TaxTMI 
TaxTMI 
2025 (1) TMI 992
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....ovisional attachment order dated 16.01.2020. Brief facts of the case The Appeals have been filed by the four appellants out of which one is a financial institution namely, Standard Chartered Bank and other is IFCI Limited. The other appeals are by Shri Sanjay Singhal and Atmaram House Investment Pvt. Ltd.. The matters largely pertain to affairs of M/s Bhushan Power & Steel Limited (hereinafter for short "M/s BPSL") and other entities apart from the individuals. The appellant, Mr. Sanjay Singhal was Director of M/s BPSL along with the others. The credit facility from 33 different Banks / Financial Institutions was availed by the Company between 2007 to till 2014. The outstanding amount as on 30.01.2018 was found to be Rs.47,204 crores. M/s BPSL availed the loan facility under the leadership of Punjab National Bank for different purposes and thereupon defaulted in making repayment of loan to the banks /financial institutions. The lead - Punjab National Bank declared the account of M/s BPSL as Non-Performing Assets (NPA) on 13.12.2015 followed by similar action by other banks / financial institutions. In search conducted by the Income-tax authorities in the premises of M/s BP....
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....sideration before the Apex Court in the pending SLP. The PAO issued on 16.01.2020 is subject matter of this appeal. The Ld. Counsel for the appellant raised legal issue to press the appeal for challenge to the impugned order i.e. PAO dated 16.01.2020 and its confirmation order dated 12.07.2021. It was submitted that the impugned order was passed by the Adjudicating Authority after expiry of 180 days from the date of the PAO which in fact lapsed on 180th day from 16.01.2020 i.e. the date of PAO. A reference to Section 5(3) of the Prevention of Money Laundering Act, 2002 (in short "the Act of 2002") was given to press the first ground of challenge. It was submitted that Adjudicating Authority was not having jurisdiction to give life to the lapsed PAO. Thus on the aforesaid ground itself the impugned order deserves to be set-aside. The other argument was that respondent failed to consider that no amount was given to the appellant by the financial institutions / banks which is said to have been laundered by it. In fact, M/s BPSL had given Rs. 136 crores to the various entities which may include the Appellant's company largely controlled by Mr. Sanjay Singhal. The respondent fa....
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....ted that as on date of passing of the impugned orders, no proceedings for the offence under the Prevention of Money-Laundering Act was pending against the appellant and therefore their properties could not have been attached. A reference of Section 8(3)(a) of the Act of 2002 was given to substantiate the arguments. The Ld. Counsel for the appellant made reference to the judgment of the Delhi High Court in the case of Mahender Khandelwal vs. ED WP(C) No. 10993 of 2023 to support the arguments referred above. It has been held that property of a person against whom criminal proceedings are not pending before the Special Court, its properties cannot be attached. In the instant case, the appellant's company has not been named as an accused and therefore no proceedings were pending against it on the date of passing of the Provisional Attachment Order. A further reference of the judgement of this Tribunal in Ramji Natarajan v. ED FPA-PMLA-2409/DLI/2018 was given where in the absence of a prosecution complaint against the person whose property was attached, an appropriate order was passed. The reference of other judgments was also given where it was held that the prosecution complain....
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.... to the period of 180 days. A prayer for lapse of provisional order has been sought. We have considered the submissions and find that the period intervening was largely effected by Covid-19 started after issuance of PAO on 16.01.2020. The period of Covid-19 from 15.03.2020 till 28.02.2022 and has been eliminated by the Apex Court in Suo Motto Petition No. 03/2020 decided by the order dated 10.01.2022 for termination of the proceedings under any statute. In the light of the exclusion of the period of Covid-19 for termination of the proceedings, the impugned order would not lapse. The issue aforesaid has been dealt with by this Tribunal in many cases where the judgment of the Apex Court not only in the Suo Motto Petition No. 03/20 decided by the order dated 10.01.2022 but also in the judgment in the case of Prakash Corporates vs. Dee Vee Projects Limited reported in 2022 INSC 180 has been considered. An elaborate judgment was given by Telangana High Court which has been referred by this Tribunal in its order in the case FPA-PMLA4363/BBS/2021 Bhuneshwar Prasad Verma vs. The Deputy Director, Directorate of Enforcement, Bhubaneswar dated 24.09.2024. The relevant paras of the order of....
