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TMI Blog2020 (12) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... d Abhishek Bagad, Advocate for M.D. Jidesh Kumar, Advocate ORDER Aravind Kumar, J. 1. These batch of writ petitions have been filed questioning the provisional order of attachment, summons issued, order passed by the adjudicating authority, proceedings initiated, complaint filed before the adjudicating authority, consequential possession notice issued under the Prevention of Money Laundering Act, 2002 (for short 'PML Act'). Hence, for the purposes of convenience, the aforesaid writ petitions are broadly categorized on the basis of prayer sought for in the respective writ petitions: I. Provisional Attachment Order: Sl.No. Case No. 1 W.P.Nos.38642-44/2017 2 W.P.No.36309/2017 3 W.P.No.36310/2017 4 W.P.Nos.23176-77/2017 5 W.P.No.33740/2016 6 W.P.No.14158/2017 7 W.P.No.57756/2016 8 W.P.Nos.46318-323/2017 9 W.P.No.5269/2017 10 W.P.No.19313/2016 11 W.P.No.17894/2015 12 W.P.No.28027/2018 13 W.P.No.48031 & 48531/2017 II. Information sought from Institutions/Bank is under challenge: Sl.No. Case No. 1 W.P.No.6159/2017 2 W.P.No.6173/2017 3 W.P.No.8261/2017 4 W.P.No.4215/2017 5 W.P.No.24480/2018 III. Confirmation O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the charge sheet being scheduled offences under Section 2(1)(y) of PML Act, a prima-facie case of money laundering having been made out, an Enforcement Case Information Report ('ECIR' for short) was registered by the Directorate of Enforcement (for short 'ED'). It is further contended that supplementary charge sheet filed, Mr. Hajee Ameen Basha and three others were added as accused for indulging in underworld activities involving life threats, extortion, murder and supply the money through Hawala channels for criminal activities. 3. It is further contended that second respondent is conferred with the powers under section 5(1) of PML Act read with Rule 3 of Rules to pass provisional attachment order. It is also contended that under section 5(5) of PML Act, a complaint has been filed before the adjudicating authority and same is pending and now adjudicating authority now having issued show cause notice under section 8 of the Act, the petitioners without replying to the same, cannot seek remedy in these writ petitions and as such, the petitions are liable to be dismissed. 4. In W.P. Nos. 38642/2016, 15917/2013 & 15974/2013, 15918/2013 & 15961/2013, 23176-77/2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and can have retrospective effect. 6. By relying upon circular No. 8/2015 issued by the Director of Enforcement, it is contended that Deputy Director is authorized to issue order of provisional attachment of properties and accordingly, provisional orders of attachment have been issued. Contending that Deputy Director is empowered to issue provisional attachment and also file a complaint under Section 5(5) of the Act under authorization issued by the Director (delegation of power) the orders of provisional attachment is sought to be sustained. It is also contended, it would suffice if the authority has recorded in its file the "reasons to believe" that such person/s is/are in possession of proceeds of crime or involved in money laundering, it would meet the requirement of Section 8(1) and it is to be read along with Section 8(2), which only mandates issuance of notice to show cause. Contending that PML Act is a special enactment and would prevail over any other enactment inconsistent therewith and also contending that when both Acts are special Acts, the later Act would prevail, they have sought to repel the contentions raised. The entertainment of "reasonable belief" is suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments of Sri Udaya Holla for Sri Nandish Patil, Sri Arvind Kamath, learned Senior Advocates, Sriyuths P.N. Manmohan, Kiran S. Javali, Chandrashekhara K, R Swaroop Anand, Nagendra Naik, Sachin B.S., Vinay Keerthi, Vijaya Kumar, Manu Kulkarni, Ashwin Kurian, Sanket M Yenagi, Thrimurthy, Muniyappa and Aniyan Joseph for petitioners. Sri K.M. Nataraj, then Additional Solicitor General of India, Sri Prabhuling K Navadgi, then Additional Solicitor General of India, Sri M.B. Nargund, Additional Solicitor General of India, Sriyuths Madhukar Deshpande, Jayakar Shetty, S. Mahesh, S.S. Hiremath, Unnikrishnan M, Jeevan M Neeralgi, P. Karunakar, P. Prasanna Kumar, Ashok M Patil, N Sukumar Jain, Reshma Thammaiah, Jidesh Kumar M.D., T.P. Muthanna, learned Advocates appearing for respondents. 11. It is the contention of Sri P.N. Manmohan, learned Advocate appearing for petitioners in W.P. Nos. 38642/2016, 27705/2017 & 28586-587/2018 that respondents have proceeded to pass the impugned order of attachment on the basis of assumptions and presumptions namely, on the ground that petitioners have invested the amount in purchasing the property as indicated in the impugned order as though it is from p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. He would also contend Section 55 of PML Act deals with definition of 'Contracting State' and section 56 refers to agreement between foreign countries and section 57 deals with letter of request to contracting state in certain cases and reading of these provisions together does not indicate that any offence has been committed by the petitioners at Dubai, which is a condition precedent for invoking proceedings under PML Act as indicated in Section 2(1)(ra) of PML Act. Therefore, very initiation of proceedings is bad in law. 11.2. His next limb of argument is, prior to 2013 amendment, Section 5(a) and Section 2(u) defined proceeds of crime and against whom proceedings can be initiated and it included only a person who was accused of the offence alleged. However, by 2013 amendment, it took away said requirement and the provision included 'any person' and thus, whether a person is accused or otherwise is sufficient for proceeding under the PML Act. The alleged incident having taken place prior to the amendment, the amended provision cannot be made applicable or in other words, petitioners cannot be proceeded for an offence which was not in existence and thereby the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 135/2011 and FIR pertaining to said charge sheet was filed on 01.12.2010 in Crime No. 57/2010 and after investigation, charge sheet came to be filed in July, 2011. Offences alleged against petitioner is under 420 & 506 IPC. Offences that are alleged against petitioner in the scheduled offence pertaining to the period 2007-08. Provisional order of attachment was passed on 25.09.2012; he would contend that allegations against the petitioner for the predicate offence is that he was a broker and was responsible for disbursement of certain compensation to certain people for lands that came to be acquired and agency which was responsible for disbursement of compensation had taken the assistance of the accused, who had felicitated for payment of bribe and in that regard, it has been alleged that petitioner was responsible for cheating certain land owners of compensation. He would contend that scheduled offences alleged against petitioner has been quashed on 03.11.2016 by this court in Crl. P. No. 2313/2016 and when there is no predicate offence pending against petitioner, question of proceedings under PML Act does not arise. He would fairly submit that prosecution has challenged the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that pursuant to impugned notice issued, petitioner had appeared before the adjudicating authority and had filed a detailed reply on 10.12.2012 (Annexure-D), pursuant to which, matter was finally heard and reserved for orders on 03.01.2013 i.e., before Amendment Act 2 of 2013 came into force with effect from 15.02.2013 and the order of confirmation came to be passed by the adjudicating authority after extracting the verbatim language found in the amended Section 8(3) as amended by Act 2 of 2013. He would contend that prior to Amendment Act 2 of 2013 came into force, Section 8(3) as it stood and amended under Act No. 21/2009 with effect from 01.06.2009 where the words "schedule offence before a court" was substituted with the words "offence under this Act" and as such, the proceedings could not have been initiated against petitioners. 