TaxTMI 
TaxTMI 
2024 (7) TMI 866
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....dings states that she is a model, actor, business woman, dentist with strong roots in society and belongs to a respectable family hailing from Perumbavoor, Kerala, had got married to Mr. Sukash Channdersekhar on 18.07.2014. After marriage, they both lived together in Bangalore and Chennai. 3. In August 2021, the Special Cell of the Delhi Police had registered an FIR against unknown individuals for orchestrating a criminal conspiracy. The conspirators, pretending to be high-ranking government officials, had extorted approximately Rs. 200 crores from a complainant, Mrs. Aditi Singh. The ordeal began when Mrs. Singh had received a call from a man, claiming to be the Law Secretary of India, who had offered to assist her in her legal battles including obtaining bail for her husband. He had directed her to communicate with his junior officer, Abhinav, via Telegram. Abhinav had convinced her that she was under surveillance and had pressured her to contribute Rs. 20 crores to a party fund, which she had managed to arrange through various means. Later, the man had demanded an additional Rs. 130 crores, and had extended threats to her. Succumbing to the pressure, Mrs. Singh had ended up p....
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....kept at the business premises of M/s Titanium Motors, Chennai, and thus, the said premises was also searched, leading to recovery of one more luxury vehicle. Investigation further revealed that one other luxury car, owned by Mrs. Leena Paulose through her proprietary concern namely M/s Super Car Artistry had been given to M/s Lanson Toyota in Chennai for repairing, which was then seized after conducting a search at the premises of M/s Lanson Toyota. It was also revealed that one associate of Mr. Sukash Chandrasekhar i.e. Mr. Arun Muthu had also purchased some high-end cars, which had been funded by Mr. Sukash. Therefore, a search had also been conducted at the residence of Mr. Arun Muthu, which led to seizure of four vehicles. It was also revealed that some vehicles of Mr. Sukash Chandrasekhar/Mrs. Leena Paulose were kept at the business premises of one Mr. Karthik, located in Chennai. Pursuant to search conducted at this premises, four more cars were recovered and seized by the Directorate of Enforcement. 8. The investigation further revealed that Mr. Sukash had purchased these cars either in the name of some firms of his wife or third parties, and had made cash payments throug....
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....ication that the adjudicating authority has already decided about the above said vehicles as per details given in Table B and therefore, the above said 26 vehicles are now liable to be taken into possession by the ED. Order of the adjudicating authority is annexed with the application. Same has not been challenged by A-2 from whose possession the vehicles have been attached. Therefore, the possession of above said vehicles are ordered to be given to ED for disposal in accordance with law and the Rules of 2013. Application is accordingly disposed off." 13. Thereafter, an application was moved by the State praying that the Directorate of Enforcement be directed to not dispose of the said vehicles without prior intimation to the Delhi Police/ Economic Offences Wing. The petitioner herein i.e. Mrs. Leena Paulose had also filed her objections to the prayer of Directorate of Enforcement, for sale of vehicles in question. 14. After considering the submissions made on behalf of all the parties, the learned Additional Sessions Judge vide order dated 14.02.2023 held that the Directorate of Enforcement was at liberty to proceed ahead to dispose off the 26 vehicles as per Rule 4....
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....ies Confirmed by Adjudicatory Authority), Rules 2013. Needless to mention that both the investigating agencies are required to cooperate with each other and in this regard before disposing off those vehicles, an inventory of engine number, registration number etc. would be prepared by ED along with photographs of those vehicles for the purpose of record/proof of those vehicles during the course of trial in ED as well as State matter. ED is also directed to file the report regarding disposal of those 234 vehicles in its ED matter as well as in the present matter. Representative of EOW can also participate in the process of auction of those vehicles so that they can also record the proceedings for the purpose of record of this case. With these directions application of State disposed off." 15. The above-mentioned orders dated 20.12.2022 and 14.02.2023, and the action of respondent i.e. Directorate of Enforcement of selling the 26 vehicles seized in the present case, has been challenged by the petitioner by way of present petition. SUBMISSIONS BEFORE THIS COURT Submissions on behalf of Petitioner 16. Learned counsel, appearing on behalf of petitioner Mrs. Leena Pa....
