TaxTMI 
TaxTMI 
2014 (1) TMI 1951
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....012 confirming the provisional attachment order No. 5/2012 dated 26.09.2012 pursuant to ECIR No. 123/MZO/2010 under Section 5 of the PMLA. All the above appeals have arisen from an offence registered vide FIR No. 132/2009 dated 29.4.2009. On filing of charge-sheet CC No. 1521/PW/2010 on 6.7.2010 before the MM, Railway Mobile, Andheri East, Mumbai, the respondent passed above two attachment orders. As most of the facts and pleas & contentions raised by the appellants are similar, the above appeals are disposed of by this common judgment. Brief facts: The Appellant Munir Mohammed Ahmed Khan (hereinafter also referred to as Munir Khan) is proprietor of M/s. Health Reactive. Smt. Rukhsana Munir Khan is wife of Munir Khan. Munish Munir Khan and Sarosh Khan are sons of Munir Khan. 2. Munir Khan, who is main accused, in his statement before the respondent, stated that he had studied up to 12 standard from government college, Bundi, Rajasthan; that he was not very interested in the normal schooling and used to study books on different subjects including Vedas and longevity; that in the year 1983, he started civil contactor work for Western Railway, Kota, Rajasthan; that he was als....
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....an was widely published as a doctor over many TV channels capable of curing patients of any ailment by taking his so called panacea "Body Revival". He claimed in TV advertisements that his medicine could cure various incurable diseases 100% and if his medicine did not produce the desired effect, he would return the money. It is alleged that however, the patients were required to sign on a consent letter on which it was written that there was no guarantee that their ailment would be cured. The refund was restricted to the quantity of medicine left in the bottle. The report regarding the medicine, received from the FDA authorities stated that the medicine did not possess any medicinal properties; that the drug Yogiraj/Kukronda contained in the medicine were banned by the Forest Department and constituents of the medicine could not cure any incurable diseases as claimed. The Appellants thus cheated the patients and people. 4. Munir Mohammed Ahmed Khan formed a trust namely 'Munir Khan Cancer Trust' and got it registered with the charity commissioner on 17/07/2006. The trustees of the trust were Munir Khan, Mrs. Ruksana Munir Khan w/o Munir Khan and Feroz Noor Mohammed Khan.....
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....Versova police filed chargesheet CC No. 1521/PW/2010 dated 06.07.2010 before the Metropolitan Magistrate, Railway Mobile Court, Andheri East, Mumbai under sections 467, 468, 471, 419, 420, 406, 108 and 34 of Indian panel Code, under section 3(d) read with Schedule S. No. 6, 9, 50 & 39 and section 7 of Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 and under sections 33 and 36 of Maharashtra Medical Practitioners Act, 1961 against Munir Khan and 9 others. It is alleged that Munir Khan along with others connived and knowing that he is not a qualified doctor on the basis of degree of Doctor of Naturopathy held by him misrepresented to be a Doctor and the medicine "Body Revival" prescribed by him, does not contain any medicinal properties which is made up of ingredients like Yogiraj, Kukrenda which are banned by the Forest Department. He professed himself as a doctor in various TV channels and treated patients by prescribing a non-effective medicine and sold the said medicine knowing that the medicine sold by him will be ineffective. 8. Munir Khan and other thus cheated patients by professing Munir Khan to be a doctor and falsely claiming that the medicine invente....
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....Ayurvedic/Unani product called "Body Revival" for whose manufacturer and sale he had a valid license number 583-AYU, issued by licensing authority, Ajmer, Rajasthan, which was in force from 16.04.2008 till 15.04.2011. The said license was duly obtained from the licensing authority under Drugs and Cosmetics Act, 1940 and rules made there under. It was thereafter, renewed before its expiry and renewal is valid from 07.01.2011 till 6.1.2016. The product was manufactured as per the terms of license and manufacturing certificate substantiates the same. 12. The counsel for appellants submitted that amongst various products manufactured by M/s. Health Reactive, which are about 26 in number, specific product approval of "Body Revival", product in question, was also obtained on 18.11.2008 from the licensing authority, Ajmer, Rajasthan. He contended that the authorities granted specific product approval, only after the product had been tried and tested by a competent authority with a number of persons and they were found to be fit. He submitted that the license number 583-AYU was cancelled on 01/12/2009 in an unauthorized manner which was subsequently revived/renewed. He submitted that th....
