2014 (5) TMI 1126 - HC - Money Laundering

Validity of lease deed executed after the Provisional Attachment - Attachment orders - money-laundering prevention - Held that - Adjudicating Authority has the power to issue a provisional attachment order so that during the pendency of the proceedings the property is neither transferred nor disposed of or parted with or dealt with in any manner. Subsequently if upon a complaint being filed by respondent No.1 the provisional attachment order is confirmed then the authority has the power to take over possession. This Court is further of the view that after a provisional attachment order has been passed no noticee-owner can create a tenancy or transfer possession or create third party rights to defeat an ultimate order of taking over possession under the Act 2002 and Rules 2013. It is pertinent to mention that the expression attachment is defined under Section 2(d) of Act 2002 to mean prohibition of transfer conversion disposition or movement of property by an order issued under Chapter III. Though in the present case it has been averred that the tenancy had been orally created on 01st June 2013 yet this Court is of the view that the alleged oral tenancy would create no right either in favour of the petitioner or respondent No.2 as the lease deed in question was compulsorily registerable under Section 17 of the Registration Act 1908.Further the covenant in the lease deed that security deposit shall be paid not at the time of handing over of possession or at the time of registration throws doubt upon the genuineness of the oral tenancy and the handing over of possession in June 2013. This Court also takes judicial notice of the fact that Prirthvi Raj Road is one of the most prime and posh areas of the city and it is inconceivable that a property ad measuring 6796.50 sq. ft. would have been leased out in an arms length transaction at 80, 000/. Consequently as the lease deed in question had been executed only after the Provisional Attachment order had been passed by the statutory authority this Court is of the view Rule 5(3) of the Rules 2013 would not enure to the benefit of either the petitioner or respondent No.2-tenant.

Summary

Issues:
1. Direction sought for release and possession of property.
2. Interpretation of Rule 5(3) of Prevention of Money Laundering Rules, 2013.
3. Validity of possession takeover without notice to tenant.
4. Confirmation of provisional attachment order and subsequent events.
5. Legal implications of oral tenancy creation.
6. Compliance with Registration Act regarding lease deed.
7. Genuineness of security deposit clause in lease deed.
8. Market value assessment of leased property.
9. Impact of executing deed post provisional attachment order.
10. Application of relevant case laws on disobedience of court orders.

Issue 1: Direction sought for release and possession of property
The writ petition requested a directive for the release of a property and handover of possession to a tenant, raising concerns over possession takeover without notice to the tenant.

Issue 2: Interpretation of Rule 5(3) of Prevention of Money Laundering Rules, 2013
The interpretation of Rule 5(3) of the Prevention of Money Laundering Rules, 2013 was pivotal, emphasizing the procedure for taking possession of immovable property given on lease or rent to a third party.

Issue 3: Validity of possession takeover without notice to tenant
The contention revolved around the validity of taking over possession without issuing notice to the tenant, citing non-compliance with Rule 5(3) and the tenant's statutory rights.

Issue 4: Confirmation of provisional attachment order and subsequent events
The confirmation of the provisional attachment order, followed by a notice of eviction and possession takeover, formed a critical sequence of events leading to legal scrutiny.

Issue 5: Legal implications of oral tenancy creation
The legal implications of an alleged oral tenancy creation were examined, highlighting the necessity of compliance with registration requirements under the Registration Act.

Issue 6: Compliance with Registration Act regarding lease deed
The compliance with the Registration Act concerning the execution of the lease deed was analyzed, emphasizing the mandatory registration for enforceability.

Issue 7: Genuineness of security deposit clause in lease deed
The genuineness of the security deposit clause in the lease deed was questioned, raising doubts about the authenticity of the oral tenancy arrangement.

Issue 8: Market value assessment of leased property
The assessment of the market value of the leased property was crucial, especially considering the prime location and the lease amount, prompting further scrutiny.

Issue 9: Impact of executing deed post provisional attachment order
The impact of executing the deed post the provisional attachment order was deliberated, questioning the validity of actions taken after the attachment order.

Issue 10: Application of relevant case laws on disobedience of court orders
The application of relevant case laws on disobedience of court orders was cited, emphasizing the consequences of executing deeds in contravention of court directives.

This comprehensive analysis delves into the intricate legal nuances and interpretations surrounding the judgment, addressing each issue with meticulous detail and legal clarity.