TaxTMI 
TaxTMI 
2026 (5) TMI 982
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....he Prevention of Money Laundering Act, 2002 (in short `the Act of 2002') have been preferred against separate orders passed by the Adjudicating Authority allowing retention of seized and continuance of the frozen property. The first order was passed on 19.07.2021 in O.A 439/2021 while the second order was passed on 06.12.2021 in O.A 449/2021. The connected appeal is arising out of the OC bearing No. 1626/2022 in reference to the provisional attachment of the property. It was confirmed by the Adjudicating Authority vide its order dated 22.08.2022. 2. The learned counsel for the appellants argued three set of appeals in reference to common facts. It is to avoid repetition of the arguments. However, separate legal arguments were raised in reference to the appeals arising out of the seizure and freezing of the property. Therefore, we would be first referring to the common facts. Brief facts of the case: 3. It is a case where an FIR was registered by Deputy Chief Manager, Indian Bank, Trichy Zone alleging that M/s Cethar Ltd., its Directors and unknown persons systematically committed fraud and cheated the Indian Bank and other consortium banks financed the company. The main al....
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....nd taken the trade advance of Rs. 77.27 Crores. Allegations were also made in reference to the Director Mr. N.S.K. Kalairaja of M/s N.S.K Builders Pvt. Ltd. After scrutiny of the documents received from Indian Bank vide letter dated 27.08.2020, the total proceeds of crime were found to be Rs. 1344.96 Crores. The company had diverted the funds to purchase the land and building instead of purchasing raw materials. The properties were purchased in the name of third party instead of in the name of the company itself. 6. On the scrutiny of the bank account and statements recorded under Section 50(2) of the Act of 2002, it was found that more than one hundred crores of loan amount was diverted by M/s Cethar Ltd. to M/s N.S.K. Builders Pvt. Ltd., Trichy and Mr. N.S.K. Kalairaja of M/s N.S.K. Builders Pvt. Ltd. They could not produce the receipts for the money by referring to the details of work and therefore, the amount transferred to the company became suspicious. 7. M/s Cethar Ltd. was headed by Shri K. Subburaj as Chairman and Shri N.K. Pothiraaj as Managing Director. They are alleged to have diverted huge loan amounts from Indian Bank as well as of other banks and laundered the ....
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....ssue for all the appeals in reference to the interim order passed by the Supreme Court in SLP (CRL) Nos.10113-10115/2025, wherein stay was granted on the pending matter before the Additional District Court (CBI Cases), Madurai qua all the petitioners therein. It was submitted that the petitioners therein are largely women members of the family and accordingly, in the light of the stay order passed by the Apex Court on 25.07.2025, the proceedings should not have been continued against them. Issue No.3: 11. The third common ground raised by the appellants is in reference to the bank accounts declared to be fraud by State Bank of India and even by Indian Bank. It is stated that both the banks removed the bank accounts of the appellants from the category of "fraud". It was on a representation made by the appellants. The specific reference of the letter sent by the SBI and Indian Bank was given. It is apart from an order passed by the Madras High Court in Writ Petition No. 3112/2019, wherein the appellants' account classification as willful defaulter was interfered with. 12. The learned counsel for the appellants submitted that non-payment of loan amount was due to loss occurre....
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..... Issue No.6: Attached jewellery and plots constitutes absolute property of women family members acquired from legitimate sources, with no nexus to proceeds of crime: 15. The jewellery attached vide Provisional Attachment Order dated 01.02.2022 belongs to women family members (including Mrs. S. Vimla, wife of Appellant No.1 and other female relatives) out of gifts received in marriage or from parents/relatives, as well as purchases from accounted personal income (salary, dividends, and proceeds from sale of shares held by them). 16. All the immovable properties attached have not been purchased out of the alleged proceeds of crime; rather, the source of funds for all attached properties was disclosed and is from own funds i.e. dividend income, salary drawn, sale of shares, etc. Thus, such properties could not have been seized or provisionally attached. 17. We have considered the rival submissions of the parties and scanned the material carefully to first decide common issues raised in all the appeals. Finding of the Tribunal: Issue No.1: 18. The challenge to the impugned orders has been made having been passed beyond a period of 180 days. The date of seizure/....
