2019 (1) TMI 1916 - HC - Money Laundering

Provisional attachment of properties - reason to believe that a person has committed offence under PMLA - non-record of reasons and non-communication of reasons can be held to be violation of the established principles of natural justice or not - Adjudicating Authority has only one Member - action initiated by the Adjudicating Authority suffers from coram non judice or not - maintainability of petition on the ground of availability of alternative remedies provided under PMLA - non-application of mind - interference at the stage of show cause notice or not - absence of production of relevant documents - offence of illegal quarrying - scheduled offences under PMLA or not - Adjudicating Authority, being non-conversant with the vernacular language of the state able to appreciate transactions of various properties which are documented in vernacular language (Tamil) or not.

HELD THAT:- The Court has given the following conclusions:-

i) That the absence of recording of reasons to believe under Section 5(1) of PMLA, does not result in violation of constitutional right to property of the citizens since it was only a provisional attachment which would be valid only for a maximum period of 180 days or less. Although the Section provides for record of reasons to believe by the authority, failure to record at worst is only a statutory infraction and the same can be pleaded before the Adjudicating Authority. In such circumstances, non-recording of reasons by the Authority initiating action under Section 5 of PMLA becomes curable while initiating action under Section 8 of PMLA by the Adjudicating Authority. It is not in doubt that under PMLA, a full-fledged trial is envisaged before the Adjudicating Authority and any initial infraction could always be rectified. Ultimately, it is the Adjudicating Authority which will confirm the attachment and also will recommend for confiscation of the property when such opportunity is available before the Adjudicating Authority consisting of experts, it cannot be gainsaid by these writ petitioners that their interest is irrepairably prejudiced and their constitutional right is violated.

ii) Further, nowhere in the Section itself, it has beenstipulated that the reasons must be communicated to the persons. In the absence of such stipulation, these writ petitioners have no right to claim that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period of provisional attachment is only for a period of 180 days before confirmation by Adjudicating Authority and therefore, the initial order has all the characteristics of show cause notice and no further requirement is contemplated in the statute. As far as the present case on hand is concerned, de horse the above legal finding, this Court finds that the Authority has given reasons in terms of the scheme of Section 5 and to what extent such reasons could ultimately end up in confirmation or not, is for the Adjudicating Authority to decide after a detailed enquiry to be conducted under Section 8 of PMLA. Therefore, on merits, this Court finds that submission that the Authority has not recorded reasons is contrary to records and the same is liable to be rejected.

iii) The language used in Section 8(1) of PMLA is different from what it is used in Section 5(1) of PMLA. Both the expressions are different and distinct and the Adjudicating Authority is not required under Section 8(1) to record reasons as in the case of the Authority exercising under Section 5(1) of PMLA which means that the Adjudicating Authority, on the basis of the complaint filed by the initial authority under Sub Section 5 of Section 5 of PMLA, can proceed with the adjudication process on the basis of subjective satisfaction. In any event, the Adjudicating Authority has to follow procedure provided under Section 8 as well as the procedure contemplated under the Adjudicating Authority (Procedure) Regulations 2013. Therefore, the writ petitioners are provided with sufficient opportunities to put forth their plea before the Adjudicating Authority. Moreover, even in the show cause notice issued, it is mentioned that there is compliance of Section 8(1) of PMLA which compliance can be verified by obtaining a copy of the order by making necessary application to the Registry. Therefore, these writ petitioners cannot successfully maintain their complaint before this Court. Hence, this Court is of the considered view that there appears to be no legitimate cause for complaining on this aspect.

iv) The plea of violation of principles of natural justice can be tested on the golden touchstone of prejudice and in this case, no prejudice is occasioned or caused to the writ petitioners since they have multiple alternative remedies as provided under PMLA before the Adjudicating Authority under Section 8; and before the appellate Authority under Section 26; and further appeal before this Court under Section 42 of PMLA. Once multi-layered remedies are provided for effective adjudication of disputes, the plea of violation of principles of natural justice is baseless and unfounded.

v) The contention regarding coram non-judice, that the Adjudicating Authority is manned only by a single Member also cannot be countenanced with reference to explicit provision contained in Section 6 of PMLA and allied provisions, wherein it is provided for formation of Bench by less than three Members. Therefore, the issue of coram non-judice is answered against the writ petitioners, notwithstanding the fact that at the time of pronouncement of this order, the Adjudicating Authority is consisting of three Members.

vi) The plea of alternative remedy is not a bar for entertaining the Writ Petition, can it best be a general proposition of law, but the same cannot be applied to these writ petitions where the statute itself provide for multi layered alternative appellate remedies, one before the Adjudicating Authority, other before the Appellate Tribunal and another before this Court. Moreover, in these cases, there is no violation of any fundamental right nor action by the first respondent can be termed to be wholly unjustified nor there was a wholesale violation of principles of natural justice. In such scenario, this Court is not inclined to transgress beyond its selfimposed limitation not to entertain these writ petitions on the ground of availability of multiple appellate remedies under PMLA.

vii) The contention as regards Rule Nisi is concerned, this Court has dealt with the preliminary objection as to the maintainability of the writ petitions since these writ petitions are challenging the initial action of provisional attachment and show cause notice and in such event, non-production of documents is not material to the adjudication of a purely legal dispute as to the maintainability of the writ petitions.

viii) The plea of non-application of mind must be tested with reference to the factual aspects and the findings as found in the order passed by the initial authority under Section 5(1) of PMLA. It is certainly not open to this Court to render any finding on such factual dispute by interjecting its opinion with the findings of the authority who passed the order under Section 5(1), as such opinion on factual matters does not fall within the domain of judicial review exercised by this Court under Article 226 of the Constitution of India.

ix) The submission regarding illegal quarrying per se may notbe one of the scheduled offence, but by such operation it gave rise to several offences which are punishable under the provisions of IPC and other enactments, like Explosive Substances Act, 1908 etc. In the provisional attachment order various offences are enumerated on the basis of final report by the police. Since this argument is being canvassed in all its seriousness, the same may be addressed by the Central Government by initiating appropriate action to have illegal quarrying included in the schedule offences. Illegal quarrying per se is a affront on the rule of law, as it involves systematic plundering of national wealth and resources endangering natural and salubrious human habitat. Such activity will ultimately put the humanity as a whole to the precipice of irredeemable disaster.

x) The submission of non-familiarity of local language by the Adjudicating Authority cannot be a valid ground for this Court to interfere with the impugned action initiated by the authorities concerned as such argument is misconceived and the same is without substance.

These Writ Petitions are not maintainable - Petition dismissed.