2022 (2) TMI 362 - HC - Money Laundering

Provisional attachment of the property - orders confirming the attachment of properties of the respondents lapsed due to the operation of the provisions of the PMLA Act - applicability of time limitation as per period specified under Section 8 (3) of the PMLA Act - scheduled offences or not - HELD THAT - It is evident from the operation of Sections 5 and 8 of the PMLA Act that under Section 8(3), as it stood at the relevant time, the order passed by the Adjudicating Authority confirming the attachment of the properties would remain in operation during the period of investigation, not exceeding 90 days. It is admitted position that in the present case, not even the complaint contemplated under Section 44 of the PMLA Act was instituted by the concerned Authority within the period of 90 days and eventually it came to be filed on 03/05/2019. Merely because the Delhi High Court had passed the above quoted interim order in Writ Petition filed by Mr. Vinod Phadke, the respondent in Appeal bearing No. 2509 of 2019, it would not ipso facto mean that the period specified under Section 8 (3) of the PMLA Act stood extended. Nothing prevented the concerned Authority from filing the complaint and investigating into the matter. It is also worth noting that a subsequent amendment was brought into the PMLA Act in the year 2019, whereby explanation was added to Section 8 (3) of the said Act. This further assists this Court in appreciating the contentions raised by the rival parties. The explanation appended to Section 8(3) by way of amendment of 2019 specifically states that for the purposes of computing the period relevant to Section 8(3) of the PMLA Act, the period during which investigation is stayed by any Court shall be excluded. Although the said explanation is not relevant in the facts and circumstances of the present case since the amendment came in the year 2019, it does show that even post amendment the period specified under Section 8 (3) would stand extended only if there is stay to the investigation by any Court. In the present case, a perusal of the above quoted interim order of the Delhi High Court would show that there was, in fact, no stay of the investigation. This is another reason why the contention raised on behalf of the appellant Directorate of Enforcement cannot be accepted. The Writ Petition is partly allowed.

Summary

Issues:
1. Quashing of order confirming provisional attachment under the PMLA Act.
2. Lapsing of orders confirming attachment of properties under the PMLA Act.
3. Interpretation of Section 8(3) of the PMLA Act regarding the period of investigation.
4. Effect of a Delhi High Court interim order on the attachment order under the PMLA Act.
5. Impact of subsequent amendment to the PMLA Act on the calculation of the investigation period.

Analysis:
1. The judgment addressed a Writ Petition and two appeals challenging the orders related to the Prevention of Money Laundering Act, 2002 (PMLA Act). The Writ Petition sought to quash an order confirming provisional attachment of the petitioner's property under Section 8 of the PMLA Act. The appeals were filed by the Directorate of Enforcement contesting the Appellate Tribunal's decision allowing the respondents' appeals against the attachment orders.

2. The key issue revolved around the interpretation of Section 8(3) of the PMLA Act regarding the period of investigation. The Adjudicating Authority had confirmed the attachment of properties, but the complaint was filed beyond the 90-day limit specified in the Act. The Appellate Tribunal held that the orders confirming the attachment had lapsed due to the expiry of the investigation period.

3. The respondents argued that the investigation period was extended due to a Delhi High Court interim order in a related case. However, the Court noted that the interim order did not stay the investigation and, therefore, did not extend the 90-day limit. The subsequent amendment to the PMLA Act in 2019 clarified that the investigation period excludes any stay by a Court, which was not applicable in this case.

4. The Court emphasized that the Delhi High Court's interim order did not automatically extend the investigation period under the PMLA Act. The Appellate Tribunal's decision to allow the appeals based on the lapsing of the attachment orders was upheld, leading to the dismissal of the appeals filed by the Directorate of Enforcement.

5. The judgment partially allowed the Writ Petition based on the ground of the attachment order lapsing under Section 8(3) of the PMLA Act. It highlighted the importance of statutory provisions and the need for timely actions in such legal proceedings. The Court did not delve into other grounds raised in the Writ Petition, focusing solely on the attachment order's validity in light of the investigation period.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, interpretations of relevant provisions, and the Court's reasoning in arriving at its decision.