TaxTMI 
TaxTMI 
2024 (7) TMI 114
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.... case was registered by the Vigilance Bureau of the State of Punjab for offence under Sections 420, 506, 120-B IPC and Section 13(1)(d) read with 13(2) of Prevention of Corruption (PC) Act against Surinder Pal Singh and others for corrupt practices in connection with the Government contracts; (d) The respondent conducted a search under Section 17(1) of the Prevention of Money Laundering Act, 2002 (in short 'the Act of 2002'). No incriminating document was recovered. However, FDRs worth Rs.5.93 Crores in Punjab National Bank, Ludhiana were frozen under Section 17(1A) of the Act of 2002. The bank accounts of the appellant were also frozen; (e) The respondent thereupon sent the application to the Adjudicating Authority under Section 17(4) of the Act of 2002 seeking retention of the seized properties; (f) After completion of the pleadings before the Adjudicating Authority, an order was passed on 22.08.2022 beyond a period of 180 days provided under Section 20(3) of the Act of 2002. 3. The learned counsel for the appellant submitted that the impugned order passed by the Adjudicating Authority deserves to be set aside having passed beyond a period of more th....
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....od for termination of proceedings till 28.02.2022. The impugned order was passed on 22.08.2022 thus within the period of 180 days after exclusion of period from 15.03.2020 till 28.02.2022 due to Covid-19. In view of the above, challenge to the order alleged to have been passed after 180 days is not made out. 9. It is further submitted that even constitution of the Adjudicating Authority so as the appointment of the Member who passed the order was strictly in consonance of the Act of 2002 and Rules of 2007. Rule 3 provides qualifications for appointment as Member and bare perusal of the said Rule would reveal that a person would be qualified as the Adjudicating Authority if he is qualified for appointment as District Judge or has been a Member of the Indian Legal Service, etc. Rule 3(2) further provides Member from the field of Administration to be eligible for appointment if he is or has been a Member of the Indian Administrative Service or the Indian Police Service and has held a post at level of Joint Secretary to the Govt. of India or an equivalent post. Sub-rule 3(a) of Rule 3 provides that Member from the field of Finance and Accountancy would also be eligible subject to ce....
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....he 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 seized or the persons entitled to receive it. (6) Where an order releasing the property has been made by the 4[Special Court] under sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60, the Director or any officer authorised by him in this b....
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....ys, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1966. Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings". 13. The perusal of the order of the Apex Court makes it clear that the exclusion of the period is even for termination of proceedings. The Apex Court has specifically provided in Para 5 (IV) of the order dated 10.01.2020 to exclude the period from 15.03.2020 till 28.02.2022 for computation of the period prescribed under certain legislations which includes The Arbitration and Conciliation Act, 1996, The Commercial Courts Act, 2015 and Negotiable Instruments Act, 1881, etc. It is apart from other laws which prescribed the period of limitation for institution of proceedings, outer limits for condonation of delay and ....
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....er therein i.e., PAO No. 01 of 2021 was passed on 01.02.2021. Pursuant to which an original complaint under Section 5(5) of the PMLA was filed on 19.02.2021 and show cause notice under Section 8(1) of the PMLA was issued by the Adjudicating Authority on 03.03.2021. A hearing under Section 8(2) of the PMLA was conducted on 05.07.2021 and 06.07.2021. However, no confirmation order was passed till date. The Petitioner contends that as 180 days have lapsed since the passing of the provisional attachment order, the Adjudicating Authority cannot pass an order confirming the provisional attachment. iii) On the other hand, the ED in both W.P. Nos. 34238 of 2022 and 34627 of 2022 contends that due to Covid-19 pandemic the provisional attachment of properties could not have been confirmed within 180 days. However, in In re: Limitation (supra) the Apex Court extended the period limitation from 15.03.2020 to 28.02.2022. ED contends that the period from 15.03.2020 to 28.02.2022 shall be excluded from the date of provisional attachment till the date of passing of confirmation order to compute the period of 180 days. iv) It is relevant to note that the Apex Court in In re: Limit....
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.... Extension of Limitation, In re, 2021 SCC OnLine SC 947] , it is directed that the period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. 5.2. Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1-3-2022. 5.3. In cases where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period of limitation remaining, with effect from 1-3-2022 is greater than 90 days, that longer period shall apply. 5.4. It is further clarified that the period from 15-3-2020 till 28-2-2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29-A of the Arbitration and Conciliation Act, 1996, Section 12-A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, ....