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..... Firoz are demanding a sum of Rs. 8 crores as extortion for the benefit of themselves so that police officials do not register cases against the appellants and their family. He submitted that as the illegal demand of Mr. Poddar had not been met, he proceeded against the appellants through FIR No. 116/2009 and also lodged a counterblast FIR No. 132/2009 on 29.4.2009 against appellants and others. The counsel submitted that as the police officials were involved therefore, proceedings in both the aforesaid cases were being conducted in a partial manner and the appellants approached the Bombay High Court for issue of appropriate and necessary directions to the police authorities. The Bombay High Court directed the Commissioner of police, Mumbai to ensure that both the cases are investigated independently and expeditiously in accordance with law. 16. The counsel submitted that pursuant to the aforesaid FIR No. 132/2009 dated 29.04.2009, chargesheet CC No. 1521/PW/2010 was filed on 6.7.2010 before the M.M., Railway Mobile, Andheri East, Mumbai, under sections 467, 468, 471, 419, 420, 406, 108 and 34 of Indian panel Code, under section 3(d) read with Schedule S. No. 6, 9, 50 & 39 and ....
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....sses to come to a finding that the appellants have committed offence under section 420 of IPC. The impugned order and the complaint as well as the provisional attachment order do not even disclose any forgery alleged to have been committed by the appellants or use of any forged documents except simply stating that charge-sheet has been filed for those concerned offences. 20. The counsel contended that PML Act is not applicable to offences that have been committed prior to the date of the enactment of the amending statute. The provisions of PMLA cannot be resorted to in respect of those offences under IPC which have been committed or alleged to have been committed prior to the date on which such offences were included within the purview of PMLA. He contended that there is no dispute that section 420 and 471 of IPC were added to the schedule of PMLA by way of amendment which came into force w.e.f. 1.6.2009. He submitted that FIR in respect of the alleged offences in the instant case was ledged on 29/04/2009. The entire complaint and impugned order contains finding against Munir Khan only in respect of offence under section 420 of IPC which allegedly was committed much prior to 01/....
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....ersons in a similar/identical fashion and dishonestly induced each of them to deliver a sum of Rs. 15,000/-, provisions of PMLA cannot be resorted to since the cumulative sum involved in the various offences of section 420 is much less than the prescribed threshold under the Act. 25. The counsel submitted that in the present case, the respondent's allegations are vague that Munir Khan had cheated and dishonestly induced innumerable persons to deliver Rs. 15,000/- each. The FIR No. 132/2009 however, is filed only by one person. The trial will consequently will only be to ascertain whether the offence under section 420 of IPC was committed qua such complainant or not. The counsel drew our attention to copy of FIR and pointed out that the total value of property involved in alleged crime is only Rs. 15,000/-. Therefore a single offence of cheating does not give jurisdiction to respondent under PMLA. 26. The counsel submitted that the charge sheet filed in the present case simply records that statements of 66 witnesses were taken and except two of these persons all others have stated that due to the medicines given by Munir Khan, condition of their relatives had worsened. Eve....
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....ffence. The power of attachment is an emergent power to be resorted only in deserving cases and not in every case indiscriminately. Therefore, the very invocation of the powers of attachment in the instant case is bad in law and attachment orders are liable to be set aside. 30. He submitted that the sanctity of section 5(1)(c) is exemplified by consequence of attachment provided under section 8(4) of PMLA. Upon rightful invocation of the attachment powers, and subsequent to their confirmation, even the possession of the property can be taken by the PMLA authorities. It need be borne that the person is dispossessed of all the properties even before he is convicted. 31. The counsel submitted that the respondent has not recorded any circumstances on the basis of which he came to the conclusion that the properties may be transferred by the appellants. He submitted that after filing of charge sheet on July 2010, no amount was drawn or utilized from the bank accounts. After the statements were recorded by the respondent and till the provisional attachment order was passed, no amount was withdrawn/spent. Immovable properties were acquired from the sale proceeds of drug in the year 2....