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....t remember the complete facts about the business activities of M/s Super Car Artistry, having client service for buying and selling cars. It is stated that after the arrest of the petitioner and questioning of her near and dear ones, the professional associates such as Chartered Accountants etc. had started distancing themselves from the petitioner. The petitioner was not allowed professional meetings with her staff and associates and, therefore, she is unable to cross check the business transactions of the firm for the purpose of answering the queries of the Directorate of Enforcement. It is stated that the petitioner has been implicated in the present case only for the reason of being wife of accused no. 1 i.e. Mr. Sukash Chandrasekhar and that she was having an independent business in the name of M/s Super Car Artistry for buying and selling cars. It is also argued that most of the cars are taken on legally valid Loan Agreements and the petitioner was paying the EMI for the same without fail. 20. It is also argued that any action of the respondent, of selling the cars, will go to the root of the Articles 14, 19 and 21 of the Constitution of India as the chances of a dignified....
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.... under section 17 of PMLA. The learned Additional Sessions Judge had thereafter granted the possession of the above-said 26 vehicles to the Directorate of Enforcement for disposal in accordance with law and the Rules of 2013, vide order dated 20.12.2022. 25. It is submitted that pursuant thereto, another application was moved by the State (EOW) with the prayer for giving directions to Directorate of Enforcement, not to dispose off the vehicles seized during investigation, without prior intimation to Delhi Police/EOW. Further, a reply to the was also filed on behalf of the present petitioner objecting to sale/disposal of 26 vehicles. The Directorate of Enforcement in its reply had submitted that the amount received from the disposal of the vehicles will be kept available for transfer to the actual claimant. It is argued that after having considered the submissions on behalf of all the parties, learned Additional Sessions Judge in continuation of its earlier order dated 20.12.2022, directed vide order dated 14.02.2023 that the Directorate of Enforcement was at liberty to proceed ahead to dispose of the 26 vehicles as per Rule 4 of Prevention of Money Laundering (Taking Possession ....
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....n. 31. Section 17 of PMLA, which grants the power of search and seizure to the Directorate of Enforcement, is extracted hereunder: "17. Search and seizure.-(1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money laundering, or (iii) is in possession of any records relating to money laundering, or (iv) is in possession of any property related to crime, then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to - (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not availa....
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....ity 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 subsection (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 subsection (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, whereupon such attachment or retention or freezing of the seized or frozen property or record shall- (a) continue during in....
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....movable property, the authorized officer shall take physical possession of such property and deposit it in a warehouse or a storage place. (2) Where the attached property confirmed by the Adjudicating Authority, is liable to speedy and natural decay or the expense of maintenance is likely to exceed its value, the authorized officer shall sell such property with the leave of the concerned Special Court or Adjudicating Authority, as the case may be, and deposit the sale proceeds in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit and retain the receipt thereof: Provided that where the owner of the property furnishes the fixed deposit receipt of a nationalised bank equivalent to the value of property in the name of Director of Enforcement, the authorised officer may accept and retain such fixed deposit receipt as security and send a report to the Special Court or Adjudicating Authority, as the case may be, for information and appropriate action: Provided further that where the movable property is a mode of conveyance of any description, the authorised officer, after obtainin....
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....After following the procedure as provided under Section 8(1), the Authority has to then decide as to whether all or any of the properties are involved in money laundering. In case the Adjudicating Authority reaches a conclusion that any property is involved in money laundering, the Authority can, in writing, confirm the retention of property seized/frozen under Section 17 of PMLA. Thereafter, the Directorate of Enforcement is required to take the possession of the property frozen under Section 17 of PMLA, in such manner as may be prescribed. (iii) Rule 4 of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013 provides that where the attached property confirmed by the Adjudicating Authority, is liable to speedy and natural decay or the expense of maintenance is likely to exceed its value, the authorized officer shall sell such property with the leave of the concerned Special Court or Adjudicating Authority, as the case may be, and deposit the sale proceeds in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit and r....
