TaxTMI 
TaxTMI 
2020 (12) TMI 1296
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.... Advocate for Aarna Law Advocates and Abhishek Bagad, Advocate for M.D. Jidesh Kumar, Advocate ORDER Aravind Kumar, J. 1. These batch of writ petitions have been filed questioning the provisional order of attachment, summons issued, order passed by the adjudicating authority, proceedings initiated, complaint filed before the adjudicating authority, consequential possession notice issued under the Prevention of Money Laundering Act, 2002 (for short 'PML Act'). Hence, for the purposes of convenience, the aforesaid writ petitions are broadly categorized on the basis of prayer sought for in the respective writ petitions: I. Provisional Attachment Order: Sl.No. Case No. 1 W.P.Nos.38642-44/2017 2 W.P.No.36309/2017 3 W.P.No.36310/2017 4 W.P.Nos.23176-77/2017 5 W.P.No.33740/2016 6 W.P.No.14158/2017 7 W.P.No.57756/2016 8 W.P.Nos.46318-323/2017 9 W.P.No.5269/2017 10 W.P.No.19313/2016 11 W.P.No.17894/2015 12 W.P.No.28027/2018 13 W.P.No.48031 & 48531/2017 II. Information sought from Institutions/Bank is under challenge: Sl.No. Case No. 1 W.P.No.6159/201....
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.... course of investigation, it was unearthed that the money required for the said illegal activities was arranged from Dubai through Hawala channels by person named Sri Hajee Ameen Basha operating from Dubai and the offences under IPC and Arms Act as indicated in the charge sheet being scheduled offences under Section 2(1)(y) of PML Act, a prima-facie case of money laundering having been made out, an Enforcement Case Information Report ('ECIR' for short) was registered by the Directorate of Enforcement (for short 'ED'). It is further contended that supplementary charge sheet filed, Mr. Hajee Ameen Basha and three others were added as accused for indulging in underworld activities involving life threats, extortion, murder and supply the money through Hawala channels for criminal activities. 3. It is further contended that second respondent is conferred with the powers under section 5(1) of PML Act read with Rule 3 of Rules to pass provisional attachment order. It is also contended that under section 5(5) of PML Act, a complaint has been filed before the adjudicating authority and same is pending and now adjudicating authority now having issued show cause notice unde....
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....injury may itself continue. Hence, the amendments made under the Act neither created the new offence nor enhanced the punishment nor changed the procedure or forum of trial to the prejudice of accused. It is also contended that it would only be a procedural in nature and can have retrospective effect. 6. By relying upon circular No. 8/2015 issued by the Director of Enforcement, it is contended that Deputy Director is authorized to issue order of provisional attachment of properties and accordingly, provisional orders of attachment have been issued. Contending that Deputy Director is empowered to issue provisional attachment and also file a complaint under Section 5(5) of the Act under authorization issued by the Director (delegation of power) the orders of provisional attachment is sought to be sustained. It is also contended, it would suffice if the authority has recorded in its file the "reasons to believe" that such person/s is/are in possession of proceeds of crime or involved in money laundering, it would meet the requirement of Section 8(1) and it is to be read along with Section 8(2), which only mandates issuance of notice to show cause. Contending that PML Act is a speci....
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....as the Deputy Director for the purposes of PML Act by order dated 06.02.2005 which has been duly gazetted on 13.09.2005. On these grounds amongst others raised in the statement of objections, respondents have sought for dismissal of writ petitions. 10. I have heard the arguments of Sri Udaya Holla for Sri Nandish Patil, Sri Arvind Kamath, learned Senior Advocates, Sriyuths P.N. Manmohan, Kiran S. Javali, Chandrashekhara K, R Swaroop Anand, Nagendra Naik, Sachin B.S., Vinay Keerthi, Vijaya Kumar, Manu Kulkarni, Ashwin Kurian, Sanket M Yenagi, Thrimurthy, Muniyappa and Aniyan Joseph for petitioners. Sri K.M. Nataraj, then Additional Solicitor General of India, Sri Prabhuling K Navadgi, then Additional Solicitor General of India, Sri M.B. Nargund, Additional Solicitor General of India, Sriyuths Madhukar Deshpande, Jayakar Shetty, S. Mahesh, S.S. Hiremath, Unnikrishnan M, Jeevan M Neeralgi, P. Karunakar, P. Prasanna Kumar, Ashok M Patil, N Sukumar Jain, Reshma Thammaiah, Jidesh Kumar M.D., T.P. Muthanna, learned Advocates appearing for respondents. 11. It is the contention of Sri P.N. Manmohan, learned Advocate appearing for petitioners in W.P. Nos. 38642/2016, 27705/2017 & 28....
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....d be without jurisdiction. 11.1. He would also contend that offence has occurred in India and money is transferred from Dubai and there is no compliance of Section 2(1)(ra) of PML Act. When money was transferred from Dubai i.e., outside India, the offence has not occurred at all. He would also contend Section 55 of PML Act deals with definition of 'Contracting State' and section 56 refers to agreement between foreign countries and section 57 deals with letter of request to contracting state in certain cases and reading of these provisions together does not indicate that any offence has been committed by the petitioners at Dubai, which is a condition precedent for invoking proceedings under PML Act as indicated in Section 2(1)(ra) of PML Act. Therefore, very initiation of proceedings is bad in law. 11.2. His next limb of argument is, prior to 2013 amendment, Section 5(a) and Section 2(u) defined proceeds of crime and against whom proceedings can be initiated and it included only a person who was accused of the offence alleged. However, by 2013 amendment, it took away said requirement and the provision included 'any person' and thus, whether a person is accused ....
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....K HAJI ISMAIL vs. DIRECTOR OF ENFORCEMENT, NEW DELHI AND OTHERS. xvii) (2006) 4 SCC 620: O KONAVALOV vs. COMMANDER, COAST GUARD REGION AND OTHERS. 12. Sri Swaroop Anand, learned Advocate appearing for petitioners in W.P. No. 15917/2013 & 15974/2013 and 15918 & 15961/2013 would contend that petitioner in W.P. No. 15917/2013 was accused No. 9 in a scheduled offence numbered as Spl. C.C. 135/2011 and FIR pertaining to said charge sheet was filed on 01.12.2010 in Crime No. 57/2010 and after investigation, charge sheet came to be filed in July, 2011. Offences alleged against petitioner is under 420 & 506 IPC. Offences that are alleged against petitioner in the scheduled offence pertaining to the period 2007-08. Provisional order of attachment was passed on 25.09.2012; he would contend that allegations against the petitioner for the predicate offence is that he was a broker and was responsible for disbursement of certain compensation to certain people for lands that came to be acquired and agency which was responsible for disbursement of compensation had taken the assistance of the accused, who had felicitated for payment of bribe and in that regard, it has been alleged....