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....ter, the matter was not listed again until March 2021, though numerous applications were filed in the meantime, including I.A. 91204/2020 filed by the ED seeking clarification regarding PMLA timelines. 72. Upon noticing improvement in Covid-19 situation, the Hon'ble Supreme Court, by a comprehensive order dated 08.03.2021, disposed of Suo Motu Writ Petition (Civil) No. 3/2020 along with all pending applications, rather than passing separate orders on each of them. 73. In our considered view, once the main petition itself was disposed of on 08.03.2021 in light of the changed circumstances, there was no necessity for the Hon'ble Supreme Court to pass separate orders either accepting or rejecting the reliefs sought in the pending interlocutory applications. Consequently, there was no requirement to specifically deal with I.A. 91204/2020 filed by the ED. As noted earlier, after 10.07.2020, the matter itself was not listed until March 2021, leaving no occasion for the Court to issue any specific clarification in that application. 74. It is also significant to note that the comprehensive order dated 08.03.2021 was intended to cover all aspects arising from the ....
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....ossibilities faced by courts, tribunals, litigants and lawyers across the country. (d) Extending the limitation under Section 167 of the CrPC would have handed arbitrary power to the police to continue detaining individuals. In contrast, applying the extension to proceedings under Section 8 of the PMLA does not create arbitrariness. The process remains under judicial scrutiny, ensuring fairness for all concerned. (e) The right to property under Article 300A, though a constitutional right of significance, does not stand on par with Article 21 of the Constitution. Even during a national emergency, Article 21 cannot be suspended, and the Judgment of the Hon'ble Supreme Court expressly notices the significance and importance of the same in Para 20. S. Kasi (supra) recognizes the avowed and undeniable nature of the constitutional guarantee of the right to personal liberty and the same cannot be compared to property-related proceedings under the PMLA. To our mind, these rights are incomparable. (f) The Hon'ble Supreme Court in Prakash Corporates v. Dee Vee Projects Ltd.25 dealt with the applicability of In re: Cognizance for Extension of Limitation (supra) to t....
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....roceedings. The order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10: (2021) 3 SCC (Cri) 801] cannot be read to mean that it ever intended to extend the period of filing charge-sheet by police as contemplated under Section 167(2) of the Code of Criminal Procedure. The Investigating Officer could have submitted/filed the charge-sheet before the (Incharge) Magistrate. Therefore, even during the lockdown and as has been done in so many cases the charge-sheet could have been filed/submitted before the Magistrate (Incharge) and the Investigating Officer was not precluded from filing/submitting the charge-sheet even within the stipulated period before the Magistrate (Incharge). 32.2. In fact, in S. Kasi case [S. Kasi v. State, (2021) 12 SCC 1 : 2020 SCC OnLine SC 529], this Court also noticed that a coordinate Bench of the same High Court had already held [Settu v. State, 2020 SCC OnLine Mad 1026] that the said order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10: (2021) 3 SCC (Cri) 801] did not cover the offences for which Section 167 CrPC was applicable but, in the order [S. Kasi v. State, 2020 SCC OnLine Mad ....
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.... keeping in mind the pandemic and its virulent nature. Curbs were imposed on travel and also on a person's liberty in cases where one was found to be infected. Such curbs, by their very nature, show that the Courts and public were well aware of the need for the same to be imposed. 77. We are also in agreement with the submissions of the learned counsel for the ED that once the ED files a complaint before the learned Adjudicating Authority within the prescribed period of 30 days under Section 5(5) of the PMLA, the responsibility for further proceedings squarely shifts to the learned Adjudicating Authority, which is statutorily mandated to conclude the matter within 180 days. 78. If, due to extraordinary circumstances, that of the Covid-19 pandemic, the learned Adjudicating Authority is unable to complete the adjudication within the stipulated period, the ED, being merely a party to those proceedings, cannot be made to suffer adverse consequences for a delay beyond its control. In such circumstances, the well-established principle of -actus curiae neminem gravabit - that no person should be prejudiced by an act of the court‖ applies with full force. 7....
