TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 424
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.... pertain to 65,00,000 shares sold through BSE (Respondent No.2) on 12.02.2018, sale proceeds of INR.386,10,00,261/- was frozen by Directorate of Enforcement on 13.02.2018 u/s 102 Cr PC, then on 23.03.2018 Directorate of Enforcement instructed BSE to remit INR.386,10,00,261/- (approx USD 60 million equivalent of 64,94,891 shares) to USA to purchaser (M/s PabraiInvestment Fund) andallowed remaining shares to be sold for INR.30,35,006.90 through BSE. 4. The total shares of 1,43,38,330 [78,38,330 + 65,00,000]were subscribed by the Appellants in November, 2003 by foreign inward remittances from Saudi Arabia to India through State Bank of India, Overseas Branch, New-Delhi. Approval of the Reserve Bank of India was obtained and is on record. These shares were held uninterrupted from 2003 to 2018 Jan/Feb. The PML Act, 2002 was notified on 01.07.2005. 5. The brief facts of the present matter are as follows: a) The Appellants are the foreign nationals and are residing in Saudi Arabia. b) They are importer of rice in Saudi Arabia from India for more than three decades. The imports of rice from India directly is above 2 billion USD in the last 30 years. c) Due to interest in the rice b....
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....f the Appellantshave been duly disclosed in the annual audited accounts of KRBL Ltd. submitted every year to all the government authorities particularly because KRBL Ltd. is a listed company in the Bombay Stock Exchange and National Stock Exchange. g) The equity shares allotted to the Appellants were also listed on the trading portal of Bombay Stock Exchange as per order dated 12.10.2004 of the Stock Exchange. Copy of the order dated 12.10.2004 of the Bombay Stock Exchange is filed as Annexure M. 6. It is contended on behalf of appellants that the Enforcement Directorate after issuing instructions dated 13.02.2018 to BSE to restrain them (BSE) not to give effect to a concluded transaction No. 1718218 of 65 Lacs shares sold on 12.02.2018, thereby depriving the Appellants funds worth approx.. Rs. 386 crores and it is alleged that the said act on the part of ED was illegal. 7. On 23.03.2018, Enforcement Directorate further issued another instructions to BSE to remit these funds to the tune of Rs. 386 Croresto M/s.Pabrai Investment Fund, USA. The BSE has compiled the said direction despite of having knowledge that it was a concluded contract between the appellants and Pabrai USA. T....
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....g to the sale of the said shares. The said letter is relevant and is set out below: 'F.No. ECIR/15/DLZO-1/2014 Dated 13.02.2018 To, Sh. Poonam Chand BSE Ltd. (Stock Exchange) 101 , 1st Floor, Aggarwal Corporate Tower Plot No. 23, District Center, Rajendra Place, New Delhi - 110 008 Sub: Seizure/freezing of Shares of M/s KRBL Limited u/s 102 Cr.P.C. r/w section 65 r/w Sec. 2(na) of PMLA. Sir, This Directorate is conducting investigation against M/s KRBL Limited in AgustaWestland Helicopter Scam and Embraer case under the Prevention of Money Laundering Act. Investigation reveals that M/s Rawasi Al Khaleej General Trading, UAE which is controlled by promoters of M/s KRBL Limited, received Agusta kickbacks through M/s Abdulla Ali Obeid Balsharaf& Omar Ali Obeid Balasharaf. These payments were routed through shell companies. Investigation reveals that the above mentioned kickbacks (proceeds of crime) were further layered through M/s KRBL DMCC and finally reached M/s KRBL Limited. The investigation also reveals that through this laundering of money M/s Abdulla Ali Obeid Balasharaf& M/s Omar Ali Obeid Balsharaf acquired 3.19% shares each of M/s KRBL Limited. ....
