TaxTMI 
TaxTMI 
2017 (7) TMI 1377
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....tioner and his family members be permitted to operate the bank accounts without any hindrance. (c) Pending admission, final hearing and disposal of this petition, stay the action of freezing the accounts of the petitioner and his family members as per details given at Annexure)B and allow the petitioner and his family members to operate the bank accounts. (d) Pending admission, final hearing and disposal of this petition, to allow the petitioner and his family members to operate bank accounts mentioned in an application dated 28.03.2017 at Annexure-D (e) To dispense with the filing of the affidavit as the petitioner is in judicial custody. (f) To pass any other and further orders as may be deemed fit and proper." 2. The facts giving rise to this writ application may be summarized as under; 2.1 The CBI/ACB, Gandhinagar registered an FIR No. RC0292016A0016 dated 20th December, 2016 against the writ applicant herein and his family members including one Shri Pankaj Bhatt, Senior Manager, Surat People's Cooperative Bank, Udhna and other unknown public servants for the offence punishable under sections 120B, 419, 420, 468 and 471 of the India....
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....A) under section 45 of the PMLA for the offence under section 3 and punishable under section 4 of the PMLA, 2002. The complaint has been registered as PMLA Special Case No. 5 of 2017. In the complaint, the following findings of investigation have been stated; "FINDINGS OF INVESTIGATION 38. Based on the scrutiny of the FIR, various bank records, bank statements, documents called from Banks and statements of various persons recorded under PMLA has revealed the following: 38.1 The CBI/ACB, Gandhinagar registered an FIR No. RC0292016A0016 on 20.12.2016 against Shri Kishorebhai Mangaljibhai Bhajiawala, Shri Jignesh Kishorebhai Bhajiawala, Shri Vilas Kishorebhai Bhajiawala, Shri Pankaj Bhatt, Senior Manager, Surat People's Co-operative Bank, Udhna, unknown public servants and unknown persons, invoking Sections 120-B, 419, 420, 468 and 471 of Indian Penal Code, 1860 and Section 13(2) r/w Section 13(1)(d) of Prevention of Corruption Act. The FIR was registered on the basis of a complaint filed by Sh. Piyush Kumar Singh Yadav, Deputy Director, Income Tax (investigation), Surat, alleging that the accused had converted a huge amount of their unaccounted money, p....
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....e of his demonetized currency notes of Rs. 500 and Rs. 1000 and obtained new currency notes in connivance with Bank officers. 38.4 Shri Jignesh Bhajiawala has derived the proceeds of crime in the form of new high denomination currency, amounting to Rs. 1,02,16,000/-, post demonetization, by forging thousands of Exchange forms in names of various persons as follows: i. Rs. 7,00,000/- in new currency was acquired from Shri Pankaj Bhatt, the then Senior Manager, Surat Peoples Cooperative Bank Ltd., Udhna branch, Surat. ii. Rs. 11,96,000/- in new currency was acquired from Shri Pankaj Bhatnagar, Chief Manager, Bank of Baroda, Bhatar Branch, Surat. iii. Rs. 1,88,000/- in new currency was acquired from Shri Kishore Mel, the then Senior Manager, Peoples Cooperative Bank Ltd., Ring Road branch, Surat. iv. 81,32,000/- were acquired from various other sources including banks. 38.5 Further investigation of the Directorate revealed that accused Sh. Jignesh Bhajiawala has mis-used the IDS of genuine account holders of Surat Peoples Co.op. Bank Ltd., Udhna, Surat without their knowledge for the purpose of Money laundering and has illegally ac....