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....ub-section (3) of Section 8 of PML Act would indicate that order confirming the provisional attachment passed under sub-section (1) of Section 5 would become final only on conclusion of trial and passing of confiscation order by a Special court. Hence, he would contend impugned notice dated 28.03.2018 (Annexure-F) is premature, highly illegal, arbitrary and liable to be quashed. 12.2. He would also submit that pursuant to impugned notice issued, petitioner had appeared before the adjudicating authority and had filed a detailed reply on 10.12.2012 (Annexure-D), pursuant to which, matter was finally heard and reserved for orders on 03.01.2013 i.e., before Amendment Act 2 of 2013 came into force with effect from 15.02.2013 and the order of confirmation came to be passed by the adjudicating authority after extracting the verbatim language found in the amended Section 8(3) as amended by Act 2 of 2013. He would contend that prior to Amendment Act 2 of 2013 came into force, Section 8(3) as it stood and amended under Act No. 21/2009 with effect from 01.06.2009 where the words "schedule offence before a court" was substituted with the words "offence under this Act" and as such, the proce....
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....5) of Section 8 earlier provided power of confirmation again back to the adjudicating authority, in the event of Special court forming an opinion that such person is guilty of offence under Section 3, in which event, petitioner had a one more chance to appear before the adjudicating authority and demonstrate as to why the properties were not involved in the offence of money laundering. Thus, he would contend the power to confiscate again vested back with the adjudicating authority, but by virtue of 2013 amendment, said power was taken away from the adjudicating authority and same was conferred with the trial courts. Hence, he would contend, trial Court had to simultaneously decide as to whether such person was guilty of the offence of money laundering under Section 3 and as to whether properties that were attached were entitled for confiscation under Section 8(5). He would also contend, two fold criteria for confirmation under Section 8(3) as per 2013 amendment is that firstly, there should exist proceedings for an offence under this Act and secondly, such provisional order of attachment would become final upon order of confiscation being passed by the Special Court. In this backgr....
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..... Nos. 4215/2017, 6159/2017, 6173/2017 & 8261/2017 that confirmation of provisional order of attachment passed by the adjudicating authority on 21.02.2013 which is subsequent to amending Act of 2013 i.e. Act 2 of 2013 and the language employed in the amended Section 8(3) has been applied and it does not satisfy the requirement of Section 8(3), inasmuch as, there is no complaint under Section 45 of the Act for an offence under Section 3 punishable under Section 4 of PML Act. In the instant case, he would contend that complaint under Section 45 was filed on 24.3.2014 and thus by operation of law as contemplated under Section 5(3), the provisional order of attachment in the instant case cease to operate. Hence, the consequential notice issued is also bad in law. 13.1. Insofar as W.P. Nos. 4215/2017, 6159/2017, 6173/2017 and 8261/2017 he would contend that PML Act is a complete code by itself. He would also contend that impugned communication issued to Association of Mutual Funds of India-AMFI being a company, is not a person and/or a listed entity as mentioned in Section 54 of PML Act and the said provision enlists "certain officers" who are to assist the authorities in the enforce....
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....sted prior to 2013 amendment would indicate that basis for arriving at a conclusion there are "reasons to believe" to attach the property is traceable to report forwarded to a Magistrate under Section 173 of Cr.P.C. and this would be the foundation and in other words, if the final report under Section 173 Cr.P.C. is not forwarded, the attachment proceedings cannot be resorted to. He would contend that in the instant cases that proceedings initiated prior to 01.06.2009 is void, inasmuch as, it is only from the said date, Section 13(1) of PML Act was included into the schedule and only from that date, it would constitute a crime for the purposes of PML Act and not prior to that and as such, proceedings initiated under the PML Act prior to 01.06.2009 is void ab initio. He would that the FIRs came to be filed subsequent to 01.06.2009 and as such, the proceedings initiated under the PML Act are bad in law. (b) He would also contend that under the unamended Section 8 of PML Act, confiscation can take place only if the guilt of the accused has been proved before competent court and post 2013 amendment, the Special court has been given the power to confiscate the property wh....
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....ity alleging that there is schedule offence. Thus, respondent-authorities retrospectively are proceeding against the petitioners for a crime which did not exist under this Act prior to 1.6.2009. He would submit that earlier situation under this Act was that confiscation or prosecution are separate and distinct which is how it was under section 8(5) and 8(6) prior to 15.02.2013 and post 15.02.2013, and now petitioners are made to face trial under the PML Act for the offence which did not exist and the respondent-authorities are attempting to make non-existing offence as a crime on the date he did not exist. (d) He would contend that respondents wants the petitioner to go before the authority and submit that there is no authority provided under section 8 and there is an appeal under section 26 of the Act and thereafter to the High Court. All these proceedings post 15.02.2016 will be restricted or limited only to the provisional attachment. Satisfaction of the authority to the existence of some material for him to derive satisfaction that there is a crime and these are proceedings of crime, he cannot do anything more than that. Then, the question that would arise would ....
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....ay 'no' to the petitioners namely, they are contending that existing Section 24 is to be applied. He has relied upon the following judgments in support of his submissions: i) (1994) 4 SCC 602: HITENDRA VISHNU THAKUR AND OTHERS vs. STATE OF MAHARASHTRA AND OTHERS. ii) AIR 2001 SUPREME COURT 958: SOLIDAIRE INDIA LTD. vs. FAIRGROWTH FINANCIAL SERVICES LTD. AND OTHERS. iii) AIR 1977 SC 265: SARWAN SINGH AND ANOTHER vs. KASTURI LAL. iv) AIR 2000 SC 1535: ALLAHABAD BANK vs. CANARA BANK AND ANOTHER. v) (1990) 4 SCC 76: NIRANJAN SINGH KARAM SINGH PUNJABI vs. JITENDRA BHIMRAJ BIJJAYA AND OTHERS. vi) (1996) 5 SCC 1: BIJAYA KUMAR AGARWALA vs. STATE OF ORISSA. vii) (1986) 4 SCC 746: STATE OF KERALA vs. MATHAI VERGHESE AND OTHERS. viii) (2013) 4 SCC 540: TEJ PRAKASH PATHAK AND OTHERS vs. RAJASTHAN HIGH COURT AND OTHERS. ix) (2013) 5 SCC 111: STATE OF ANDHRA PRADESH AND OTHERS vs. CH. GANDHI. x) (2014) 3 SCC 151: VARINDER SINGH vs. STATE OF PUNJAB AND ANOTHER. xi) (2000) 2 SCC 536: KOLHAPUR CANESUGAR WORKS LTD. AND ANOTHER....
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....n of the property or for repayment of the loan borrowed for such construction. On the other hand, it was borrowed as a personal loan by the petitioner lent to the company. He would contend that respondent is empowered to initiate action under Section 5 of PML Act only in respect of proceeds of crime and the property purchased by the petitioner was not out of the proceeds of crime. Hence, contending that authority has no jurisdiction to initiate proceedings under PML Act has sought for allowing the writ petition. 16. Sri R Nagendra Naik, learned counsel appearing for petitioner in W.P. No. 42157/2016 would contend that Section 5 does not contemplate enquiry and summoning of accused at the stage of adjudication of provisional attachment does not arise and hence, the impugned notice is liable to be quashed. He would also submit Section 8 provides for enquiry and under Section 8, the adjudicating authority decides that property is involved in money laundering and thereafter 90 days time is allowed for investigation and criminal case can be registered if required only after decision of the adjudicating authority. He has relied upon the following judgment in support of his contenti....
