2019 (11) TMI 961 - HC - Money Laundering

Delhi High Court quashes attachment order under Prevention of Money Laundering Act

The Delhi High Court set aside a common order under the Prevention of Money Laundering Act, 2002, which provisionally attached properties of the ... Provisional attachment - proceeds of crime - reasoned order - setting aside for failure to disclose material - fresh consideration permitted where material existsProvisional attachment - proceeds of crime - reasoned order - setting aside for failure to disclose material - Impugned provisional attachment order and accompanying complaint set aside in respect of the petitioners for failure to indicate reasons or material to show assets were proceeds of crime. - HELD THAT: - The Court found that the common order under the Act, passed in respect of four persons, did not indicate any reason or material that could have persuaded the Deputy Director to conclude that the petitioners' properties were proceeds of crime. The respondent conceded that the order ought to have been better worded and that reasons ought to have been disclosed. In the absence of any material shown in the impugned provisional attachment order or complaint justifying attachment of the petitioners' assets, the Court held that the order and complaint were liable to be set aside insofar as they related to the petitioners and their properties. The Court therefore excluded the petitioners' properties from the operation of the order/complaint and set aside the impugned instruments as they applied to the petitioners. [Paras 2, 3, 4, 5]Impugned provisional attachment order and complaint set aside qua the petitioners for failure to disclose reasons or material demonstrating the assets were proceeds of crime.Fresh consideration permitted where material exists - Concerned officer not precluded from passing a fresh order if material is available to believe the assets qualify as proceeds of crime. - HELD THAT: - While setting aside the impugned order and complaint as they related to the petitioners, the Court clarified that the decision did not bar the enforcement authority from taking action afresh. If the concerned officer possesses material sufficient to form a belief that the petitioners' assets are proceeds of crime within the statutory definition, the officer remains free to pass a fresh order under the Act. The Court's order therefore imposed no substantive prohibition on future action, but required that any fresh exercise be supported by material and stated reasons. [Paras 6]Fresh order may be passed by the concerned officer if material exists to believe the assets are proceeds of crime; present order does not preclude such action.Final Conclusion: The provisional attachment order and accompanying complaint are set aside insofar as they relate to the petitioners for lack of disclosed reasons or material; the properties are excluded from those instruments, but the enforcement authority remains entitled to pass a fresh, reasoned order if material exists to show the assets constitute proceeds of crime. Issues: Impugning a common order under the Prevention of Money Laundering Act, 2002 and provisional attachment of properties; Lack of reasons for attaching properties; Setting aside the order and complaint; Exclusion of properties from the order/complaint; Possibility of passing a fresh order based on new material.In this judgment by the Delhi High Court, the petitioners challenged a common order dated 9-3-2019 under Section 5 of the Prevention of Money Laundering Act, 2002, which provisionally attached their properties. The order did not provide any reasons or material justifying the attachment of the petitioners' properties as proceeds of crime. The respondent's counsel acknowledged that the order should have been better phrased and reasons for attachment should have been disclosed. The Court observed the lack of material justifying the attachment and set aside the order and the complaint against the petitioners. The properties mentioned in the order and complaint were excluded from the attachment. However, the Court clarified that a fresh order could be passed if new material emerged to establish the assets as proceeds of crime. The pending applications were disposed of, and the order was to be provided under the signatures of the Court Master.