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....s were likely to exceed their value and cause unnecessary burden upon the exchequer, an appropriate application was moved before the learned ASJ seeking permission under Rule 4 (2) of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013, for the sale of vehicles in question, in accordance with the procedure prescribed under the said rule. The same was allowed by the learned ASJ vide impugned order dated 20.12.2022. 40. Thus, a bare perusal of the record leads to only one conclusion that the procedure followed by the respondent was in accordance with the provisions of PMLA and the Rules of 2013. Even the petitioner, neither through the contents of the petition nor during the course of arguments, has been able to point out any infirmity in the above-mentioned process followed by the respondent. Further, the validity of the relevant rule(s) of Rules of 2013, as referred hereinabove, has also not been assailed before this Court by the petitioner herein. Whether Vehicles are subject to natural decay? 41. Rule 4 of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Conf....
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....onslaughts and decay due to rusting, cannot be ensured. 44. The depreciation of vehicles is also a well-recognized phenomenon in the automobile industry. From the moment a car is driven out of the showroom, its value begins to decrease. This depreciation accelerates with each passing year, and the resale value drops substantially. After some years, most vehicles lose a significant part of their original value, making them less economically viable to maintain or sell. 45. In this background, this Court also takes note of the observations of the Coordinate Bench in case of Manjit Singh v. State 2014 DHC 4541 wherein it was observed, though in context of release of vehicles on superdari, that vehicles which deteriorate with time must be disposed of speedily. The relevant observations are extracted hereunder: "20. In case of perishable properties or those subject to speedy and natural decay, disposal should be ordered keeping in view the expected life of the property rather than the conclusion of investigation/trial. Certain items like vehicles, which also deteriorate with time, speedy disposal shall similarly be ensured to effectively implement the mandate of the Suprem....
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....ned under PMLA, if the accused is found not guilty after conclusion of trial and is therefore acquitted, this Court is of the view that a provision of law cannot be read in isolation and rather, has to be read as a whole. As noted in the preceding discussion also, Section 8(4) of PMLA itself provides that after an order is passed under Section 8 (3) by the Adjudicating Authority, the concerned officer of Directorate of Enforcement has to take possession of the properties in such "manner as provided". This 'manner' has been provided under Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013, which have been framed by the Central Government in exercise of power under Section 73 of PMLA. This procedure has been explained in detail in the preceding paragraphs. 51. Therefore, there is no merit in the argument that the sale of seized vehicles in this case is against the mandate of Section 8(6) of PMLA. Needless to say, as per Section 8(6), if the accused persons in this case are found not guilty of offence of money laundering, they would be entitled to receive the amount generated from selling the movable p....
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....ns and demands. Thus, if Mrs. Paulose is indeed an independent business woman as she claims, it is hard to believe that she would be unaware of the legal implications of significant financial transactions in her bank accounts made by her husband i.e. Mr. Sukash Channdersekhar. If she was genuinely unaware and simply following her husband's directives, it contradicts her claim of being an independent businesswoman, having an identity of her own, who knew what she was doing. 55. Further, this court notes that, in one breath, she states that she is suffering from depression with memory loss due to prolonged incarceration and she does not remember any details of the cars in question except 5 cars, and in the other, she states that most of the cars were taken on loans, based on legally valid loan agreements and she was paying the EMIs for the same without fail and the said cars are essential for continuing with her business activities. 56. The petitioner also states that these 26 cars are essential for continuing with her business activities, but at the same time, she mentions in the petition that she does not even remember the complete facts about her business M/s Super Car Artis....