TMI Blog2020 (10) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... d Alemaos who are facing trial and therefore, in the name of striking balance, confirmed the attachment of the FDRs or imposed conditions for raising the attachment on the immovable properties. The directions issued by the Tribunal in its impugned order are this, quite contrary to its reasoning. The directions, therefore, are quite unsustainable in such circumstances. On a plain reading of the provisions of Section 5(1) of the PMLA, it is apparent that the two predicates in clauses (a) and (b) have to be construed conjunctively and not disjunctively as suggested by Mr. Vaze, learned counsel for the ED. This means that the director or the authorized officer before he proceeds to make an order under Section 5(1) of the PMLA, must have reason to believe, on the basis of material in his possession, not only any person is in possession of any proceeds of crime but further, such proceeds of crime are likely to be concealed, transferred or dealt with to frustrate confiscation proceedings under Chapter III of PMLA - reading the and which connects the two predicates in clauses (a) and (b) might even lead to an absurd position because it might imply that even though a person is not in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the PMLA. The statement made on behalf of the Appellants-Kamats that they will not sell, transfer, alienate, encumber or liquidate or encash the attached properties/FDRs and order until the conclusion of PMLA Case No.1/2018 pending before the Special Court at Mapusa and for one month thereafter, is hereby accepted. The Appellants-Kamats will have to abide by this statement - Application disposed off. - APPEAL UNDER PREVENTION OF MONEY LAUNDERING NO.1 OF 2019, WITH APPEAL UNDER PREVENTION OF MONEY LAUNDERING NO.2 OF 2019, WITH APPEAL UNDER PREVENTION OF MONEY LAUNDERING NO.3 OF 2019 - - - Dated:- 26-10-2020 - M.S. SONAK SMT. M.S. JAWALKAR, JJ. Mr. Parag Rao with Ms. Mamta Bhandari, Advocates for the Appellant in AUPML No.1/2019. Mr. Nikhil Vaze with Mr. Pranav Vaze, Advocate for Respondent No.1 Enforcement Directorate (ED) in AUPML No.1/2019. Mr. Nikhil Vaze with Mr. Fernandes Luis Alex, Advocates for the Appellant ED in AUPML No.2/2019. Mr. P. Rao with Ms. Reshma Kale, Advocates for Respondent Nos.1 and 2 in AUPML No.2/2019. Mr. Arun Bras De Sa with Mr. Sahil Sardessai, Advocates for Respondent Nos.3 and 4 in AUPML No.2/2019. Mr. Nikhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ao 9,83,001/- 5 Fixed Deposit bearing no.253100MB00004460 maintained with Punjab National Bank, Margao 7,31,057/- 6 Fixed Deposit bearing no.253100MB00004451 maintained with Punjab National Bank, Margao 8,04,335/- 7 Fixed Deposit bearing no.253100MB00004451 maintained with Punjab National Bank, Margao 5,29,748/- Total 1,19,90,063/- ALEMAOS Sr. No. Description Value 1 Flat no.101, Ground Floor, Building no.1 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs. 2 Flat no.102, Ground Floor, Building no.1 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs. 3 Flat no.308, 3 rd Floor, Building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Alemaos and even held that the orders of attachment are illegal and deserve to be set aside, the Tribunal, could not have in the name of striking balance continued with the attachment of the FDRs or imposed conditions for raising attachment in respect of immovable properties. He submits that the properties/FDRs which are the subject matter of these proceedings are not proceeds of crime as defined under Section 2(u) of PMLA, since, admittedly, these were acquired much before 2010, which is the year in which the alleged offence was said to have been committed. He, therefore, submits that there could not have been any reason to believe that the Kamats or Alemaos were indeed in possession of any proceeds of crime. 12. Mr. Rao submits that in any case, there was absolutely no reason to believe that such proceeds of crime were likely to be concealed, transferred, or dealt with in any manner by Kamats or Alemaos which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime under Chapter III of the said Act. He submits that the authorized officer, before making any order under Section 5(1) of the PMLA, is not only required to have reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instituted by the ED, be allowed. 20. The learned counsel for the parties relied upon several decisions in support of their respective contentions and we shall deal with some of such relevant decisions in the course of our judgment and order. 