12.3. He would contend that entire crux of PML Act would revolve around the authorities exercising jurisdiction by virtue of Section 2(u), which broadly defines "proceeds of crime" as referred to in the penal provision Section 3. He would draw the attention of the court to the said provision pre and post amendment, to contend that that prior to 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e power to confiscate again vested back with the adjudicating authority, but by virtue of 2013 amendment, said power was taken away from the adjudicating authority and same was conferred with the trial courts. Hence, he would contend, trial Court had to simultaneously decide as to whether such person was guilty of the offence of money laundering under Section 3 and as to whether properties that were attached were entitled for confiscation under Section 8(5). He would also contend, two fold criteria for confirmation under Section 8(3) as per 2013 amendment is that firstly, there should exist proceedings for an offence under this Act and secondly, such provisional order of attachment would become final upon order of confiscation being passed by the Special Court. In this background, he would contend that in the instant case, firstly, there was no complaint that was existing against the petitioner for an offence under the Act and secondly, there was no complaint filed under Section 45 against the petitioner, as a result of which, the order of attachment by operation of law as contemplated under Section 5(3) would get extinguished. He would also contend that in case of petitioner, conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 4 of PML Act. In the instant case, he would contend that complaint under Section 45 was filed on 24.3.2014 and thus by operation of law as contemplated under Section 5(3), the provisional order of attachment in the instant case cease to operate. Hence, the consequential notice issued is also bad in law. 13.1. Insofar as W.P. Nos. 4215/2017, 6159/2017, 6173/2017 and 8261/2017 he would contend that PML Act is a complete code by itself. He would also contend that impugned communication issued to Association of Mutual Funds of India-AMFI being a company, is not a person and/or a listed entity as mentioned in Section 54 of PML Act and the said provision enlists "certain officers" who are to assist the authorities in the enforcement of the Act and it makes it clear that only officers who are appointed under the statute and as such, Section 54 has no application. He would also contend that AMFI is also not a "reporting entity" as defined under Section 2(wa) as indicated in Section 54(j) of the PML Act and as such, the purported exercise of jurisdiction by first respondent is illegal and void. 13.2. He would also contend that it is only the Director or any other officer not below the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid date, Section 13(1) of PML Act was included into the schedule and only from that date, it would constitute a crime for the purposes of PML Act and not prior to that and as such, proceedings initiated under the PML Act prior to 01.06.2009 is void ab initio. He would that the FIRs came to be filed subsequent to 01.06.2009 and as such, the proceedings initiated under the PML Act are bad in law. (b) He would also contend that under the unamended Section 8 of PML Act, confiscation can take place only if the guilt of the accused has been proved before competent court and post 2013 amendment, the Special court has been given the power to confiscate the property which has been attached. He would further contend that in Section 2(y) "schedule offence" has been defined and under clause (ii) the monetary limit had been fixed at Rs. 30 lakhs till 14.05.2015 and from 15.05.2015 it has been fixed at Rs. 1 crore or more. He would submit that Clause (ii) was substituted by Act 29 of 2009 with effect from 1.06.2009 and after Act, 2 of 2013 the schedule as indicated in clause (i), (ii) and (iii) of Section 2(y) has substantially changed and that it will have to be examined on case to cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re attempting to make non-existing offence as a crime on the date he did not exist. (d) He would contend that respondents wants the petitioner to go before the authority and submit that there is no authority provided under section 8 and there is an appeal under section 26 of the Act and thereafter to the High Court. All these proceedings post 15.02.2016 will be restricted or limited only to the provisional attachment. Satisfaction of the authority to the existence of some material for him to derive satisfaction that there is a crime and these are proceedings of crime, he cannot do anything more than that. Then, the question that would arise would be which is the law to be applied? The law to be applied as on that date when the crime allegedly took place as set out in the final report under Section 173 or ECIR registered by the Enforcement Directorate based on report under Section 173 or the law on the date the proceedings are going on under Section 8 before the adjudicating authority or law when the appeal is pending before appellate authority under Section 26. (e) He would submit that proceedings initiated prior to 15.02.2016 which provided for confiscation only af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1990) 4 SCC 76: NIRANJAN SINGH KARAM SINGH PUNJABI vs. JITENDRA BHIMRAJ BIJJAYA AND OTHERS. vi) (1996) 5 SCC 1: BIJAYA KUMAR AGARWALA vs. STATE OF ORISSA. vii) (1986) 4 SCC 746: STATE OF KERALA vs. MATHAI VERGHESE AND OTHERS. viii) (2013) 4 SCC 540: TEJ PRAKASH PATHAK AND OTHERS vs. RAJASTHAN HIGH COURT AND OTHERS. ix) (2013) 5 SCC 111: STATE OF ANDHRA PRADESH AND OTHERS vs. CH. GANDHI. x) (2014) 3 SCC 151: VARINDER SINGH vs. STATE OF PUNJAB AND ANOTHER. xi) (2000) 2 SCC 536: KOLHAPUR CANESUGAR WORKS LTD. AND ANOTHER vs. UNION OF INDIA AND OTHERS. xii) (2016) 1 HCC (DEL) 265: MAHANIVESH OILS AND FOODS PRIVATE LIMITED vs. DIRECTORATE OF ENFORCEMENT. xiii) CRL. O.P. NOS. 10497 AND 10500 OF 2017: SHRI AJAY KUMAR GUPTA AND OTHERS vs. ADJUDICATING AUTHORITY (PMLA) AND OTHERS. xiv) (1998) 8 SCC 1: WHIRLPOOL CORPORATION vs. REGISTRAR OF TRADE MARKS, MUMBAI AND OTHERS. xv) SLP (CRIMINAL) DIARY NO. 4968/2018: ADJUDICATING AUTHORITY (PMLA) AND OTHERS vs. AJAY KUMAR GUPTA AND OTHERS. xvi) CRL. R.P. NO. 432/2013 C/W CRL. P. NO. 2313/2016, DECIDED ON 03.11.2016: SRI KATTA SUBRAMANYA NAIDU vs. STATE OF KARNAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd summoning of accused at the stage of adjudication of provisional attachment does not arise and hence, the impugned notice is liable to be quashed. He would also submit Section 8 provides for enquiry and under Section 8, the adjudicating authority decides that property is involved in money laundering and thereafter 90 days time is allowed for investigation and criminal case can be registered if required only after decision of the adjudicating authority. He has relied upon the following judgment in support of his contentions: i) 2011(5) KCCR 4080-Smt. P. VIJAYALAKSHMI vs. DEPUTY DIRECTOR, ENFORCEMENT DIRECTORATE AND ANOTHER. 17. Sri Nagendra Naik, learned counsel appearing along with Sri Muniyappa in W.P. No. 24480/2018 would contend that Section 50 of PML Act does not authorize the Assistant Director to freeze the Bank account. He would contend that proviso to sub-section (5) prohibits the authorities mentioned thereunder from impounding any records without recording reasons for doing so, by referring to Rule 6 of the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the manner of forwarding the reasons and material to the Adjudicating Authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence punishable under Section 13(1)(e) and 13(2) of PC Act alleging that he had amassed wealth disproportionate to his known source of income. It is also contended that house has been constructed and the predicate offence was not a schedule offence under the PML Act at the time of registration of FIR and Section 13 of PC Act was inserted a schedule offence with effect from 01.06.2009 and as such, the proceedings initiated against the petitioner is liable to be quashed. Hence, on these grounds, he has prayed for both the petitions being allowed. In support of his submissions, he has relied upon the judgment of Hon'ble Apex Court in the matter of KALPANATH RAY vs. STATE (THROUGH CBI) reported in (1997)8 SCC 732. 