2023 (8) TMI 1599 - AT - Money Laundering

Money Laundering - seizure order - valuable right of the Appellant to cross examine the witness ignored - violation of principles of natural justice - HELD THAT - An order of seizure is required to be confirmed within 180 days failing which it stands lapsed. We are not recording our opinion that intention of the Appellant is to delay the proceedings but acceptance of the prayer of cross examination may cause delay thus proper scrutiny of prayer is to be made. The detailed judgment on it was given by this Tribunal in the case of Dr. U.S. Awasthi 2023 (1) TMI 1420 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI . The reference of Section of 6(15) of the Act of 2002 and Regulation 21 of the Adjudicating Authority (Procedure) Regulations 2013 were given therein. It was held in the said case that The party who does not want to controvert the veracity of the evidence from or testimony gathered behind his back cannot expect to succeed in any subsequent demand that there was no opportunity of cross-examination specially when it was not asked for and there was no dispute about the veracity of the statements. Where there is no dispute as to the facts or the weight to be attached on disputed facts but only an explanation of the acts absence of opportunity to cross- examination does not create any prejudice in such cases. The purpose of the cross examination is to extract the truth from the statement of the witnesses recorded in examination-in-Chief - As per the Indian Evidence Act right of cross examination is on examination of witness which does exist in this case. The Appellant wants to cross examine the witness to prove his innocence - The cross examination of witnesses necessarily need examination-in-chief which is missing in this case. Therefore the prayer of the Appellant to allow cross examination of Kumari Purnima Assistant Director Directorate of Enforcement cannot be accepted. Conclusion - The prayer of the Appellant to allow cross examination of Kumari Purnima Assistant Director Directorate of Enforcement denied - appeal disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

• Whether the Appellant has the right to cross-examine Ms. Kumari Purnima, Assistant Director, Directorate of Enforcement, under the principles of natural justice and the relevant legal framework.
• Whether the procedural conduct of the Directorate of Enforcement, including the issuance of multiple summons and the search and seizure operation, was justified and lawful under the Prevention of Money Laundering Act, 2002 (the Act of 2002).
• Whether the principles of natural justice, particularly the right to cross-examination, apply in the summary proceedings before the Adjudicating Authority under the Act of 2002.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Right to Cross-Examine Ms. Kumari Purnima

• Relevant Legal Framework and Precedents: The Appellant invoked Section 6(15) of the Act of 2002 and Regulation 21 of the Adjudicating Authority (Procedure) Regulations, 2013, which emphasize the principles of natural justice. The case of Dr. U.S. Awasthi was referenced to support the claim for cross-examination.
• Court's Interpretation and Reasoning: The Tribunal acknowledged that cross-examination is part of the principles of natural justice but clarified that it is not a rule in summary proceedings before the Adjudicating Authority. The Tribunal emphasized that cross-examination could be allowed if a case is made out, but it is not a default right.
• Key Evidence and Findings: The Appellant argued that the cross-examination was necessary to establish the truth and prove innocence. However, Ms. Kumari Purnima had not deposed as a witness, and no examination-in-chief was conducted, which is a prerequisite for cross-examination under the Indian Evidence Act.
• Application of Law to Facts: The Tribunal found that the request for cross-examination aimed to shift the burden of proof, which is contrary to Section 24 of the Act of 2002. The burden of proof lies with the accused in money laundering cases.
• Treatment of Competing Arguments: The Tribunal considered the Appellant's arguments but concluded that the absence of examination-in-chief precluded the right to cross-examine.
• Conclusions: The Tribunal denied the Appellant's request for cross-examination, citing the lack of examination-in-chief and the procedural nature of the proceedings.

Issue 2: Procedural Conduct of the Directorate of Enforcement

• Relevant Legal Framework and Precedents: The Tribunal referred to the procedural guidelines under the Act of 2002 and the principles of natural justice.
• Court's Interpretation and Reasoning: The Tribunal noted the Appellant's allegations of harassment due to repeated summons and the search and seizure operation. It emphasized that the proceedings are summary in nature, and the Adjudicating Authority is not bound by the Code of Civil Procedure but should follow natural justice principles.
• Key Evidence and Findings: The Appellant provided detailed accounts of interactions with the Directorate, including compliance with summons and the search operation, which allegedly yielded no incriminating evidence.
• Application of Law to Facts: The Tribunal highlighted that the proceedings aim to protect property during the trial period and are not intended for exhaustive cross-examination.
• Treatment of Competing Arguments: While acknowledging the Appellant's grievances, the Tribunal maintained that the procedural conduct was within the framework of the Act of 2002.
• Conclusions: The Tribunal refrained from interfering with the Adjudicating Authority's order and advised the Appellant to present all relevant issues before the Authority.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The cross-examination is part of principle of natural justice but not in all the circumstances... a chance of cross-examination cannot be sought as a rule and in all the circumstances, rather it can be in a given case."
• Core principles established: The Tribunal reaffirmed that the right to cross-examination is not automatic in summary proceedings under the Act of 2002 and must be justified on a case-by-case basis.
• Final determinations on each issue: The Tribunal denied the request for cross-examination and upheld the procedural conduct of the Directorate of Enforcement, advising the Appellant to address concerns before the Adjudicating Authority.

The judgment underscores the balance between procedural expediency and the principles of natural justice in the context of money laundering proceedings, emphasizing the need for specific justification to exercise the right to cross-examination.