TaxTMI 
TaxTMI 
2026 (9) TMI 351
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....pondent for the violation of the agreement with him in connection with the construction of an apartment complex in the 336 cents of land which belonged to the petitioner. A compromise decree is said to have been passed by the Sub Court, Neyyattinkara, in the aforesaid suit on 28.01.2025 as per which the fourth respondent herein is said to have undertaken to transfer 01 Acre and 98 cents belonging to the said company to the petitioner. However, the aforesaid property had already been attached by Ext.P11 provisional attachment order dated 12.01.2024 of the first respondent, which was later on confirmed by the second respondent on 18.06.2024 vide Ext.P12 order. According to the petitioner, the aforesaid attachment made by the respondents 1 & 2 are having no legal sanctity. 3. Heard the learned counsel for the petitioner, Sri. A.R.L Sundaresan, learned ASGI representing the first respondent, and Sri. Jai Sankar V. Nair, the learned counsel representing the second respondent. 4. It has to be stated at the outset that the contention of the petitioner against the attachment effected over the property of the fourth respondent by respondents 1 & 2 is prima facie unsustainable, in view....
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....t, 2002 (for short 'PMLA'). iv) There was no independent finding of the Adjudicating Authority under Section 8 of the PMLA that the said authority has reason to believe that any person has committed an offence under Section 3 or is in possession of the proceeds of the crime. 6. By referring to the proviso of Section 6(2) relating to the composition of the Adjudicating Authority which shall consist of a Chairperson and two other members having experience in the field of law, administration, finance or accountancy, the learned counsel for the petitioner argued that the sole financial member of the coram of Adjudicating Authority has no legal competence to pass an order under Section 8 of the PMLA. Referring to Section 6(3)(a) of the PMLA, the learned counsel pointed out that the minimum qualifications prescribed thereunder are intended to ensure that the adjudication order under Section 8 of PMLA is the product of a legally trained brain. According to the learned counsel, the attachment of the properties which curtails the right to property of the citizens under Article 300A of the Constitution of India, cannot be done by a person who has not been trained in law. Th....
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....1], the learned counsel adverted to the observation of the Apex Court that the fundamental right to equality before law and equal protection of laws guaranteed by Article 14 of the Constitution clearly includes the right to have the person's rights adjudicated by a forum which exercises judicial power in an impartial and independent manner consistent with the recognized principles of adjudication, and argued that the decision of the Adjudicating Authority without a judicial member in the coram is against the aforesaid principles laid down by the Hon'ble Apex Court. On that score, it is pertinent to note that, the aforesaid decision has been rendered by the Hon'ble Supreme Court in a case challenging the constitutional validity of the relevant provisions of the Companies Act providing for the constitution of National Company Law Tribunal and the National Company Law Appellate Tribunal. The main contention in the aforesaid case was that in respect of matters hitherto dealt with by High Courts, the constitution of NCLT and NCLAT was not in accordance with the Constitutional Principles. The dictum laid down by the Hon'ble Supreme Court in the aforesaid case has got applicabil....
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....) PMLA again has to satisfy the requirement of law as explained in this decision. (iv) There has to be a communication of the 'reasons to believe' at every stage to the noticee under S.8(1) PMLA. (v) The notice under S.8(1) PMLA is entitled access to the materials on record that constituted the basis for 'reasons to believe' subject to redaction in the manner explained hereinbefore, for reasons to be recorded in writing. (vi) If there is a violation of the legal requirements outlined hereinbefore, the order of the provisional attachment would be rendered illegal. (vii) There can be single - member benches of the AA and the AT under the PMLA. Such single - member benches need not mandatorily have to be JMs and can be AMs as well." (emphasis supplied) 11. Following the aforesaid dictum of Delhi High Court, a Division Bench of the High Court of Calcutta in R.P Infosystems Ltd. and Another v. Adjudication Authority and Another [2023 SCC OnLine Cal 2391 : AIR 2023 Cal. 326] reaffirmed the aforesaid principles, upholding the legal sanctity of the decision rendered by a non-judicial single member of the Adjudicating Authority. The relevant paragraph of the aforesaid ....
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....embers as the Chairperson of the adjudicating authority may deem fit. Therefore, it would be incorrect interpretation on the part of the appellant to state that the adjudicating authority namely the Chairperson who has presently taken up the case for adjudication has no jurisdiction to do so. A plain reading of the provision makes it clear that the Central Government is empowered to appoint an adjudicating authority by issue of notification in the Gazette to exercise the jurisdiction, powers and authority conferred by or under the Act and in accordance with the said provision the Central Government has issued a notification on 01.07.2005 and have appointed the adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act. Thus, for all purposes an adjudicating authority has been put in place and the manner in which the business of the adjudicating authority has to be carried out is stipulated in Sub-Section (5) of S.6 and in terms of Clause (b) of Sub Section (5) of S.6, a single member bench of the adjudicating authority is competent to adjudicate any matter under the provisions of the Act. Any other interpretation as suggested by the appellan....
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....l as prosecution or criminal action. The original provision prior to amendment vide the Finance Act, 2015 and Finance (No. 2) Act, 2019, took within its sweep any property [mentioned in Section 2(1)(v) PMLA] derived or obtained, directly or indirectly, by any person "as a result of" criminal activity "relating to" a scheduled offence [mentioned in Section 2(1)(y) read with Schedule to the Act] or the value of any such property. Vide the Finance Act, 2015, it further included such property (being proceeds of crime) which is taken or held outside the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No. 2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word "relating to" (associated with/has to do with) used in the m....
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....criminal activity relating to the scheduled offence concerned. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 PMLA. 107. Be it noted that the definition clause includes any property derived or obtained "indirectly" as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the "property" which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of the Explanation added in 2019 to the definition of the expression "proceeds of crime", it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to "any property" including abroad derived or obtained directly or indirectly. The Explanation added in 2019 in no way travels beyond that intent of tracking and reaching ....
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....eds of crime including its concealment, possession, acquisition or use and projecting or claiming". We are not so much concerned with this change introduced vide Act 2 of 2013. In other words, the provision as it stood prior to amendment vide Finance (No. 2) Act, 2019 remained as it is. Upon breaking-up of this provision, it would clearly indicate that-it is an offence of money laundering, in the event of direct or indirect attempt to indulge or knowingly assist or being knowingly party or being actually involved in "any process or activity" connected with the proceeds of crime. The latter part of the provision is only an elaboration of the different process or activity connected with the proceeds of crime, such as its concealment, possession, acquisition, use, or projecting it as untainted property or claiming it to be as untainted property. This position stands clarified by way of Explanation inserted in 2019. 15. The law laid down by the Three Judge Bench of the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) leaves no room for any doubt about the authority of the Deputy Director of Enforcement and the Adjudicating Authority to proceed with the attachment of propert....