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....s where confiscation proceedings may be carried out subsequently, by attachment simplicitor, without dispossessing the accused or other persons in the interregnum section 8(4) of PMLA should be read as discretionary, rather than being mandatory, to provide for dispossession. The word 'shall' used therein has to be read as 'may', and possession should be taken only in those cases where properties are capable of being tampered with which may frustrate the ultimate confiscation proceedings and there lies the possibility of the same e.g. in the cases of movable properties. 35. The counsel for appellants submitted that an application dated 12.10.2012 was filed before the Adjudicating Authority for seeking cross examination of the witnesses relied or referred to in the complaint filed u/s 5(5) of the PML Act. He submitted that the Adjudicating Authority did not dispose of the said application. The Adjudicating Authority neither allowed nor rejected the application and just did not dispose of the application. He submitted that the Adjudicating Authority has given an erroneous finding in the impugned order on page 50 which is adverted to as follows: As the proce....
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.... of the appellants and contended that there is no merit in the pleas and contentions raised by the appellants. He submitted that initial material to start investigation under PMLA are FIR and charge sheet etc. If the accused is charged for the commission of an offence which is in the schedule, annexed to PMLA, the respondent has jurisdiction to begin investigation in the matter. He submitted that this Tribunal cannot go into the correctness of the charges for scheduled offence as the same is not within its jurisdiction. He submitted that section 467 of IPC was there in the statute even prior to 1.6.2009 and section 420 and 471 were added to the statute by the Prevention of Money Laundering (Amendment) Act, 2009 which came into force w.e.f. 1.6.2009. He contended that for the purpose of determining the applicability of the provisions of PMLA, it is the date on which charge sheet is filed which is relevant and in the present case charge sheet was filed on 6.7.2010 which is after 1.6.2009 and thus on the day the charge sheet was filed, offences under section 420 and 471 of IPC were already scheduled offence under PMLA. The counsel relied on the judgment of the Andhra Pradesh High Cour....
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....e is likelihood that the appellants will attempt to conceal, transfer, dissipate and commit waste of the properties to frustrate the attachment/confiscation. He further submitted that one of the important object of the PMLA is to deprive the perpetrators of the schedule offence from the enjoyment of the fruits of the crime. If the properties are not attached and appellants are allowed to enjoy the properties, the object of the PMLA will be defeated. The counsel pointed out that the documents of immovable properties have been seized by the Income Tax Department as confirmed by Munish Munir Khan in the statement recorded by respondent u/s 50 of the Act on 13.2.2012, therefore, appellants were not in a position to transfer the properties and there are transactions of withdrawals from bank account after the filing of charge sheet in July 2010 and therefore, the submissions made by appellants that there is no attempt to draw any money from bank account since filing of charge sheet is not correct. 43. The counsel for respondent submitted that there is no provision in PML Act for allowing cross examination of a person whose statement is recorded under section 50 of the Act. He drew our....
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....which necessitated cross examination which will de-facto or de-jure prejudice the appellants. The counsel submitted that the application to allow cross examine witnesses was only a ploy of the appellants to delay the adjudication proceedings. He further submitted that the appellants never pressed the application for cross examination before the Adjudicating Authority and never sought disposal of the application knowing the law laid down by the Hon'ble Court. He contended that the order cannot be impugned in the facts and circumstances on this ground by the appellants. 44. The counsel for respondent submitted that it is not mandatory to record statement u/s 50 of a person before his property is provisionally attached and it has not caused any illegality or prejudice to the appellant Mr. Sarosh Munir Khan. He further submitted that as per the scheme of PMLA, it is not mandatory to hear the party and give an opportunity to a person whose property is sought to be provisionally attached as the same is followed by time bound adjudication proceedings by the Adjudicating Authority where he is given notice and provided full opportunity of filing a reply and documents he relies on and....
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....' accounts in various banks were from sale of medicine to his patients. In the year 2008 he appointed more homeopathic and ayurvedic doctors to check the patients' case history for the satisfaction of patients and to know the size of tumor in case of cancer or percentage of blockage in case of heart disease. He obtained a Naturopathy Certificate from Bharvin's Academy of Naturopathy, Mumbai within two months after studying from home and he did not attend any formal classes anywhere. 47. Perusal of charge sheet reveals that certain documents were seized from the clinic of Munir Khan which includes NOC/consent letter taken from patients on which it was stated that there was no guarantee that the medicine will have the desired effect and the money which could be sought as refund would be restricted to the amount of medicine remaining in the bottle, letter head of Health Reactive on which 9 prescriptions signed by the lady doctors without name and date etc. so that they can be used as prescription by putting name of patient and date were also recovered. It was alleged that though Munir Khan had claimed in his interview telecast over TV that his medicine could cure cancer....