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....which, appeal has been filed and is pending before the appellate authority and yet notice dated 07.06.2018 has been issued to take possession of the property which has been called in question in W.P. No. 28027/2018 and he has prayed for allowing the writ petition, contending inter alia that Sri T Basavaraj (petitioner in W.P. No. 35991/2018) was working in Department of Education, Government of Karnataka as a teacher and retired on 30.09.2012 as District Education Officer and just prior to his retirement on 25.06.2009 an FIR in Crime No. 9/2009 was registered on 25.05.2009 by the Lokayukta Police, Mysore and after investigation, charge sheet has been filed on 25.05.2013 for the offence punishable under Section 13(1)(e) and 13(2) of PC Act alleging that he had amassed wealth disproportionate to his known source of income. It is also contended that house has been constructed and the predicate offence was not a schedule offence under the PML Act at the time of registration of FIR and Section 13 of PC Act was inserted a schedule offence with effect from 01.06.2009 and as such, the proceedings initiated against the petitioner is liable to be quashed. Hence, on these grounds, he has pray....
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....whereunder first respondent by forwarding the order dated 16.08.2017 confirming the provisional attachment order and has requested the Bank to transfer a sum of Rs. 58,37,34,000/- by contending that the order of attachment and its confirmation thereof is erroneous, contrary to Section 8 of PML Act on the ground that it is not a party in the complaint before the adjudicating authority, since the petitioner Bank as a secured creditor, has a claim over the fixed deposits. He has also reiterated the contentions raised by Sri Udaya Holla, learned Senior counsel appearing for petitioners in the connected matters. 24. Sri K.M. Nataraj, learned Additional Solicitor General of India appearing for the respondents would contend that PML Act is targeted at money or source of proceeds of crime, which a person derives from a particular offence. It is contended that such person might have acquired some assets through tainted means or illegally and when such person comes before the society and claims that said money was acquired by proper means, then he is guilty of this offence. He would submit that we are not at all concerned about other offence/s. A person might have committed it long back. ....
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....re, double jeopardy concept propounded by the learned counsel appearing for petitioners that such person was already tried under the PC Act at some point of time and at that time, the provision of PC Act was not there in the schedule, has no legs to stand under this Act. He would submit present affairs are covered by the present law or in other words present affairs are determined on the basis of existing law. As of now, Section 3 would indicate that either acquiring, projecting or concealment, of the proceeds of crime is an offence. So far as money laundering is concerned, concealment of proceeds of crime is an offence. Section 2(u) mandates by virtue of scheduled offence some proceeds of crime if knowingly acquired or in possession or acquisition, it would become crime and projecting any activity connected to it, is an offence under Section 3 of PML Act. That is how Section 3 is to be read. 24.2. He would submit that any schedule offence which may be under the IPC or any notified offence, then such person will be tried independently for the offence that was existing at that point of time. By different enactments, what is targeted is proceeds of activities that such person may ....
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....und by the mandate of Section 8(4) to take possession forthwith on provisional order being confirmed. He would submit that possession means physical possession and repelling the contention raised by Sri. Nagendra Naik by relying upon judgment of Madras High Court in THE DEPUTY DIRECTOR & OTHERS vs. A. KAMARUNNISA GHORI & OTHERS (M.A. No. 1/2012 in W.A. No. 2137/2012 and M.P. No. 2/2012 in W.A. No. 2138-2140/2012, decided on 11.07.2012) to contend that 2013 amendment was not available at that time and said judgment was rendered on 11.07.2012 i.e., much before Act 2 of 2013 came into force. He would submit that language employed under Section 8(4) by 2009 amendment is different from the language employed in Section 8(4) post 2013 amendment. Therefore, language of the provision as found in Section 8(4) 'shall forthwith take possession of attached property' came to be amended by inserting the expression 'possession of the property attached under Section 5 or frozen under sub-section (1-A) of Section 17, in such manner as may be prescribed." The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authorities) Rules....
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....e PML Act and therefore, the authorities under the PML Act are holding the property so attached are seized or frozen as statutory trustees, ultimately to achieve the object of the PML Act. 24.6. He would read Section 10 of PML Act which relates to management of properties confiscated. He would also invite the attention of the court to Section 23 and 24 of the PML Act, which relates to the presumption in interconnected transactions and upon whom the burden of proof lies. He would contend that under Section 23 the adjudicating authority and the special court is empowered to presume that where money laundering involves 2 or more interconnected transactions and 1 or more such transactions is or are proved to be involved in money laundering, such authority or court can draw presumption, shall otherwise proved or rebutted. To illustrate this issue, he would contend that one transaction when it had taken place in 2010 or 2012 and out of the proceeds, such person had acquired some property and there is a connection with the proceeds of crime, it can be presumed by the authority or court, as the case may be that remaining transactions form part of such interconnected transactions. In oth....
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....d to assist the authorities in the enforcement of the PML Act. 24.9. By referring to Chapter IX he would contend that Reciprocal Arrangement for assistance in certain matters and procedure for attachment and confiscation of property has been provided and it is an enabling provision when there is cross border implications or matters falls under contracting state where the Government of India takes the assistance of other countries. He would submit that this Chapter has to be read along with provisions of the PML Act and not in exclusion. By reading Section 56 of PML Act, he would submit that it is an enabling provision to enter into agreement with foreign countries and it does not exclude other provisions of the PML Act. 24.10. He would further submit that reading of Section 60 of PML Act would indicate that whatever orders that are passed under the PML Act, would be applicable in a contracting state or in India. He would submit by interpreting Chapter IX that it cannot be said that order of attachment is vitiated though reciprocal agreement provides otherwise. He would submit that where an order of attachment has been passed and it is to be executed in a contracting state by ....
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....ential notice and the order of provisional attachment and its confirmation thereof has not been challenged and as such said writ petitions are liable to be dismissed. He would also submit that petitioner has nowhere contended that the authority who has issued the notice is without jurisdiction. 24.15. He would also contend that in some of the writ petitions only possession notice has been challenged and against order of attachments the appeals are pending before the appellate authority and on the ground that there was no sitting of the appellate authority and they are likely to be dispossessed they had approached this court and they have obtained interim orders by suppressing the fact the appellate authority had in fact being conducting the proceedings. He would submit that taking possession would mean physical possession and the authorities have recourse to Rule 3 and 5 of Rules 2013 and as such the petitioners are not entitled to the reliefs sought for. 24.16. He would submit that arguments of Sri. Nagendra Naik canvassed with regard to symbolic possession in W.P. No. 20307/2017 by referring to KAMARUNNISA's case would be inapplicable to the facts on hand, inasmuch as, ....