21. Towards the conclusion of arguments, both Mr. Rao and Mr. De Sa, based on instructions made a statement that Kamats and Alemaos, without prejudice to their respective rights and contentions and without in any manner admitting any of the allegations against them but merely to show their bonafides will not transfer or alienate or encash any of the properties/FDRs referred to in paragraph 18 of the impugned order of the Tribunal, pending disposal of PMLA case No.1/2018, pending before the Special Court at Mapusa and for one month thereafter. 22. Mr. Vaze based on the instructions from ED states that if Kamats and Alemaos offer FDR worth 1.20 crores and 75 lakhs₹ ₹ respectively for confiscation in case they are convicted, the ED will not insist upon the attachment of any immovable properties. In the absence of any such offer, ED may be inclined not only to attach the immovable properties but also to take possession of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 75.00 lakhs, respectively, and also give an undertaking that if after trial, at the time of passing the final order, the matter is decided against them, then they shall deposit the said amount with the respondent without any protest. 26. According to us, once the Tribunal concluded that the attachment orders were liable to be set aside, it could not have avoided setting aside the same, by merely observing that there are allegations by the CBI against Kamats and Alemaos who are facing trial and therefore, in the name of striking balance, confirmed the attachment of the FDRs or imposed conditions for raising the attachment on the immovable properties. The directions issued by the Tribunal in para 79 of its impugned order are this, quite contrary to its reasoning in the preceding paras. The directions, therefore, are quite unsustainable in such circumstances. 27. Mr. Vaze the learned counsel for ED however contends that the reasoning of the Tribunal is quite defective and therefore, the appeals instituted by ED may be allowed so that the attachment of all properties is restored unconditionally. He submits that there was no infirmity in the provisional attachment order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llai vs The Joint Director, Director of Enforcement 2017 SCC Online Ker 10118. 30. According to us, in this case, it is not necessary for us to go into the issue of construction of the expression value of any such property in Section 2(u) of the PMLA. Though, we must say that the view taken by the Tribunal is not in accord with the view taken by the Delhi High Court in K. Rethinam (supra) and Directorate of Enforcement (supra). However, the view of the Tribunal is quite in accord with the decision of Punjab and Haryana High Court in Seema Garg v. Deputy Director 2020 SCC Online P H 738 relied upon by Mr. Rao. We do not need to go into this issue because even if we accept Mr. Vaze's contention on the construction of Section 2(u) of the PMLA, still, the attachment order dated 30.03.12017 is vitiated for non -compliance with the predicates of Section 5(1) of the PMLA. 31. Section 5(1) of the PMLA as it stood on the date of the offence in 2010 or for that matter even after its amendment in 2013, inter alia provides that if the director or the authorized officer has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because it might imply that even though a person is not in possession of any proceeds of crime, he is nevertheless likely to conceal, transfer or deal with 'such proceeds of crime' to frustrate confiscation proceedings under Chapter III of PMLA. Further, if the expression and is construed as it stands, it is not as if some absurdity would result in the construction of Section 5(1) of the PMLA or the object of Section 5(1) of the PMLA would be frustrated or defeated. There is, according to us, nothing in the text or the context obliging the Court to read and as or simply because the Court, may, in certain circumstances, have the power to do so. 34. In Ranchhoddas Atmarain (supra), the Hon'ble Apex Court in fact refused to read or as and . 35. In J. Jayalalitha (supra), the Hon'ble Apex Court held that the dictionary meaning of the word or is a particle used to connect words, phrases, or classes representing alternatives . The word `or', which is a conjunction, is normally used to join alternatives and also to join rephrasing of the same thing but at times to mean `and' also. Alternatives need not always be mutually exclusive. Moreover, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not gone to the extreme limit of interpretation. 