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....f justice. iv. The complainant craves permission of the Hon'ble Court for filing of Supplementary complaints under Section 45 of the PMLA, 2002 on completion of further investigation as number of accused against whom the FIR has been filed are yet to be examined and money trial of balance proceeds of crime as well as investments made by the accused in properties derived out of Proceeds of Crime, and their Bank Accounts are under investigation and are being examined. " 2.6 It appears that by a communication dated 29th March, 2017, the Enforcement Directorate informed the father of the writ applicant that the request to de-freeze the bank accounts had been rejected as the matter was under investigation under the provisions of the PMLA, 2002. The letter reads as under; "To, Shri Kishorebhai Mangaljibhai Bhajiyawala Kamal 40-41, Gayatri Nagar Society-I Udhanagam, Surat Sub: Availing benefit under Pradhan Mantri Garib Kalyan Yojna - reg. Kindly refer to your letter dated 28/03/2017 in the subject matter. It is to inform that a case of money laundering has been registered under the provisions of Prevention of ....
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....edures and powers in it for inquiry/investigation etc. (D) That Chapter V of the PMLA deals with Summons, Search and Seizure etc. i.e. Section 16 deals with Power of survey, Section 17 deals with Search and Seizure, Section 18 deals with search of persons, Section 20 deals with retention of property, Section 21 deals with retention of records and Section 22 deals with presumption as to records for property in certain cases. In other words, Chapter V of the PMLA deals with exhaustive procedure and powers to be exercised by the officers of the respondent No. 2 for search, seizure etc. while investigating the offence under the PMLA. (E) Over and above Chapter V, Chapter Ill of the PMLA also deals with the Attachment, Adjudication and Confiscation i.e. Section 5 deals with the attachment of property involved in money laundering and Section 8 deals with the adjudication, whereas section 10 deals with the management of the properties confiscated under Chapter-III of the PMLA. (F) In other words, the PMLA is complete code and has provisions to deal with for search, seizure, retention attached property and confiscation. Therefore, the officer of the respondent No....
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....ow the petitioner and his family members to operate the bank accounts. The officers of the respondent No. 2 are deliberately making a show that they are exercising powers under Section 102 of the Code of Criminal Procedure, 1973 with a view to escape the limitation of 30 days prescribed under sub-section 4 of section 17 of the PMLA, whereas under Section 102 of the Code of Criminal Procedure, 1973 neither there is limitation nor seizing or freezing is required to be regularized or authorized by any higher authorities. (J) Even otherwise the investigation with respect to the petitioner is over and the Criminal Complaint is filed on 16/03/2017 and therefore also the accounts freezed by the officers of the respondent No. 2 are required to be de-freezed and the communication/order dated 29/03/2017 is required to be quashed and set aside. (K) Even otherwise the officers of the respondent No. 2 have not obtained any orders under sub-section 4 of section 17 of the PMLA of the adjudicating authority for continuation of the order of freezing of the bank accounts of the petitioner and therefore also, the freezing of the petitioner and his family members' accounts be de-....
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....sure collection of evidence. He would submit that the contention raised on behalf of the writ applicant as to the lack of inherent jurisdiction to make request to the bankers for prohibition/freezing of withdrawal from the accounts maintained by the accused and his family members without resorting to section 5(attachment) or section 7 (seizure) of the PMLA, is without any merit. The Investigating Officer must be held to possess an enabling and/or incidental power to request a reporting entity, namely, a banking company to temporarily prohibit withdrawal from the accounts of an accused who is being investigated into under the Act. 5. Mr. Vyas, the learned Assistant Solicitor General of India, in such circumstances, prays that there being no merit in this writ application, the same be rejected. 6. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is whether the writ applicant is entitled to the relief as prayed for in this writ application. 7. I had an occasion in the case of Paresha G. Shah v. State of Gujarat & Ors., Special Criminal Application No. 150 of 2015, decide....
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....nd of disuse/misuse as other enactments of similar nature, by first targeting the local criminals then their international counter parts. Section 2(d) of the PMLA defines attachment as under : attachment mean prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III. Section 2(na) defines the term investigation as under : investigation includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. Section 2(u) defines the term proceeds of crime as under: 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. Section 2(v) defines the term property as under : property means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located. ....
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....n, that if such property involved in money laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. (2) The Director, or any other Officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under subsection (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of Section 8, whichever is earlier. (4) Nothing in this Section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.--For the purposes of this sub-section, "person interested" in relation to any immovable property, includes all persons claiming or en....
