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TMI Blog2014 (5) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... lso question the jurisdiction of the Enforcement Directorate in conducting the inquiry/investigation against the petitioners under the provisions of the Prevention of Money-Laundering Act, 2002 (for short "P.M.L. Act"). 4. It appears that on 22.04.2014, the petitioner-Foziya's premises were raided and panchnama came to be drawn which is produced on record and the documents relating to the four wheeler as noted in the panchnama, came to be recovered. 5. It also appears that the premises of the petitioner-Afroz Mohamad Hasanfatta in Special Criminal Application No.1748 of 2014 also came to be raided on 21.03.2013 under Search Warrant No.3 issued by the Joint Director, Enforcement Directorate, Ahmedabad, but nothing was found. At the same time, Shop Nos.1 and 2, Halima Palace, Adajan Patiya, New Rander Road, Surat were also raided in the presence of petitioner-Afroz Mohamad Hasanfatta, who is one of the Directors of M/s.Nile Industries Private Limited. Various documents were seized under the panchnama produced at Annexure-C. 6. Both the petitioners were summoned under Section 50 of P.M.L. Act inter alia for recording of the statement by respondent no.2. While petitioner-Afroz Moham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.M.L. Act and Section 62 thereof makes a vexatious search an offence indicating that the provisions of P.M.L. Act are strict in nature and therefore, must be strictly construed. It was argued that if at all any information was received by the second respondent, only survey as contemplated under Section 60 of P.M.L. Act was permissible without search warrant but no proceedings freezing the accounts could have been initiated without complying with Sections 5 and 17 of P.M.L. Act. 12. So far as the case of freezing is concerned, in addition to the argument aforementioned, it was contended on assumption that the proceedings under P.M.L. Act were permissible on the basis of the search made under the Foreign Exchange Management Act, 1999 (for short "FEMA"), the compliance with the provisions of FEMA was necessary and in absence thereof, the proceedings are illegal. 13. It was contended that the Assistant Director is not empowered to initiate the proceedings under Sections 5 and 17 of P.M.L. Act inasmuch as it is only the Director or the Officer below the rank of Deputy Director as may be authorized by him is entitled to initiate the proceedings under the said provisions. The Court's a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, the scheme of the Prevention of Money-Laundering Act, 2002 as is relevant needs to be examined. 19. Section 2(d) defines "attachment" so as to mean prohibition or transfer, conversion, disposition or movement of property by an order issued under Chapter III. 20. Section 2(k) defines "Director" or Additional Director" or "Joint Director" so as to mean such authority appointed under sub-section (1) of Section 49. As per Section 2(p), "money-laundering" has the meaning assigned to it in Section 3 and Section 3 holds the indulging of a person or his conscious assistance or being party to, or his involvement in any process or activity with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property, guilty of offence of money-laundering. Such offences are triable under Section 43 read with Section 44 of P.M.L. Act. 21. Section 2(u) defines "proceeds of crime" so as to mean derivation or obtaining of any property or it value directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The expression "property" is defined so as to mean any property or assets of every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, not necessarily naming the person therein, is sufficient compliance of Section 5. 25. Sub-section (2) of Section 5 obliges the Attaching Officer to immediately forward a copy of the order with material in his possession referred to in sub-section (1) to the Adjudicating Authority. The life of attachment under Section 5(1) as prescribed in sub-section (3) thereof is 180 days or until making of final order under Section 8 whichever is earlier. Subsection 5 of Section 5 obliges the Attaching Officer to registering a complaint stating the facts of attachment with the Adjudicating Authority as defined in sub-section (1)(a) of Section 2 i.e. the authority constituted under sub-section (1) of Section 6, within 30 days of attachment. Thus, sufficient safeguards with time bound schedule are provided under Section 5. 26. The next relevant section is 8 which confers powers upon the Adjudicating Authority to adjudicate the complaint received under sub-section (5) of Section 5 or applications made to it under sub-section (4) or 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material to the Adjudicating Authority after searching and seizing or upon issuance of freezing orders. Further under sub-section (4) thereof, the Seizing Authority is obliged to file an application within the period of 30 days of seizure or freezing requesting for retention of such record or properties seized, as the case may be. Thus, sufficient safeguards with time bound schedule are provided under Section 17. 