2024 (5) TMI 778 - HC - Money Laundering

Money Laundering - possession of properties as envisaged under Section 8(4) of the Prevention of Money Laundering Act 2002 - symbolic/constructive possession - HELD THAT - Section 8(4) of the PMLA Act would envisage that the Director or any other officer authorised by him on confirmation of a provisional attachment can take possession of the property attached. It could also be seen that subsection (4) of Section 8 provides that the attachment or retention of the seized property shall continue during the pendency of the proceedings relating to any scheduled offence and would become final if the guilt of a person is proved in trial. The learned Single Judge had interpreted the term possession under Section 8(4) to be only constructive possession by holding that the rights of the person whose properties available under any other enactment would be affected if they are physically dispossessed of the property. This is the main bone of the reasoning that had been assigned by the learned Single Judge in coming to such a conclusion. When an Act by a non obstante clause makes it clear that the said provision of the Act will have effect notwithstanding anything inconsistent contained in any other law then the said enactment would prevail over all the existing laws. Therefore the reasoning assigned by the learned Single Judge that the term possession if would mean taking actual physical possession would affect the existing right available under any other law would have to fall in view of Section 71 of the PMLA Act. Similarly under the Rule making power clauses (ee) to subsection (2) of Section 73 had been introduced and pursuant to the said Rule Making Power the Central Government had also notified the Prevention of Money Laundering (taking possession of attachment or property confirmed by the Adjudicating Authority) Rules 2013 under Rule 5 of the said rules manner of taking possession of immovable property had also been enumerated - In view of the subsequent amendment the PMLA Act empowers the authority under the said enactment can take physical possession of an immovable property which had been attached under Section 8(3). The order passed by the learned Single Judge in reading down the term possession under Section 8(4) of the PMLA Act would have to be interfered with by us and the direction issued by the learned Single Judge to put back the respective Writ Petitioners in actual possession of the property would have to be set aside - Appeal allowed.

Summary

Issues involved: Interpretation of the term "possession" under Section 8(4) of the Prevention of Money Laundering Act, 2002.

The judgment by the High Court of Madras involved the interpretation of the term "possession" under Section 8(4) of the Prevention of Money Laundering Act, 2002. The Enforcement Directorate had appealed against a portion of the order directing the Department to put back the Writ Petitioners into possession of properties, arguing that possession should be actual rather than symbolic or constructive.

The appellants contended that the PMLA Act aims to protect the state's interests by preventing illegal transactions, and the learned Single Judge erred in not considering the Division Bench's interpretation of possession as actual possession to prevent property wastage. They argued that properties adjudicated upon under the Act should not be released until the accused is acquitted, and the learned Single Judge's interpretation goes against the Act's purpose.

The Court considered the submissions and materials on record, noting that the Writ Appeals arose from adjudicatory proceedings where the Single Judge rejected challenges to the validity of the proceedings but did not interfere with them. The Department appealed the interpretation of possession under Section 8(4) and the directive to return possession to the owners, which the Single Judge had based on a symbolic or constructive possession concept.

The Court analyzed Section 8 of the PMLA Act, particularly Section 8(4), emphasizing that the Act allows the Department to take possession of attached property. It highlighted the Act's overriding effect over other laws and noted that the Single Judge's interpretation conflicted with this provision. The subsequent amendment empowered authorities to take physical possession of attached immovable property, aligning with the Act's objectives.

In conclusion, the Court held that the Single Judge's interpretation of possession under Section 8(4) should be overturned, setting aside the directive to return actual possession to the Writ Petitioners. The Writ Appeals were allowed, and the Single Judge's order was upheld in all other aspects, with no costs awarded.