2015 (3) TMI 1432 - HC - Money Laundering

Money Laundering - Provisional attachment - illegal collection of public deposits with promise of return at high rates of interest, as well as money circulating activity without being enlisted as an NBFC in RBI and SEBI which was prohibited under the provisions of Prize Chits and Money Circulation Scheme (Banning) Act, 1978 - HELD THAT - The elaborate statutory provisions of PMLA are well-equipped to deal with cases of the present nature and the adjudicating authority is amply imbued with powers under Section 8 of the PMLA to decide the validity of the provisional attachment. When the Petitioner's claims based in considerable proportion on issues of fact are capable of being decided by a competent statutory authority, there appears to me little reason for this Court to exercise its extraordinary constitutional writ jurisdiction at this stage. While several show cause notices have been annexed as Annexure-36 series relating to the group companies and its officials, nothing has been brought on record to show that any such show notice was at all issued to the petitioner-company in violation of the interim order passed in its favour as aforesaid. Such statement by the Petitioner is thus misleading. In these circumstances, the challenge to the show cause notices dated 26.12.2014 issued to various other persons as contained in Annexure-36 series to the amendment petition at the instance of the Petitioner-Company is clearly completely misconceived. This is not a fit case calling for interference in exercise of the discretionary and extraordinary powers of this Court in its writ jurisdiction - petition dismissed.

Summary

Issues:
1. Jurisdiction of the High Court regarding the maintainability of the writ petition.
2. Validity of the provisional attachment order under Section 5 of the Prevention of Money Laundering Act (PMLA).
3. Allegations of money laundering against the petitioner-company and its group companies.
4. Applicability of the PMLA and the role of the adjudicating authority.
5. Compliance with show cause notices and interim orders.

Jurisdiction of the High Court:
The petitioner sought to challenge various letters, summons, and orders related to a case under the Prevention of Money Laundering Act (PMLA). An amendment was requested to include additional reliefs in the writ petition. The Court allowed the amendment, considering the jurisdiction based on the attachment of the petitioner's accounts in Bihar, making the petition maintainable before the High Court.

Validity of the Provisional Attachment Order:
The petitioner questioned the validity of the provisional attachment order under Section 5 of the PMLA. The petitioner argued that the order lacked jurisdiction as it did not meet the necessary conditions related to money laundering activities. The respondents defended the order, citing the statutory provisions of the PMLA allowing provisional attachment in cases of suspected money laundering. The Court acknowledged the serious allegations against the petitioner but refrained from expressing an opinion on the issue of money laundering, emphasizing the statutory authority's role in determining the validity of the attachment.

Allegations of Money Laundering:
The case involved allegations that the petitioner-company engaged in criminal activities by collecting public deposits illegally, which were then transformed into share capital through fraudulent means. The Court noted the complexity of the case and the need for a thorough analysis to establish whether the petitioner committed money laundering offenses. The Court highlighted that the statutory provisions of the PMLA are equipped to handle such cases, and the adjudicating authority should determine the legality of the provisional attachment.

Applicability of the PMLA and Role of the Adjudicating Authority:
The Court refrained from preempting the statutory authority's jurisdiction under the PMLA and emphasized the importance of allowing the adjudicating authority to decide on the validity of the provisional attachment. The Court highlighted that the statutory provisions provide mechanisms for determining the involvement of the petitioner in money laundering activities, indicating that the case should proceed through the established legal procedures.

Compliance with Show Cause Notices and Interim Orders:
The Court addressed inaccuracies in the petitioner's claims regarding the violation of interim orders related to show cause notices. It clarified that the interim relief granted to the petitioner was effective until a specific date and had expired, allowing the authorities to proceed with adjudication under the PMLA. The Court dismissed the writ petition, stating that there was no basis for interference in the case.

In conclusion, the High Court dismissed the writ petition, emphasizing the importance of following the statutory procedures under the PMLA to determine the validity of the provisional attachment and allegations of money laundering against the petitioner-company and its group companies. The Court highlighted the role of the adjudicating authority in assessing the legality of the attachment and refrained from expressing an opinion on the money laundering issue to avoid prejudicing the ongoing proceedings.