20. Sri B.S. Sachin, learned counsel appearing for petitioner in W.P. No. 57756/2016 has sought for quashing of the provisional order of attachment dated 30.06.2016 contending inter alia that said order has been passed on assumptions and presumptions and the petitioner has sold the property bearing Sy. No. 40/5(P) and 40/8 of Idya village, Mangalore Taluk measuring 19 cents which is a non-agricultural property in the year 2012 and the mineral water plant is not sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the respondents would contend that PML Act is targeted at money or source of proceeds of crime, which a person derives from a particular offence. It is contended that such person might have acquired some assets through tainted means or illegally and when such person comes before the society and claims that said money was acquired by proper means, then he is guilty of this offence. He would submit that we are not at all concerned about other offence/s. A person might have committed it long back. Incorporation of certain offences in the schedule is to bring it within the net of PML Act i.e., proceeds of that crime is also brought within the purview of this Act. Unless it is brought within the schedule, proceeds of crime even by assuming that he has acquired some wealth by wrong means, then, he is not under the provisions of PML Act. He would submit that at different points of time, by amendment, scheduled offences have been incorporated so that proceeds of crime arising out of that particular offence also is an offence under this Act. Hence, he brings to the notice of the court Section 3 to contend that offence under the PML Act is connected with the proceeds of the crime and not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rime if knowingly acquired or in possession or acquisition, it would become crime and projecting any activity connected to it, is an offence under Section 3 of PML Act. That is how Section 3 is to be read. 24.2. He would submit that any schedule offence which may be under the IPC or any notified offence, then such person will be tried independently for the offence that was existing at that point of time. By different enactments, what is targeted is proceeds of activities that such person may acquire some property and if it is projected as untainted or knowingly in possession of such property and attempt is made to bring it or thrust into the main stream, entire focus would be that by virtue of such activity, then such person will be guilty of the offence specified under Section 3 and liable for punishment under Section 4. 24.3. He would submit that under the provisions of the PML Act, a person who is found guilty of the offence, the property will be confiscated to the Government and it becomes property of the Government. He would contend for invoking Section 5 of the PML Act, such prescribed authority will have to meet with three (3) requirements namely, (i) he has reason to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed in Section 8(4) post 2013 amendment. Therefore, language of the provision as found in Section 8(4) 'shall forthwith take possession of attached property' came to be amended by inserting the expression 'possession of the property attached under Section 5 or frozen under sub-section (1-A) of Section 17, in such manner as may be prescribed." The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authorities) Rules, 2013, having come into force w.e.f. 19.08.2013 would govern the issue relating to the manner in which possession of such movable or immovable properties is to be taken, vide Rule 4 and 5 respectively. Hence, he would contend that the contentions raised by the learned Advocates appearing for the petitioners that taking possession would only mean constructive possession, would not hold water and the prescription in which possession of the property has to be taken as indicated in sub-section (4) of Section 8, has resulted in 2013 Rules being framed and if the intention of the parliament was only to include constructive possession and not physical possession, they would have said so. Hence, he would c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved to be involved in money laundering, such authority or court can draw presumption, shall otherwise proved or rebutted. To illustrate this issue, he would contend that one transaction when it had taken place in 2010 or 2012 and out of the proceeds, such person had acquired some property and there is a connection with the proceeds of crime, it can be presumed by the authority or court, as the case may be that remaining transactions form part of such interconnected transactions. In other words, he would submit the person who claims that such transactions are not interconnected is required to prove the said fact. He would also draw the attention of the court to Section 24 of PML Act, which places the burden of proof on the person charged with the offence of money laundering to prove that the money is not relatable to proceeds of crime and same is not used for money laundering. He would submit that unless the contrary is proved, presumption is that such proceeds of crime are involved in money laundering. 24.7. He would contend that under Section 26 of PML Act first appeal lies to the appellate tribunal and under Section 42 an appeal lies to the High Court against the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the PML Act. 24.10. He would further submit that reading of Section 60 of PML Act would indicate that whatever orders that are passed under the PML Act, would be applicable in a contracting state or in India. He would submit by interpreting Chapter IX that it cannot be said that order of attachment is vitiated though reciprocal agreement provides otherwise. He would submit that where an order of attachment has been passed and it is to be executed in a contracting state by virtue of reciprocal agreement with another country, Section 60 would come to the assistance and in such circumstances, a letter of request to a court or an authority in the contracting state for execution of such order will be issued. 24.11. He would submit that these are the salient features of the PML Act under which authorities pass order. There are three streams of proceedings namely, (1) scheduled offence that will be independently tried i.e., independent offence; (2) offence under the Act i.e., which is Money Laundering is totally a standalone offence; and, (3) in aid of the proceedings under Sections 3 & 4 read with offence indicated in Section 44 and all these ultimately depend upon the result of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact being conducting the proceedings. He would submit that taking possession would mean physical possession and the authorities have recourse to Rule 3 and 5 of Rules 2013 and as such the petitioners are not entitled to the reliefs sought for. 24.16. He would submit that arguments of Sri. Nagendra Naik canvassed with regard to symbolic possession in W.P. No. 20307/2017 by referring to KAMARUNNISA's case would be inapplicable to the facts on hand, inasmuch as, there are two parts in the said judgment namely, it was rendered on 11.07.2012 in the background of 2009 amendment and even otherwise, said judgment has been stayed by the Division Bench. He would also submit that except physical possession aspect rendered thereunder, entire judgment is against the contentions raised by him. 24.17. He would also refer to the arguments canvassed by Sri. Manmohan, learned counsel appearing for petitioners with reference to cross border implication to contend Chapter IX is only an enabling provision namely, it would enable to execute the order of attachment and connected issues by entering into reciprocal arrangement with any other country and it would not take away the effect of authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners are bound to disclose the amount which has been withdrawn by them. 24.19. He would also contend what is challenged is either provisional order or confirmation order or consequential notice. Hence, we are not concerned about prosecution of the case. Since Sections 44, 45 & 46 falling under Chapter VII deals with criminal proceedings, whereas, the order of attachment and its confirmation thereof would fall under Chapter III and under Chapter III, limited examination is to be made. He would submit that only with the intention of protecting the property as otherwise, it may frustrate the proceedings, the safeguard is provided under Chapter III. The authorities who act under Chapter III are only statutory trustees who would preserve the property. By drawing the attention of the court to Section 8(3), he would submit that investigation is not a condition precedent for purposes of criminal prosecution. The authorities are empowered to file a criminal case or leave at that. He would refer to Section 8(5) to contend that there would be no necessity for separate confiscation order being passed and on conclusion of a trial of an offence under the Act, if the Special court finds that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y vs. CENTRAL BUREAU OF INVESTIGATION. vi) (1986) 2 SCC 237: M/S. GIRDHARI LAL AND SONS vs. BALBIR NATH MATHUR AND OTHERS. vii) (2015) 16 SCC 1: GAUTAM KUNDU vs. DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY-LAUNDERING ACT) GOVERNMENT OF INDIA THROUGH MANOJ KUMAR, ASSISTANT DIRECTOR, EASTERN REGION. viii) (1996) 4 SCC 622: DELHI DEVELOPMENT AUTHORITY vs. SKIPPER CONSTRUCTION CO. (P.) LTD. AND ANOTHER. ix) 2014 AIR SCW 2550: RAM BUILDERS vs. STATE OF M.P. AND OTHERS. x) SLP (CRIMINAL) DIARY NO. 34143/2017: JOIN T DIRECTOR, DIRECTORATE OF ENFORCEMENT AND OTHERS vs. TECH MAHINDRA LTD. AND ANOTHER. xi) W.P. NO. 17525/2014 DECIDED ON 22.12.2014: TECH MAHINDRA LIMITED vs. JOINT DIRECTOR. xii) (2007) 5 SCC 211: PUNE MUNICIPAL CORPN. vs. STATE OF MAHARASHTRA AND OTHERS. xiii) M.P. NO. 1 OF 2012 IN W.A. 2137/2012 AND M.P. NO. 2 OF 2012 IN W.A. 2138 TO 2140/2012, DECIDED ON 11.07.2012: THE DEPUTY DIRECTOR AND OTHERS vs. A. KAMARUNNISA GHORI AND OTHERS. xiv) CRL. P. NO. 432/2013 C/W CRL. P. NO. 2313/2016 DECIDED ON 03.11.2016: SRI. KATTA SUBRANANYA NAIDU AND ANOTHER vs. STATE OF KARNATAKA. xv) (2003) 