TaxTMI 
TaxTMI 
2025 (4) TMI 185
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...., Party City Township, Kalwar Road, Jaipur has been attached. The appellant purchased the said property through sale deed dated 06.06.2014 for a consideration of Rs. 19 lakhs. The source to acquire the property has been disclosed, yet the Adjudicating Authority confirmed the attachment ignoring the material on record. The prayer was accordingly made to cause interference in the impugned order in reference to the facts of the case, otherwise, the appellant has raised legal issues to challenge the impugned order. 3. It is submitted that while the Provisional Attachment Order ("PAO") is dated 11.02.2022, the Adjudicating Authority passed the order on 25.08.2022 i.e. beyond the period of 180 days. Thus, the attachment ceases to exist by virtue of Section 5(3) of the Act of 2002. 4. It is submitted that the PAO is having life of 180 days.If the PAO is not confirmed by the Adjudicating Authority within 180 days, it would cease to exist. In the instant case, the impugned order was passed after a period of 190 days from the date of PAO. The impugned order, thus, deserves to be set-aside on the aforesaid ground itself. 5. Touching on the merit of the case, submitted that Villa No. ....
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....group of Customers by way of inter-linked fraudulent transactions among the three branches resorting to discounting of forged cheques, discounting of forged inland bills and availing of overdraft facility against non-existent LIC policies caused wrongful loss to the bank with dishonest intention. The total loss caused to the bank was of Rs. 1055 crores. It was siphoned off by a Chartered Accountant, Bharat Bomb and Shankar Lal Khandelwal apart from Piyush Jain along with bank officials. 8. We are not required to refer to the facts pertaining to commission of crime beyond what has been stated above because serious allegation exists against the officials of bank apart from Shri Bharat Bomb, Shri Shankar Lal Khandelwal and Shri Piyush Jain. So far as appellant is concerned, he was not named as an accused and accordingly in reference to the facts of the case when Villa No. 60, Party City Township, Kalwar Road, Jaipur was attached followed by its confirmation, this appeal preferred on three prime grounds and would be dealt with by this order. Issue No. 1 9. It was submitted that provisional Attachment Order is dated 11.02.2022, and has been confirmed by the Adjudicating Authori....
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.... Vs. Union of India & Ors [MANU/TL/1003/2023] has given a detailed Judgement on the issue and the relevant paras of the Judgement are quoted hereunder:- "15. Issue No. 3: Whether the period from 15.03.2020 to 28.02.2022 which was excluded by the Apex Court in computation of limitation vide In re: Limitation (supra) is applicable to orders confirming provisional attachment within 180 days? i) The Petitioner in W.P. No. 34238 of 2022 contends that the provisional attachment order i.e., PAO No. 04 of 2022 dated 03.02.2022 could not have been confirmed by the Adjudicating Authority vide order dated 22.08.2022 as the same was passed after the lapse of 180 days. Further, the Petitioner contends that Adjudicating Authority cannot rely on In re: Limitation (supra) in calculating the period of 180 days in light of the Apex Court's decision in S. Kasi (supra). ii) In W.P. No. 34627 of 2022, the provisional attachment order therein i.e., PAO No. 01 of 2021 was passed on 01.02.2021. Pursuant to which an original complaint under Section 5(5) of the PMLA was filed on 19.02.2021 and show cause notice under Section 8(1) of the PMLA was issued by the Adjudicating Authority on 03.03.202....
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.... Subsequently, the limitation period was extended vide In re: Cognizance for Extension of Limitation MANU/SC/0108/2022: (2022) 3 SCC 117 (hereinafter 'In re: Limitation, 2022') till 28.02.2022. The Apex Court vide the said order clarified that where any statute provides an outer limit of limitation period within which the proceedings are to be completed, the period between 15.03.2020 to 28.02.2022 shall be excluded in computing such period. The relevant paragraphs of In re: Limitation, 2022 (supra) are extracted below: 5.1. The order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] is restored and in continuation of the subsequent orders dated 8-3-2021 [Cognizance for Extension of Limitation, In re, MANU/SC/0158/2021 : (2021) 5 SCC 452 : (2021) 3 SCC (Civ) 40 : (2021) 2 SCC (Cri) 615 : (2021) 2 SCC (L&S) 50], 27-4-2021 [Cognizance for Extension of Limitation, In re, MANU/SC/0358/2021 : (2021) 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 FPA-PMLA- 4363/....
