2016 (7) TMI 474 - HC - Money Laundering

Whether the services of the Show Cause Notices u/s. 8 1 of Prevention of Money Laundering Act, 2002 (PMLA) on the minor sons of the petitioner, were proper or not? - Held that - A careful perusal and scrutiny of PMLA, Rules and Regulations, framed thereunder, do not prohibit the application of the Code of Civil Procedure to the proceedings except certain exceptions. As per the own admission of the 1st respondent complainant, the defendants 2 to 5 in the Original Complaint No.552/2016, are minors and the Cause Title insofar as they are concerned, is not in proper form. This Court, vide order dated 23.06.2016, has asked the learned Standing Counsel appearing for the respondents for production of acknowledgments and according to the counter affidavit and the additional counter affidavit, notices were sent by speed post and to evidence the service of the same, the Detailed Track Events have been furnished. However, acknowledgment cards have not been produced. Therefore, this Court is unable to arrive at any definite conclusion as to whether notices addressed to the minor defendants were received by whom. It is also not clear from the counter affidavit as well as the additional counter affidavit sworn to on behalf of the 1st respondent. Be that as it may, the four sons of the petitioner did not join with the petitioner challenging the legality of the procedure adopted by the 1st respondent as to their array as parties in the complaint and to the services of notices. Therefore, this Court is not in a position to grant the relief to them. Insofar as the petitioner is concerned, this Court is of the opinion that the notice u/s.8 1 of PMLA has been properly served on him and his counsel had also entered appearance. - Writ petition dismissed - Decided against the petitioner.

Issues Involved:
1. Legality of the registration of ECIR under PMLA against the petitioner and his minor children.
2. Validity of the provisional attachment of properties.
3. Compliance with procedural requirements under Section 8(1) of PMLA.
4. Proper representation and service of notice to minor children.

Detailed Analysis:

1. Legality of the Registration of ECIR under PMLA:
The petitioner contended that the registration of ECIR No.CEZO/3/2013 under the Prevention of Money Laundering Act (PMLA) against him and his minor children was illegal and without basis. The petitioner argued that his name did not appear in the original FIR related to the alleged murder case and that the subsequent alteration of the FIR did not implicate him directly. Furthermore, the petitioner asserted that the confiscated amount of ?74,47,700/- had no connection to the alleged crime.

2. Validity of the Provisional Attachment of Properties:
The petitioner challenged the provisional attachment of properties standing in his name and those of his minor children, arguing that there was no nexus between the properties and the alleged criminal activities. He claimed that the properties were acquired between 2005 and 2011, while the criminal cases were from 1992 to 1997 and 2002. Additionally, the petitioner stated that he was an Income Tax Assessee since 1998 and that the properties were purchased from self-earnings and borrowings, which were reflected in his Income Tax Returns.

3. Compliance with Procedural Requirements under Section 8(1) of PMLA:
The petitioner argued that the statutory notice under Section 8(1) of PMLA was not served on him, which is a mandatory requirement. The petitioner’s counsel contended that the notice must be served in a manner prescribed by law, and in this case, it was not properly served. The respondents, however, maintained that the procedural formalities were fully complied with and that the notices were dispatched and delivered as required.

4. Proper Representation and Service of Notice to Minor Children:
The petitioner contended that the notices under Section 8(1) of PMLA were improperly served on his minor children directly, instead of through their next friend and natural guardian, which is a procedural requirement. The court noted that the minor children were not properly represented in the complaint and that the service of notices should have been done in accordance with the Code of Civil Procedure, which mandates service through a guardian for minors.

Court's Findings:

1. Legality of ECIR Registration:
The court did not find merit in the petitioner’s argument regarding the illegality of the ECIR registration. The court observed that the investigation revealed a connection between the petitioner and the proceeds of the crime, justifying the registration under PMLA.

2. Provisional Attachment of Properties:
The court upheld the provisional attachment of properties, noting that the petitioner had purchased several immovable properties disproportionate to his declared income. The court found that the provisional attachment was justified based on the evidence presented.

3. Compliance with Section 8(1) of PMLA:
The court found that the notice under Section 8(1) of PMLA was properly served on the petitioner. The court noted that the petitioner’s counsel had entered an appearance and that the procedural formalities were complied with, as evidenced by the dispatch register and delivery reports.

4. Service of Notice to Minor Children:
The court acknowledged that the minor children were not properly represented in the complaint and that the service of notices was not in accordance with the procedural requirements. However, since the minor children did not join the petitioner in challenging the legality of the procedure, the court did not grant relief to them.

Conclusion:
The court concluded that the writ petition lacked merit and dismissed it. The court emphasized that the petitioner could seek redress through the Adjudicating Authority and, if necessary, through the Appellate Tribunal and further legal avenues provided under PMLA. The court also dismissed the connected miscellaneous petition.

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