3 SCC 57: C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Additional Solicitor General of India appearing for respondents by reiterating the contentions raised by the learned Advocates appearing on behalf of the Revenue, would contend even if proceedings relating to predicate offence is closed, the proceedings under the PML Act would not come to an end. He would also contend that constitutional validity of Section 8(4) has been challenged before the Madras High Court in W.P. No. 3176/2020 and same has been negatived by the Division Bench by order dated 17.02.2020 and as such, he prays for rejecting similar contention raised with regard to constitutional validity of Section 8(4) of PML Act. He would further contend the writ petitions filed by the Directors and ex-employees of Devas Multimedia Limited namely, W.P. Nos. 6159/2017, 6173/2017, 8261/2017 & 4215/2017 are premature since only information has been sought from the Bank. He would contend that power to seek such information by the authorities is traceable under Sections 54 and 55 of the Act and as such, said writ petitions are liable to be dismissed as not maintainable. In support of his submissions, he has relied upon the following judgments: i) AIR 1952 SC 324-SHAM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receives something without knowing the fact that what he has received is proceeds of crime, the very fact that it is in my possession is sufficient to constitute an offence under Section 3 and requirement of scheduled offence has been decoupled both under Section 5 as well as under Section 8. 28.1. He would also contend that additional feature under Section 8 is that there is added safeguard that has now been introduced for confirmation of provisional order of attachment and there has to be necessarily a proceeding for the offence under the Act subsisting on the date of confirmation. Enactment of Prevention of Money Laundering Act would not fall within the fiscal statute, it would definitely be a penal statute. The colour of PML Act being a fiscal statute could have been attributed to it prior to 2013 amendment since it had the attributes of a fiscal statute. Subsequent to 2013 amendment, there has been a conscious effort to ensure that procedure for attachment is directly linked to commencement of proceedings for an offence of money laundering within the scope of the enactment. A plain reading of Section 8(3)(a) prior to 2018 amendment would indicate that complaint under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable. 28.3. He would submit that provisional order of attachment was passed on 25.09.2012 under Section 5(1), in pursuance of the same, complaint came to be filed on 5.10.2012 in terms of Section 5(5) before the adjudicating authority and on 18.10.2012 notice under Section 8(1) was issued by the adjudicating authority, for which petitioners have filed reply on 10.12.2012 before the adjudicating authority. Subsequently, order of confirmation in terms of Section 8(3) as amended by 2013 amendment was passed by the adjudicating authority on 22.02.2013 and immediately petitioner has preferred an appeal in No. 444/2013 wherein petitioner has taken a specific contention that order of adjudicating authority by operation of law has lapsed because there is no proceedings for an offence under the Act amongst other contentions. He would submit that on issuance of impugned notice on 28.03.2013 under Section 8(4), writ petition has been filed on 03.04.2013 and interim relief was granted. It is thereafter, the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Conferred by the Adjudicating Authority) Rules, 2013 which has come into force with effect from 19.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under PML Act are liable to be quashed? (ii) Whether the proceedings initiated under the PML Act by the authorities would be bad in law or without jurisdiction for want of existence of predicate offence or offence prescribed under the Schedule to the PML Act not being in existence on the date of initiation of proceedings under PML Act? OR Whether the offence of money laundering under Section 3 of PML Act is a stand alone offence? (iii) Whether the proceedings initiated by the authorities under PML Act and passing orders of provisional attachment and its confirmation thereof is liable to be set aside or quashed on account of any procedural lapse prescribed under Sections 5 and 8 of PML Act? (iv) Whether the notice/s issued by the authorities to take possession of the property on provisional order of attachment being confirmed is liable to be set aside? (v) Whether writ petitions are liable to be dismissed on the ground of petitioners having not availed the alternate remedy of appeal available under Section 25 and under Section 42 of PML Act? (vi) What order? 31. In order to examine and adjudicate the points formulated herein above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em. In effect, it sought to deny the banking system to those involved in money laundering by the application of the four basic principles namely, identifying the customer, compliance with the laws, co-operation with law enforcement agencies and adherence to the Statement. 35. The Financial Action Task Force (FATF) is an inter-Governmental Body established at G-7 Summit in Paris in 1989 with the objective to set standards and promote effective implementation of legal, regulatory and operational measures to combat money laundering and terrorist financing and other related threats to the integrity of the International Financial System. In 1990 a report was issued containing set of 40 recommendations to fight against money laundering. In October, 2001, 8 special recommendations came to be issued to deal with the issue of terrorist financing and during October, 2004, 9 special recommendations was published for further strengthening the agreed international standards for combating money laundering and terrorist financing. 36. The initiatives under the aegis of the United Nations are: (i) United Nations Political Declaration and Action Plan against Money-Laundering 1988; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to 16th July, 1989 to examine the problem of money laundering has made forty recommendations, which provide the foundation material for comprehensive legislation to combat the problem of money laundering. The recommendations were classified under various heads. Some of the important heads are--- (i) Declaration of laundering of monies carried through serious crimes a criminal offence; (ii) To work out modalities of disclosure by financial institutions regarding reportable transactions; (iii) Confiscation of the proceeds of crime; (iv) Declaring money laundering to be an extraditable offence; and (v) Promoting international cooperation in investigation of money-laundering. (d) The Political Declaration and Global Programme of Action adopted by United Nations General Assembly by its Resolution No. S-17/2 of 23rd February, 1990, inter alia, calls upon the member States to develop mechanism to prevent financial institutions from being used for laundering of drug related money and enactment of legislation to prevent such laundering. (e) The United Nations in the Special Session on countering World Drug Problem Together concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Amalgamated Collieries (1940) 3 All E.R. 549) referred to in Pye vs. Minister for Lands for N.S.W.- (1954)3 All. E.R. 514) wherein it was held that if the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid such a construction which would reduce the legislation to futility, and should rather accept the bolder construction, based on the view the parliament would legislate only for the purpose of bringing about an effective result. 44. Time and again, Hon'ble Apex Court in catena of judgments has held that whenever it is possible to do so, it must be done to construe the provisions which appear to conflict so that they harmonise. The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute. 45. Hon'ble Apex Court in SHASHIKANT SINGH vs. TARAKESHWAR SINGH & ANOTHER reported in (2002)5 SCC 738 has held that it is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed. It has been further held: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sustain validity of impugned law to the extent possible and it can strike down the enactment only when it is impossible to sustain it; (b) the court should not approach the enactment with a view to pick up holes or to search for defects of drafting or for the language employed; (c) the court should consider that the Act made by the legislature represents the will of the people and that cannot be lightly interfered with; (d) the court should strike down the Act only when the unconstitutionality is plainly and clearly established; (e) the court must recognize the fundamental nature and importance of legislative process and accord due regard and deference to it. 47. In R.S. RAGHUNATH vs. STATE OF KARNATAKA AND ANOTHER reported in AIR 1992 SC 81 it has been observed by Hon'ble Apex Court: 12........ "The court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law, and the setting in which clause to be interpreted occurs.".... 48. As noticed hereinabove, the constitutional validity of sub-section (4) of Section 8 of PML Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall-- (a) continue during the pendency of the proceedings relating to any scheduled offence before a court; and (b) become final after the guilt of the person is proved in the trial Court and order of such trial court becomes final. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the attached property. (5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under Sub-section (3) and net income, if any, shall cease to have effect. (6) Where the attachment of any property or retention of the seized property or rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall-- (a) continue during the pendency of the proceedings relating to any scheduled offence before a court; and (b) become final after the guilt of the person is proved in the trial Court and order of such trial court becomes final. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the attached property. (5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under Sub-section (3) and net income, if any, shall cease to have effect. (6) Where the attachment of any property or retention of the seized property or record becomes final under clause (b) Sub-section (3), the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating such property. Section 8. Adjudication (1) On recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings relating to any offence under this Act before a Court or under the corresponding Law of any other country before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed under sub-section (5) or Sub-section (7) of Section 8 or Section 58B or sub-Section (2A) of Section 60 by the Adjudicating Authority. (4) Where the provisional order of attachment made under sub-section (1) of section 5 had been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under Section 5 or frozen under sub-section (1A) of Section 17, in such manner as may be prescribed. Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of Section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: PROVIDED that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money- laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property or record shall-- (a) continue during investigation for a period not exceeding ninety days or the pendency of the proceedings relating to any offence under this Act before a court or under a corresponding Law of any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantifiable loss as a result of the offence of money-laundering: PROVIDED that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money-laundering; PROVIDED FURTHER that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed." 49. A plain reading of sub-section (4) of Section 8 would indicate that where the provisional order of attachment is made under sub-section (1) of Section 5 has been confirmed under sub-section (3), the Director or any other officer authorized by the Director is empowered to take possession of the property so attached forthwith. By Act, 2 of 2013 after the words "shall forthwith take the", the words "possession of the attached property under Section 5 or frozen under sub-section (1-A) of Section 17, in such manner as may be prescribed" came to be substituted. The proviso thereto also came to be added which would indicate that if it is not possible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the circumstances warrant. 52. From yet another angle, the challenge to the validity of sub-section (4) of Section 8 ought to fail for the reasons morefully indicated herein below: 53. On confirmation of an order of provisional attachment under Section 8(4) of PML Act, the authorities specified thereunder would be empowered to take possession of the property so attached. If the Special court arrives at a conclusion after trial, relating to an offence under the Act that offence of money laundering has been committed, it can order for confiscating such property involved in money laundering or which has been used for money laundering. Under sub-section (6) of Section 8, if the Special court after trial finds that offence of money laundering has not taken place or the property is not involved in money laundering, it can order for release of such property to the person so entitled to receive it. 54. Section 8 as amended by the Amendment Act 2 of 2013 cannot be said to be arbitrary or violative of fundamental right of a person, even if the proceedings are continued for trial of scheduled offence resulting in acquittal and the alleged proceeds of crime pertained to that scheduled c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the enjoyment of the property. However, taking physical possession of such property is by the prescribed mode namely, as prescribed under Rule 5 of Possession Rules, 2013. Hence, this court is of the considered view that judgment of KAMARUNNISA's case would have no application to the present scenario by virtue of the Amendment Act i.e., Act 2 of 2013 and also having regard to the Possession Rules, 2013. 56. It can be further noticed that under sub-section (5) of Section 20, it enables the special court to release all the property other than the property involved in money laundering to the person from whom such property was seized or the persons entitled to receive it, after passing the order of confiscation under sub-section (5) or sub-section (7) of Section 8. In other words, the special court would adjudicate as to whether the property which has been provisionally attached and same having been confirmed and arrived at a conclusion that such property was not involved in money laundering is to be released or retained. 57. A conspectus reading of sub-sections (3), (4), (5), (6) of Section 8 along with Sections 20 and 21 of the PML Act and Rule 5 of Possession Rules 2013, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved if the economic offenders who are ruining the economy of the State are not brought to book and the cause of the community deserves equal treatment at the hands of the court in the discharge of its judicial function. The community or the State is not a persona-non-grata whose cause may be treated with disdain. 59. PML Act was brought to prevent money laundering and confiscation of property derived from or involved in money laundering. The statement of objects and reasons of the PML Act would clearly indicate that PML Act is a complete code in itself, clearly defining the offence, the Scheme of attachment of properties which are involved in the offence of money laundering and the hierarchy of authorities before whom the matters would be taken up. The PML Act read as a whole would indicate that same was brought to ensure that proceeds of crime are attached and offenders who participate and assist in the commission of crime do not enjoy the benefits of the property which is relatable to the crime. The PML Act envisages attachment of all properties involved in the offence of money laundering and the proceeds of such crime would also come within the sweep of the PML Act. 60. The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filament of reasoning has to rest in favour of confiscation and not against it. Therefore, we are of the considered view that the provision does not violate any constitutional assurance." 62. By incorporating Article 300A to the Constitution by 44th Amendment Act, 1978, it has resulted in: (1) the right to hold property to be a fundamental right; and (2) it has been left to the legislature to deprive a person of his property by the authority of law. The deprivation of property may take place in various types such as confiscation or revocation of a proprietary right granted by a private proprietor or seizure of goods or immovable property from the possession of an individual or assumption of control of business. The expression "save by authority of law" would indicate that executive cannot deprive a person of his property without specific legal authority. If the State sought to acquire the property of an individual it could do only by making a law, and on payment of amount by way of compensation for such expropriation. Thus, in effect it would clearly indicate that no person can be deprived of his property, save by authority of law. In other words, if the property belonging to a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence specified under the Schedule not being in existence or in other words, even though FIR is not registered for the offences specified in the schedule to the PML Act, against such person who is facing the proceedings under the PML Act? Point Nos. (ii) & (iii) are interlinked. Hence, they are taken up together for consideration, adjudication and being answered, since any opinion expressed on either of them is likely to overlap. 