2019 (6) TMI 842 - AT - Money Laundering

Offence under PMLA - attachment orders - freezing the Appellant's bank accounts - HELD THAT - PMLA is a Special Act. The provisions of the said Act are mandatory. They have to be applied as it. Being an independent Act, no different meaning can be given. They have to be interpreted as it is. The power to attach or seize or freeze a property can be exercised only if the officer concerned has material in his possession who has a reason to believe that property sought to be attached or seized is proceed of crime or related to the crime irrespective as to whether complaint under the schedule offence and prosecution complaint under PMLA is filed or not against the party who has in his possession of proceeds of crime. But, the situation where the investigation was being done on the basis of a mere suspicion against the party where the statute provides prescribed period of time and mandates the condition that it would continue during investigation for a period not exceeding ninety days. Having in possession of proceed of crime and period of investigation on the basis of suspicion are two different situations. The law laid down earlier where the time limit was not provided may not be applicable because of change of situation by virtue of amendment which was carried on 19.4.2018, the specific period is prescribed in the Act for the purpose of investigation. Earlier, no specific timeline was set to complete the investigation and to file the prosecution complaint. The mandates now is changed whereby it is mandated that the attachment shall continue during investigation for a period not exceeding ninety days, as provided under section 8(3)(a) or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India. The second part of the provision is not applicable in the absence of such situation. Even this Tribunal is of the view that ninety days period is a less period and the said provision is rightly further amended where the period has been substituted by Act 7 of 2019-5-22 (i) to 365 days from 90 days, however, it is yet to be notified. Thus, unless it is notified, this Tribunal is duty bound to apply the provision as existed. In the light of above, the appeal is allowed. Both the accounts are de-freezed accordingly. The impugned order against the appellant is set-aside pertaining to two bank accounts only maintained by the appellant.

Summary

Issues Involved:
1. Legality of freezing the appellant's bank accounts.
2. Compliance with procedural requirements under the Prevention of Money Laundering Act (PMLA), 2002.
3. Application of Section 8(3)(a) of PMLA post-amendment.
4. Validity of actions taken by the Enforcement Directorate (ED) without naming the appellant or her husband in FIRs or ECIRs.

Detailed Analysis:

1. Legality of Freezing the Appellant's Bank Accounts:
The appellant's bank accounts were frozen based on an order dated 05.09.2018 by the respondent, confirmed by the Adjudicating Authority on 08.02.2019. The freezing was challenged on the grounds that neither the appellant nor her husband were named in any FIR or ECIR. The Tribunal noted that the respondent did not dispute the absence of any FIR or criminal complaint against the appellant, nor was any complaint filed under Section 8(3)(a) within 90 days from the date of the impugned order. Consequently, the freezing of the appellant's accounts was found to be unjustified.

2. Compliance with Procedural Requirements under PMLA:
The Tribunal emphasized the necessity of adhering to the procedural safeguards outlined in Sections 17, 18, 20, and 21 of PMLA. These sections mandate specific conditions for search, seizure, and retention of property, including the requirement to record reasons in writing and forward them to the Adjudicating Authority. The Tribunal found that the ED's actions did not comply with these procedural requirements, particularly the failure to file a complaint within the stipulated 90-day period.

3. Application of Section 8(3)(a) of PMLA Post-Amendment:
The Tribunal highlighted the amendment to Section 8(3)(a) effective from 19.04.2018, which limits the continuation of attachment during investigation to a period not exceeding 90 days. The Tribunal noted that the investigation must be completed within this period, failing which the attachment lapses. The Tribunal acknowledged the further amendment extending this period to 365 days, although it had not yet been notified. Therefore, the Tribunal applied the existing 90-day limit and found the freezing order invalid due to non-compliance with this timeline.

4. Validity of Actions Taken by the ED Without Naming the Appellant or Her Husband in FIRs or ECIRs:
The Tribunal observed that the appellant and her husband were not named in any FIR or ECIR, and no evidence was presented to justify the freezing of their accounts. The Tribunal referenced the Delhi High Court's judgment in "Omar Ali Obaid vs. ED," which discussed the scheme of seizure under Section 102 of Cr.P.C. and its inconsistency with PMLA's provisions. The Tribunal concluded that the ED's actions were based on mere suspicion without substantive evidence, rendering the freezing orders invalid.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order related to the appellant's two bank accounts and directing their de-freezing. However, the freezing orders on the bank accounts of the appellant's husband/joint accounts were to continue until the appeals were decided on merit. No costs were awarded.