29. As per Section 12 of the P.M.L. Act, reporting entity is obliged to maintain the records and furnish the information to the Director and perform such other acts as are contemplated therein and as per Section 12A, the Director can have access to the information with the reporting entity. It is also noticed that the Adjudicating Authority under Section 6(15) is not bound by the Code of Civil Procedure, 1908. From the aforesaid provisions of P.M.L. Act, it can be noticed that the main purpose and object is to contain money-laundering activities. Other purpose of the Act is to prevent the money-laundering activities by attaching, confiscating and freezing the properties involved in such activities. As can be seen from proviso to Section 17, a report or a complaint under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty made by him within the prescribed period to the Adjudicating Authority to enable it to adjudicate upon such attachment. It is pertinent to note that the legislative intent insofar as powers of the Adjudicating Authority are concerned, is made clear under Section 6(15) by clarifying that it is not bound by the procedure laid down by the Code of Civil Procedure. Thus, if the Adjudicating Authority was intended to be an authority dealing with the criminal acts, the proviso dispensing with Code of Civil Procedure would not have been made. Instead proviso dispensing with Cr.P.C. would have been made. These facts thus sindicate that the Adjudicating Authority under Section 8 is authorized to undertake civil proceedings and adjudicate thereupon as rightly argued by the learned counsel for the respondents. 32. True that the first proviso to Section 5(1) and Section 17(1) requiring the compliance of the aforementioned provisions before embarking upon the exercise under Section 5 of P.M.L. Act but that would be the basis for proceedings to make attachment or passing of various other orders as contemplated under the Act particularly Section 5 so far as present case is concerned. 33. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired during preliminary enquiry/investigation under the Act to be restrained from allowing normal operations in respect of a property suspected to be involved in the offence of money laundering. It is therefore, crucial to achieve the objectives of the Act that the authorities under PML Act are empowered to collect and if need be, compel disclosure of relevant facts including specific details of the suspected properties, movable or immovable, liable to be attached in the course of investigation. The challenge mounted by the petitioners on such powers of the authorities is therefore, erroneous. The term investigation as defined in section 2 (na) of PML Act has to be read in consonance with the provisions of section 65 which empowers the authorities under PML Act to issue such directions/prohibitory orders. Therefore, any such direction issued in the course of investigation is within the four walls of law and in consonance with the object and reasons of the Act to ensure that the proceed of crime do not change hands making it impossible for authorities to trace and recover such proceeds of crime. 6. The provisional order of attachment of a property suspected to be proceeds of crime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an alternative remedy provided by statute for obtaining relief. Where it 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. 10. *****" 35. True that the said FFR Software Private Limited (supra) deals with the case pursuant to registration of the FIR. In the instant case also, two FIRs though not naming the petitioners but on the same subject have been lodged and thus legal proposition as discussed in the aforementioned authority can as well be applied to the facts of the present case. The contention of the learned counsel for the petitioners to the contrary thus cannot be accepted. 36. As noticed above, inquiry, investigation, etc., are permissible under Cr.P.C. by the authorities or officers exercising the jurisdiction under P.M.L. Act. It therefore goes without saying that on noticing an offence under P.M.L. Act against the offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a case, mandatory provisions of FEMA were required to be complied with. Such an argument is misconceived for the simple reason that so far as present cases are concerned, the respondents after noticing the incriminating material which may lead to the crime under Section 3 of the Act, did not proceed further under FEMA but have chosen to proceed under P.M.L. Act. That apart, the question as regards compliance of mandatory provisions can be raised at appropriate stage of the proceedings and not at the threshold as interference by the Court at the threshold may frustrate the very purpose and object of P.M.L. Act. 38. True it is that the vexatious search would expose the authority or officer concerned to prosecution but that in fact is a safeguard provided to the suspects so as to prevent them against unnecessary harassment or inconvenience. In view of such safeguard, at this stage, this Court would not doubt the credentials of the respondents when they are inquiring into or investigating what may turn out to be a serious offence. Further Sections 22 and 23 raise various presumptions against the suspects and Section 24 casts a burden of proof under various situations on the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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