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....ties of the following entities for their trades executed in the scrip KRBL Ltd. (530813) on trade date 12/02/2018. Buyer Client Securities to be withheld Seller Client Funds to be withheld The Pabrai Investment Fund II LP 64,94,891 shares Abdullah Ali Balsharaf Omar Ali Obaid Balsharaf Rs. 3,86,10,00,261.00 80. It is apparent from the aforesaid email that securities due to M/s Pabrai Investment Fund and the amount due to the petitioners had been withheld. This also clearly indicates that as far as the said entities are concerned, the said transaction of sale and purchase is complete. 82. Clearly, the Deputy Director of the Enforcement Directorate had no authority whatsoever to freeze the shares, which were to be delivered in settlement to the purchaser. There was no allegation or any iota of suspicion against the purchaser who had purchased the shares from the floor of the exchange. If at all, any order for freezing any property was required to be passed under Section 102, Cr.P.C. (assuming it is accepted that Section 102, Cr.P.C. is at all applicable, which this Court has not accepted), at best, the officers of the Enforcement Directorate could have frozen the money (a....
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.... No authority for such actions can be found in section 102 Cr. PC. A police officer cannot set aside a transaction of sale and purchase of shares under the provisions of Section 102 Cr.PC. This Court pointedly asked Mr Singh, the learned counsel for the respondents as to under which authority did the Assistant Director, PMLA issue the communication dated 23.03.2018. Apart from contending that such action was bonafide, there was no explanation forthcoming as to under which provision of law, this direction had been issued. 87. Curiously, the said officer permitted BSE to let the transaction relating to 5109 equity shares go through. On 15.02.2018 the said officer sent an email to the BSE, which reads as under: 'Subject: RE: Seizure/freezing of shares traded on 12.02.2018 of M/s KRBL Please refer to the trail mail. As discussed with you regarding the 3 counter parties mentioned below, as they have already sold their securities on the same day, no action is required to be taken against them. Sum of Qty Sum of TRADE _VALUE Buy CP_MEMBER Buy CP_MEMBER_ NAME Buy CP_CLIEN TCODE Buy CP- CLIENTNA M E 25 148.50 37 BIPIN RATILAL VORA J005 JETAL PRAVINCHA NDRA PAREKH 5000 29....
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....eezing the said shares and the amount released in the bank account of the petitioners has since been passed and, the petitioners have preferred an appeal before the Appellate Tribunal. Keeping this in view, no further orders are being passed and it would be open for the petitioners to seek appropriate remedy including compensation for any loss suffered by them on account of the illegal actions on the part of the respondents. Whether the provisions of the PMLA apply to the shares of KRBL Ltd. that were acquired prior its enactment. 94. The next question to be examined is whether the provisions of the PMLA are applicable in respect of freezing orders passed under Section 17(1A) of the PMLA in respect of the shares of KRBL Ltd. As noticed above, these shares were acquired in the year 2003 and held uninterruptedly by the petitioners for approximately 15 years. Although, in the communication dated 13.02.2018 sent to BSE, it is alleged that the said shares were acquired in the process of money laundering, there is no material to substantiate such allegation. The alleged scheduled crime is stated to have been committed much after the acquisition of the aforesaid shares, therefore, t....
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....rred Euro 1 million and USD 1 million to M/s. Windsor Group Holding Limited between 2009 to 2012. Out of which, USD 830,000 were transferred to M/s RAKGT between 03.02.2010 to 13.02.2010. E. M/s. Interstellar Technologies Limited transferred USD 10,000 to the accounts of M/s. Carisma Investment Limited in 2010. Whereas, USD 419,980 were transferred to M/s RAKGT between 18.04.2009 to27.02.2010 by M/s. Carisma Investment Limited. F. M/s. Interstellar Technologies Limited transferred USD 200,000 to the accounts of M/s. Capital Infrastructure Limited in 2009 out of which USD 114,972 were transferred to M/s RAKGT on 18.04.2009." 101. During the course of hearing, this Court had repeatedly called upon the learned counsel for the Enforcement Directorate to explain as to how the petitioners are connected with the funds remitted to RAKGT and the material available with the Enforcement Directorate, which would give reasons to believe that the petitioners are in possession of the proceeds of crime overseas. 102. In this regard, the learned counsel for the Enforcement Directorate referred to the affidavit filed on behalf of the Enforcement Directorate in compliance with the orders pass....
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....nd on the allegation made against the petitioners." 106. The expression 'proceeds of crime" has been defined under Section 2(1)(u) of PMLA as under: 'Section 2(1) (u) - 'Proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country] [or abroad];" '107. A plain reading of the aforesaid definition indicates that the definition/expression of proceeds of crime is in two parts. The first part relates to proceeds of crime derived or obtained by crime and the second relates to property of an equivalent value. The expression 'proceeds of crime" means any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Clearly the shares in question do not fall within this part of the definition. This is so because shares were subscribed by remittances paid through banking channels much prior to commission of any alleged crime and much prior to the PMLA coming into force." '110....
