TMI Blog2017 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents ordinarily resides or carries on business or personally works for gain, shall have the jurisdiction. In that view of the matter, the respondent would be forced to, if it is aggrieved finally by an order of the Appellate Tribunal to challenge such order before the High Court of Kolkata only whereas if the contention of the petitioner is accepted and if this Court assumes the jurisdiction of exercising its discretion, two options would be available to the petitioner namely of Kolkata High Court and Delhi High Court. This would definitely militate against the principle of forum convenience. This Court, therefore, is of the view that this Court ought not to entertain the present writ petition. In case the petitioner is so advised, an appropriate petition could be preferred before the High Court of Kolkata for the needful. In that view of the matter, the Adjudicating Authority shall not pass any final order for a period of 15 days to be counted from the date of the present order so as to enable the petitioner either to assa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the very initiation of the proceedings under the Act is unwarranted and per-se illegal. 3. The show cause notice dated 21.06.2017 issued by the Adjudicating Authority under Section 8(1) of the Act inter-alia states that on the basis of the complaint filed under Section 5(5) of the Act, the Adjudicating Authority has reasons to believe that the petitioner has committed an offence under Section 3 of the Act or is in possession of proceeds of crime being the property derived or obtained as a result of criminal activities relating to a scheduled offence or the value of any such property and as such the petitioner was called upon to indicate the source of the income, earning or assets out of which or by means of which the petitioner acquired the properties attached under Section 5(5) of the Act and the evidences on which it would rely and other relevant information and particulars and show cause as to why all or any of such properties should not be declared to be the properties involved in money laundering and be confiscated by the Central Government and the attachment order be not confirmed. 4. The ECIR No. 07/2012/KOL/PMLA indicates, that one FIR No.RC0102011A0035 dated 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kata High Court vide W.P.(Crl.) No.22813(W)/2012 which is pending consideration. In the meantime a FIR was registered by the CBI on December 30, 2011 under Sections 120B/467/420/468/471/477A IPC read with Sections 13(2) and 13(1) of the Prevention of Corruption Act, 1988 as officers of the Railway administration were also made accused in the case. 6. It has been submitted that after the registration of the aforesaid FIR, the impugned ECIR was registered on 19.04.2012. 7. In the meantime, it has been submitted that another company called Rashmi Metallics Limited also challenged one such show cause notice vide W.P.(Crl.) No.14656(W)/2011 which was decided on 29.09.2014. The matter went upto Division Bench in appeal. In the aforesaid proceedings before the Kolkata High Court, the validity of rate circular and the action of the Railway Administration to unilaterally levy and recover the alleged short payment of freight in terms of rate circular No.36.2009 was challenged. 8. It would be relevant here in this context to state that a suit also had been filed by the Railway administration for realization of such claim of the Railways on account of evasion of the Railway freight c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.2017 was passed. 16. Thereafter in terms of Section 5 of the Act, the original complaint No.78/2015 dated 13.06.2017 has been filed before the Adjudicating Authority with a request for confirmation of the provisional attachment. 17. On the aforesaid complaint, the impugned show cause notice dated 21.06.2017 has been issued by the Adjudicating Authority. 18. Learned counsel for the petitioner, therefore, has urged that when the validity of the rate circular, which is the genesis of the controversy, is pending adjudication before the Supreme Court of India, any decision rendered with regard to the validity of the rate circular would have a direct bearing on the monetary claim of the Railways for any freight based on that rate circular. In fact, the FIR also has been lodged on the basis of the rate circular and ultimately the charge sheet also has been submitted by taking the rate circular No. 36/2009 into account. Thus the very registration of the ECIR, the provisional attachment of the property and the original complaint before the Adjudicating Authority by the respondent, it has been argued, is premature and reflects a hasty handling of the case by the respondent. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of Railway transportation i.e. 2008-2012 would be against the proceeds of crime and, therefore, would be subject to attachment. It has been argued that it is obviously fallacious to hold all the properties of the petitioner as being tainted. As such the entire action of the respondent is arbitrary and without the sanction of law. 23. For the provisional attachment of the property, it is of utmost importance that there should be a threat of concealment or transfer of a property in such a manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. 