TaxTMI 
TaxTMI 
2024 (2) TMI 141
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....diamond jewellery as mentioned in the Panchanama / seizure memo dated 19/08/2020 and 20/08/2020." Factual matrix 2. It is the case of the petitioner that, vide order dated 26.07.2017, passed by the learned National Company Law Tribunal, Principal Bench, New Delhi (in short, 'NCLT') in CA No.(IB)-202(PB)/2017, the petitioner was appointed as the Interim Resolution Professional (in short, 'IRP') for the Corporate Insolvency Resolution Process of M/s Bhushan Power and Steel Ltd. (hereinafter referred to as 'BPSL'). 3. On 01.09.2017, the Committee of Creditors (in short, 'CoC') for BPSL confirmed the appointment of the petitioner as the Resolution Professional (in short, 'RP') for BPSL. 4. On 16.10.2018, the CoC also approved the resolution plan for BPSL, which was submitted by M/s JSW Steel Limited. The said plan was approved by the learned NCLT vide order dated 05.09.2019. 5. The petitioner claims that in the course of his functioning as the IRP and as the RP of BPSL, the petitioner unearthed fraud committed by the ex-promoters and directors of BPSL, for which he even filed a criminal complaint dated 07.02.2020 with the SHO, Thelkoloi Police Station, District- Sambalpu....
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....ed persons; the petitioner was cited as a witness in the said Prosecution Complaint. 10. The petitioner claims that on 19th and 20th August, 2020, the respondent carried search and seizure on the premises of the petitioner on the basis of the abovementioned ECIR and seized various documents, records, digital devices, and gold and diamond jewellery having an aggregate value of Rs. 85,98,677/- from the petitioner. 11. On 17.09.2020, the respondent filed an Original Application bearing no. 404/2020 under Section 17 (4) of the Act before the Adjudicating Authority seeking confirmation of the retention of the items, documents, records, and jewellery seized by the respondent during the search and seizure. 12. The Adjudicating Authority, by its order dated 10.02.2021 passed under Section 8(3) of the Act, confirmed the retention of the items, documents, records, and jewellery seized by the respondent during the search and seizure. 13. The petitioner claims that as no complaint against the petitioner was thereafter filed for a period of more than 365 days, the petitioner, vide an application dated 11.04.2023, sought the return of the seized documents and properties. As the respo....
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....erties of the petitioner post the order dated 28.08.2020 passed by this Court in Writ Petition (Crl.) no. 1342/2020, titled as Mahender Kumar Khandelwal v. Union of India & Ors., whereby the respondent was restrained from taking any coercive action against the petitioner. The respondents did not even apply for seeking the vacation of the said order before carrying out the search and seizure. He submits that the reliance of the respondents on the said order to seek extension of seizure is, therefore, mala fide. Submissions of the learned counsel for the respondents 17. On the other hand, the learned counsel for the respondents submits that in the present case, based on the information obtained from open source regarding initiation of investigation against BPSL by the Director General of GST Intelligence, Bhubaneswar (hereinafter referred to as 'DGGI') involving fraudulent and clandestine removal of finished goods by the previous as well as the current management of BPSL, the respondents collected incriminating evidence in the shape of statements recorded by DGGI. It was found that BPSL had engaged in clandestine clearance of the finished goods from its Odisha Plant to its plan....
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....for the purpose of Section 8(3)(a) of the Act. He submits that cognizance is taken of the offence and not the offender. He submits that it is immaterial as to whether the said prosecution complaint arrays the petitioner herein as an accused or not. In support, he places reliance on the following judgments: a) Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., 2022 SCC OnLine SC 929; b) S.K. Sinha v. Videocon International Ltd. & Ors., (2008) 2 SCC 492; c) Sunil Bharti Mittal v. Central Bureau of Investigation (2015) 4 SCC 609; d) Nahar Singh v. State of Uttar Pradesh & Anr.(2022) 5 SCC 295; e) Pradeep S. Wodeyar v. State of Karnataka, 2021 SCC OnLine SC 1140; and, f) Yogender Chandolia v. Vishesh Ravi & Ors. 2021 SCC OnLine Del 5540. 19. He submits that apart from the above Criminal Complaint, there are other proceedings that are also pending, which shall also fall within the scope and ambit of Section 8(3)(a) of the Act. They are as follows: (a) W.P. (Crl.) 1342/2020 filed by the petitioner seeking quashing of summons dated 19.08.2020 and 22.08.2020 issued under the Act; (b) W.P.(C) 11256/2022 filed ....
