9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1108 - HC - Money LaunderingRelease of attached properties - Attachment of immovable properties - continued attachment of the FDRs - concealment of proceeds of crime or not - HELD THAT - The Tribunal in the present case, in its impugned order dated 26.07.2019, agreed with most of the contentions raised on behalf of Kamats and Alemaos and even concluded in para 78, that the properties attached in the matter are liable to be released 'in the light of the reasons stated in earlier paras'. However, instead of setting aside the attachment, the Tribunal issued a host of directions in para 79, perhaps not even contemplated under the PMLA, by simply observing that there is a need to strike a balance in these matters since the trial is pending before the Special Court - Once the Tribunal concluded that the attachment orders were liable to be set aside, it could not have avoided setting aside the same, by merely observing that there are allegations by the CBI against Kamats and Alemaos who are facing trial and therefore, in the name of striking balance, confirmed the attachment of the FDRs or imposed conditions for raising the attachment on the immovable properties. The directions issued by the Tribunal in its impugned order are this, quite contrary to its reasoning. The directions, therefore, are quite unsustainable in such circumstances. On a plain reading of the provisions of Section 5(1) of the PMLA, it is apparent that the two predicates in clauses (a) and (b) have to be construed conjunctively and not disjunctively as suggested by Mr. Vaze, learned counsel for the ED. This means that the director or the authorized officer before he proceeds to make an order under Section 5(1) of the PMLA, must have reason to believe, on the basis of material in his possession, not only any person is in possession of any proceeds of crime but further, such proceeds of crime are likely to be concealed, transferred or dealt with to frustrate confiscation proceedings under Chapter III of PMLA - reading the and which connects the two predicates in clauses (a) and (b) might even lead to an absurd position because it might imply that even though a person is not in possession of any proceeds of crime, he is nevertheless likely to conceal, transfer or deal with 'such proceeds of crime' to frustrate confiscation proceedings under Chapter III of PMLA. Further, if the expression and is construed as it stands, it is not as if some absurdity would result in the construction of Section 5(1) of the PMLA or the object of Section 5(1) of the PMLA would be frustrated or defeated. There is, according to us, nothing in the text or the context obliging the Court to read and as or simply because the Court, may, in certain circumstances, have the power to do so. Therefore, based upon the supposed intention of the Legislature, the expression and which connects the predicates in clauses (a) and (b) of Section 5(1) of the PMLA cannot be read as or . There is nothing in the context to indicate that the Legislature intended to provisionally attach the proceeds of crime irrespective of whether or not there was any likelihood of such proceeds of crime being concealed, transferred, or dealt with to frustrate any confiscation proceedings under Chapter III of the PMLA. Rather, it appears that the Legislature intended to empower the director or the authorized officer to provisionally attach the proceeds of crime where such proceeds of crime were likely to be concealed, transferred, or dealt with to frustrate the confiscation proceedings. The Legislature was conscious that it was vesting the director or the authorized officer with such extraordinary powers in the teeth of the presumption of innocence and therefore, such extraordinary power was hedged with certain contentions which had to be cumulatively existent. In the present case, analysis of the Joint Director s order dated 30.03.2017 makes it clear that there are no reasons whatsoever recorded by the Joint Director in support of his alleged belief that the proceeds of crime were likely to be concealed, transferred or dealt with in any manner by the Kamats or Alemaos to frustrate proceedings relating to the confiscation of such proceeds under Chapter III of the PMLA. The mere incantation that the officer had reason to believe that such proceeds of crime will be dealt with in a manner which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime, constitutes no compliance whatsoever with the predicates of clause (b) of Section 5(1) of the PMLA. The statement made on behalf of the Appellants-Kamats that they will not sell, transfer, alienate, encumber or liquidate or encash the attached properties/FDRs and order until the conclusion of PMLA Case No.1/2018 pending before the Special Court at Mapusa and for one month thereafter, is hereby accepted. The Appellants-Kamats will have to abide by this statement - Application disposed off.
Issues Involved:
1. Legality of the provisional attachment order under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA). 2. Interpretation of "proceeds of crime" under Section 2(u) of PMLA. 3. Compliance with the predicates of Section 5(1) of PMLA. 4. Conditions imposed by the Tribunal for setting aside the attachment of immovable properties. 5. Continuance of the attachment of Fixed Deposit Receipts (FDRs). Detailed Analysis: 1. Legality of the Provisional Attachment Order under Section 5(1) of PMLA: The Tribunal concluded that the provisional attachment orders dated 30.03.2017 were liable to be set aside. However, it imposed conditions for raising the attachment on immovable properties and continued the attachment of FDRs. The High Court found this contradictory, stating, "once the Tribunal concluded that the attachment orders were liable to be set aside, it could not have avoided setting aside the same." The Tribunal's directions were deemed unsustainable and contrary to its reasoning. 2. Interpretation of "Proceeds of Crime" under Section 2(u) of PMLA: The Tribunal and the High Court discussed the definition of "proceeds of crime" and whether it includes untainted properties of equivalent value. The High Court noted that the Tribunal's view was not in accord with the Delhi High Court's decisions in K. Rethinam and Directorate of Enforcement v. Axis Bank but aligned with the Punjab and Haryana High Court in Seema Garg v. Deputy Director. However, the High Court did not delve deeply into this issue, focusing instead on the compliance with Section 5(1) of PMLA. 3. Compliance with the Predicates of Section 5(1) of PMLA: The High Court emphasized that the director or authorized officer must have "reason to believe" that the proceeds of crime are likely to be concealed, transferred, or dealt with to frustrate confiscation proceedings. The Court rejected the argument that the predicates in clauses (a) and (b) of Section 5(1) should be read disjunctively. It stated, "the two predicates in clauses (a) and (b) have to be construed conjunctively and not disjunctively." The Joint Director's order lacked reasons for the belief that the proceeds of crime were likely to be concealed or transferred, thus failing to comply with Section 5(1)(b) of PMLA. 4. Conditions Imposed by the Tribunal for Setting Aside the Attachment of Immovable Properties: The High Court found that the Tribunal's directions in paragraph 79 of its order were not contemplated under PMLA. It stated, "most of the directions in paragraph 79 of the impugned order like calling upon the parties to furnish indemnities, etc., are not even contemplated under the scheme of the PMLA." The Tribunal's conditions were set aside, and the statements made by the parties to not transfer or alienate the properties/FDRs were accepted. 5. Continuance of the Attachment of Fixed Deposit Receipts (FDRs): The High Court set aside the Tribunal's decision to continue the attachment of FDRs. It accepted the appellants' statement that they would not encash the FDRs until the conclusion of the PMLA case pending before the Special Court. The Court stated, "the continuance of the attachment of the FDRs by the Tribunal deserves to be set aside." Conclusion: The appeals by Kamats were allowed, setting aside the Tribunal's conditions and continuance of FDR attachment. The appeals by the Enforcement Directorate (ED) were dismissed. The Special Court was directed to expedite the PMLA case within one year. The High Court emphasized the need for strict compliance with the predicates of Section 5(1) of PMLA and rejected the interpretation of reading "and" as "or" in the statute.
|