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....orders under the PMLA by invoking Covid-related extension orders, thereby keeping attachments alive far beyond the period contemplated by the Parliament. According to them, this would dilute statutory safeguards, disturb the delicate balance between enforcement powers and individual rights, undermine the rule of law, render Section 5(3) of the PMLA nugatory, and set a dangerous precedent of enforcement agencies misusing exceptional reliefs meant for litigants as a tool to curtail substantive rights. 84. We find this concern misplaced. Covid-19 pandemic was not an ordinary occurrence; it was an unprecedented event in recent human history, one that may arise only once in generations. The relaxations granted by the Hon'ble Supreme Court during this extraordinary crisis cannot, and certainly should not, be equated with or exploited by authorities to claim undue advantage in normal circumstances. They must be understood strictly in the exceptional context in which they were granted. 85. In the prevailing circumstances, to give an unexceptional interpretation to the Provisions of Section 5(3) would, to our mind render the entire exercise of provisional attachment nugato....
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....uation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1966. Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, ....
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....In his rejoinder submissions, the learned Senior Counsel for the Appellant has contended that S. Kasi's case (supra) related to the fundamental right of liberty, referable to Article 21 of the Constitution of India read with Section 167(2) Code of Criminal Procedure; and the observations of this Court in the said case cannot operate in relation to the procedural law concerning civil litigation and more particularly, in relation to the right of filing written statement in a civil suit. The learned Counsel would further submit that the decision in the case of Sagufa Ahmed (supra) is of no application to the present case because the observations therein came to be made in the setup of the facts that time for filing the appeal had expired even prior to the order dated 23.03.2020 passed by this Court in SMWP No. 3 of 2020. **** 14.4. Even when it appeared to almost all the concerned that normalcy was around the corner, the sneaky spread of virus continued for one reason or the other or in one way or the other; and this led to a huge surge in COVID-19 cases across the country. This phenomenon came to be generally known as the second wave of pandemic. In the given scenario....
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....special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders. It is further clarified that the period from 14th March, 2021 till further orders shall also stand excluded in computing the periods prescribed Under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. We have passed this order in exercise of our powers Under Article 142 read with Article 141 of the Constitution of India. Hence it shall be a binding order within the meaning of Article 141 on all Courts/Tribunals and Authorities. This order may be brought to the notice of all High Courts for being communicated to all subordinate courts/Tribunals within their respective jurisdiction. Issue notice to all the Registrars General of the High Courts, returnable in 6 weeks. List the Miscel....
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....sional 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 03.03.2021. 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....
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....luded 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, (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, (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, (2021) 17 SCC 231 : 2021 SCC OnLine SC 373] and 23-9-2021 [Cognizance for Extension of Limitation, In re, 2021 SCC OnLine SC 947], it is directed that the period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. 5.2. Consequently, the balance period of limitation remaining as on 3-10-2021, if any, shall become available with effect from 1-3-2022. 5.3. In cases where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, al....
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....h 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 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 ha....
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....scription of 180 days is in the form of a protection against deprivation of right to property. The relevant paragraphs are extracted below: 15. It is further relevant to state that the orders passed by the Supreme Court in the Suo Motu writ petition mention specific provisions in specific statutes such as Sections 23(4) and Section 29A of The Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and Section 138 provisos (b) and (c) of the Negotiable Instrument Act, 1881. On an examination of the specific statutes mentioned by the Supreme Court, it will be seen that all these statutes prescribed provide for specific time frame for instituting a suit, filing a claim/counter claim or an application in furtherance of a remedy provided under the statute. The intention was hence to preserve the right of a litigant to seek a remedy under the Act and not to deprive a litigant of such right of remedy where the litigant has not been able to physically come to the Court or to the Tribunal to file the proceeding in aid of the right. 16. The right thus conferred by the Supreme Court is in relation to the prescribed period of limitation in insti....