66. Before embarking upon the journey of addressing these two points, it would be apt and appropriate to notice the statutory provisions which would reflect on the findings that would be recorded by this Court. Hence, the relevant provisions which are pressed into service and which are likely to be noticed by this court while adjudicating these two points, namely, Sections 2(na), 2(p), 2(ra), 2(u), 2(y), 2(wa), 3, 4, 5 together with corresponding amendments brought about have been tabulated herein below. Act, 2002 Section 2 read as: Amendment by Act 20 of 2005, Section 2 read as: Amendment by Act 21 of 2009, Section 2 read as: Amendment by Act 2 of 2013, Section 2 read as: Finance Act, 2016 (28 of 2016), Section 2 read as: Latest Amendment Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-Laundering (Amendment) Act, 2009 (ra) "offence of cross border implications" means- (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person (transfers in any manner) the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India. Explanation: Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-Laundering (Amendment) Act, 2009 (ra) "offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty (u) "proceeds of crime" means any 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 (u) "proceeds of crime" means any 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. (u) "proceeds of crime" means any 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 or where such property is taken or held outside the country, then the property equivalent in value held within the country. (u) "proceeds of crime" means any 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 or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. (y) "schedule offence" means- (i) the offences specified under Part A of the Schedule; or (ii) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from 01.06.2009 by Act 21 of 2009 and as such the offences which had occurred prior to 01.06.2009 cannot be brought under the sweep of the PML Act or it cannot be made applicable retrospectively. It has been further contended that for invoking the provisions of PML Act, a person must have committed a schedule offence; there must be proceeds of crime; either accused or a third party must be in possession of such proceeds of crime; must be projecting that money or property as untainted; and there must be reasonable belief or apprehension in the mind of the authority that such property will be concealed, transferred or dealt with, resulting in frustrating the confiscation proceedings and only when these ingredients are present, the proceedings under the PML Act can continue and not otherwise. 68. The PML Act is a special enactment having been enacted to deal with ever increasing menace of money laundering. The provisions of the PML Act have over-riding effect over provisions in other statutes or in other words, the provisions of PML Act prevail over anything inconsistent contained in any other law. It is trite law that when two Acts are Special Acts, in such an event it is the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of provisions of penal nature with retrospective effect in the facts and circumstances of the case and absence of any ingredients to bring the alleged transaction about subject property within the definition of 'criminal proceeds', property' and 'value of the property', etc. a complete answer is given by a Division Bench of the Andhra Pradesh High Court in the case of B. Rama Raju. 11. In view of the above, I am in complete agreement with the conclusions drawn by the Division Bench of Andhra Pradesh High Court in the case of B. Rama Raju [supra] whereby the contention that the definition of "proceeds of crime" [Section 2(1)(u)] is too broad and is therefore arbitrary and invalid since it subjects even property acquired, derived or in the possession of a person not accused, connected or associated in any manner with a crime and thus places innocent persons in jeopardy, does not merit acceptance." 72. Section 2(p) defines "money laundering" and it has the same meaning as assigned to it in Section 3. A plain reading of Section 3 of PML Act would indicate that whosoever directly or indirectly attempts to indulge or knowingly assists or knowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erever located. Section 2(u), therefore, does not envisage either mens rea or knowledge that the property is a result of criminal activity. If any property, which includes value of the property, is "proceeds of crime" then any transfer in terms of Section 2(za) requires examination to verify as to whether it is by way of a money-laundering operation involving the process of placement, layering or integration. Such property could be subjected to attachment and confiscation. The Section, however, does not presuppose knowledge of the proceeds being of criminal activity. Properties apart from the "proceeds of crime" are not liable to attachment, neither is it included in the ambit of the Act. All that the Section is concerned with is the "proceeds of crime" and does not extend to property not so involved. 75. A plain reading of the definition of "money laundering" as indicated in Section 2(p) would indicate, it has not undergone any change and it has the same meaning as assigned to it under Section 3. Whereas, Section 2(y) which defines "schedule offence" has undergone amendment namely, sub-clause (ii) was substituted by Act No. 21 of 2009. For the words "thirty lakh rupees or more" w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the offence of money laundering. A person might have committed an offence long back and the proceeds of it is being placed, layered or sought to be integrated to the main stream of economy, then also, he is said to have committed the offence of money laundering. Incorporation of certain offences in the Schedule is to bring it within the net of PML Act namely, proceeds of that crime within the provisions of the Act. For constituting an offence under Section 3 of PML Act, it is the connection of transaction to proceeds of crime which is sufficient and not the crime. 79. The main object of PML Act is to ascertain the proceeds of crime which involved in money laundering and attachment, confirmation and confiscation of the proceeds of crime in the form of properties and also to punish the offenders of money laundering. The date of acquisition of properties is immaterial but the date of projecting the proceeds of crime as untainted properties would only have to be ascertained by conducting investigation. 80. What is targeted by Section 3 is 'laundering of money' and therefore, the date of 'laundering' would be relevant. The expression 'laundering' as found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art 'A' to Part 'C' of the Schedule, still such person can be proceeded under PML Act. In other words, proceedings can be against persons who are accused of a scheduled offence or against persons who are accused of having committed an offence of money laundering and also persons who are found to be in possession of the "proceeds of crime". It is not necessary that a person has to be prosecuted under the PML Act only in the event of such person having committed schedule offence. The prosecution can be independently initiated only for the offence of money laundering as defined under Section 3 read with section 2(p) which provides that "money laundering" having the meaning assigned to it under Section 3 of the Act." "23. In other words, the proceedings under PML Act are independent, separate, distinct and different from the proceedings initiated for scheduled offences by other law enforcement agencies. PML Act is a stand alone enactment which differentiates the Schedule offence and the money laundering offence separately. To put it differently, if the investigation for the predicate offence is conducted by the authorities so empowered under the enactments and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (2) of Section 8, whichever is earlier. The first proviso to sub-section (1) would indicate that no such order of attachment can be made unless, in relation to the schedule offence, a report of which has been forwarded to a Magistrate under Section 173 of Code of Criminal Procedure or a complaint has been filed by a person authorized to investigate the offence mentioned in that schedule as indicated thereunder. However, second proviso to Section 5(1) would indicate that notwithstanding anything contained in first proviso, any property of any person may be attached under Section 5 if the authorities specified in sub-section (1) has reason to believe that such property involved in money laundering if not attached immediately is likely to frustrate the proceedings under the PML Act. Section 5 mandates that the officers specified thereunder should forward a copy of the order of provisional