2021 (11) TMI 556 - HC - Money Laundering

Court clarifies direction against coercive action does not bar criminal prosecution. Department can proceed with investigation.

The High Court disposed of the appeal, clarifying that the direction against coercive action did not affect the criminal prosecution. The Court allowed ... Prevention of coercive action - interim protection following Supreme Court order - scope of stay in interlocutory order - attachment of property - continuation of investigation and prosecution - requirement to challenge orders by amendmentAttachment of property - requirement to challenge orders by amendment - scope of stay in interlocutory order - Whether the learned Single Judge's interim order stayed the Department's provisional attachment of the petitioner's property dated 18.01.2021. - HELD THAT: - The impugned interim direction restrained the respondents from taking any coercive steps against the petitioner 'as directed by the Supreme Court,' but did not expressly include a stay of the provisional attachment dated 18.01.2021. The attachment was effected in 2021 and was not the subject of challenge in the original 2017 petition nor was the petition amended to seek relief against that attachment. For these reasons the Single Judge's order cannot be read as having stayed the Department's attachment; absent an express challenge and corresponding prayer, the learned Single Judge could not properly stay the attachment.No stay was granted against the Department's provisional attachment of the petitioner's property; the attachment remains unaffected by the impugned order.Prevention of coercive action - interim protection following Supreme Court order - continuation of investigation and prosecution - Whether the learned Single Judge's restraint on taking coercive steps barred the Department from continuing investigation and prosecution against the petitioner. - HELD THAT: - The Single Judge followed the Supreme Court's earlier order in Anil Kumar Gadodia by restraining coercive steps against the petitioner. However, the Supreme Court later clarified and modified its order to provide that such interim directions do not stay trial or investigation and that investigation or trial may proceed in accordance with law. In view of that clarification, the court held that the restraint in the impugned order does not prevent the Department from carrying on with investigation and prosecution; the Department remains free to investigate and prosecute the petitioner in accordance with law, subject to any separate remedy the petitioner may pursue.The restraint against taking coercive steps does not bar continuation of investigation or prosecution; the Department may proceed in accordance with the Supreme Court's clarified position.Final Conclusion: The appeal is disposed of with clarifications: the Single Judge's interim direction did not stay the Department's attachment of the petitioner's property and does not prevent the Department from continuing investigation or prosecution; the petitioner remains free to seek appropriate remedies in law. Issues:Challenge to order freezing bank account, legality of proceedings under PMLA, interim relief against coercive actions, stay on provisional attachment order, reference to Supreme Court order in similar case, challenge to order of attachment, stay against criminal investigation and prosecution.Analysis:The appeal was filed by the Directorate of Enforcement and its Officers to challenge the order passed by the Single Judge in a Civil Writ Petition. The respondent-petitioner sought relief to set aside the order freezing the bank account and declare the proceedings illegal under the Prevention of Money Laundering Act, 2002. The Single Judge initially granted liberty to approach the Court if coercive actions were taken. The petitioner later requested a stay on coercive actions and the provisional attachment order. The Single Judge referred to a similar case pending before the Supreme Court and granted interim protection to the petitioner, restraining coercive steps.The Department argued that the order of attachment was not challenged in the original petition filed in 2017 and should not have been stayed. They also contended that the criminal prosecution was not challenged, and the Single Judge could not prevent further investigation and prosecution. The Department highlighted that the Supreme Court modified its earlier order in a similar case, allowing full investigation and prosecution.On the other hand, the petitioner's counsel argued that the case was similar to the one before the Supreme Court, justifying the Single Judge's decision to grant interim protection. The High Court clarified that there was no stay against the attachment order and that the direction preventing coercive action did not cover the criminal prosecution. The Court emphasized that the Department could continue the investigation and prosecution in accordance with the law.In conclusion, the High Court disposed of the appeal, clarifying that the direction against coercive action did not affect the criminal prosecution. The Court allowed the Department to proceed with the investigation and prosecution. The parties were advised to seek appropriate legal remedies if needed in relation to the investigation and prosecution.