24. Proceeds of Crime has been defined in Section 2(u) of the Act which means:- 2 (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 2 [or where such property is taken or held outside the country, then the property equivalent in value held within the country]; 25. Property has been defined in Section 2(v) as:- 2 (v) property means any property or assets of every description, whether corporeal or incorporeal, movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d eighty days from the date of the order, in such manner as may be prescribed: 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 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 1 [first proviso], 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 ..... urce of income and demonstrate the documents on which it relies upon in its defence. If the Adjudicating Authority decides that the property which is being provisionally attached is involved in money laundering, such provisional attachment would be confirmed whereafter the property would be taken possession of or frozen under sub Section 1A of Section 17 of the Act. After the conclusion of the trial of the offences under the Act, the Special Court, in the event of coming to the conclusion that money was laundered, will order for the confiscation of the property to the Central Government. If the special Court does not find any that money laundering has taken place, the attached property shall be released to the person entitled to the same. 31. For ready reference, Section 8 of the Act dealing with the process of attachment by the Adjudicating Authority is extracted below:- 8. Adjudication.-( 1) On receipt of a complaint under subsection (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 1 [offence under section 3 or is in pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the 6 [Special Court];] (4) Where the provisional order of attachment made under subsection (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 section 17, the order of confiscation shall have the same effect as if the property had been taken possession of.] (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orty-five days from the 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 subsection (2), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Director, as the case may be. (6) The appeal filed before the Appellate Tribunal under sub-section (1) or sub-section (2) shall be dealt with by 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the situs/location of the Adjudicating Authority and the Appellate Tribunal and for no other reason. It has further been argued that should an appeal be preferred against the order of the Appellate Tribunal under Section 42 of the Act, it would have to be filed in the High Court at Kolkata. Thus, for all practical purposes, but for the situs/location of the Adjudicating Authority in Delhi, there is no other reason for preferring the instant petition before the Delhi High Court. 39. The earlier round of litigation, challenging the rate circular also took place before the Kolkata High Court. That apart, on the principle of forum convenience, High Court of Kolkata would be the appropriate High Court for adjudicating the issues contained in the present writ petition. It would be highly inconvenient, it has been argued, for the prosecution to bring all the papers/documents before this Court and the principle of forum convenience which is accepted internationally, mandates that the convenience of the parties have to be looked into before assuming the jurisdiction for issuing writs. 40. The other ground of challenge is that the petition is premature in as much as only show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under Article 226 of the Constitution the machinery created under the statute to be bypassed, and will leave the party applying to it to seek resort to the machinery so set up. (emphasis added) 42. The Supreme Court, it has been argued, in Raj Kumar Shivhare (Supra) held that so far as the jurisdiction of the High Court under Article 226 or of the Supreme Court under Article 32 of the Constitution of India are concerned, the provisions of any act cannot bar and curtail the remedies. Nonetheless, while exercising powers under the aforesaid provisions of the Constitution, the Courts would certainly take note of the legislative intent manifested in the provisions of the Act. The powers under Article 226, it was observed is conceived to serve the ends of law and not to transgress them. Thus it was stated that even if a High Court had territorial jurisdiction, it should not entertain a writ petition which impugns a show cause notice by an Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi High Court does not have the jurisdiction to deal with the present issue. 45. Secondly, Mr.Vikas Singh, learned senior advocate appearing for the petitioner submitted that normally High Court may not interfere at the stage of show cause notice but if it is apparent on the face of it that there are no justifiable material to proceed against the petitioner, the High Court would be failing in its duty and constitutional obligation if it turns its gaze away. 46. In Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Ors, (1998) 8 SCC 1 , the Supreme Court has held as follows:- 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court throughout the territories in relation to which it exercised jurisdiction and secondly, the person or authority to whom writ would be issued, must be within those territories i.e they must be amenable to its jurisdiction either by residence or location within those territories. 51. Later, with the amendment in the Constitution sub Clause (2) of Section 226 was added which clarified that if a cause of action, wholly or in part, arose within the jurisdiction of such High Court, the powers could be exercised in an unfettered manner. Thus, cause of action became a ground for conferring jurisdiction on High Court under Article 226 of the Constitution of India and it became one of the necessary considerations while entertaining a writ petition. An attempt also was made to explain and define as to what would constitute the cause of action . The classic definition of the expression cause of action was espoused by Lord Bret in Cooke vs. Gill, (1873) 8 CP 107. Cause of action means every fact which it would be necessary for the plaintiff to prove, if traversed in order to support his right to the judgment of the Court. 