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....ed in money laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of Section 5 or retention of property or record seized under Section 17 or Section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall-- (a) continue during the pendency of the proceedings relating to any scheduled offence before a Court; and (b) become final after the guilt of the person is proved in the trial Court and order of such trial Court becomes final. (4) Where the provisional order of attachment made under sub-section (1) of Section 5 has been confirmed under sub-section (3), the Director or any other Officer authorised by him in this behalf shall forthwith take the possession of the attached property. (5) Where on conclusion of a trial or any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under sub-section (3) and net income, if any, shall cease to have effect. (6) Where the attachment of any property or retention of the seized property or record becomes final under ....
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....e sources of his income, earning or assets, out of which he had acquired the property. After such person gives a reply, the Adjudicating Authority should hear the aggrieved person as well as the Director, take into account all relevant materials and pass an order thereafter, recording a finding whether the property in question was involved in money laundering. While sub-section (1) of Section 8 deals with the service of notice by the Adjudicating Authority on the person against whom the complaint is made, sub-section (2) deals with the manner in which the Authority should deal with the complaint, reply and evidence and the manner in which the Authority shall record a finding. Under sub-section (3) of Section 8, the Adjudicating Authority should pass an order "confirming the provisional attachment" if he decides under sub-section (2) that the property is involved in money laundering. While ordering confirmation of attachment under subsection (3), the Adjudicating Authority shall also pass an order to the effect (i) that the attachment shall continue during the pendency of the proceedings relating to any scheduled offence before a Court; and (ii) that the attachment....
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.... 65. Code of Criminal Procedure, 1973 to apply.- The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, in so far as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act. Section 65 of the PMLA seeks to provide that the provisions of the Code of Criminal Procedure, 1973 shall apply in so far as it is not inconsistent with the provisions of this Act to arrest, searches, seizures, attachments, confiscations, investigations, prosecution and all other proceedings under the proposed Act. Section 4 of the Criminal Procedure Code declares that all offences under any law other than the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the Code, but subject to any enactment for the time being in force regulating the manner of place of investigation, inquiring into, trying or otherwise dealing with such offences. Section 5 of the Code further provides that nothing contained in the Code shall, in the absence of a specific provision to the contrary, affect....
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....ons for such belief for the purpose of passing a provisional order of attachment. He may be in possession of some material which may create some doubt or suspicion, and in such circumstances, the authority may have to carry out some investigation before he could proceed to pass a provisional order of attachment under Section 5 of the PMLA. It is at that stage that the authority is empowered to issue appropriate directions of attachment/freezing of the bank account in exercise of the powers under Section 102 of the Code by virtue of Section 65 of the PMLA. Like any other property a bank account is freezable. Freezing the account is an act in investigation. Like any other act, it commands and behoves secrecy to preserve the evidence. It does not deprive any person of his liberty or his property. It is necessarily temporary i.e. till the adequate material is collected.. It clothes the authority with the power to preserve a property suspected to have been used in the commission of the offence in any manner. The property, therefore, requires to be protected from dissemination, depletion or destruction by any mode. Consequently, under the guise of being given information about the said a....
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....under circumstances creating suspicion of the commission of any offence. The legislature having used the expression "any property" and "any offence" have made the applicability of the provisions wide enough to cover offences created under any Act. But the two pre- conditions for applicability of Section 102(1) are that it must be 'property' and secondly, in respect of the said property there must have suspicion of commission of any offence. In this view of the matter the two further questions that arise for consideration are whether the bank account of an accused or of his relation can be said to be 'property' within the meaning of sub-section(1) of Section 102 of the Cr.P.C. and secondly, whether circumstances exist, creating suspicion of commission of any offence in relation to the same. Different High Courts in the country have taken divergent views in this regard. In the case of Ms. Swaran Sabharwal v. Commissioner of Police, reported in 988 Criminal Law Journal(Vol. 94) 241, a Division Bench of Delhi High Court examined the question whether bank account can be held to be 'property' within the meaning of Section 102 of the Cr.P.C. In the said case, proce....
