TMI Blog2021 (7) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... tes neither covers the same field nor overlaps against each other. Since SARFAESI Act only protects the interest of secured creditors against other debts and government dues. Whether in the facts and circumstances of the case, the petitioner should be relegated to the cumbersome litigation before the referred statutory body? - HELD THAT:- It is well settled by a catena of judicial pronouncements that the jurisdiction of the High Court under Article 226 of the Constitution of India is broad, plenary, equitable and discretionary one. It is equally settled that the writ jurisdiction of the High Court cannot be completely excluded by statute. However, certain self-imposed limitations are there. To illustrate the High Court should not act as Court of Appeal or entertain disputed question of fact while exercising writ jurisdiction under Article 226. Ordinarily, the High Courts should refrain to exercise jurisdiction under Article 226 if alternative remedy is there to the petitioner. In the case on hand what is noticeable that the statutory authority under Section 5 of the P.M.L.A., 2002 has not acted in accordance with the provisions of the enactment in question rather acted in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the petitioner and respondent No.5 on 05.08.2013 and thereafter on 24.08.2016 vide Annexure-1 and Annexure-2. 2. Thereafter two FIRs were lodged on 13.12.2016. First was Gaya Civil Lines P.S. Case No.339 of 2016 registered under Sections 419/420/467/468/469/471/120B of the Indian Penal Code. The informant Shashi Kumar, the Proprietor of Firm Shiva Agro Industries alleged that he had a bank account, in the Bank of India, G.B. Road Branch, Gaya, opened on 12.11.2016 bearing A/C. No. 447520110000742. Younger brothers of the informant, namely, Shailesh Kumar and Rajnish Kumar, had also separate bank accounts opened on 07.09.2016 in the same branch. On 07.12.2016 the informant inquired from the bank about debit and credit status in the said accounts and it was noticed that huge cash were deposited in the said accounts by some fake persons and money was transferred to some other accounts. It is worth to mention that demonetization was enforced on 08.11.2016. The statement of the bank account enclosed with the FIR would reveal that from 12th of October, 2016 to 18th November, 2016 huge transactions of credit and debit were there. Another FIR was Gaya Civil Lines P.S. Case No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses material in the possession of the authority concerned for such belief and the reason is to be recorded in writing. According to learned counsel the property-in-question was acquired much prior to the alleged act of scheduled offences under PMLA. Hence, those do not come within the mischief of proceeds of crime . As such, the entire exercise of the respondent-authorities suffers from arbitrariness against the mandate of law and as such is violative of the legal right of the petitioner. 7. Mr. Anshay Bahadur Mathur, learned counsel appearing for respondent Nos.1 to 4, does not dispute the factual position that the property in question were acquired by respondent No.5 prior to the date on which the alleged act of money laundering was committed and the said properties were mortgaged with the petitioner bank prior to the alleged date of the act of money laundering or institution of the FIRs or a case by the Enforcement Directorate. However, learned counsel strenuously contends that the property-in-question is covered under the definition of proceeds of crime in Section 2(1)(u) of the PMLA. 8. Mr. Gautam Kejriwal, learned counsel for respondent No.5, goes in line with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of rupees thirty-five lacs fifty-four thousand five hundred eighty-two only and the rest amount of rupees one crore ten lacs sixty-five thousand four hundred eighteen was utilized in the business of M/S. Maa Tara Agency and is not available. 11. From perusal of the impugned order and counter affidavit filed by respondent Nos.1 to 4 as well as the oral stand taken by learned counsel for respondent Nos.1 to 4 it appears that the respondents were of the view that since no tainted property of respondent No.5 was available for attachment the property which was acquired by untainted money could also be attached and, accordingly, it was attached assuming that the case falls within Limb No.II above. 12. In my view, the property derived from legitimate source cannot be attached on the ground that property derived from scheduled offence is not available for attachment. Limb No. II above is confined to value of property derived or obtained from criminal activity and not any property of the person alleged to be involved in money laundering. Otherwise the legislature would not have defined the proceeds of crime , which was attachable under Section 5 of the PMLA. Indisputably, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India, the property of equivalent value held in India or abroad may be attached irrespective of date of purchase. We fully subscribe to the opinion expressed by Delhi High Court. We find that third limb of definition proceeds of crime covers property equivalent to property held or taken outside India, thus date of purchase of property which is equivalent to property held outside India, is irrelevant. Any property irrespective of date of purchase may be attached if property derived or obtained from scheduled offence is held or taken outside India. 