attachment immediately along with the material in his possession to the adjudicating authority in a sealed envelope in the manner prescribed and the adjudicating authority is required to keep such order and material for such period as may be prescribed. Sub-section (3) of Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude clause (b) of Section 5(1) in the circumstances provided under the second proviso, is clear and unambiguous. To put it differently, if other conditions set out in Section 5 of the PML Act are satisfied, any property of any person could be proceeded against for attachment, adjudication and confiscation. In fact, the definition of the expression "person" under Section 2(s) is not restrictive definition limited to a person charged of having committed a schedule offence only and it includes "any other person" also. 85. The adjudicating authority on being satisfied and having reason to believe that any person has committed an offence under Section 3 or in possession of proceeds of crime, would serve a notice under Section 8(1) of not less than 30 days on such person by 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. The adjudicating authority would thereafter pass an order by recording a finding whether all or any of the properties referred to in the notice under sub-section (1) or involved in money laundering. Thereafter the adjudicating authority would confirm or annul the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished. In other words, petitioner has prayed for unamended provisions of Section 8(3) to 8(6) being applied. 88. By amending Act 2 of 2013, Section 2(1)(ia) was inserted and the expression "scheduled offence before a court and" found in clause (a) of sub-section (3) of Section 8 was substituted by the expression "any offence under this act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, as the case may be;". The said amendment came into force from 15.02.2013. 89. As could be seen from clause (2)(1)(ia) the expression "corresponding law" has been defined indicating the offences alleged to have been committed in any foreign country, should be corresponding to the scheduled offence under the PML Act. A plain reading of this provision would indicate that the parliament has only envisaged or has thought fit in its wisdom to rely on the scheduled offences of the PMLA for holding person guilty in foreign jurisdictions and not leave out the persons, who have committed the scheduled offences in India, by considering them as not guilty, when both have indulged in money laundering activity. On an harmoniou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the adjudicating authority to release the attached properties, where the scheduled offence itself is found not to have been committed or the attached property is not involved in money-laundering and vest the same with the Special Court." 93. In the light of the aforestated analysis, this court is of the considered view that contention of the petitioners with regard to applicability of unamended Section 8(3) (a) would not hold water and it is liable to be rejected and accordingly it stands rejected. 94. The Division Bench of Andhra Pradesh High Court in the matter of B. RAMA RAJU vs. UNION OF INDIA reported in (2011) 3 ALD 443 (DB) having examined as to whether the provision of Sections 5 and 8 of PML Act is in violation of Articles 14, 21 & 300A of the Constitution of India, has held in the negative. It came to be held: "25. In our considered view the petitioners' contention proceeds on a misconception of the relevant provisions of the Act. Against transactions constituting money-laundering, the provisions of the Act contemplate two sets of proceedings; (a) prosecution for the offence of money-laundering defined in Section 3 with the punishment provided in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so accused, the property in his possession may be proceeded against for attachment and confiscation, on a satisfaction by the appropriate and competent authority that such property constitutes proceeds of crime. 28. In our considered view, the provisions of the Act which clearly and unambiguously enable initiation of proceedings for attachment and eventual confiscation of property in possession of a person not accused of having committed an offence under Section 3 as well, do not violate the provisions of the Constitution including Articles 14, 21 and 300-A and are operative proprio vigore." 95. The offence of money laundering under Section 3 of the PML Act is an offence independent of predicate offence and to launch prosecution under Section 3 of the PML Act, it is not necessary that a predicate offence should also have been committed. In fact, Section 3 criminalizes the possession or the conversion of the proceeds of crime, which includes projecting or claiming the proceeds of crime as untainted property. The element of mens-re a is inherent in the section as against the provision of Section 2(u), thereby preventing prosecution of any innocent person. 96. The expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or kept in their names, do not escape the net of the Act. It is a well-known fact that persons indulging in illegal activities screen the properties acquired from such illegal activity in the names of their relatives and associates. Sometimes they transfer such properties to them, may be, with an intent to transfer the ownership and title. In fact, it is immaterial how such relative or associate holds the properties of convict/detenu-whether as a benami or as a mere name-lender or as a bona fide transferee for value or in any other manner. He cannot claim those properties and must surrender them to the State under the Act. Since he is a relative or associate, as defined by the Act, he cannot put forward any defence once it is proved that property was acquired by the detenu whether in his own name or in the name of his relatives and associates." In fact, the aforesaid judgment has been referred to in RAMA RAJU's case referred to supra and concluded as under: "46. The object of the Act is to prevent money-laundering and connected activities and confiscation of "proceeds of crime" and preventing legitimizing of the money earned through illegal and criminal activities b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uishable from the offence which is committed once and for all. It has been held: "5. A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule of it requirement is obeyed or complied with. On every occurs and reoccurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act of omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission if committed once and for all." 103. Having regard to the aforesaid authoritative pronouncement of the Hon'ble Supreme Court, when the scheme of PML Act is seen that money laundering is a continuing offence and as such question of it bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on" occurring in Section 2(s) and held that on conjoint reading with Section 5(1), wherein the expression "any person" is referred that proceeds of crime may be or can be in possession of "any person", be it a person charged of having committed a scheduled offence "or otherwise". It has been further held: "11. The question is whether section 5 can be invoked against a person who is not named as an accused in the commission of a scheduled offence? Sub-section (1) of Section 5 will have to be read as a whole conjointly with the other provisions of the Act already referred to hitherto, including section 8 thereof. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the purposes of the said section to resort to action of "attachment of property" if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such property until the crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd none else. Whereas, the Act has come into being to prevent money laundering and to provide for confiscation of property derived from or involved in, money laundering and for matters connected therewith or incidental thereto. It is the outcome of the Political Declaration and Global Programme of Action, as annexed to the resolution S-17/2 adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990. It has come into being also on account of the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 which called upon the Members States to adopt national money-laundering legislation and programme. The term "money-laundering" has the same meaning assigned to it in Section 3 of the Act of 2002. It essentially refers to the tainted property which is derived from criminal activity relating to a scheduled offence. Such tainted property may travel at different levels or by way of circular transactions for being eventually projected as untainted property in the hands of or possession of person other than the person charged of having committed a schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of provisional attachment and its confirmation thereof would not fail