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....s 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: Limitation (supra) took suo moto cognizance....
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....1) 17 SCC 2] and 23-9-2021 [Cognizance for Extension of Limitation, In re, MANU/SC/0946/2021 ] , 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 In....
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.... under Section 173 of the Code of Criminal Procedure, 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 exce....
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....rm of a procedural safeguard. The relevant paragraph is extracted below 287. Be that as it may, as aforesaid, sub-section (1) delineates sufficient safeguards to be adhered to by the authorised officer before issuing provisional attachment order in respect of proceeds of crime. It is only upon recording satisfaction regarding the twin requirements referred to in sub-section (1), the authorised officer can proceed to issue order of provisional attachment of such proceeds of crime. Before issuing a formal order, the authorised officer has to form his opinion and delineate the reasons for such belief to be recorded in writing, which indeed is not on the basis of assumption, but on the basis of material in his possession. The order of provisional attachment is, thus, the outcome of such satisfaction already recorded by the authorised officer. Notably, the provisional order of attachment operates for a fixed duration not exceeding one hundred and eighty days from the date of the order. This is yet another safeguard provisioned in the 2002 Act itself. x) It is true that the period of 180 days within which the provisional attachment order under Section 5(1) of the PMLA h....
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....tention of the Petitioners. xiv) In S. Kasi (supra), the question before the Apex Court was whether the decision in In re: Limitation (supra) extended the time period `to complete investigation and file charge sheet and whether default bail under Section 167(2) of the Code of Criminal Procedure (hereinafter 'CrPC') could be denied on the ground that investigation was not completed and charge sheet was not filed due to Covid-19. The Court therein held that Section 167(2) of the CrPC envisages an indefeasible right to obtain statutory bail, if investigation is not completed within the prescribed time. The Court held that the decision in In re: Limitation (supra) is not applicable to Section 167(2) of the CrPC as personal liberty of an individual cannot be curtailed. The Court noted the decisions of other High Courts and held that the decision in In re: Limitation (supra) is not applicable to police investigations. In other words, time periods prescribed to complete police investigations and where individual liberty of the accused is in question, the benefit of extension of limitation in In re: Limitation (supra) cannot be taken. The relevant paragraphs are extracted ....
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....nounced by the Government shall operate as any restriction on the rights of an accused as protected by Section 167(2) regarding his indefeasible right to get a default bail on non-submission of charge-sheet within the time prescribed. The learned Single Judge committed serious error in reading such restriction in the order of this Court dated 23-3-2020 [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10] . 34. The Rajasthan High Court had occasion to consider Section 167 as well as the order of this Court dated 23-3- 2020 passed in Cognizance for Extension of Limitation, In re [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10] and the Rajasthan High Court has also come to the same conclusion that the order of this Court dated 23-3-2020 [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10] has no consequence on the right, which accrues to an accused on non-filing of charge-sheet within time as prescribed under Section 167CrPC. The Rajasthan High Court in Pankaj v. State [Pankaj v. State, MANU/RH/0309/2020] decided on 22-5-2020 has also followed the judgment of the learned Sin....
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....der is passed of his right to deal in the property against which the attachment is ordered. Such deprivation can therefore, be for a maximum of 180 days and no further, except where such order is confirmed by the Adjudicating Authority prior thereto under Section 8(3) of the Act. Once the 180 day period has lapsed without such order being passed under Section 8(3) of the Act, the Provisional Attachment Order ceases to have effect and therefore, there is no order before the Adjudicating Authority to confirm under Section 8(3) of the Act. The Adjudicating Authority therefore, becomes functus officio. 28. In view of the above dicta, the submission of the learned counsel for the respondents that as the delay in proceedings before the Adjudicating Authority cannot be blamed on the respondents, the respondents must not be penalized and the time period should be extended, cannot be accepted. It is not a question of penalization of the respondents for the delay, but of application of the mandate of law from which there is no escape. Equally, the principle of Actus Curiae Neminem Gravabit can also have no application. 30. Clearly, the above order extended the period of lim....
