TMI Blog2017 (7) TMI 1377X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the PMLA, 2002 to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the PMLA. The PMLA, 2002, has provided specifically a provision for search and seizure. What is important is section 17(4) of the PMLA, 2002, which provides that the authority freezing any record or property is obliged to file an application, requesting for continuation of the order of freezing before the adjudicating authority - Section 102 of the Cr.P.C. differs to this extent with section 17(4) of the PMLA, 2002. In view of section 65 of the PMLA, 2002, when it comes to freezing the accounts, the source of power is section 17, and clause (4) will have to be complied with. In the case on hand, I inquired with Mr. Vyas, the learned Assistant Solicitor General of India, appearing for the department, whether there is anything to show as regards the compliance of section 17(4) of the PMLA, 2002. Mr. Vyas replied that ordinarily, in all cases of search, seizure and freezing of the accounts, a request is made by the authority concerned before the adjudicating authority to continue the order of freezing beyond the period of 30 days. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oversy at this stage. Application dismissed. - Special Criminal Application (Quashing) No. 2449 of 2017 - - - Dated:- 14-7-2017 - J.B. Pardiwala, J. For Appellant: Chetan K. Pandya, Advocate For Respondents: Public Prosecutor JUDGMENT J.B. Pardiwala, J. 1. By this writ application under Article 226 of the Constitution of India, the writ applicant-original accused, has prayed for the following reliefs; (a) To issue a writ of mandamus and/or Certiorari of any other appropriate writ order of directions to quash and set aside the action of the respondent No. 2 of freezing the bank accounts of the petitioner and his family members mentioned at Annexure-B and order/communication dated 29.03.2017 at Annexure-E passed by the respondent No. 2. (b) To issue a writ of mandamus and or Certiorari of any other appropriate writ order of directions, directing the respondent No. 2 to communicate to the bankers of the petitioner and his family members that the accounts be no longer remained freeze and the petitioner and his family members be permitted to operate the bank accounts without any hindrance. (c) Pending admission, final hearing and disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/c No. 34619004762 and Pr.DIT, Surat on 26th December, 2016. 2.3 Based on the aforenoted FIR, the Directorate of Enforcement, Ministry of Finance, Department of Revenue, Government of India, registered an Enforcement Case Information Report (ECIR) bearing No. ECIR/01/STSZO/2016 dated 22nd December, 2016 against the writ applicant and his family members including a public servant and other unknown public servants in terms of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as the PMLA ) as the offence under sections 120B, 419, 420 and 471 of the Indian Penal Code and section 13 of the Prevention of Corruption Act are the scheduled offences in terms of section 2(1)(y) of the PMLA, 2002 fall under para-1 and para-8 of part-A of the schedule to the PMLA, 2002 respectively. 2.4 On 16th March, 2017, the Assistant Director, Directorate of Enforcement, Surat, Sub-Zonal Office, Surat filed a complaint in the court of the learned Principal Sessions Judge, Ahmedabad (Rural), (Designated Court under the PMLA) under section 45 of the PMLA for the offence under section 3 and punishable under section 4 of the PMLA, 2002. The complaint has been registered as PMLA Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion currency through collusion with bank officials of private and public sector banks and private persons by impersonation and by using forged documents. Shri Jignesh Kishorebhai Bhajiawala, in collusion with Shri Pankaj Bhatt, the then Senior Manager, Surat Peoples Co-Operative Bank Ltd., Udhna branch, Surat managed to procure 1109 ID's(Identity Proof documents) from records of said Bank and using the same, the accused Shri Jignesh Kishorebhai Bhajiawala filled thousands of Annexure 5 forms (Exchange forms prescribed by RBI for exchange of old notes of ₹ 500 and ₹ 1000) and these Exchange forms were used by him to get exchange of his demonetized currency notes of ₹ 500 and ₹ 1000 in collusion with Bank officials. Shri Jignesh Kishorebhai Bhajiawala has therefore abused/misused the demonetized currency Exchange scheme announced by Government of India and RBI on 08.11.2016 by forging thousands of Exchange forms in names of various persons and submitted such forged Exchange forms in bulk to Banks to get exchange of his demonetized currency notes of ₹ 500 and ₹ 1000 and obtained new currency notes in connivance with Bank officers. 38.4 Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the tune of ₹ 1,02,16,000/- at present. Apart from this, the further investigation is still in progress. Supplementary charge sheet will be filed in due course. 2.5 The prayer in the complaint is as under; In view of the facts and circumstances of the case, the complainant herein humbly prays that: I. This Hon'ble Court be pleased to take cognizance of the offence of money laundering as defined under Section 3 and punishable under Section 4 of the Prevention of Money Laundering Act, 2002, against the Accused Shri Jignesh Kishorebhai Bhajiawala and punish the accused in accordance with the law. ii. It is also prayed for confiscation of properties, to the Central Government, under Section 8(5) of the PMLA, 2002 involved in money laundering which has been used for commission of offence of money laundering, provisionally attached vide Provisional Attachment Order No. 1/2017 dated 21.02.2017. iii. Any other order deemed appropriate in the facts and circumstances of this case in the interest of justice. iv. The complainant craves permission of the Hon'ble Court for filing of Supplementary complaints under Section 45 of the PMLA, 2002 on comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be accepted as the matter is under investigation under the provisions of PMLA, 2002. 