2014 (6) TMI 1010 - HC - Money Laundering

Appeals to Appellate Tribunal - remedy provided by the statute - Held that - I do not propose to consider the grievance of the petitioner over the non-recording and non-communicating of the reasons to the petitioner. Such a grievance is required to be ventilated by filing an appeal before the Appellate Tribunal invoking Section 26 of the said Act. If the order in the anticipated appeal goes adverse, it shall also be o pen to the petitioner to invoke the remedy of filing a second appeal before this Court under Section 42 of the said Act. On the ground of non-furnishing of the order sheet or of any other document also, the quashing of the show cause notice is not warranted. The petitioner s grievance can be redressed by directing the petitioner to submit an application in Form No.10 for the issuance of the certified copies of the documents required by her and by directing the respondent No.1 to issue the sought copies after collecting the necessary administrative cost from the petitioner. Needless to observe that it is also open to the petitioner to seek the inspection of the documents by making the necessary application under Regulation 16 of the said Regulations. The liberty is also reserved to the petitioner to avail of the remedy of filing an appeal invoking Section 26 of the said Act. It is made clear that all the contentions are kept open.

Summary

Issues Involved:
1. Validity of the show cause notice issued under Section 8 of the Prevention of Money-Laundering Act, 2002.
2. Requirement of recording and communicating reasons for issuing the show cause notice.
3. Non-furnishing of order-sheet and other documents to the petitioner.
4. Prematurity and speculative nature of the petition.
5. Availability of alternative remedies under Section 26 and Section 42 of the said Act.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner challenged the show cause notice dated 24.2.2014 issued by the Adjudicating Authority under Section 8 of the Prevention of Money-Laundering Act, 2002. The notice required the petitioner to indicate the source of her income used to acquire the attached property and to show cause why the provisional attachment should not be confirmed as representing proceeds of crime. The petitioner argued that the Adjudicating Authority failed to record the reasons for issuing the notice, which is a mandatory requirement under Section 8(1) of the Act.

2. Requirement of Recording and Communicating Reasons:
The petitioner contended that the expression 'reason to believe' in Section 8(1) is a safeguard against arbitrary exercise of power, and the reasons must be communicated to the noticee to enable an effective defense. The petitioner relied on the Supreme Court's judgment in Pannalal Binjraj v. Union of India, which emphasized the need for recording reasons even for administrative decisions. The petitioner also cited the Division Bench judgment of the Bombay High Court in Shashank Vyankatesh Manohar v. Union of India, which held that the Adjudicating Authority must record reasons for forming an opinion and communicate them to the noticee upon request.

3. Non-Furnishing of Order-Sheet and Other Documents:
The petitioner argued that the respondent failed to provide the order-sheet and other documents despite requests. The respondent countered that the petitioner did not apply for the documents in the prescribed form (Form No.10) as required by Regulation 6 of the Adjudicating Authority Regulations, 2006. The respondent also pointed out that the petitioner could inspect the records by applying under Regulation 16.

4. Prematurity and Speculative Nature of the Petition:
The respondent argued that the petition was premature and speculative, as the petitioner was aware of the documents on which the proceedings were based and would have an opportunity to present her evidence during the adjudication process. The respondent also contended that the petitioner should not seek the quashing of the show cause notice based on non-furnishing of documents.

5. Availability of Alternative Remedies:
The respondent emphasized that the petitioner had alternative remedies under Section 26 of the Act to appeal against any order of the Adjudicating Authority and under Section 42 for a second appeal to the High Court. The respondent cited the Supreme Court's judgment in Rajkumar Shivhare v. Assistant Director, Directorate of Enforcement, which held that a writ petition should not bypass the statutory appeal process provided by the Act.

Conclusion:
The court declined to consider the petitioner's grievance regarding the non-recording and non-communicating of reasons, directing the petitioner to file an appeal before the Appellate Tribunal under Section 26 of the Act. The court also directed the petitioner to apply for the certified copies of the documents in Form No.10 and allowed the petitioner to inspect the records under Regulation 16. The court reserved the petitioner's right to file an appeal and directed the Appellate Tribunal to dispose of the appeal expeditiously. The petition was disposed of without costs.