VIPL), M/s
Vuenow Marketing Services Ltd. (M/s VMSL), M/s Zebyte Infotech Pvt.Ltd. (M/s ZIPL) and M/s Zebyte Rental Planet Pvt. Ltd. (M/s ZRPPL). Initial inquiries/investigations reveal that the above mentioned entities received foreign inward remittance. It was found from the financial statements that the aforesaid foreign inward remittances have not been declared by VIPL and VMSL in the financial year 2021-22 and 2022-23.
The promoters and major shareholders/directors of the companies were issued summons on 30.10.2024 and 19.11.2024 in order to offer them an opportunity of being heard and proceed with the investigation, however, none of the aforesaid persons joined the investigation. Further, the direction issued to bank for debit freeze of the bank accounts of the petitioner company under the provisions of the 1999 Act have turned ineffective since 02.12.2024 because the order of debit freeze has been lapsed and never extended. On 19.11.2024, the officials relating to the companies have been requested to join for monitoring the extraction of data from the digital devices recovered and seized during the search operation, however, none of them joined.
It was revealed that these companies have effected a huge banking transactions amongst themselves. It was also revealed that these companies have dishonestly induced around 25000 individuals/investors to invest in cloud particles by selling them nonexistent and insubstantial particles and have, therefore, cheated and breached the trust of various investors and have also suspected criminal offence under the provisions of Bhartiya Nagrik Suraksha Sanhita, 2023 (“the BNSS”) which are the scheduled offences under the Prevention of Money Laundering Act, 2002 ( “the 2002 Act”).
The counsels representing the petitioners submitted that while carrying out search and seizure, the ED has not followed the procedure and no prior notice before conducting search and seizure was issued to the petitioner company. It is further submitted that no intimation notice or opportunity was given to the petitioner to explain their position and seizure memos failed to disclose the reasons behind the search and seizure.
Per contra, the counsel representing the ED contended that the investigation is in progress and the matter is required to be placed before the Adjudicating Authority within a period of 30 days from such attachment as per Section 5(5) of the 2002 Act. It is submitted that the petitioner would have an opportunity to represent and explain its position. It has further been disclosed that the petitioner and its sister concerns have been indulging in forum shopping as they have filed various petitions in different High Courts as a petition has been filed in the Allahabad High Court for quashing the FIR and the sister concern of the petitioner, namely M/s Zebyte Infotech has filed a petition i.e. Writ Petition (Civil) No. 15400 of 2024 in the Delhi High Court.
The Division bench of Chief Justice Sheel Nagu and Justice Anil Kshetarpal viewed that section 5 (5) of the 2002 Act mandates the ED to file a complaint stating the facts of such attachment before the Adjudicating Authority within a period of 30 days.
The Adjudicating Authority is entitled to adjudicate the matter on receipt of a complaint. Before the Adjudicating Authority all the stakeholders are entitled to participate and explain their position. The court disposed of the writ petitions with the liberty to the petitioners to present their case before the Adjudicating Authority under the 1999 Act as well as the 2002 Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