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....izure of the same by the Police Officer. 7. In the case of M/s. Malnad Construction Co., Shimoga and Ors. v. State of Karnataka and Ors., 1994 Criminal Law Journal(Vol. 100) 645, a learned Single Judge of Karnataka High Court examined the provisions of Section 102 of the Criminal Procedure Code and relying upon the Gauhati High Court's decision, referred to supra, came to hold that the 'seizure' in Section 102 would mean taking actual physical possession of the property and such a prohibitory order to the banker of the accused not to operate the account is not contemplated under the Code and consequently, the police has no power to issue such order. Thus the High Courts of Karnataka, Allahabad, Gauhati and Delhi have taken the view that the provisions of Section 102 of the Criminal Procedure Code cannot be invoked by the Police Officer in course of investigation to issue any prohibitory order to the banker or the accused from operating the bank account. 8. In P.K. Parmar and ors. v. Union of India and anr., 1992 Criminal Law Journal 2499 (Vol. 98), a learned Single Judge of Delhi High Court considered the power of police officer under Section 102 of th....
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....ression 'property' could not have been the intent of the framers of the Criminal Procedure Code. In paragraph 11 of the said judgment, the learned Judge referred to the object behind investing the police with powers of seizure. It will be appropriate to extract the same in extenso: "It would now be useful to refer to the object behind investing the police with powers of seizure. Seizure and production in court of any property, including those regarding which an offence appears to have been committed or which appears to have been used for the commission of any offence or any other property will have a two-fold effect. Production of the above property may be necessary as evidence of the commission of the crime. Seizure may also have to be necessary, in order to preserve the property, for the purpose of enabling the Court, to pass suitable orders under S. 452 of the Criminal Procedure Code at the conclusion of the trial. This order would include destruction of the property, confiscation of the property or delivery of the property to any person claiming to be entitled to possession thereto. It cannot be contended that the concept of restitution of property to the victi....
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....h would be capable of being seized under Section 102 of the Code of Criminal Procedure. 12. Having considered the divergent views taken by different High Courts with regard to the power of seizure under Section 102 of the Code of Criminal Procedure, and whether the bank account can be held to be 'property' within the meaning of said Section 102(1), we see no justification to give any narrow interpretation to the provisions of the Criminal Procedure Code. It is well known that corruption in public offices has become so rampant that it has become difficult to cope up with the same. Then again the time consumed by the Courts in concluding the trials is another factor which should be borne in mind in interpreting the provisions of Section 102 of the Criminal Procedure Code and the underlying object engrafted therein, inasmuch as if there can be no order of seizure of the bank account of the accused then the entire money deposited in a bank which is ultimately held in the trial to be the outcome of the illegal gratification, could be withdrawn by the accused and the Courts would be powerless to get the said money which has any direct link with the commission of the offe....
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.... the officer to suspect that some offence had been committed somewhere. The discovery of the bank account was a sequel to the discovery of the commission of the offence. The police suspected that some of the proceeds realized by the sale of official secrets had been passed on to the petitioner by her husband. The Division Bench of the Delhi High Court finally concluded that it was not sufficient to attract 102 of the Code as it could not be said that the bank account had been traced or discovered in circumstances which had made the police aware of the commission of an offence. According to Mr. Raju, the Supreme Court in the case of Tapas D. Neogy (supra), did approve the line of reasoning adopted by the Division Bench of the Delhi High Court and, therefore, in the present case also the authority could not have invoked Section 102 of the Code since it was not the discovery of the bank account of the petitioners account that created suspicion but the bank account was a sequel to the discovery of the commission of offence, for which a complaint has also been lodged and so far as the other accused are concerned, there has been a provisional order of attachment of their propert....