32. The moot question arises that whether property of equivalent value may be attached where property derived or obtained from scheduled offence is not held or taken outside India. If any property is permitted or held liable to be attached irrespective of its date of purchase, it would amount to declaring second and third limb of definition of proceeds of crime one and same. As pointed out by counsel for Appellants, the third limb of definition clause was inserted by Act 20 of 2015. The aforesaid 3rd limb has been further amended w.e.f. 19.04.2018 enlarging the scope. The question arises that if phrases value of such prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person whose property is attached. There is no sense on the part of any person to discharge burden qua source of property if any property may be attached, irrespective of its source. 33. As per Section 8(6) of the PMLA, where the Special Court finds that offence of money laundering has not taken place or property is not involved in money laundering, it shall release such property. If contention of Respondent is upheld, there would be no need of recording findings by Special Court with respect to property attached being proceeds of crime, no sooner it is held that offence of money laundering has been committed, then the Special Court would be bound to confiscate every attached property because every property in the hand of a person, who had obtained or derived property from scheduled offence, would be proceeds of crime. 34. We deem it appropriate to examine contention of Respondents from another angle i.e. offence of money laundering as defined under Section 3 of the PMLA. As per Section 3 of the PMLA, any person who has directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is involved in concealment, possession, acquisition or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FIR or ECIR, the property derived from scheduled offence would not be available, however money generated from sale or transfer of said property in the form of cash or any other form of property may be available. The cash or any other form of property movable or immovable, tangible or intangible would be value of property derived from commission of scheduled offence. 16. I adopt the view of the Division Bench of Punjab and Haryana High Court in preference to the single Judge judgment of Delhi High Court in Deputy Director of Enforcement V. Axis Bank and others relied upon by learned counsel for respondent Nos.1 to 4 for the simple reason that the issue directly involved herein was there before the Punjab and Haryana High Court and not before the Delhi High Court. Finally, this Court finds that the phrase value of such property does not mean and include any property which have no link direct or indirect with the property derived or obtained from commission of scheduled offence i.e., the alleged criminal activity. 17. Mr. Sandeep Kumar, learned counsel for the petitioner, next contends that the petitioner being secured creditors in respect to the three immovable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Explanation.- For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code. 19. A conjoint reading of the aforesaid provisions ofSARFAESI Act and Bankruptcy Law makes it clear that the secured creditors have preferential right of realization of their dues against all other debts and government dues. Provisional attachment of the proceeds of crime under Section 5 of the PML Act is not an exercise for recovery of government dues of any nature; rather it is an exercise to seize /confiscate the property acquired by unlawful means of money laundering. Therefore, both the laws SARFAESI and Bankruptcy Act on the one hand; and PML Act on the other; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed limitations are there. To illustrate the High Court should not act as Court of Appeal or entertain disputed question of fact while exercising writ jurisdiction under Article 226. Ordinarily, the High Courts should refrain to exercise jurisdiction under Article 226 if alternative remedy is there to the petitioner. However, in State of U.P. Vs. Mohd. Nooh, reported in AIR 1958 SC 86, a Constitution Bench of the Hon ble Supreme Court observed in the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute. (Halsbury s Laws of England, 3rd Edn., Vol.11, Page 130 and the cases cited there). In the case of C.I.T. Vs. Chhabil Dass Agarwal, reported in (2014)1 SCC 603, the Hon ble Supreme Court observed as follows: 15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Identical provision of seizure or freezing of illegally acquired property under Chapter V-A of the N.D.P.S. Act, 1985 was under consideration before the Hon ble Apex Court in Aslam Mohammad Merchant Vs. Competent Authority, reported in (2008)14 SCC 186, the Hon ble Supreme Court said that for reason to believe there must be direct nexus between the property sought to be forfeited with the income etc. derived by way of contravention of any provisions of the N.D.P.S. Act. For the purpose, there must the material before the authority concerned and such material must have been gathered during investigation carried out in terms of Section 68E or otherwise. Thereafter, issuance of show cause notice is essential so as to fulfill the requirement of natural justice. Such notice should contain the value of the property held by the person concerned. His non-source of income, earning or assets and any other information or material available as a result of the report from any officer making the investigation under Section 68E or otherwise. The judgment in Aslam Mohammad Merchant Case was followed by a Divisional Bench of this Court in L.P.A. No.02 of of 1997 disposed off with conn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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