TaxTMI 
TaxTMI 
2017 (8) TMI 966
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....ng Authority in O.C. No. 409/2015. The appeal referred in serial no. 2 to 6 are filed against the order dated 3rd March, 2015 passed by the Adjudicating Authority in O.C. No. 381/2014. I propose to decide these appeals with the single order as the allegations and cause of action against in both O.C. No. 409 and O.C. No. 381/2014 substantially similar. 2. When the matter is taken up today, the learned counsel for all the appellants in the have referred the final judgment dated 22nd September, 2015 passed by the Hon'ble High Court Sikkim, Gangtok in Criminal Writ Petition No. 02/2015 as well as our earlier order passed on 9th March, 2017. They submit that the directions passed by the court in said judgment have not been complied with by the Adjudicating Authority in passing the impugned order dated 01.12.2015. the said judgment would also directly apply to the appeal No. FPA-PMLA-863/KOL/2015, FPAPMLA- 869/KOL/2015, FPA-PMLA-886/KOL/2015, FPA-PMLA- 871/KOL/2015, FPA-PMLA-866/KOL/2015 in O.C. No. -381/2014. 3. On 9th March, 2017 this tribunal allowed the five appeals wherein the similar issue about of judgment delivered by the Hon'ble Sikkim High Court was argued which was co....
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....f 2015 came before the Hon'ble High Court of Sikkim, the counsel appearing for the respondent in the said proceedings requested the Hon'ble High Court of Sikkim to clarify the interim orders dated 02.04.2015 with regard as other defendants (who are the appellants herein). The Hon'ble Court of Sikkim clarified that the order dated 02.04.2015 was to apply only to the writ petitioner there i.e. EIILM University the defendants no. 1 in the matter and appellant herein. 5.3. On the same day i.e. 05.06.2015, in the e-mail sent by Assistant Director, Enforcement Directorate, intimating to all the appellants i.e. Jharkhand Rai University, Rai Technology University, Malvika Foundation, Integrated Institute of Excellence Society, Eastern Institute for Integrated Learning in Management that the hearing of the complaint was scheduled and fixed on 8.6.2015. In the said mail the "other defendants" were directed to appear for the hearing of the said complaint, failing which the complaint would be heard and decided in their absence. The mail was sent by the Respondent on 06.06.2015, which happened to be a Saturday, at 10:10 PM on the official e-mail of the Appellants University. The counsel of "....
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....omplaint would be heard and decided in their absence. The mail was sent by the Respondent on 06.06.2015, which happened to be a Saturday, at 10:10 PM on the official e-mail of the Appellants University. The counsel of "other defendants" did not get the e-mail sent by the Registrar, Adjudicating Authority, PMLA due to some problems at the end of the office of the Registrar, Adjudicating Authority. 6. By order dated 15.06.2015, the Adjudicating Authority confirmed the provisional attachment order passed in O.C. No. 409/2015. 7. The said "other defendants" in the same O.C. No.-409/2015 thereafter filed appeals FPA-PMLA-943/KOL/2015, FPA-PMLA- 997/KOL/2015, FPA-PMLA-995/KOL/2015, FPA-PMLA-991/KOL/2015 & FPA-PMLA-999/KOL/2015 against the impugned order dated 15.06.2015, interalia, mainly on the following grounds:- (a) the provisional attachment order, show cause notice, complaint and impugned order dated 15.06.2015 passed by the Learned Adjudicating Authority is without jurisdiction and contrary to the provisions of the Act and the Rules and is bad in law as the constitution/Coram of the adjudicating authority comprising of a single Member which is to hear the Appellants is not....
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....ity. (e) The Learned Adjudicating Authority failed to appreciate that the action of the respondent in attaching the land sold by the sponsoring body of the Appellant as well as the consideration received by it and invested in the endowment fund of the Appellants amounts to double attachment of properties which is not contemplated under the provisions of the act and violates the provisions of law and violates the fundamental rights of the appellant. The Learned Adjudicating Authority has failed to appreciate that the action of entering into an agreement to sell does not constitute a crime falling within the ambit of scheduled offences under the PML Act, 2002. (f) The Learned Adjudicating Authority has failed to appreciate that money received by the sponsoring body of the Appellant from the legitimate sale of land and building cannot be termed as a "proceeds of crime" in the hands of Appellant instead it is the assets in the hands of EIILM University procured from the alleged proceeds of crime which are to be treated as "proceeds of crime" as defined under the Section 2(1)(u) of the Prevention of Money Laundering Act, 2002. Thus the impugned order being bad in law" ought to be ....