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....nings attributed to the words "suspect" and "reason to believe", it is evident that the initial stage for believing the existence of a certain thing or an alleged fact is suspicion. After suspecting the existence of a thing, condition or a statement of fact, you collect information and then examine that information and come to a final conclusion on the basis of that information that the thing, condition a statement or a fact exists. If I accept the submission of the learned counsel appearing for the petitioner, then it will frustrate the very object with which the PMLA came to be enacted. Any person who indulges in money laundering would transfer the proceeds of the crime to the account of any other person which may include his own family members, friends or any other person. The whole object of the Act is to prevent money laundering. If the proceeds of crime are suspected to have been transferred in a bank account of someone else against whom no complaint is lodged and if the authority is precluded or prohibited from proceeding against such person with a view to see that the proceeds of crime are not further transferred, then that will lead to a situation of absurdity. Th....
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....nder Section 8 various acts undertaken under Sections 5, 17 and 18 with which Adjudicating Authority or the Court is authorized to deal with can be confirmed by the Adjudicating Authority or by the Special Court on conclusion of the trial. 31. In light of the aforementioned scheme of several provisions of P.M.L. Act, the question as to whether the proceedings under Sections 5, 8 and 17 are civil proceedings or criminal is required to be addressed. The argument is that unless a report or the complaint as contemplated under first proviso to Section 5 and also as contemplated in the proviso to sub-section (1) of Section 17 is made, the proceedings are not sustainable. As noticed in greater detail, the ultimate object of Section 5 is provisional attachment of the property. The object appears to prevent destruction of the evidence which may be produced in the proposed criminal proceedings or to take in possession the property involved in the money-laundering, though the proceedings can be initiated on the basis of the reports or complaint, etc., as contemplated in the first proviso to Section 5. In view of second proviso, proceedings can be initiated under Section 5 even in abs....
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....said that an act of freezing the account is illegal. As noticed hereinabove, proviso to Section 17(1) indicates that the report under Section 157 of Cr.P.C. may not be necessary and therefore, freezing of accounts under Section 17(1-A) without such report is prima facie permissible. However, in view of the preliminary stage of the proceedings initiated against the petitioners, no final verdict can be pronounced on that aspect. However, in this context, FFR Software Private Limited (supra) explains in detail the authority vested in the Directorate of Enforcement to freeze the properties preceding the provisional attachment under Section 5 of P.M.L. Act. Paragraphs-5 and 6 of the said case can be quoted herein for convenience: 5. Having heard learned counsels for the parties and on perusal of the record of the case, I find substance in the contention of the respondents that the given statutory mandate under the PML Act makes it imperative for the authorities in the course of investigation i.e. collection of facts to establish specific details of the suspected properties from the concerned authorities prior to issuance of the provisional attachment order under section 5 of th....
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....t and the objects of the Act. 34. Assuming that Sections 5 and 17 can be interpreted as canvassed by the learned counsel for the petitioners, pertinent observations made in FFR Software Private Limited (supra) in Paragraphs-8 & 9 are thus: 8. It is trite that Article 226 is not meant to short circuit or circumvent statutory procedures. The court must have good and sufficient reasons to bypass the alternative remedies provided by the statute. In the case of Asstt. Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and others ( 1985 SCC(1) 260), the Apex court has held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the tribunal and thereafter to have the cases stated to the High Court, it was not for the High Court to exercise its extra ordinary jurisdiction under Art. 226 of the Constitution ignoring as it were, the complete statutory machinery. 9. In yet another case of Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement & Another Civil Appeal No. 3221 of 2010 Date of judgment 12.04.2010 the Hon'....
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....ct to confirmation by the Adjudicating Authority. Before such adjudication, a notice to the interested person is contemplated under Section 8 of P.M.L. Act and therefore, by convincing the Adjudicating Authority that no offence under Section 3 is committed by the petitioners, the orders defreezing their accounts can be obtained from the such authority. In the facts and circumstances discussed hereinabove, it is difficult to accept the contention that initiation of the proceedings against the petitioners are illegal.. I am also not impressed by the submission of the learned counsel appearing for the petitioner regarding the non-compliance of the provisions of Section 102(3) of the Code. I may only say that the procedure that has been followed by the authority under the PML is one under the provisions of the PMLA. When seizure or any search or any attachment is by officers under the PMLA other than the police, non-compliance with Section 102(3) would not vitiate the proceedings. However, at the same time, I am of the view that an order or instructions of attachment/freezing of bank account passed or issued by the authority under the PMLA in exercise of his powers un....
