2019 (1) TMI 133 - AT - Money Laundering

Tribunal invalidates notice, sets aside orders, requires due process in property case.

The Tribunal held that the impugned notice dated 31.08.2018 was bad in law and set it aside regarding the property in question. The order confirming the ... Offence under PMLA - Provisional Attachment Order - Held that:- It is an admitted fact that Appellant is not made a Party either in the Provisional Attachment Order under Section 5(1) nor in the O.C. filed before the Adjudicating Authority under Section 5(5) of PMLA, 2002. There is no denial on the part of the respondent regarding the execution of registered deed of agreement to sale executed on 22.03.2013. It is prima facie felt that the Appellant should have been made a party to the proceedings before the Adjudicating Authority in the interest of justice and complete adjudication of the case appellant should have been given proper opportunity being heard as provided under the provisions of PMLA, 2002. Order confirming the attachment to the extent of the property in question is set aside. The matter is remanded back to the Adjudicating Authority. The Appellant shall file the necessary reply before the Adjudicating Authority within twenty days, not beyond thirty days, from the date of this Order, with an advance copy of the said reply to be served on ED. The Adjudicating Authority, thereafter, shall decide the reply of the appellant within 150 days from the date of receipt of such reply, in accordance with law, after giving due opportunity to both the parties. Issues Involved:1. Legality of the impugned notice dated 31.08.2018 issued by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA), 2002.2. Bona fide purchase and ownership of the property by the appellant.3. Compliance with procedural requirements under PMLA by the Enforcement Directorate.4. Appellant's right to be heard and violation of natural justice.5. Validity of the attachment order and subsequent actions by the Enforcement Directorate.Detailed Analysis:1. Legality of the Impugned Notice:The appeal challenges the notice dated 31.08.2018 issued by the Joint Director, Guwahati Zonal Office, Enforcement Directorate for taking possession under sub-section 4 of section 8 of the PMLA, 2002. The immovable property involved is located in Kamrup (M), Assam.2. Bona Fide Purchase and Ownership:The appellant, a company incorporated under the Company Act, 1956, claimed to be a bona fide purchaser of the property in question. The appellant had no connection with the Director of Saradha Realty India Ltd. or its CMD Sudipta Sen. The appellant verified the land documents and found the title clear. They executed a Memorandum of Understanding and a Registered Agreement for Sale in March 2013, paying Rs. 19,00,000/- initially. Due to the seller's non-compliance, the appellant filed a suit for specific performance, resulting in an ex-parte decree in their favor. The appellant deposited the balance amount of Rs. 51,00,000/- in court, and the sale deed was executed following due process of law.3. Compliance with Procedural Requirements:The appellant contended that despite informing the Enforcement Directorate about the purchase and the ongoing civil proceedings, the Directorate failed to make the appellant a party in the Provisional Attachment Order (PAO) and the Original Complaint (O.C.). The appellant was denied notice under Section 8(2) of the PMLA, which mandates hearing the claimant.4. Right to be Heard and Violation of Natural Justice:The appellant argued that they were not served any notice and were denied the opportunity to be heard by the Adjudicating Authority, violating principles of natural justice and Articles 14, 19, and 21 of the Constitution. The Enforcement Directorate did not investigate the appellant's claims or approach the Civil Court to assert the jurisdictional bar under Section 67 of PMLA.5. Validity of the Attachment Order:The Enforcement Directorate argued that the property was part of the proceeds of crime from the Saradha Scam. They claimed the appellant acted in connivance with Saradha Realty India Ltd. to frustrate legal proceedings under PMLA. The Directorate took possession of the property based on the confirmed attachment order. However, the Tribunal found that the appellant continuously informed the Directorate about the purchase and civil proceedings, which the Directorate ignored.Conclusion:The Tribunal held that the impugned notice dated 31.08.2018 was bad in law and set it aside concerning the property in question. The order dated 07.11.2014 of the Adjudicating Authority confirming the attachment and the PAO dated 16.07.2014 were also set aside. The authorities failed to follow due process and mandatory provisions of Sections 5 and 8 of the PMLA. The possession of the property was to be handed over to the appellant immediately, with the attachment continuing. The matter was remanded back to the Adjudicating Authority for a fresh decision after giving due opportunity to both parties. The appeal was accordingly disposed of.