TMI Blog2021 (2) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only after taking all the submissions of the accused and documents brought on record to establish the sources of his property so attached that the Adjudicating Authority takes a final decision on the same. In paragraph 22, it has been further observed that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PML Act can avail the remedy of appeal under Section 26 of PML Act to the Appellate Tribunal, whereby again the accused person is given ample opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale and supply of chemicals like potassium chloride, potassium nitrite, zinc sulphate, acids, soda ash and such chemicals since several years. It is the case of the petitioner No.1 that earlier in the year 2008-2009, he has supplied about 400 metric tons of potassium chloride (Muriate of Potash) (hereinafter referred to as MoP ) to one M/s. Saraf Impex Pvt. Ltd. at Rajasthan and on demand of the said company and its owners to conceal the true identity of goods as industrial salt with silica gel being MoP, a restricted commodity. 2.2 The petitioner No.1 was purchasing such MoP from various cooperative agencies permitted to sell the same. It then repacked the same in smaller packs of 25 kgs and labeled it as Industrial Salt with Silica Gel which was then supplied to M/s. Saraf Impex Pvt. Ltd. The officers of the Directorate of Revenue, Customs Department had conducted investigations which resulted into an adjudication proceeding before the Commissioner of Customs. The petitioner No.1 was penalised under Section 114 of the Customs Act, 1962 (hereinafter referred to as the 'Act of 1962') against which, the appeal filed by the petitioner No.1 is pending before the CEST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No.21/2002 dated 1.3.2002 as amended from time to time. It is further the case of the respondent No.2 that MoP is a restricted commodity for export in terms of Foreign Trade Policy 2009-2014 and various conditions are laid down for export of MoP vide Notification No.03/2009 dated 27.8.2009 issued by DGFT in exercise of the powers conferred under Foreign Trade (Development and Regulation) Act, 1992. 3.3 The investigation was conducted and upon completion of investigation, a show cause notice dated 14.8.2012 was issued to M/s. Saraf Impex Pvt. Ltd. and others by the Additional Director General, DRI. The noticee as well as the co-noticees were required to show cause as to why penalty should not be imposed on them under the provisions of Sections 114(i) and 114AA of the Act of 1962. It is stated that the petitioner No.1 was also issued a notice. The case was adjudicated by the Commissioner of Customs, Kandla vide Order-in-Original dated 31.12.2013 and the goods valued at ₹ 1,30,08,29,836/- were confiscated by the Adjudicating Authority under section 113(d) and 113(i) of the Act of 1962. The petitioner No.1 was also subjected to penalty as a result of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 authority has retained the documents, namely, saving accounts, investment documents relating to vehicles etc. However, it is on record that no scheduled offence has been committed by the petitioner No.1 or by his family members and the only illegality, the petitioner No.1 has committed is the concealment of the identity and showing the MoP as Industrial Salt with Silica Gel for which, the petitioner No.1 has been penalised and the proceedings under the Act of 1962 have been initiated and appeal is pending before the CESTAT, Ahmedabad. 4.2 Further, the proceedings under challenge are expressly illegal and time-barred inasmuch as, the respondent No.2 authority has not carefully applied the provisions of the PML Act for undertaking such actions and the same is without proper authority of law. It is submitted that in the present case, the sale of MoP took place in the year 2008-2009 to M/s. Saraf Impex Pvt. Ltd. and the present proceedings are being initiated after 12 years and therefore, the proceedings suffers from gross delay and laches on the part of the respondent No.2 authority and the commencement of impugned proceedings under the PML Act, cannot be permitted und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act at New Delhi in the case of Sanjeev Kapoor vs. The Deputy Director, Directorate of Enforcement, Delhi to contend that the Tribunal, has observed that it is settled law that if a particular thing is to be done in a particular manner, it must be done in that way and none other. It has been also observed that sub-section (1) of Section 17 provides that the authorised officer has to record the reason in writing and while recording the reasons, authority concerned shall also record the basis of information which is in his possession, before conducting the search and seizure. It is submitted that in the present case, there is no subjective satisfaction reached by the authorities, which empowers them to retain the properties before initiating the proceedings and therefore, the proceedings are vitiated. 