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....e charge sheet under Section 167(2) of The Code of Criminal Procedure (Cr.P.C.) and hence would not apply to filing of written statements beyond the prescribed time-limit. 22. The reasoning in S. Kasi would apply to the present case. The Supreme Court recognised that the 23rd March, 2020 order in the Suo Motu writ petition was for the benefit of those whose remedy may be barred by time because of not being able to physically come to Court to file proceedings. The Supreme Court made a distinction between the benefit given to litigants and extension of time for filing of a chargesheet by the police as contemplated under Section 167(2) of the Cr.P.C. The Court also noted the element of personal liberty of a person which was required to be protected. Although, the right of the petitioners before the Court is more to do with the right not to be deprived of property save by authority of law - Article 300A, the petitioners have established a case where such right is under threat by the action of the ED. The litigants have been conferred a benefit under Section 5(1)(b) and 5(3) of the PMLA on the failure of the Authority to take action within the specified time frame. If the Autho....
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....) It is relevant to note that the Supreme Court in Prakash Corporates v. Dee Vee Projects Ltd. 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 as a whole, it is but clear that the anxiety of this Court had been to obviate the hardships likely to be suffered by the litigants during the onslaughts of this pandemic. Hence, the legal effect and coverage of the orders passed by this Court in SMWP No. 3 of 2020 cannot be unnecessarily narrowed and rather, having regard to their purpose and object, full effect is required to be given to such orders and directions. [ To complete the scenario, we may indicate in the passing that even after we had heard this matter, there had been re-surge of Covid-19 cases with spread of a new variant of the virus. The drastic re-su....
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....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 under Article 300-A of the Constitution of India and the judgment of the Apex Court in S. Kasi case cannot be applied to a case involving property right of an individual or a corporate. 14. Our reasoning supra is also supported by the judgment of the Apex Court in Prakash Corporates v. Dee Vee Projects Limited [(2022) 5 SCC 112]. The Apex Court has explained the scope of the order passed in S. Kasi case and has categorically held that the same cannot be applied in a matter involving proceedings before a Court. The second respondent was exercising a quasi-judicial function and the ratio in S. Kasi case cannot be applied to such a quasi-judicial authori....
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....8.02.2022 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". In the light of the judgment (supra) and the facts of the case, we are unable to accept first ground because after exclusion of the period of Covid-19 from 15th March, 2020 upto 28th February, 2022, the order was passed within 180 days. Issue No.2: 20. We have considered the submissions made by the learned counsel for the appellants and perused the order passed by the Hon'ble Apex Court. The stay order passed by the Apex Court is in reference to the criminal proceedings pending before the II Additional District Judge (CBI Cases) and not on the present proceedings. In fact, predicate offence still exists due to pendency of the case and the ECIR was recorded by the respondents subsequent to it in reference to Section 3 of the Act of 2002 defining offence of money laundering. The learned counsel for the appellants could not refe....
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....112/2019, wherein the appellants' classification as "willful defaulter" was interfered with and accordingly it was submitted that the allegation interfered with by the Madras High Court should not continue to justify the provisional attachment. We find the aforesaid argument to be contrary to the argument raised by the appellants themselves. The appellants have admitted defaults in making payment, showing certain investments to be non-productive and otherwise it has already been clarified that the allegations, apart from the material available on record, reveal and make out a prima facie case of predicate offence and it is for that reason only that till date the FIR has not been set aside, nor have the proceedings. The interim order by the Apex Court is on the petition largely in the hands of the women and is admitted by the appellants themselves. In any case, till the criminal case exists and it is not finally interfered, we cannot ignore the serious allegations against the appellants involving huge amount at their instance for commission of offence. Thus, the third ground raised is not made out to cause interference in the orders. Issue No.4: 23. The counsel for the appella....
