TMI Blog2012 (7) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... a limited extent, confirming all other portions of the impugned orders of the Deputy Director and the Adjudicating Authority, except the portion relating to actual physical possession. The respondents are directed to put the petitioners back into possession of the properties. However, the legal and constructive possession of the properties shall be deemed to remain with the Deputy Director/Director and the petitioners cannot alienate, encumber or part with possession of the properties until the conclusion of the criminal proceedings against the accused and until the conclusion of the confiscation proceedings that may be taken up after the decision of the Criminal Courts. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed. - Writ Petition Nos.1912, 2870, 13421 and 22062 of 2011 And M.P.Nos.2,2,2 and 1 of 2011 - - - Dated:- 11-7-2012 - Mr. V.Ramasubramanian, J. For Petitioner: Mr.N.Manokaran, M.Fahmeetha Ghori, Mr.J.Ferozkhan, A.Kamarunnisa Ghori For Directorate of Enforcement: Mr.M.Dhandapani COMMON ORDER The petitioners in these writ petitions, challenge the provisional orders of attachmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010, directing the confirmation of the Provisional Attachment Orders and further directing the second respondent to forthwith take possession of the properties attached. Accordingly, the Deputy Director also took actual physical possession of the properties. Therefore, the petitioners who are the wife and daughter of the prime accused, have come up with the above writ petitions, challenging the Provisional Attachment Order dated 23.6.2010 and the order of the Adjudicating Authority dated 12.11.2010. 6. The petitioner in the third and fourth writ petitions viz., W.P.Nos.13421 and 22062 of 2011, is the mother of one S.Anbu, who was implicated along with one Mr.Amarchand Kothari and a few others in a criminal complaint in Crime No.4 of 2008 for offences under Sections 420, 467, 468, 471 and 406IPC. On the basis of the said complaint, enquiries were initiated by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002. 7. On the basis of the documents available in Crime No.4 of 2008, the Enforcement Directorate registered an Enforcement Case Information Report No.01 of 2009 dated 4.6.2009. Thereafter, a property standing in the name of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the frustration of any proceedings for confiscation under Section 8. He must also be satisfied, before passing the order of attachment, that a report has been forwarded to the Magistrate under Section 173 of the Code of Criminal Procedure, in relation to the scheduled offence. Section 5(4) protects persons who are in enjoyment of such property, from being deprived of such enjoyment. Therefore, the question of giving an opportunity of hearing at the stage of provisional order of attachment under Section 5(1) does not arise. 11. The petitioners in the first two writ petitions raise an additional ground to the effect that even the Adjudicating Authority did not give adequate opportunity of hearing before passing the order dated 12.11.2010 in O.C.No.58 of 2010. But a perusal of the order dated 12.11.2010 in O.C.No.58 of 2010 shows that two Advocates by name M/s.Sivabala Murugan and Aris Mohammed appeared for the hearing on 12.10.2010 at Delhi and sought an adjournment. Therefore, the case was adjourned to 19.10.2010. Even on 19.10.2010, the said counsel appeared and sought one more adjournment. The Adjudicating Authority finally granted an adjournment for a second time on co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as the petitioner in the first writ petition is concerned. Therefore, the copy of the provisional order of attachment also had only to be affixed. However, the accused, who was in Central Prison, was duly served with the provisional order of attachment. Therefore, the contention that there was no adequate opportunity of being heard, cannot be raised by the petitioners in the first two writ petitions. 14. Mr.N.Manokaran, learned counsel for the petitioner relied upon the decision of the Supreme Court in Uma Nath Pandey vs. State of U.P. {2009 (2) CTC 663}, in support of his contention that principles of natural justice are rules guaranteeing minimum protection of the rights of the individuals against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and Administrative Authority and that therefore, they are deeply rooted in tradition and conscience and hence, cannot be compromised. Though the said contention, as a principle of law, is unquestionable, it has no application to the case on hand, as the petitioners allowed the opportunities given to them to drift away. 15. The learned counsel also relied upon a decision of this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, if the offence falls within Paragraph 1 of Part A and Part B of the schedule. Alternatively, a police report or a complaint should have been filed under Section 36 of the NDPS Act, before a Special Court, if the offence relates to Paragraph 2 of Part A of the schedule. 