4.6 It is submitted that not a single provision under the PML Act empowers the respondent No.2 authority to initiate the proceedings; however, the proceedings have been initiated only on the basis of the statement and panchnama. Assuming that there is material available with the respondent to initiate the proceedings against the petitioner No.1, but there is no such material availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Mahanivesh Oils Foods Pvt. Ltd. vs. Directorate of Enforcement reported in 2016 (338) ELT 225 (Del.). It is submitted that the Delhi High Court, was examining the issue as to whether the order of provisional attachment can be issued only in respect of property that is in possession of persons accused of a scheduled offence. Vide said judgment, while allowing the writ petition, the Delhi High Court quashed and set aside the order of provisional attachment passed by the Deputy Director, Directorate of Enforcement under Section 5(1) of PML Act. It has been held that the power of provisional attachment are not unbridled and there are several conditions that must be met before any property can be attached or confiscated. It is submitted that while doing so, ingredients of Section 3 has to be satisfied before attachment, retention, seizure or final confiscation under the Act. 4.10 While referring to the contents of the rejoinder, it is submitted that the petitioner No.1 is not even prosecuted under the Act of 1962. While reiterating, it is submitted that the only illegality which was committed by the petitioner No.1 was concealing the identity of the products and earning a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and rules framed thereunder has already been initiated. It is on the basis of the said ECIR, searches were conducted on 22.7.2020 at various locations, including that of the petitioners, as they were one of the main suppliers of MoP to M/s. Saraf Impex Pvt. Ltd. and further investigation in the matter is going on. It is submitted that the issue is arising out of the provisions of the PML Act and that the courts have taken a consistent view that the PML Act is a Code unto itself and there shall not be any interference. 5.1 It is submitted that as per the scheme of the PML Act, scheduled offence is only a triggering point, on the basis whereof, the authorities are at liberty to start the investigation. It is submitted that the provisions of PML Act contemplate the initiation of proceedings on the basis of some information received followed by recording of reasons in writing by the authorised officer to initiate the inquiry. While referring to the scheme of the PML Act, it is submitted that the authorities are not concerned with the accused of the offence, but are concerned with the filing of the scheduled offence which can be under Indian Penal Code, Code of Criminal Procedure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence and the trail of that money; secondly, whoever is dealing with the money and/or claims it to be untainted money, the authorities are well within their right to proceed against such person. It is submitted that the investigation is at the initial stage and at this stage, it is difficult to comprehend that the particular amount is proceeds of crime or not and for which purpose, scrutiny of offence is required. Therefore, it would be appropriate that till the time this exercise is undertaken the person should be prevented from dealing with such money which, the authorities have reason to believe can be proceeds of crime . It is submitted that it may happen that once the investigation is over and the authorities come to the conclusion that what the petitioner No.1 has received was only the commission, but not the proceeds of crime or it was a commission which was generated out of the crime or would fall within the definition of proceeds of crime, then, further steps will be taken either by arraigning the petitioner No.1 as accused by filing the complaint before the competent Magistrate who may or may not take the cognizance. 5.4 It is next submitted that the petition is filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wala vs. State of Gujarat rendered in Special Criminal Application (Quashing) No.2449 of 2017. 5.6 It is next submitted that provisions, namely, Sections 17, 25, 42 of the PML Act provide for an inbuilt mechanism and that it would be impermissible to any party to deviate from the same. Further, the petitioner has not availed of the remedies and in absence of the availment of the remedy, the petition may not be entertained at this stage. Further, various aspects are to be gone into, more particularly, in light of the admitted facts; firstly, that there is a scheduled offence against the entity with which the petitioner was connected and has a financial transaction which has a direct nexus with the scheduled offence; secondly, on the basis of the scheduled offence, an ECIR is registered which is being investigated by the competent officer, adhering to the statutory provisions under the PML Act; and lastly, the entire action is initiated under the provisions of Section 17, which is well within the powers of the authority coupled with the fact that the petitioner is not estopped from using the policies and investments, except the restriction that he may not deal with the same with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the individual properties of the petitioners No.2 to 4 need not be freezed in such manner. 