2020 (11) TMI 755 - HC - Money Laundering

Money Laundering - Modification of the ex parte ad interim order - maintenance of status quo in respect of attached properties - acquittal of the accused - it was alleged that the present applicants with other accused were intentionally aiding and facilitating the payment of alleged quid pro-quo of ₹ 200 crores as a reward for alleged undue favours shown to company - HELD THAT - The plea of petitioner/ED raised in these applications for early hearing was that since this Court is to demit the office on 30th November, 2020 and arguments on behalf of petitioner in Crl.L.P. 185/2020 stand concluded and part arguments on behalf of respondents have already been advanced, the leave petitions should, therefore, be heard expeditiously and in case, the arguments remain inconclusive, the petitioners will have to address all the arguments afresh. The said applications for early hearing were strongly opposed by learned counsel for the applicants and other respondents on various grounds i.e. the Courts are hearing only urgent matters through video conferencing as per the Roster and non-urgent matters shall be taken up by the Roster Benches on resumption of regular hearings. It was also argued as to why these petitions be given preference in hearing over the appeals in which accused persons are in jails. The leave petition was set down for day to day hearing from 5th October, 2020, while the orders in these applications stood reserved. It goes without saying that Coordinate Bench of this Court after preliminary hearing and being satisfied, had passed ex parte ad interim order dated 21st March, 2018 directing the parties to maintain status quo in respect of the attached properties. Perusal of instant applications and replies reveals that disputed and complicated issues have been raised which require analysis of evidence and judgment of learned trial court which is voluminous in nature and is, no doubt, subject matter of leave to appeal also which this Court intended to decide at the earliest and had even directed listing of the same for hearing on day to day basis from 5th October, 2020 onwards. Since the subject matter of present applications required thorough examination of the impugned judgment, this Court had, therefore, made an earnest effort to hear and decide the leave to appeal as expeditiously as possible. However, this Court has to say with a heavy heart that limited time available at its disposal was consumed in hearing and disposal of miscellaneous applications and writ petitions filed one after another on behalf of the respondents, which have been dismissed vide detailed orders/judgments on merits. Had the leave to appeal been heard on merits, a clear picture would have emerged and this Court could have arrived at a conclusion whether the properties at all are required by the prosecution or these should be released to the applicants - In the absence of any arguments on merits, this Court is of the opinion that the order dated 21st March, 2018 vide which status quo in respect of attached properties was directed to be maintained, need not be interfered with at this stage. This Court is of the opinion that it will be in the interest of justice if these applications are decided only after hearing arguments in criminal leave to appeal. However, if there is inordinate delay in disposal of leave to appeal, the applicants/respondents are at liberty to approach this Court by filing fresh application for release of attached properties, which will then be considered in accordance with law. Application disposed off.

Summary

Issues Involved:
1. Modification of the ex parte ad interim order dated 21st March 2018.
2. Release of attached properties upon acquittal.
3. Validity of the attachment of properties under PMLA.
4. Maintenance and financial implications of attached properties.
5. Prima facie establishment of offenses by ED.
6. Jurisdiction and authority of the High Court in reviewing acquittal judgments.
7. Applicability of Prevention of Corruption (Amendment) Act, 2018.
8. Procedural aspects and delays in hearing the leave to appeal.

Issue-Wise Detailed Analysis:

1. Modification of the ex parte ad interim order dated 21st March 2018:
The applications Crl.M.A. 10885/2020 by respondent No.17 and Crl.M.A. 12520/2020 by respondent No.15 sought modification of the ex parte ad interim order dated 21st March 2018, which directed maintaining the status quo concerning the attached properties. The applicants argued that the status quo order deprived them of using and enjoying their properties despite their acquittal by the Special Court on 21st December 2017.

2. Release of attached properties upon acquittal:
The applicants contended that the properties should be released as they were acquitted of the charges framed against them, and the attached properties were not acquired from the alleged proceeds of crime. They argued that the ED had taken physical possession of the properties since September 2014, and the properties were not connected to the alleged criminal activities.

3. Validity of the attachment of properties under PMLA:
The applicants argued that the attachment of properties by ED under PMLA was based on civil liability and not on actual involvement in money laundering. They emphasized that the properties were not derived from criminal activities and had no nexus with the alleged proceeds of crime. They cited various decisions where attached properties were released on furnishing indemnity bonds.

4. Maintenance and financial implications of attached properties:
The applicants highlighted the financial burden due to the maintenance and property taxes of the attached properties, which were not being paid by the ED. They received notices from the Municipal Corporation of Greater Mumbai and Shagun Arcade Premises Co-Operative Society Ltd. for outstanding taxes and maintenance charges, leading to potential auction of the properties.

5. Prima facie establishment of offenses by ED:
The applicants argued that the ED failed to establish prima facie that the applicants had committed offenses or had a nexus with the proceeds of crime. They emphasized that the properties were not acquired from the alleged proceeds of crime and that no money from the disputed transactions reached the applicants.

6. Jurisdiction and authority of the High Court in reviewing acquittal judgments:
The applicants cited decisions emphasizing that the High Court should not interfere with acquittal judgments unless the findings are perverse. They argued that the trial court's judgment should be given due weight, and the High Court should be slow to disturb the trial court's findings.

7. Applicability of Prevention of Corruption (Amendment) Act, 2018:
The ED argued that the offense of money laundering is a standalone offense and that the acquittal in the scheduled offense investigated by the CBI should not automatically lead to acquittal in the money laundering case. The applicants contended that the amendment in Section 13 of the Prevention of Corruption Act, 1988, was relevant for adjudicating the leave to appeal.

8. Procedural aspects and delays in hearing the leave to appeal:
The court noted that the applications were listed during limited court functioning due to COVID-19, and extensive arguments were heard through video conferencing. The ED filed applications for early hearing, which were opposed by the applicants. The court emphasized the need for judicial discipline and the necessity to hear the leave to appeal expeditiously.

Conclusion:
The court decided that the applications for modification of the ex parte ad interim order and release of attached properties should be decided only after hearing arguments in the criminal leave to appeal. The court acknowledged the need to hear the leave to appeal on merits to determine whether the properties should be released. If there is an inordinate delay in disposing of the leave to appeal, the applicants are at liberty to file fresh applications for the release of attached properties. The applications were disposed of with these observations.