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....embers pertained to payments received in respect of sale of medicine viz. "Body Revival". 50. Though the counsel for appellants stated that Munir Khan was having license number 583-AYU to manufacture and sell medicines including "Body Revival" which was valid for the period from 16.4.2008 to 15.4.2011 and also filed copy of license in Form 25D which is placed on page 119 of the paper book. Perusal of the copy filed by appellants reveals that the same is not certified by the appellants to be true copy of the license. The said license authorizes M/s. Health Reactive to manufacture medicines as per the list appended with the license but the same has not been produced/filed by the appellants before this Tribunal. No cogent reasons have been given for non-production of the same. The license permits manufacture of medicine under the direction and supervision of the technical staff i.e. Sh. Kailash Dutt Sharma and Sh. Bhawani Shankar. Though it was submitted by the appellants that specific product approval for manufacture of "Body Revival" was received on 16.11.2008 but no such document was filed/brought to our notice by the counsel for appellants. The appellants have stated that the l....
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....d competent to prescribe medicines to patients. The above facts prima facie show that Munir Khan and others are charged for commission of offences which are in the schedule annexed to the PMLA and whether the charges will be sustainable ultimately in the Criminal Court is not to be adjudicated by this Tribunal. The appellants have also not approached any competent Court for quashing of charge sheets or the charges framed against them. 53. The contention of the appellants that provisions of PMLA are not attracted as the offences under section 420 and 471 of IPC were added in the Schedule of PMLA by the Prevention of Money Laundering (Amendment) Act 2009 which came into force w.e.f. 1st June, 2009 and FIR for predicate offences in the present case was lodged on 29.4.2009 and charges against Munir Khan are mainly in respect of offence u/s 420 of IPC is also not sustainable. After careful consideration of the facts of the case and FIR/charge sheet we are of the opinion that there is no doubt that Munir Khan and others have been charged for various offences inter-alia u/s 420, 467 and 471 of IPC. Offence u/s 467 of IPC was in the Schedule of PMLA even prior to 1.6.2009. Whether the c....
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....those offences would amount to an ex post law and hence, the Petitioners cannot be charged under the PML Act at all. By judgment dated 25.08.2011, Andhra Pradesh High Court dismissed the petition and had held that since charge was framed against 1st Petitioner by C.B.C.I.D., on file of Additional Chief Metropolitan Magistrate alleging him to have committed offences punishable under Section 120B r/w Section 420 of Indian Penal Code, on 22nd November 2009, therefore, after that date, proceeds of crime punishable under provisions of IPC, in hands of 1st Petitioner, could be subjected to action under Section 5 of 2002 Act. Moreover, provisional attachment order had been passed subsequent to 22nd November, 2009, therefore, action initiated under Section 5 of 2002 Act against 1st Petitioner could not be faulted. To hold so, the Hon'ble Andhra Pradesh High Court also referred to and relied upon the principals enunciated in judgment of division bench of that court in the case of B. Rama Raju and Ors. v. Union of India, Ministry of Finance, Department of Revenue, Rep. by its Secretary (Revenue), New Delhi and Others 2011 (3) ALT 443 (D.B.). Relevant extracts of the Andhra Pradesh High C....
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....fessions * establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and * cooperate internationally in investigating and prosecuting money laundering. 10. These recommendations have been updated regularly and periodically, of late, India has been facing, on a regular periodicity, terrorist attacks. Hence, it needs to arm itself with an appropriate toolkit for a rigorous law enforcement to track and tackle the funding behind such attacks. These efforts led to this enactment. 11. Chapter-II of the PML Act defined the offence of money laundering and provided the punishment therefore in Sections 3 and 4 incorporated in the said Chapter. Section 3 declares that, whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property, shall be guilty of offence of money-laundering. Section 4 declares that whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term, which shall not be less than three years, but whic....
