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TMI Blog2012 (5) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 5(1), 8(1), 8(2), 8(3), 8(4), 23 and 24 of the Act ; (ii) a declaration that the provisional attachment order No. 1 of 2009 in ECIR No. 01/H20/2009, dated August 18, 2009 passed by the Deputy Director, Enforcement, Hyderabad (respondent No. 3), is arbitrary and illegal ; (iii) that the order dated January 14, 2010 passed by the adjudicating authority (respondent No. 4) in O. C. No. 38 of 2009 is arbitrary and illegal ; (iv) a declaration that the 4 respondent's direction to the petitioner to hand over possession of the attached properties is without jurisdiction and contrary to law and the Directorate of Enforcement (respondent No. 2) or any other officer is not entitled to take possession of the petitioner's properties ; (v) a declaration that the petitioner's properties sought to be attached by the impugned pro-visional attachment order (dated August 18, 2009) as confirmed by the impugned order (dated January 14, 2010) of the fourth respondent are free from attachment or encumbrance ; and (vi) for attendant reliefs. W. P. No 10769 of 2010 3. B. Teja Raju also s/o B. Ramalinga Raju seeks (i) invalidation of the same provisions of the Act as in W. P. No. 10765 of 2010 ; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2009 was furnished to the several defendants including the petitioner on January 24, 2009. (D)The petitioner and some other defendants filed W. P. No. 27058 of 2009 challenging the adjudicating authority's notice dated September 15, 2009 and the order dated November 20, 2009. This court by the order dated December 1, 2009 in W. P. No. 25846 of 2009 (filed by another defendant) allowed the petitioner therein to appear before the adjudicating authority to seek information as to whether he was being proceeded against as one who committed an offence under section 3 of the Act or for being in possession of the proceeds of a crime. Consequent on this order the petitioner also applied to the adjudicating authority for relevant information. On December 7, 2009 the adjudicating authority informed all the defendants seeking information that they were being proceeded against for committing an offence under section 3 of the Act. (E)This court eventually disposed of the writ petition filed by the petitioner on December 10, 2009 on similar lines as other writ petitions directing that the proceedings before the adjudicating authority be post-poned to December 21, 2009 and the writ petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that such property involved in money-laundering, if not immediately attached is likely to frustrate any proceedings under the Act. Section 5(1) is vague and confusing. While under the main provision [section 5(1)], "such property" is the property of a person charged of a scheduled offence ; the second proviso enables property of any person, and if involved in money-laundering, to be proceeded against. The term "involved in money-laundering" is vague and ambiguous. There is no indication as to the nature or degree of involvement required. It is not clear whether the liability runs with the property or is only in respect of property belonging to a person charged with committing a scheduled offence. The provision is also bereft of guidelines consistent and commensurate with the serious consequences that follow. The provision is therefore arbitrary and unconstitutional. The proviso to section 5(1) can be operated only from the date of coming into force of the provisions of the second Amendment Act. It cannot therefore apply against property acquired or possessed prior to enactment of this provision or in respect of any scheduled offence prior to its enactment. It is ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of focus and clarity as to what is adjudicated and decided upon ; on what criteria ; and under what procedure and application of standards of appreciation of evidence. The scheme of adjudication set out in section 8(1) to (3) being vague, unfair and diffused, is violative of article 14. Under the scheme of the Act even if a person is acquitted by the Special Court of the offence of money-laundering, the adjudicating authority's finding as to such person being involved in money-laundering and the involvement of such person in money-laundering would nonetheless stand undisturbed and such person would not have any recourse against orders of attachment and confiscation. The same consequence follows if the person is not even accused of or charged with the offence of money-laundering; and his guilt determined by improper standards of trial or proceedings and by an improper forum, is inflicted with punitive consequences. The provisions of the Act are thus arbitrary and offend articles 14, 21 and 300A of the Constitution. Section 8(4) of the Act as construed by the respondent authorities enables deprivation of possession and enjoyment of an attached immovable property even before conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence, when and by whom the offence was allegedly committed. Since the adjudicating authority failed to deal with any of the submissions, contentions and arguments of the petitioner and other defendants ; since the order proceeds on generalisations, surmises and conjectures ; and the adjudicating authority erred in assuming and holding that it was not necessary to draw a conclusion as to the commission of an offence to consider adjudication under section 8 of the Act, the same is vitiated by an error in holding that the investigation by the CBI and the Directorate of Enforcement, are sufficient material to infer the commission of a scheduled offence as well as an offence under section 3 of the Act. The confirmation order is unsustainable for failure to consider whether determination of guilt as to commission of a scheduled offence ; whether for the purpose of punishment or for attachment and/or confiscation of property, must be predicated on the same standards of evidence "beyond reasonable doubt". 6. There are other and detailed challenges pleaded to the validity of the order of the adjudicating authority (dated January 14, 2010). 7. We are not inclined to consider the several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istently with the evil the provisions are intended to address ; (B)Money-laundering while facially appears to comprise one or more clear and simple financial transactions, involves and comprises a complex web of financial and other transactions. A money-laundering transaction usually involves three stages : (i)The placement stage : The malfeasant places the crime money into the normal financial system ; (ii)The layering stage : The money induced into the financial system is layered-spread out into several transactions within the financial system with a view to concealing the origin or original identity of the money and to make this origin/identity virtually disappear ; and (iii)The integration stage : The money is thereafter integrated into the financial system in such a way that its original association with crime is totally obliterated and the money could be used by the malfeasant and/or the accomplices to get it as untainted/clean money. (C)Money-laundering often involves five different directional fund flows : (i)Domestic money-laundering flows : In which domestic funds are laundered within the country and reinvested or otherwise spent within the country ; (ii)Returning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act). (iv)On receipt of a complaint, under section 8(1) the adjudicating authority is required to issue a notice (to any person who has committed an offence under section 3 or is in possession of proceeds of crime), to indicate the sources of income, earnings and assets out of which or by means of which he has acquired the property attached under section 5(1) of the Act. If on considering the response and after granting an opportunity of hearing, the adjudicating authority is satisfied that any property is involved in money-laundering, it shall under section 8(3) issue an order confirming the provisional attachment. The confirmation of an order of provisional attachment by the adjudicating authority attains finality only after the adjudicating authority passes an order confiscating the property, after giving an opportunity