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....nder Section 17 of PML Act Assistant Director has no jurisdiction. He would submit that during course of investigation the authority has right to secure the information from anyone and it is a statutory obligation for such of those authorities prescribed under Section 54 to assist during investigation. By relying upon the judgment of the Calcutta High Court in Rose Valley Real Estate and Constructions Ltd. V. Union of India he has prayed for rejection of said writ petition. By drawing the attention of the court to the impugned communication issued to AMFI and Bank, he would contend that they need not be reporting entity and by virtue of interim order granted the petitioners have withdrawn all the amounts and as such the petitioners are bound to disclose the amount which has been withdrawn by them. 24.19. He would also contend what is challenged is either provisional order or confirmation order or consequential notice. Hence, we are not concerned about prosecution of the case. Since Sections 44, 45 & 46 falling under Chapter VII deals with criminal proceedings, whereas, the order of attachment and its confirmation thereof would fall under Chapter III and under Chapter III, limite....
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....nd by referring to sub-section (2) of Section 50 he would contend incidental power of investigation for the purposes of the Act is to ensure enforcement of the provisions of the Act. Hence, he prays for dismissing the writ petitions. He has relied upon the following judgments in support of his contentions: i) 2015(3) CLJ (CAL) 536: ROSE VALLEY REAL ESTATE AND CONSTRUCTIONS LTD. AND OTHERS vs. UNION OF INDIA AND OTHERS. ii) SM T. SOODAMANI DORAI vs. THE JOINT DIRECTOR OF ENFORCEMENT (PMLA) AND OTHERS. iii) (2003) 7 SCC 628: BALRAM KUMAWAT vs. UNION OF INDIA AND OTHERS. iv) (1987) 2 SCC 364: STATE OF GUJARAT vs. MOHANLAL JITAMALJI PORWAL AND ANOTHER. v) (2013) 7 SCC 439: Y.S. JAGAN MOHAN REDDY vs. CENTRAL BUREAU OF INVESTIGATION. vi) (1986) 2 SCC 237: M/S. GIRDHARI LAL AND SONS vs. BALBIR NATH MATHUR AND OTHERS. vii) (2015) 16 SCC 1: GAUTAM KUNDU vs. DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY-LAUNDERING ACT) GOVERNMENT OF INDIA THROUGH MANOJ KUMAR, ASSISTANT DIRECTOR, EASTERN REGION. viii) (1996) 4 SCC 622: DELHI DEVELOPMENT AUTHORITY vs. SKIPPER CONSTRUCTIO....
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....ON 01.04.2013: NITISH J. THAKUR vs. STATE OF MAHARASHTRA AND ANOTHER. xxviii) (2011) 10 SCC 235: UNION OF INDIA vs. HASSAN ALI KHAN AND ANOTHER. xxxix) SLR 2017 SIKKIM 280: SMT. USHA AGARWAL vs. UNION OF INDIA AND OTHERS. xl) SPECIAL LEAVE TO APPEAL (CRL.) CRL. MP No. 18015/2015, DECIDED ON 23.11.2015-DIRECTORATE OF ENFORCEMENT, NEW DELHI vs. ARUN KUMAR MISHRA. xli) AIR 1970 SC 636-NANI GOPAL MITRA vs. STATE OF BIHAR xlii) AIR 1961 (CALCUTTA) 560 (FB)-AJIT KUMAR PALIT vs. THE STATE. xliii) W.P. No. 14649/2014 c/w W.P. No. 19732/2014 DISPOSED OF ON 28.01.2016-SMT. K SOWBHAGYA vs. UNION OF INDIA 25. Sri Prabhuling K Navadgi, the then Additional Solicitor General of India appearing for respondents has supported the arguments advanced by Sri K.M. Nataraj, learned Additional Solicitor General of India and has prayed for dismissal of the writ petitions. 26. Sri M.B. Nargund, learned Additional Solicitor General of India appearing for respondents by reiterating the contentions raised by the learned Advocates appearing on behalf of the Revenue, would contend even if proceedings relating to predi....
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....aroop Anand, learned Advocate appearing for petitioners would contend that possession notice issued under Section 8(4) has been challenged and the crux of the matter is confirmation of the provisional attachment. Section 8(2)(a) and 8(2)(b) mandates twin requirement and only upon completion of these requirements, the provisional attachment is confirmed. He would submit that under Section 8(3)(a) as it stood on 2009, the reason for believing was directly co-related to the schedule offence, which does not find a place in Section 8(3)(a) after amendment by Act 2 of 2013 and the definition of 'proceeds of crime' having remained unamended, the condition precedent for attachment of the properties is proceeds of crime should be relatable to schedule offence. He would submit that constant feature in the amendments carried out to Sections 3, 5 & 8 is that legislature has ensured that the aspect of mens rea is taken away. He would further submit by virtue of the amendment, if a person receives something without knowing the fact that what he has received is proceeds of crime, the very fact that it is in my possession is sufficient to constitute an offence under Section 3 and requireme....
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.... date of confirmation and meeting of the requirement prescribed under clause (b) is also a condition precedent insofar as the order of confirmation of provisional attachment to become final. He would submit order of confiscation has to be passed in terms of Section 8(5) which is done only by the Special court constituted under section 43 after 2013 amendment. A plain reading of Section 8(3) makes it amply clear that now upon fulfillment of entire conditions stipulated under Section 8(3), notice under Section 8(4) can be invoked, failing which notice issued under Section 8(4) would be premature and dehors the jurisdiction conferred on the authorities. 28.2. He would submit that contention raised with regard to alternate remedy available to the petitioners under Section 26 is concerned, would be against an order of provisional attachment and confirmation of such provisional attachment, but not against a notice issued under Section 8(4). Hence, he contends that writ petitions are maintainable. 28.3. He would submit that provisional order of attachment was passed on 25.09.2012 under Section 5(1), in pursuance of the same, complaint came to be filed on 5.10.2012 in terms of Sectio....
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.... He would further submit that there are no reason whatsoever to believe that petitioner is associated with the offence and by relying upon TECH MAHINDRA's case, he would contend that the language used in Section 3 is "knowingly" and "directly or indirectly" and these ingredients are not to be found insofar as petitioners are concerned and as such, the proceedings are bad in law. He would also submit that Section 3 as well as Section 5(1)(a) refers to "proceeds of crime" which is referable to schedule offence and as such, the contention of learned ASG that scheduled offence has no relevance to the money laundering is an argument which ought not to be accepted. 30. Having heard the learned Advocates appearing for parties, I am of the considered view that following points would arise for my consideration: (i) Whether sub-section (4) of Section 8 of PML Act is violative of Article 14 and Article 300A of the Constitution of India and as such proceedings initiated against petitioners under PML Act are liable to be quashed? (ii) Whether the proceedings initiated under the PML Act by the authorities would be bad in law or without jurisdiction for want o....
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....fficking, apart from promoting international cooperation in investigation amongst others. The Council for Europe Convention in 1990 made an attempt to establish a common policy on money laundering and it laid down principles for international co-operation among the member States and the purpose of this convention was to facilitate international co-operation as regards investigative assistance, search, seizure and confiscation of the proceeds of all types of criminality, particularly serious crimes such as drug offences, arms dealing, terrorist offences etc., which generate large profits. 34. During December, 1988 the Basel Committee on Banking Regulations and Supervisory Practices, a statement came to be issued of principles which aimed at encouraging the Banking sector to adopt common position in order to ensure that Banks are not used to hide or launder funds acquired through criminal activities. Its statement of principles did not restrict itself to drug related money laundering, but also extended to all aspects of laundering through banking system. In effect, it sought to deny the banking system to those involved in money laundering by the application of the four basic princ....