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....fect from 01-06-2009. Therefore, it does not pose any difficulty that post 01-06-2009, any property derived or obtained, by any person, as a result of criminal activity, relating to offences punishable under Sections 120-B and 420 Indian Penal Code, can be dealt with under the PML Act. 14. It will be appropriate at this stage to notice that Chapter-III of the PML Act dealt with the process of attachment, adjudication and confiscation of the proceeds of the crime. 15. As was noticed supra, the PML Act is not only intended to create and provide for prohibitive measures, but also intended to put in place regulatory mechanism, so as to arrest the impact of 'proceeds of crime' denting, in any manner, the fiscal and economic agenda of the State. If I may say so, the Act has provided for two distinct and separate branches of action. Chapter-II dealt with the conduct, which constitutes the offence and provided for the appropriate punishment therefore, while Chapter-III dealt with the regulatory aspects of the 'proceeds of the crime', enabling them to be subjected to attachment and adjudication and leading to their ultimate confiscation to the State. Theref....
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....ion of the confiscation. (2) A person must be in possession of the proceeds of crime; (3) Such person must have been charged of having committed one or the other of the scheduled offences under this Act; (4) Such proceeds of crime are likely to be concealed or transferred or dealt with in any manner, which may result in frustrating any proceedings of their ultimate confiscation. 18. In the instant case, with effect from 01-06-2009 Sections 120-B and 420 Indian Penal Code have been incorporated in para 1 of Part A of the Schedule. Therefore, the proceeds of such crime are capable of being dealt with under Section 5, provided, of course, such person, who is in possession of the proceeds of crime, should have also been charged of having committed the said offence under Sections 120-B and 420 Indian Penal Code after 01-06-2009. As was already noticed, a charge was laid against the 1st Petitioner by the C.B.C.I.D., in C.C. No. 187 of 2009 on the file of the XIV Additional Chief Metropolitan Magistrate, Hyderabad, alleging him to have committed offences punishable under Section 120-B r/w Section420 Indian Penal Code, on 22-11-2009. Therefore, after 22-....
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.... by committing which offence as charge sheet is filed for commission of various offences and only some of the offences are scheduled offences is not sustainable. It is not the case of the appellants that each offence generated separate amount of proceeds of crime and the same is accounted for separately for each offence. The fact remain that purpose of the same offence committed with different persons was to make them believe that the accused Munir Khan has a miracle medicine which can cure incurable disease and to tempt them to buy the purported medicine "Body Revival" and thus cheated them and generated proceeds of crime. Under section 24 of the Act, burden was on the appellants to prove that the properties provisionally attached were not acquired out of proceeds of crime generated from commission of schedule offence. There is no dispute that total amount of sale consideration received in the names of appellants for sale of "Body Revival" is much more than 30 lakhs. Thus, the provisions of PMLA are applicable in the present cases and the contention of the appellants that the total proceeds of crime not more than Rs. 30 lakhs is to be repelled. 57. As regards contention of the ....
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....Such a restricted interpretation will defeat the entire tenor of the provisions of section 5 of PMLA and will make it otiose. When the reasons to believe that the proceeds of crime are likely to be concealed or transferred is preceded by reasons to believe that a person is in possession of proceeds of crime which are liable for attachment and confiscation under the provisions of PMLA and on attachment/confiscation such proceeds of crime will no longer be available to him for his/her enjoyment, then a reasonable person will undoubtedly have reasons to believe that such person will make an attempt to conceal, transfer or deal with the properties in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. Therefore, considering the entire facts and circumstances of the case, we are of the opinion that there were sufficient reasons to believe by respondent u/s 5(1)(c) of PMLA. At this stage it is important to mention that though in his arguments the counsel for appellants contended that since the filing of charge sheet on 6.7.2010, no amount has been drawn from the bank accounts but copy of saving bank account No. 010510100009089 wi....
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.... as the appellants did not press for it, no detailed order was required and therefore, was not passed on the same. 59. The Adjudicating Authority has categorically stipulated in its order impugned before us that the applications for cross examination of witnesses were not pressed. The Appellants counsel who had argued the appeals before the Adjudicating Authority has not filed any affidavit contradicting the observation of the Adjudicating Authority. The appellants in such an eventuality ought to have sought review of the impugned judgments. The Hon'ble Supreme Court in Sukhpal Singh Vs. Kalyan Singh, (1963) 2 SCR 733 had held that appellant cannot just raise objections in his memorandum of appeal and leave it to the Appellate Court to give its decision after going through the record and determining the correctness thereof. It was held in para 5 of the said case as under: 5....Not unoften certain grounds of objection raised in the memorandum of appeal are not argued or pressed at the hearing and in that case such grounds cannot be taken to be the points for determination and are rightly not discussed in the judgment at all. It is for the appellant to raise the point....
