TaxTMI 
TaxTMI 
2026 (6) TMI 1302
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....sposal of the Writ Petition) CM. APPL. 71598/2025 in W.P.(C) 12276/2022 (On Behalf of The Respondent Seeking Disposal of the Writ Petition) CM. APPL. 71595/2025 in W.P.(C) 12865/2022 (On Behalf of The Respondent Seeking Disposal of the Writ Petition) 1. W.P.(C) 8406/2022 has arisen out of a provisional attachment order dated 19.05.2022 issued by Directorate of Enforcement ("ED") whereas, W.P.(C) 12276/2022 and W.P.(C) 12865/2022 have arisen out of common attachment order dated 19.08.2022 (collectively "Impugned Orders"). 2. In W.P.(C) 8406/2022, vide order dated 26.05.2022, this Court stayed the operation of the order impugned therein; similar orders were passed in the other two writ petitions as well. It appears that against the interim order dated 26.05.2022 passed by this Court, a Special Leave Petition (Civil) (Diary No.39037/2022) was filed by the ED. 3. The Supreme Court vide order dated 21.02.2023 disposed of the SLP, granting liberty to the parties to complete the pleadings and to decide the writ petitions pending before the Court on their own merit in accordance with law without being influenced by any of the observations made in the interim order, which was....
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....he present listo the Lodha Committee. Before adverting to the reasoning, the submissions of the parties may be taken note of. 7. During the course of submissions, Mr. Dayan Krishnan in W.P.(C) 8406/2022, W.P.(C) 12276/2022 and Mr. Deepesh Aneja, learned counsel who appears in W.P.(C) 12865/2022 contended that the action of the ED is de hors the subsisting directions passed by the Supreme Court in its orders dated 02.02.2016 and 06.10.2021. Both these orders have been extensively read over to emphasise that the Supreme Court has already placed a mechanism to deal with the affairs of PACL Ltd. ("PACL"). 8. It is pointed out that under the peculiar facts concerning the affairs of PACL and the alleged fraud with the investors, the Supreme Court ordered the appointment of Mr. Justice (Retd.) R. M. Lodha, former Chief Justice of India as a Chairman of the Committee (Referred to in this Judgement as the "Lodha Committee") while granting liberty to the Chairman to appoint such experts or other persons as he might think it necessary in consultation with the SEBI so as to enable committee to sell the land and pay to the investor in a manner that might be decided by the said committee. ....
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.... in accordance with the mandate of the provisions of the Prevention of Money-Laundering Act, 2002 ("PMLA"), which fully empowers the ED to undertake such an exercise. It is further their submission that the act of the respondent in handing over the attached properties to the Lodha Committee would amount to restitution under Section 8(8) of the PMLA. 14. At the very outset it may be considered that while there is no cavil with the settled position that statutory powers cannot be curtailed by orders of Court, the special scheme of the Supreme Court demands a modified application of the powers conferred upon the ED under the PMLA. The order dated 06.10.2021 of the Supreme Cout in Subrata Bhattacharya v. SEBI, (Civil Appeal No. 13391/2015) in the context of the SEBI‟s statutory powers similarly notes as under: "4. The order dated 2 February 2016 makes it abundant clear that SEBI was entrusted with certain functions in pursuance of the directions issued by this Court under Article 142 of the Constitution. This was in order to protect the interests of the investors impacted by collective acts of defrauding them by PACL and its Directors, promoters, group companies and r....
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.... acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money-laundering: Provided further that 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." 16. The rule framed in furtherance of the second proviso to Section 8(8) is found in Rule 3A of the Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016 ("Confiscation Rules") which reads as under: "3A. Manner of restoration of property during trial. (1) The Special Court, after framing of the charge under section 4 of the Act, on the basis of an application moved for restoration of a property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18 of the Act prior to confiscation, if it thinks fit, may, for the purposes of the second proviso to sub-section (8) of section 8 of the Act, cause to be published a notice in two daily newspapers, one in English language and one in vernacular language, having sufficient circulation....
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.... of such a property. 18. It be noted that the Special Court is distinct from the agency which is the ED. It is the Special Court‟s satisfaction that could warrant a release under Section 8(8) and Rule 3A of the Confiscation Rules. The fact that those recoveries were directed to and retained by the Lodha Committee, for disbursement to investors, is an unambiguous acknowledgment by the ED that the Supreme Court scheme governs these assets and not the PMLA. 19. The approach of the ED in relation to the PACL matter, prior to the issuance of the impugned POA, may now be considered. 20. It appears the ED had vide letter dated 01.09.2016, addressed to the Lodha Committee, informed the latter, about an amount of Rs. 113.45 Crores purportedly being received by Systematics Venture Capital Trust Ltd. ("SVCT") from PACL Ltd., through 25 front companies, and that SVCT further invested this amount into two entities, namely M/s. Unicom Infra Projects & Estates Private Ltd., Mumbai (Rs. 60.79 Crores) and M/s. DDPL Global Infrastructure Pvt. Ltd., Mumbai (Rs. 33.11 Crores), the latter being the petitioners herein. 21. Acting on the aforenoted investigative information, letters wer....
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....dly linked to PACL. Said route, ex facie it appears, was the ED, in effect, adhering to and modifying its own powers under the PMLA, to fulfil the goal sought be achieved by the Supreme Court through its directions passed under Article 142 of the Constitution concerning the affairs of PACL. 26. Even otherwise, owing to the stark contrast between the ultimate objective of the scheme of the PMLA, where the properties are intended to vest with the Central Government; and that established by the Supreme Court under Article 142 of the Constitution, where the properties, or their proceeds, are restored with the investors, the Impugned Orders, which have been passed under Section 5 of the PMLA, without prior consultation or intimation with the Lodha Committee, can ex facie be considered as being in the teeth of the Supreme Court directions. This understanding is further confirmed by the ED‟s Said Applications, wherein it has prayed for the very restitution of the attached property to the Lodha Committee in accordance with the scheme under Section 8(8) of the PMLA. 27. At its highest the ED‟s case may be appreciated as putting forth an emergent and dire need existing at t....