to the persons concerned and when a person is found guilty of the scheduled offence by the competent court, after trial. (v)From the scheme of the Act and the evils its provisions are intended to address it is apparent that action by way of provisional attachment under section 5(1) must be taken expeditiously during the course of investigation so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to provisionally attach the property must be supported by reasons to be recorded which must be based on material available in the possession of the attaching authority; no order of provisional attachment could be made unless, in relation to the scheduled offence a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 or a complaint has been filed by a person authorised to investigate the offence set out in the Schedule to the Act, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be; the provisional attachment is limited for a period not exceeding one hundred and fifty days; under the second proviso to section 5(1) attachment of property even of persons not charged with committing a scheduled offence is permitted but must be exercised only in exceptional cases for reasons to be recorded in writing and on the basis of the material in possession of the authority concerned asserting that the property is involved in money-laundering and non-attachment of such property would frustrate any proceedings under the Act; the order of provisional attachment and the material in possession of the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er appeal is provided to the High Court, to any person aggrieved by a decision or order of the Appellate Tribunal, both on a question of law and fact, arising from such order. M)The provisions of sections 23 and 24 of the Act are valid and unassailable. These provisions are incorporated to regulate an inherently complex and layered series of transactions involved in money-laundering operations section 23 enacts a presumption (applicable to adjudication or confiscation under section 8 of the Act), that where money-laundering involves plural and interconnected transactions and one or more of such transactions is/are proved to be involved in money-laundering, it shall, unless otherwise proved to the satisfaction of the adjudicating authority, be presumed that the remaining transaction forms part of such interconnected transactions. The presumption is a rebuttable presumption. (N)Section 24 inheres on a person accused of having committed the offence under section 3, the burden of proving that the proceeds of crime are untainted property. The shifting of the incidence of the burden of proof, which is rebuttable, is an essential component of the scheme of the Act which targets money-la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irman of SCSL addressed a letter to the board of directors admitting to inflated cash and bank balances; non-existent accrued interest; understated liability in respect of funds arranged by himself ; overstated debtors position; inflated revenues and operating margins and consequent artificial cash and bank balances. The letter dated January 7, 2009 admitted that falsified projections of the financial position of the SCSL in the balance sheet is the consequence of inflated profits over several years accentuated over the years by the company having to carry additional resources and assets to justify artificial higher levels of operation, thereby increasing the costs significantly. The letter further stated that the aborted MAYTAS acquisition deal by the SCSL was an attempt to fill the fictitious assets with real ones and that this stratagem would have solved the SCSL problem but MAYTAS payments would have been delayed ; (b)As a consequence of the disclosures in the letter dated November 7, 2009, share prices of SCSL crashed and many investors suffered huge losses. On the complaint of an investor Smt. L. Mangat, Crime No. 2 of 2009 was registered on January 9, 2009 by APCID against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to shore up their personal financial positions, Sri Ramalinga Raju, B. Rama Raju and Sri B. Suryanarayana Raju floated the 327 companies, classified by the enforcement officials as A to D category companies. 83 companies are enumerated as Group A comprising the family members of Sri B. Ramalinga Raju viz., his wife Smt. Nandini Raju and his children Sri B. Teja Raju and B. Rama Raju (who are petitioners herein) as directors ; 78 companies are categorized as B-Group, having Sri B. Suryanarayana Raju his wife Jhansi Rani as directors; C group comprises 86 companies having Smt. B. Radha wife of B. Rama Raju as the director; and in D-group other family members and trusted employees of Sri B. Ramalinga Raju are the directors. (g)The five investment companies (formed in 1995) facilitated sale of shares of the family members of Sri B. Ramalinga Raju. The 327 companies are located at 12-addresses common to all. The investigation reveals that all the directors in these companies were either family member, relatives of Sri B. Ramalinga Raju or trusted employees who admitted (during the course of investigation) to have simply lent their names to facilitate acquisition of immovable properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members and trusted employees. Some of the 327 companies which received loans from several NBFCs could not repay the loans and the corresponding NBFCs sold the shares of SCSL pledged with them as collateral by SRSR Holdings, in the open market and settled their outstanding liability. While the shareholdings of Sri B. Ramalinga Raju and other close family members in SCSL was of the order of 18.78 per cent in June, 1998 ; and 11.48 per cent on March 31, 2002, it fell drastically continually thereafter by off loading and became nil by March 31, 2009. The investigation further reveals that from July 1, 2005 Sri B. Ramalinga Raju, Rama Raju, Suryanarayana Raju, Nandini Raju, Radha, Jhansi Rani, Teja Raju, Ramaraju and SRSR Holdings received a dividend of Rs. 66.38 crores (approximately) which constitutes proceeds of crime since the dividends were the product of a scheduled offence under the Act. Further Sri B. Ramalinga Raju, Rama Raju, Teja Raju and Rama Raju (Jr.) received approximately Rs. 150.90 crores through off loading shares of SCSL at inflated values, also proceeds of crime ; (4)According to the investigation the properties that are the subject matter of the impugned proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LAUNDERING ACT, 2002 : RELEVANT PROVISIONS : "The preamble Whereas the Political Declaration and Global Programme of Action, annexed to the resolution S-17/2 was adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990 ; And whereas the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 calls upon the Member States to adopt national money-laundering legislation and programme ; And whereas it is considered necessary to implement the aforesaid resolution and the Declaration. BE it enacted by Parliament in the Fifty-third Year of the Republic of India. The Statement of Objects and Reasons appended to the Bill It is being realised, world over, that money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty. Some of the initiatives taken by the international community to obviate such threat are outlined below : (a)The United National Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is a party, calls for preventing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Penal Code, the word, 'offence' under section 477A relating to falsification of accounts should be omitted; (c)'knowingly' be inserted in clause 3(b) relating to the definition of money-laundering; (d)The banking companies, financial institutions and intermediaries should be required to furnish information of transactions to the director instead of Commissioner of Income-tax; (e)The banking companies should also be brought within the ambit of clause II relating to obligations of financial institutions and intermediaries; (f)a definite time-limit of 24 hours should be provided for producing a person about to be searched or arrested before the Gazetted officer or Magistrate; (g)the words 'unless otherwise provide to the satisfaction of the authority concerned' may be inserted in clause 22 relating to presumption on interconnected transactions; (h)vacancy in the office of the chairperson of the Appellate Tribunal, by reason of his death, resignation or otherwise, the senior most member shall act as the chairperson till the date on which a new chairperson appointed in accordance with the provisions of this Act to fill the vacancy, enters upon his office; (i)the appellant befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enjoy the fruits of the money that passed under the activity and therefore the present enactment is intended to deprive the property which is related to the proceeds of specific crimes listed in the Schedule to the Act. Relevant Provisions of the Act : Relevant Provisions of The Act Chapter I PRELIMINARY 2. Definitions.