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..... Judicial decorum restrains us. Matters of judicial record are unquestionable. They are not open to doubt. Judges cannot be dragged into the arena. 'Judgments cannot be treated as mere counters in the game of litigation.' (Per Lord Atkinson in Somasundaram Chetty v. Subramanian Chetty AIR 1926 PC 136.) We are bound to accept the statement of the Judges recorded in their judgment, as to what transpired in court. We cannot allow the statement of the Judges to be contradicted by statements at the Bar or by affidavit and other evidence. If the Judges say in their judgment that something was done, said or admitted before them, that has to be the last word on the subject. The principle is well settled that statements of fact as to what transpired at the hearing, recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to call the attention of the very Judges who have made the record to the fact that the state....
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....ther point except the point of office of profit has been dealt with in the impugned judgment of the High Court, the presumption is that no other point was pressed before the High Court, even though the point may have been contained in the election petition. Hence we do not allow these points to be raised here. 62. Constitution bench of the Hon'ble Supreme Court in Daman Singh Vs. State of Punjab (1985) 2 SCC 670 at page 682 had held: 13. The final submission of Shri Ramamurthi was that several other questions were raised in the writ petition before the High Court but they were not considered. We attach no significance to this submission. It is not unusual for parties and Counsel to raise innumerable grounds in the petitions and memoranda of appeal etc. but, later, confine themselves, in the course of argument to a few only of those grounds, obviously because the rest of the grounds are considered even by them to be untenable. No party or Counsel is thereafter entitled to make a grievance that the grounds not argued were not considered. If indeed any ground which was argued was not considered it should be open to the party aggrieved to draw the attention of the court....
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....ent dated 24.1.2013 in WP (C) 401/2013 & CM No. 802/2013 in the case of Shahid Balwa v. The Directorate of Enforcement, Division Bench of Delhi High Court in LPA No. 79/2013 & CM No. 2310/2013 in the case of Shahid Balwa v. The Directorate of Enforcement allowed the appeal filed against the order of the single judge dated 24.1.2013 in Shahid Balwa case (supra) and held that it is not possible to lay down any rigid rules as to when in compliance of principles of natural justice opportunity to cross-examine should be given. In any case the decision of the Division Bench of the Hon'ble Delhi High Court has been stayed by the Hon'ble Supreme Court, as has been intimated by the counsel for the respondent which is not refuted by the counsel for the Appellants. It is to be notices that everything depends on the subject matter. In the application of the concept of fair play there has to be flexibility. The application of the principles of natural justice depends on the facts and circumstances of each case. 65. Further, the facts of the Shahid Balwa case are different from the facts of the present case. In the Shahid Balwa case, the petitioner was charged for the contravention of....
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.... be retained till final adjudication or criminal proceedings are over. The orders are only interim arrangements pending final decision. The judgments cited by the appellants are regarding final orders passed abridging the rights of parties unlike the present proceedings. Here is final adjudication is yet to be made and is only a proceedings for interior detention of properties prima facie involved in money-laundering, pending final adjudication, in a time bound manner, it is not necessary for summoning, witnesses etc. except in special circumstances. 67. A case is only an authority for what it decides. As observed by the Supreme Court in State of Orissa v. Sudhansu Sekhar Misra :- A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury, LC said in Quinn v. Leathem, 1901 AC 495: Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repe....
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....s and circumstances, we are of the considered view that the appellants neither disclosed sufficient reasons or special circumstances in the application for cross examination nor they pressed the application at the time of oral submissions before the Adjudicating Authority. Thus the contention raised by the appellants is rejected. 69. As regards the contention of the appellant Sh. Sarosh Munir Khan that his statement under section 50 of PMLA was not recorded and no opportunity was given to him before passing the provisional attachment order and thus respondent violated principles of natural justice it is apparent that recording of statement u/s 50 of PMLA of the person in whose name property has been acquired by the accused is not obligatory under the provisions of PMLA. The said appellant has not disclosed that by not recording his statement, what illegality or prejudice has been caused against him while provisionally attaching his properties and thereafter confirming the attachment order. As per scheme of the PMLA, provisional attachment is done with a view to prevent frustration of any proceedings relating to confiscation of proceeds of crime under the PML Act and also with th....