52. Later, in Kusum Ingots Alloys Ltd vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the constitutionality thereof can be filed in any High Court of the country. It was held that the constitutionality of a Parliamentary act shall not be maintainable only in the High Court of Delhi because of the seat of the Union of India being in Delhi. It was, therefore, held as hereunder:- 27. When an order, however, is passed by a court or tribunal or an executive authority whether under provisions of a statute or otherwise, a part of cause of action arises at that place. Even in a given case, when the original authority is constituted at one place and the appellate authority is constituted at another, a writ petition would be maintainable at both the places. In other words, as order of the appellate authority constitutes a part of cause of action, a writ petition would be maintainable in the High Court within whose jurisdiction it is situate having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of the original authority merges with that of the appellate authority. 54. With regard to forum convenience i.e the convenience of the parties, the Supreme Court in Kusum Ingots Alloys Ltd (Supra) held as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity in that case was situated in New Delhi, the Delhi High Court had the jurisdiction under Article 226 of the Constitution of India and that the principle of forum convenience cannot be invoked to refuse the exercise of jurisdiction. 56. The full bench judgment in New India Insurance (Supra) came up for further consideration before a special bench of Delhi High Court in M/s.Sterling Agro Industries Ltd vs. Union of India Ors, ILR (2011) VI Delhi 729. 57. A five Judges bench of this Court, by taking into account all the case laws on the subject of jurisdiction and forum convenience, formulated its conclusions as follows:- 33. In view of the aforesaid analysis, we are inclined to modify the findings and conclusions of the Full Bench in New India Assurance Company Limited (supra) and proceed to state our conclusions in seriatim as follows: (a) The finding recorded by the Full Bench that the sole cause of action emerges at the place or location where the tribunal/appellate authority/revisional authority is situate and the said High Court (i.e., Delhi High Court) cannot decline to entertain the writ petition as that would amount to failure of the duty of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice A.K.Sikri further explained the judgment in M/s.Sterling Agro Industries Ltd (Supra). In the aforesaid case, Vishnu Security Services, a proprietorship concern was having its office in Gujarat which was allotted a particular code by the employees Provident Fund Commissioner. Later, the business was shut down but the Provident Fund code had not been surrendered by the aforesaid establishment. So the proprietor of the establishment received summons from the office of the Regional Provident Fund Commissioner, Gujarat directing him to appear in person before it. On his appearance and rendition of the explanation that the business had been shut down, he was directed to pay the provident fund dues. Aggrieved by the aforesaid order, he preferred an appeal before the Appellate Tribunal located in Delhi, which too was dismissed. Against the aforesaid judgment of the Appellate Tribunal, the establishment preferred a writ petition before the Delhi High Court but the same was dismissed by a learned Single Judge on the ground of territorial jurisdiction. The learned Single Judge was of the view that merely because the situs of the appellate Tribunal was in Delhi, the Delhi High Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the writ petition is maintainable at both places, it is further specifically held by the Supreme Court that in such a case, it will be for the petitioner to choose his forum (see para 25). Once the Supreme Court gave choice to the petitioner, the question would be as to whether the Court can still non-suit him invoking the doctrine of forum conveniens. To answer this, let us again analyze in detail what Kusum Ingots (supra) holds. We have to bear in mind that in Kusum Ingots (supra), the issue of territorial jurisdiction was raised in the context of challenge to the law, namely, judicial review of legislative action, viz., provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Court was considering the question whether the seat of Parliament or the Legislature of a State would be a relevant factor for determining the territorial jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution of India. The writ petition was filed in Delhi High Court which was dismissed on the ground of lack of territorial jurisdiction. In appeal, the contention was that since the SARFESI was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any which is situated in Kolkata, West Bengal. The address of the petitioner in the FIR, charge sheet and in all other documents is of Kolkata. The FIR (predicate offence) was lodged by CBI at Kolkata. The ECIR has been registered at Kolkata. Pursuant to the ECIR, properties falling under the jurisdiction of Kolkata High Court have been attached provisionally. It is only after the filing of the original complaint as contemplated under Section 5(5) of the Act before the Adjudicating Authority which is located in Delhi that the impugned notice by the Adjudicating Authority has been issued from Delhi. Though a small fraction of a cause of action has definitely arisen in Delhi but before exercising the discretion of entertaining the present writ petition, this Court would per force be required to look to other factors as well including forum convenience . 61. As has been stated earlier, but for the lodging of the original complaint, nothing has happened in Delhi. That apart, no final order has been passed by the Adjudicating Authority and only notice to show cause as to how and with what available resource, the property which has been provisionally attached was purchased by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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