‑ (1) . . . (d) 'attachment' means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III ; (p) 'Money-laundering' has the meaning assigned to it in section 3 ; (t) 'prescribed' means prescribed by rules made under this Act ; (u) 'proceeds of crime' means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property ; (v) 'property' means an property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located ; (y) 'scheduled offence' means- (i)the offences specified under Part A of the Schedule ; or (ii)the offences specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule to the Income-tax Act, 1961 (43 of 1961), and the director or the other officer so authorised by him, as the case may be shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule : Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the schedule, before a magistrate or court for taking cognizance of the scheduled offence, as the case may be: Provided further that, notwithstanding anything contained in clause (b), any property of any person may be attached under this section if the director or any other officer not below the rank of Deputy Director authorised by him 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 if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The adjudicating authority shall, after‑ (a)considering the reply, if any, to the notice issued under sub-section (1) ; (b)hearing the aggrieved person and the director or any other officer authorised by him in this behalf ; and (c)taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering : Provided that if the property is claimed by a person, other than a person to who the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the adjudicating authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under section 3 has been committed, he may enter an place- (i)within the limits of the area assigned to him ; or (ii)in respect of which he is authorised for the purposes of this section by such other authority, who is assigned the area within which such place is situated, at which any act constituting the commission of such offence is carried on, and may require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, such act so as to,- (i)afford him the necessary facility to inspect such records as he may require and which may be available at such place ; (ii)afford him the necessary facility to check or verify the proceeds of crime or any transaction related to proceeds of crime which may be found therein ; and (iii)furnish such information as he may require as to any matter which may be useful for, or relevant to, an proceedings under this Act. Explanation.‑ For the purposes of this sub-section, a place, where an act which constitutes the commission of the offence is carried on, shall also include any other place, whether any activity is carried on therein or not, in which the person carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be. (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section to the adjudicating authority in a sealed envelope, in the manner, as may be prescribed and such adjudicating authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter an search the building or place where such evidence is located and seize that evidence : Provided that no authorization referred to in sub-section (1) shall be required for search under this sub-section. (4) The authority, seizin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he office of the Gazetted officer, superior in rank to him, or the Magistrate's court. (5) The Gazetted officer or the magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made. (6) Before making the search under sub-section (1) or sub-section (5), the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons. (7) The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the list. (8) No female shall be searched by any one except a female. (9) The authority shall record the statement of the person searched under sub-section (1) or sub-section (5) in respect of the records or proceeds of crime found or seized in the course of the search. (10) The authority, seizing any record or property under sub-section (1) shall, within a period of thirty days from such seizure, file an application requesting for retention of such record or property, before the adjudicating authority. 20. Retention of property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscation under section 8, it shall, unless otherwise proved to the satisfaction of the adjudicating authority, be presumed that the remaining transactions form part of such interconnected transactions. 24. Burden of proof. ‑ When a person is accused of having committed the offence under section 3, the burden of proving that proceeds of crime are untainted property shall be on the accused. 71. Act to have overriding effect. ‑ The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force." 13. At the oral hearing, learned counsel Sri Gopal Chowdary (W. P. No. 23166 of 2010) and Sri S. Niranjan Reddy (W. P. No. 10765 of 2010) made detailed submissions. In support of the contention that the definition of "proceeds of crime" section [2(1)(u)] is void for vagueness and over-breadth and that in its broad connotation the expression traps innocent persons and their property ; places disproportionately onerous burdens and requirements to make enquiries and investigation as to antecedent criminality adhering to a property ; poses a pervasive and infinite threat to the title of a property and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysis of the facts and circumstances the assertions and responses are predicated on a prima facie view of the relevant factual matrix, since the trial of the scheduled offence is under way. Though the petitioners assert to be not yet accused of having committed a scheduled offence, it is the contention on behalf of the enforcement directorate as expressed by Sri Rajeev Awasthi, learned counsel for the enforcement directorate that the petitioners will also be eventually charged of an offence under section 3 of the Act. Our analysis of the provisions and their applicability to the facts of these cases is also tentative since the proceedings are now at the stage of confirmation of orders of provisional attachment which in our view involves only a prima facie assessment of the matter by the adjudicating authority ; a comprehensive view to be taken at the stage of confiscation. 15. On the basis of rival pleadings, contentions and the material on record, the following issues are formulated for consideration. Issues (A)Whether property owned by or in possession of a person, other than a person charged of having committed a scheduled offence is liable to attachment and confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted intentionally : . . . (b)( i) The conversion or transfer of property, knowing that such property is derived from any offence or offences established in accordance with sub-paragraph (a) of this paragraph, or from an act of participation in such offence or offences, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions ; (ii) The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property knowing that such property is derived from an offence or offences established in accordance with sub-paragraph (a) of this paragraph or from an act of participation in such an offence or offences ; (c) Subject to its constitutional principles and the basic concepts of its legal system : (i)The acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from an offence or offences established in accordance with sub-paragraph (a) of this paragraph or from an act of participation in such offence or offences ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 8). 