TMI Blog2019 (2) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... a Member For the Appellant : Mr. S. Gowthaman, Advocate, Mr. Naveen Malhotra, Advocate Dr. Maurya Vijay Chandra,Advocate For the Respondent : Sh. Nitesh Rana, Advocate JUDGEMENT FPA-PMLA-2323, 2238, 2239 2240/PTN/2018 1. By this order, we propose to decide all the above-mentioned four appeals by giving the reasoned order in view of the order passed on 16th January, 2019 whereby we orally allowed the appeals after hearing both the parties. 2. The above-said appeals have been filed by the appellants under Section- 26 of PMLA, 2002 against the order dated 12th March, 2018 passed by the Adjudicating Authority in O.A. No. 133/2017. 3. It is the admitted position that prior to filing of O.A. No. 133/2017 by the respondent, who earlier filed O.A. No. 77/2017 which was decided by the Adjudicating Authority on 14.07.2017. The said order was challenged by one of the parties i.e. Shri Rajan S. Shah in Appeal no. 1880/2017. In the said order, the Adjudicating Authority did not allow the OA and held that application filed before the authority was beyond the scope of provisions of Sections 17(1-A) and 17(4) of the Prevention of Money Laundering Act, 2002. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not practicable to seize such record or property, the officer authorized under sub-section 1 (of section 17), may make an order to freeze such property, whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and copy of such order shall be served on the person concerned. It is contented by the several respondents that they have not been served with any copy of order of freezing in terms of section 17 (1-A). What is pointed out and relied upon by the Applicant are the intimations sent to the different banks, where the respective respondent have their bank accounts. Their contentions as to non-receipt/ non-service of the communication regarding non-allowing of the debit in the bank account, would not survive as there is no action under section 17 (1-A). The provisions of section 17(4) indicates that the authority seizing any record or property under sub-section 1 (of section 17) or freezing any record or property under sub-section 1-A within a period of 30 days from such seizure or freezing as the case may be, file an application requesting for retention of such record or property seized under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day of seizure of the bank accounts as well as from the date of passing the impugned order. 20. No doubt, as far as the 2nd application and proceedings under section 5 of PMLA are concerned, the appeal would be considered on merit once it is listed before us. However, we are of the considered view that the adjudicating authority has passed the order beyond its jurisdiction to direct the respondent to file the fresh application. Such jurisdiction is not within the domain of the adjudicating authority because of the reason that the application of the respondent was decided on merit. Even direction for investigation under section 102 was uncalled for as in the application for retention of the property under section 17 (4) filed by the respondent, there was no prayer by the respondent for further investigation under section 102 of Cr.P.C. Without prayer, the said relief cannot be granted by the adjudicating authority suo-moto. 21. In the light of above, the present appeal is allowed. The impugned application filed by the respondent is rejected in toto. 11. It is pertinent to mention that the Hon‟ble High Court of Delhi in its Judgement delivered on 09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything contained in 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: [Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted] (2) The Director, or any other officer not below the rank of Deputy Director, shall, 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 pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty,in respect of all matters relevant for the purposes ofany investigation under this Act: Provided that no search shall be conducted unless, in relation to the scheduled offence, 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, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose. (lA) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of crime are likely to be concealed or tampered with or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. 51. Similarly, an officer can seize any property or pass an order for freezing such property provided that he has, on the basis of information in his possession, reason to believe that any person has committed an act of money laundering; or is in possession of the proceeds of crime involved in money laundering; or is in possession of any records related to money laundering; or is in possession of property related to crime. It is material to note that the reasons to so believe are to be recorded in writing. 52. It is also relevant to note that in either case - the order of provisional attachment of any property under section 5(1) of the PMLA or an order of seizure of any property - has a limited life. The order of provisional attachment cannot extend beyond the period of one hundred and eighty days. Further, in terms of Section 5(5) of the PMLA, a Director or any officer who provisionally attaches a property is required to make a complaint to the Adjudicating Authority within a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l also be given an opportunity of being heard to prove that the property is not involved in moneylaundering. (3) Where the Adjudicating Authority decides under subsection (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, whereupon such attachment or retention or freezing of the seized or frozen property or record shall- (a) continue during investigation for a period not exceeding ninety days or the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 or Section 58-B or subsection (2-A) of section 60 by the Special Court. (4) Where the provisional order of attachment made under subsection (1) of section 5 has been confirmed under sub-section (3), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed. 54. In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets or the means with which he has acquired the property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA. 55. In either case, the