TMI Blog2014 (10) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of the Act would bring out that if the Enforcement Directorate has reason to believe that the property in possession of a person against whom crime is already registered is acquired as a result of proceeds of crime and he has reason to believe that there is possibility to conceal or transfer or deal with in any manner which may result in frustrating the proceedings relating to confiscation of such proceeds of crime, he can provisionally attach the property. Wide amplitude of powers are vested in the adjudicating authority in dealing with the matter concerning the attachment of properties. A bare look at the provisions of Sections 5 and 8, it cannot be said that Adjudicating Authority is not competent to go into the manner of exercise of power by Enforcement Directorate under Section 5(1). The Adjudicating Authority shall afford due opportunity of hearing to the person concerned. He is mandated to consider all aspects and on duly considering the submissions of the aggrieved person shall record a finding that all or any of the properties shown in the notice issued under Section 8(1) are involved in money-laundering. The petitioners have effective and efficacious statutory r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase agreement with Power Trading Corporation (PTC) in January, 2006 and entered into memorandum of understanding with Government of Odisha. The Government of Odisha promised to provide 42 cusecs of water from river Brahmani. NPPL promised to supply 25% of the power generated to the State of Odisha. Mahanadi Coal Fields Limited issued letter of assurance for supply of 2.404 MTPA of F grade coal. NPPL signed power purchase agreement with GRIDCO, where under GRIDCO agreed to purchase 25% of the power generated by NPPL. 3. On 13.11.2006, advertisement was published on behalf of the Government of India, inviting companies to apply for allotment of coal blocks for captive utilization of power plants. On the same day, NPPL entered into memorandum of understanding with Globeleq Singapore Private Limited. On 23.11.2006, Odisha Government recommended name of NPPL for allocation of coal blocks for its power projects. By order dated 17.01.2008, the Ministry of Coal, Government of India, conveyed decision to allocate the coal blocks in Rampia and Dipside locations. Insofar as Rampia is concerned, petitioner is part of consortium of six companies. On 19.02.2008, joint venture company i.e., Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 3 of the Act, 2002. Enforcement Directorate had reason to believe that the accused are in possession of proceeds of crime amounting to ₹ 186.11 crores in the form of shares, wind mills and lands and these properties are involved in money laundering. Thus, in exercise of power vested in the Enforcement Directorate under Section 5(1) of Act, 2002, order of provisional attachment of assets mentioned therein is passed in proceedings No. ECIR/02/HYZO/2013, dated 22.07.2014. This order of provisional attachment is under challenge in this writ petition. 7. Heard learned senior counsel Sri D.V. Sitarama Murthy for petitioners and standing counsel Sri P.S.P. Suresh Kumar for Enforcement Directorate. 8. Learned senior counsel contended that the provisional attachment is ex facie illegal and in excess of jurisdiction vested in the Joint Director of Enforcement Directorate. Unless the mandate of section 5(1)(b) of Act, is complied, no provisional attachment can be made. Learned senior counsel submitted that as per Section 5(1) authority must have reason to believe and the reason for such belief to be recorded in writing on being satisfied that the person is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even granted any prospecting licence and there was no mining lease agreement executed as on the said date. 11. Learned senior counsel further contended that though the share capital of NPPL was ₹ 20 crores in the year 2008, but the potential value of the company was high because the company secured permissions and licences in due compliance of all statutory requirements. ESSAR Power Limited was looking for a readymade company to venture into power generation and was attracted to NPPL since the company has secured all required formalities which are time consuming and require lot of paper work. Learned senior counsel further contended that even after the sale to ESSAR Power Limited, there was no change in the end user insofar as coal blocks is concerned. 12. Learned senior counsel further contended that Nava Bharat group is well established group. It had six foreign subsidiaries and six Indian subsidiaries. They are executing huge infrastructure and power projects globally and have good reputation and financial credibility with the banks and financial institutions. On account of the arbitrary decision taken by the Enforcement Directorate, the reputation of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following decisions. i) State of H.P. and others v. Gujarat Ambuja Cement Ltd., Anr. AIR 2005 SC 3936 ii) Calcutta Discount Co. Ltd., v. Income Tax Officer, Companies District I, Calcutta Anr. AIR 1961 SC 372 iii) Gujarat Steel Tubes Ltd. Ors. V. Gujarat Steel Tubes Mazdoor Sabha Ors. (1980) 2 SCC 593 On the proposition of effect of orders of Supreme Court on court monitoring, he relied on the following decisions. i) Supreme Court order dated 17.12.2013 in W.P. (Criminal) No. 120 of 2012. ii) Jakia Nasim Ahesan and Anr. v. State of Gujarat and Ors. MANU/SC/1061/2011 iii. Contending that the order of the Supreme Court regarding monitoring of the cases is not Obiter Dicta, he relied on the decision of Arun Kumar Aggarwal v. State of Madhya Pradesh and Ors. MANU/SC/1011/2011 For the proposition that on account of the orders impugned, the reputation of the petitioners has adversely effected, he relied on the decision of State of Bihar v. Lal Krishna Advani Ors. (2003) 8 SCC 361 On the proposition that an order passed in exercise of quasi-judicial power strict compliance of the statutory procedure is mandatory, he relied on the decision of As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olation of the provisions of the Act, has examined