18. Sri Gopal Chowdury has also contended, by reference to provisions of the Narcotic Drugs and Psychotropic Substances Act, 1985 that mens rea or some measure of an informed association with an offence is the sine qua non to constitute "illegally acquired property" under the NDPS Act. 19. We are required, in the context of the rival contentions in these writ petitions to interpret the Act in accordance with established and applicable principles of statutory interpretation. The unit of interpretation is the Act as a whole and such of those provisions which are considered for interpretation but in the context of the provisions of the Act. While the preamble to the Act refers to the U. N. General Assembly resolution S-17/2, dated February 23, 1990 ; and the political declaration adopted by the Special Session of the U. N. General Assembly held on 8th to 10th June, 1998 ; these are among the reasons for the legislation and the contents of those resolutions or declarations are not to be considered while interpreting the provisions of a domestic law such as the Act unless there is an ambiguity in any provision necessitating reference to extra textual sources for guidance. The we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusing the judgment by a learned Division Bench of the Bombay High Court, dated August 5, 2010 in first Appeal Nos. 527 to 529 of 2010 (per A. M. Khanwilkar, J.). The very question as to whether the provisions in the Act are applicable for attachment and confiscation of property belonging to persons other than those charged and prosecuted of having committed a scheduled offence fell for consideration in this judgment. The appeals (to the Bombay High Court) were preferred (under section 42 of the Act) against the judgment and order of the Appellate Tribunal rejecting a challenge to orders of the adjudicating authority confirming orders of provisional attachment. It however requires to be noted that the decision was delivered in the context of the provisions of section 5 of the Act prior to its amendment by the Second Amendment Act, 2009, i.e., prior to the introduction of the second proviso to section 5(1) of the Act. On an interactive interpretation of the several provisions of the Act including definition of the expressions - "person" ; "proceeds of crime" ; "property" and "transfer" ; and the provisions of sections 5 and 8, the Bombay judgment concluded that attachment of proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is charged of having committed a scheduled offence, for initiating proceedings for attachment and confiscation. If the provisions of section 5(1)(b) are to be eschewed for ascertaining the meaning of the second proviso (qua the legislative injunct of the non obstante provision), on a true and fair construction of the provisions of section 5(1) including the second proviso thereof but ignoring clause (b), the legislative intent is clear, unambiguous and linear. Provided the other conditions set out in section 5 of the Act are satisfied, any property of any person (the expression "person", is not restrictively defined in section 2(s) limited to a person charged of having committed a scheduled offence), could be proceeded against for attachment, adjudication and confiscation. We are persuaded to the view that incorporation of the second proviso section 5(1) is intended to clarify the position or remove any ambiguity as to the application of section 5(1) to the property of a person not charged of having committed a scheduled offence. 23. The petitioners further contend (as an aspect of this issue) that if attachment and confiscation proceedings are held to be permissible against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a due trial by the Special Court; which is conferred exclusive jurisdiction qua section 44, Chapter VII of the Act. The prosecution, trial and conviction for the offence of money-laundering are the criminal sanction administered by the legislation and effectuated by a deprivation of personal liberty as a disincentive to a malfeasant. The second matrix of proceedings targets the "proceeds of crime" defined in section 2(u); as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property, for initial attachment and eventual confiscation. 26. Chapter III of the Act enables the specified authority, if he has reasons to believe (the reasons to be recorded in writing), on the basis of material in possession of the authority that any person charged of having committed a scheduled offence [section 5(1)(b)] or even if not so charged [the second proviso to section 5(1)] is in possession of proceeds of crime and such proceeds are likely to be concealed, transferred, etc., in a manner as may frustrate any proceedings relating to confiscation of such proceeds of crime under Chapter I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and is part of a layering transaction. As the provisions of the Act target malfeasants charged of an offence under section 3 and the proceeds of crime in the pos-session of a person so charged and any other person as well, the legislative intent is manifest that attachment and confiscation constitute a critical and clearly intended and specifically enacted strategy to combat the evil of money-laundering. A person though not accused/charged of an offence under section 3, when in possession of any proceeds of crime, from the provisions of the Act it is clear, has but a defeasible and not a clear title thereto. In the context of attachment and confiscation proceedings, knowledge that a property is proceeds of crime is not legislatively prescribed. 31. 'Proceeds of crime' is defined to include not merely property derived or obtained as a result of criminal activity relating to a scheduled offence but the value of any such property as well. The bogey of apprehensions propounded on behalf of the petitioners is that where the proceeds of crime are sequentially transferred through several transactions, in favour of a series of individuals having no knowledge or information as to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related to or employees of the individual(s) who orchestrated the massive scam and that these persons had traded in the shares of SCSL (with a presumptive insider information) when those shares had a peak value, achieved on account of the criminal conduct of Sri. Ramalinga Raju, and others. 34. The contention by the petitioners that attachment and confiscation of proceeds of crime in possession of a person who is not charged of an offence under section 3 or who has no knowledge or information as to the antecedent criminality are arbitrary and unfair legislative prescriptions is misconceived. 35. Section 24 inheres on a person accused/charged of having committed an offence under section 3, the burden of proving that proceeds of crime are untainted property. Section 23 of the Act enjoins a presumption in interconnected transactions that where money-laundering involves two or more interconnected transactions and one or more of such transactions is or are proved to be involving in money-laundering, then for the purposes of adjudication or confiscation under Chapter III, the Act enjoins a rebuttable presumption that the remaining transactions form part of such interconnected transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; [1995] 83 Comp. Cas. 804, a Constitution Bench of the Supreme Court considering the validity of provisions of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) observed : "The relatives and associates are brought in only for the purpose of ensuring that the illegally acquired properties of the convict or detenu, acquired or kept in their names, do not escape the net of the Act. It is a well-known fact that persons indulging in illegal activities screen the properties acquired from such illegal activity in the names of their relatives and associates. Sometimes they transfer such properties to them, may be, with an intent to transfer the ownership and title. In fact, it is immaterial how such relative or associate holds the properties of convict/detenu - whether as a benami or as a mere name-lender or as a bona fide transferee for value or in any other manner. He cannot claim those properties and must surrender them to the State under the Act. Since he is a relative or associate, as