Home Case Index All Cases Money Laundering Money Laundering + HC Money Laundering - 2020 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 1258 - HC - Money LaunderingProvisional attachment of confiscated proceeds of crime - Validity of provisions of Section 8 (4) of the Prevention of Money Laundering Act, 2002 - vires of of Article 14 of the Constitution of India - offence of money laundering - HELD THAT - The Act was brought in to ensure that proceeds of crime are attached and offenders who participate and assist in the commission of crime do not enjoy the benefits of the property which is relatable to the proceeds of the crime. The Prevention of Money Laundering Act, indicates to make Money Laundering an offence under Section 3 and proceeds for punishment which extends to imprisonment. The Act envisages attachment of all properties involved in the offence of Money Laundering and the proceeds of such crime falls within the scope of the Act. It is well known that perpetrators of crime try to conceal the proceeds of crime and the purpose of the Act is to trace these properties and deprive the perpetrators who are involved in crime or assist in committing of the crime or assist in concealing the proceeds of the crime from enjoying the property. The Prevention of Money Laundering Act is a complete code in itself which defines the offence, the scheme of attachment of properties which are involved in the offence of Money Laundering and the hierarchy of authorities before which the matters can be taken - A perusal of the scheme of the Act would show that attachment under Section 8 of the Act does not automatically per se extinguish all rights. Subject to the outcome of trial, it can be restored. The property is only taken away to ensure that properties are not disposed of. The question is whether eviction of the occupant of the property provided under the Rules is violative of Article 14 of the Constitution of India and does it amount to depriving a person of his property rights guaranteed under Article 300 A of the Constitution of India. Section 24 imposes the burden on the accused to prove that the property is not acquired by the tainted money and in this regard, therefore, the accused has to either show that the property has been acquired by legitimate source of funds - In view of this presumption, which is contained in Section 24 of the Act, it cannot be said that Rule 4 and 5 of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties confirmed by Adjudicating Authority) Rules, 2013, which has been framed for achieving the directions issued under Section 8 (4) of the Act is manifestly arbitrary - When an attempt is made to project proceeds of crime as untainted money and also when the burden of proof is on the accused to show that the property has not been purchased out of the proceeds of crime, it cannot be said that the mandate given by the Act and the Rules to evict the person in whose name the property stands from the property is manifestly arbitrary. The Hon'ble Supreme Court in SHAYARA BANO VERSUS AAFREEN REHMAN, GULSHAN PARVEEN, ISHRAT JAHAN, ATIYA SABRI VERSUS UNION OF INDIA AND OTHERS IN RE MUSLIM WOMEN S QUEST FOR EQUALITY VERSUS JAMIAT ULMA-I-HIND 2017 (9) TMI 1302 - SUPREME COURT has held that test of manifest arbitrariness to invalidate legislation under Article 14 of the Constitution of India must be something done by the legislature capriciously, irrationally and/or without adequate determining principle and also when something is done which his excessive and disproportionate, such legislation would be manifestly arbitrary. It cannot be said that Section 8 (4) r/w. Rule 5 of the said Rules which provides for attachment of property purchase out of proceeds of crime or from an offence under Section 3 of the Money Laundering Act, cannot be said to be manifestly arbitrary. The purpose is to deprive the purporter of the crime or any person involved in an offence of Money Laundering from enjoying the property. Such being the object, challenge to Section as being manifestly arbitrary, cannot be sustained. The provisional attachment is under Section 5 (1) of the Act. The Adjudicating Authority while exercising its powers under Section 8 confirms the attachment after hearing all the parties. The order confirming the attachment is appealable to the Tribunal under Section 26 of the Act and a further appeal lies to the High Court. The property is confiscated only after the criminal Court finds that the offence under Section 3 of the Act has been committed. Mere order of attachment cannot be said to be violative of Article 300 A of the Constitution of India. The challenge on this score cannot be accepted. Petition dismissed.
Issues Involved:
1. Constitutionality of Section 8(4) of the Prevention of Money Laundering Act, 2002. 2. Constitutionality of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013. 3. Violation of Article 14 of the Constitution of India. 4. Violation of Article 300-A of the Constitution of India. Issue-wise Detailed Analysis: 1. Constitutionality of Section 8(4) of the Prevention of Money Laundering Act, 2002: The petitioner challenged Section 8(4) of the Act, arguing it is ultra vires and manifestly arbitrary. Section 8(4) allows the Director or authorized officer to take possession of attached properties once the attachment order is confirmed by the Adjudicating Authority. The court analyzed the Act's purpose, emphasizing that it aims to prevent money laundering and confiscate properties derived from such activities. The court held that the Act is a comprehensive code designed to ensure that proceeds of crime are not enjoyed by offenders. The court found that the provisions, including Section 8(4), are necessary to achieve the Act's objectives and are not arbitrary. 2. Constitutionality of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013: The petitioner argued that the Rules, which prescribe the procedure for taking possession of attached properties, are unjust and arbitrary. The court examined the Rules in the context of the Act's objectives. It concluded that the Rules are essential for implementing Section 8(4) and ensuring that properties involved in money laundering are secured and not disposed of by the accused. The court found that the Rules are not manifestly arbitrary and are aligned with the Act's purpose. 3. Violation of Article 14 of the Constitution of India: The petitioner contended that the Act and the Rules violate Article 14, which guarantees equality before the law. The court referred to the Supreme Court's judgment in Shayara Bano v. Union of India, which states that legislation can be invalidated under Article 14 if it is capricious, irrational, or without adequate determining principle. The court found that the Act and the Rules have a clear objective to prevent money laundering and confiscate proceeds of crime. Therefore, they are not arbitrary and do not violate Article 14. 4. Violation of Article 300-A of the Constitution of India: The petitioner argued that the Act and the Rules deprive individuals of their property rights without due process, violating Article 300-A. The court explained that Article 300-A ensures that no person is deprived of their property except by authority of law. It emphasized that the Act provides a detailed procedure for attachment and confiscation of properties, including opportunities for the accused to contest the attachment. The court concluded that the Act and the Rules do not violate Article 300-A, as they are based on a valid legal framework and provide adequate safeguards. Conclusion: The court dismissed the writ petition, upholding the constitutionality of Section 8(4) of the Prevention of Money Laundering Act, 2002, and the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013. It found that the provisions are not arbitrary and do not violate Articles 14 and 300-A of the Constitution of India. The court emphasized that the Act aims to prevent money laundering and ensure that proceeds of crime are not enjoyed by offenders, and the challenged provisions are essential to achieve this objective.
|