2017 (8) TMI 1139 - AT - Money Laundering

Application under section 35 (2) (f) of the PMLA, 2002 for review of Judgment - Held that - Considering the facts that similar prayer is sought by his wife and son which is pending before High Court with the same prayer, we are of the view, it would be appropriate to await the decision of the writ-petitioner as the appellant also intends to continue the said proceedings. Even otherwise, we feel that in view of order passed in LPA to the effect that the attachment shall continue, it is better to await the direction from the higher court.

Issues Involved:
1. Jurisdictional error in remanding the matter to the Adjudicating Authority.
2. Applicability of common law and equity principles to statutory proceedings under the PMLA.
3. Validity of retention order under Section 20 of PMLA.
4. Requirement of Section 173 Cr.P.C. report for reason to believe under PMLA.
5. Non-application of mind by Adjudicating Authority in issuing notice under Section 8(1) of PMLA.
6. Continuation of retention of seized jewelry without adjudication.
7. Relief of retention of seized jewelry without an appeal by the Respondent.
8. Misplaced reliance on the judgment in State of Maharashtra Vs. Ramdas Shrinivas Nayak.

Issue-wise Detailed Analysis:

1. Jurisdictional Error in Remanding the Matter:
The appellant contended that the impugned judgment suffers from a jurisdictional error by remanding the matter to the Adjudicating Authority, as the Appellate Tribunal under Section 26(4) of the PMLA does not have the jurisdiction to remand cases. The Tribunal can only confirm, modify, or set aside the order appealed against. The principle of expressio unius est exclusion alterius was cited, indicating that the express inclusion of one thing excludes all others. The absence of an express provision for remand means the Tribunal lacks inherent powers for remand, unlike a Civil Court under Section 151 CPC.

2. Applicability of Common Law and Equity Principles:
The appellant argued that the appeal under the PMLA is a statutory proceeding to which neither common law nor equity principles apply, but only those provisions which the statute makes and applies. The Tribunal has no right or jurisdiction to apply common law or equity principles. Allowing remand would nullify the statutory time limits for adjudication and retention of properties under the Act, giving the Department unbridled discretion to continue proceedings indefinitely.

3. Validity of Retention Order Under Section 20 of PMLA:
The appellant contended that the Tribunal erred in holding that the retention order under Section 20 was valid. The appellant relied on Rule 2(1)(f) of the PMLA Rules, which states that material for the purpose of Section 20(1) means material in possession of an authorized officer, including a report forwarded to a Magistrate under Section 173 of the Cr.P.C. The requirement of a Section 173 Cr.P.C. report is mandatory to establish 'reason to believe' of commission of the scheduled offense.

4. Requirement of Section 173 Cr.P.C. Report:
The appellant argued that without a Section 173 Cr.P.C. report, the Investigating Agency only has a reason to suspect, not a reason to believe, the commission of a crime. Without such a reason to believe, the Adjudicating Authority cannot have a reason to believe that the appellant is in possession of proceeds of crime. The absence of a crime means there cannot be proceeds of crime.

5. Non-application of Mind by Adjudicating Authority:
The appellant claimed that the Adjudicating Authority did not apply its mind to the material before issuing a notice under Section 8(1). The original show cause notice dated 22.10.2014 was issued without proper inspection of records, indicating non-application of mind. This defect cannot be cured by resorting to Section 68 of the Act.

6. Continuation of Retention Without Adjudication:
The Tribunal erred in allowing the continued retention of seized jewelry beyond the 180-day period without any adjudication that the jewelry was involved in money laundering. This is contrary to the provisions of Section 20(3) of the Act and violates the appellant's constitutional rights under Article 300A.

7. Relief of Retention Without Appeal by Respondent:
The appellant argued that in the absence of an appeal by the Respondent, the Respondent cannot be given relief of retention of seized jewelry beyond 180 days without adjudication under Section 8(2). The Respondent should have appealed for a direction to the Adjudicating Authority for adjudication.

8. Misplaced Reliance on Judgment in State of Maharashtra Vs. Ramdas Shrinivas Nayak:
The appellant contended that the Tribunal's reliance on the judgment in State of Maharashtra Vs. Ramdas Shrinivas Nayak was misplaced. The judgment pertains to a Court of Record like a High Court and cannot be applied to the Adjudicating Authority, which has no provision for review.

Conclusion:
The Tribunal adjourned the review application sine die, awaiting the decision of the writ petition No. 1766/2016 filed by the appellant's wife and son before the High Court. The Tribunal deemed it appropriate to await directions from the higher court, considering the overlapping relief sought in the writ petition and the pending LPA before the Division Bench of the Delhi High Court.

← Previous Next →