TMI Blog2021 (6) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... his stage in favour of third party may result in non-availability for attachments and may also jeopardise the ongoing investigation and siphoning off proceeds of crime - 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. 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 satisfaction about the ingredients essential to making the provisional order of attachment must relate to the present time, not to presumptive future. It is not permissible for the designated officer of Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney 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 ₹ 6.189 Crores, situated at Sozeith, Goripora, Narbal, Budgam, of the accused in the aforesaid ECIR and his family members, namely, Sarwa Bano wife of Zahoor Ahmad Shah Watali, Yasir Gaffar Shah Watali son of Zahoor Ahmad Shah Watali and Yameen Zahoor Shah Watali son of Zahoor Ahmad Shah Watali, who also happen to be the Promoter-Directors of the petitioner-Company, was provisionally attached by respondent no. 2 vide Provisional Attachment Order (PAO) no. 04/2019 dated 16.04.2019 which was confirmed by the Adjudicating Authority (PMLA), New Delhi, vide order dated 09.10.2019. Subsequently, further land measuring 05 Kanals and 17.3 Marlas, comprised in different Survey Nos. valuing ₹ 1,47,74,881/- situated at Sozeith, Goripora, Narbal, Budgam, belonging to the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 already been sold to various third parties. However, it is stated that due to administrative delays, the sale deeds favouring the concerned parties could not be registered. The petitioner-Company has placed on record, as annexures to the writ petition, two lists of individuals who have purchased such residential plots/apartments from the petitioner-Company. Excluding the attached land and the land/apartments already sold to various third parties, it is stated that the promoters of the Company still hold about 108 Kanals of land which is in the process of being developed by the petitioner-Company. 9. It is averred that the buyers of the residential plots and apartments from the petitioner-Company approached the Tehsildar concerned, respondent no. 4, for issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahoor 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 specifically stated that during the investigation of the said ECIR, proceeds of crime amounting to ₹ 8.93 Crore received by Zahoor Ahmad Shah Watali were identified. It is further averred in the reply affidavit that during investigation it was noticed that Zahoor Ahmad Shah Watali had purchased parcels of land by piecemeal in the name of his family members from 2004. Accordingly, the properties in the name of Zahoor Ahmad Shah Watali and his family members, equivalent in value to the proceeds of crime, were provisionally attached by PAO Nos. 03/2019 dated 11.03.2019 [this attachment order appears to be concerning an immovable property, namely, L-25/4, Entire Basement and Ground Floor, DLF Phase-II, Gurgaon, Area 210 Sq. Metres, valuing ₹ 1.031, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 submitted that the impugned action of respondent no. 3 clearly offends the constitutionally guaranteed rights of the petitioner-Company and its promoters under Articles 19(1)(g) and 300-A of the Constitution of India and, therefore, renders the same illegal. 17. The learned counsel further submitted that the factual circumstance and foundation on which the impugned action of respondent no. 3, as stated in the impugned communication, was premised, is now non-existent, inasmuch as, the investigation referred to therein, has already been completed and has culminated into filing of a final report/complaint before the Court of Additional Sessions Judge, Patiala House, New Delhi; therefore, the impugned communication is without any basis. 18. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purpose of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that.- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter; he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation by an order in writing provisionally attach such property in the prescribed manner for the given period of time. It is mandatory for the Director or the officer authorised by him not below the rank of Deputy Director making such order to record in writing the reasons for such belief and the order then remains subject to confirmation by the Adjudicating Authority. The provision of law does not envisage issuing any restraints by the designated officer vis- -vis a property about whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttachment, 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 ingredients essential to making the provisional order of attachment must relate to the present time, not to presumptive future. 25. In view of the clear language of the provision of law, I am of the considered view that it is not permissible for the designated officer of Directorate of Enforcement, acting under the provisions of Act, to ask the Tehsildar, Narbal, Budgam, Kashmir, not to issue revenue extracts vis- -vis the properties which, admittedly, have not been attached under Section 5 of the said Act and have, in fact, been left out of attachment. The question of doing so by respondent no. 3, who is neither the Director or an officer of the rank not below the rank of Deputy Director and authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gam, 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 have been filed before the competent court of jurisdiction on 24.08.2020. So, once the final report/complaint has been filed by the Directorate of Enforcement and there being no other attachment order passed by the competent authority relating to any other properties, legally, there should be no impediment in the way of Tehsildar concerned in discharging his official functions in accordance with law in relation to the properties which are not covered by the attachment orders passed by the competent authority. Furthermore, now that the response of respondent no. 3 to respondent no. 4 in consequence of the aforesaid communication dated 25.02.2020, viz the impugned communication dated 18.03.2020, has been ..... 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