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.... each and every issue by the appellant with elaborate findings. It is not only in reference to the legal issues but also the factual issues involved in the matter. It is despite the fact that the elaborate arguments were not made to contest the serious allegations levelled in the FIR and ECIR; otherwise, this Tribunal would have referred to the evidence and statements of the witnesses to record a prima facie case of money laundering involving proceeds of crime. Accordingly, this common issue raised by the appellants is also rejected. 25. The issues dealt with are common in reference to the seizure and freezing of the articles and provisional attachment of the properties and all the issues have been determined adverse to the appellants. Thus, we do not find any reason to cause interference in the order of provisional attachment of the properties and its confirmation by the Adjudicating Authority. So far as the seizure and freezing of documents and jewellery are concerned, additional legal grounds have been raised and would be dealt with. The conclusion would govern the appeals arising out of the Original Application under Section 17(4) of the Act of 2002. Accordingly, fourth issu....
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....pect of the other attached properties, where, although payments may have been routed through banking channels but no material has been produced to substantiate the actual source of such funds, as claimed. In terms of the burden of proof cast upon the Appellants under Section 24 of the Act of 2002, it was incumbent upon them to establish, with credible evidence, that the properties were acquired from legitimate and disclosed sources having no nexus with the alleged proceeds of crime. The Appellants have failed to discharge this burden. Further, insofar as the seized jewellery is concerned, no source thereof has been established. No invoices or supporting documents have been placed on record to substantiate its acquisition from legitimate sources. Legal Issues on Section 20 of the Act of 2002: 28. The challenge to the order on the Original Application under Section 17(4) of the Act has been made for non-compliance of Section 20(2) of the Act of 2002. 29. The learned counsel for the appellants submitted that the compliance of Section 20(1) and (2) is mandatory after the compliance of Section 17(4). In absence of an order under Section 20(1) for retention of the property under....
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....ch the learned AA can pass an order under Section 8(3) and thereby retain the same. The concomitant to the same would be that the Respondent can directly seek an adjudication under Section 8(3) for "Retention" of seized goods/ property without resort to the provisions of Section 20 of the PMLA. (b). The second challenge is more factual in nature, and wherein the Appellant would contend that, in the facts of the present matter, since the adjudication process was completed before the period of 180 days, there was no need to resort to Section 20 of the PMLA". Learned counsel for the respondents submitted that para quoted above refers to correct interpretation of the provisions. He thereupon made a reference of para 58 of the judgment, wherein Sections 8(3), 17 and 18 have been referred as it exist but from Para 59 onwards, many words under the statutory provisions were substituted by Delhi High Court in the case of Rajesh Kumar Agarwal (supra) making part of Section 8(3) and 17(4) to be redundant and for that reason, the judgment is to be treated per incuriam. It is also in conflict to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). 33. T....
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....under sub-section (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18 and record a finding to that effect, (Emphasis added) whereupon such attachment or retention or freezing of the seized or frozen property or record shall- (a) continue during investigation for a period not exceeding three hundred and sixty-five days or the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Special Court. Explanation.- For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the ....
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....at the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed. 17. Search and seizure.-(1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money- laundering, or (iii) is in possession of any records relating to money-laundering, or (iv) is in possession of any property related to crime then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to- (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred ....
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....operty seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority". 20. Retention of property.-(1) Where any property has been seized under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the officer authorised by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property may, if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized or frozen, as the case may be. (2) The officer authorised by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession referred to in sub-section (1), to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed an....
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....or such retention, which can be confirmed under Section 8(3). 61. The other aspect is that, the power of confirmation, once exercised, would entitle the retention of the seized or frozen property for a period beyond 180 days and up to 365 days. The provision, therefore, is clearly not exercisable for the purpose of retention of the property for the period of 180 days, as is sought to be contended. 62. If we were to accept the contention of the Appellant, it would mean that any property so seized, upon the making of an application under Section 17(4), would, on the basis of an order passed by the learned AA, be able to be retained from the date of seizure for a period of 365 days (during investigation). 64. We take note of the fact that both Sections 17 and 20 form an intrinsic and integral part of the said Chapter. Both Sections have been reproduced earlier and are not being reproduced again. 65. Section 17(1) provides for the officer authorised in that behalf, on the basis of information in his possession, formulating a reason to believe, in respect of any person regarding the various aspects related to money laundering as set out therein, eithe....
