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2019 (1) TMI 1916 - HC - Money LaunderingProvisional attachment of properties - reason to believe that a person has committed offence under PMLA - non-record of reasons and non-communication of reasons can be held to be violation of the established principles of natural justice or not - Adjudicating Authority has only one Member - action initiated by the Adjudicating Authority suffers from coram non judice or not - maintainability of petition on the ground of availability of alternative remedies provided under PMLA - non-application of mind - interference at the stage of show cause notice or not - absence of production of relevant documents - offence of illegal quarrying - scheduled offences under PMLA or not - Adjudicating Authority, being non-conversant with the vernacular language of the state able to appreciate transactions of various properties which are documented in vernacular language (Tamil) or not. HELD THAT - The Court has given the following conclusions - i) That the absence of recording of reasons to believe under Section 5(1) of PMLA, does not result in violation of constitutional right to property of the citizens since it was only a provisional attachment which would be valid only for a maximum period of 180 days or less. Although the Section provides for record of reasons to believe by the authority, failure to record at worst is only a statutory infraction and the same can be pleaded before the Adjudicating Authority. In such circumstances, non-recording of reasons by the Authority initiating action under Section 5 of PMLA becomes curable while initiating action under Section 8 of PMLA by the Adjudicating Authority. It is not in doubt that under PMLA, a full-fledged trial is envisaged before the Adjudicating Authority and any initial infraction could always be rectified. Ultimately, it is the Adjudicating Authority which will confirm the attachment and also will recommend for confiscation of the property when such opportunity is available before the Adjudicating Authority consisting of experts, it cannot be gainsaid by these writ petitioners that their interest is irrepairably prejudiced and their constitutional right is violated. ii) Further, nowhere in the Section itself, it has beenstipulated that the reasons must be communicated to the persons. In the absence of such stipulation, these writ petitioners have no right to claim that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period of provisional attachment is only for a period of 180 days before confirmation by Adjudicating Authority and therefore, the initial order has all the characteristics of show cause notice and no further requirement is contemplated in the statute. As far as the present case on hand is concerned, de horse the above legal finding, this Court finds that the Authority has given reasons in terms of the scheme of Section 5 and to what extent such reasons could ultimately end up in confirmation or not, is for the Adjudicating Authority to decide after a detailed enquiry to be conducted under Section 8 of PMLA. Therefore, on merits, this Court finds that submission that the Authority has not recorded reasons is contrary to records and the same is liable to be rejected. iii) The language used in Section 8(1) of PMLA is different from what it is used in Section 5(1) of PMLA. Both the expressions are different and distinct and the Adjudicating Authority is not required under Section 8(1) to record reasons as in the case of the Authority exercising under Section 5(1) of PMLA which means that the Adjudicating Authority, on the basis of the complaint filed by the initial authority under Sub Section 5 of Section 5 of PMLA, can proceed with the adjudication process on the basis of subjective satisfaction. In any event, the Adjudicating Authority has to follow procedure provided under Section 8 as well as the procedure contemplated under the Adjudicating Authority (Procedure) Regulations 2013. Therefore, the writ petitioners are provided with sufficient opportunities to put forth their plea before the Adjudicating Authority. Moreover, even in the show cause notice issued, it is mentioned that there is compliance of Section 8(1) of PMLA which compliance can be verified by obtaining a copy of the order by making necessary application to the Registry. Therefore, these writ petitioners cannot successfully maintain their complaint before this Court. Hence, this Court is of the considered view that there appears to be no legitimate cause for complaining on this aspect. iv) The plea of violation of principles of natural justice can be tested on the golden touchstone of prejudice and in this case, no prejudice is occasioned or caused to the writ petitioners since they have multiple alternative remedies as provided under PMLA before the Adjudicating Authority under Section 8; and before the appellate Authority under Section 26; and further appeal before this Court under Section 42 of PMLA. Once multi-layered remedies are provided for effective adjudication of disputes, the plea of violation of principles of natural justice is baseless and unfounded. v) The contention regarding coram non-judice, that the Adjudicating Authority is manned only by a single Member also cannot be countenanced with reference to explicit provision contained in Section 6 of PMLA and allied provisions, wherein it is provided for formation of Bench by less than three Members. Therefore, the issue of coram non-judice is answered against the writ petitioners, notwithstanding the fact that at the time of pronouncement of this order, the Adjudicating Authority is consisting of three Members. vi) The plea of alternative remedy is not a bar for entertaining the Writ Petition, can it best be a general proposition of law, but the same cannot be applied to these writ petitions where the statute itself provide for multi layered alternative appellate remedies, one before the Adjudicating Authority, other before the Appellate Tribunal and another before this Court. Moreover, in these cases, there is no violation of any fundamental right nor action by the first respondent can be termed to be wholly unjustified nor there was a wholesale violation of principles of natural justice. In such scenario, this Court is not inclined to transgress beyond its selfimposed limitation not to entertain these writ petitions on the ground of availability of multiple appellate remedies under PMLA. vii) The contention as regards Rule Nisi is concerned, this Court has dealt with the preliminary objection as to the maintainability of the writ petitions since these writ petitions are challenging the initial action of provisional attachment and show cause notice and in such event, non-production of documents is not material to the adjudication of a purely legal dispute as to the maintainability of the writ petitions. viii) The plea of non-application of mind must be tested with reference to the factual aspects and the findings as found in the order passed by the initial authority under Section 5(1) of PMLA. It is certainly not open to this Court to render any finding on such factual dispute by interjecting its opinion with the findings of the authority who passed the order under Section 5(1), as such opinion on factual matters does not fall within the domain of judicial review exercised by this Court under Article 226 of the Constitution of India. ix) The submission regarding illegal quarrying per se may notbe one of the scheduled offence, but by such operation it gave rise to several offences which are punishable under the provisions of IPC and other enactments, like Explosive Substances Act, 1908 etc. In the provisional attachment order various offences are enumerated on the basis of final report by the police. Since this argument is being canvassed in all its seriousness, the same may be addressed by the Central Government by initiating appropriate action to have illegal quarrying included in the schedule offences. Illegal quarrying per se is a affront on the rule of law, as it involves systematic plundering of national wealth and resources endangering natural and salubrious human habitat. Such activity will ultimately put the humanity as a whole to the precipice of irredeemable disaster. x) The submission of non-familiarity of local language by the Adjudicating Authority cannot be a valid ground for this Court to interfere with the impugned action initiated by the authorities concerned as such argument is misconceived and the same is without substance. These Writ Petitions are not maintainable - Petition dismissed.