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....follows:- Para 6 (iii). 'In the present case, the Exchange received directions dated 13.2.2018 from the Enforcement Directorate, New Delhi ('ED"), directing the Enchange in exercise of powers conferred upon Section 102 of the Code of Criminal Procedure, 1973, read with Sections 65 and 2 (na) of the Prevention of Money-Laundering Act, 2002, to withhold the pay-out of funds/securities in the scrip of KRBL Ltd for trades executed on 12.2.2018, wherein the Petitioners were reflected as clients who were supposed to receive pay-out of funds pursuant to their sale of shares in the said scrip. ..........................................................." Para 6 (iv) 'The Exchange duly complied with the said directions of the ED and accordingly the counter-party members and the member through whom the Petitioners transacted, i.e., Respondent No. 3 herein were intimated by the Exchange about withholding of their pay-out of funds and securities to the receiving members pursuant to the direction received from the ED. ............................................................................" 16. It is alleged on behalf of appellants thatthe Respondent no. 1 - Directorate of Enfor....
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....ds of crime (para 77 of the judgment). Directorate of Enforcement now in fact shifted its earlier stand that these were acquired from proceed of crime and contended that theshares are 'equivalent" to proceeds of crime, therefore, seizure and frozen of any movable and immovable property is permissible in law as per amendment carried out in the Act. 22. It was observed by the High Court that had the proper material been available with the authorised officer, such situation could not have arisen apprehension and assumption and perception is a dangerous proposition.It is observed by the Hon'ble High Court that some material must be in hand of authorised officer who is duty bound to record the reason to believe pertaining to the party concerned whose property is to be seized and frozen. In the absence of above, it is an abuse of process of law. 23. It appears from reason to believe that on 23.02.2018 when reason to believe recorded by the authorised officer, he inter-alia had mentioned that further on 12.02.2018, the bull of trading of shares of M/s. KRBL Limited owned by Omer Ali Balsharaf was done in BSE, which seems to be an attempt to shift the suspected proceeds of crime related....
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.... feel free to contact me if I can be of any service. 26. It is stated on behalf of appellants that 1,43,38,330 shares are neither 'proceeds of crime', nor equivalent to proceeds of crime u/s 2 (1) (u) of PMLA. Hence Directorate of Enforcement's action to freeze them as proceeds of crime is contrary to law on the date of freezing the same. 27. It is argued on behalf of appellants that the said illegal act of remittance of USD 60 millions outside India can also amount to offence u/s 418 and 420 of IPC, which is a scheduled offence under Part A Paragraph 1 of the Schedule to the PMLA u/s 2 (y), with cross border implications as per Part C of the Schedule and Directorate of Enforcement not only illegally depleted India's forex reserves amounting to USD.60 million,but also knowingly caused wrongful loss to the Balsharafs, whose lawful interest is to be bound to protect. Directorate of Enforcement wrongly induced BSE to deliver Balsharaf's property to USA party and since the Directorate of Enforcement's actions are illegal and malafide, no protection u/s 67 PMLA is available to them. 28. Learned counsel appearing on behalf of BSE has made very short submission and admitted that the BS....
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.... money is shown by Mr. D.P. Singh. 32. It is also stated by him that the appellants in their WP (Civil) 3531/18 have taken a stand that the amount was advanced to RAKGT through the assistance of GautamKhaitan, a renowned international solicitor for purchase of rice and other material from RAGKT. However, the said stand is contradicted by GautamKhaitan in his statement u/s 50 PMLA dated 15.02.2018 wherein he states in relation to the appellant that : 'I do not remember any personal meeting with him and I confirm that I have no direct dealings personal or professional, with him or any of his companies." 33. Therefore, it is argued by him that there are reasons to believe that the frozen shares may be'proceeds of crime" under the PMLA. He also states that after the completion of investigations, the appellants might or might not found to be involved, however, at this stage, no opinion can be formed. 34. It is stated on behalf of appellants that Directorate of Enforcement has allegedly shown Rs. 111 crores worth of ledger entry abroad, and has frozen about Rs. 900 crores (value of 1,43,38,330 shares) alleging them as equivalent to Rs. 111 crores and its shows the non-application of....