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....rd its reasons to believe that if the account is not freezed, then the non freezing of the property would frustrate the proceeding under the PMLA, and (ii) the authority does not intend to file any complaint against such person whose account has been ordered to be freezed. For the aforesaid reasons, although the judgment was reserved CAV, this matter was once again notified on 8th June 2015 only with a view to ascertain from the learned Assistant Solicitor General of India, whether in the mean time the authority had passed any order of provisional attachment under Section 5 of the Act or whether it intended to pass such order in the near future if adequate material has been collected during the course of the investigation carried out so far. The learned Assistant Solicitor General of India, after taking instructions from the officer of the Department present in the Court, made a statement that the authority has been able to collect sufficient material on the basis of which the authority now intends to pass an appropriate order of provisional attachment under Section 5 of the PMLA. On one hand if an order of provisional attachment is passed under Section 5 of the PMLA, the ....
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....ason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to money-laundering, [or] (iv) is in possession of any property related to crime,] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or contro....
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....place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. [(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority.]" 11. Thus, the PMLA, 2002, has provided specifically a provision for search and seizure. What is important is section 17(4) of the PMLA, 2002, which provides that the authority freezing any record or property is obliged to file an application, requesting for continuation of the order of freezing before the adjudicating authority. 12. Section 102 of the Cr.P.C. differs to this extent with section 17(4) of the PMLA, 2002. In view of section 65 of the PMLA, 2002, when it comes to freezing the accounts, the source of power is section 17, and clause (4) will have t....
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....o be reported to the officer in Incharge if he is subordinate to the officer of Incharge of the Police Station. _ Shall forthwith report the seizure to the Magistrate having jurisdiction. Under sub-section (2) shall immediately after search and seizure or upon issuance of freezing order forward a copy of the reasons so recorded along with material in his possession to the Adjudicating Authority in a sealed envelope. 17. As such there is no abuse of the power at the end of the authority concerned. In a matter like one on hand, a detailed investigation is necessary. The allegations are of money laundering to the tune of crore of rupees. I am not inclined to go further into the matter for one good reason and, that is, that the Joint Director, Directorate of Enforcement has already passed a provisional attachment order No. 03 of 2017 dated 14th July, 2017. It reads as under; "40. Therefore, I have reason to believe that the property of accused in the form of cash balance in various Bank account, Fixed Deposits in HDFC Bank Ltd., investment in LIC policies, totally amounting to Rs. 3,72,66,630/- as mentioned in the schedule of properties, are proceeds of crime and i....
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....n and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under subsection (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall- (a) continue during the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other count....
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....e. 20. Section 3 of the PMLA, prescribes the offence of money laundering and its punishment is prescribed under Section 4 of PMLA. To attract the provisions of Section 3 of PMLA, it is necessary that the person is indulged in the proceeds of crime. Further, in terms of Section 5 of PMLA where the Director or any other officer not below the rank of Deputy Director authorised by the Director, has reason to believe, on the basis of material in his possession that any person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, he may provisionally attach such proceeds of crime based on the said material reasons to believe that are to be given in writing. After every order of such attachment the Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, to the adjudicating authority. The provisional attachment under Section 5(1) of PMLA is only a cautious and tentative step and only becomes effective after an order is passed by the adjudicating authority under Sect....
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....ions of Section 17, which reads thus:- "17. Search and seizure.--(1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person-- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money laundering, or (iii) is in possession of any records relating to money-laundering, [or] [(iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks o....
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..... (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub- section (1) shall be required for search under this sub- section. [(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under sub- section (1A), before the Adjudicating Authority.]" 29. We are well aware that the power of freezing is a draconian power and safe guards have to be kept in mind to check its abuse and limit its exercise. However, a balance has to be maintained between the right of the citizen and the right of the investigating agency which cannot be restricted as i....