20. By Prevention of Money Laundering (Amendment) Act, 2009, the proviso under Section 5(1) was substituted by two provisos. This amendment came into effect from 1.6.2009. Both the provisos read as follows:- 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 the Schedule, before a Magistrate or Court for taking cognizance of the scheduled offence, as the case may be: Provided further that, notwithstanding anything contained in clause (b), 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 reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of lawful means by themselves, they should have participated in the adjudication proceedings before the Adjudicating Authority and adduced evidence. Having failed to do so, the petitioners cannot now ask this Court to examine their title to the properties. Hence the second contention is also to be rejected. GROUND NO.1 IN THE THIRD AND FOURTH WRIT PETITIONS: 23. Even the petitioner in the third and fourth writ petitions claim lack of adequate opportunity of being heard and violation of the principles of natural justice in the proceedings before the Adjudicating Authority. But the order of the Adjudicating Authority dated 10.8.2011, passed in O.C.No.98 of 2011 would show that the adjudication proceedings were taken up for the first time before the Adjudicating Authority on 17.6.2011. It appears that one Mr.Firoz Khan, who is also the counsel for the petitioner in the third and fourth writ petitions, sent a letter to the Adjudicating Authority on 11.6.2011, seeking an adjournment, on the ground that the writ petition filed against the provisional order of attachment was pending in the Court. The request was turned down by the Authority by order dated 17.6.2011. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if such properties, in the opinion of the Director represent the proceeds of crime. Therefore, it may be essential to take note of the Scheme of the Prevention of Money Laundering Act, 2002. 27. The Prevention of Money Laundering Act, 2002, hereinafter called the 'Act', was enacted in pursuance of the Political Declaration adopted by the Special Session of the United Nations General Assembly held in June 1998, calling upon the member States to adopt National Money Laundering Legislation and Program, primarily with a view to meet out the serious threat posed by money laundering to the Financial Systems of countries and to their integrity and sovereignty. If we have a look at the statement of objects and reasons and also trace the historical basis for the Political Declaration and Global Program of Action adopted by the General Assembly, it could be seen that the concern of the Global Community which led to the above resolutions, was about the illicit traffic in Narcotic drugs and the huge amount of money generated from the same. The original object of the Declaration of the General Assembly and the 2002 Act, was not to deal with normal crimes such as robbery, dacoit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the provisional attachment, even before the conviction of the accused for an offence of money laundering. 31. Therefore, it is contended by Mr.M.Dhandapani, learned counsel for the Enforcement Directorate that the power conferred by Section 8(4) to dispossess a person in possession of the proceeds of crime or the property acquired from out of the proceeds of crime, even before the conviction of the accused, is perfectly valid and justified. As a matter of fact, the direction issued by the Adjudicating Authority in the writ petitions on hand, mandating the Director of Enforcement to take possession of the properties of the writ petitioners, is on the basis of the language employed in Section 8 and the reasoning given by the Division Bench of the Andhra Pradesh High Court for upholding the validity of Section 8(4). 32. But there is some difficulty in accepting the reasoning given by the Andhra Pradesh High Court, on this issue and the manner in which Section 8(4) has been understood. It must be noted that the Act not only enables the Director or Deputy Director of Enforcement to proceed against the properties of a person charged of having committed a scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person charged of having committed a scheduled offence is in possession of any proceeds of crime. The alternative condition is that the property is involved in money laundering though the person in possession is not charged under the Act. 35. Section 3 defines money laundering to mean the indulgence or involvement in any process or activity connected with the proceeds of crime, provided the person so indulging or involving projects it as untainted property. Therefore, it is clear that the stress is on two things viz., (i) proceeds of crime and (ii) scheduled offence. 36. The expression proceeds of crime is defined in Section 2(1)(u) to mean any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence. The expression scheduled offence is defined in Section 2(1)(y) to mean (i) either the offences specified in Part A of the schedule to the Act or (ii) the offences specified in Part B of the schedule, if the total value involved in such offences is ₹ 30 lakhs and more or (iii) the offences specified in Part C of the schedule. 