2015 (8) TMI 1423 - AT - Money Laundering

Tribunal sets aside order for exceeding jurisdiction under PMLA, remands for speaking order within six months.

The Tribunal set aside the Adjudicating Authority's order remanding the case for further investigation, finding it exceeded jurisdiction under PMLA. The ... Offence under PMLA - Provisional Attachment orders - Adjudicating Authority jurisdiction - Held that:- In this case, the provisional attachment order was passed on 31st March, 2014 on the basis of material in the possession of appellant on that day. If, in compliance to the directions of the Adjudicating Authority in terms of order dated 19th September, 2014, further investigation is carried out by the appellant and fresh material is collected and a fresh complaint is filed to confirm the provisional attachment order dated 31st March, 2014, which was passed on the basis of material in the possession of appellant on that day i.e. 31-3-2014, the same would be completely illegal and against the provisions of section 5 of PMLA. In the facts and circumstances and considering the provisions of Section 5 and 8 of PMLA and the scheme of the Act, we are of the view that the Adjudicating Authority has exceeded its jurisdiction by remanding the matter to the appellant with the direction to carry out fresh investigation and file fresh complaint. The directions given by the Adjudicating Authority are beyond the scope of the provisions of Section 8(2) and 8(3) of PMLA. Consequently, the impugned order dated 19-9-2014 is set aside and the matter is remanded back to Adjudicating Authority to pass a speaking order in accordance with law within a period of six months from the date of this order. During the pendency of proceedings before the Adjudicating Authority, the provisional Attachment order shall continue to be in force and in the mean time, all the parties shall maintain status quo in respect of properties attached vide provisional Attachment Order Issues Involved:1. Legality of the provisional attachment order under PMLA.2. Jurisdiction and authority of the Adjudicating Authority under Section 8 of PMLA.3. Compliance with procedural requirements under Sections 5 and 8 of PMLA.4. Validity of remanding the case for further investigation by the Adjudicating Authority.Detailed Analysis:1. Legality of the Provisional Attachment Order under PMLA:The appeal challenges the impugned order dated 19-9-2014 of the Adjudicating Authority under PMLA, which was based on the Provisional Attachment Order No. 02/LKZO/2014 dated 31-3-2014. The appellant, Enforcement Directorate, initiated the case on 18-12-2009 based on an FIR lodged by CBI for defrauding the State Bank of India of Rs. 44.22 crores. The investigation revealed that the defrauded funds were invested in various properties. Consequently, multiple provisional attachment orders were issued, including the one in question.2. Jurisdiction and Authority of the Adjudicating Authority under Section 8 of PMLA:The appellant argued that the Adjudicating Authority exceeded its jurisdiction by remanding the case for further investigation. According to Section 8(1) of PMLA, upon receiving a complaint under Section 5(5), the Adjudicating Authority should issue a notice if there are reasons to believe that an offense under Section 3 has been committed. The Adjudicating Authority is then required to follow the procedure under Sections 8(2) and 8(3), which involve considering replies, hearing the parties, and recording findings on whether the properties are involved in money laundering.3. Compliance with Procedural Requirements under Sections 5 and 8 of PMLA:The appellant complied with Section 5(5) by filing the complaint within 30 days of the provisional attachment. The Adjudicating Authority issued a show cause notice under Section 8(1), but later directed further investigation without providing specific reasons for finding the initial investigation incomplete. The appellant contended that this direction was beyond the scope of Section 8, which does not authorize remanding for further investigation once a notice under Section 8(1) has been issued.4. Validity of Remanding the Case for Further Investigation by the Adjudicating Authority:The Adjudicating Authority's order to remand the case for further investigation was contested as being ultra vires. The appellant argued that the order was non-speaking and did not specify reasons for deeming the investigation incomplete. The Adjudicating Authority's role, as per Sections 8(2) and 8(3), is to confirm or decline the provisional attachment based on the materials and hearings, not to remand the case for further investigation.Conclusion:The Tribunal concluded that the Adjudicating Authority exceeded its jurisdiction by remanding the case for further investigation, which is not supported by Sections 8(2) and 8(3) of PMLA. The impugned order dated 19-9-2014 was set aside, and the matter was remanded back to the Adjudicating Authority to pass a speaking order in accordance with the law within six months. The provisional attachment order shall remain in force, and the parties are to maintain the status quo regarding the attached properties.