2016 (1) TMI 1181 - HC - Money Laundering

Provisional attachment orders questioned - Held that - Mixed questions of fact and law are involved in the present case. Moreover as a show cause notice has already been issued as to why the provisional attachment order be not confirmed this Court is of the view that the ends of justice would be met if the petitioners are permitted to take all their pleas and defences in the adjudication proceedings which are pending under Section 8 of the PML Act. It is pertinent to mention that by virtue of Section 5(4) of the PML Act there is nothing which prevents the person interested in the enjoyment of the immovable property from such enjoyment.

Summary

Issues:
1. Quashing of provisional attachment order dated 23rd September, 2015.
2. Quashing of show cause notice dated 20th October, 2015.
3. Violation of Section 5 of the Prevention of Money-Laundering Act, 2002.
4. Interpretation of the report under Section 173 of the Cr.P.C.
5. Adjudication of mixed questions of fact and law.
6. Rights of a person interested in the enjoyment of immovable property.

Analysis:
1. The petitioners sought the quashing of the provisional attachment order dated 23rd September, 2015, issued by the Directorate of Enforcement, Ministry of Finance, Department of Revenue, Lucknow Zonal Office. They also aimed to quash the show cause notice dated 20th October, 2015, which required them to explain the source of their income and justify why the provisional attachment order should not be confirmed.

2. The petitioners argued that the provisional attachment order violated Section 5 of the Prevention of Money-Laundering Act, 2002, as it was related to a Schedule Offence without reflecting their names in the report under Section 173 of the Cr.P.C. The CBI's supplementary report stated that certain individuals were not being charge-sheeted due to insufficient evidence of their involvement in the case.

3. On the other hand, the Additional Solicitor General referred to specific orders issued by the Directorate of Enforcement, Lucknow Zonal Office, to demonstrate that the petitioners had not been cleared of any allegations. The Court noted that mixed questions of fact and law were involved in the case and decided that the petitioners should present their pleas and defenses in the pending adjudication proceedings under Section 8 of the PML Act.

4. The Court highlighted that Section 5(4) of the PML Act did not prevent a person interested in the enjoyment of immovable property from such enjoyment. Consequently, the Court disposed of the petition and directed the Adjudication Authority to conclude the pending proceedings within three months.