TaxTMI 
TaxTMI 
2022 (10) TMI 737
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....cted a factory shed, office building and other structures. The entire property is hereinafter referred to as "the said property". 5. The present writ petition has been preferred against an order of provisional attachment dated March 31, 2022 under Section 5 (1) of the Prevention of Money Laundering Act, 2002 (in short, "the PMLA") as well as proceedings initiated under Section 8 (1) of the PMLA by issuing a show cause notice dated May 5, 2022. 6. According to the petitioners, copies of the show cause notice dated May 5, 2022 were served on the petitioners together with the order dated March 31, 2022 and the original complaint of April, 2022. 7. On March 30, 2013 an FIR was registered with the Central Bureau of Investigation (CBI) against Mahesh, his wife Alka and their son Siddharth Kejriwal under Sections 120B and 420 of the Indian Penal Code and Section 13 (2) read with Section 13 (1)a (d) of the Prevention of Corruption Act, 1988. 8. Petitioner nos. 2 and 3 received summons dated March 23 and March 16, 2022 respectively and appeared before the Deputy Director, Kolkata Zone I of the Enforcement Directorate (ED), who is the respondent no. 2 herein. 9. Subsequently, the impugn....
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....is nothing to show that proceeds of crime are likely to be transferred, concealed or dealt with. Placing reliance on Opto Circuit India Ltd. V. Axis Bank & Ors., reported at (2021) 6 SCC 707, it is argued that the above ingredients, missing in the present case, are necessary for exercise of jurisdiction under Sections 5 and 8 of the PMLA. 14. Next relying on Suman Chattopadhyay & Ors. v. Directorate of Enforcement, Govt. of India & Ors., reported at 2022 SCC Online Cal 1807, learned counsel contends that, as held therein, the chain of reasons to believe, expressed in writing, must indicate, in specific terms, that the proceeds of crime/ the property in question is derived directly or indirectly by the person as a result of criminal activity relating to a scheduled offence. Moreover, conditions of both clause (a) and (b) of Section 5 (1) are required to be satisfied for invocation of jurisdiction under the said provision. Learned counsel also cites for such proposition a later judgment of the Supreme Court reported at 2022 SCC Online SC 929 (Vijay Madanlal Choudhary & Ors. v. Union of India & Ors.). 15. There are no allegations in the present case that the petitioners are involved....
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....cites several judgments in support of his proposition that that if a 'statutory remedy' is available, a writ petition is not maintainable. The said judgments are as follows: I. Commissioner of Income Tax and others Vs. Chhabil Dass Agarwal [(2014) 1 SCC 603] -Ref. Para 15 and 16; II. Raj Kumar Shivhare Vs. Directorate of Enforcement [(2010) 4 SCC 772] - Ref. Para 31; III. M/s. Rose Valley Real Instates & Constructions Pvt. Ltd. & anr. Vs. Securities and Exchange Board of India & ors. [(2011) 4 CHN 91] - Ref. Para 24, 30, 31 and 32; IV. A John Kennady Vs. Joint Director, Directorate of Enforcement, Cochin Zonal Office, Cochin [AIR OnLine 2020 MAD 2243] - Ref. Para 11, 13 and 25; V. Devdas Multimedia Pvt. Ltd., Bangalore Vs. Joint Director, Directorate of Enforcement, Bangalore and others [2018 (1) AKR 87] - Ref. Para 28, 29, 30 and 31; VI. Abhay Nigam Vs. Union of India [AIR OnLine 2021 MP 433] - Ref. Para 5; VII. Namrata Marketing Pvt. Ltd. Vs. UOI [AIR OnLine 2021 ALL 429] - Ref. Para 15, 18, 23, 24, 25, 26, 30 and 31; VIII. Impex Ferro Tech Ltd. & another Vs. Union of India and others [Order dated 12.07.2021 passed by the Hon'ble High Court at Calcutta in W.P.A. ....
