2023 (5) TMI 1382 - AT - Money Laundering

Money Laundering - property attached in disproportionate to value of the proceeds of crime - whether attachment of the property should be after assessment of its value on the current market price as on the date of attachment to protect the proceeds of crime? - Right to cross-examination - principles of natural justice - HELD THAT - The word value has been used in section 2(1)(u) defining proceeds of crime and if section 2(1) (u) 2(1) (zb) are read together value of any such property can be assessed at the fair market value as on the date of acquisition and not at the current market price on the date of attachment. There are no ground is made out to seek cross examination of the two officers. It is when cross examination of the officer is sought for valuation of the property attached and that too as on the date of attachment while as per the definition of value given in section 2(zb) of the Act, 2002, it is to be taken as on the date of its acquisition or possession, as the case may be. There are no reasons to cause interference in the interim order passed by the Adjudicating Authority though it kept the legal issue open with liberty to the Appellant to raise it appropriately but Tribunal was requested to decide the legal issue. It is observed that the cross examination of the witness may be part of the principle of natural justice but it cannot be sought for the sake of it and even in the case, issue for cross examination is not even made out. The proceeding before the Adjudicating Authority is otherwise to be completed within 180 days as per the provisions of the Act of 2002. The appeal is accordingly fails and dismissed.

Summary

Issues Involved:
1. Determination of the "value" of attached property under the Prevention of Money Laundering Act, 2002.
2. Right to cross-examination as part of the principle of natural justice.

Issue-Wise Detailed Analysis:

1. Determination of the "Value" of Attached Property:

The primary issue in this case revolves around the interpretation of the term "value" as defined under the Prevention of Money Laundering Act, 2002 (the Act of 2002). The Appellant challenged the interim order of the Adjudicating Authority which denied the cross-examination of two officers from the Enforcement Directorate. The Appellant argued that the value of the attached properties should be assessed at their current market value on the date of attachment, rather than their value on the date of acquisition, as stipulated in section 2(1)(zb) of the Act. This was contested on the grounds that the attached properties' value significantly exceeded the value of the proceeds of crime, which was Rs. 78,39,82,343/-, while the attached properties were valued at Rs. 216,84,36,000/-.

The Tribunal examined the statutory definitions under section 2(1)(u) and 2(1)(zb) of the Act, which define "proceeds of crime" and "value" respectively. The Tribunal concluded that the definition of "value" is unambiguous and refers to the fair market value on the date of acquisition or possession, not the current market value. The Tribunal emphasized that neither it nor any court has the jurisdiction to reinterpret statutory definitions unless challenged and struck down by a Constitutional Court. Thus, the Tribunal rejected the Appellant's request to interpret "value" as the current market price.

2. Right to Cross-Examination as Part of the Principle of Natural Justice:

The Appellant sought cross-examination of the officers to ascertain the valuation method used by the Enforcement Directorate. The Appellant argued that denying cross-examination violated the principles of natural justice, as the Adjudicating Authority is bound to follow these principles. The Tribunal, however, held that cross-examination cannot be sought merely for its sake, especially when the issue for cross-examination is not substantiated. The Tribunal noted that the proceedings before the Adjudicating Authority must be completed within 180 days as per the Act, and the request for cross-examination was not justified given the statutory definition of "value."

The Tribunal also addressed the Appellant's reference to various judgments to support their argument for a broader interpretation of "value." However, it found these references either irrelevant or repetitive of issues already discussed. The Tribunal concluded that the Appellant's argument for a different interpretation of "value" was unsustainable, and thus, there was no basis to allow cross-examination of the officers.

In conclusion, the Tribunal dismissed the appeal, upholding the Adjudicating Authority's interim order and reiterating the statutory interpretation of "value" as per the Act of 2002. The Tribunal also clarified that any deviation from this interpretation would require a constitutional challenge, which was not pursued by the Appellant.