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....er was never meant to curtail any provision of other statute which is enacted to protect the personal liberty of a person. In my opinion, in a similar manner, the order dated 23.03.2020 was not meant to deny any person his/her property rights. 37. In view of the above, the 180 days from the date of the Provisional Attachment Order dated 13.11.2019 having expired without any order under Section 8(3) of the Act being passed by the Adjudicating Authority, it is held that the Adjudicating Authority has been rendered functus officio and cannot proceed with the Original Complaint, being O.C. No. 1228/2019 pending before it. The Notice/Summons dated 26.05.2020 is accordingly set aside. 38. In the present case I have intentionally refrained myself from making any comment on whether the period of total lockdown declared by the Central Government, that is from 24.03.2020 to 20.04.2020, can be excluded for computation of the 180 days, as it is not disputed that even on exclusion of this period, the 180 days would have expired on 16.06.2020, the returnable date of the notice issued by the Adjudicating Authority. xvi) Similarly, the Calcutta High Court in Gobindo Das ....
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....a consequence of failure on the part of the Respondent Enforcement authority/Adjudicating authority in passing further order under Section 8 (3) of The Prevention of Money Laundering Act, 2002 extending or confirming order dated 11th December, 2020 under Section 5 (1) of the said Act on or before 9th June, 2021 after expiry of its validity under Section 5 (3) of the said Act by taking the stand of automatic deemed extension/confirmation of the said order by virtue of the order of the Hon'ble Supreme Court in Suo moto Writ Petition (Civil) No. 3 of 2020 (supra) by claiming itself as a litigant or advocate or quasi-judicial authority when it was not required to approach physically any quasi-judicial or judicial authority to initiate any proceeding or to file any application/suit/appeal for the purpose of extension or confirmation of the order under Section 5 (1) of The Prevention of Money Laundering Act, 2002. xvii) Similarly, the Calcutta High Court in Hiren Panchal (supra) held that vide orders in In re: Limitation (supra), the Apex Court extended the period of limitation to safeguard the right of litigants to institute proceedings. The Court held that computation of 1....
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....t to take away a remedy under a given statute. The respondents before this Court seek to do the latter. The only step taken by the ED is the order of the provisional attachment dated 30th September, 2021. No other steps were taken by the ED before the petitioners reply on 3rd January, 2022 or before the expiry of 180 days period on 31st March, 2022. By its inaction and failure to act in terms of Section 5(1)(b) or the other conditions of the said section, the ED has made itself vulnerable to Section 5(3) of the PMLA. The petitioner in turn has been given the breather of exhaustion of the 180 days window from 1st April, 2022 and the ED cannot now revive the proceedings after more than 80 days have passed from the end point of the 180 days period. 21. In Gobindo Das, the Appeal Court disagreed with the view of the Adjudicating Authority being a "non-litigant". The Division Bench was also disturbed by the fact that the bank accounts of the writ petitioners have been debited leaving the balance at zero despite the order of attachment. Prakash Corporates dealt with the prescribed statutory time period for filing of the written statement under Order VIII Rule 1 of The Code of Ci....
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....ffect of potentially depriving a person of his property. However, right to personal liberty and right to property stand on a different footing and cannot be equated. This is evident from the fact that the urgency in concluding proceedings dealing with a person in jail is much higher than a person whose property is provisionally attached. Further, under Section 5(4) of the PMLA, the person whose property is provisionally attached can still enjoy such property till the same is confiscated. Even in cases of confirmation of provisional attachment, a person can still enjoy such property till the same is confiscated. xx) In Vijay Madanlal Choudhary (supra), the Apex Court held that provisionally attached properties which are confirmed can still be enjoyed by a party till a confiscation order is passed. The relevant paragraphs are extracted below: 304. The other grievance of the petitioners is in reference to the stipulation in sub-section (4) of Section 8 providing for taking possession of the property. This provision ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. In that, merely because the provisional attachment order....