Issues Involved:
1. Recording of reasons for provisional attachment under Section 5(1) of PMLA. 2. Validity of show cause notices under Section 8(1) of PMLA. 3. Violation of principles of natural justice. 4. Composition of Adjudicating Authority under Section 6(2) of PMLA. 5. Maintainability of Writ Petitions due to alternative remedies. 6. Non-application of mind by authorities. 7. Adverse inference due to non-production of documents. 8. Inclusion of illegal quarrying as a scheduled offence under PMLA. 9. Competence of Adjudicating Authority in understanding vernacular language. Detailed Analysis: Issue Nos. (i) to (iii): - The petitioners contended that the first respondent did not record reasons for provisional attachment under Section 5(1) of PMLA, which is mandatory. The Adjudicating Authority also failed to record reasons while issuing show cause notices under Section 8(1) of PMLA, violating principles of natural justice. - The court emphasized that 'recording of reasons' is crucial under Section 5(1) and Section 8(1) of PMLA. The requirement of recording reasons is to ensure transparency and fairness in the process. - The court referred to multiple judgments, including those of the Delhi High Court and the Supreme Court, which held that reasons must be meaningful and not just a formality. The court noted that the reasons must reflect the material on which the belief is based and should be communicated to the affected party. Issue No. (iv): - The petitioners argued that the Adjudicating Authority should consist of a Chairperson and two other Members as per Section 6(2) of PMLA. The current composition with only one Member is coram non judice. - The court examined Section 6 of PMLA and concluded that it allows for the jurisdiction of the Adjudicating Authority to be exercised by Benches, which may consist of one or two Members. The court referred to the Delhi High Court's decision, which upheld the validity of single-member benches under PMLA. Issue No. (v): - The petitioners contended that the Writ Petitions are maintainable despite the availability of alternative remedies under PMLA. - The court referred to several judgments, including those of the Supreme Court, which held that the existence of alternative remedies does not bar the High Court from exercising its jurisdiction under Article 226 in cases of violation of fundamental rights, failure of natural justice, or lack of jurisdiction. - The court noted that the petitioners have multiple effective remedies under PMLA, including appeals to the Adjudicating Authority, the Appellate Tribunal, and further appeal to the High Court. Therefore, the Writ Petitions were not maintainable. Issue No. (vi): - The petitioners argued that the action initiated by the authorities under PMLA suffers from non-application of mind. - The court examined the provisional attachment order and found that it contained detailed reasons and material justifying the action. The court held that the petitioners could raise their objections before the Adjudicating Authority. Issue No. (vii): - The petitioners contended that the court should draw an adverse inference against the respondents for non-production of documents when Rule Nisi was issued. - The court held that the primary issue was the maintainability of the Writ Petitions, not the production of documents. Therefore, the argument was not relevant in this context. Issue No. (viii): - The petitioners argued that illegal quarrying is not a scheduled offence under PMLA. - The court noted that the petitioners were charged with various offences under IPC and the Explosives Substance Act, which are scheduled offences under PMLA. Therefore, the argument was without merit. Issue No. (ix): - The petitioners contended that the Adjudicating Authority's lack of familiarity with the vernacular language (Tamil) would affect the appreciation of transactions documented in Tamil. - The court dismissed this argument, stating that documents can be translated, and lack of familiarity with the language does not constitute a valid ground for challenging the proceedings. Conclusion: The court dismissed the Writ Petitions, holding that the provisional attachment and show cause notices were in compliance with PMLA. The court emphasized that the petitioners have effective alternative remedies under PMLA and should pursue those remedies instead of approaching the High Court at the preliminary stage. The court also rejected the arguments regarding coram non-judice, non-application of mind, and violation of principles of natural justice.
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