2.7 The grievance of the writ applicant is that the action on the part of the authorities in freezing the various bank accounts is contrary to the provisions of the PMLA and a writ be issued to de-freeze the bank accounts and permit the writ applicant and his family members to operate the bank accounts. 3. Mr. Chetan Pandya, the learned counsel appearing for the writ applicant has raised the following contentions; (A) That the action of the respondent No. 2 is contrary to law and procedure established under the PMLA and the Code of Criminal Procedure, 1973. (B) That the officers of the respondent No. 2 have powers to investigate under the provisions of the PMLA for the offence punishable under Sections 3 and 4 of the PMLA and have no powers under the Code of Criminal Procedure, 1973. (C) That the PMLA is complete code in itself and has defined various procedures and powers in it for inquiry/investigation etc. (D) That Chapter V of the PMLA deals with Summons, Search and Seizure etc. i.e. Section 16 deals with Power of survey, Section 17 deals with Search and Seizure, Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Code of Criminal Procedure, 1973 to apply - The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act . Hence when specific provision is available under the PMLA, the officers of the respondent No. 2 cannot exercise their power via Section 65 of the PMLA for investigation, search, seizure, powers and procedures under Section 102 of the Code of Criminal Procedure, 1973. (I) That the officers of the respondent No. 2 are deliberately and willfully knowing fully well that they do not have powers under Section 102 of the Code of Criminal Procedure, 1973, they are exercising their powers in abuse of process of law by not resorting to Section 17 of the PMLA and issuing oral direction to the bankers not to allow the petitioner and his family members to operate the bank accounts. The officers of the respondent No. 2 are deliberately making a show that they are exercising powers under Section 102 of the Code of Criminal Procedure, 1973 with a view to escape the limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 2, i.e., the Directorate of Enforcement. Mr. Vyas would submit that the entire issue is no longer res integra in view of the judgment and order of this Court in the case of Bhanuben W/o. Rameshbhai Jagubhai Patel Anr. v. State of Gujarat Ors., Special Criminal Application No. 1555 of 2017, decided on 29th March, 2017. According to Mr. Vyas, the department is not concerned with the difficulties that the writ applicant and his family members are facing as on date, as pleaded, as the freezing of the accounts was the first steps very much necessary and essential for effective investigation. Mr. Vyas would submit that section 2(na) defines the term investigation . The definition is an inclusive one and, therefore, would empower the Investigating Agency to take recourse to not only the proceedings under the Act but also to all incidental and consequential acts that may be necessary for effectively pursuing such proceedings to ensure collection of evidence. He would submit that the contention raised on behalf of the writ applicant as to the lack of inherent jurisdiction to make request to the bankers for prohibition/freezing of withdrawal from the accounts maintained by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embly 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 the normal crimes such as robbery, dacoity, fraud etc. but in course of time, the Prevention of Money Laundering Act, 2002 also appears to have fallen into the same kind of disuse/misuse as other enactments of similar nature, by first targeting the local criminals then their international counter parts. Section 2(d) of the PMLA defines attachment as under : attachment mean prohibition of transfer, conversion, disposition or movem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-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 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority 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 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 under Section 17 or Section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall-- (a) continue during the pendency of the proceedings relating to any scheduled offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act 21 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. Keeping the above in mind, let me now turn on to Section 8 of the PMLA. 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 upon him to indicate the sources of his income, earning or assets, out of which he had acquired the property. After such person gives a reply, the Adjudicating Authority should hear the aggrieved person as well as the Director, take into account all relevant materials and pass an order thereafter, recording a finding whether the property in question was involved in money laundering. While sub-section (1) of Section 8 deals with the service of notice by the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty, shall have reasons to believe on the basis of materials in his possession; ii. The person, against whom proceedings under P.M.L.A., 2002 has been initiated, must be in possession of any proceeds of crime; iii. Such person must be charged of having committed any scheduled offence; iv. Such proceeds of crime are likely to be concealed, transferred or dealt with in any manner; and v. If the provisional attachment is not ordered immediately such concealment or transfer of such proceeds of crime may result in frustrating the proceedings relating to confiscation of such proceeds of crime. I shall now look into Section 65 of the PMLA. Section 65 reads as under : 65. Code of Criminal Procedure, 1973 to apply.