Adjudicating Authority is required to pass an order within a period of one hundred and eighty days from the date of the order of provisional attachment under Section 5(1) or from the date of order of seizure/freezing passed under Section 17 of the PMLA. This is explicitly clear by the plain language of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or the persons entitled to receive it. (6) Where an order releasing the property has been made by the Special Court under sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60, the Director or any officer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of receipt of such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act. 56. It is clear from the aforesaid scheme of the PMLA that any property can be provisionally attached under Section 5 or be seized under Section 17 or be frozen under Section 17(1A) of the PMLA. However, any such order can be passed only if the necessary checks and balances are complied with; namely, that the seizure or attachment is preceded by the concerned authority having reason to believe that such properties are proceeds of crime or are otherwise related to crime. Further, such reasons to believe must be formed on the basis of material in possession of the concerned officer and must be recorded in writing. In addition, such orders cannot be extended beyond the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the disposal of the same. 61. It is clear from the plain reading of Section 102 Cr.P.C. that any police officer may seize the property, which may be alleged or suspected to have been stolen or which is found in circumstances which create suspicion of the commission of any offence. However, the said order of seizure is only a temporary order and in terms of subsection (3) of Section 102 of Cr.P.C., the police officer seizing any property on the grounds of suspicion of an offence is required to forthwith report the seizure to the Magistrate having jurisdiction. 62. The said property seized is required to be produced before a Court and/or reported to a Magistrate. In such cases, the court would have the power to pass necessary orders with regard to the said property. In terms of Section 457 of the Cr.P.C., whenever a property is seized by any police officer and is reported to the Magistrate, the Magistrate is empowered to make such orders as he thinks fit in respect of disposal of the property or the delivery of such property to the person entitled to the possession thereof. In cases where such person cannot be ascertained, the Magistrate can pass orders in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the checks and balances enacted therein. 67. Mr Singh had contended on behalf of the Enforcement Directorate that the PMLA does not contain any provision regarding seizure on mere suspicion, therefore the power to make such seizure can be drawn from Section 102 of Cr.P.C. He contended that the provisions of Section 102(1) of Cr.P.C. are, therefore, not inconsistent with the provisions of the PMLA with regard to seizure of property. The said contention is unmerited. The question whether an enactment is repugnant to another is not determined on whether two provisions can be simultaneously obeyed but is determined in the context of the scheme of the legislative enactment. The question to be asked is whether the schemes of the two enactments can subsist and be implemented simultaneously. It is apparent that the scheme of effecting provisional attachment and seizure of property under the PMLA is wholly inconsistent with the one as enacted under the Cr.P.C. 68. In Innoventive Industries Ltd. v. ICICI Bank and Anr.: (2018) 1 SCC 407, the Supreme Court had examined the question of repugnancy between two enactments, namely, the Maharashtra Relief Undertakings (Special Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties of parties are not attached or seized without the authorities effecting such actions having reason to believe that such properties are proceeds of crime or are related to a crime. 70. If the contention as advanced on behalf of the Enforcement Directorate is accepted, it would mean that whereas the property cannot be provisionally attached under Section 5(1) of the PMLA and/or seized or frozen under Section 17 of the PMLA without (a) theDirector having a reason to believe, on the basis of material available with him, that the properties are proceeds of crime and (b) recording such reasons in writing; the same officer can on mere suspicion pass orders for freezing the properties without recording reasons. Further, there are strict timelines provided under the PMLA. The orders of provisional attachment and/or seizure and/or freezing cannot extend beyond the period of 180 days. The Director of the Enforcement Directorate (or the officer authorized by him) is required to file a complaint by seeking extension of the period of retention from the adjudicating authority within a period of thirty days from passing such order. However, this safeguard would also be rendered mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... templated under the provisions of Cr.P.C. is drastic and exercise of such powers is likely to have severe adverse effects on the person concerned; thus, the parliament in its wisdom did not confer upon the Enforcement Directorate, any powers to attach or freeze assets on a mere suspicion. 73. The learned counsel appearing for the Enforcement Directorate has also referred to the decision of the Supreme Court in V.T. Khanzode and Ors. v. Reserve Bank of India and Anr.: (1982) 2 SCC 7. The said decision has no application in the facts of the present case. In that case, the petitioners had challenged the circular issued by the Reserve Bank of India whereby it had decided to combine the seniority of all officers. The petitioners had contended that such conditions of service could not be framed by administrative circulars but necessitated framing Regulations under Section 58 of the Reserve Bank of India Act, 1934. The Supreme Court repelled the said contention and held that under Section 7(2) of the Act, the Central Board had the power to provide for service conditions of the bank staff by issuing administrative circulars as long as they did not impinge upon the Regulations made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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