TaxTMI 
TaxTMI 
2015 (10) TMI 27
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.... 2,171.36 crores is the contribution by the shareholders and the remaining amount of Rs. 7,856.90 crores to be funded by the lenders in the consortium led by the Power Finance Corporation Limited. The consortium also included several banks. After approval of the power project agreement by the Chhattisgarh State Electricity Regulatory Commission on 22.12.2007, Coal Block was allotted on 23.01.2008. The petitioner signed the Implementation Agreement with the Government of Chattisgarh on 28.07.2008 followed by Power Purchase Agreement for 700 MW with PTC India Limited on 08.05.2009. 2.2. On 07.08.2014, a First Information Report was registered against the petitioner by the Central Bureau of Investigation. By an order dated 24.09.2014, the Apex Court cancelled the Coal Block allotments of the petitioner along with many others. 2.3. On 06.01.2015, the Power Finance Corporation sent a letter to the petitioner regarding approval of cost overrun, modification of terms and conditions of sanction and underwriting of cost overrun debt. On 19.01.2015, Punjab National Bank wrote a letter to the petitioner in respect of approval of Bank Guarantee of Rs. 422.00 crores. On 31.01.2015, Bank o....
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.... of the case you are advised not be transfer or liquidate or withdraw or otherwise deal with that the amount/ stock/security held in the above referred account(s) as on date, except with the prior permission of the authorities of this Directorate." 2.9. In W.P.Nos.10643, 14448 and 15317 of 2015, the following are the relevant passages of the impugned orders, which are the subject matter of the writ petitions. "It is to clarify that this Directorate has no objection for release of sanctioned/fresh funds for the project including the bank guarantees & working capital facilities and for pledging of shares among the consortium of lenders without its sale/transfer to a third party. It is also requested not to disturb the Fixed Deposits held with your bank or the consortium of lenders/pledged to the Customs authorities, without the prior concurrence of this Directorate." 2.10. On the earlier occasion, this Court framed the following issues. (i) Whether in terms of Section 49(1) of the Prevention of Money-Laundering Act, 2002, the respondent herein, namely, The Assistant Director, Directorate of Enforcement, Government of India, Chennai Zonal Office, is vested with power....
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....n the cadre of Deputy Director and therefore, the respondents concerned cannot do the same. There is no necessity to freeze the accounts especially when there are civil consequences. Nobody would be benefited by the orders impugned. There is no indication about the necessity to do so for the purpose of investigation. Such an investigation cannot go on for ever affecting the rights of the party. The proceedings do not have any relevancy to the case registered by the Central Bureau of Investigation. The petitioner has admittedly not started the mining operation. Even assuming that power is available to the respondents under Section 5 of the Prevention of Money-Laundering Act, 2002, the same cannot be used without any basis, especially when an affidavit has been filed. The impugned orders are contrary to the scheme of the Act. The object of the Act is to prevent the property from being alienated. Even in case of an attachment, a person interested would continue to enjoy the immovable property. There is no proceeds of the crime involved. The respondents have not looked into the relevant materials especially the various letters addressed by the petitioner. Accordingly, it is submitted t....
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....g and the same has been cancelled already. Neither the respondents are parties before the Apex Court nor the issues similar. Thus, the objection raised by the respondents is rejected. 6.2. ON MERITS: The legal issue raised has, in fact, been considered by the Calcutta High Court in ROSE VALLEY REAL ESTATE AND CONSTRUCTIONS LTD., V. UNION OF INDIA (2015) SCC online Cal. 539). By a detailed order, the Division Bench has agreed with the exercise of power during the course of investigation. As there is no dispute on the power of the respondents to investigate, the ratio laid down therein would apply to the case on hand. In other words, the exercise of power by the respondents is well within their jurisdiction while discharging duties as an Investigation Officer. Therefore, the distinction sought to be made by the learned Senior Counsel appearing for the petitioner cannot be accepted. The Division Bench has taken into consideration Sections 2(na) and 54 of the Act. The following paragraphs would be apposite. "A balance has to be struck between the right to property of an individual and the measures which may be required to be inferred by necessary implication in an invest....
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....ate within which the respondent authorities are at liberty to initiate appropriate proceedings as contemplated under the Act, if not already done, in respect of the assets/accounts referred to therein. If the respondent authorities fail to initiate proceedings under the Act in respect of the accounts/assets referred to in the impugned letter within the aforesaid time frame, the respondent banks would be at liberty to permit the appellants to operate the said accounts/assets in accordance with law. The appeal is partly allowed. Findings or observations made herein are for the purpose of disposal of the appeal and shall not have any binding effect on the parties at the subsequent stage of the proceeding or in any other collateral proceeding." 6.3. Now, the issue for consideration is as to whether the continuance of such an exercise of power is justified or not? As clearly held by the Division Bench referred to supra, the exercise of power is only meant for the purpose of investigation. Thus, such an exercise is meant to be undertaken sparingly to the minimum extent for a temporary period. Such a power can neither be a substitute nor akin to the power available un....
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....ed so far. Strangulating the petitioner would benefit none. When the exercise of power is for a specified purpose, it cannot be used otherwise. The decision of the Division Bench cited supra also would go against the respondents. It has also been held therein that such a power cannot be a substitute to the one available under Section 5 of the Act. The non consideration of the plea of the petitioner would lead to arbitrariness and thus, there is violation of Article 14 of the Constitution of India. Incidentally it would attract a violation of Article 19(1)(g) of the Constitution of India. It is not the case of the respondents that the plea of the petitioner, particularly, with reference to the continued usage is not correct. Therefore, this Court is of the considered view that though the power is available to the respondents to pass the orders impugned, its continued exercise in the given case cannot be sustained in the eye of law. More over even under Section 5 of the Act, the provisional attachment can be in force only for a period of 180 days and not beyond. 6.5. On the question of applicability of Section 68 of the Act, it deals with invalidation of the notice on certain grou....