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....came to be accepted by the Central Government, resulted in introduction of the said Bill in both the Houses of the Parliament and was passed by both the Houses and received the assent of the President on 17.01.2003. Thus, the birth of the Prevention of Money Laundering Act, 2002 (Act 15 of 2003) took place and it came into the statute book on its publication in the Gazette on 01.07.2005. 38. The statement of objects and reasons as outlined for enacting PML Act are: (a) The United Nationals Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is a party, calls for prevention of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence. (b) The Basle Statement of Principles, enunciated in 1989, outlined to basic policies and procedures that banks should follow in order to assist the law enforcement agencies in tackling the problem of money laundering. (c) The Financial Action Task Force established at the summit of seven major industrial nations, held in Paris from 14th to 16th July, 1989 to examine the problem of money launderi....
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....reduces the statute to a futility has to be avoided. The principle expressed in the maxim ut res magis valeat quam pereat i.e., liberal construction should be put upon written instruments so as to uphold them, if possible and carry into effect the intention of parties has to be adopted. (See Broom's Legal Maxims 10th Edition, page 361, Craies on Statutes (7th edition), page 95 and Maxwell on Statutes (11th edition) page 221.) A statute or a provision in any enactment must be so construed to make it effective and operative. The Hon'ble Apex Court in the case of CIT vs. S. TEJA SINGH reported in AIR 1959 SC 352, have held that a statute is designed to be workable and interpretation thereof by a court should be to secure that object unless crucial omission or clear direction makes that end unattainable. It has been further held that courts will have to reject that construction which will defeat the plain intention of the legislature, even though there may be some inexactitude in the language used in the enactment. 43. The Hon'ble Apex Court in MOHAN KUMAR SINGHANIA vs. UNION OF INDIA reported in AIR 1992 SC 1 has reiterated the principles indicated in Nokes vs. Doncaste....
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.... said to be capable of only one construction. If it was so, approach to be adopted would be different since the intention of Parliament is to be respected despite the consequences of interpretation. There is, however, a scope for two possible constructions. That being the position, a reasonable and common sense approach deserves to be adopted and preferred rather than a construction that would lead to absurd results of Respondent 1 escaping the trial despite passing of an order against him on the court's satisfaction under Section 319(1) and despite the fact that the proceedings against him have to commence afresh. In this view, the fact that trial against Chandra Shekhar Singh has already concluded is of no consequence insofar as Respondent 1 is concerned." 46. The constitutional validity of any law is to be tested in the teeth of law laid down by Hon'ble Apex Court in: (1) BHANUMATHI vs. STATE OF UTTAR PRADESH, THROUGH ITS PRINCIPAL SECRETARY AND OTHERS- (2010) 12 SCC 1; and (2) STATE OF BIHAR & OTHERS vs. BIHAR DISTILLERY LIMITED AND OTHERS- (1997)2 SCC 453. whereunder it came to be held that while judging the constitutionality of an e....
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...., and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: PROVIDED that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: PROVIDED FURTHER that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after-- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person 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 sub-section (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 prope....
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....der this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: PROVIDED FURTHER that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after-- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person 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 sub-section (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 ....
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....here such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after-- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person 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 sub-section (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, suc....
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....int under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an [offence under section 3 or is in possession of proceeds of crime], he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: PROVIDED that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: PROVIDED FURTHER that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2....
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.... order that such property involved in laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a the money- proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it. (8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may b....
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....39; has been defined to include 'property'. The expression 'property' has been defined under clause (v) of Section 2(1) of the Act which defines property to mean "any property or assets of every description" and this is clarified in the Explanation thereto which came to be inserted by Act 2 of 2013. It reads: "Explanation-For the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences." Plain reading of above explanation would indicate that property includes "property of any kind used in the commission of an offence under the Act" or "any of the scheduled offences". Even under sub-section (5) of Section 8, the property which can be confiscated to the Central Government after conclusion of a trial of an offence under the Act, includes property involved in money laundering or which has been used for commission of an offence of money laundering. Thus, harmonious reading of Sections 2(u), 2(v) and sub-section (5) of Section 8, it can be held without any iota of doubt that expression "proceeds of crime" would not only include mon....
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...., the judgment of KAMARUNNISA would not come to rescue of the petitioners. 55. It is in the aforesaid background the Rules namely, The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 (for short 'Possession Rules, 2013'), which was made in exercise of the power vested under sub-section (2) of Section 73 of PML Act which came into force with effect from 19.08.2013 will have to be seen. In the matter of KAMARUNNISA's case where Section 8(4) came to be interpreted, neither the amended sub-section (4) nor the 2013 Rules were in force and as such the interpretation extended to the word "possession" as found in sub-section (4) was held to be constructive possession only. It is in this background, the Parliament introduced by Act 2 of 2013 to interpret possession, to mean the possession as prescribed. The delegated legislation partakes the character of a statutory provision. In fact, Section 5(4) would make it expressly clear that even where the immovable property is attached, it does not prevent the person interested of its enjoyment. However, when the provisional order of attachment is ....
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....m opinion after having recorded their reasons to believe that any person is in possession of any proceeds of crime to provisionally attach the property, its confirmation thereof, as well as taking possession of such property to secure the interests of the State. 58. The Hon'ble Apex Court in the case of STATE OF GUJARAT vs. MOHAN LAL JITAMALJI PORWA reported in (1987)2 SCC 364 while examining the expression "reasonable belief" found in Section 123 and 135(1) read with Section 111 of Customs Act, 1962 has held: "4. P.W. 1 Superintendent of Customs xxx made of smuggled gold. Whether or not the official concerned seized the article in the "reasonable belief" that the goods were smuggled goods is not a question on which the court can sit in appeal. The law to this effect has been declared in no unambiguous terms in PUKHRAJ vs. D.R. KOHLI- AIR 1962 SC 1539. This court has administered caution to the courts not to sit in appeal in regard to this question and has observed that if prima facie there are grounds to justify the belief the courts have to accept the officer's belief regardless of the fact whether the court of its own might or might not have entertained....
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....viewed, the property of an accused facing trial under the 1988 Act could be attached and there can be administration by third party of the said property and eventual forfeiture after conviction. The term "attachment" has been understood by this Court in Kerala State Financial Enterprises Ltd. v. Official Liquidator [Kerala State Financial Enterprises Ltd. v. Official Liquidator, (2006) 10 SCC 709] in the following manner: (SCC p. 713, para 11) "11. The word 'attachment' would only mean 'taking into the custody of the law the person or property of one already before the court, or of the whom it is sought to bring before it'. It is used for two purposes: (i) to compel the appearance of a defendant; and (ii) to seize and hold his property for the payment of the debt. It may also mean prohibition of transfer, conversion, disposition or movement of property by an order issued by the court." 152. The legislature has though it property to change the nature and character of the interim measure. The property obtained by ill-gotten gains, if prima facie found to be such by the authorized officer, is to be confiscated. An accused has no vested rig....