defined by the Act, he cannot put forward any defence once it is proved that that property was acquired by the detenu-whether in his own name or in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and associates as explained in this judgment (p. 852)" 42. The SAFEMA targets for forfeiture "illegally acquired property" of a person (defined as a convict or detenu under specified enactments and relative or associate of such convict or detenu (the expression relative or associate also defined)). This is a 1976 enactment that provides for forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators. The Act, on the other hand, specifically targets the wider pathology of money-laundering in relation to a large number of scheduled offences enumerated from a variety of specified legislations. In the context of the objects sought to be achieved by the Act and the specificity of the definitions of the expressions "money-laundering" and "proceeds of crime" ; the inherence of the burden of proof on a person accused of an offence under section 3 (section 24) and the presumptions in interconnected transactions (section 23), it is clear that what is targeted for confiscation is proceeds of crime in the ownership, control or possession of any person and not all property or proceeds of all crime in the ownership, control or possession of any person. 43. Agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-offenders as well ; but in respect of scheduled offences. 46. The object of the Act is to prevent money-laundering and connected activities and confiscation of "proceeds of crime" and preventing legitimising of the money earned through illegal and criminal activities by investments in movable and immovable properties often involving layering of the money generated through illegal activities, i.e., by inducting and integrating the money with legitimate money and its species like movable and immovable property. Therefore, it is that the Act defines the expression "proceeds of crime" expansively to sub-serve the broad objectives of the Act. We thus do not find any infirmity in the provisions of the Act. Issue A is answered accordingly. Issue B 47. The Bombay High Court in the judgment dated August 5, 2010 (in First Appeal Nos. 527 to 529 of 2010) has interpreted the provisions of section 5(1) of the Act even prior to incorporation of the second proviso by the Second Amendment Act, 2009) as enabling initiation of proceedings for attachment and confiscation of property in possession of a person not accused/charged of an offence under section 3 as well. The Second Amendment Act ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson in possession of any proceeds of crime involved in money-laundering or in possession of records relating to money-laundering. On search of any person or seizure of such record or property constituting proceeds of crime in the possession, ownership or control of any person, which may be useful or relevant to any proceedings under the Act, a property, which constitutes proceeds of crime seized under section 17 or 18, is equally subject to the adjudicatory processes under section 8. 49. On analysis of the provisions of sections 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudication and confiscation in Chapter III. Attachment or confiscation of proceeds of crime in the possession of a person who is not accused or charged of an offence under section 3 is thus not an incorporation for the first time by the provisions of the Second Amendment Act, 2009. The contention on behalf of the petitioners that the second proviso to section 5(1) of the Act, applies only to property acquired/possessed prior to enforcement of this provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the provision of penalty for default of payment of tax as enacted in the State Act is equally applicable to the payment and collection of the tax under the Central Act and is incidental to and part of the process of such payment and collection. Ray C. J. held that the provisions of the State Act imposing penalty for non-payment of the tax under the Central Act within the prescribed time is not attracted to impose penalty on dealers under the Central Act. The Central Act is a self-contained code which by the charging section creates liability for tax and penalty and section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, re-assessment, collection and enforcement of tax and penalty payable by a dealer under the Central Act. In his concurring majority opinion Beg J. held that the imposition of a pecuniary liability, which takes the form of a penalty or fine for a breach of a legal obligation, cannot be relegated to the routine of mere procedure and machinery for the realisation of tax. It is more than that. Such liabilities must be curbed by clear, unambiguous and express enactment. The language used should leave no serious doubts abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act as well. It has also the authority to recognise the degrees of harm an identified pejorative conduct has on the fabric of our society and to determine the appropriate remedy for the pathology. Issue B is answered accordingly. Issues C & D 55. Under issue C, the challenge to the provisions of section 8 on the ground of vagueness is considered. The petitioners also contend that the definitions, "money-laundering" [section 2(1)(p)] ; "proceeds of crime" [section 2(1)(u)] and the provisions of section 5 (enabling provisional attachment) are void for being vague. We analyse the authorities cited on behalf of the petitioners to support the void for vagueness contention. 56. Reliance is placed on precedents of foreign and domestic jurisdiction. Cited at the bar are decisions of the U.S. Supreme Court in, Thornhill v. Alabama [1940] 310 US 88 ; United States v. Harriss [1954] 347 US 612 ; Papachristou v. City of Jacksonville [1972] 405 US 156 ; Grayned v. City of Rockford [1972] 408 US 104 ; the decision of the Supreme Court of Canada in, R. v. Nova Scotia Pharmaceutical Society [1972] 408 US 104 . Reliance is also placed on the decisions of our Supreme Court in Romesh Thappar v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtake risky behaviour that might deprive them of liberty. Where vague provisions of legislation deter citizens from engaging in certain political and religious discourse, courts will apply heightened scrutiny to ensure that protected expressions are not suppressed. It must however be noted that though courts will scrutinise a vague law that strikes a fundamental freedom, in other cases the void for vagueness doctrine does not however require mathematical precision on the part of the legislators. Also, laws that regulate the economy are scrutinised less closely than those that regulate individual behaviour ; and laws that impose civil or administrative penalties may be drafted with less clarity than those imposing criminal sanctions. 58. In Thornhill's case ( supra), section 3448 of the Alabama State Code of 1923, which prohibits loitering or picketing was struck down as intrinsically vague, over-broad and violative of first amendment freedoms and the Due Process Clause of the Constitution. 59. In Harriss case (supra) sections 305, 307 and 308 of the Federal Regulation of Lobbying Act, 1946, were upheld in the majority opinion of the Chief Justice Warren as not too vague and indef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck down the Federal Communications Commission's (FCC) indecency policy as unconstitutionally vague because the FCC had applied its "patently offensive" standard and the policy's expectations so inconsistently that television broadcasters could not predict when they would be subject to sanction. In Fox Television Stations Inc. v. FCC 613 F. 3d 317 (2d CIR.2010), the Second Circuit Court held in a unanimous opinion (Judge Pooler joined by Judge Hall and senior Judge Leval) that the FCC's indecency policy was void for vagueness because it was so inconsistently applied that networks could not predict what speech would be actionably indecent. The court so concluded on the basis that regulation of speech is subject to heightened vagueness scrutiny to avoid chilling protected speech. 