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....its that, in any case, Section 8(3)(a) does not provide for any consequence on the lapse of the period of 365 days inasmuch as it does not state that the order of seizure would thereafter lapse or that the documents and property seized must be returned to the person from whom it is seized. He submits that in absence of such a provision, the present petition is liable to be dismissed. Analysis and finding 24. I have considered the submissions made by the learned counsels for the parties. 25. The issue in the present case is the meaning to be prescribed to the words 'the proceedings relating to any offence under this Act before a Court' in Section 8(3)(a) of the Act. While the learned counsel for the petitioner submits that these words have to be read in a narrow manner so as to mean only the complaint which arrays the person from whom the documents or the property has been seized as an accused or mentions such documents or property as relied upon in such complaint, the learned counsel for the respondents submits that there is no reason to give a restricted meaning to these words and any proceedings relating to any offence under this Act shall be sufficient to extend the per....
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....es of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a of order of vacation of such further period not exceeding thirty days from the date stay order shall be counted." 28. A reading of the above provision would show that the provisional attachment of the property can be ordered where there is a reason to believe that any person is in possession of any proceeds of crime and such proceeds of crime is likely to be concealed, transferred or dealt with in any manner which may result in frustrating 'any proceedings relating to confiscation of such proceeds of crime'. The first proviso of Section 5(1) of the Act states that no such order of attachment shall be made unless inter alia, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 of the CrPC, or a complaint has been filed by a person authorized to investigate the offence mentioned in the schedule before a Magistrate or a Court for taking cognizance of the scheduled offence. Therefore, for ordering a provisional attachment of the property, proceedings in the form of a r....
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....ound 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 control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: (1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub- section (7) of section 8 or section 58B or sub- section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under sub-section (1) may seize such property. (2) The authority, who has been authorised under sub-section (1) shall, immediately after....
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....ward a copy of the order along with the material in his possession, referred to in sub-section (1), 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) On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. (4) The Adjudicating Authority, before authorising the retention or continuation of freezing of such property beyond the period specified in sub-section (1), shall satisfy himself that the property is prima facie involved in money-laundering and the property is required for the purposes of adjudication under section 8. (5) After passing the order of confiscation under sub-section (5) or sub- section (7) of section 8, Special Court, shall direct the release of all property other than the property involved in money-laundering to the person from whom such property was se....
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....uch order, if he is of the opinion that such record is relevant for the appeal proceedings under this Act." 33. Section 8 of the Act empowers the Adjudicating Authority to inter alia pass an order confiscating the properties on a complaint received under sub-Section 5 of Section 5 or application under Section 17(4) or 18(10) of the Act. Section 8 of the Act reads as under:- "8. Adjudication.-(1) On receipt of a complaint 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, it 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 ....
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....e property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money 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 proclaimed offender or for any other reason or having commenced but could not be concluded, the Sp....
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....roclaimed offender or for other reasons, may pass an appropriate order regarding confiscation or release of the property in respect of which an order has been passed sub-Section 3 of Section 8 of the Act. Similar, provisions under Section 58B and Section 60(2A) of the Act have been made with respect to a trial under the corresponding law of any other country. 35. From the combined reading of the above provisions of the Act, it is evident that the powers of attachment, seizure and freezing of the properties and records becomes final on the order passed by the Special Court in relation thereto. The words 'proceedings relating to any offence under this Act' appearing in Section 8(3)(a) of the Act, therefore, has to be read in light of the above provisions to mean only a proceeding that is pending before a Special Court in relation to the property or records that are so attached or seized or frozen or with the respect to the person from whom such property was seized or recovered. The provisions of the Act have to be reasonably read and in a harmonious manner with other provisions. It is also to be remembered that the power of attachment, seizure, and freezing of the properties and r....
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....l devices seized/recovered vide panchnama(s) dated 19.08.2020 from the residence and office premises of the respondents as mentioned at page no 4-8 of this order, in terms of section 17(4) of the PMLA. 4. Hence the Application as filed by the Enforcement Directorate is allowed." xxxxx 7. Having taken into consideration the facts and circumstances of the case and request of the defendants first to give a suitable date for pronouncement and second to defer to any date after 08.02.2021, in view of the statutory limitation involved the pronouncement of order cannot be kept pending. Moreover this order which is merely for granting permission to retain the seized articles for the purpose of investigation in the backdrop of serious economic offences and no prejudice is caused to the Respondents at this stage, the order which is subject to the directions of the Hon'ble High Court in the writ petition, is pronounced today in the open court as per schedule for pronouncement vide cause list dated 09.02.2021." (Emphasis supplied) 37. From the above, it would be apparent that the retention of the documents and properties has been allowed for the purpos....