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....he authority by virtue of express provision namely Section 8(4). There is no confiscation of the property or the owner of the property is not deprived of his title, which could happen only under sub-section (5) of Section 8. Hence, at the stage of either the provisional order of attachment passed under Section 5(1) or its confirmation thereof under Section 8(3), can it be construed as a person of having been deprived of his right, title and interest over the property. These stages as noticed hereinabove being intermediary stages before confiscation, the question of deprivation of the property right to its owner by virtue of Article 300A of the Constitution does not arise at all. Hence, contention raised in that regard is liable to be rejected and it is accordingly rejected. 64. For the reasons aforestated, this court is unable to accept the contention raised by learned Advocate appearing for petitioners that sub-section (4) of Section 8 of PML Act falls foul of either Article 14 of the Constitution of India or Article 300A of the Constitution of India. Hence, Point Nos. (i) and (iv) is answered against the petitioners and it is held that sub-section (4) of Section 8 is intra-vir....
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....r this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. (p) "money laundering" has the meaning assigned to it in Section 3. (p) "money laundering" has the meaning assigned to it in Section 3. (p) "money laundering" has the meaning assigned to it in Section 3. (p) "money laundering" has the meaning assigned to it in Section 3. (p) "money laundering" has the meaning assigned to it in Section 3. (p) "money laundering" has the meaning assigned to it in Section 3. (ra)-was not present (ra)-was not present (ra) "offence of cross border implications" means- (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person (transfers in any manner) the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds o....
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....art A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-Laundering (Amendment) Act, 2009 (ra) "offence of cross border implications" means- (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person (transfers in any manner) the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India. Explanation: Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-Laundering (Amendment) Act, 2009. (u) "proceeds of crime" means any property derived or ....
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....tal value involved in such offences is thirty lakh rupees or more; or (iii) the offences specified under Part C of the Schedule. (y) "schedule offence" means- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the schedule if the total value involved in such offences is thirty lakh rupees or more; or (iii) the offences specified under Part C of the Schedule. (y) "schedule offence" means- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the schedule if the total value involved in such offences is thirty lakh rupees or more; or (iii) the offences specified under Part C of the Schedule. (wa)-was not present (wa)-was not present (wa)-was not present (wa) "reporting entity" means a banking company, financial institution, intermediary or a person carrying on a designated business or profession. (wa) "reporting entity" means a banking company, financial institution, intermediary or a person carrying on a designated business or profession (wa) "reporting entity" means a banking company, financial institution, ....
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.... of law makers can be ascertained by looking to the objects and reasons. 69. In RAMA RAJU's case referred to supra, it has been further held that "unit of interpretation is the Act as a whole and such of those provisions which are considered for interpretation but in the context of the provisions of the Act." It is also held that the words of a statute, passed after the date of a treaty and dealing with the same subject-matter, are to be construed, if they are reasonably capable of bearing such a meaning, as intended to carry out the treaty obligation and not to be inconsistent with it. 70. The said order passed by the High Court of Andhra Pradesh is a subject matter of challenge before the Hon'ble Apex Court and that there is no interim order against the order passed by the Andhra Pradesh High Court. This Court is in full agreement with the views expressed by the High Court of Andhra Pradesh and do not find any good and valid ground to take any view contrary to the view expressed by High Court of Andhra Pradesh. 71. In fact, the High Court of Gujarat in the matter of ALIVE HOSPITALITY AND FOOD PRIVATE LIMITED VS. UNION OF INDIA AND OTHERS, has expressed its view t....
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....d, 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. By Finance Act, 28 of 2016 the words "or where such property is taken or held outside the country, then the property equivalent in value held within the country" came to be inserted. By Act 13 of 2018, after the words "within the country" the words "or abroad" came to be added. Thus, the definition of "proceeds of crime" as amended give a wider ambit to include value of specific property equivalent in value held outside the country as well. For instance, if a person in India is being labeled for having proceeds of crime in a country outside India, then, in such a scenario, his property situated in India shall be attached even though it may not have a relation to the proceeds of crime. The 2018 amendment has extended the ambit, wherein, the authorities can now proceed against such property equivalent to proceeds of crime held outside the country. 74. Thus, the expression "proceeds of crime" means any property derived or o....
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....L Act or on a conjoint reading of the provisions of the PML Act, it would leave no manner of doubt that it deals only with laundering of money acquired by committing the scheduled offence. To put it differently, the PML Act deals only with the process or activity with the proceeds of crime including its concealment, possession or use. The PML Act has been enacted to prevent money laundering and to provide for confiscation of property derived from or involved in, money laundering. 77. Article 20 of the Constitution prohibits conviction except for violation of a law in force at the time of commission of an offence. In other words, there cannot be prosecution under the PML Act for laundering of money acquired by committing the schedule offences prior to the introduction of the PML Act. Therefore, the time of commission of scheduled offences would not be relevant in the context of the prosecution under the PML Act. What would be relevant in the context of prosecution is the time of commission of the act of money laundering. The question would be, whether a person involved in money laundering as provided under Section 3 of the PML Act has indulged in the said act or not has to be dec....
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....plates a distinct procedure at the initial stage and thereafter provide for initiation of prosecution in order to achieve the special purpose envisaged under the Act and as such, it cannot be construed that proceedings under the PML Act is to be equated with prosecution initiated under the criminal proceedings for the offence punishable under the Indian Penal Code. Thus, initiation of action under the PML Act cannot have any implication or impact in respect of registration of other cases either under the Indian Penal Code or any other penal laws. 26. The offence of money laundering under Section 3 of the Act is an independent offence. A reference to criminal activity relating to a schedule offence has wider connotation and it may extend to a person, who is connected with criminal activity relating to schedule offence, but may not be the offender of schedule offence. It is in this background, it has to be necessarily held that money laundering is a stand alone offence under the PML Act. In this background, when Section 44 of the PML Act is perused, it would clearly indicate that special court may take cognizance of the offence upon a complaint by authorized signatory,....
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.... unraveled by verifying the relevant records and documents during the course of investigation. The mere suspicion of the authorities that proceeds of crime is being ploughed into main stream of the economy as untainted money is sufficient enough for the authorities to investigate and examine and this can be done only by collecting the information, recording the statements who might not be the offender also." 82. In the light of aforestated analysis, this Court is of the considered view that existence of a predicate offence for initiation of proceedings under the PML Act is not a condition precedent or in other words, the offence under Section 3 of the PML Act is a stand alone offence. Hence, the presence of a schedule offence as prescribed under the PML Act would not be condition precedent for proceeding against such person under the PML Act. 83. A plain reading of Section 5 of the PML Act would indicate where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purposes of said section has reason to believe, to be recorded in writing, on the basis of material in his possession would proceed to pass an order in writing pro....