- The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, in so far as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act. Section 65 of the PMLA seeks to provide that the provisions of the Code of Criminal Procedure, 1973 shall apply in so far as it is not inconsistent with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different than Section 5 of the PMLA. The expression reason to believe is not defined under the Act. Section 26 of the Indian Penal Code explains the term. Accordingly, a person is said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. The reason to believe must be tangible in law and if the material in hand has no nexus with the belief or there is no material or tangible information for the formation of the belief, then in such a case, the whole process would get vitiated. It may happen that initially the authority may not be in a position to collect adequate material sufficient enough to record the reasons for such belief for the purpose of passing a provisional order of attachment. He may be in possession of some material which may create some doubt or suspicion, and in such circumstances, the authority may have to carry out some investigation before he could proceed to pass a provisional order of attachment under Section 5 of the PMLA. It is at that stage that the authority is empowered to issue appropriate directions of attachment/freezing of the bank account in exercise of the powers under Section 102 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice station shall forthwith report the seizure to that officer. (3) Every Police Officer acting under sub-sec. (1) shall forthwith report the seizure to the Magistrate having jurisdiction and where the property seized is such that it cannot be conveniently transported to the Court, he may give custody thereof to any person on his executing a bond undertaking to produce the property before the Court as and when required and to give effect to the further orders of the Court as to the disposal of the same. 6. A plain reading of sub-section(1) of Section 102 indicates that the Police Officer has the power to seize any property which may be found under circumstances creating suspicion of the commission of any offence. The legislature having used the expression any property and any offence have made the applicability of the provisions wide enough to cover offences created under any Act. But the two pre- conditions for applicability of Section 102(1) are that it must be 'property' and secondly, in respect of the said property there must have suspicion of commission of any offence. In this view of the matter the two further questions that arise for consideration are wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used be prohibited from taking away any property from the locker, as such an order would not be a 'seizure' within the meaning of Section 102 of the Criminal Procedure Code. The learned Single Judge agreed with the view taken by Allahabad High Court in the case of Textile Traders Syndicate Ltd., Bulandshahr v. The State of U.P., AIR 1960 Allahabad 405 (Vol. 47). In the Allahabad Case on which Gauhati High Court relied upon (AIR 1960 Allahabad 405), what was decided by the Court is, once money passes on from the accused to some other person or to the bank, money itself becomes unidentifiable and, therefore, there cannot be any question of seizure of the same by the Police Officer. 7. In the case of M/s. Malnad Construction Co., Shimoga and Ors. v. State of Karnataka and Ors., 1994 Criminal Law Journal(Vol. 100) 645, a learned Single Judge of Karnataka High Court examined the provisions of Section 102 of the Criminal Procedure Code and relying upon the Gauhati High Court's decision, referred to supra, came to hold that the 'seizure' in Section 102 would mean taking actual physical possession of the property and such a prohibitory order to the banker of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused when the police officer reaches the conclusion that the amount in the bank is the outcome of commission of offence by the accused. The Court considered the fact as to how in modern days, commission of white collar crimes and bank frauds are very much on the increase and banking facilities have been extended to the remotest rural areas and, therefore the expression 'property' may not be interpreted in a manner so as to exclude the money in a bank which in turn would have the effect of placing legal hurdles, in the process of investigation into the crimes. According to the learned Judge, such literal interpretation of the expression 'property' could not have been the intent of the framers of the Criminal Procedure Code. In paragraph 11 of the said judgment, the learned Judge referred to the object behind investing the police with powers of seizure. It will be appropriate to extract the same in extenso: It would now be useful to refer to the object behind investing the police with powers of seizure. Seizure and production in court of any property, including those regarding which an offence appears to have been committed or which appears to have been used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account is 'property' within the meaning of Section 102 of the Criminal Procedure Code, which could be seized by prohibiting order. In the aforesaid case, the learned Judge has also noticed the fact that the Judgment of Padmini Jesudurai, J, in 1988 LW(Crl.)106, was upheld by the Division Bench subsequently. 11. In the case of Dr. Gurcharan Singh v. The State of Punjab, 1978(80) Punjab Law Reporter, 514, a Division Bench of the Punjab Haryana High Court differing with the view taken by the Allahabad High Court in AIR 1960 Allahabad 405, came to hold that the bank account would be 'property' and as such would be capable of being seized under Section 102 of the Code of Criminal Procedure. 