2020 (11) TMI 629 - HC - Money Laundering

Money Laundering - Provisional Attachment Orders - attachment of certain properties of the petitioners for a period of 180 days from the date of the said order - petitioners filed the present petition on 15.06.2020 claiming therein that as the period of 180 days from the date of the Provisional Attachment Orders had expired, in terms of Section 5(3) of the Act, the said order ceased to have effect and therefore, the Adjudicating Authority had become functus officio and the proceedings in the complaint cannot proceed - HELD THAT - The submission of the learned counsel for the respondents that as the delay in proceedings before the Adjudicating Authority cannot be blamed on the respondents, the respondents must not be penalized and the time period should be extended, cannot be accepted. It is not a question of penalization of the respondents for the delay, but of application of the mandate of law from which there is no escape. Equally, the principle of Actus Curiae Neminem Gravabit can also have no application. The 180 days from the date of the Provisional Attachment Order dated 13.11.2019 having expired without any order under Section 8(3) of the Act being passed by the Adjudicating Authority, it is held that the Adjudicating Authority has been rendered functus officio and cannot proceed with the Original Complaint, being O.C. No. 1228/2019 pending before it. The Notice/Summons dated 26.05.2020 is accordingly set aside. In the present case, it is restrained from making any comment on whether the period of total lockdown declared by the Central Government, that is from 24.03.2020 to 20.04.2020, can be excluded for computation of the 180 days, as it is not disputed that even on exclusion of this period, the 180 days would have expired on 16.06.2020, the returnable date of the notice issued by the Adjudicating Authority. Petition allowed.

Issues Involved:

1. Effect of COVID-19 lockdown on the period of Provisional Attachment Orders under Section 5(1) of the Prevention of Money Laundering Act, 2002.
2. Whether the period of validity of Provisional Attachment Orders can be extended beyond 180 days.
3. Whether the orders of the Supreme Court extending limitation periods due to COVID-19 apply to the validity of Provisional Attachment Orders.

Issue-wise Detailed Analysis:

1. Effect of COVID-19 lockdown on the period of Provisional Attachment Orders under Section 5(1) of the Prevention of Money Laundering Act, 2002:

The petitioners argued that the COVID-19 lockdown should not affect the statutory period of 180 days for Provisional Attachment Orders. They contended that the lockdown and subsequent orders extending limitation periods did not apply to the validity of Provisional Attachment Orders. The respondents, however, argued that the Supreme Court's orders extending limitation periods should apply, thus extending the validity of the Provisional Attachment Orders. The court found that the lockdown and Supreme Court orders extending limitation periods did not affect the statutory period of validity of Provisional Attachment Orders.

2. Whether the period of validity of Provisional Attachment Orders can be extended beyond 180 days:

The court analyzed Section 5(1) and Section 5(3) of the Prevention of Money Laundering Act, 2002, which clearly state that Provisional Attachment Orders are valid for a maximum of 180 days unless confirmed by the Adjudicating Authority under Section 8(3). The court emphasized that this period is the outer limit and cannot be extended by any authority or court. The court referred to various judgments, including the Supreme Court's ruling in New India Assurance Co. Ltd. vs. Hilli Multipurpose Cold Storage Pvt. Ltd., which held that statutory periods must be strictly adhered to and cannot be extended on equitable grounds.

3. Whether the orders of the Supreme Court extending limitation periods due to COVID-19 apply to the validity of Provisional Attachment Orders:

The court examined the Supreme Court's orders in Suo Moto W.P.(C) No. 3/2020, which extended limitation periods due to the COVID-19 pandemic. The court noted that these orders were intended to extend the period for filing petitions, applications, suits, appeals, and other proceedings, but did not extend the validity of orders such as Provisional Attachment Orders. The court highlighted that the Supreme Court's orders were specific to limitation periods and did not apply to statutory periods of validity for orders under other statutes. The court also referred to the Supreme Court's judgment in S. Kasi vs. State, which clarified that the extension of limitation periods did not affect statutory periods for actions required under other statutes.

Reasoning and Finding:

The court concluded that the 180-day period for the validity of Provisional Attachment Orders under Section 5(1) of the Prevention of Money Laundering Act, 2002, is a statutory period that cannot be extended. The court held that the Supreme Court's orders extending limitation periods due to COVID-19 did not apply to the validity of Provisional Attachment Orders. Consequently, the Provisional Attachment Order dated 13.11.2019 had lapsed after 180 days, and the Adjudicating Authority became functus officio, meaning it could no longer proceed with the complaint. The court set aside the Notice/Summons dated 26.05.2020 issued by the Adjudicating Authority and allowed the petition.

Conclusion:

The court ruled that the statutory period of 180 days for the validity of Provisional Attachment Orders under the Prevention of Money Laundering Act, 2002, cannot be extended, and the Supreme Court's orders extending limitation periods due to COVID-19 do not apply to such orders. The Adjudicating Authority was rendered functus officio after the expiry of the 180-day period, and the proceedings in the complaint could not continue. The petition was allowed, and the Notice/Summons dated 26.05.2020 was set aside.

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