AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2024 (6) TMI 775
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice in the electronic and print media that it was proposing to construct premium residential apartments at Humhama, Airport Road Srinagar, under the name and style "Palm Springs". It was represented that the project proposed by the respondent-Company was first of its kind in the valley, and would have all the ultra modern facilities. The petitioners, as is claimed by them. after exercising due diligence with regard to viability of the project and having regard to the fact that the housing project proposed by the respondent-Company was being developed by M/S ABL Tech infrastructure (JV), chose the construction link plan offered by the respondent No. 4 and, accordingly, applied for allotment of residential dwelling Units. As is claimed, the petitioners made it sure that the project had the approval of all the competent authorities including NOC from the Revenue Department and building permission by the Municipal Corporation. 3. The petitioners submit that they also deposited the booking amount and were accordingly issued allotment letters by respondent No. 4. The petitioners continued to make payments as per the mode and manner provided in the construction plan. The tri-party ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at they deposited the demanded installments. As the construction of Towers A, C, D and E was almost complete, as such the petitioners approached the respondent No.6 for execution of the sale agreements so that they could deposit the balance amount and have the sale deeds executed. The respondent No.6 showed his inability to do so and informed the petitioners that the matter was under investigation of respondent No.3, which had, vide Order No. 03/2022 dated 25-03-2022 provisionally attached the project property by having resort to Section 5(1) of the Act of 2002. The entire land under the project along with two towers ( Block B and F) and four Units ( G3, G4, G5 and G6) of Block A of the project were provisionally attached by the respondent No.3 on the ground that the project had been raised out of proceeds of crime. As a result of this provisional attachment order, respondent Nos. 5 and 6 have been restrained from transferring, disposing of, parting with or otherwise dealing in any manner whatsoever until or unless specifically permitted to do so. 6. As is evident from reading of the provisional attachment order and the impugned order of confirmation, the respondent No.3 initiat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Block B, F and Unit G3,G4, G5 and G6 of Block A is equivalent to the proceeds of crime and, therefore, it was totally arbitrary on the part of the respondent Nos. 2 and 3 to attach the entire project land and thereby rendering the residential units, which are otherwise not formally attached, totally useless and beyond the reach and use of the petitioners; (iv) That the petitioners are neither the accused in the scheduled offences nor are in any manner privy to the transactions relating laundering of proceeds of crime, and, therefore, they cannot be deprived of their right to shelter, which, in terms of Article 21 of the Constitution of India, is a fundamental right guaranteed to the citizens of this country. The petitioners claim that they are the bona fide investors in the allotment of the residential houses and were not aware that the project was being raised through the proceeds of crime generated by the ACCSL; 8. The petition is opposed by the Directorate of Enforcement i.e. respondent No.3. It is submitted that the Directorate of Enforcement, Jaipur Zonal Office, Jaipur, recorded case No. ECIR/01/JPZO/2019 dated 22-03-2019 under the Act of 2002. This case was reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of availability of alternative statutory remedy, which is equally efficacious, the writ petition under Article 226 of the Constitution of India, is not maintainable. The issue of jurisdiction, which was seriously debated by both sides, is thus left totally undecided for the reason that, in the given facts and circumstances of the case, it is not necessary to do so. 12. Indisputably, the petitioners are not named in the FIR registered by SOG, Jaipur against the founder Director and the Managing Director of ACCSL and others connected therewith in respect of commission of Scheduled offences under the Act of 2002. Prima facie the claim of the petitioners that they have legitimate interest in the property and have been made to suffer quantifiable loss as a result of impugned order of confirmation of the attachment by the Adjudicating Authority, has substance. As claimed, the petitioners have invested their hard earned money in procuring residential units under construction linked plan floated by respondent No.4. They carried out the exercise diligently to find that the project they were investing in, was being raised without offending any law. They verified the title of the land from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns 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 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, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
......................................................... (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country Explanation.-For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence." 16. It is thus evident that proceeds of crime means any property derived or obtained by any person directly or indirectly as a result of criminal activity relatable to the Scheduled offences or the value of any such property. 17. In the instant case, the ED has found a sum of Rs. 20,28,53,280.01 invested in the project "Palm Springs" as proceeds of crime. The total investment made in the project is found to be Rs. 41,48,39,786/-, out of which a sum of Rs. 31,22,69,380/- is found ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. Sub-section (8) of Section 8, as is apparent from its bare reading, provides remedy to the claimant during the trial of the case and also after the trial when the attached property is confiscated. The first proviso to sub-section (8) of Section 8 clearly lays down that where, after the conclusion of the trial the attached property is confiscated to the Central Government under sub-section (5) of Section 8 of the Act, the Special Court may also direct the Central Government to restore such confiscated property or part thereof to a claimant with legitimate interest in the property, provided such claimant has suffered a quantifiable loss as a result of money-laundering. Proviso 1st further lays down that the Special Court may not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is, otherwise, not involved in the offence of money-laundering. The proviso 2nd added to this Section by Act No. 13 of 2018 with effect from 19-04-2018 provides similar remedy to the claimant during trial of the case also. It is here we are required to make a reference to the Prevention of Money-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the claimant as a result of the offence of money-laundering, the Special Court, as it thinks fit, may pass an order of restoration of property directing the Central Government, if necessary, to auction such property and disburse on a pro-rata basis in accordance with the share of loss suffered by each claimant and may give custody thereof to such claimant on his executing a bond undertaking to produce such restored property before the Special Court as and when required for the purposes of sub-section (5) or sub-section (6) or sub-section (7) of section 8 of the Act. (3) No claimant shall be entitled to claim restoration of the property referred in sub-rule (1) before the Special Court beyond thirty days from the date of publication of the notice referred to in that sub-rule: Provided that the Special Court may entertain any claim not exceeding further thirty days, upon the satisfaction that the claimant was prevented by sufficient cause." 24. It is thus abundantly clear that the remedy of the petitioners lies before the Special Court under the Prevention of Money-laundering Act, at Jaipur which has taken cognizance of the case and is seized of the matter. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng of the appeal." 25. As is provided under sub-section (1) of Section 26, an appeal from the order of the Adjudicating Authority lies before the Appellate Tribunal. It is not only the accused or any person who is found to be in possession of the property raised by proceeds of crime but any person aggrieved by an order of the Adjudicating Authority has the locus standi to file an appeal against such order before the Appellate Tribunal. The petitioners are undoubtedly persons aggrieved and thus well within their right to invoke Section 26 of the Act and avail the remedy against the order passed by the Adjudicating Authority. 26. In view of the availability of the statutory remedy of approaching the Special Court under Section 8 (8) of the Act read with Rule 3-A of the Prevention of Money-Laundering (Restoration of Property) Rules, 2016 and filing of an appeal against the order of the Adjudicating Authority before the Appellate Tribunal, I am not inclined to entertain this petition. 27. Learned senior counsel for the petitioners has relied upon several judgments to canvass his point that petition under Article 226 of the Constitution of India is maintainable notwithstanding ....