TMI Blog2022 (12) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... tall further proceedings in the impugned attachment order i.e., the provisional attachment order directing it not to be confirmed or it being taken any further, however, it would not mean that there can be release of the subjects of attachment in favour of the petitioners. If status quo has to be maintained in the proceedings under the IPC for the reason that there is an interim order; status quo has to be maintained in the proceedings of ECIR as well i.e., the impugned proceedings, all of which would mean that they are mutual to each other. The writ petition is allowed in part. - WRIT PETITION No.20713 OF 2022 (GM – RES) - - - Dated:- 14-12-2022 - THE HON'BLE MR. JUSTICE M. NAGAPRASANNA For the Petitioners : SRI UDAYA HOLLA, SENIOR COUNSEL FOR SRI MAHESH S., ADVOCATE For the Respondenst : SRI MADHUKAR DESHPANDE, ADVOCATE ORDER The petitioners are before this Court calling in question provisional attachment order dated 11-08-2022 attaching immovable properties of the petitioners worth Rs.300,43,93,475 held by petitioners 2 and 3 in lieu of alleged value of proceeds of crime of an equivalent amount. 2. Heard Sri Udaya Holla, learned senior counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and, therefore, seeks quashment of entire proceedings and make it subject to the offences under the IPC being taken to their logical end. 6. On the other hand, the learned counsel representing the respondent/Directorate of Enforcement would contend that the two are entirely independent proceedings notwithstanding the fact that the offence under the ECIR would spring only from the predicate offences i.e., offences under the IPC. No purpose would be served if the properties that are attached are directed to be released, as in the event the petitioners get convicted of the offences, the proceedings under the Act would become an empty formality if no attachment proceedings are permitted to continue. 7. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record. 8. The afore-narrated facts are not in dispute. A crime comes to be registered against the petitioners and several others in Crime No.163 of 2020 alleging that the petitioners entities/persons are involved in money laundering by collecting money from home buyers by delivery of flats constructed by them by inducing buyers by projecting certain apa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. Explanation. For the removal of doubts, it is hereby clarified that, (i) a person shall be guilty of offence of money laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 4. PUNISHMENT FOR MONEY-LAUNDERIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is likely to frustrate any proceeding under this Act. Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted. (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that subsection, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (3) of Section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e power of attachment is always available and such power is held to be valid in the eye of law. 13. In the teeth of the preceding analysis that the order of attachment cannot be found fault with, as it is in tune with the PMLA, but should it be permitted to be taken to its logical end or otherwise is the issue in the lis. Interdiction of attachment order is sought to be on the ground that there is an interim order of stay in the predicate offence i.e., offence under the IPC. The link between the two is, what is considered by the Apex Court in the case of VIJAY MADANLAL CHOUDARY (supra). The Apex Court in the case of VIJAY MADANLAL CHOUDARY (supra) considers the entire spectrum of PMLA and at paragraph 467 of the judgment draws up the conclusions. Paragraph 467 reads as follows: CONCLUSION 467. In light of the above analysis, we now proceed to summarise our conclusion on seminal points in issue in the following terms: (i) The question as to whether some of the amendments to the Prevention of Moneylaundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. (vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned. (vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the offence of moneylaundering, including about it posing serious threat to the sovereignty and integrity of the country. (c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness. (d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply. (xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act. (xv)(a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not investigation in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such. (b) The statements recorded by the Authorities under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion the Apex Court considers Section 3 of the Act and later upholds the constitutional validity of Section 5 of the Act in terms of clause (vi) supra. Section 5 of the Act is what deals with the attachment of the properties. Clause (v)(d) of paragraph 467 (supra) establishes the link between the two. The Apex Court holds that in the event the accused in the PMLA or whose allegations are linked to any persons in the predicate offence such accused in the predicate offence gets a clean chit on three circumstances one by acquittal after a full blown trial; two on discharge by the competent Court and three on the proceedings being quashed by the High Court in exercise of its jurisdiction under Section 482 of the Cr.P.C. 14. In these circumstances the offence alleged under the provisions of the PMLA cannot be sustained and cannot be permitted to be continued. Therefore, if the allegations in the predicate offences are considered to be the flesh, the offences under the PMLA is the blood. Therefore, if the predicate offence is not permitted to move forward, the impugned proceedings cannot. It would have been altogether different circumstance, if the petitioners were all acquitted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts in Crime Nos. 441 of 2015, 298 of 2017, 344 of 2018, which culminated in the proceedings in C.C. No. 24 of 2021, C.C. No. 19 of 2020 and C.C. No. 25 of 2021 respectively and the proceedings in C.C. No. 25 of 2021 culminating from Crime No. 344 of 2018 have been quashed. The calendar cases arising out of the other two First Information Reports have been stayed. As stated supra, since the ECIR itself was only on the basis of the said three First Information Reports, when the proceedings pursuant to the said First Information Reports have been stayed by the High Court, whether the ECIR, which is also pursuant to the First Information Reports, can be proceeded with, is a question that stares at open. Our considered answer is in the negative. 18. Because, it is not the case of the respondent that apart from the above three First Information Reports, there are other materials based upon which they have initiated the proceedings under the Prevention of Money-laundering Act. Hence, in our view, when the calendar cases which culminated from the said two First Information Reports also have been stayed, the respondent Department should also refrain itself from proceeding any furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. 75. In Halsbury's Laws of England, it has been stated: Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive. 76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction. 26. Further, the Apex Court in the case of State of Punjab v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inherent powers under Section 482 of the Code that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not constitute any offence or make out a case against the accused, based on which, when the orders of stay are granted, the parties to the proceedings bound by the rule of law, should abide by the orders of stay. In this background, when the learned Additional Solicitor General appearing for the respondent fairly conceded that in view of the order of quash passed in Criminal Original Petition No. 13374 of 2021 dated 30.07.2021, the respondent Department would not proceed against the accused therein, the same analogy would equally apply to the other cases, where orders of stay granted are operating against the C.C. No. 19/2020 and C.C. No. 20 of 2020 based on which the ECIRs are recorded and summons are issued till the cases are decided. Therefore, the impugned proceedings/summons do not have any legal sanctity. Interim order of stay granted will be subject to the final orders in the main proceedings, after which the eclipse would also wane away. In such circumstances, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Division Bench of Madras, but only to the extent of challenge to the impugned proceedings. There is no challenge to the proceedings under the ECIR. What is called in question is the provisional attachment order. In the light of judgments quoted hereinabove, the order passed under sub-section (1) of Section by the Enforcement Directorate cannot be termed to be illegal, however, those proceedings cannot be permitted to be taken to its logical conclusion. 17. There are only three circumstances that the Court would indicate in VIJAY MADANLAL CHOUDARY s case that in the event the accused in the predicate offence is discharged, acquitted or the proceedings against him are quashed in exercise of jurisdiction under Section 482 of the Cr.P.C., it is only then all the proceedings under the Act would become a nullity. That situation has not yet arrived. Therefore, if the proceedings under the predicate offences are eclipsed and not extinguished, the same would become applicable to the proceedings under the ECIR. The same will have to be eclipsed and cannot be extinguished. 18. In the event the submission of the learned counsel for the petitioners is accepted, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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