TaxTMI 
TaxTMI 
2020 (10) TMI 1108
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....ith Mr. Sahil Sardessai, Advocates for Respondent Nos.1 and 2 in AUPML No.3/2019. Mr. P. Rao with Ms. Sandya Kushawah, Advocates for Respondent Nos.3 and 4 in AUPML No.3/2019. JUDGMENT (Per M. S. Sonak, J) Heard learned counsel for the parties. 2. The learned counsel for the parties agree that these appeals may be taken up and disposed of by a common judgment and order since, the challenge in all these appeals is to the common judgment and order dated 26.07.2019 made by the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS, PBPT Act at New Delhi (Tribunal) in the proceedings under the Prevention of Money Laundering Act, 2002 ( the said Act ). 3. For these appeals, the Appellants in AUPML No.1/2019 are referred to as "Kamats", Respondent No.1 as Enforcement Directorate or ED, and Respondent Nos. 2 and 3 as "Alemaos". 4. On 21.07.2015, a First Information Report (FIR) No.93/2015 was registered against "Kamats" and "Alemaos" alleging the offence under Sections 7, 8, 9, and 13 of the Prevention of Corruption Act, 1988 (PCA). 5. Thereafter, on 07.08.2015, the ED registered ECIR/PJ20/01/2015 thereby commencing the proceedings under the Prevention of Money Laundering Ac....
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.... Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. To the extent of Rs. 2 Lakhs. Total 75.00 Lakhs 6. The Joint Director - ED then filed a complaint under Section 5(5) of the PMLA before the adjudicating authority (AA) seeking inter alia confirmation of the provisional attachment made by order dated 30.03.2017. 7. The AA, by order dated 10.08.2017 confirmed the provisional attachment order dated 30.03.2017. 8. Kamats and Alemaos appealed the AA's order dated 10.08.2017 to the Tribunal. The Tribunal vide impugned order partly allowed the appeal. The attachment in respect of immovable properties was raised subject to certain conditions. The attachment in respect of FDRs was confirmed and directed to continue. 9. Aggrieved, both Kamats as well as ED have instituted these appeals. There is no appeal on behalf of Alemaos. 10. Kamats are aggrieved by conditions imposed for raising attachment of the immovable properties as well as the continued attachment of the FDRs. The ED is aggrieved by raising of attachment in respect of the immovable properties, even conditionally. 11. Mr. Rao, learned counsel for Kamats contends that o....
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....f the object and emphasis of Section 5(1) of the PMLA are kept in mind then, two predicates in sub-clauses (a) and (b) of Section 5(1) are required to be read disjunctively and not conjunctively. He submits that for this purpose, expression "and" is required to be read as "or" so that, the full effect is given to the legislative intent in enacting Section 5(1) of the PMLA. 17. Mr. Vaze submits that the Tribunal has also misconstrued the definition of "proceeds of crime" in Section 2(u) of the PMLA. He submits that expression "value of any such property" in Section 2(u) makes it clear that where the property directly or indirectly constituting the proceeds of crimes is converted or not presently available, it is permissible to treat even untainted property of the same or equivalent value as proceeds of crime for PMLA. 18. Mr. Vaze submits that any other interpretation would unduly advantage an accused who may be astute enough to dispose of or convert the property derived or obtained directly or indirectly as a result of criminal activities relating to the scheduled offence, leaving nothing for confiscation even after the conviction. 19. Mr. Vaze submits that for all the afo....
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...., thus, till the final order is passed, the alleged proceed of crime is to be secured by striking the balance. 79. Under these circumstances, the following directions are passed by modifying the impugned order: (a) With regard to movable properties of the appellants in appeal no.1976/2017 are concerned, the said attachment shall continue till the final order is passed. (b) Pertaining to immovable properties, it has come on record that the said properties were not acquired from proceed of crime. They were purchased much prior to the date of alleged offence. No valid reasons were recorded. The notice issued under Section 8(1) was defective notice. It is evident that while issuance of notice, the materials available were not properly discussed. The major part of reply has been ignored by the Adjudicating Authority. The charges have not been framed as informed by both parties. The witnesses have made contrary-statements to each other under section 50 of PML Act. Thus, the immovable properties are released forthwith as no case is made out by the respondent. However, in order to strike the balance, Digambar Kamat and Churchill Alemano shall furnish the Indemnit....
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....f India & Ors 2018 SCC Online Del 6523 and Directorate of Enforcement v. Axis Bank 2019 SCC Online Del 7854. He submits that the narrow view taken by the Tribunal in interpreting the provisions of Section 2(u) of the PMLA is contrary to the view of the Delhi High Court in the said two matters. 29. Mr. Vaze then submits that if the object of Section 5(1) of the PMLA is kept in mind then, the moment a person is found in possession of the proceeds of crime, it must follow that such person, will be likely to conceal, transfer or deal with such proceeds to frustrate confiscation proceedings under the PMLA. He, therefore, submits that the expression "and" which connects the predicates in clauses (a) and (b) in Section 5(1) of the PMLA must be construed as "or". He submits that it only if these two predicates are construed disjunctively and not conjunctively that full effect can be given to the provisions of Section 5(1) of the PMLA and its object effectively achieved. He relies on Ranchhoddas Atmarain vs Union of India (1961) 3 SCR 718, J. Jayalalitha vs Union of India (1999) 5 SCC 138, Municipal Corporation of Delhi vs Tek Chand Bhatia (1980) 1 SCC 158, Mr. Radha Mohan Lakhotia vs Th....