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....taken or held outside the country, then the property equivalent in value held within the country or abroad. 38. It is stated by him that 'value of any such property' as mentioned in section 2 (1)(u) means: 'a value equivalent to the value of a property derived or obtained directly or indirectly by any person as a result of criminal activity. The property itself may no longer be available but the equivalent value of such property, whether held in cash, etc., would be available for attachment." 39. It is submitted by him that the shares were frozen in lieu of value of equivalent which provision was already existed previously. The said amendment of property equivalent abroad only which seeks to prevent frustration of any proceeding relating to attachment and confiscation of proceeds of crime, in line with the object of the Act, by necessary implication. 40. Let me now deal with the rival submissions of parties. It is not denied on behalf of ED and BSE that on 13th February, 2018, 65 lakhs shares were sold by Balsharafs on the platform of BSE and approx.. Rs. 386,10,00,261/- were payable to Balsharafs. Sale was concluded even as observed in paras 80, 86 of Hon'ble High Court order....
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....para-82 that the officer of ED could have frozen the money which were to be paid to the appellants by BSE. It has also been noticed by the High Court that on 25.02.2019, M/s. Pabrai Investment Fund sent a letter to ED confirming the purchase of shares and paid the entire consideration to BSE and ED has no justification to withhold the same. The Hon'ble High Court has recorded that by letter dated 23.3.2018, Assistant Director, PMLA sent a letter to BSE to release the amount paid by M/s. Pabrai Investment Fund but to continue to withhold the securities and shares of KRBL Ltd. 46. The Hon'ble High Court of Delhi in para-86 of the judgement, held that the Police Officer cannot set-aside a transaction which was completed contract under the provision of Section 102 Cr.P.C. and the appellants were entitled to the consideration paid by Pabrai Investment Fund. The Deputy Director of ED had interdicted the BSE for doing so in its letter dtd. 23.03.2018. 47. The Hon'ble High Court judgment dated 9.1.2019 in para 82 has held that :- 'Clearly, the Deputy Director of the Enforcement Directorate had no authority whatsoever to freeze the shareswhich were to be delivered in settlement to the ....
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....d contract, and incorrected directed remittance USD 60 million abroad in violation of Section 3 (b) of FEMA, 1999, and in contravention of PML Act, 2002 without any power to exercise Section 102 Cr PC to freeze shares and/or interdict and annul an executed sale purchase transaction, held Hon'ble High Court. This Tribunal fully endorsed the finding of the Hon'ble Court. 54. Mr. D.P. Singh has not disputed the fact that the Hon'ble Delhi High Court has already dealt with this aspect, included the interpretation of Section-65 of the PMLA as well as the provision of Section 102 Cr.PC where the arguments of D.P. Singh were rejected. The said paras 56 to 74 of the judgement where the said issues were discussed, are reproduced below:- '56. It is clear from the aforesaid scheme of the PMLA that any property can be provisionally attached under Section 5 or be seized under Section 17 or be frozen under Section 17(1A) of the PMLA. However, any such order can be passed only if the necessary checks and balances are complied with; namely, that the seizure or attachment is preceded by the concerned authority having reason to believe that such properties are proceeds of crime or are otherwise r....
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....may give custody thereof to any person on his executing a bond undertaking to produce the property before the Court as and when required and to give effect to the further orders of the Court as to the disposal of the same." 61. It is clear from the plain reading of Section 102 Cr.P.C. that any police officer may seize the property, which may be alleged or suspected to have been stolen or which is found in circumstances which create suspicion of the commission of any offence. However, the said order of seizure is only a temporary order and in terms of sub-section (3) of Section 102 of Cr.P.C., the police officer seizing any property on the grounds of suspicion of an offence is required to forthwith report the seizure to the Magistrate having jurisdiction. 62. The said property seized is required to be produced before a Court and/or reported to a Magistrate. In such cases, the court would have the power to pass necessary orders with regard to the said property. In terms of Section 457 of the Cr.P.C., whenever a property is seized by any police officer and is reported to the Magistrate, the Magistrate is empowered to make such orders as he thinks fit in respect of disposal of the ....