63. In Nova Scotia Pharmaceutical Society case (supra ) the Supreme Court of Canada rejected challenge to section 32(1)(c) of the Combines Investigation Act, 1917. The court held that the impugned provision did not violate the Canadian Charter of Rights and Freedoms. The basis for the vagueness doctrine was summarized by the court : "The 'doctrine of vagueness' is founded on the rule of law, particularly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher requirement as to certainty can be imposed on law in our modern State. The modern State intervenes today in fields where some generality in the enactments is inevitable. The substance of these enactments must remain nonetheless intelligible. The standard of 'absence of legal debate' applies to all enactments, irrespective of whether they are civil, criminal administrative or other." 64. The decisions of our Supreme Court in Romesh Thappar's case (supra); Khemka & Co. (Agencies) (P.) Ltd's. case (supra ) ; A.K. Roy's case (supra) and Kartar Singh's case (supra) reiterate and reinforce the void for vagueness doctrine evolved and refined in other constitutional jurisdictions, in the United States and Canada. A prohibitory order issued by the Governor of Madras in exercise of powers under section 9(1A) of the Madras Maintenance of Public Order Act, 1949 ‑ prohibiting the entry into or circulation, sale or distribution in the State of Madras of a newspaper Cross Roads ; validity of certain provisions of the National Security Act, 1980 ; and challenge to the provisions of the Terrorist Affected Areas (Special Courts) Act, 1984, the Terrorist and Disruptive Activities (Preve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcer. 67. As pointed out in Matajog Dobey v. H.C. Bhari, [1955] 28 ITR 941 (SC) : a discretionary power is not necessarily a discriminatory power. The mere possibility that a power may be misused or abused cannot per se induce the court to deny the existence of the power. A provision cannot be struck down on the ground that although it is valid and not per se vague, it is likely to be employed for an unauthorised purpose or in a discriminatory fashion in the actual exercise of the discretion conferred by a provision vide Sukumar Mukherjee v. State of West Bengal [1993] 3 SCC 723. Our Supreme Court has pointed out in Moti Ram Deka v. General Manager, North-East Frontier Railway, AIR 1964 SC 600 ; R. Chitralekha v. State of Mysore, AIR 1964 SC 1823 and in Budhan Choudhary v. State of Bihar, AIR 1955 SC 191, that when in the scheme of a regulation (an Act or a Rule), a clear policy relating to the circumstances in which the power is to be exercised is discernible, the conferment of power must be regarded as made in furtherance of the scheme and it is not open to attack as infringing the equality clause (article 14), merely on account of a possibility of abuse. 68. In the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3. 72. At the provisional attachment stage under section 5(1) or a seizure under section 17 or 18, the prima facie satisfaction that the property in question constitutes proceeds of crime as defined in the Act, is a satisfaction that the appropriate authority arrives on his own ; on the basis of the report as to the scheduled offence forwarded to a magistrate under section 173 of the Code of Criminal Procedure, 1973 or a complaint filed by a person authorised to investigate an offence enumerated in the Schedule before a magistrate or a court for taking cognizance of the scheduled offence [first proviso to section 5(1) and proviso to section 18(1)]; or on the basis of information in the possession of the authorised officer [under section 17(1)]. No notice or providing of an opportunity to the person in possession, ownership or control of the property, believed by the authorised officer to constitute proceeds of crime; hearing the version or considering the material produced by any such person (in support of a claim that the property does not constitute proceeds of crime in view of the sources of his income, earning or assets out of or by means of which the property was acquired), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 8(3), confirming the provisional attachment made under section 5(1) or retention of a property seized under section 17 or 18. The vagueness challenge 76. Within the scheme of the provisions of the Act, on receipt of a complaint under section 5(5) (from the authority which passed the provisional attachment order) or pursuant to applications made under section 17(4) or 18(10) (pursuant to a search and seizure), the adjudicating authority is required, on the basis of the material in his possession to have a reason to believe that any person has committed an offence under section 3 or a person even if not so accused is in possession of proceeds of crime involved in money-laundering. On such prima facie satisfaction, the adjudicating authority is required to serve a notice (for the stipulated period) on such person ; on any other person holding the property on behalf of another person ; or where the property is jointly held by more than one person on all persons holding the property [1st and 2nd Provisos to section 8(1)] calling upon him/them to indicate the sources of his/their income etc. The noticee is thus provided an opportunity to rebut the prima facie assumptions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized property or record becomes final under section 8(3)(b) i.e. (proof of guilt of the accused in the trial court and such order attaining finality), the adjudicating authority may initiate the process and shall again afford an opportunity of being heard to the person concerned with the property, before passing an order confiscating the property. 81. Clause (5) of section 20 and of section 21 provide that after an order of confiscation under section 8(6) is passed, the adjudicating authority shall direct release of all properties other than properties involved in money-laundering to the person from whom such properties were seized ; and direct release of records to the person from whom such records were seized, respectively. 82. In view of the clear and unambiguous provisions of section 8 (analysed above), considered in the context of the other provisions of the Act, we discern no vagueness in the trajectory of the provisions of section 8. It is clear that the stage of confirmation of an order of provisional attachment or retention of the property or record seized is an intermediary stage, anterior to confiscation. Where the property is provisionally attached or a record seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the remaining transactions form part of such interconnected transactions (i.e., involved in money-laundering). 86. As we have observed earlier in this judgment in another context, the provisions of sections 3, 5, 8, 23 and 24 are also interrelated provisions and must be considered as components of a statutory symphony that elucidate the true scope of the onus probandi and the burden of proof. The argument as to incoherence as to the onus and standards of proof in section 8, proceeds on a misconception of the holistic trajectory of the several provisions of the Act. If the several provisions are considered together as they must, there is no incoherence discernible. On a person accused of having committed offence under section 3, inheres the burden of proving that the proceeds of crime are untainted property. Proceeds of crime is defined [section 2 (u)] as any property derived or obtained, directly or indirectly by any person as a result of a criminal activity relating to a scheduled offence or the value of any such property. "Value" is defined [section 2(zb)] as the fair market value of any property on the date of its acquisition by any person or if such date cannot be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5(1) or seized under section 17 or 18, the evidence on which he relies to establish the claim of his income, earning or assets and other relevant information and particulars, that the property is acquired by him bona fide ; without knowledge or information of the association with criminality ; and out of his own income, earnings or assets and for fair market value, to dispel the presumption that the property is proceeds of crime involved in money-laundering. 