TMI Blog2014 (5) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners that freezing of the accounts was not permissible that Sections 5 and 17 of P.M.L.A. Act were applicable at this stage is accepted, as noticed in a greater detail, acts under Sections 5 and 17 are only provisional and subject to confirmation by the Adjudicating Authority. Before such adjudication, a notice to the interested person is contemplated under Section 8 of P.M.L. Act and therefore, by convincing the Adjudicating Authority that no offence under Section 3 is committed by the petitioners, the orders defreezing their accounts can be obtained from the such authority. In the facts and circumstances discussed hereinabove, it is difficult to accept the contention that initiation of the proceedings against the petitioners are illegal. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Draft Amendment in Special Criminal Application No.1725 of 2014 is allowed. 2. Since the common questions of law and facts are involved, the petitions are heard together. 3. The petitioners in these petitions question the investigation carried out by the Assistant Director, Directorate of Enforcement as also the orders passed by the said authority freezing the accounts of the petitioners. A Search Warrant No.1 of 2014 in Special Criminal Application No.1725 of 2014 and Search Warrant No.3 of 2014 in other petition issued by the Joint Director, Enforcement Directorate, Ahmedabad and the panchnamas dated 22.04.2014 and 21.03.2014 respectively drawn by respondent no.2 at premises of the petitioners is also questioned. The petitioners also 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 157 or Section 173 of Cr.P.C., the attachment of the petitioners accounts is illegal. It was also contended that freezing of the account was traceable to only Section 5 of P.M.L. Act and if the argument of the respondents that no proceedings were initiated under Section 5 of P.M.L. Act is accepted, the proceedings are unauthorized. 10. While relying upon Kottom Raju Vikram Rao Vs. State of Gujarat [1977(18) G.L.R. 107] , it was argued that without disclosing the material to the petitioners, the proceedings under P.M.L. Act are not sustainable. 11. It was argued that without search warrant under P.M.L. Act, the proceedings were unauthorized. It was contended that the respondents are strictly bound to comply with the procedure under the relevant provisions of 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 init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary entries to the concerned Magistrate constituted the compliance with said provisions. 17. It was contended that it was permissible for the respondents to prohibit the operation of the accounts of the petitioners even before initiating the proceedings under Section 5 of P.M.L. Act. In support of such contention, reliance is placed upon FFR Software Private Limited Vs. Union of India (in Special Civil Application No.2183 of 2012, decided on 12.11.2013 by the Gujarat High Court) . Again, on the assumption that Section 5 of P.M.L. Act was applicable at this stage, it was contended, while relying upon FFR Software Private Limited (supra), that account can be frozen even before the situation contemplated under Section 5 of P.M.L. Act. 18. In light of the aforementioned contentions, 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5 deals with attachment of the property involved in money-laundering and authorizes the officer, contemplated in subsection (1) to provisionally attach the property for the reason to be recorded in writing and on the basis of the material with him. The proviso to sub-section (1) prescribes compliance of a condition precedent to provisional attachment being lodgment of a report under Section 173 of Cr.P.C. or a complaint by person authorized to investigate the scheduled offences to a Magistrate or Court for taking its cognizance, as the case may be, or a similar report or complaint. The first proviso to subsection (1) of Section 5 is further qualified by a second provision which dispenses with the requirement of first proviso in case of urgent need of attachment. Thus, lodgment of the aforementioned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then can enter and search the building, place, etc. and carry out various acts as contemplated in Section 17. Such exercise is not permissible in absence of a report or a complaint as the case may be, by a person authorized to investigate the scheduled offence, to the Magistrate or a Court as the case may be, in relation to a scheduled offence and or in cases where such report is unnecessary, the information has to be submitted by the officer authorized to investigate the scheduled offence to an officer mentioned in Section 17. Under sub-section (1-A) of Section 17 of P.M.L. Act, freezing orders of properties can be passed if seizure is not practicable. Similarly, an authority authorized under sub-section (1) of Section 17 is obliged to immediately forward a copy of the reasons recorded by it along with the 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 sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also as contemplated in the proviso to sub-section (1) of Section 17 is made, the proceedings are not sustainable. As noticed in greater detail, the ultimate object of Section 5 is provisional attachment of the property. The object appears to prevent destruction of the evidence which may be produced in the proposed criminal proceedings or to take in possession the property involved in the money-laundering, though the proceedings can be initiated on the basis of the reports or complaint, etc., as contemplated in the first proviso to Section 5. In view of second proviso, proceedings can be initiated under Section 5 even in absence of compliance of first proviso. Various safeguards impose fetters upon the attaching officer obliging him to immediately send the order made by him and the factum of attachment of the property 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freeze the properties preceding the provisional attachment under Section 5 of P.M.L. Act. Paragraphs-5 and 6 of the said case can be quoted herein for convenience: 5. Having heard learned counsels for the parties and on perusal of the record of the case, I find substance in the contention of the respondents that the given statutory mandate under the PML Act makes it imperative for the authorities in the course of investigation i.e. collection of facts to establish specific details of the suspected properties from the concerned authorities prior to issuance of the provisional attachment order under section 5 of the Act. As such, it has to be issued with abundant caution. It is therefore necessary that the requisite information/details are ascertained from the repositories of such information. Such repositories may be required 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 SCC(1) 260), the Apex court has held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the tribunal and thereafter to have the cases stated to the High Court, it was not for the High Court to exercise its extra ordinary jurisdiction under Art. 226 of the Constitution ignoring as it were, the complete statutory machinery. 9. In yet another case of Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement Another Civil Appeal No. 3221 of 2010 Date of judgment 12.04.2010 the Hon ble Supreme Court has observed that : .... The High Court does not therefore act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226 trench upon 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 Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of the material found during search aforementioned, a further process to inquire into the matter is initiated. Assuming again that provisions of Sections 5 and 17 were applicable, the material was already collected under FEMA from aforementioned company in which petitioner-Afroz Mohamad Hasanfatta in Special Criminal Application No.1748 of 2014 is a Director. Once such material was collected, there was no occasion for the respondents to again make search for the same purpose and therefore, in the facts of the case, Sections 5 and 17 were not attracted for the purpose of initiation of inquiry or investigation. In view of the provisions made in Cr.P.C., it is always permissible for the authorities or officers under the Act to proceed ahead with the inquiry or investigation from the stage, the incriminating material was located. The argument however is that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation is involved. It is settled law that accused has no right to interfere or know as to what is being inquired or interrogated against him. Acceptance of such a proposition would lead to a situation where the accused may get a freehand to thwart the proceedings. 42. However, so far as petitioner-Foziya Samir Godil is concerned, being a woman, it is rightly contended by the learned counsel for the petitioners that she is entitled to benefits of all the procedures applicable to the woman under the relevant law and to that extent, the respondents at the threshold shall have to comply with the provisions of law. 43. The contention that exclusive procedure for summoning a person under Section 50 not providing the safeguards to a woman as under various provisions of Cr.P.C. and therefore, no benefit as is available to the woman under Cr.P.C. can be conferred upon her, is devoid of merits and suffers from misconception of law inasmuch as concededly by virtue of Section 65 of P.M.L. Act, provisions of Cr.P.C. as are not inconsistent with the provisions of P.M.L. Act are applicable to the proceedings under P.M.L. Act and it cannot be said that the provisions providing safeguard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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