7. In a brief reply, Mr. Devang Vyas, learned Additional Solicitor General of India submitted that it is erroneous to contend that Section 135 does not cover Section 114. A combined reading of Sections 135, 111, 113 of Act of 1962 clearly suggest that it covers Section 113(d) which in turn is also covered by Section 135. The petitioner No.1 was penalised under Section 114 of the Act of 1962 which speaks of penalty for attempting to export goods improperly etc. Section 114 provides that any person who, in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable, for penalty. Section 113 provides for confiscation of goods attempted to be improperly exported etc. and the goods shall be liable to confiscation. Clause (d) of Section 113 provides that any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n observed thus:- .....8[D] The Act is a special Law and a self contained code intended to address the increasing scourge of money laundering and provides for confiscation of property derived from or involved in money laundering. The Act provides a comprehensive scheme for investigation, recording of statements, search and seizure, provisional attachment and its confirmation, confiscation and prosecution. The provisions of the Act [vide Sec. 71] are enacted to have an overriding effect [entrenched by a non-obstante provision], notwithstanding anything inconsistent therewith contained in any other law from the time being in force. .... 10.11 That reference to criminal activity relating to a schedule offence is again a wider connotation and even may extend to a person, who is connected with criminal activity relating to schedule offence but may not be offender of scheduled offence. Thus, money laundering itself is an offence standalone under Section 3 of PML Act having a distinct character, with many facets with wider implications and, therefore, twofold dragnet is laid down by the Legislature by providing a mechanism of punishment as defined under Section 4 for such offend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the sources of his property so attached that the Adjudicating Authority takes a final decision on the same. In paragraph 22, it has been further observed that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PML Act can avail the remedy of appeal under Section 26 of PML Act to the Appellate Tribunal, whereby again the accused person is given ample opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PML Act is in the nature of second appeal. It is also held and observed that it will be open for the party concerned to raise all the contentions available to him before the Adjudicating Authority as regards the freezing of the accounts including, prima facie, non-compliance of Section 17(4) of the PML Act. The co-ordinate bench, has referred to the decision of the Punjab Haryana High Court in the case of Sudeep Kaur Sawhney vs. Union of India Ors. reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any process or activity connected proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. Section 8 provides for the adjudication and the provision relevant for the present purpose read thus:- 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 [or is in possession of proceeds of crime], it may 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, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or 2[property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.] 14. Section 17 deals with search and seizure. Sub-section (1) of Section 17 provides that whether 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, inter alia, has committed any act which constitutes money laundering, then, subject to the rules made in this behalf, he may authorise any officer subordinate to him, inter alia, to seize any record or property found as a result of such search. Sub-section (2) of Section 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall, by an order in writing, confirm the freezing of the property made under Section 17 and record a finding to that effect. 16. Section 26 of the PML Act provides for remedy of appeal to the Appellate Tribunal to an aggrieved person. Any person aggrieved by an order made by the Adjudicating Authority under Section 8, can file an appeal under the aforesaid Section 26 to the Appellate Tribunal and the parties concerned will get an opportunity to put-forth his case. A further appeal is provided under Section 42 before the High Court within 60 days from the date of the communication of the decision or order of the Appellate Tribunal. Therefore, reading the provisions of Section 17 in juxtaposition with the provisions of Section 8 read with further provisions of Sections 26 and 42, an alternative efficacious remedy has been provided to the aggrieved person. The PML Act, therefore, is a Code unto itself. In view of the effective alternative efficacious remedy available to the persons aggrieved so also considering the object of enacting the PML Act and the principle enunciated by this court, this court would be loath to exercise its extra-ordinary power under Article 226 of the Co ..... 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