12. Having considered the divergent views taken by different High Courts with regard to the power of seizure under Section 102 of the Code of Criminal Procedure, and whether the bank account can be held to be 'property' within the meaning of said Section 102(1), we see no justification to give any narrow interpretation to the provisions of the Criminal Procedure Code. It is well known that corruption in public offices has become so rampant that it has become diffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, the order impugned has already been given effect to and the accused has been operating upon his account, and so, we do not interfere with the same. At this stage, it deserves to be noted that the Supreme Court considered a Division Bench decision of the Delhi High Court in the case of Swaran Sabharwal v. Commissioner of Police, 1988 Cri.L.J. 241 (Del). The Division Bench of the Delhi High Court took the view that the suspicion of an offence did not arise on account of discovery of the property (bank account). There were no circumstances attendant upon the bank account or its operation that had led the officer to suspect that some offence had been committed somewhere. The discovery of the bank account was a sequel to the discovery of the commission of the offence. The police suspected that some of the proceeds realized by the sale of official secrets had been passed on to the petitioner by her husband. The Division Bench of the Delhi High Court finally concluded that it was not sufficient to attract 102 of the Code as it could not be said that the bank account had been traced or discovered in circumstances which had made the police aware of the commission of an of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a statement is true . In K.J. Aiyer's 'Manual of Law Terms and Phrases' at page 510 the phrase 'reason to believe' is explained thus: A person is said to have reason to believe a thing if he has sufficient cause to believe that thing but not otherwise . Similarly in Prem's Judicial Dictionary the meaning given to the phrase reason to believe which is found at page 1377 is: A person has reason to believe under Section 26, I. P. C. if he has sufficient cause to believe the thing but not otherwise . From the meanings attributed to the words suspect and reason to believe , it is evident that the initial stage for believing the existence of a certain thing or an alleged fact is suspicion. After suspecting the existence of a thing, condition or a statement of fact, you collect information and then examine that information and come to a final conclusion on the basis of that information that the thing, condition a statement or a fact exists. If I accept the submission of the learned counsel appearing for the petitioner, then it will frustrate the very object with which the PMLA came to be enacted. Any person who indul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of money-laundering activity if such case is made out, by confiscating properties involved in Money-Laundering Act, either during pendency of prosecution or at the conclusion of the trial. Similarly, conjoint reading of Sections 17 and 8 would indicate that its main purpose is to search and seize incriminating material in cases where prosecution is intended and even in cases where it is not immediately intended. Thus, where the prosecution is not immediately intended, compliance with Section 157 of Cr.P.C. or lodgment of the complaint is not mandatory. Under Section 8 various acts undertaken under Sections 5, 17 and 18 with which Adjudicating Authority or the Court is authorized to deal with can be confirmed by the Adjudicating Authority or by the Special Court on conclusion of the trial. 31. In light of the aforementioned scheme of several provisions of P.M.L. Act, the question as to whether the proceedings under Sections 5, 8 and 17 are civil proceedings or criminal is required to be addressed. The argument is that unless a report or the complaint as contemplated under first proviso to Section 5 and also as contemplated in the proviso to sub-section (1) of Section 17 is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners herein are involved in either offence of money-laundering or are connected with such an offence or proceeds of crime or are in possession of such proceeds. Pertinently, in view of Section 65 of P.M.L. Act, the powers to search, seizure, attach, confiscate, investigate and all other proceedings under the Act can be performed with the assistance of the provisions made in the Cr.P.C. The respondents have frozen the accounts of the petitioners. Considering the fact that the Cr.P.C. is applicable as above at this stage, it cannot be said that an act of freezing the account is illegal. As noticed hereinabove, proviso to Section 17(1) indicates that the report under Section 157 of Cr.P.C. may not be necessary and therefore, freezing of accounts under Section 17(1-A) without such report is prima facie permissible. However, in view of the preliminary stage of the proceedings initiated against the petitioners, no final verdict can be pronounced on that aspect. However, in this context, FFR Software Private Limited (supra) explains in detail the authority vested in the Directorate of Enforcement to freeze the properties preceding the provisional attachment under Section 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 in the instant case, the rationale behind such orders being the property would otherwise might change hands frustrating the objectives of the Act. I also find force in the averments of the respondents that the power of the authorities under PMLA to issue such directions is ingrained in the powers of conducting investigation as defined in the PMLA which includes all proceedings under the Act. On the contrary, if the plea of the petitioners in regard to the statutory scheme under the PMLA is accepted, it will cause violence to the spirit and the objects of the Act. 34. Assuming that Sections 5 and 17 can be interpreted as canvassed by the learned counsel for the petitioners, pertinent observations made in FFR Software Private Limited (supra) in Paragraphs-8 9 are thus: 8. It is trite that Article 226 is not meant to short circuit or circumvent statutory procedures. The court must have good and sufficient reasons to bypass the alternative remedies provided by the statute. In the case of Asstt. Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others ( 1985 SCC(1) 260), the Apex court has held that where the statute itself provided the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused, it appears that they are sought to be interrogated to ascertain their complicity in the offence if any. Such action cannot be thwarted at a preliminary stage where only summons have been issued after freezing the accounts of the petitioners. Even if the argument of the 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.. I am also not impressed by the submission of the learned counsel appearing for the petitioner regarding the non-compliance of the provisions of Section 102(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not remain for an indefinite period of time like in the present case. In the present case, the instructions were issued to the bank to freeze the account of the petitioner way back in the month of August 2014. Indisputably, till this date, the authority has not been able to pass any order of provisional attachment under Section 5 of the Act. This would suggest two things : (i) there is no sufficient material collected by the authority so that the authority can record its reasons to believe that if the account is not freezed, then the non freezing of the property would frustrate the proceeding under the PMLA, and (ii) the authority does not intend to file any complaint against such person whose account has been ordered to be freezed. For the aforesaid reasons, although the judgment was reserved CAV, this matter was once again notified on 8th June 2015 only with a view to ascertain from the learned Assistant Solicitor General of India, whether in the mean time the authority had passed any order of provisional attachment under Section 5 of the Act or whether it intended to pass such order in the near future if adequate material has been collected during the course of the investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the PMLA, 2002 to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the PMLA. 10. Section 17 of the PMLA, 2002 reads as under; 17. Search and seizure.-(1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to money-laundering, [or] (iv) is in possession of any property related to crime,] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. [(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty 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-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority.] 11. Thus, the PMLA, 2002, has provided specifically a provision for search and seizure. What is important is section 17(4) of the PMLA, 2002, which provides that the authority freezing any record or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reason to believe (reasons for such believe to be recorded in writing.) No limitation of order of seizure Under sub-section (4) of Section 17 of the Act, within a period of 30 days from seizure or freezing has to file an application requesting for retention of such record or property seized or for continuation of the order of freezing before the Adjudicating Authority. Seizure of the property shall have forthwith to be reported to the officer in Incharge if he is subordinate to the officer of Incharge of the Police Station. _ Shall forthwith report the seizure to the Magistrate having jurisdiction. Under sub-section (2) shall immediately after search and seizure or upon issuance of freezing order forward a copy of the reasons so recorded along with material in his possession to the Adjudicating Authority in a sealed envelope. 17. As such there is no abuse of the power at the end of the authority concerned. In a matter like one on hand, a detailed investigation is necessary. The allegations are of money laundering to the tune of crore of rupees. I am n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 subsection (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 any property is involved in money-laundering, he shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Money Laundering Act was enacted to prevent money-laundering and to provide for the confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. On a plain reading of the aforementioned sections, it is clear that under Section 2 (u) of PMLA any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence is proceeds of crime. 20. Section 3 of the PMLA, prescribes the offence of money laundering and its punishment is prescribed under Section 4 of PMLA. To attract the provisions of Section 3 of PMLA, it is necessary that the person is indulged in the proceeds of crime. Further, in terms of Section 5 of PMLA where the Director or any other officer not below the rank of Deputy Director authorised by the Director, has reason to believe, on the basis of material in his possession that any person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, he may provisionally attach such proceeds of crime based on the said material reasons to believe that are to be given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been served on the petitioner also and there is no dispute that the Deputy Director has the power to order freezing of the properties under Section 17(1)(i)(ii) where it is not practical to seize the same or where he has reason to believe and such belief is to be recorded in writing that the person has committed any act of money laundering or is in possession of any proceeds of crime involved in money laundering . The said power emanates from the provisions of Section 17, which reads thus:- 17. Search and seizure.--(1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person-- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money laundering, or (iii) is in possession of any records relating to money-laundering, [or] [(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (1) shall, immediately after search and seizure [or upon issuance of a freezing order] forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub- section (1) shall be required for search under this sub- section. [(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty 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-section (1) or for continuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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