2021 (4) TMI 1262 - HC - Money Laundering

Money Laundering - provisional order of attachment - extension of time limitation - petitioner argues that extension of limitation granted by the Supreme Court on various occasions, pertained only to limitations regarding proceedings and the stipulation under Section 5(3) of the 2002 Act is not covered by said limitation - HELD THAT - The language of Section 5(3) of the 2002 Act is very clear as to the period of 180 days operating in respect of orders of attachment and says in positive language that such order of attachment shall cease to have effect after the expiry of such period. The said restriction/stipulation does not relate to any period of limitation prescribed under the general or special laws pertaining to institution or termination of proceedings but directly deals with the tenure of operation of the order of provisional attachment - the writ petition is required to be heard on its merits. The matter shall next be enlisted for hearing fairly at the top of the list on May 12, 2021.

Summary

Issues:
1. Interpretation of Section 5(3) of the Prevention of Money Laundering Act, 2002 regarding the period of attachment orders.
2. Applicability of Supreme Court orders extending limitation to the period under Section 5(3) of the 2002 Act.
3. Validity of continuing proceedings based on a provisional order of attachment after the expiry of 180 days.

Analysis:
1. The petitioner argued that despite a provisional order of attachment expiring after 180 days as per Section 5(3) of the 2002 Act, the Enforcement Directorate continued issuing notices for hearings based on the expired order. The petitioner contended that the language of Section 5(3) clearly states that the order of attachment shall cease to have effect after the specified period, emphasizing the operational tenure of the attachment order, not related to general or special laws on proceedings.

2. The senior counsel for the petitioner asserted that the extension of limitation granted by the Supreme Court did not cover the stipulation under Section 5(3) of the 2002 Act. On the contrary, the senior counsel for the respondents argued that the Supreme Court orders extending limitation applied to both general laws and special statutes, including the period under Section 5(3) of the 2002 Act. However, the Court noted that the extension by the Supreme Court was limited to the institution and termination of proceedings, not the operational period of attachment orders.

3. The Court found that the petitioner established a strong prima facie case that the respondents acted beyond the scope of Section 5(3) of the 2002 Act by continuing proceedings based on the expired attachment order. Consequently, the Court directed the respondents to file their affidavits-in-opposition comprehensively addressing the contentions raised in the supplementary affidavit. Additionally, the Court restrained the respondents from taking any further action based on the provisional order of attachment until further orders and scheduled the matter for a hearing on a specified date.

4. The senior counsel for the respondents requested a stay of the Court's order, which was refused by the Court to prevent negating the effect of the restraint order and reviving the proceedings, potentially rendering the petitioner's writ petition ineffective. The Court emphasized the importance of maintaining the status quo and preventing any actions that could jeopardize the ongoing legal process.