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2017 (8) TMI 800 - AT - Money LaunderingProvisions of the PMLA applicability - possession of a property taken over in terms of the provisions of the PMLA - Held that - In terms of Rule 7 of The Prevention of Money-laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules 2013 (Possession Rules for short) in cases where the confirmed attached property is in the custody of any court the authorized officer is required to make an application to such court and that such applications shall contain a relief that such property may be released in favour of the Directorate of Enforcement. Pertinently the said Possession Rules are of 2013 i.e later to the judgment in the case of Om Prakash Daulatram 2011 (9) TMI 1143 - BOMBAY HIGH COURT . In view of the said Rule on the particular issue under consideration the submission of the Ld. Counsel for the Respondent that even when the possession of a property is in the custody of the Court the possession can be taken over in terms of the provisions of the PMLA without leave of the court is without any merit and is rejected. The impugned order as far as taking over possession of the subject flats are concerned unconditionally. It is directed that till the appeals are finally decided action for taking over possession of Flat No. 302 Shri Sai Nirmala Building Bhavani Shankar Road Dadar Mumbai Flat no. 303 and Flat No. 304 Jacob Apartment Baburao Parulkar Marg Bhawani Shankar Road Dadar Mumbai-400024 in pursuance of the impugned order and the notices under Section 8(4) of PMLA (if issued) shall remain stayed.
Issues Involved:
1. Confirmation of Provisional Attachment Order under Section 5(1) of the Prevention of Money Laundering Act, 2002. 2. Stay of the order and directions to restrain the respondent from taking possession of the attached properties. 3. Amendment of memo of appeal and condonation of delay in filing the appeal. 4. Constitutional validity of Section 8(4) of the Prevention of Money Laundering Act, 2002. 5. Jurisdiction of the Enforcement Directorate to attach properties already in the custody of the court. Detailed Analysis: 1. Confirmation of Provisional Attachment Order: The appeals are directed against the order dated 21.08.2014 by the Adjudicating Authority, confirming the Provisional Attachment Order under Section 5(1) of the Prevention of Money Laundering Act, 2002. The charge sheet filed by Thane Police on 26.05.2006 against 18 accused persons, including the appellants, revealed that they had committed offenses under various sections of the IPC, which are scheduled offenses under PMLA, 2002. The respondent passed the Provisional Attachment Order No. 05/2014 on 27th March 2014, based on the investigation and material available, including the charge sheet. 2. Stay of the Order and Restraint from Taking Possession: Applications were filed seeking a stay of the order and directions to restrain the respondent from taking possession of the attached properties. The Tribunal noted that the properties were already in the custody of the court and had been given to the appellants on bond by the court in 2007. The Tribunal allowed the prayer for stay, directing that till the appeals are finally decided, action for taking over possession of the flats shall remain stayed. However, the order of attachment of the said flats shall continue, and the appellants shall not dispose of or create any third-party right or interest in the properties. 3. Amendment of Memo of Appeal and Condonation of Delay: Applications for amendment of memo of appeal and condonation of delay in filing the appeal were allowed. These applications were consequential due to the initial appeal being filed jointly and later treated as an appeal by one of the parties, leading to some delay in filing separate individual appeals. 4. Constitutional Validity of Section 8(4) of PMLA: The appellants challenged the constitutional validity of Section 8(4) of PMLA, 2002, before the Hon’ble High Court, Bombay. The High Court passed an order stating that if the provisional attachment order is confirmed by the Adjudicating Authority, no effect is to be given to the said order for two weeks, allowing the applicant to approach the proper forum. 5. Jurisdiction of Enforcement Directorate: The Tribunal considered the jurisdiction of the Enforcement Directorate to attach properties already in the custody of the court. It was observed that in terms of Rule 7 of The Prevention of Money-laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013, the authorized officer is required to make an application to the court for the release of such property in favor of the Directorate of Enforcement. The Tribunal rejected the respondent's submission that possession could be taken without the court's leave, emphasizing the need for adherence to the Possession Rules. Conclusion: The Tribunal allowed the applications for stay of the impugned order regarding taking over possession of the attached properties, directed the continuation of the attachment order, and prohibited the appellants from disposing of or creating any third-party rights in the properties. The applications were disposed of accordingly, and the matter was listed for further hearing on 1st November 2017.
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