the accused, recorded their statements, gone through the voluminous record and having found prima facie that the provisions of Section 3 of the Act are attracted decided to provisionally attach the shares to the value of alleged proceeds of crime. As mandated by Section 5(1), detailed exercise was conducted and having found that the petitioners are in possession of proceeds of crime and there is possibility of concealing the proceeds of crime/transferring/dealing with in any manner to frustrate the proceeding for confiscation the order is made. Enforcement Directorate cannot monitor the day to day functioning of the petitioners and does not have means to monitor sale of shares and other assets. Therefore, it is necessary to attach the shares to the extent of assessment of proceeds of crime. Thus, having satisfied that the ingredients of section 5(1) are attracted, the order of provisional attachment is passed. It is a provisional decision and a full gamut of such decision shall be gone into during the adjudication process under Section 8 of the Act. As mandated by Section 5(2), complaint is filed before the Adjudicating Authority a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers. 2011(3) ALT 443 (D.B.) 21. I have given my anxious consideration to rival submissions. 22. Act, 2002 is brought out with principal object to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering. The object of this enactment is not only to punish the person who receives proceeds of crime after following due procedure, but the assets acquired by utilization of proceeds of crime should also be confiscated. 23. Section 3 of the Act, prescribes the offence of money laundering and Section 4 prescribes punishment for money laundering. To attract the provisions of Section 3, it is necessary that the person indulged in proceeds of crime, which means as defined in section 2(u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property. 24. Once a complaint is received by the Enforcement Directorate that a person is involved in money laundering, the Enforcement Directorate sets in motion the investigation on the allegations of money laundering against the person. Chapter-II of the Act prescribes offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating the proceedings and he must pass orders in writing for such provisional attachment. 28. The provisional attachment decision is a decision based on the understanding of the competent authority on the material available in his possession and it is a tentative decision. Such decision has to be affirmed by the Adjudicating Authority after following due process. Within thirty days from the date of provisional attachment the Enforcement Directorate has to file a complaint before the Adjudicating Authority stating the facts of such attachment. Such provisional attachment is valid only for a period of 180 days. 29. The decision of Enforcement Directorate under Section 5(1) is tentative and can become effective only after an order is passed by the adjudicating authority under Section 8. Provision in Section 5 cannot be seen in isolation, but has to be read with provision in Section 8. 30. The Adjudicating Authority independently considers the issue of such attachment and if he has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The person is entitled to explain the sources of income, earning or assets, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1), (2) and (3); 17; and 18 to comprise an intermeshing raft of provisions. The process of provisional attachment under Section 5; seizure under Section 17(1)(c) or 18(1) are, in the legislative scheme of the Act, intended to empower the appropriate authority to provisionally attach but without the consequence of dispossession from immovable property (under Section 5) or to seize a property (under Sections 17 or 18), on the basis of a unilateral satisfaction of the appropriate authority (if there is reason to believe; such belief to be recorded in writing), that such property constitutes proceeds of crime, in the possession, ownership or control of any person, whether or not accused of an offence under Section 3. 69. At the provisional attachment stage under Section 5(1) or a seizure under Section 17 or 18, the prima facie satisfaction that the property in question constitutes proceeds of crime as defined in the Act, is a satisfaction that the appropriate authority arrives on his own; on the basis of the report as to the scheduled offence forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure, 1973 or a complaint filed by a person authorized to investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature or a case of glaring injustice writ Court can entertain a writ petition. Constitutional Courts have laid down parameters for exercising of such discretion. 35. In Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal, (2014) 1 SCC 603 Supreme Court exhaustively reviewed the precedents on the subject. Supreme Court held as under: 11. Before discussing the fact proposition, we would notice the principle of law as laid down by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. 37. The petitioners have effective and efficacious statutory remedies to prove the nature of acquisition of assets and to ventilate their grievances. Furthermore, at the stage of provisional attachment the person concerned is not dispossessed of the property, but is only prevented from dealing with the property till orders are passed by the adjudicating authority under Section 8(2). Against order of the adjudicating authority under Section 8(2), appeal shall lie to the Appellate Tribunal under Section 26 and further appeal to the High Court under Section 42. The statute has provided enough safeguards and layers of redress mechanism. The writ Court cannot go into the merits of the issue at this stage even before the attachment order has become final, investigation is completed and trial concluded and issue of attachment is considered by Adjudicating Authority, first Appellate Authority and second Appellate Authority. It is premature to go into the validity of attachment order at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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