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....ion proceedings are to be initiated only against such person who having been charged of/having committed a scheduled offence is in possession of proceeds of any crime, which are likely to be concealed, transferred or dealt with etc., is an argument which requires to be considered for the purposes of rejection, inasmuch as, the second proviso to sub-section (1) of Section 5 enables the authority referred to in sub-section (1) of Section 5 to attach any property of any person, in the event of such property involved in money laundering, if not attached or the non-attachment is likely to frustrate any proceedings that may be initiated under the PML Act. Second proviso to clause (b) of sub-section (1) of Section 5 would indicate that notwithstanding anything contained in Clause (b), "any property" of "any person" may be attached. This provision came into force by Act 21 of 2009 with effect from 06.03.2009. The second proviso to Section 5(1) enjoins that any property of any person may be attached if the specified authority therein has reason to believe on the basis of material in his possession that if such property is not attached, it is likely to frustrate any proceedings under the PML....
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....provisional order of attachment or annul the same. Sub-section (4) of Section 8 authorizes the authorities specified thereunder to take possession of the property attached under Section 5 and on conclusion of trial of an offence under the PML Act, such property would stand confiscated to the Central Government if the Special Court finds that the offence of money laundering has been committed vide Section 8(5). In the event of the Special Court arriving at a conclusion that money laundering has not taken place or the property is not involved in money laundering, it would order release of such property to the person entitled to receive it as indicated under Section 8(6). In the event of trial not being proceeded for the reason of death of accused or the accused being declared a proclaimed offender or for any other reason or having commenced trial, it could not be concluded, the Special Court on an application filed by the Director or a person claiming to be entitled for possession of a property can pass appropriate orders regarding confiscation or release of such property involved in the money laundering after having regard to the material before it. Section 8(8) prescribes that wher....
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....d offences, and to bring only those charged under Section 8(3)(a) as amended. 90. The amended provision of Section 8(3)(a) uses the phrase "any offence under this act before a court", and the use of expression "any offence" pre-supposes more than one offence which means the scheduled offence defined under Section 2(1)(y) and not narrowly to mean only the offence of money laundering as defined under Section 3 which is punishable under Section 4 as speciously contended by the petitioners. 91. The proper and rational meaning to be attached to clause (a) in sub-section (3) of Section 8 is, that once the provisional attachment order passed under Section 5, is confirmed by the adjudicating authority under Section 8(3), the attachment would continue till the conclusion of proceedings relating to any offence under PML Act. It does not mean that confirmation of provisional attachment will not have any force if no proceedings relating to the offence of money laundering are pending before Special Court on the date of confirmation. 92. The Finance Minister while introducing Bill No. 133 of the Prevention of Money Laundering (Amendment) Bill, 2011 in his notes on clause relating to Sec....
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.... a due trial by the Special Court; which is conferred exclusive jurisdiction qua Section 44, Chapter VII of the Act. The prosecution, trial and conviction for the offence of money-laundering are the criminal sanction administered by the Legislation and effectuated by a deprivation of personal liberty as a disincentive to a malfeasant. The second matrix of proceedings targets the "proceeds of crime" defined in Section 2(u); as 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, for initial attachment and eventual confiscation. 26. Chapter III of the Act enables the specified authority, if he has reasons to believe (the reasons to be recorded in writing), on the basis of material in possession of the authority that any person charged of having committed a scheduled offence (Section 5(1) (b)) or even if not so charged (second proviso to Section 5(1)) is in possession of proceeds of crime and such proceeds are likely to be concealed, transferred etc., in a manner as may frustrate any proceedings relating to confiscation of such proceeds of crime under C....
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....uential transactions, thus, bringing within the scope of Chapter III of the Act, all the properties involved in the transactions. 97. It would not be out of context to refer at this juncture itself Sections 23 and 24 of the PML Act. For the purposes of convenience, said provisions are extracted herein below: "23. Presumption in inter-connected transaction.--Where money laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation [under section 8 or for the trial or the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court], be presumed that the remaining transactions form part of such inter-connected transactions. 24. Burden of Proof.--In any proceeding relating to proceeds of crime under this Act,-- (a) in the case of a person charged with the offence of money-laundering under section 3, the authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money laundering; and ....
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....erty' is elucidated in Clause (v) of Section 2, as 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. Section 2(u), therefore, does not envisage either mens rea or knowledge that the property acquired is a result of criminal activity. 100. The Hon'ble Apex Court in the matter of KARTAR SINGH vs. STATE OF PUNJAB, reported 1994 SCC (Cri) 899 has held that in a criminal action, the general conditions of penal liabilities are indicated in the word maxim "actus non facit reum, nisi mens sit rea" i.e., the act alone does not amount to guilt, it must be accompanied by a guilty mind. But there are exceptions to this Rule and the reason for this is that the legislature, under certain situations and circumstances, in its wisdom, may think it so important, in order to prevent a particular act from being committed to forbid or rule out the element of mens rea as a constituent part of a crime or of adequate proof of intention or actual knowledge. It has been further held that unless a statute either....
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....f 2009, 2 of 2013, 28 of 2016 and 13 of 2018 neither create the new offence nor enhance the punishment nor they have changed the procedure or forum of trial to prejudice of the accused and it is only procedural in nature and as such it would have retrospective effect as the offence is continuing one. In other words, the money laundering offence is a continuing offence. 105. Thus, in case of the proceeds of crime are being projected as being untainted and thereby ploughing such tainted money to the economy of the country, it would definitely have delirious effect and impact on the economy and as such the offence which has been committed and continuing would not wipe-out the offence committed on the premise that act is prospective and cannot have retrospective effect. It would be that date when a person is found involved in any process or activity connected with the proceeds of crime and projecting as untainted property, which would be the relevant date for the purposes of prosecution under Section 3 of the PML Act and not the date when the scheduled offence was committed. What is being targeted by Section 3 is the "laundering" of money which would be relevant. The expression "lau....
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....possession of "any person" Be it a person charged of having committed a scheduled offence "or otherwise" In the case of any other person in possession of proceeds of crime, if it is also found that he has directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property, he shall be liable to be prosecuted for offence under section 3 read with section 4 of the Act of 2002--in addition to suffering the action of attachment of the proceeds of crime in his possession. Attachment of proceeds of crime in possession of any person (other than the person charged of having committed a scheduled offence) will, therefore, be legitimate within the sweep of Section 5 of the Act of 2002. In our opinion, the thrust of section 5 is to attach every property involved in money-laundering irrespective of whether it is in possession of the person charged of having committed a scheduled offence or any other person-provided however it must be shown to be proceeds of crime and further, that proceeds of crime are likely to be concealed, transferred or dealt....
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.... without his knowledge that the property held by him is tainted. That person may not face prosecution under section 3 of the Act of 2002. But even in his case, an order of attachment of the proceeds of crime can be invoked and later end up with confiscation thereof depending on the outcome of the criminal action against the person charged of having committed a scheduled offence. The action of attachment is not in relation to a person as such but essentially to freeze the proceeds of crime. The interpretation given by the Appellants, if accepted would be destructive of the said legislative intent. Suffice it to observe that the term "person" appearing in clause (a) of Section 5(1) of the Act cannot be limited to the person who has been charged of having committed a scheduled offence. If that was the intent of the legislature, there was no reason to insert clause (a). In that case, the Legislature would have simply provided for any person who has been charged of having committed a scheduled offence and in possession of any proceed of crime, such proceeds of crime can be attached and confiscated, subject to fulfillment of the specified conditions." 107. Hence, this Court is of the ....
