2017 (12) TMI 1729 - HC - Money Laundering

Offence under PMLA - Attachment orders - maintainability of the writ petition - HELD THAT - On an analysis of several provisions of the Act in particular Section 5, Section 8 and Section 26, it becomes clear that the legislative intent underlying the sequential provisions for provisional attachment, confirmation of such attachment and eventual confiscation or for retention of a seized property and also providing remedy of appeal to the appellate authority, is to balance public interest with the individual interest of the person against whom allegations are made and action is initiated. A mechanism is provided under the Act for redressal of the grievance at different stages that is to say before the Adjudicating Authority at the first instance and latter before the Appellate Tribunal. It is only when a person is aggrieved by the order of the Appellate Tribunal that he may file an appeal to the High Court as per Section 42 of PML Act. When such is the mechanism provided for the effective redressal of the grievance within the four corners of the provisions of the PML Act, petitioner is not justified in rushing to this Court at the stage of show-cause notice and the provisional order of attachment. Therefore, it is not appropriate for this Court to enter into various contentions urged by petitioner. This is not a case where extraordinary jurisdiction of High Court under its writ jurisdiction has to be exercised ignoring the efficacious machinery provided under the Act. Hence, without expressing any opinion on the merits of the matter and making it clear that whatever prima facie opinion is expressed shall be confined only for the purpose of deciding the maintainability of the writ petition, by reserving liberty to the petitioner to urge all necessary grounds before the competent authority, this writ petition is dismissed. It is made clear that that period taken in prosecuting this writ petition before this Court shall be excluded for the purpose of time limit prescribed under the Act, both for seeking redressal by the petitioner and also with regard to duration of the provisional attachment order.

Summary

Issues:
1. Maintainability of the writ petition against the provisional attachment order and show-cause notice.
2. Allegations of malafide actions by the respondent authorities.
3. Jurisdiction of the respondent authorities under the PML Act.
4. Retrospective application of the PML Act.
5. Non-existence of proceeds of crime.
6. Validity of the provisional attachment order.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The respondent's counsel argued that the writ petition against the provisional attachment order and show-cause notice is not maintainable, citing precedents from the Apex Court and High Courts. The petitioner’s counsel contended that the writ petition is maintainable due to the alleged malafide actions of the respondent authorities. The court, however, noted that the High Court should not entertain writ petitions if an effective alternative remedy is available, as per the principle established in the case of *Nivedita Sharma vs. Cellular Operators of India & Others* and *Special Director & Another vs. Mohd. Ghulam Ghouse & Another*. The court concluded that the petitioner should respond to the show-cause notice and utilize the statutory mechanism provided under the PML Act.

2. Allegations of Malafide Actions:
The petitioner alleged that the actions against it were malafide, initiated after it invoked arbitration against Antrix Corporation Limited. The petitioner referred to several letters between the Department of Space and other government departments to support its claim. The court examined these letters and found that the decision to investigate was based on recommendations by a High Powered Review Committee, not solely on the Department of Space’s instructions. The court concluded that the petitioner’s claim of malafide actions was not substantiated by the evidence presented.

3. Jurisdiction of the Respondent Authorities:
The petitioner argued that the proceedings under the PML Act were without jurisdiction, as the alleged offences did not constitute a scheduled offence at the time they were committed. The court noted that the PML Act’s purpose is to prevent money laundering and that the definition of 'proceeds of crime' includes property derived from criminal activity related to a scheduled offence. The court emphasized that the determination of whether the petitioner was involved in money laundering is a matter for the competent authority to decide, involving mixed questions of law and fact.

4. Retrospective Application of the PML Act:
The petitioner contended that the application of the PML Act to transactions from 2005 was unconstitutional, as the relevant offences were only included in the schedule in 2009. The court acknowledged that the offences were included in the schedule in 2009 but stated that the question of when money laundering occurred and whether it continued beyond 2009 is a matter for the authorities to examine. The court refrained from expressing an opinion on this issue at the provisional attachment stage.

5. Non-existence of Proceeds of Crime:
The petitioner argued that there were no proceeds of crime, making the provisions of the PML Act inapplicable. The court noted that the PML Act allows for provisional attachment if there is a reason to believe that any person is in possession of proceeds of crime. The court emphasized that this determination is a factual question to be examined by the authorities during the adjudication process.

6. Validity of the Provisional Attachment Order:
The petitioner claimed that the provisional attachment order was invalid as there were no reasons to believe that it was in possession of proceeds of crime. The court explained that the provisional attachment order is a preemptive measure to prevent the frustration of proceedings under the PML Act. The court stated that the petitioner could present evidence to disprove the assumption of money laundering during the adjudication process.

Conclusion:
The court dismissed the writ petition, concluding that the petitioner should utilize the statutory mechanism provided under the PML Act to address its grievances. The court emphasized that it was not appropriate to exercise its extraordinary jurisdiction under Article 226 of the Constitution at this stage. The period taken in prosecuting the writ petition would be excluded for the purpose of the time limit prescribed under the Act.