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....settled by the Supreme Court in several cases, including the ones cited by counsel in the present case, a patent jurisdictional error can be interfered with by this court even if an alternative remedy is available. Whirlpool's case has summed up the limited windows for such interference. Even as per Chhabil Das's case, as rightly argued by the petitioners, where a statutory authority has failed to act in accordance with the statute in question or without jurisdiction, the same comprises an exception to the alternative remedy bar. The distinction sought to be drawn in this regard by learned counsel for the ED between an "alternative" remedy and a "statutory" remedy is artificial and not borne out by any of the cited judgments. Often, the two terms are interchangeable. Whereas alternative remedy is a genus, statutory remedy is one of the species thereunder. Therefore, the test for interference in the present case is whether any patent jurisdictional contravention of the respondents has been established prima facie by the petitioners. 28. To answer such query, it is necessary to delve into the second issue, that is, whether a third party property, having no nexus with the proceeds of....
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....the company. 35. The respondents have cited certain decisions in support of their contention that even third party properties can be attached. The first of such judgments is Vijay Madanlal (supra). The relevant paragraph in this context, which is relied on by the respondent no. 2, is paragraph 65 thereof. The Supreme Court holds therein that "... The sweep of Section 5 (1) is not limited to the accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. Such a person besides facing the consequence of provisional attachment order, may end up in being named as accused in the complaint to be filed by the authorised officer concerning offence under Section 3 of the 2002 Act." 36. The above ratio is self-explanatory and it does not require Rocket Science to decipher that it is not applicable to the present case, in the absence of any connection being established, or even alleged, between any of the present petitioners and any "activity connected with the proceeds of the crime", at least insofar as the asse....
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....older of certain shares of a company, acquired much prior to the alleged date of crime, cannot have an iota of right whatsoever over the assets of the company, also acquired much before such date. The argument that the company may deal with or encumber its assets, thereby denuding the value of its shares, is too remote to carry any weight. 41. Even if only the shares in the name of the accused persons in the company (although acquired much prior to the alleged crime) were sought to be attached provisionally under Section 5 of the PMLA, some reason could be laboriously attributed to the same. Here, the respondent no. 2 goes one step further and calculates the share of the company's assets in ratio with the number of shares held in the company by the accused and attaches the said "share" in the property provisionally. This would tantamount not to law enforcement but unwarranted muscle-flexing by the respondent no. 2-agency. 42. The next line of argument of learned counsel for the petitioner no. 2 is that property acquired prior to commission of the scheduled offence may also be attached. Two decisions of learned Single Judges of the Delhi High Court have been cited in this context.....
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....6. Even upon a repeated reading of the said judgment, comprised of about ten paragraphs, I fail to tint myself in the hue of the respondents' argument. The said judgment does not lay down a blanket proposition of law that in no case, the adjudication under Section 8 would not be nullified due to invalidation of the order of provisional attachment under Section 5 of the PMLA. Rather, in paragraph 4 thereof, it is held that, going by the scheme of Sections 5 and 8 of the PMLA, the fact that the petitioner has succeeded before the High Court, does not per se result in nullifying the adjudication proceedings which, nevertheless, can proceed and need to be taken to its logical end by the Adjudicating Authority in accordance with law. An important factor, which distinguishes the said case from the present one, is that the matter was remanded by the High Court to the appropriate authority for passing a fresh order of provisional attachment, by quashing the impugned order on the technical ground of non-disclosure of sufficient reasons in the order under Section 5 of the PMLA but mere quotation by the authority of the provisions of law. The merits of the order, as specifically observed by t....
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....of such attachment before the Adjudicating Authority by the Director or other officer who provisionally attaches any property under sub-section (1) of Section 5. 52. Whereas, for invocation of Sections 17(4) and 18 (10), the property or records may, in the perception of the authorities, be "useful for or relevant to" any proceedings under the PMLA, in the case of Section 5(5), the standard is much stricter, as the complaint, unlike the applications contemplated in the other two provisions, relates specifically to "the facts of such attachment", in other words, the attachment envisaged under Section 5(1). 53. Hence, the effect of a quashing on technical ground and consequential remand, as in M/s Kaushalya (supra), and that of prospective setting aside of the provisional order of attachment under Section 5 (1) on merits (hence, no question of remand arises), with regard to the provisional attachment of immovable property, as in the present case, on a proceeding or adjudication under Section 8 of the PMLA stand on entirely different footings. Thus, an ultimate quashing of a portion of the provisional attachment order under Section 5 (1) itself, with regard to a portion of the immova....