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....ure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in first proviso, any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. Provided also that for the purposes 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 further period not exceeding thirty days from the date of order of vacat....
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.... will be seen that all these statutes prescribed provide for specific time frame for instituting a suit, filing a claim/counter claim or an application in furtherance of a remedy provided under the statute. The intention was hence to preserve the right of a litigant to seek a remedy under the Act and not to deprive a litigant of such right of remedy where the litigant has not been able to physically come to the Court or to the Tribunal to file the proceeding in aid of the right. 16. The right thus conferred by the Supreme Court is in relation to the prescribed period of limitation in instituting a proceeding. **** 18. Section 5(3) is a clear embargo on the order of attachment continuing to have effect after the expiry of 180 days. Section 5(1) designates the authority and the steps to be taken for proceeding against any person who is in possession of any proceeds of crime. The section is hence concerned with the procedure to be undertaken for provisional attachment of a property subject to the fulfillment of the other conditions in Section 5. A prescribed procedure after the same has been initiated cannot be equated to institution of a suit or filing of a....
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....eet by the police as contemplated under Section 167(2) of the Cr.P.C. The Court also noted the element of personal liberty of a person which was required to be protected. Although, the right of the petitioners before the Court is more to do with the right not to be deprived of property save by authority of law - Article 300A, the petitioners have established a case where such right is under threat by the action of the ED. The litigants have been conferred a benefit under Section 5(1)(b) and 5(3) of the PMLA on the failure of the Authority to take action within the specified time frame. If the Authority does fail to take requisite steps, the right to relief arises immediately after exhaustion of the 180 days window and once such right is given to a litigant, it cannot be taken away. This Court respectfully disagrees with the views expressed in Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra) in relation to applicability of In re: Limitation (supra). xviii) According to this Court, the decision in S. Kasi (supra) cannot be relied upon by the Petitioners to contend that In re: Limitation (supra) is not applicable in computing 180 days under Secti....
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.... clear that the anxiety of this Court had been to obviate the hardships likely to be suffered by the litigants during the onslaughts of this pandemic. Hence, the legal effect and coverage of the orders passed by this Court in SMWP No. 3 of 2020 cannot be unnecessarily narrowed and rather, having regard to their purpose and object, full effect is required to be given to such orders and directions. [ To complete the scenario, we may indicate in the passing that even after we had heard this matter, there had been re-surge of Covid-19 cases with spread of a new variant of the virus. The drastic re-surge in the number of Covid cases has led this Court to again deal with the matter in SMWP No. 3 of 2020 on an application bearing No. 21 of 2022; and by the order dated 10-1-2022 [Cognizance for Extension of Limitation, In re, (2022) 3 SCC 117 : (2022) 2 SCC (Civ) 46 : (2022) 1 SCC (Cri) 580 : (2022) 1 SCC (L&S) 501], this Court again restored the principal order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] and in continuation of the previous orders, has further directed that the period from 15-3-2020 till 28-2-2022 shall stand e....
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....t of the Apex Court in S. Kasi case cannot be applied to a case involving property right of an individual or a corporate. 14. Our reasoning supra is also supported by the judgment of the Apex Court in Prakash Corporates v. Dee Vee Projects Limited [(2022) 5 SCC 112]. The Apex Court has explained the scope of the order passed in S. Kasi case and has categorically held that the same cannot be applied in a matter involving proceedings before a Court. The second respondent was exercising a quasi-judicial function and the ratio in S. Kasi case cannot be applied to such a quasi-judicial authority. In any case, we keep this issue open to enable the petitioner to agitate the same before the Appellate Tribunal. xxiv) This Court also disagrees with the view adopted in Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra). The decision in Vikas WSP Ltd. (supra) was stayed by a Division Bench of the Delhi High Court vide order dated 08.01.2021 in LPA 362/2020. In any case, the question regarding the application of In re: Limitation (supra) was left open. xxv) As far as Gobindo Das (supra), is concerned, though it is true that Adjudicating Authority is....