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.... Magistrate. There is clearly no principle of law that would permit such interpretation, where officers can draw the power under a statute and yet not be accountable for the checks and balances enacted therein. 67. Mr Singh had contended on behalf of the Enforcement Directorate that the PMLA does not contain any provision regarding seizure on mere suspicion, therefore the power to make such seizure can be drawn from Section 102 of Cr.P.C. He contended that the provisions of Section 102(1) of Cr.P.C. are, therefore, not inconsistent with the provisions of the PMLA with regard to seizure of property. The said contention is unmerited. The question whether an enactment is repugnant to another is not determined on whether two provisions can be simultaneously obeyed but is determined in the context of thescheme of the legislative enactment. The question to be asked is whether the schemes of the two enactments can subsist and be implemented simultaneously. It is apparent that the scheme of effecting provisional attachment and seizure of property under the PMLA is wholly inconsistent with the one as enacted under the Cr.P.C. 68. In Innoventive Industries Ltd. v. ICICI Bank and Anr.: (2....
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.... applies the aforesaid test, it is at once clear that the PMLA has set out a separate scheme with a separate set of safeguards for ensuring that properties of parties are not attached or seized without the authorities effecting such actions having reason to believe that such properties are proceeds of crime or are related to a crime. 70. If the contention as advanced on behalf of the Enforcement Directorate is accepted, it would mean that whereas the property cannot be provisionally attached under Section 5(1) of the PMLA and/or seized or frozen under Section 17 of the PMLA without (a) theDirector having a reason to believe, on the basis of material available with him, that the properties are proceeds of crime and (b) recording such reasons in writing; the same officer can on mere suspicion pass orders for freezing the properties without recording reasons. Further, there are strict timelines provided under the PMLA. The orders of provisional attachment and/or seizure and/or freezing cannot extend beyond the period of 180 days. The Director of the Enforcement Directorate (or the officer authorized by him) is required to file a complaint by seeking extension of the period of rete....
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....perty, interdict transactions and perhapsbring a person's business to a standstill. The nature of the power of seizure contemplated under the provisions of Cr.P.C. is drastic and exercise of such powers is likely to have severe adverse effects on the person concerned; thus, the parliament in its wisdom did not confer upon the Enforcement Directorate, any powers to attach or freeze assets on a mere suspicion. 73. The learned counsel appearing for the Enforcement Directorate has also referred to the decision of the Supreme Court in V.T.Khanzode and Ors. v. Reserve Bank of India and Anr.: (1982) 2 SCCThe said decision has no application in the facts of the present case. In that case, the petitioners had challenged the circular issued by the Reserve Bank of India whereby it had decided to combine the seniority of all officers. The petitioners had contended that such conditions of service could not be framed by administrative circulars but necessitated framing Regulations under Section 58 of the Reserve Bank of India Act, 1934. The Supreme Court repelled the said contention and held that under Section 7(2) of the Act, the Central Board had the power to provide for service conditions o....
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....alent" of proceeds of crime was enacted by Parliament vide Finance Act, 2015 (w.e.f 14.05.2015). It is admitted position that these shares were purchased in 2003 when PMLA was not in existence. It is also matter of record that the relevant period about the bribe amount, if any, is between from the period 2008 onward. The question of purchase of shares in the year 2003 from tainted amount or acquiring the shares from proceed of crime does not arise. 59. Clause 145 of the Finance Act, 2015, and Clause 171 of the Finance Bill, 2015, reads, inter-alia, as follows :- AMENDMENT TO THE PREVENTION OF MONEY-LAUNDERING ACT, 2002 145. Amendment of Section 2---In the Prevention of Money- Laundering Act, 2002 (15 of 2003) (herein referred to as the Moneylaundering Act), in Section 2, in sub-section (1),---- (i) in clause (u), after the words 'or the value of any such property", the words 'or where such property is taken or held outside the country, then the property equivalent in value held within the country" shall be inserted. The 'EQUIVALENT" concept was inserted in Section 2 (1)(u) of PMLA, 2002 with effect from 14.05.2015. The amendment is prospective as its plain language indica....
