9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (12) TMI 1675 - HC - Money LaunderingMoney Laundering - provisional attachment order - Section 5(1) of the Prevention of Money Laundering Act, 2002 - proceeds of crime - HELD THAT - The PMLA is not a statute dealing merely with matters of procedure or evidence or which is declaratory in nature - the PMLA, 2002 underwent several amendments from the year 2005 onwards. Even the expression proceeds of crime defined in Section 2(1)(u) underwent an amendment by Act 2 of 2013 and later by Finance Act, 2016. Today, the definition includes any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. Therefore, even the property in the hands of third parties can be attached and confiscated, if it is shown that they represent proceeds of crime. Hence, by its very nature, the provisions of the Act cannot have retrospective effect. If the amount of ₹ 822 crores lying in fixed deposits represented the proceeds of crime, the Ministry of Corporate Affairs could not have auctioned the same through competitive price bids. After one wing of the Government had induced a third party like the strategic investor to come to the rescue of the company, another wing of the Government cannot take an action that will vitiate the entire process - the impugned order of attachment is liable to be set aside. Petition allowed.
Issues Involved:
1. Challenge to the Provisional Attachment Order by the Enforcement Directorate under PMLA, 2002. 2. Interim suspension of the Provisional Attachment Order. 3. Confirmation of the interim suspension by a Division Bench. 4. Clarification sought by the Bank of Baroda regarding the release of fixed deposits. 5. Maintainability of the writ petition. 6. Merits of the Provisional Attachment Order. Detailed Analysis: 1. Challenge to the Provisional Attachment Order by the Enforcement Directorate under PMLA, 2002: The petitioner challenged the Provisional Attachment Order passed by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The order was based on the charge-sheets filed by the CBI, which alleged that the former Chairman and others conspired to inflate the company's accounts, leading to significant financial discrepancies. 2. Interim Suspension of the Provisional Attachment Order: Pending the writ petition, the petitioner sought interim suspension of the Provisional Attachment Order. On 11-12-2012, a learned Judge of the High Court granted interim suspension of the order. 3. Confirmation of the Interim Suspension by a Division Bench: The Enforcement Directorate appealed against the interim suspension order. However, a Division Bench of the High Court dismissed the appeal on 31-12-2014, thereby confirming the interim suspension. 4. Clarification Sought by the Bank of Baroda Regarding the Release of Fixed Deposits: The Bank of Baroda sought clarification on whether the fixed deposits amounting to ?255 crores should be released to the petitioner, given the interim suspension of the Provisional Attachment Order. The court decided to hear the writ petition along with the miscellaneous petition filed by the Bank of Baroda. 5. Maintainability of the Writ Petition: The Enforcement Directorate argued that the writ petition was not maintainable due to the availability of a statutory remedy. However, the court held that the writ petition was maintainable, noting that the petitioner could challenge the jurisdictional facts and that substantial questions of law were involved, such as the retrospective application of the 2013 amendment to Section 8(5) of PMLA and the conflict between statutory regulatory regimes. 6. Merits of the Provisional Attachment Order: The court examined the merits of the Provisional Attachment Order, considering the following key points: - Victim of Fraud: The court noted that various statutory authorities, including the Company Law Board, CBI, and SFIO, recognized Satyam Computers as a victim of fraud. It was held that the amounts lying with the company, being a victim, could not be attached as proceeds of crime. - Fairness and Strategic Investor: The court highlighted that the strategic investor (Tech Mahindra Limited) was induced to infuse funds through a transparent bidding process supervised by a former Chief Justice of India. It was unfair for the Enforcement Directorate to attach the company's assets after such an investment. - Contradictions in the Provisional Attachment Order: The court found contradictions in the order, noting that the amount of ?822 crores was used for day-to-day expenses and had mingled with legitimate sources of income. Therefore, the fixed deposits could not be considered proceeds of crime. - Retrospective Application of Section 8(5) of PMLA: The court held that the 2013 amendment to Section 8(5) of PMLA could not be applied retrospectively. The amendment changed the conditions under which property could be confiscated, and applying it retrospectively would affect substantive rights. Conclusion: The court allowed the writ petition, setting aside the Provisional Attachment Order. It directed the banks to disburse the amounts to the petitioner and closed any pending miscellaneous petitions.
|