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....e order, in the manner provided in the Second Schedule to the Income tax Act, 1961 (43 of 1961) and the Director or the other officer so authorized by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule: .......... 8. Adjudication- (1) On receipt of a complaint under subsection (5) of section 5, or applications made under subsection (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, he 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 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....
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.... there is a clear mandate to the contrary. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. Where substantial rights of parties are considerably affected, the application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment. Its aim is to secure justice or to prevent miscarriage of justice. The principles of natural justice have many facets. Two of them are; notice of the case to be made and opportunity to explain. In Maneka Gandhi Vs. Union of India (AIR 1978 SC 597), it is laid down that where in an emergent situation on requiring immediate action, it is not practicable to give prior notice or opportunity to be heard, the preliminary action should be followed by a full remedial hearing. Such cases where owing to the compulsion of the fact situation or the necessity of taking speedy action no pre-decisional hearing is given but the action is followed soon by a full post-decisional hearing to the person affected, do not, in reality, constitute an 'exception' to the AUDI ALTERAM PARTEM R....
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....d to the exigency of the public interest involved in attaching a property believed to be proceeds of crime/involved in money laundering, to prevent frustration of other proceedings under the Act, the maximal due process of hearing an affected party before passing an order of provisional attachment is consciously excluded under the presents of Section 5 of the Act. In our opinion, for these reasons, section 5 of the Act does not provide for giving of a pre-decisional hearing by the respondent. Section 8 of the Act provides for full fledged adjudication to be followed for confirmation of the provisional attachment made or for vacating the provisional order, as the case may be. Section 8 of the Act provides for issuing notice to the affected person, to be followed by consideration of the reply that may be filed, opportunity to adducing evidence and of hearing the aggrieved person as provided under section 8. A complete hearing is thus provided, which is required to be given prior to confirming, finalizing or vacating the provisional attachment. 16. In view of such provisions in section 8 of the Act and looking at the object of the Act and purpose of section 5 of the Act, the ....
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....rectly or indirectly involving/assisting/indulging in any process or activity connected with the proceeds of crime and projecting those proceeds as untainted property is guilty of offence of money laundering. Thus, a person guilty under section 3 will be any person who has committed the schedule offence or/and who is connected with the proceeds of crime and projecting the same as untainted property. The proceeds of crime is defined under section 2(u) of the Act as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. Reading together sections 2(p), 2(u) and 3, we are of the opinion that even person(s) who are not charged of having committed a schedule offence are covered under the provisions of section 3 of the Act. Now coming to section 5, from sub section (1)(a) which says any proceeds of crime, read with sub section 1(c) which says such proceeds of crime, we have no doubt that all the proceeds of crime are to be attached. In our opinion, if the contention of the appellant, as regard provisions of section 5(1)(a) and (b) of the Act, that property of only such person can be attached who has been ch....
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.... follows: 11. The question is whether section 5 can be invoked against a person who is not named as an accused in the commission of a scheduled offence? Sub-section (1) of Section 5 will have to be read as a whole conjointly with the other provisions of the Act already referred to hitherto, including section 8 thereof. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorized by Director for the purposes of the said section to resort to action of "attachment of property" if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such property until the criminal action for the scheduled offence is taken to its logical end against the accused named therein. The proceeds of crime means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing ....
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....ogramme of Action, as annexed to the resolution S-17/2 adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990.......... ........That person may not face prosecution under section 3 of the Act of 2002. But even in his case, an order of attachment of the proceeds of crime can be invoked and later end up with confiscation thereof depending on the outcome of the criminal action against the person charged of having committed a scheduled offence. The action of attachment is not in relation to a person as such but essentially to freeze the proceeds of crime. The interpretation given by the Appellants, if accepted would be destructive of the said legislative intent. Suffice it to observe that the term "person" appearing in clause (a) of the Section 5(1) of the Act cannot be limited to the person who has been charged of having committed a scheduled offence. If that was the intent of the legislature, there was no reason to insert clause (a). In that case, the Legislature would have simply provided for any person who has been charged of having committed a scheduled offence and in possession of any proceed of ....
