2017 (11) TMI 942 - HC - Money Laundering

Court orders return of Rs. 25 lac deposit seized under Money Laundering Act

The court allowed the petition for the return of a fixed deposit of Rs. 25 lacs attached by the Directorate of Enforcement under the Prevention of Money ... Offence under PMLA Act - attachment of fixed deposit of the HDFC Bank - Held that:- We are inclined to exercise our jurisdiction under Article 226. The respondents adopted proceedings against the Director instead of doing so against the petitioner company. The petitioner’s Director fairly deposited the amount of Rs. 25 lacs with the respondents. The proceedings were initiated by the respondents against the Director and not against the company. The maintainability of such proceedings itself is doubtful. However, when the Director sought to appeal against the order, the appeal was dismissed on the ground that it was not maintainable. The petitioner’s application for being impleaded before the adjudicating authority was also dismissed on the ground that it was not maintainable as the adjudicating authority held that it had no power of review. Most important, there is no link between the said sum of ₹ 25 lacs and the alleged proceeds of crime namely the sum of ₹ 3.61 crores received by TI Limited from CDP Limited. In the circumstances, the petition is allowed in terms of prayer (i) The FDR shall be returned together with the accretions thereto, if any. It is clarified that in the event of any evidence being obtained by the respondents in respect of the said sum of Rs. 25 lacs, they are always at liberty to take necessary action in accordance with law. Issues:Petitioner seeking return of fixed deposit attached under Prevention of Money Laundering Act; Dispute involving petitioner, Thapar Infrastructure Limited (TI Limited), and Chandana Developers Private Limited (CDP Limited); Attachment of funds by Directorate of Enforcement; Allegations under Prevention of Money Laundering Act; Jurisdiction under Article 226 challenged.Analysis:The petitioner sought the return of a fixed deposit of Rs. 25 lacs attached by the Directorate of Enforcement under the Prevention of Money Laundering Act. The dispute involved the petitioner, TI Limited, and CDP Limited. The petitioner, owning a piece of land, had a transaction with TI Limited which ended with the dismissal of a suit in 2008, resulting in the forfeiture of the earnest money. Meanwhile, TI Limited had a separate agreement with CDP Limited for a different property, leading to disputes and an FIR. The Enforcement Directorate initiated proceedings against TI Limited and CDP Limited under the Act, but the petitioner was not a party to those cases.The respondents issued a provisional attachment order in 2014, but it did not implicate the petitioner in any illegal transactions related to TI Limited. The complaint filed under the Act did not contain allegations against the petitioner, confirming the provisional attachment order. The court noted that there was no evidence linking the Rs. 25 lacs received by the petitioner to any proceeds of crime derived by TI Limited from CDP Limited. The petitioner's director deposited the amount with the respondents, leading to a legal predicament for the petitioner due to procedural issues.The court found discrepancies in the proceedings initiated against the director instead of the company, leading to doubts about the maintainability of the actions. Despite the dismissal of the director's appeal and the company's application for impleadment, the court allowed the petition, ordering the return of the fixed deposit. The judgment emphasized that if any evidence linking the funds to criminal proceeds is found, the respondents are free to take necessary action. The court exercised its jurisdiction under Article 226, highlighting the lack of connection between the attached funds and the alleged proceeds of crime.