37. A careful look at Parts A, B and C of the schedule, would highlig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph-22 Offences under the Environment Protection Act, 1986 Paragraph-23 Offences under the Water (Prevention and Control of Pollution) Act, 1974 Paragraph-24 Offences under the Air (Prevention and Control of Pollution) Act, 1981 Paragraph-25 Offences under the Suppression of Unlawful Acts against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Act, 2002 41. Under Paragraph 1 of Part A of the schedule, only a few Sections of Indian Penal Code viz., Sections 121, 121-A, 489-A and 489-B alone are included. 42. In so far as Part B is concerned, certain offences under the Indian Penal Code come under Paragraph-1. It is interesting to note that prior to 1.6.2009, Paragraph 1 of Part B of the schedule included within itself, the offences under Sections 302, 304, 307, 308, 327, 329, 364A, 384 to 389, 392to 402, 467, 489-A, 489-B, 412, 413, 414, 417, 418, 419, 420, 421, 422, 423, 424, 467, 471, 472, 473, 475, 476, 481, 482, 483, 484, 485, 486, 487 and 488 of the Indian Penal Code. But with effect from 1.6.2009, the old paragraph 1 of Part B of the schedule to the Act, was substituted by a new Paragraph 1 by the Prevention of Money Laundering (Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paragraph 1 of Part B of the schedule to the Act. A person, who is robbed or a person on whom dacoity is committed, has to lose his property to the Central Government by virtue of Section 8(6) and Section 9of the Act, if the stand taken by the respondents is accepted. In other words, the only choice available for the victims is to lose the property either to the central government or to the accused. 45. I should make it clear at this stage that the above discussion is neither purely academic nor merely hypothetical. Today, I have passed orders in another case arising out of similar orders of attachment. In that case, a company was accused of defrauding 3 nationalised banks. Therefore, at the instance of the banks, criminal cases were lodged and a property purchased out of the funds provided by the Bank was sought to be attached under the PML Act, 2002. Then the Bank woke up and came up with a writ petition W.P.No.4696 of 2012 challenging the order of attachment on the ground that the property was mortgaged to them and that they have the right to proceed against the property under the SARFAESI Act,2002. I accepted the bank's contention and allowed the bank to proceed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and fifty days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other Officer so authorised by him, as the case may be, shall be deemed to be an Officer under sub-rule (e) of rule 1 of that Schedule: 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 the Schedule, before a Magistrate or Court for taking cognizance of the scheduled offence, as the case may be: Provided further that, notwithstanding anything contained in clause (b), 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 materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. 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) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other Officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds of crime. 50. Therefore, primarily it is the property of the person charged of having committed a scheduled offence which represents the proceeds of the crime, that could be attached under Section 5(1). However, the Second Proviso to Section 5(1), which contains a non abstante clause, enables the concerned Officer to attach any property of any person , if such property is believed to be involved in money laundering and the non attachment of the same is likely to frustrate the proceedings under the Act. It is only by virtue of the Second Proviso inserted by way of amendment under Amendment Act21 of 2009 that the Director derives his powers, even to attach the property standing in the name of any person other than those charged of having committed a scheduled offence. 51. Keeping the above in mind, let me now turn on to Section 8. 52. The Officer who passes the order of attachment under Section 5(1), is obliged to file a complaint within 30 days under Section 5(5), before the Adjudicating Authority. Upon receipt of the said complaint, the Adjudicating Authority is obliged to serve a notice upon the person against whom the complaint is made, calling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent stages relating to attachment, the statute uses 3 different expressions viz., (i) provisional in Section 5 (ii) confirmation in Section 8(3) and (iii) final in Clause (b) under Section 8(3). Keeping in mind, the difference in these 3 expressions, let us now move on to Section 8(4). 57. Under Section 8(4), the Director is empowered to take possession of the attached property forthwith, if the provisional order of attachment passed under Section 5(1) is confirmed under Section 8(3). Section 8(4) uses the expression confirmed . It does not use the expression final as found in Section 8(3)(b). Therefore, it may appear at the threshold that immediately after an order of provisional attachment is confirmed under Section 8(3), the Director can take possession, even without waiting for the order of attachment to attain finality as contemplated under Section 8(3)(b). But whether such understanding or interpretation will be in tune with the scheme of the Act, and in tune with Constitutional guarantees, is the question that we should address ourselves to. 58. Sub-section (5) of Section 8 declares that the attachment under Section 8(3) shall cease to have effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many as 30 distinctive sub-definitions of the various forms and types of possession, indicating thereby that the term may be subjected to plurality of meanings and interpretations. 