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.... Member. The Chairman who heard the matter is not a Judicial Member and other officer was appointed as Member (legal) on 07.09.2015 two weeks prior to the judgment delivered by the Hon'ble High Court. 13. The Hon'ble High Court in the criminal writ petition after hearing the 7-14 have discussed the facts in the matte as well as law on the subject. It is necessary to reproduce the said paras:- 7. On a bare reading of Section 6 and Sub-Sections thereunder, I find substance in the submission of the Learned Central Government Counsel that there is no mandate that a Bench to be constituted by the Chairperson of the Adjudicating Authority under Sub- Section (5) of Section 6, must necessarily have one Member who is a Judicial Member. Sub-Sections (1) and (2) of Section 6 prescribes the constitution and composition of the Adjudicating Authority. Sub- Section (3) of Section 6 prescribes the eligibility conditions for persons to be appointed as the Members of the Adjudicating Authority. We may reproduce below Sub- Sections (1), (2) and (3) and Clauses (a) and (b) of Sub-Section (5) of Section 6 of the PMLA- "6. Adjudicating Authorities, composition, powers, etc.- (l) The Central ....
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....has been held as under:- "59. In view of the aforesaid categorical statement of law, we would accept the submission of Mr Nariman that the tribunal such as the State Commission in deciding a lis, between the appellant and the respondent discharges judicial functions and exercises judicial power to the State. It exercises judicial functions of far-reaching effect. Therefore, in our opinion, Mr Nariman is correct in his submission that it must have essential trapping of the court. This can only be achieved by the presence of one or more judicial members in the State Commission which is called upon to decide complicated contractual or civil issues which would normally have been decided by a civil court. Not only the decisions of the State Commission have far reaching consequences, they are final and binding between the parties, subject, of course, to judicial review." 11. The passage in Kihoto Hollohan (supra) relied upon to arrive at the above finding is found reproduced in paragraph 58 of the Tamil Nadu Generation and Distribution Corporation Limited (supra) which we may also reproduce below:- "58. Again in para 99, it is observed as follows: (Kihoto Hollohan case, SCC p.70....
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.... the Bench constituted under Clause (b) of Sub- Section (5) of Section 6 of PMLA by the Chairperson of the Adjudicating Authority should be a Judicial Member as he "with his judicial experience would, by virtue of his specialised knowledge, would be better equipped to dispense with speedy and efficient justice". This appears to be import of the words "as the Chairperson of the Adjudicating Authority may deem fit". 14. It is an admitted position that the post of a Judicial Member under Respondent No.3 is still lying vacant and that the impugned show cause notice was issued and the order under challenge passed in the absence of such a Member. Apart from what have been observed earlier, in a proceeding of the present kind, where orders were passed ex parte by the Adjudicating Authority in the absence of the Petitioner- University, it would have been essential for a Judicial Member to be part of the Bench considering the nature of the lis before it to ensure that the orders are passed in satisfaction of all the principles relevant and acceptable in law. Prima facie, therefore, I am of the view that the order does not appear to pass the muster of the law laid down in Tamil Nadu Gener....
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....ion with regard to argument addressed by the Counsel for the respondent that the member as per the scheme of the Act was/is empowered to hear the matter on behalf of Adjudicating Authority. Infact the same issue has been raised in many appeals pending before this Tribunal and the same would be considered as and when the said pending appeals are heard. 20. It appears that the impugned order dated 1st December, 2015 the same has not been passed by the Judicial Member. The learned counsel for the appellants submit that even as of today the Judicial Member has not been appointed except after filing the writ petition Member (legal) has been appointed. It is evident that the directions issued by the Hon'ble High Court of Sikkim, Gangtok dated 22nd September, 2015 are not complied with. The impugned order has not been passed by the Judicial Member despite of directions issued by the Hon'ble High Court. No doubt the Member (legal) may be having the qualifications to become Judicial Member, but facts remains that his appointment was not made for as Judicial Member and this tribunal is bound to the respect the judgment and directions issued in the criminal writ-petition. 21. I am also ....