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....or the sake of convenience, Section 5 is extracted below: 5. Attachment of property involved in money-laundering.- 29[(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 of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate 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 Magistra....
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....rovides that the authorized officer can provisionally attach properties for a period not exceeding 180 days. The third proviso to Section 5(1) of the PMLA states that if the proceedings initiated under the PMLA are stayed by the High Court, then such period during which the stay operates shall be excluded in computing the 180-day period. Further, Section 5(3) of the PMLA states that a provisional attachment order passed under Section 5(1) of the PMLA shall cease to have effect after the expiry of 180 days from the date of provisional attachment. ix) A conjoint reading of Sections 5(1) & 5(3) of the PMLA indicates that the period of 180 days within which a confirmation order shall be passed is mandatory. This view is fortified in light of the decision in Vijay Madanlal Choudhary v. Union of India MANU/SC/0924/2022 wherein the Apex Court dealing with constitutionality of various provisions of the PMLA held that the period of 180 days is in the form 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 provis....
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....13.02.2023 in W.A. No. 194 of 2023. xii) According to this Court, in appropriate cases, certain period can be excluded while computing the 180day period under Section 5(3) of the PMLA. It is important to note exclusion of certain period is different from extending the period. In the present case, the Apex Court exercising its inherent powers under Article 142 of the Constitution of India excluded the period from 15.03.2020 to 28.02.2022 in computation of limitation. Therefore, the period from 15.03.2020 to 28.02.2022 shall be excluded while computing the period of 180 days under Section 5(3) of the PMLA. xiii) As stated above, the Petitioners relying on the decision in S. Kasi (supra) and other decisions of the High Courts in Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra) contend that the decision in In re: Limitation(supra) is not applicable to PMLA proceedings. This Court cannot accept the said contention 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 ....
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.... We, thus, are of the clear opinion that the learned Single Judge in the impugned judgment [S. Kasi v. State, MANU/TN/7730/2020] erred in holding that the Lockdown announced by the Government of India is akin to the proclamation of Emergency. The view of the learned Single Judge that the restrictions, which have been imposed during the period of Lockdown by the Government of India should not give right to an accused to pray for grant of default bail even though charge-sheet has not been filed within the time prescribed under Section 167(2) of the Code of Criminal Procedure, is clearly erroneous and not in accordance with law. 29. We, thus, are of the view that neither this Court in its order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10] can be held to have eclipsed the time prescribed under Section 167(2)CrPC nor the restrictions which have been imposed during the Lockdown announced 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....
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....utation of 180 days within which provisional attachment of properties has to be confirmed by the Adjudicating Authority. The Court therein also held no period of limitation is prescribed under Section 5(1) & 5(3) of the PMLA and after the lapse of 180 days, the Adjudicating Authority becomes functus officio. Further, had the legislature or the Government thought it fit, they would have expressly extended the period within which provisional attachment of properties could have been confirmed. However, the Court left the question regarding the applicability of In re: Limitation (supra) in computation of 180 days open. The relevant paragraphs are extracted below: 23. Therefore, a reading of sub-section (1) of Section 5 with Section 2(1)(d) of the Act leaves no manner of doubt that the effect of the Provisional Attachment Order is deprivation of the right to property. 25. In the present case, the Act clearly deprives the person against whom the Provisional Attachment Order 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....
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....ourt are not a universal extension of time across the board, be it limitation or period prescribed for doing a particular thing, or as in the present case, the period of validity of an order. 32. The above distinction is also apparent to the Government of India as it promulgated The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 on 31.03.2020, extending the time limit for completion of any proceedings or passing of any order etc. specified in the Acts specified therein. However, the Prevention of Money Laundering Act, 2002 is not one of the "specified Acts" under the Ordinance. Therefore, the respondents cannot take benefit of even this Ordinance. On the other hand, the Ordinance clearly shows that the reliance of the respondents on the orders of the Supreme Court is liable to be rejected. 35. The above judgment clearly highlights the reason and the limit of the order dated 23.03.2020 passed by the Supreme Court. It also highlights that the said order 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 2....