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....on which such property was seized", taken together, to our mind, clearly establish that Section 20 comes into play from the day of any seizure and will have to be applied for any retention of seized goods upto a period of 180 days. Put simplistically, post the action of seizing or freezing under Section 17, the baton would be handed over to the provisions of Section 20. 70. Further, this provision also clearly indicates that the said retention is to be for the purpose of adjudication under Section 8; meaning thereby that the retention is for the purpose of the exercise of the power of adjudication by the learned AA under Section 8, which, as indicated earlier, is to be exercised for the purpose of "confirmation" of retention. A plain reading of Sections 20 (1) and (2) leads us to firmly opine that the provisions of Section 20(1) will necessarily have to be brought into play, before the adjudication under Section 8, since the said retention can only be for the purposes of an "adjudication" under Section 8. 71. Section 20(1) makes it evident that the authorised officer would, under it, pass an order for retention. 72. Section 20(2) clarifies that an Order f....
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....wer of the Adjudicating Authority from "retention" to "confirm the retention". 35. The learned counsel for the respondents further submitted that the finding of the Delhi High Court in reference to Section 17 of the Act of 2002 is even in conflict to the judgment of the three judges' bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Para 84 of the said judgment is referred and quoted thus: "84. As noticed earlier, in terms of Section 17(2) of the 2002 Act immediately after the search and seizure, the Authority conducting the search is obliged to forward a copy of the reasons recorded and materials in his possession to the Adjudicating Authority in a sealed envelope. This sealed envelope is required to be preserved for period as specified under the Rules framed in that regard so that it is not tempered with in any manner and to ensure fairness of the procedure including accountability of the Authority. Not only that in terms of Section 17(4) of the 2002 Act the Authority seizing the record or property is obliged to submit an application before the Adjudicating Authority within a period of thirty days therefrom for the retention of the said recor....
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....onal attachment of the property under Section 5(1) of the Act of 2002 and the other for retention of the property or record seized or frozen under Section 17 or 18 of the Act of 2002. The word "or" has to be given meaning. It is submitted that the word "and" is used as conjunction and "or" for disjunction. In this regard, reference of the judgment of the Apex Court in the case of Commissioner, Customs, Central Excise and Service Tax, Patna Vs. Shapoorji Pallonji and Company Pvt. Ltd. and Ors. reported in (2024) 3 SCC 358 was given. Paras 31 and 32 of the said judgment are quoted hereunder: "31. Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word "or" as well as the word "and" is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions "or" and "and" are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh's Principles of Statutory Interpretation, the word "or" is normally disjunctive while the word "and" is normally conjunctive. In English law, the position i....
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....ove, it has been ruled that the competent authority would be under an obligation to send the application to the Adjudicating Authority under Section 17(4) within a period of thirty days from the date of seizure to seek retention of the property or record. It is not to confirm the retention of record or property. The judgment of Delhi High Court (supra) virtually nullifies the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) and even Section 17(4) for sending the application to seek retention or continuance of the frozen or seized property or record. It is not only offending the provisions of statute but also the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). 39. The learned counsel for the respondents further submitted that even if reference of Section 20 is taken, it does not make any reference to seek confirmation of retention of the order passed therein; rather, perusal of Section 20(4) reveals that the power of Adjudicating Authority under Section 8(3) is for authorizing the retention or continuance of the freezing of such property beyond a period specified under Section 20(1). The entire provision of Section 20 does ....
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....er. According to the Delhi High Court, Section 17 of the Act of 2002 is completely silent on adjudication and does not provide a procedure to allow Adjudicating Authority to exercise the power immediately after a seizure and freezing being effected. Relevant portion of the said para is quoted hereunder at the cost of repetition: "66. ......However, the fact that Section 8 is clearly for the purpose of adjudication and also the fact that Section 17 is completely silent on the aspect of adjudication, makes it apparent that Section 17, in fact, does not contemplate a procedure where immediately after a seizure or freezing being effected, the adjudicatory powers of the learned AA could be resorted to. In the succeeding paragraphs, relating to Section 20, this aspect will be further elaborated upon". The finding recorded aforesaid is dehors to Section 17(4) of the Act of 2002. The learned counsel for the respondents submitted that Section 17(4) requires an application to the Adjudicating Authority within thirty days to seek retention of the freezing or seized record. It thus remains immediately after seizure or freezing of the property. The Delhi High Court has recorded the ....