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....udulently obtained VAT refund from VAT authorities without actual export of goods. The properties in question are lying mortgaged with bank, since 2009. As per impugned order, the Respondent is empowered to attach any property, thus property even though purchased in 1991 could be attached. Concededly, the Appellants are neither arrayed as accused in scheduled offence nor criminal complaint filed before Special Court under PMLA. The Respondent has already filed criminal complaint under PMLA against Raman Garg and others before Special Court, however admittedly investigation is still pending. The respondent has not filed any criminal complaint under Section 3 of PMLA against Appellants and a period of even 365 days from the date of confirmation order passed by Ld. Adjudicating Authority has already expired. xxxxxxx 27. Q.(i). As per clause (a) of Sub-Section (3) of Section 8 of the PMLA, the provisional attachment shall continue during investigation for a period not exceeding 90 days. The aforesaid period of 90 days has been increased to 365 days w.e.f 01.08.2019 vide amendment Act 7 of 2019. The concept of 90 days period during investigation was Introduced w.e.f. 1....
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.... original complaint filed against BPSL and others. 42. Explanation (ii) to Section 44 of the Act states that the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted "to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence" for which complaint has already been filed, whether named in the original complaint or not. From the said provision also, it is apparent that the investigation may lead to filing of a subsequent complaint to bring on record further evidence in form of seized documents and records, either against the accused named in the original complaint or subsequent thereto. However, till such Supplementary Complaint is filed, it has to be presumed that the investigation is still pending, and in such a scenario, the outer limit of 365 days to retain the property/documents seized, shall continue to operate. 43. In view of the above, it is held that the period of 365 from the passing of the order dated 10.02.2021 by the Adjudicating Authority having been passed, the documents/digital device/property seized from the petitioner in the search and seizu....
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....achment has lapsed. In the said petition, an interim order dated 28.07.2022 has been passed, which read as under: "3. Till the next date of listing, the respondent shall stand restrained from taking further steps as contemplated under Section 8 of Prevention of Money Laundering Act, 2002. The petitioner shall also stand restrained from disposing of or creating any third party rights or encumbering the property which forms subject matter of the provisional order of attachment." 48. I am informed that the above order continues till date. 49. However, the fact remains that the above Writ Petition does not relate to the seizure of the documents and property. In case the above Writ Petition relates to any document or property seized pursuant to the action taken on 19-20.08.2020 and by the order dated 10.02.2021 passed by the Adjudicating Authority, the order presently passed shall be subject to the interim order as referred hereinabove. However, it is clarified that for the purposes of extending the seizure under the order dated 10.02.2021 passed by the Adjudicating Authority, the pendency of the above writ petition can come to no avail to the respondent inasmuch as the s....
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....r. An action could have been taken in no other manner except in accordance with the procedure prescribed by law as laid down in the decisions referred to at the Bar thus: (a) State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, wherein this Court observed: "59. ....In absence of any substantive provisions contained in a parliamentary or legislative act, he cannot be refrained from dealing with his property in any manner he likes. Such statutory interdict would be opposed to one's right of property as envisaged under Article 300-A of the Constitution." (b) K.T. Plantation Pvt. Ltd. v. State of Karnataka, (2011) 9 SCC 1 in which it was opined: "168. Article 300-A proclaims that no person can be deprived of his property save by authority of law, meaning thereby that a person cannot be deprived of his property merely by an executive fiat, without any specific legal authority or without the support of law made by a competent legislature. The expression "property" in Article 300-A confined not to land alone, it includes intangibles like copyrights and other intellectual property and embraces every possible interest recognised by law. 169....
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....titutional democracy and the rights available to the citizens are declared by the Constitution. Although Article 19(1)(f) was deleted by the Forty-fourth Amendment to the Constitution, Article 300-A has been placed in the Constitution, which reads as follows: "300-A. Persons not to be deprived of property save by authority of law.-No person shall be deprived of his property save by authority of law." 8. This is a case where we find utter lack of legal authority for deprivation of the respondent's property by the appellants who are State authorities. ..." (e) In Delhi Airtech Services (P) Ltd. v. State of U.P., (2011) 9 SCC 354, this Court held: "83. The expression "law" which figures both in Article 21 and Article 300-A must be given the same meaning. In both the cases the law would mean a validly enacted law. In order to be valid law it must be just, fair and reasonable having regard to the requirement of Articles 14 and 21 as explained in Maneka Gandhi. This is especially so, as "law" in both the Articles 21 and 300-A is meant to prevent deprivation of rights. Insofar as Article 21 is concerned, it is a fundamental right whereas in Article ....