2017 (8) TMI 964 - AT - Money Laundering

PMLA - attachment of property - taking custody of the vehicle - Held that - Rule 7 of PMLA is very clear that the authorized officers of the respondent has to file the application before Spl. Court providing the order passed under section 5 & 8 (3) of the Act. In the present case the said procedure has not been followed by the respondent. No application for seeking the leave has been filed. No different interpretation can be given once the language of the Rule is clear. The respondent may be entitled to take the possession of the confirmed attachment property only if the leave of the court is granted who is having the custody of the vehicle. Therefore, if so required authorized officers has to make a application to such court by providing the copy of the Provisional Attachment Order and confirmation order by the Adjudicating Authority. Nothing of that sort has happened in the present case. In the present case, we are of the view that the custody taken by the respondent is unauthorized without following the procedure of Rule-7, even without informing the Court. The respondent, therefore, shall handover the possession of the vehicle to the appellant forthwith who shall not dispose of the said vehicle in any manner directly or indirectly during the pendency of the appeal. The respondent is at liberty to move such application as provided under sub rule 7 of PMLA before the Special Court. If such application is filed it would be decided accordingly.

Summary

Issues Involved:
1. Legality of the attachment of the appellant's vehicle.
2. Procedural compliance under the Prevention of Money Laundering Act (PMLA) and its rules.
3. Jurisdiction and authority of the respondent to take possession of the vehicle.

Detailed Analysis:

1. Legality of the Attachment of the Appellant's Vehicle:
The appellant challenged the impugned order dated 3rd September 2015, which involved the attachment of his vehicle, a Fortuner Toyota Car. The appellant contended that the vehicle was purchased through a bank loan and was being used by his family during his judicial custody. He argued that no third-party rights had been created over the vehicle, and he had retracted his statement, which was allegedly obtained forcibly. The appellant emphasized that the vehicle was released on 'Superdari' by the Additional Session Judge Fatehgarh Saheb on 20th November 2013, indicating that the vehicle was under the court's control.

2. Procedural Compliance under PMLA and its Rules:
The appellant argued that the respondent's action to take possession of the vehicle was contrary to the prescribed procedure under the law. Specifically, the respondent failed to seek leave from the Special Court before taking possession of the attached vehicle, as mandated by Rule 7 of the PMLA (Taking Possession of the Attachment or Frozen Property Confirmation by the Adjudicating Authority) Rules, 2013. The appellant cited Rule 7, which requires the authorized officer to make an application to the court that has custody of the confirmed attached property, providing a copy of the provisional attachment order and the order under sub-section (3) of section 8 passed by the Adjudicating Authority.

3. Jurisdiction and Authority of the Respondent to Take Possession of the Vehicle:
The respondent opposed the appellant's prayer, referring to decisions of the Bombay High Court and the Division Bench in similar cases, arguing that the possession of the vehicle was justified under the PMLA. However, the Tribunal highlighted the binding nature of the Supreme Court's decision in the case of Kanhaiyalal V. Dr. D.R. Balaji and others, which established that proceedings taken in respect of a property in the possession and management of a court-appointed Receiver without the court's leave are illegal. The Tribunal emphasized that any authority wishing to take possession of property in custodia legis must seek leave from the court holding custody of the property.

Conclusion:
The Tribunal concluded that the respondent's action of taking possession of the vehicle without informing the court and without following the procedure stipulated in Rule 7 of the PMLA was unauthorized. The Tribunal ordered the respondent to hand over the possession of the vehicle to the appellant forthwith and prohibited the appellant from disposing of the vehicle during the pendency of the appeal. The respondent was granted liberty to move an application under Rule 7 of the PMLA before the Special Court, which would be decided accordingly. The appellant's application was disposed of accordingly.