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....tion of the petitioner, dated 11th December, 2019, which has expired its validity on 9th June, 2021, has no force after expiry of 180 days from the date of passing of such order in view of not passing any formal order under Section 8 (3) of the said Act extending the validity of the same by the Respondent No. 2 and the action of Respondent No. 3 in not allowing the petitioner to operate its bank and postal accounts in question after the expiry of the period validity of 180 days from the date of the order passed under Section 5 (1) of the aforesaid Act, such action of the Respondent Enforcement authority, is arbitrary and illegal. 14. In view of the discussion made above this Writ Petition is allowed by declaring that the impugned order of provisional attachment of Bank accounts and postal accounts in question dated 11th December, 2019 passed under Section 5 (1) of The Prevention of Money Laundering Act, 2002 after expiry of 180 days on 9th June, 2021 is ceased to have any effect or force as 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 Launder....
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....n instituting a proceeding. 18. Section 5(3) is a clear embargo on the order of attachment continuing to have effect after the expiry of 180 days. Section 5(1) designates the authority and the steps to be taken for proceeding against any person who is in possession of any proceeds of crime. The section is hence concerned with the procedure to be undertaken for provisional attachment of a property subject to the fulfillment of the other conditions in Section 5. A prescribed procedure after the same has been initiated cannot be equated to institution of a suit or filing of a petition/application which is a starting point of litigation for a person who seeks relief under a statute. The 180 days window in Section 5 contemplates an endpoint whereas the Supreme Court in the Suo Motu writ petition sought to protect the starting-point, which was at the risk of being defeated by reason of the pandemic. 19. In other words, what was being protected by the orders of the Supreme Court was the right to remedy, not the right 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 prov....
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....rame. If the Authority does fail to take requisite steps, the right to relief arises immediately after exhaustion of the 180 days window and once such right is given to a litigant, it cannot be taken away. This Court respectfully disagrees with the views expressed in Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra) in relation to applicability of In re: Limitation (supra). xviii) According to this Court, the decision in S. Kasi (supra) cannot be relied upon by the Petitioners to contend that In re: Limitation (supra) is not applicable in computing 180 days under Section 5(3) of the PMLA. In S. Kasi (supra), In re: Limitation (supra) was held to be inapplicable to proceedings involving personal liberty of a person where the investigating officer failed to file charge sheet within the prescribed time. The decision in S. Kasi (supra) cannot be extended to PMLA proceedings dealing with confirmation of provisional attachment order within 180 days. xix) It is true that provisional attachment of property has an effect 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 e....
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....terregnum if the property changes hands and title vest in some third party, it would result in civil consequences even to third party. That is certainly avoidable unless it is absolutely necessary in the peculiar facts of a particular case so as to invoke the option available under sub-section (4) of Section 8. 305. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act regarding the manner of taking possession of attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8(4) for taking possession of the property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order, should be an exception and not a rule. That issue will have to be considered on case-to-case basis. Upon such harmonious construction of the relevant provisions, it is not possible to countenance challenge to the validity of sub-section (4) of Section 8 of the 2002 Act. xxi) Therefore, provisions prescribing timelines and which deal....
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....eral or special laws in respect of all judicial or quasi-judicial proceedings. Be that as it may, the fresh order in SMWP No. 3 of 2020 need not be elaborated for the present purpose.] 32.2. In fact, in S. Kasi case [S. Kasi v. State, MANU/SC/0491/2020 : (2021) 12 SCC 1], this Court also noticed that a coordinate Bench of the same High Court had already held [Settu v. State, MANU/TN/3790/2020] that the said order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, MANU/SC/0505/2020 : (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] did not cover the offences for which Section 167CrPC was applicable but, in the order [S. Kasi v. State, MANU/TN/7730/2020] impugned, the other learned Single Judge of the same High Court took a view contrary to the earlier decision of the coordinate Bench; and that was found to be entirely impermissible. In any case, the said decision, concerning the matter of personal liberty referable to Article 21 of the Constitution of India and then, relating to the proceedings to be undertaken by an investigating officer, cannot be applied to the present case relating to the matter of filing written statement by the defendant in a civ....