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....ty of sub-section (4) of Section 8 of the 2002 Act. xxi) Therefore, provisions prescribing timelines and which deal with police investigation upon which a person's liberty is dependent has to be strictly construed. On the other hand, where timeline is prescribed for attachment of properties and due to unforeseen circumstances like Covid-19 such attachment was not confirmed, benefit can be granted in favour of the Adjudicating Authority by excluding the period as prescribed under In re: Limitation (supra), a fortiori when the property can still be enjoyed. xxii) It is relevant to note that the Supreme Court in Prakash Corporates v. Dee Vee Projects Ltd. MANU/SC/0180/2022 : (2022) 5 SCC 112 dealt with the application of In re: Limitation (supra) in relation to filing of a written statement. The Court therein held that the scope of In re: Limitation (supra) cannot be unnecessarily narrowed and in relation to S. Kasi (supra) held that the same stands on different footing as it dealt with Article 21 of the Constitution of India. The relevant paragraphs are extracted below: 27.7. We are not elaborating on other directions issued by this Court but, when read....
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....ficer, cannot be applied to the present case relating to the matter of filing written statement by the defendant in a civil suit. xxiii) Further, a Division Bench of Madras High Court in S. Prasanna v. The Deputy Director, Directorate of Enforcement, Government of India MANU/TN/8962/2022 held that the decision in S. Kasi (supra) is not applicable to compute the period of 180 days under Section 5(3) of the PMLA. The Court also disagreed with the view adopted in Vikas WSP Ltd. (supra), and Hiren Panchal (supra). The relevant paragraphs are extracted below: 12. Insofar as the judgment of the Calcutta High Court that was brought to our notice, we find that the Calcutta High Court had mainly relied upon the judgment of the Apex Court in S. Kasi case. With utmost respect to the learned Single Judge of the Calcutta High Court, we are not in agreement with the reasoning in the above judgment. The issue that was dealt with by the Apex Court in S. Kasi case pertains to the scope of Section 167(2) of Cr.P.C. which is directly referable to Article 21 of the Constitution of India viz., personal liberty of a person. The same cannot be equated while dealing with a property right....
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....d for the simple reason that In re: Limitation (supra) was further clarified in In re: Limitation 2022 (supra) wherein the Court at Para 5.4 (extracted supra) held that where time period is prescribed for termination of proceedings, the period from 15.03.2020 to 28.02.2022 shall be excluded. In the present case, Section 5(3) of the PMLA states that provisional attachment of properties will cease to have effect after a lapse of 180 days from the date of provisional attachment. That would mean that attachment proceedings shall terminate if the same are not confirmed within a period of 180 days. Therefore, while calculating/computing the 180 day period, the period from 15.03.2022 to 28.02.2022 shall be excluded. xxviii) To answer Issue No. 3, this Court holds that the decision in In re: Limitation (supra) and subsequent extensions vide In re: Limitation 2022 (supra) are applicable to PMLA proceedings to compute the period of 180 days. While computing such period, the period from15.03.2020 to 28.02.2022 shall be excluded The para quoted above deals with the issue and is applicable to the facts of this case. Since the period of Covid19 from 15.03.2020 till 28.02.2022 h....
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....verted the funds to many entities which includes the appellant company which has failed to show its own source to acquire the properties. The appellant could have disclosed its independent source to acquire the properties which they failed. The further case of the appellant is that out of the many properties, one property was purchased prior to commission of crime. A serious contest to it was made by the respondent. It was submitted that the check period involved in this case from the year 2007 till 2014. The properties attached by the respondent were purchased during the check-period when huge funds borrowed by the M/s BPSL was diverted to its entities and individuals who in turn purchased the immovable properties. We may give reference of the properties attached by the respondent, which are as under: S. No. Details of property Details of entity in whose name registered Proportion of property attached Value of property attached (Rs.) 1. 53, Jor Bagh, New Delhi Atma Ram House Investment Private Limited 100% 74,35,00,000 2. 5, Tolstoy Marg, New Delhi Atma Ram House Investment Private Limited 100% 11,20,11,326 3. Apartment A.03.2,....
