2024 (2) TMI 507 - HC - Money Laundering

Provisional Attachment Order - Money Laundering - proceeds of crime - Petitioner being Housewife - company had prepared 17 fake bills of entry and presented the same before the ICICI Bank for making foreign outward remittances - HELD THAT - Section 5 of the PMLA postulates that where the Director or any other officer not below the rank of Deputy Director authorised by the Director, on the basis of material on possession has reason to believe, which has to be recorded in writing, that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings, he may, by order in writing, provisionally attach such property for a period not exceeding 180 days from the date of the order. The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. It is well settled that where any Statute provides a procedure to deal with the issues which arises under the Statute, the High Court while exercising its jurisdiction under Article 226 of the Constitution of India ordinarily must not interfere with the scheme unless there is a patent lack of jurisdiction. The present case is not a case of patent lack of jurisdiction. The Adjudicating Authority has the power to look into the facts of the case of the Petitioner before coming to a conclusion as to whether the properties in question are proceeds of crime or not. It has been contended by the Petitioner that one accused has been discharged and proceedings against one accused has been abated because of his death. It is pertinent to mention that apart from individuals, even companies have been made accused. Merely because proceedings have been dropped against some individuals does not mean that the proceedings against the Petitioner should or will be dropped. The offences under the PMLA Act are distinct from offences under the IPC. The companies can still be convicted for the predicate offence and the Petitioner can be prosecuted under the PMLA Act. This Court is not inclined to interfere under Article 226 of the Constitution of India - the writ petition is dismissed.

Summary

Issues Involved:
1. Challenge to Provisional Attachment Order (PAO)
2. Allegations of Conspiracy and Fraud
3. Involvement of Petitioner's Family and Companies
4. Legal Provisions under PMLA, 2002
5. Jurisdiction and Alternative Remedies

Summary:

1. Challenge to Provisional Attachment Order (PAO):
The Petitioner approached the Court challenging the Provisional Attachment Order (PAO) No. 3/2023 dated 06.10.2023 issued by the Respondent.

2. Allegations of Conspiracy and Fraud:
The PAO was based on FIRs registered by the Detection of Crime Branch, Surat Police, alleging that various companies and their directors prepared fake bills of entry to make illegal foreign remittances. The chargesheets filed indicated a well-planned conspiracy involving the creation of different companies and the use of forged documents to open bank accounts and transfer funds.

3. Involvement of Petitioner's Family and Companies:
The investigation revealed that the Petitioner's husband and son were directors and shareholders of M/s Kross Diamonds Pvt. Ltd., which was implicated in the fraudulent activities. The Petitioner, a housewife, was initially a director and later a shareholder of the company. The PAO detailed significant amounts transferred from M/s Kross Diamonds Pvt. Ltd. to other entities based on forged documents.

4. Legal Provisions under PMLA, 2002:
Proceedings were initiated under the Prevention of Money Laundering Act, 2002 (PMLA). Section 5 of PMLA allows for provisional attachment if there is reason to believe that proceeds of crime are likely to be concealed or transferred. Sections 8(1) and 8(2) outline the adjudication process, requiring the Adjudicating Authority to serve notice, consider replies, and hold hearings before confirming the attachment.

5. Jurisdiction and Alternative Remedies:
The Court emphasized that when a statute provides a specific procedure for addressing grievances, the High Court should not interfere under Article 226 of the Constitution unless there is a patent lack of jurisdiction. The Petitioner's arguments were primarily factual and could be addressed by the Adjudicating Authority and the Appellate Tribunal under PMLA. Citing several precedents, the Court reiterated that the existence of an alternative remedy precludes the High Court from exercising its jurisdiction unless exceptional circumstances are demonstrated.

Conclusion:
The Court dismissed the writ petition, stating that the Petitioner should seek remedy through the statutory mechanisms provided under PMLA, 2002. The Court found no grounds to bypass the alternative remedies and interfere under Article 226 of the Constitution.