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2015 (9) TMI 865 - DELHI HIGH COURT

2015 (9) TMI 865 - DELHI HIGH COURT - 2016 (332) E.L.T. 433 (Del.) - Commission of offence under Prevention of Money Laundering Act - Attachment of property - Held that:- In terms of Section 8 of the PMLA, the Adjudicating Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, o .....

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f PMLA can avail the remedy of appeal under Section 26 of PMLA to the Appellate Tribunal, whereby again the accused person is given an ample amount of opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PMLA is .....

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ourt is not appropriate at this stage. If this Court were to enter into the merits of this case at this stage, it would amount to scuttling the statutorily engrafted mechanism i.e. PMLA. - Decided against the appellant. - W. P. (C) No. 8266/2015, W. P. (C) No. 8359/2015 - Dated:- 2-9-2015 - Ved Prakash Vaish, J. For the Petitioner : Mr Farook M Razack, Sr. Adv. with Mr Faisal Farook and Mr Shubail Farook, Advs. For the Respondent : Mr Ripu Daman Bhardwaj, CGSC, Mr Raj Kumar Dahiya and Mr T P Sin .....

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ndering Act, 2002 (for short "PMLA") issued by respondent No.3 and the provisional attachment order bearing F.No. KLZO/03/2015/AD(AKS)/ NKM/3742 dated 21.05.2015 under Section 5 of the PMLA issued by the respondent No.2. 2. Since both these petitions have arisen out of the same show cause notice and involves common question of law therefore, both the petitions are taken up together. 3. The facts as borne out from W.P.(C) No. 8266/2015 are that on 08.03.2014, officers of Directorate of .....

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ause notice under Section 124 of the Customs Act, 1962 was issued to the petitioner‟s husband and to Mr. Moksed Mandal. Thereafter, a case under the PMLA was initiated against the petitioner‟s husband and the same is now pending before the learned Chief Judge City Sessions Court and Special Court under PMLA. On 21.05.2015 the petitioner received a provisional attachment order, in terms of which, she was informed that various movable and immovable properties attributed to her and her .....

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ent No.2 under Section 5(1) of the PMLA are illegal, arbitrary and malafide and have been issued without following the procedure established under the PMLA, and as such, the same are violative of petitioner‟s rights as guaranteed under Article 21 of the Constitution of India. He further submits that the notice to show cause dated 19.06.2015 has been issued without there being any "reason to believe" that (i) the person concerned has committed an offence under Section 3 i.e., offe .....

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thout application of mind by the makers of the same and are premature. 5. Before examining the merits of the case it is necessary to consider relevant provisions of the PMLA. The term proceeds of crime‟ has been defined in Sub-section u) of Section 2 (1) of the PMLA, which reads as under: - "(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 .....

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f money-laundering. Section 5 - Attachment of property involved in money-laundering (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in .....

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al Procedure, 1973(2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in [first proviso], any property of any person may be attached under this section if the Director or .....

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hall, immediately after attachment under sub-section (1), forward a copy of the order, along with the 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 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 .....

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ionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. Section 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an [offence under section 3 .....

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d to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such 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) consider .....

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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 or frozen under section 17 or section 18 and record a finding to that effect, wher .....

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section 60 by the [Special Court];] (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the [possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of .....

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Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director o .....

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tral Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering.] Section 26. Appeals to Ap .....

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date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may, after giving an opportunity of being heard, entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub-section (1) or sub-section (2), the .....

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it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal." 6. Prevention of Money Laundering Act was enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. On a plain reading of the aforementioned sections, it is clear that under Section 2 (u) of PMLA any property d .....

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uthorised by the Director, has reason to believe, on the basis of material in his possession that any person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, he may provisionally attach such proceeds of crime based on the said material reasons to believe that are to be given in writing. After every order of such attachment the Director, or any other officer not below the rank of Deputy Director, shall, immediate .....

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the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only after taking all the submissions of the accused and documents brought on record to establish the sources of his .....

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al to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PMLA is in the nature of second appeal. 10. Further, it is a settled law that a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by the Supreme Court in 'State of .....

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