2022 (2) TMI 621 - HC - Money Laundering

Money Laundering - Seeking vacation of property - Attachment of property - notice for vacating the property was issued to the petitioner without providing any opportunity - violation of principles of natural justice - HELD THAT - The subject property was attached after confirmation by the Adjudicating Authorities under Section 8 (3) of the Act. Once the Adjudicating Authorities confirmed the attachment under Section 8(3) of the Act, then the authorities are empowered to take possession of the property. In this context, the impugned order has been issued. Thus, there is no infirmity in respect of the order passed by the 3rd respondent - Opportunity of hearing is contemplated both under Section 8 as well as Section 9 of the Act. Under Section 8(2) proviso clause, it is stated that, if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering . When the proviso clause contemplates an opportunity to a person interested, in the present case, undoubtedly, the petitioner is a person interested as he claims that he had purchased the property from the owner and the Civil Suit instituted by him was also ended in his favour. However, the appeal suit is pending - the authorities ought to have provided an opportunity to the petitioner to submit all the documents enabling him to establish his case and thereafter take a decision for the purpose of proceeding with the matter. Contrarily, the respondents admitted the possession of the petitioner in the subject property. The respondents in the present case directly issued a notice of eviction asking the petitioner to vacate the premises and hand over possession within seven days from the date of receipt of a copy of the notice. Thus, valuable opportunity of defence has been denied to the petitioner and even under the principles of law such an opportunity cannot be denied - the order impugned has been passed in violation of principles of natural Justice. The 3rd respondent is directed to issue a fresh notice to the petitioner setting out the facts and circumstances, as well as the allegations within a period of four weeks from the date receipt of a copy of this order - Petition allowed by way of remand.

Summary

Issues:
Challenge to notice for vacating property based on money laundering allegations, violation of principles of natural justice, entitlement to opportunity under Prevention of Money Laundering Act, 2002.

Analysis:
The petitioner entered into a lease agreement for a property, which was later the subject of a sale agreement. The sale deed was not executed by the owner, leading to a civil suit for specific performance. The suit was decreed in favor of the petitioner, but an appeal by the owner is pending. Subsequently, the property was attached under the Prevention of Money Laundering Act due to the owner's alleged involvement in money laundering.

The petitioner argued that the notice for vacating the property was issued without providing an opportunity, violating principles of natural justice. It was contended that as a bona fide purchaser, the petitioner was entitled to an opportunity under the Act. The respondents were criticized for not allowing the petitioner to submit a defense despite the decree in his favor and the pending appeal by the owner.

The respondents justified their actions, stating that the property was attached after confirmation by the Adjudicating Authorities under the Act, empowering them to take possession. They argued that the impugned order was valid and in line with the Act's provisions regarding opportunity of hearing.

The Court found that the petitioner, being an interested party claiming ownership through the sale agreement and the favorable civil suit decree, should have been given an opportunity to present his case and submit relevant documents. The Court held that the order to vacate the property lacked natural justice, quashing it and remitting the matter back to the respondents for fresh consideration.

The Court directed the respondents to issue a fresh notice to the petitioner, allowing him to provide explanations and evidence. A personal hearing opportunity was mandated, with instructions to complete the inquiry within a specified timeframe. The writ petition was allowed, emphasizing the importance of upholding principles of natural justice in such matters.