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....gh Court in the case of Rajesh Kumar Agarwal (supra) is in conflict to the judgment of three judges' bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) thus would not be binding on any of the court. 44. The finding in Para 68 of judgment of the Delhi High Court is similar to what has been referred in earlier paras. In Para 68 of the judgment (supra), the power of the Adjudicating Authority for retention of seized and frozen property has been taken away which is not only opposed to the statutory provision but make it redundant. According to the counsel for the respondents, it is otherwise contrary to the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Part of the Para 68 of the judgment of Delhi High Court in the case of Rajesh Agarwal (supra) is quoted hereunder: "68. ....Section 17(4) cannot confer upon Section 8(3), a power to pass an order of Retention. Section 8(3) is confined to the confirmation of an order of retention. Surely, one cannot contend that the authority which is statutorily conferred the power to "confirm" an order can also pass the order". The provision of Section 8(3) gives power to the Adjudi....
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....as of the Delhi High Court. 48. The learned counsel for the respondents further submitted that the power under two provisions i.e. Section 17 and 20 are separate and are not overlapping. The complete mechanism under Section 8 on submission of the application under Section 17(4) has been given while Delhi High Court made emphasis on the mechanism given under Section 20 to be complete in all respects. If Section 20 provides complete procedure and mechanism after retention of seized or frozen property, then what would be the consequence of the mechanism provided under Section 8?. Two provisions could not have been taken in conflict and, therefore, harmonious interpretation was required to be given. It otherwise makes last part of Section 8 to be redundant. It is for the reason that the power of retention of the Adjudicating Authority has been taken away in Para 68 of the judgment and is made for confirmation of retention, while Section 17 and 18 provides for an application within thirty days to seek retention from the Adjudicating Authority. 49. The learned counsel submitted that the High Court failed to mark word "or" between two different actions under Section 8(3) of the Act ....
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....ll completion of investigation, etc. The period of such retention is kept limited to 180 days. However, according to the respondents, the power of retention of seized or frozen property has been given by Delhi High Court in the case of Rajesh Agarwal (supra) only to the authorized officer contrary to Section 8(3) of the Act. 52. According to the counsel for the respondents, there cannot be overlapping provisions for one and same action which may have serious consequences and even affect the person from his legal rights under Article 300A of the Constitution because as per the judgment in the case of Rajesh Kumar Agarwal (supra), the action under Section 20 is mandatory and till such action is taken, the Adjudicating Authority cannot pass an order under Section 8(3) of the Act. Section 20(1) does not mandate action to be immediate while it is given under Section 17(4) in view of mandate for an application within thirty days to seek retention. Action under Section 20(1) can be within 180 days from the date of seizure in a given case. The property, in that case would remain under seizure or frozen till then whereas on an application under Section 17(4) within 30 days, the Adjudicat....
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....ra aforesaid clarifies the jurisdiction of the Adjudicating Authority which is not for "confirmation of the retention" but to pass the order of "retention" itself. The judgment of Delhi High Court in the case of Rajesh Kumar Agarwal (supra) is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). We have perused the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) and find that proper assistance seems to have not been provided to the High Court, otherwise the Apex Court has dealt with the issue in reference to the powers of the Adjudicating Authority and the procedure to be applied under Section 17(2) and 17(4) of the Act of 2002. The judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) thus cannot hold field. The counsel for the appellants made a contest but could not clarify as to how the judgment of Delhi High Court can stand in conflict with the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Thus, argument made by the counsel for the respondents holds fiel....
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....legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature the Court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The Court of course adopts a construction which will carry out the obvious intention of the legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities. Vide P.K. Unni v. Nirmala Industries MANU/SC/0631/1990: [1990] 1 SCR 482; Mangilal v. Suganchand Rathi [1965] 5 SCR 239; Sri Ram Ram Narain Medhi v. The State of Bombay MANU/SC/0132/1958: [1959] SCR 489; Smt. Hira Devi and Ors. v. District Board, Shahjahanpur MANU/SC/0021/1952: [1952] 1 SCR 1122; Nalinkhya Bysack v. Shyam Sunder Haldar and Ors. MANU/SC/0076/1953: [1953] 4 SCR 533; Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha MANU/SC/0369/1979: (1980) ILLJ 137 SC; S.....