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....ficer representing the ED is a litigant to the proceedings initiated under PMLA and for the purpose of application of In re: Limitation (supra). Therefore, where the ED has been diligent in provisionally attaching the property and filing the original complaint within 30 days under Section 5 of the PMLA, prejudice cannot be caused to it by not excluding the period from 15.03.2020 to 28.02.2022. One litigant's interests cannot be protected at the cost of another. This Court would further like to stress that the provisionally attached properties can still be enjoyed under Section 5(4) of the PMLA. xxvi) The reasoning in Hiren Panchal (supra) that what was protected under In re: Limitation (supra) was institution of proceedings and not proceedings which were already initiated cannot be accepted in light of the decision in Prakash Corporates (supra) which held that In re: Limitation (supra) cannot be narrowly applied. xxvii) Lastly, the decisions in S. Kasi (supra),Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra) cannot be applied for the simple reason that In re: Limitation (supra) was further clarified in In re: Limitation 2022 (supra) wherein the Court at Par....
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....ession of the proceeds of crime, then a property can be attached even if he is not named as an accused. Relevant paras of the judgement are reproduced hereunder: - 12. It is submitted that appellant is not an accused thus his property could not have been attached in reference to the FIR and ECIR registered against others. Before referring the legal issues, we have given brief background of the case which indicates that appellant is a recipient of the 'proceeds of crime' to the extent of Rs. 78,96,700/- directly from the students who have made serious allegations against Pirtpal Singh and Gurinder Singh of M/s Seabird International Pvt. Ltd. for cheating them and extracting money to the tune of Rs. 7.56 crores in the name of arranging visa for international study in Australia. The appellant was in possession of the 'proceeds of crime' and in the light of the aforesaid, it was liable to be attached. A reference of Sections2(1)(u), 3 and 5 of the Act of 2002 would be relevant and are quoted hereunder: "2(1)(u)"proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offen....
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....hapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate 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 or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in 2[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 immed....
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....inding recorded by us, we may refer to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary and Others v. Union of India & Ors. reported in (2022) SCC Online SC 929. Para 65 of the judgment is quoted thus: "65. As aforesaid, in this backdrop the amendment Act 2 of 2013 came into being. Considering the purport of the amended provisions and the experience of implementing/enforcement agencies, further changes became necessary to strengthen the mechanism regarding prevention of money- laundering. It is not right in assuming that the attachment of property (provisional) under the second proviso, as amended, has no link with the scheduled offence. Inasmuch as section 5(1) envisages that such an action can be initiated only on the basis of material in possession of the authorised officer indicative of any person being in possession of proceeds of crime. The precondition for being proceeds of crime is that the property has been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. The sweep of section 5(1) is not limited to the accused named in the criminal activity relating to a scheduled off....
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....erty or document can be subjected to seizure/attachment. In the para quoted above, the issue was dealt with not only in reference to the provisions of the Act of 2002 but the judgment of the Apex Court in the case of Vijay Madanlal Choudhary Vs. Union of India reported in 2022 SCC OnLine SC 929 where it was categorically held that the attachment of the property can be of a person other than an accused. Thus, in the light of the finding aforesaid, we do not find any substance even in the second argument raised by the appellant because he is in possession of the proceeds of crime. 3rd Issue: 10. The Ld. Counsel for the appellant thereupon touched the merit of the case. It is to show that Villa No. 60, Party City Township, Kalwar Road, Jaipur is not a proceed of crime contrary to statement recorded under Section 50 of the Act of 2002. In the statement, appellant, had admitted that out of Rs. 19,00,000/- for purchase of plot from M/s Shri Govind Kripa Buildcon Pvt. Ltd. he had received Rs. 14,00,000/- from Shanker Lal Khandelwal which was nothing but the proceeds of crime. The appellant could not otherwise disclose the source to acquire Rs. 19,00,000/- to purchase the property....