63. Other authorities such as the Dictionary of English Law (Earl Jowitt) (1959, at page 1367) define possession as the visible possibility of exercising physical control over a thing, coupled with the intention of doing so, either against all the world, or against all the world except certain persons. There are, therefore, three requisites of possession. First there must be actual or potential physical control. Secondly, physical control is not possession, unless accompanied by intention; hence, if a thing is put into the hand of a sleeping person, he has not possession of it. Thirdly, the possibility and intention must be visible or evidenced by external signs, for if the thing shows no signs of being under the control of anyone, it is not possessed;... (cited by Krishna Iyer, J., in Gurucharan Singh vs. Kamla Singh {1976 SCR (1) 739}. Moreover, the above reproduced definition of the Dictionary of English Law was cited with approval in Gurucharan Singh (supra) as well as in Baldeshwar Tewar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for a minute, that the object of the Prevention of Money Laundering Act, 2002 is to keep the accused out of the possession and enjoyment of the proceeds of crime, the human rights of other members of his family or even persons who are in occupation of the property under lawful agreements of tenancy, cannot be thrown to the mercy of the respondents. We must be conscious of the fact that the right to dispossess the accused, is conferred upon the respondents by the Statute, even before his conviction. Therefore, if the expression possession is construed to mean actual physical possession, Section 8(4) would infringe upon the human rights and Constitutional rights not only of persons accused, but also of other persons who are in actual physical possession of the property. 69. As I have pointed out in the previous part of this order, the offences of kidnapping in ransom, extortion, fraud, dacoity, robbery etc., are also made scheduled offences under the Act, if the value is more than the prescribed limit. But for the Prevention of Money Laundering Act, 2002, the victims would approach the regular Criminal Courts with applications under Section 451 of the Criminal Procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the property by the Administrator. The question as to how the property will be managed during the said period is left open in the Act for anybody's guess. 72. Similarly, the first proviso under Section 9 postpones the vesting of a confiscated property in the Central Government, free of all encumbrances, till a declaration is made by the Adjudicating Authority that an encumbrance on the property or leasehold interest has been created with a view to defeat the provisions of this Chapter. Therefore, it is clear that the vesting of the property under Section 9, is not absolute even after an order of confiscation under Section 8(6), if there is a leasehold interest created in the property. If the intention of the law-makers was to enable the Directorate to take actual physical possession of the property even under Section 8(4), the Lessee would have already been thrown out of possession, even before confiscation under Section 8(6) and vesting under Section 9. In such an event, there is no necessity for the Adjudicating Authority to declare a leasehold interest to be null and void in terms of the first proviso to Section 9. Thus, the first proviso to Section 9 also give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than supporting the stand of the respondents, the judgment of the Karnataka High Court tends to support the view I have taken above. 75.Therefore, it is clear that Section 8(4) cannot be understood to confer a power to take actual physical possession. But the respondents, including the Adjudicating Authority, have understood the expression to mean actual physical possession. This is on account of the interpretation placed by the High Court of Andhra Pradesh and hence, the petitioners are entitled to a limited relief, as otherwise, the Adjudicating Authority as well as the Appellate Authority, are obliged to follow only the interpretations given by the Andhra Pradesh High Court with regard to actual physical possession. 76. Before winding up, I must deal with one preliminary objection raised by Mr.M.Dhandapani, learned counsel for the respondents as to the maintainability of the above writ petitions, in view of the availability of an alternative remedy of appeal to the Appellate Tribunal under Section 26(1) of the Act. The learned counsel also relied upon a judgment of K.Chandru, J., in G.Srinivasan vs. Chairperson {W.P.No.530 of 2011 dated 1.4.2011} in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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