2022 (12) TMI 606 - HC - Money Laundering

Court affirms Single Judge order, setting aside attachment but not granting consequential benefits.

Directorate of Enforcement & Ors. Versus The Union of India and Ors.

The court affirmed the learned Single Judge's order setting aside the provisional attachment order dated 30th September 2021 but set aside the part of the ... Provisional attachment - Expiry of 80 days mandatory period for confirmation of the provisional attachment u/s 5 of PMLA - Applicability of decision of Supreme Court for exclusion of certain period on account of COVID-19 pandemic - the competent authority had failed to pass any formal order of confirmation or extension of validity of the provisional attachment order u/s 8(3) - HELD THAT:- undisputedly the order of provisional attachment under Section 5(1) of the PMLA was passed on 30th of September, 2021. 180 days period from the date of order was over on 31st of March, 2022. Before the expiry of 180 days, no order was made under Section 8(3) of the PMLA. Hence, on these undisputed facts, the provisional order of attachment had expired on 31st of March, 2022. Hon’ble Supreme Court in the above judgment has clearly noted in suo motu petition that the order was passed for extending the limitation for filing petitions/applications/suits/appeals and all other proceedings and the order was for the benefit of those who wanted to take remedy, whose remedy were barred by time because they were unable to come physically to file such proceedings. Hon’ble Supreme Court has clearly laid down that the order passed in Suo Motu petition dated 23rd of March, 2020 never meant to curtail any provisions of the Cr.P.C. or any other statute which was enacted to protect personal liberty of a person. Considering the provisions contained under Section 5(1) and 5(3) of the PMLA in the light of the above pronouncement, it is found that Section 5(1) does not relate to filing of any pleading but relates to the period of validity of the order of attachment. By virtue of Section 5(3) of the PMLA, the order of attachment under Section 5(1) ceases to have effect on expiry of the prescribed period. Thus, for such a provision, the order of the Hon’ble Supreme Court passed in SMW (C) No. 3 of 2020 extending the period for filing the pleading will not apply. The learned Single Judge has not committed any error in reaching to the conclusion that the benefit of extended period of limitation by virtue of the orders passed by the Hon’ble Supreme Court from time to time in SMW (C) No. 3 of 2020 will not be available for extending the validity period of provisional attachment order under Section 5(1) of the PMLA. Hence, learned Single Judge has rightly set aside the provisional attachment order. Issues Involved:1. Validity of the 180-day period prescribed for the provisional attachment order under Section 5(1) of the PMLA.2. Applicability of the Supreme Court's order extending the period of limitation due to the COVID-19 pandemic to the provisional attachment order under Section 5(1) of the PMLA.3. Consequential benefits granted by the learned Single Judge upon setting aside the provisional attachment order.4. Availability of an alternate remedy and the maintainability of the writ petition.5. Opportunity for the appellants to file an affidavit-in-opposition before the learned Single Judge.Detailed Analysis:1. Validity of the 180-day Period for Provisional Attachment Order:The Enforcement Directorate challenged the learned Single Judge's order which set aside the provisional attachment order dated 30th September 2021. The respondent nos. 3 and 4 argued that the 180-day mandatory period for confirmation of the provisional attachment order had expired on 31st March 2022, and no formal order of confirmation or extension was passed before this date, making the authority functus officio. The court confirmed that the provisional attachment order had indeed expired on 31st March 2022 as no order under Section 8(3) of the PMLA was made before the expiry of the 180 days.2. Applicability of Supreme Court's Order on Limitation Period:The appellants contended that the 180-day period for the provisional attachment order should be extended by the Supreme Court's order in SMW (C) No. 3/2020, which extended the period of limitation due to the COVID-19 pandemic. The court examined the provisions of Section 5(1) and 5(3) of the PMLA and the relevant Supreme Court orders. It concluded that the Supreme Court's order extending the limitation period applied to filing petitions, applications, suits, appeals, and other proceedings, but not to the validity period of the provisional attachment order under Section 5(1) of the PMLA. Therefore, the learned Single Judge correctly found that the extended period of limitation did not apply to the provisional attachment order.3. Consequential Benefits Granted:The learned Single Judge granted all consequential benefits upon setting aside the provisional attachment order, which included setting aside the proceedings under Section 8 of the PMLA. The court referred to the Supreme Court's judgment in Kaushalya Infrastructure Development Corporation Limited vs. Union of India, which held that quashing the provisional attachment order under Section 5(1) does not impact the adjudication process under Section 8. Consequently, the court found that the learned Single Judge erred in granting all consequential benefits that affected the proceedings under Section 8 of the PMLA.4. Availability of Alternate Remedy:The appellants argued that the writ petition was not maintainable due to the availability of an alternate remedy. However, the court noted that this issue was not raised before the learned Single Judge, and the impugned order did not indicate any discussion on this matter. Therefore, the court did not find any substance in this argument.5. Opportunity to File Affidavit-in-Opposition:The appellants claimed they were not given an opportunity to file an affidavit-in-opposition before the learned Single Judge. However, the court examined the proceedings and found that the petition was heard on multiple occasions in the presence of the appellants' counsel, and no request for filing an affidavit-in-opposition was made. Therefore, the court found no merit in this argument.Conclusion:The court affirmed the learned Single Judge's order setting aside the provisional attachment order dated 30th September 2021 but set aside the part of the order granting all consequential benefits. The appeal was disposed of accordingly.