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.... the above judgment is of no help to the appellants. 75. The counsel for appellants also relied upon the judgment in the case of Uma Charan v. State of Madhya Pradesh & Another AIR 1981 SC 1915 and contended that the respondent should have recorded reasons for likelihood of transfer of properties u/s 5(1)(c) of PMLA. In this case the Selection Committee in review of selection list, without recording any reason superseded a member of State Police Service. Hon'ble Supreme Court held that Selection Committee would be said to have contravened regulation 5(5) of Indian Police Service (Appointment by Promotion) Regulations, 1955 as it was incumbent on the Selection Committee to have stated reasons in a manner which would disclose how the record of each officer superseded stood in relation to records of others who were to be preferred. The facts of the above case are different from the present case. Proceedings in the above case are under a different piece of legislation where the intent and purpose are different from PMLA. Further, in the present case the respondent has recorded the reasons in writing before passing the provisional attachment order which are indicated in the provi....
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....n only in those cases where properties are capable of being tempered with, which may frustrate the ultimate confiscation proceedings and there lies a possibility of the same e.g. in the cases of movables. 78. The counsel for appellants relied upon judgment in the case of P.M. Doraswamy Reddy v. The Election Authority and Director of Marketing, A.P. and others, AIR 1977 AP 286 and contended that every use of the word 'shall' or 'must' in a particular law does not render that provision mandatory. Reliance was also placed on the judgment in the case of Bhikhabhai Devshi v. State of Gujrat and others AIR 1987 Gujrat 136. 79. The counsel contended that all the appellants are residing at flat No. 1403 & 1404, A Wing Raj Classic, Off Yari Road, Versova, Andheri (West), Mumbai and possession of this property at the very least should not be taken away till the order of the Criminal trial court becomes final. 80. The counsel for respondent contended that the word "shall" in section 8(4) of PMLA has to be read as "shall" and the provisions are mandatory provisions. He submitted that one of the main objects is to deprive the accused person or his relatives/associates f....
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....ct, 2012 is adverted to as follows: 8(4) - Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the attached property. 83. A plain reading of the above provision of section 5(4) and 8(4) of the Act shows that the legislator, has consciously and after considering the change in position of the attachment proceedings after confirmation by Adjudicating Authority u/s 8(3), contemplated that the Enforcement Director shall forthwith (emphasis supplied) take the possession of the attached property. Forthwith means 'Immediately, without delay, Black's Law Dictionary, 7th Edn., p. 664. When a statute or rule of Court requires an act to be done 'forthwith,' it means that the act is to be done within a reasonable time having regard to the object of the provision and the circumstances of the case [Ex parte Lamb, (1881) 19 Ch D 169; 2 Chit. Arch. Prac., 14th Edn., 1435]. The expression 'forthwith' would mean 'as soon as may be', that the action should be performed by the authori....
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....ent of immovable property provisionally attached under Section 5(1) while enjoining taking over of possession on confirmation under Section 8(3), is part of a consciously calibrated legislative schemata to achieve the object which the several provisions of the Act are designed to fulfill. The wholesome legislative intent underpinning the sequential provisions for provisional attachment, confirmation of such attachment and eventual confiscation; or for retention of a seized property, permitting continuance of such retention pending a determination as to confiscation under Section 8, while preserving the right to possession at the stage of provisional attachment while mandating dispossession after confirmation of the attachment; are conceived to balance the governmental interest expressed by the provisions of the Act on the one hand and the several degrees of rights of persons in possession of property that is believed to be proceeds of crime involved in money-laundering, on the other. In our analysis of the provisions of Sections 5 and 8, we have observed that the reason to believe that a property in possession of a person constitutes proceeds of crime involved in money-laundering, ....
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....nfirmation stage is taking possession of the attached property legislatively enjoined {Section 8(4)}. The reason for the prescription as to dispossession is apparent. The apparent purpose is also vouchsafed in the counter of the Respondents and the contentions of the Learned Counsel Sri Rajeev Awasthi. The satisfaction as to the provisional attached property constituting proceeds of crime involved in money-laundering is arrived at by the adjudicating authority after considering a fuller basket of information, material and evidence which includes a showing by a person concerned with the property. From the legislative scheme, in particular of Section 8, we infer that dispossession from immovable property is prescribed under Section 8(4) to prevent wastage or spoilage of the property and thus dissipation of its value so as to preserve the integrity and value of the property till the stage of confiscation. Thus construed the provisions of Section 8(4) are neither arbitrary nor disproportionate to the object sought to be achieved by the provisions of the Act. The provisions of Section 8(4) are reasonable and unimpeachable. The challenge to Section 8 of the Act must therefore fail. 85....