88. The same is the burden even at the confiscation stage under section 8(6). By then, there is proof of guilt of a person accused of a scheduled offence established before a court and the conviction recorded by the trial court would have become final. Where the property is in the ownership, control or possession of a person not accused of a scheduled offence but constitutes part of interconnected transactions, i.e., connected to one or more transactions proved to have been involved in money-laundering, the presumption under section 23 comes into play and must be discharged by the person (though not an accused, but) in the ownership, control or possession of the property attached or seized and retained (under section 5, 17 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e burden lies has not discharged the burden ; but if it has on the evidence no difficulty in arriving at a definite conclusion, then the burden of proof on the pleadings recedes into the background. How the above rules relating to onus operate in a case is thus described by Lord Dunedin in Robins v. National Trust Co. [1927] AC 515 (PC) at page 520 ; (96 L.J.P.C. 84) : 'Their Lordships cannot help thinking that the appellant takes rather a wrong view of what is truly the function of the question of onus in such cases. Onus is always on a person who asserts a proposition or fact which is not self-evidence. To assert that a man who is alive was born requires no proof. The onus is not on the person making the assertion, because it is self-evident that he had been born. But to assert that he was born on a certain date, if the date is material, requires proof ; the onus is on the person making the assertion. Now, in conducting any inquiry, the determining Tribunal, be it judge or jury, will often find that the onus is sometimes on the side of one contending party, some times on the side of the other, or as it is often expressed, that in certain circumstances the onus shifts. But onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party ; it may comprise of circumstantial evidence or presumptions of law or fact. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under section 101 of the Evidence Act, 'Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist'. Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in section 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore, on the plaintiff ; but as soon as the execution is proved, section 118 of the Negotiable Instruments Act imposes a duty on the court to raise a presumption in his favour tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a survey or a search, it shall be presumed that (i) such records or property belong or belongs to such person ; (ii) the contents of such records are true ; and (iii) the signature and every other part of such records which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a record, stamped, executed or attested, that it was executed or attested by the person by whom it purports to have been so stamped, executed or attested." Sub-section (2) of this section enjoins a substantially similar presumption in respect of records received from outside India. 93. The observations in Amratlal Prajivandas case (supra), are apposite in this context. The definition of "illegally acquired properties" in section 3(1)(c) of the SAFEMA were challenged on the ground of over breadth and, therefore as arbitrary. Negativing this contention the Constitution Bench of the Supreme Court observed (per B. P. Jeevan Reddy, J.) : "Even apart from the protection of article 31B, we see no substance in the submission that the definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These properties must justly go back where they belong - to the State. What we are saying is nothing new or heretical. Witness the facts and ratio of a recent decision of the Privy Council in Attorney-General for Hong Kong v. Charles Warwick Reid [1993] 3 WLR 1143. The respondent, Reid, was a crown-prosecutor in Hong Kong. He took bribes as an inducement to suppress certain criminal prosecutions and with those monies, acquired properties in New Zealand, two of which were held in the name of himself and his wife and the third in the name of his solicitor. He was found guilty of the offence of bribe-taking and sentenced by a criminal court. The administration of Hong Kong claimed that the said properties in New Zealand were held by the owners thereof as constructive trustees for the Crown and must be made over to the Crown. The Privy Council upheld this claim overruling the New Zealand Court of Appeals. Lord Templeman, delivering the opinion of the Judicial Committee, based his conclusion on the simple ground that any benefit obtained by a fiduciary through a breach of duty belongs in equity to the beneficiary. It is held that a gift accepted by a person in a fiduciary position as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of sections 8 and 22 to 24, it is clear that the Legislature considered it appropriate to inhere different shades of presumptions and thus corollary burdens, on persons in the ownership, control or possession of property believed to be proceeds of crime, depending on whether the person is accused of a scheduled offence or not, necessitating such person to dislodge the presumption by probative evidence or material. The inherence of such presumptions is a matter of legal policy and no case is made out to hold, nor is it contended that the inherence of the burden by the enactment of presumptions is ultra vires the legislative power for being in transgression of any limitations on such legislative power in the Constitution of India. Challenge : As to ambiguity as regards criteria for determination of nexus between the property attached and the offence of money-laundering. 95. In view of the analysis on the sub-issue relating to the challenge of incoherence on onus and standards of proof ; the definition of the expressions - "proceeds of crime" ; "money-laundering" ; and the fact that money-laundering includes acquisition of title to or possession of property derived or ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship or control of a property (provisionally attached or seized) is provided ample opportunity to produce relevant material and evidence to satisfy the adjudicating authority, at the stage of confirmation of provisional attachment or retention of the seized property [sections 8(1) to (3)], that the property was acquired out of lawful earnings or assets, that there were means to do so and thus the acquisition of the property is legitimate, bona fide and at the fair market value of such property. A person aggrieved by or concerned with the property provisionally attached may perhaps gainfully contend that in the circumstances it is the value paid for the acquisition of the property and not the property currently in his possession that constitutes proceeds of crime involved in money-laundering. 99. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the attached property whose provisional attachment is confirmed under section 8(3). On an holistic analysis of the several provisions of the Act, in particular of sections 5 and 8, we are of the considered view that the legislative intent underlying the preservation of the right to the enjoyment of immovable property provisionally attached under section 5(1) while enjoining taking over of possession on confirmation under section 8(3), is part of a consciously calibrated legislative schemata to achieve the object which the several provisions of the Act are designed to fulfil. The wholesome legislative intent underpinning the sequential provisions for provisional attachment, confirmation of such attachment and eventual confiscation ; or for retention of a seized property, permitting continuance of such retention pending a determination as to confiscation under section 8, while preserving the right to possession at the stage of provisional attachment while mandating dispossession after confirmation of the attachment ; are conceived to balance the Governmental interest expressed by the provisions of the Act on the one hand and the several degrees of rights of persons in possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence furnished in response to the notice issued under section 8(1) ; the reply furnished in response thereto ; and taking all and other relevant material into consideration, to record a finding that the property or so much of it, is involved in money-laundering. 