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....of writ jurisdiction, had an occasion to consider the said issue in the matter of BANGALORE TURF CLUB vs. UNION OF INDIA, MINISTRY OF FINANCE AND OTHERS reported in ILR 2015 KAR 1825 and after referring to catena of judgments referred to thereunder, it came to be held: "20. It is well settled law that when an alternate or efficacious remedy is available to a litigant same should be exhausted before invoking the extraordinary jurisdiction and when such jurisdiction is invoked the existence of adequate alternate remedy will be taken note of before issuing writ or exercising the extraordinary jurisdiction. Where such alternate remedy is available it would be normal to refrain thereof. However, writ Courts would not lose sight of the fact that a writ in the nature of certiorari will issue, provided the requisite grounds exist and mere existence of alternate remedy would not per se act as a barrier to the issuance of such writs. The exercise of extraordinary jurisdiction by the writ Court would depend upon variety of individual facts which is pre-eminently one of discretion. No flexible rule can be laid down or in other words there cannot be any straight jacket formula in....
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.... of attachment made under sub-section (1) of Section 5 shall seize to have effect after the expiry of the period specified in that said sub-section (180 days) or on the date of an order made under sub-section (2) of Section 8, whichever is earlier. The authorities specified under sub-section (5) of Section 5 are required to file a complaint stating the facts of such attachment before the adjudicating authority. The adjudicating authority on being satisfied and having reason to believe that any person has committed an offence under Section 3 or in possession of proceeds of crime, would serve a notice of not less than 30 days on such person by calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached. The adjudicating authority shall thereafter pass an order by recording a finding whether all or any of the properties referred to in the notice under sub-section (1) or involved in money laundering. Thereafter the adjudicating authority would confirm or annul the provisional order of attachment. Thus, on a provisional order of attachment being passed, such person would receive the notice under sub-s....
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....e, in the facts obtained in the present case Point No. (v) is answered in the negative. RE. POINT NO. (vi) IN THE MATTER OF W.P. Nos. 4215/2017, 6159/2017, 6173/2017 & 8261/2017: 114. In these writ petitions the company as well as former Directors and ex-employees have challenged the communication issued by the Chief Director of Enforcement Directorate to the Chief Executive Officer of the Association of Mutual Funds of India (for short "AMFI"), contending inter alia that it is a colourable exercise of power without jurisdiction and arbitrary. 115. It is the contention of Sri. Uday Holla, learned Senior Counsel appearing on behalf of the petitioners that in W.P. No. 6159/2017, there is no provisional order of attachment passed, yet the impugned letter dated 06.01.2017 (Annexure-A) is issued by the Assistant Director, Directorate of Enforcement to AMFI calling upon the noticee to furnish details of investments made by the petitioner-company in mutual funds/fixed maturity plans of various asset management companies, who are members of the noticee. He would draw the attention of the Court to the said communication to contend that AMFI is not a government organization nor an i....
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....ell as the show cause notice dated 20.02.2017 came to be challenged before this court in W.P. No. 11544/2017 and said writ petition came to be dismissed vide order dated 06.10.2017. The copy of the said order has been filed by the learned counsel appearing for the respondent along with memo dated 09.11.2017 which discloses this court had held that writ petition filed against a provisional order of attachment is not maintainable. As such contention raised by the learned Senior Counsel appearing for the petitioner with regard to there being no provisional order passed would not hold water and said contention is liable to be rejected. On this short ground alone, this writ petition is liable to be dismissed. 117. By the impugned communication first respondent has called upon second respondent to inform its members to furnish information about any investment having been made by the petitioner-company with the members of the second respondent in mutual funds/other plans and if so to furnish the details thereof. The second respondent has also been informed that such investments should not be redeemed or released until further instructions are issued as per Section 2(na) and Section 54 ....
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....vestigation". As already noticed hereinabove, the said definition is an inclusive definition and would empower the investigating agency to take recourse to not only proceedings under the PML Act but also to all incidental and consequential acts that may be necessary for effectively pursuing such proceedings under the Act and to ensure collection of evidence. The investigation commences as soon as the authority decides to take the first step whether by way of seeking evidence or by way of seeking explanation from the person concerned who is said to have indulged in money laundering. It is not necessary that it should commence with the communication of such acquisition to the person concerned. Nor is there any rule of justice or fair play which requires the authority to seek the comments of the person concerned before embarking upon an investigation. The Hon'ble Apex Court in the matter of DIRECTORATE OF ENFORCEMENT VS. DEPPAK MAHAJAN reported in AIR 1994 SC 1775 has held that the word "investigation" cannot be limited only to police investigation but on the other hand, the said word is with wider connotation and flexible so as to include the investigation carried on by any agenc....
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....rtue of the powers conferred under Section 49(1) of the PML Act by authorizing him to exercise the exclusive powers conferred under Sections 5, 8, 16 to 21, 26(1), 45, 50, 57, 58A, 58B, 60, 62 and 63 and therefore, he becomes an authority as indicated under Section 48. The said Director has the exclusive power under Section 5 to "authorize" officers not below the rank of Deputy Director for the purpose of Section 5 and the Director of Enforcement in his capacity as Director under PML Act has indeed "authorized" all Deputy Directors of Enforcement to provisionally attach the property in respect of cases registered for investigation in their respective zones in accordance with PML Act and Rules made thereunder vide Notification F. No. T-1/HQ/03/PMLA/207 dated 07.02.2007. In fact, the Central Government in exercise of its power conferred under Section 49(1) has appointed the Deputy Director under Foreign Exchange Management Act, 1999, as the Deputy Director for the purpose of PMLA vide order S.O. 1274(E) in F. No. 6/2/2005-ES which has been duly notified in the Gazette of India Extraordinary, Part-II, Section-3(ii) in No. 961 on 13.09.2005. 123. Investigation encompasses the power ....
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....dicating authority may be exercised by benches thereof; and, a bench can be constituted by the Chairperson of the adjudicating authority with one or two members, as the Chairperson may deem fit. Hence, this court is of the considered view that constitution of a bench hearing the original complaint or its adjudication thereof consisting of one member cannot be found fault with. It can be further noticed that under sub-section (13) of Section 6, if the vacancy arises in the office of the Chairperson by reason of death, resignation or otherwise, the senior most member would act as the Chairperson and such Chairperson would exercise the power as provided under Section 6 of the PML Act. 127. For the reasons indicated herein above, this Court is of the considered view that contentions raised by the petitioners challenging the action of the respondents in initiating the proceedings under the PML Act cannot be accepted and same stands rejected. RE: W.P. NO. 27705/2018: 128. In this writ petition, the order dated 16.12.2016 Annexure-AA passed by respondent No. 3 is under challenge, whereunder respondent No. 3 has confirmed the attachment of the property i.e., immovable property at ....