9911796707
TMI Blog2021 (6) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999 under the provisions of the Indian Companies Act, 1956, having its registered office at Baba Dharam Dass Complex Fakhr-i-Kashmir Bridge, Barbarshah, Srinagar. Sarwa Begum wife of Zahoor Ahmad Shah Watali, through whom the present writ petition has been filed, is one of its Directors. The petitioner-Company is stated to be engaged in real estate business, buying land, developing it, raising construction of residential colonies and residential apartments thereon and sale thereof. The Company's present business project is stated to be going on at Sozeith, Tehsil Narbal, District Budgam. 4. In 2017, the Enforcement Directorate, respondent no. 2, registered Enforcement Case Information Report, ECIR No. 03/DLZO-II/2017/AD(AK) under the provisions of the Prevention of Money Laundering Act, 2002 (hereinafter, the Act) against Zahoor Ahmad Shah Watali, one of the Promoter Directors of the petitioner-Company. 5. Consequent to the registration of aforesaid ECIR and after seeking information from the concerned revenue authorities about the properties held by Zahoor Ahmad Shah Watali and his family, land measuring 24 Kanals, 11.2 Marlas comprised in different Survey Nos, valuing Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. It is further averred in the petition that the investigation in ECIR No. 03/DLZO-II/2017/AD(AK) is already complete and that statutory complaint/final report thereabout has been filed by respondent no. 2 before the Court of Addl. Sessions Judge, Patiala House, New Delhi. 8. It is stated that the aforesaid properties attached under Section 5 of PMLA, 2002, are not the properties derived from the proceeds of any crime, but have been attached merely being the properties equivalent in value to the alleged proceeds of crime. The petitioner states that the attached land is a part of the estate of the promoters of the petitioner-Company, who cumulatively hold more than 207 Kanals of land acquired and assimilated gradually over the period of last thirty years by them and is being developed by the petitioner-Company under the charter of its incorporation into residential colonies and apartments under the name and style of M/s. Trison City Narbal. It is further stated that out of the said total land holding of more than 207 Kanals, about 97 Kanals have been already developed into residential apartments and individual landholdings and about 65 Kanals out of the said 97 Kanals have alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of respondents 2 and 3, it is stated that ECIR no. ECIR/03/DLZO-II/2017 was recorded on 14.06.2017 consequent upon the registration of an FIR by the National Investigation Agency (NIA), bearing no. RC-10/2017/NIA/DLI dated 30.05.2017 for the commission of offences under Sections 120-B/121/121-A Indian Penal Code read with Sections 13/16/17/18/20/38/39 and 40 of UAPA against one Hafiz Muhammad Saeed and Zahoor Ahmad Shah Watali, the charge sheet dated 18.01.2018 vis-à-vis which is stated to have been filed by the NIA against several persons. It is also stated that subsequently a supplementary charge sheet was also filed by the NIA whereby one Naval Kishore Kapur was also arrayed as an accused. It is averred that the specific allegation against the Zahoor Ahmad Shah Watali was that he was one of the conduits responsible for arranging, raising, receiving and collecting funds domestically and abroad through various illegal channels, including 'hawala', for funding separatist and terrorist activities in the then State of Jammu and Kashmir. Based on the said NIA FIR, it is stated, the Directorate of Enforcement recorded the aforesaid ECIR on 14.06.2017. 13. It is specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5 of the Act. He submitted that it is the admitted case of respondents 2 and 3 that 30 Kanals and 8.5 Marlas of land situated at Sozeith, Goripora, Narbal, Budgam, Kashmir, belonging to the promoters of the petitioner-Company, stand attached by two PAOs bearing nos. 04/2019 dated 16.04.2019 and 10/2019 dated 31.07.2019, confirmed by the Adjudicating Authority by orders dated 09.10.2019 and 10.01.2020, and that there is neither any attachment order passed by the competent authority in relation to rest of the properties lying at Sozeith, Goripora, Narbal, Budgam, Kashmir, belonging to the promoters of the Company, nor is there any specific allegation made vis-à-vis such properties. The learned Senior Counsel submitted that in view of the aforesaid admitted position, there was no reason, cause or justification in law for respondent no. 3 to addressed the impugned communication to respondent no. 4. The learned counsel submitted that the impugned communication, thus, is totally arbitrary and suffers from the vice of being ultra vires the power and authority vested in the competent authorities of the Directorate of Enforcement under Section 5 of the Act. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority vide orders dated 26.08.2019, 09.10.2019 and 10.01.2020. These properties, as mentioned earlier, are situated at, Gurgaon and in Kashmir at Sozeith, Goripora, Narbal, Budgam. In fact, it is also specifically averred that the Enforcement Directorate on 24.08.2020 has filed the Prosecution Complaint against Zahoor Ahmad Shah Watali and the petitioner-Company & others. 20. So, it is in context of the above admitted facts that the limited question mentioned at the outset of this judgment arises for consideration and determination. The answer to the question has to be found in the relevant provision of the, which is Section 5 thereof. 21. First and the foremost, the object of the Act, is to be borne in mind, which is to prevent money laundering. With a view to achieving that object, the law provides to confiscate the property derived from, or involved in, money laundering. To confiscate such property, the Act, provides a procedure under Chapter III, captioned Attachment, Adjudication and Confiscation. The first provision that falls in Chapter III of the Act is Section 5 thereof which reads as under: "5. Attachment of property involved in money laundering.- (1) Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under subsection (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (3) of Section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.-For the purpose of this sub-section, 'person interested', in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority." 22. A bear perusal of sub-section (1) of Section 5 of the Act makes it manifest that if the officer designated in the provision of law has reason to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 5(1) or authorised in accordance with the mandate contained therein. Assistant Director is no body either in terms of the provision of Section 5(1) of the Act or in terms of Rule 5 of the Prevention of Money-laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013, which prescribes the manner of taking possession of immovable property. 24. The provision of law manifestly, without any doubt, mandates that there must be material to found the belief, meaning thereby that such material has to be in existence at the time such belief is entertained and at the time of making the provisional order of attachment. So, for making the order of attachment, there has to be evidence in existence. Conversely, if there is no provisional order of attachment made, it connotes that as at present there is no evidence in existence. The law does not envisage taking such an action on the presumption that in future such reason to believe or evidence/material may come into existence. This tantamount to placing the cart before the horse; and it hardly needs to be emphasised that carts don't draw the horses. The satisfaction about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 18.03.2020 is declared illegal and is quashed, the consequence thereof must follow. The advice and instructions sought by respondent no. 4 vide his communication no. 383/08/GN/19-20 dated 25.02.2020 in unnumbered para 4 thereof related to a period prior to filing of the Investigation Report/Complaint before the Court of law. It be reiterated here that ECIR no. ECIR/03/DLZO-II/2017 was recorded on 14.06.2017; the three provisional attachment orders, as stated by the respondents in their reply, were passed by the competent authority on 11.03.2019, 16.04.2019 and 31.07.2019; these orders were confirmed by the Adjudicating Officer on 20.08.2019, 09.10.2019 and 10.01.2020; the Tehsildar, Narabal, Budgam, sought instructions from Assistant Director, respondent no. 3 vide communication dated 25.02.2020 when the case was, admittedly, under investigation; and the impugned communication is dated 18.03.2020. Obviously, it is a date falling earlier to the filing of the final report/complaint before the court of competent jurisdiction when the case was without doubt under investigation. It may be mentioned here that the final report/complaint by the Enforcement Directorate is stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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