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....e judgment of the Apex Court while the Delhi High Court and also the Calcutta High Court had taken a different view but seems to be that the counsel appearing before them did not refer to the order of the Apex Court dated 10.01.2022 in specific terms to show exclusion of the period even for termination of proceedings. It was not only for the purpose of limitation in the hands of the litigants but even for the conclusion of the proceedings under different statutes while giving specific reference of few statutes and made applicable to other laws. 16. The Government had also notified for the exclusion of period of Covid and elaborate discussion has been made in the case of Hygro Chemicals PharmtekPvt. Limited (supra). Thus, we need not to reiterate the aforesaid but it also supports the respondent and thereby a challenge to the order on the ground that it was passed beyond the period of 180 days given under Section 20(2) of the Act of 2002 is not made out. 17. We cannot take a view going against the judgment of the Apex Court in Suo Motu petition (supra). The appellant has ignored the order of the Apex Court for exclusion of the period from 15.03.2020 to 28.02.2022 even for term....
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....all the concerned that normalcy was around the corner, the sneaky spread of virus continued for one reason or the other or in one way or the other; and this led to a huge surge in COVID-19 cases across the country. This phenomenon came to be generally known as the second wave of pandemic. In the given scenario, the Supreme Court Advocates-on-Record Association moved an application in SMWP No. 3 of 2020, seeking restoration of the order dated 23.03.2020 while highlighting the surge of COVID-19 cases in Delhi and the difficulties being faced by the lawyers and litigants to institute their cases. This application was registered as Miscellaneous Application No. 665 of 2021 in SMWP No. 3 of 2020 and was considered by this Court on 27.04.2021. This Court took judicial notice of steep rise in COVID-19 cases that had engulfed the entire country and found that the situation required extraordinary measures to minimise the hardship of litigant-public. Therefore, the order dated 23.03.2020 was restored and in continuation of the order dated 08.03.2021, it was directed that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial ....
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....Tribunals and Authorities. This order may be brought to the notice of all High Courts for being communicated to all subordinate courts/Tribunals within their respective jurisdiction. Issue notice to all the Registrars General of the High Courts, returnable in 6 weeks. List the Miscellaneous Application on 19th July, 2021. **** 19.2. Further, on 10.07.2020, this Court enlarged the scope of initial order in relation to the timelines fixed in Section 29-A and Section 23(4) of the Act of 1996. Significantly, Section 23(4) of the Act of 1996 mandates that the statement of claim and defence shall be completed within a time period of six months. Yet further, it was also provided that the time for completing the process of compulsory pre-litigation mediation Under Section 12-A of the Commercial Courts Act, 2015 shall stand extended for 45 days after lifting of lockdown. **** 19.5. Reverting to the orders passed by this Court, noticeable it is that on 27.04.2021, this Court restored the order dated 23.03.2020 and it was directed, in continuation of the order dated 08.03.2021, that the periods of limitation as prescribed under any general or special laws i....
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....s Member.- An Adjudicating Authority shall have three Members - one from the field of Law and two from the fields of administration and finance or accountancy:- (1) For the Member from the field of Law, a person shall be qualified for appointment if he:- (a) is qualified for appointment as District Judge; or (b) has been a member of the Indian Legal Service and has held a post in Grade-I of that Service. (2) For the Member from the field of administration, a person shall be qualified for appointment if he is or has been a member of the Indian Administrative Service or the Indian Police Service and has held a post of Joint Secretary to the Government of India or an equivalent post. (3) For the Member from the field of finance or accountancy, a person shall be qualified for appointment if he is or has been a member of an All India Service or a Central Service Group 'A', and has held the post of a Joint Secretary to the Central Government or an equivalent post in that service, and has academic qualifications or experience in finance or accounting". 23. The rule quoted above provides that even a Member from the field of Administra....
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....(7) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit. (8) The Chairperson and every Member shall hold office as such for a term of five years from the date on which he enters upon his office: Provided that no Chairperson or other Member shall hold office as such after he has attained the age of [sixty-five] years. (9) The salary and allowances payable to and the other terms and conditions of service of the Member shall be such as may be prescribed : Provided that neither the salary and allowances nor the other terms and conditions of service of the Member shall be varied to his disadvantage after appointment. (10) If, for reasons other than temporary absence, any vacancy occurs in the office of the Chairperson or any other Member, then, the Central Government shall appoint another person in accordance with the provisions of this Act to fill ....