or lapse on account of any procedural irregularity for the reasons indicated herein above. Hence, this court holds that point Nos. (ii) and (iii) are to be answered against the petitioners and they are accordingly answered. RE: POINT NO. (v): 108. It is contended by the respondents that on provisional orders of attachment being passed, show cause notices have been issued and even without filing objections to the said show cause notices by explaining as to why the provisional order of attachment should not be confirmed, petitioners have invoked the extraordinary jurisdiction of this court by challenging either the provisional orders of attachment or consequential show cause notice issued and as such the writ petitions are not maintainable. It is also contended that where the provisional orders have been confirmed by the adjudicating authority, the aggrieved person has a right of appeal to the appellate tribunal and in case of the order passed by the tribunal dismissing the appeal, the aggrieved party can yet again file one more appeal to this court and without exhausting the said alternate remedies availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of fundamental rights or where there has been violation of principles of natural justice or where the order or proceedings is wholly without jurisdiction or the vires of an Act is under challenge. It has been further held: "15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in atleast three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling further appeal under Section 42 before this court within sixty days from the date of communication of the decision. Thus, sufficient safeguards protecting the interests of the aggrieved persons including granting of opportunity to file reply to the provisional order of attachment is found in the provisions aforestated and as such this court is of the considered view that these provisions would provide ample opportunity to the aggrieved person to challenge the order passed by the authorities and as such it cannot be gainsaid, there would be violation of principles of natural justice or on that ground the writ petition would be maintainable. 113. In the writ petitions filed at Sl. No. I, II, III, IV, VI, VIII and IX, the challenge is not only to the provisional order of attachment but also to the confirmation order of attachment, notice issued seeking information from the Banks and financial institutions, consequential notices issued to comply with the confirmation order of attachment, consequential notice for handing over possession of the properties issued, summons issued under Section 50(3) and the remand application filed before the Special Judge of PMLA Court and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a financial institution or intermediary or a person carrying on a designated business or profession, as indicted thereunder. He would also contend that under Section 17 it is only the Director or Deputy Director who can order for such seizure and the impugned communication which is issued by the Assistant Director is without jurisdiction. He would also contend that Assistant Director has no power to freeze the account except under Section 17(1A) of the PML Act. In substance he would contend that; (i) officer who has issued the impugned communication has no jurisdiction; (ii) AMFI is not a reporting entity nor does it fall within the ambit of Section 54; and, (iii) the officer issuing the impugned communication must have reason to believe that money laundering exits, which is not forthcoming from the impugned communication. He would further contend that petitioners in W.P. Nos. 6159/2017, 6173/2017 and 8261/2017 have ceased to be the Directors and employee of the company and their life savings in mutual funds have been frozen and under the guise of investigation which exercise cannot be undertaken. Hence, he has prayed for allowing the writ petitions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpts or indulges or knowingly assists or is a party in such process is said to have committed an offence under PML Act. 119. Investigation as defined under Section 2(na) is an inclusive definition. Chapter III, IV and V of PML Act provide for exercise of powers by the investigation agencies. Sections 16 to 18, Section 20 and 21 of the PML Act provide such authorities the powers to survey, seizure and retention or proceeds of crime or any record or property relating thereto upon recording reasonable belief as postulated under the said provisions. Section 12 and 12A of the PML Act casts duty upon the "reporting entities" namely, banks and financial institutions to maintain records of transactions, identities of persons, entering into such transactions and report the same to the authorities under the PML Act. Section 19 of the PML Act provides for power to arrest. Sections 5, 8 and 9 of the PML Act provide for attachment of proceeds of crime or records/properties related thereto upon recording reasonable belief thereto and eventual confiscation of such attached/retained properties. Section 54 of the PML Act provides for duty of certain officers and others to assist the authorities fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of monies in the accounts maintained by "any person" who is being investigated for the offence under the PML Act. Thus, when this process of investigation has commenced namely, the authorities are attempting to trace, identify and verify the source of such monies invested or deposited from such accounts, if permitted to be withdrawn, the investigation would lose its purpose and it may become an exercise in futility. It is to prevent such contingencies, the investigating agency must be necessarily held to possess the incidental power to request a reporting entity namely, banking company, financial institution, intermediary or a person carrying on a designated business such information as may be necessary. Thus, the expression "investigation" as found in the PML Act will have to be necessarily held as an inclusive definition and it would take within its sweep all such incidental and consequential powers, which would be necessary to achieve the ultimate end i.e., collection of evidence and consequently, achieving the object of the Act. 121. In fact, the issue relating to the Assistant Director having issued the impugned communication being without power does not arise, inasmuch as, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business relationship between the client and the reporting entity has ended or the account has been closed, whichever is later. Section 12A empowers the Director to call from reporting entity any of the records referred to in sub-section (1) of Section 12 and additional information as he considers necessary. 125. Under Section 54 of the Act officers specified in clauses (a) to (j) are empowered and required to assist the authorities under PML Act. This Section neither prohibits nor prevents the power of the investigating authority to call for information or records from a banking company, financial institution, intermediary or a person carrying on a business or profession. The acts which are necessary and incidental for exercise of a statutory power are to be inferred by necessary implication, as otherwise, such statutory power would be of no use. The second respondent being an financial institution and also falling within the expression of "intermediary" would definitely fall within the parameters of "reporting entity" as defined under Section 2(wa) of the PML Act and as such the contention raised by the learned Senior Counsel appearing for the petitioner cannot be accepted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tachment of immovable property namely three flats would not arise. 130. The language as found in Section 8(1) when read along with Section 8(3), would clearly disclose that the adjudicating authority would adjudicate the claim relating to the "property attached" under sub-section (1) of Section 5 or seized or frozen under Section 17 or Section 18. Expression "such property" refers to the property which has been attached under Section 5(1) of the Act. Until and unless the property has been attached under Section 5(1), question of confirming the attachment of the property made under sub-section (1) of Section 5 would not arise. In other words, for confirming the attachment, the property requires to be attached under Section 5(1) as otherwise, the adjudicating authority under Section 8 would not get jurisdiction to adjudicate such attachment. 131. In the instant case, as noticed hereinabove, it would clearly disclose what was sought to be attached under Provisional Order of Attachment dated 30.06.2016 (Annexure-V) was the movable property namely a sum of Rs. 1,21,50,000/- paid by the writ petitioner to M/s. Prime Housing Development Company, Mangalore and not flats bearing Nos. 114, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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