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.... not be involved, however, the respondent would only come to know once the investigation is complete. 63. The legislature has consciously used the words 'value of any such property' and 'property equivalent in value' in the same definition clause and therefore, they cannot connote or mean as the same property. 64. Therefore, when the case of the ED falls under equivalent in 'value of any such property', it cannot take any unrelated property which has no nexus or link with the actual proceeds of crime and attach the same as 'property equivalent in value' in the absence of evidence. 65. On the issue of the question of retrospectively operation, the Maxwell on Interpretation of Statutes, Twelfth Edition, at page 215, under the heading-Retrospective Operation of Statutes, writes. 'UPON the presumption that the legislature does not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retros....
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....of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. In Principles of Statutory Interpretation (7th Edn., 1999) by Justice G.P. Singh, the statement of Lord Blanesburg in Colonial Sugar Refining Co. v. Irving [1905 AC 369 : (1904-07) All ER Rep Ext 1620 (PC)] and the observations of Lopes, L.J. in Pulborough Parish School Board Election, In re, Bourke v. Nutt [(1894) 1 QB 725 : (1891- 94) All ER Rep 831 (CA)] have been noted as follows: (QB p. 737) 'In the words of Lord Blanesburg, 'provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment'. 'Every statute, it has been said', observed Lopes, L.J., 'which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already past, must be presumed to be intended....
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....ly be considered to have had will be put on the words, if necessary even by modification of the language used." d) K. C. Arora and Another Versus State of Haryana, 1984 (3) SCC 281, para 15 [3 Judge Bench of SC], held that: '15. It may be pointed out at the very outset that the Parliament as also the State Legislature have plenary powers to legislate within the field of legislation committed to them and subject to certain constitutional restrictions they can legislate prospectively as well as retrospectively. It is, however, a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect..............................................." 69. In M/s Punjab Iron Supply Co., Chandigarh V. Central Government, [1984]1SCR428, the exemption was granted by the Home Department Notification dated 31.01.1973, as modified notifications dated 24.09.1974 to those buildings which were given sewerage connection or electric connection or which are occupied, as the case may be, on or after January 31, 1973. It was held that the benefit of the notification cannot be extended to the buildings whic....
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....nt, retrospectivity should not be considered to have arisen. 70. These shares were admittedly not acquired from the proceeds of crimewhich is even recorded by the Hon'ble Court when the respondent had changed his stand. The allegation of alleged bribe, if any, is from the period 2008 onward as it is observed by the Hon'ble High Court. The issue in hand is whether the principle of retrospective effect would apply in the present case in view of acquiring the shares in the year 2003. Even at that time, PMLA was not in existence. 71. The total shares of 1,43,38,330 [78,38,330 + 65,00,000]were subscribed by the Appellants in November, 2003 by foreign inward remittances from Saudi Arabia to India through State Bank of India, Overseas Branch, New-Delhi. Approval of the Reserve Bank of India was obtained and is on record. These shares were held uninterrupted from 2003 to 2018 Jan/Feb. The PML Act, 2002 was notified on 01.07.2005 72. It is correct that the amendment of property equivalent abroad is only to seek to prevent frustration of any proceeding. In case the argument of D.P. Singh is taken a face value, admittedly, the effective date of notification (vide-GSR: 437(E) of this Act is....
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.... for a period not exceeding one hundred and eighty days from the day the such property was seized or frozen as the case may be. The officer authorized immediately after he has passed the order of retention or continuation of freezing of property for the purpose of adjudication under Section 8, has to forward a copy of the order along with the material in his possession to the Adjudicating Authority in a sealed cover within the meaning of Sub-section (2) of Section 20. Sub-section (3) of Section 20 mandates that on the expiry of 180 days, the property shall be returned to the person concerned from whom such property was seized and whose property was ordered to be frozen unless the Adjudicating Authority permits retention or confirmation thereof of such property beyond the said period. 76. It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property is 180 days from the date of seizure of any property or records. The said period is not extendable as per the scheme of the Act, unless the prayer for retention is allowed and subject to filling of prosecution complaint within 90 days from the date of passing the ....