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....n occupying or holding the property may not be accused, the property can yet be attached and if such person is not an accused there would be no question of filing prosecution complaint against such a person. The aforesaid issue has been decided by this Tribunal in the case of Mr. Irfan Ahmed Siddiqui vs. The Deputy Director Directorate of Enforcement, Delhi in Appeal no. FPA-PMLA-4599/DLI/2022 vide order dated 24.09.2024. The relevant paras of the said order are quoted thus- "The argument is that prosecution complaint has not been filed against the appellant after investigation. Section 8(3)(a) does not postulate investigation against the person whose property has been attached or even the criminal proceedings against such person, rather what has been provided is for continuance of the attachment till completion of investigation within 365 days or during the pendency of the proceedings for the offence under the Act of 2002. The pendency of the proceedings again does not postulate against the person whose property has been attached. The reason for it seems to be that after commission of the predicate offence and the offence of money laundering, accused may park "proceeds....
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....rt of law rather what is required is the investigation and pendency of proceedings relating to „any offence‟ under this Act. Further, section 5(1) refers to "any person‟, which would include even those who have not been charged for an offense, however, are in possession of the proceeds of crime. The interpretation of "any person‟ under section 5 cannot be kept limited to the "accused‟ who has been charged with an offence. It is wide enough to include persons who are in possession of the proceeds of crime, irrespective of whether they are accused or not. The plain reading of section 5(1) read with section 8(3)(a) supports the finding. For better elucidation, we are reproducing the section 5(1)herein below: "Section 5(1). Attachment of property involved in money-laundering.- (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; and (b) such proceeds....
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....ird party can be when the accused involved in predicate offence has parked it with such person or it was arranged in such a manner where proceeds of crime may not remain in the hands of the accused so as to be attached but to be kept with other person not involved in the crime. Since the emphasis is to attach the proceeds of crime, it is not necessary it to be from the accused but wherever it exists, the attachment can be made. In view of the above, bare reading of the provision does not support the argument raised by the appellant. The judgement of the Apex Court in the case of Vijay Madanlal Choudhary (supra) has otherwise clarified that attachment and seizure of the property and document can be from a person other than an accused and if that is so where would be a question of investigation against such person not named as accused or any proceeding in the court relating to the offence under the Act. In the light of the judgment in the case supra, we find no substance in the arguments of the appellant. In fact in the case of reported Vijay Madanlal Choudhary vs. Union of India in 2022 SCC Online SC 929, the issue was dealt with in para 65 of the judgment and has been q....
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.... is from the year 2007 to 2014 when BPSL had taken the loan and started committing default in making the repayment. The amount was diverted to other entities / companies, therefore, even the case of moneylaundering was found. The appellant's Company has not given independent source of Rs. 74,35,00,000/- rather, acquisition of property is on diversion of the fund by BPSL and therefore only the Adjudicating Authority has confirmed the attachment of property. The earlier attachment has been stayed by Apex Court, as stated, thus respondent could not secure the proceeds of crime. If the value of attached property was in excess to the proceeds of crime, the issue could have been raised before the Apex Court also. In fact, no such issue was raised by the appellant before the Adjudicating Authority. It may be for the reason that total outstanding amount is Rs.47,204 crores as on 30.01.2018. In fact, the appellant has ignored the check-period which has been given by them itself to show cash profit of Company between 2007 to 2014 while the property was purchased on 09.11.2012. The facts, however, remain that even if the BPSL was having cash profit, they were making default in repaym....
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....pex Court in Vijay Madanlal Choudhary (supra). The order of this Tribunal so as the judgment of Delhi High Court cannot be applied going against the judgement of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). It is further necessary to add that the prosecution complaint can be filed against the accused and not against the person who is not named as an accused but his property has been attached because proceeds of crime travelled to his hand. Thus the argument that the prosecution complaint against the appellant has not been filed despite the expiry of period of 365 days is an issue raised in ignorance of the fact that no prosecution complaint can be filed against the person not named as accused while as per the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) the property of such person can also be attached even though not named as an accused. The appellant, further, contended that the "reason to believe" under section 5(1) of the Act recorded by the competent authority was not supplied to the appellant. The statement of aforesaid has been raised without raising an issue that the "reason to believe" was otherwise to be served u....