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....urt to remake the statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so." In the judgments aforesaid, substitution or rewriting of the words in the statutes has not been accepted; rather, it has been held to be without jurisdiction. The judgments aforesaid have been referred to at the first instance because this Tribunal should be slow to render any judgment of the High Court to be per incuriam unless a case is made out. 57. The learned counsel for the respondents has raised the issue of per incuriam by referring and citing other judgments. For the aforesaid, the judgment of the Supreme Court in the case of M.P. Rural Road Development Authority and Ors. Vs. L.G. Chaudhary Engineers and Ors. (Civil Appeal No. 974 of 2012 - Arising out o....
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.... Court held the doctrine of 'per incuriam' in practice means 'per ignoratium' and noted that English Courts have developed this principle in relaxation of the rule of stare decisis and referred to the decision in the case of Bristol Aeroplane Company Ltd. (supra). The Hon'ble Apex Court also made it clear that the same principle has been approved and adopted by the Supreme Court while interpreting Article 141 of the Constitution (see para 41). 60. In the case of Municipal Corporation of Delhi v. Gurnam Kaur reported in MANU/SC/0323/1988 : (1989) 1 SCC 101, a three- Judge Bench of the Apex Court explained the principle of per incuriam very elaborately in paragraph 11 at page 110 of the report and in explaining the principle of per incuriam, the learned Judges held: "...A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute..". 61. We may further refer to the judgment of the Apex Court in the case of Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Ors. reported in (2003) 6 SCC 659. Paras 18 to 25 of the judgment are quoted hereunder for rea....
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....their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation. 22. While interpreting a provision the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. (See CST v. Popular Trading Co.22) The legislative casus omissus cannot be supplied by judicial interpretative process 23. Two principles of construction and the other in regard to reading the statute as a whole - appear to one relating to casus omissus be well settled. Under the first principle a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses the....
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....ument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no further" (see Grey v. Pearson 22). The latter part of this "golden rule" must, however, be applied with much caution. "If", remarked Jervis, C.J., "the precise words used are plain and unambiguous in our judgment, we are bound to construe them in their ordinary sense, even though it lead, in our view of the case, to an absurdity or manifest injustice. Words may be modified or varied. where their import is doubtful or obscure. But we assume the functions of legislators when we depart from the ordinary meaning of the precise words used, merely because we see, or fancy we see, an absurdity or manifest injustice from an adherence to their literal meaning" (see Abley v. Dale, ER p. 525)". The Apex Court in the judgment (supra) has ruled the jurisdiction of the court while giving interpretation to the statutory provisions. It clarified limited jurisdiction of the court while giving interpretation of the provisions and if the judgment of the Delhi High Court is applied on the aforesaid and otherwise clarified by the counsel for the ....
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.... or frozen property. According to the counsel for the respondents, the High Court was not having competence to substitute the power of the Adjudicating Authority from "retention" to "confirmation" of retention of the property seized or frozen under Section 17 and 18. 64. It is stated that when the word "confirmation" for seizure and freezing of the property has not been used either under Section 8(3) or Section 17 or18 and even under Section 20(1) and (2) of the Act, how such a power can be conferred by the High Court. The consequences are otherwise said to be serious because ultimate power of retention of the property under seizure or continuance of the property frozen has been conferred to the Adjudicating Authority. It has been diverted to the authorized officer of the ED with confirmation of such an order by the Adjudicating Authority. It is nothing but rewriting of Section 8(3) of the Act for retention of seized or frozen property to that of "confirmation". 65. The learned counsel for the respondents submitted that there exists substitution of the powers of the Adjudicating Authority by the High Court under Section 8(3). It is by diverting the jurisdiction of the Adjudic....