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....-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable, unless the prosecution complaint is filed against the party concerned in relation to the property . Admittedly, in the present case, the confirmation/impugned order was passed on 10.09.2018. At that time, the prescribed period was 90 days. 81. As already stated, where the Adjudicating Authority decides by an order confirm the retention under Sub-section (1) of Section 17 or Section 18 for the purpose of continuation during investigation for a period not exceeding ninety days under this Act before the Competent Court, or under the corresponding law of any other countries as the case may be under Sub-section (3) (a) of Section 8 may take necessary action within the time prescribed. In failure to do so under this Act, all the proceedings, seizures/frozen under Section 17 would be lapsed ipso facto. 82. Section 8 of the PMLA provides for procedure for adjudication by the Adjudicating Authority. The relevant extract of Section 8 of the PMLA is set out below:- '8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications m....
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....edings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 or Section 58-B or sub-section (2-A) of section 60 by the Special Court. 83. It is settled law that if a particular thing is to be done in a particular manner, it must be done in that manner only and none other. Reliance in this regard is also placed on a judgements of Hon'ble Supreme Court in the cases of DipakBabaria and another vs. State of Gujarat 2014 (3) SCC 502 and J. Jayalalitha&Anrvs State of Karnataka &Ors 2014 (2) SCC 401. 84. Sub-section (1) of Section 17 provides that the authorised officer has to record the reason to believe in writing. In the such reason to believe, he has also to record the basis of information which is in his possession before conducting the search and seizure. 85. It stipulates that if person concerned has committed any act which constitutes money-laundering, or is in possession of any proceeds of crime involved in money-laundering....
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....on (2) stipulates that after search and seizure, the authorised officer shall immediately forward a copy of the reason so recorded along with the material in his possession to the Adjudicating Authority in a sealed cover. 87. Before the High Court, the counter-affidavit was filed by the respondent no. 1 stating that the proceed of crime suspected to be passed in the account of RAKGT under the ledge entries of M/s.Omar Ali Balsharaf GK who is the major shareholder of M/s. KRBL Ltd. It was stated that RAKGT is alleged to have received the alleged proceed of crime. It was observed by Hon'ble Delhi High Court that a ledger entry is not property and cannot be proced of crime. Nothing has been brought on record to show that the said alleged ledger entries of M/s. Omar Ali Balsharaf GK is the part of proceed of crime. It was merely an apprehension and suspicion. More than an year is passed. As per the scheme of the Act that outer time limit for investigation is 90 days if the retention/ confirmation order is to continue. Merely stating that the party is not joining the investigation is not enough, it was for the respondent to investigate the matter as per time limit provided by the Act.....
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.... the Appellant herein. The properties and records of the Appellant were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already elapsed as more than an year has been expired. No prosecution complaint has been filed by the respondent against the appellants. The said fact has been admitted by the learned counsel for the respondent. The dispute is not ended here as one set of appellants are pressing for passing the decree in their favour. 94. The appellants in appeal nos. 2817 and 2818/2018 have also claimed the decree of its own money of about INR.386 crores with interest which is arising out of a concluded sale transaction on the platform of Bombay Stock Exchange (Respondent no. 2 herein) on 13.02.2018. 95. Mr. Bhattacharya, learned counsel appearing on behalf of appellants in order to claim the decree in favour of his client, submits that the market value of the shares have gone down to large extent. It was the malafide act on the part of ED and BSE, the appellant has suffered Rs. 386 crores without any fault of the appellant. They must return this amount with interest. He has referred the relevant dates, facts and Sec....
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....ify or setting aside the impugned order. No power is given to pass a decree for recovery of amount. The recovery of amount, interest and to receive the compensation and damages lies with the civil court. 101. Under section 35(3), the power of civil courts are given to do the work in this Tribunal which is akin to civil court for that purpose only. But a decree for recovery cannot be passed for the same. However, at the same time I am of the view that suit in civil court for recovery may be brought against any authority if anything done or intended to be done in bad faith with malafide intention, deliberately and wilfully having knowledge that the said act of any authority would cause loss and injury to the party without its fault. Under these circumstances, there is no bar of suits in civil court. The said preposition of law is not disputed by Mr.D.P. Singh at the time of hearing. 102. Therefore, the decree in terms of prayer 'A' of appeal no. 2817/2018 and 2818/2018 cannot be passed. The appellants, no doubt, are entitled to receive the money which is wrongly remitted to third party but in accordance with law. However, the appellants are entitled for relief of defreezing all the....