2017 (8) TMI 861 - AT - Money Laundering

Tribunal sets aside order, remands for fresh adjudication. Property attachment remains.

Amanpreet Singh Gandhi @ Jaggu Versus The Deputy Director Directorate of Enforcement, Jalandhar

The Tribunal reviewed and set aside its previous order, remanding the matter back to the Adjudicating Authority for fresh adjudication. The Adjudicating ... Adjudicating Authority power to review its own orders - whether any order passed by this Tribunal directing the Adjudicating Authority to hear the applicant after passing of the confirmation order is a valid order or not? - Held that:- In the instant case after publication and communication of the confirmation order dated 11.03.2014 to the parties concerned the Adjudicating Authority became functus officio and hence was not empowered or entitled to review its own orders, that too when there are no express provisions for such a review by the Adjudicating Authority in the PMLA. But the Appellate Tribunal can exercise its power of review as per scheme of the Act. In view of the above, we are of the view that the order dated 12.12.2014 of this Tribunal allowing the applicant to invoke his remedy before the Adjudicating Authority as contemplated under proviso to section 8(2) of PMLA needs to be reviewed. Therefore, in terms of the powers vested in this Tribunal under section 35(2) of the PMLA we review the order dated 12.12.2014 of this Tribunal and pass the following order: I. Order of confirmation dated 31.03.2014 in OC No. 228/2013 in so far as it pertains to house No. D-5/5 DLF Phase-I, Gurgaon, Haryana is set aside and the matter is remanded back to the Adjudicating Authority for deciding the matter afresh after giving an opportunity of being heard to the applicant in terms of proviso to section 8(2) and also the other defendants in OC No. 228/2013. II. The Adjudicating Authority shall fix a date of hearing not beyond 45 days from the date of receipt of this order. The applicant and the defendants in OC No. 228/2013 shall appear before the Adjudicating Authority on the date fixed by the Adjudicating Authority for hearing. The Adjudicating Authority shall pass its order in remand proceedings within 45 days of the date of hearing. III. The applicant and the defendants in OC No. 228/2013 shall not sell, dispose of, alienate or create any third party interest in the property viz. D-5/5, DLF Phase-I, Gurgaon, Haryana during the pendency of remand proceedings before the Adjudicating Authority and the provisional attachment order No. 03/2013 dated 28.10.2013 in ECIR/06/JLZO/2012 shall remain alive. The applicant shall also continue to deposit charges for use and occupation of the said property @ of ₹ 50,000 per month to be deposited by 15th date of the next English calendar month. Issues Involved:1. Review of Tribunal’s Order2. Powers of Adjudicating Authority under PMLA3. Applicability of Principles of Natural Justice4. Jurisdiction and Powers of Review by Adjudicating AuthorityIssue-wise Detailed Analysis:1. Review of Tribunal’s Order:The appellant filed a miscellaneous petition under Section 35(F) of the Prevention of Money Laundering Act, 2002 (PMLA), seeking review of the Tribunal’s order dated 12.12.2014. The original appeal was against an order dated 2nd May 2014, passed under Section 8(4) of PMLA, which asked the appellant to vacate a residential house. The Tribunal had allowed the appellant to withdraw the appeal with liberty to invoke the remedy under proviso to Section 8(2) of PMLA. The appellant argued that this withdrawal rendered him remediless, contrary to judicial principles and the Supreme Court’s pronouncements. The Tribunal reviewed its order dated 12.12.2014, setting aside the confirmation order dated 31.03.2014 and remanding the matter back to the Adjudicating Authority for fresh adjudication.2. Powers of Adjudicating Authority under PMLA:The Adjudicating Authority’s powers to adjudicate under PMLA flow from Section 8. Section 8(1) requires issuing a show cause notice to any person believed to have committed an offense under Section 3 of PMLA or is in possession of proceeds of crime. The proviso to Section 8(2) mandates that if the property is claimed by a person other than the one to whom the notice was issued, such person must be given an opportunity to be heard. The Tribunal noted that the Adjudicating Authority does not have the power to review its own orders as per Section 11 of PMLA, which only provides powers similar to those of a civil court for summoning, enforcing attendance, and other procedural matters.3. Applicability of Principles of Natural Justice:The Tribunal emphasized the importance of natural justice, stating that any person claiming a right in the property must be heard before a final order of confirmation of attachment is passed. The proviso to Section 8(2) ensures that such persons are given an opportunity to prove that the property is not involved in money laundering. The Tribunal disagreed with its earlier decision in the Central Bank of India case, which allowed post-decisional hearings, stating that this would lead to the Adjudicating Authority reviewing its own orders, which is not permissible under PMLA.4. Jurisdiction and Powers of Review by Adjudicating Authority:The Tribunal clarified that the Adjudicating Authority becomes functus officio after issuing a confirmation order under Section 8(3) and cannot review its own orders, as no such power is provided under PMLA. The Tribunal referred to the Supreme Court’s judgment in SBI v. S.M. Goyal, which described the concept of functus officio and emphasized that once an authority makes a final decision, it cannot review it unless expressly permitted by statute. The Tribunal also cited the case of Rajeev Hitendra Pathak v. Achyut Kashinath Karekar, where the Supreme Court held that tribunals are creatures of statute and cannot exercise powers not expressly conferred by the statute.Conclusion:The Tribunal reviewed and set aside its previous order dated 12.12.2014, remanding the matter back to the Adjudicating Authority for fresh adjudication. The Tribunal directed the Adjudicating Authority to fix a hearing date within 45 days and pass an order within 45 days of the hearing. The appellant and defendants were instructed not to sell or create any third-party interest in the property during the pendency of remand proceedings, and the provisional attachment order remained in effect. The Tribunal emphasized that its decision was based on a question of law and did not express any opinion on the merits of the case.