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....mbers. Section 6(7) of the Act of 2002 provides that if a Chairperson or a Member during the course of hearing feels that matter should be heard by a Bench of two Members, he/she may transfer the matter to a Bench consisting of two Members. The perusal of Section 6 does not mandate that the Bench should consist of three Members, rather it can be one or two Members in the Bench as per the requirement and as the Chairperson finds deem fit and appropriate. In the light of the aforesaid, it is not a mandate of Section 6 of the Act and the Rules of 2007 that Member adjudicating the matter and passing the order as Adjudicating Authority should be necessarily from the field of law, rather it can be from the field of Finance, Accountancy and Administration unless one is not in possession of the qualification prescribed under Rule 5 of Rules of 2007. It is also not necessary that order should be passed by the Authority with three members. 26. The issue aforesaid was decided by the Delhi High Court in the case of J. Shekharv. Union of India &Ors.reported in 2018 SCC Online Del 6523and relevant paras of the said judgment are quoted hereunder: "Composition of the AA and AT ....
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....the contention of the Petitioners that there cannot be any single-member benches of the AA. 82. It was then contended on the strength of the decisions in L. Chandrakumar v. Union of India (1997) 3 SCC 261; Eastern Institute for Integrated Learning v. Joint Directorate 2016 Cri LJ 526, Vishal Exports Overseas Ltd. v. Union of India (decision dated 9th March 2016 of the Gujarat High Court in SCA No. 13949 of 2014) and UdayNavinchandraSanghani v. Union of India (decision dated 1st April 2016 of the Gujarat High Court SCA No. 10076/2015) that even that Single Member has to necessarily be a Judicial Member (JM) and not an Administrative Member (AM). 83. The reliance on L. Chandrakumar v. Union of India (supra) is misplaced. There the question was whether the ousting the jurisdiction of the High Court and vesting the powers of the High Court in a Tribunal is constitutionally valid. That is not what is sought to be done under Section 8 PMLA. It is only to provide an internal judicial review of the orders passed by the authorities under Section 5(1) PMLA. The AA under Section 8 PMLA cannot, therefore, be equated with an Administrative Tribunal under the Administrative Tri....
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....it." 80. From the above, it could be seen that not only Adjudicating Authority can be constituted, but it can be even less than Two. Likewise, Sub Section 14 of Section 6 of PMLA also provides for functioning of Adjudicating Authority in the absence of Chairperson, which reads as under: "6(14) When the Chairperson of the Adjudicating Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior- most Member shall discharge the functions of the Chairperson of the Adjudicating Authority until the date on which the Chairperson of the Adjudicating Authority resumes his duties." 81. In fact, Clauses (a) to (d) of Sub Section 5 of Section are more explicit on this aspect, which are extracted as under: (5) Subject to the provisions of this (a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof (b) Bench may be constituted by the Chairperson of the Adjudicating Authority with one or two Members as the Chairperson of the Adjudicating Authority may deem fit; (c) the Benches of the Adjudicating Authority shall ordinarily sit at New Delhi and such other place....
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.... provision, the Central Government is empowered to appoint the adjudicating authority which shall consists of a Chairperson and two other members. The Central Government in exercise of the said powers conferred under Sub Section (1) of Section 6 of the PMLA Act by notification in GSR 437(E) dated 01.07.2015 appointed an adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act and such adjudicating authority shall consists of a Chairperson and two members and shall function within the department of Revenue, Ministry of Finance of the Central Government with headquarters at New Delhi. By notification in the GSR 438(E),the Central Government in exercise of the powers conferred by clause d of Sub Section (5) of Section 6 of the PMLA Act specified that the New Delhi bench of the adjudicating authority appointed under Sub Section (1) of Section6 of the Act shall exercise jurisdiction, powers and authority conferred by or under the Act over the whole of India. Thus, the Central Government has exercised powers in terms of Sub Section (1) of Section 6 and notification in GSR 437(E) dated 01.07.2005 has been issued. Thus, the adjudicating authority ....
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....under Section 6 of the Act of 2002 can be exercised by the Adjudicating Authority comprising of single member. In this regard, the relevant paras of the judgment are quoted hereunder: "16. Now we may advert whether the aforesaid quasi- judicial function under Section 8 of PMLA can be performed by an Adjudicating Authority, which can be exercised only by a member having experience in the field of law. The Adjudicating Authority, as stated supra, is an authority constituted by a statute, namely PMLA, which confers the power on it under Section 8 of PMLA. An adjudication is a function which is performed by several statutory authorities under different enactments, namely under the Foreign Exchange Regulation Act, 1973; the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976; the Narcotic Drugs and Psychotropic Substances Act, 1985 and the Foreign Exchange Management Act, 1999. Thus, when legislature confers the function of adjudication on an authority under the statute, the same can be performed by such authority within the four corners of the power conferred on it. It is pertinent to note that under PMLA, the Adjudicating Authority neither has power....