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....merely entertains such reason to believe in his mind but further, the reasons for such belief are required to be recorded in writing. At least on a plain reading of the provisions of Section 5(1) of the PMLA, it is apparent that the two predicates in clauses (a) and (b) have to be construed conjunctively and not disjunctively as suggested by Mr. Vaze, learned counsel for the ED. This means that the director or the authorized officer before he proceeds to make an order under Section 5(1) of the PMLA, must have reason to believe, on the basis of material in his possession, not only any person is in possession of any proceeds of crime but further, such proceeds of crime are likely to be concealed, transferred or dealt with to frustrate confiscation proceedings under Chapter III of PMLA. 33. At least the plain reading of the provisions of Section 5(1) does not support Mr. Vaze's contention that the moment any person is found to be in possession of any proceeds of crime, it must be presumed that such person would be likely to conceal, transfer or deal with such proceeds to frustrate confiscation proceedings under Chapter III of PMLA. So also, reading the "and" which connects the ....
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.... but; or; never does mean 'and'." 37. In Tek Chand Bhatia (supra), the Hon'ble Apex Court referred to Maxwell on Interpretation of Statutes, 11th Edn., pp. 229-30, as well as observations of Scrutton L.J. said in Green v. Premier Glynrhonwy Slate Co. and observed that it has been accepted that 'to carry out the intention of the legislature, it is occasionally found necessary to read the conjunctions "or" and "and" one for the other'. The word 'or' is normally disjunctive and 'and' is normally conjunctive, but at times they are read as vice versa. As you do sometimes read 'or' as 'and' in a statute....... But you do not do it unless you are obliged, because 'or' does not generally mean 'and' and 'and' does not generally mean 'or'. As Lord Halsbury L.C. observed in Marsey Docks & Harbour Board v. Henderson, the reading of 'or' as 'and' is not to be resorted to "unless some other part of the same statute or the clear intention of it requires that to be done". The substitution of conjunctions, however, has been sometimes made without sufficient reasons, and it has been doubted whether....
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....at the words mean" (REID MACDONALD AND FORDHAM, 'Cases and other Materials on Legislation' by, 2nd Edition, p.1005.) Lord Broughan has more emphatically stated the importance of the text of the statute in the following words: "if the Legislature did intend that which it has not expressed clearly; much more if the Legislature intended something very different; if the Legislature intended pretty nearly the opposite of what is said, it is not for judges to invent something which they do not meet within the words of the text (aiding their construction of the text always, of course, by the context)" (Robert Wigram Crawford v. Richard Spooner 4 MIA 179, p. 187 (PC)). These and like opinions lay stress on one aspect of intention, i.e., what the words mean; and undoubtedly to the extent, the 'referent' is clearly indicated and the words have a 'plain' meaning, the courts are not to busy themselves with 'supposed intention' (Pakala Narayanswami v. Emperor AIR 1939 PC 47, p.51). 43. Therefore, based upon the supposed intention of the Legislature, the expression "and" which connects the predicates in clauses (a) and (b) of Section 5(1) of the PMLA cannot be ....
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....o suspect." Belief is a matter of faith or opinion-even in the secular sense. But "reason" to believe needs more than a nagging suspicion or personal conviction. At the same time, it is less emphatic than "reason to act." It stands in an intermediary position. So we may say that the information must be credible, and the conclusions from that information probable. In other words, a surmise or a conjecture should not be the foundation for the belief. Under Section 5 of the Act, "reason to believe" serves two purposes: that (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred, or dealt with in any manner that may frustrate any proceedings to confiscate such proceeds of crime. 46. Kavita Pillai (supra) refers to analogous provisions under the Income Tax Act, NDPS Act, and Penal Code and employed expression "reasons to believe" and in that context, referred to the ruling of the Hon'ble Supreme Court in the case of Income Tax Officer v. Lakhmani Mewal Das (1976) 3 SCC 757 in which it is held that the expression "reason to believe" in Section 147 of the Income Tax Act does not mean a purely subjective satis....
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....er or deal with in any manner such proceeds of crime which may result in frustrating any confiscation proceedings under the PMLA. The Tribunal was certainly right in holding that there was no compliance with Section 5(1) of the PMLA insofar as the compliance with the predicates of Section 5(1)(b) of the PMLA were concerned. 50. The impugned order made by the Tribunal indicates that the ED authorities were repeatedly called upon to produce on record the reasons, if any, concerning predicates of Section 5(1)(b) of the said Act. The matter was adjourned on at least two occasions to enable the authorities to produce the reasons for such belief. However, the ED authorities failed to produce such reasons and ultimately, in their pleadings before the Tribunal admitted that apart from what is reflected in the order dated 30.03.2017 there are no separate reasons to be found in the file or any other contemporaneous record. The order dated 30.03.2017 made by the Joint Director as noted above, contain no reason whatsoever in the belief concerning predicates of Section 5(1)(b) of the said Act. On this short ground, the order dated 30.03.2017 warrants interference. 51. For all such reasons....