2023 (3) TMI 132 - HC - Money Laundering

Money Laundering - provisional attachment of property on the ground of being proceeds of crime - seeking extension of time granted by the learned Single Judge, to file effective reply to the show cause notices since a large number of properties have been provisionally attached - HELD THAT - From a conjoint reading of relevant provisions of Sections 5 and 8 of PMLA, it is seen that there is no such time limit statutorily prescribed for submission of reply to the show cause notice issued under Sub-Section (1) of Section 8 of PMLA though it has to be borne in mind that under Sub- Section (3) of Section 5 every order of attachment made under Sub-Section (1) of Section 5 which is the subject matter of proceedings under Section 8 shall cease to have effect after expiry of 180 days or on the date of an order made under Sub-Section (3) of Section 8, whichever is earlier. Insofar the concern of the Enforcement Directorate pertaining to the overall limitation of 180 days is concerned, the 3rd proviso to Sub-Section (1) of Section 5 clearly protects the interest of the Enforcement Directorate. While computing the period of 180 days, the period during which proceedings under Section 5 is stayed by the High Court shall be excluded and thereafter a further period not exceeding 30 days shall be counted to arrive at the figure of 180 days. The direction of the learned Single Judge granting two months of further time to respondent Nos.1 to 29 to file reply to the show cause notice is in the nature of a stay order passed by the Court and therefore, the 3rd proviso to Sub-Section (1) of Section 5 will come into play - the period extended by the learned Single Judge would expire on 22.02.2023. If by that time respondent Nos.1 to 29 do not file their reply, it would be open to the appellant to proceed in accordance with law. Appeal dismissed.

Summary

Issues:
Extension of time for preparation of reply to show cause notices under PMLA.

Analysis:
The appeal concerned an order passed by a Single Judge in a writ petition filed by respondent Nos.1 to 29, who were facing proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The respondents sought an extension of time to prepare their replies to show cause notices issued under Section 8 of PMLA. The Single Judge granted a two-month extension, excluding this period from the overall 180-day limit for proceedings. The Enforcement Directorate challenged this extension, arguing that no provision allowed for it and that it hindered their ability to proceed efficiently. However, the respondents contended that the extension was necessary to provide a thorough response due to the complexity of the case involving multiple properties. Despite the Enforcement Directorate's concerns about setting a precedent, the High Court held that each case is unique, and the Single Judge's decision did not establish a binding precedent. The High Court dismissed the appeal, upholding the Single Judge's order for the extension of time, subject to the exclusion of the extended period from the 180-day limit. The High Court clarified that if the respondents did not submit their replies by the extended deadline, the Enforcement Directorate could proceed as per the law. The High Court emphasized that the concerns of the Enforcement Directorate regarding the extension's impact on the overall timeline were adequately addressed by the exclusion of the extended period from the statutory limit.