2021 (11) TMI 1083 - HC - Money Laundering

Lifting of provisional attachment - seeking permission to respondents/writ petitioners to operate the bank account and postal accounts by declaring the order of provisional attachment as having lost its efficacy as the confirmation order was not passed within a period of 180 days in terms of Section 5(3) of the Act - HELD THAT - The writ petition is of year 2021 and the same has been allowed. We also find that no adequate opportunity was granted to the appellant to file affidavit-in-opposition. If the writ petition needs to be allowed at the admission stage and/or soon thereafter the court should record the finding that the affidavit-in-opposition is not required to be filed or if the contesting respondents give away its right to file affidavit-in-opposition. The writ petition could not have been allowed with the finding and observations contained therein which may affect other litigants as well. That apart we find the learned writ Court after making such observations holding the appellant as a non-litigant has granted a direction in the penultimate paragraph of the impugned order with an observation that the order passed in the writ petition will not prevent the Adjudicating Authority from passing final order of adjudication in the pending proceeding in accordance with law which, according to the appellants, had already been concluded and final orders passed. The respondents/writ petitioners have not preferred an appeal against the said finding - the present appeal filed by the department against order passed in the writ petition filed by the writ petitioners/respondents questioning the correctness and efficacy of the order of provisional attachment. As of now, the order of provisional attachment is no longer in existence because a final adjudication order has been passed on 9.11.2021. Thus, as on date the prayer sought for in the writ petition would have to be held to be infructuous. Be that as it may, the respondents/writ petitioners seek liberty to question the order passed by the Adjudicating Authority dated 9.11.2021 on all grounds, both factual and legal, including the contention that it has been passed in violation of the principles of natural justice. A prima facie observation that an order of attachment would mean that status quo needs to be maintained and it could not mean that the person who has attached a property can appropriate the property before a final order was passed. This principle needs to be borne in mind and appropriate orders be passed by the appellant - appeal allowed.

Summary

Issues:
Challenge to order under Prevention of Money Laundering Act, 2002 regarding provisional attachment and confirmation order validity.

Analysis:
The appeal was filed by the Adjudicating Authority challenging an order allowing respondents to operate bank accounts due to delay in confirmation order as per PMLA. Appellant argued that the extension due to pandemic did not apply, and litigants should not gain advantage. Single Judge's decision was criticized for deciding without affidavits and treating Adjudicating Authority as a non-litigant.

Analysis:
Appellant contended that PMLA is a complete Code, and respondents participating in proceedings should not have filed a writ petition. Reference was made to Supreme Court decisions, distinguishing them from the current case. Adjudicating Authority confirmed provisional attachment after Single Judge's order, leading to the appeal seeking to set aside the decision.

Analysis:
Respondent's counsel supported Single Judge's decision, emphasizing the statutory limit for confirmation of attachment orders. Allegations were made regarding freezing of bank accounts and unauthorized debiting of funds by the Adjudicating Authority. The importance of a fair hearing and adherence to legal procedures was stressed.

Analysis:
High Court found Single Judge's observations on Adjudicating Authority's status and lack of opportunity for the appellant problematic. Concerns were raised about the impact on other litigants and the need for a fair hearing process. The Court vacated the finding that the appellant was a non-litigant and granted liberty to challenge the Adjudicating Authority's order on all grounds.

Analysis:
The Court observed discrepancies in the attachment process, emphasizing the need to maintain status quo and prevent appropriation before a final order. The appeal was allowed, vacating the previous finding and granting respondents liberty to challenge the Adjudicating Authority's order through appropriate legal channels. Requests for relief regarding withdrawal from bank accounts were directed to the appropriate authority for consideration.