38. Therefore, the above decisions relied upon by Mr. Vaze only establish that the Court, in certain circumstances, has the power to read and as or and vice versa. However, in the absence of such compelling circumstances, the Court cannot, as a matter of course read and as or or vice versa as, the Courts, would be ignoring the caution expressed in Tek Chand Bhatia (supra) about going to the extreme limits of interpretation. 39. In Union of India v. Ind-Swift Laboratories Ltd. (2011) 4 SCC 635, the Hon'ble Apex Court has held that where provision is clear and unambiguous the word or cannot be read as and by applying the principle of reading down. 40. In A. G. v. Beauchamp (1920) 1 KB 650 and in R v. Oakes (1959) 2 ALL ER 92, it is held that if the literal reading of the words produces an unintelligible or absurd result, and maybe read for or and or for and even though the result of so modifying the words is less favourable to the subject, provided that the intention of the Legislature is otherwise quite clear. Conversely if the reading of and as or produces grammatical distortion and make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the Legislature intended to provisionally attach the proceeds of crime irrespective of whether or not there was any likelihood of such proceeds of crime being concealed, transferred, or dealt with to frustrate any confiscation proceedings under Chapter III of the PMLA. Rather, it appears that the Legislature intended to empower the director or the authorized officer to provisionally attach the proceeds of crime where such proceeds of crime were likely to be concealed, transferred, or dealt with to frustrate the confiscation proceedings. The Legislature was conscious that it was vesting the director or the authorized officer with such extraordinary powers in the teeth of the presumption of innocence and therefore, such extraordinary power was hedged with certain contentions which had to be cumulatively existent. 44. Radhamohan Lakhotiya (supra), is not at all an authority for the proposition that the two predicates in clauses (a) and (b) of Section 5(1) of the PMLA can be construed disjunctively by reading and as or . In fact, in para 16 of Radhamohan Lakhotiya (supra), the Division Bench of this Court speaking through Justice Khanvilkar (as His Lordship then was) held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief, not being extraneous or irrelevant. Based upon this ruling, the Kerala High Court held that a mere mechanical recording that the property is likely to be concealed, transferred, or dealt with would not meet the requirements of Section 5(1) of the said Act. 47. For all the aforesaid reasons, it is not possible to accept Mr. Vaze s contention that the expression and which connects the two predicates in clauses (a) and (b) of Section 5(1) of the PMLA is required to be construed as or and on which basis, the order dated 30.03.2017 made by the Joint Director, sustained. None of the authorities relied upon by Mr. Vaze support the proposition advanced by him in the context of the provisions of Section 5(1) of the PMLA. 48. As noted earlier, in the present case, analysis of the Joint Director s order dated 30.03.2017 makes it clear that there are no reasons whatsoever recorded by the Joint Director in support of his alleged belief that the proceeds of cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding that the attachment order was required to be set aside, was not justified in issuing the directions which it has issued in paragraph 79 of its impugned order. Accordingly, the conditions imposed by the Tribunal for setting aside the attachment of the immovable properties deserve to be set aside. So also, the continuance of the attachment of the FDRs by the Tribunal deserves to be set aside. 52. According to us, most of the directions in paragraph 79 of the impugned order like calling upon the parties to furnish indemnities, etc., are not even contemplated under the scheme of the PMLA. Such directions could not have been issued merely on the basis that the CBI had made some allegations against Kamats and Alemaos and that prosecutions were pending against them. Such directions could not have been issued in the name of striking balance between the interests of the ED as well as the accused persons. 53. In any case, even assuming that some directions were justified in the interest of striking balance, the statements made by Mr. Rao and Mr. De Sa as referred to in paragraph 21 of this judgment and order, will sufficiently protect the interests of ED, whilst, at the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