104. Only at the confirmation stage is taking possession of the attached property legislatively enjoined [section 8(4)]. The reason for the prescription as to dispossession is apparent. The apparent purpose is also vouchsafed in the counter of the respondents and the contentions of learned counsel Sri Rajeev Awasthi. The satisfaction as to the provisional attached property constituting proceeds of crime involved in money-laundering is arrived at by the adjudicating authority after considering a fuller basket of information, material and evidence which includes a showing by a person concerned with the property. From the legislative scheme, in particular of section 8, we infer that dispossession from immovable property is prescribed under section 8(4) to prevent wastage or spoilage of the property and thus dissipation of its value so as to preserve the integrity and value of the property till the stage of confiscation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions in describing all the subject-matter to which the word or expression so defined is intended to apply. A definition section may borrow definitions from an earlier or an existing statute ; not necessarily in the definition section but in some other provision, of that Act ; and may equally borrow the definition from some other section of the same Act where a word or an expression is defined for a distinct purpose, occasion, or in a specific context section 2(1)(p), thus, defines the expression "money-laundering" by borrowing the definition expressed in section 3, where this expression is defined for the purpose of delineating the offence. In section 2(1)(p), however, the expression "money-laundering" is defined for the generic purpose of describing the contours of the conduct ; wherever the expression is employed in the several provisions of the Act, including in Chapter III - for attachment and confiscation. It is also well settled that the Legislature has the power to define a word or an expression artificially Kishan Lal v. State of Rajasthan [1990] 183 ITR 433. The definition of a word or an expression in the definition section may thus be restrictive or extensive of its or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference, affirmative or disaffirmative of the truth of false-hood of a doubtful fact or proposition drawn by a process of probable reasoning from something proved or taken for granted". Quoting with approval the statement of principle set out in the Principles of the Law of Evidence by Best, his Lordship observed that when the rules of evidence provide for the raising of a rebuttable or irrebuttable presumption, they are merely attempting to assist the judicial mind in the matter of weighing the probative or persuasive force of certain facts proved in relation to other facts presumed or inferred. 113. Wills Circumstantial Evidence observes that the expression "presumption" inherently imports an act of reasoning - a conclusion of the judgment ; and it is applied to denote such facts or moral phenomena, as from experience we know to be invariably, or commonly, connected with some other related facts. 114. In M. Naringa Rao v. State of A.P. [2001] 1 SCC 691, Thomas J. (writing the opinion for the court) observed that presumption is an inference of a certain fact drawn from other proved facts. While inferring the existence of a fact from another, the court is only applying a process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in money-laundering, subject of course to the said presumption being rebutted by proof to the contrary. 118. On the aforesaid analysis, since section 23 enjoins a rule of evidence and a rebuttable presumption considered essential and integral to effectuation of the purposes of the Act in the legislative wisdom ; a rebuttable and not an irrebuttable presumption, we are not persuaded to conclude that the provision is unduly harsh, oppressive or arbitrary. After all a legislative remedy must correspond to the social pathology it professes to regulate. Issue E is answered accordingly. Issue F 119. Section 24 shifts the burden of proving that proceeds of crime are untainted property onto person(s) accused of having committed the offence under section 3. This provision is challenged as arbitrary; is contended to be applicable only to the trial of an offence under section 3 and not the proceedings for attachment and confiscation of property under Chapter III ; and alternatively as not applicable to proceedings for attachment and confiscation of property of a person not accused of an offence under section 3. 120. On its textual and grammatical construction, the provision shifts th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssive transactions relating to proceeds of crime and intent to project the layered proceeds as untainted property, effectuation of the legislative purposes is achieved only where the burden is imposed on the accused to establish that proceeds of crime are untainted property. This is the legislative purpose and the justification for section 24 of the Act. 122. In response to a notice issued under section 8(1) and qua the legislative prescription in section 24 of the Act the person accused of having committed the offence under section 3 must show with supporting evidence and material that he has the requisite means by way of income, earning or assets, out of which or by means of which he has acquired the property alleged to be proceeds of crime. Only on such showing would the accused be able to rebut the statutorily enjoined presumption that the alleged proceeds of crime are untainted property. This being the purpose, we are not satisfied that the provisions of section 24 are arbitrary or unconstitutional; section 24 is not confined to the trial of an offence under section 3 but operates to attachment and confiscation proceedings under Chapter III, as well. The legislative prescript ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deal with the wide range of social, economic, law-and-order, security and developmental issues involving governance, which that representative and deliberative body, accountable to the people in our democratic context, is eminently qualified to make. Different levels of scrutiny by the judicial branch of legislative action, designed to maintain the vitality of our governance processes, accommodating the efficacy of the legislative process along with an oversight on legislative action for transgression of clear and explicit constitutional prescriptions, is the balancing act integral to separation of powers. In areas of social and economic choices, the State in its legislative and executive processes is traditionally vouchsafed a wide power to experiment and identify the balance between individual liberties and the larger public good by regulation of rights and liberties. Brandeis J. in his famous dissent in New State Ice Co. v. Liebmann [1932] 285 US 262, recorded what is considered the most brilliant statement on the principle of judicial restraint in areas of social and economic legislation. Brandeis observes : "The discoveries in physical science, the triumphs in invention, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramed herein before we hold : (i) On Issue A : that property owned or in possession of a person, other than a person charged of having committed a scheduled offence is equally liable to attachment and confiscation proceedings under Chapter III ; and section 2(1)(u) which defines the expression "proceeds of crime", is not invalid ; (ii) On Issue B : that the provisions of the second proviso to section 5 are applicable to property acquired even prior to the coming into force of this provision (vide the Second Amendment Act with effect from March 6, 2009) ; and even so is not invalid for retrospective penalisation ; (iii) On Issue C & D : that the provisions of section 8 are not invalid for vagueness ; incoherence as to the onus and standard of proof ; ambiguity as regards criteria for determination of the nexus between a property targeted for attachment/confirmation and the offence of money-laundering ; or for exclusion of mens rea/knowledge of criminality in the acquisition of such property ; section 8(4), which enjoins deprivation of possession of immovable property pursuant to an order confirming the provisional attachment and before conviction of the accused for an offence of ..... 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