2018 (5) TMI 225 - HC - Money Laundering

Offence under PMLA - provisional order of attachment - application to keep the civil proceeding in abeyance for confirmation of the provisional order of attachment during pendency of the trial - Held that - This Court is of the opinion that there is no further issue to be decided and the writ application can be disposed of with the observation that the findings, which may be recorded by the adjudicating authority, would be prima facie the findings under the provisions of the PML Act, 2002 and the same would not have any binding effect on the trial Court, which would try the case/charges against the appellant in the criminal case under the provisions of the Code of Criminal Procedure. Another stipulation in this observation that since the civil proceeding is separate and distinct proceeding, the show cause filed by the petitioners or evidence led by the petitioners before the adjudicating authority will be in no way used by the prosecuting agency against the petitioners in the criminal trial pending before the Learned Vigilance Judge. This Court hastens to add that the petitioners should file their show cause before the adjudicating authority within a period of 15 days. Provisional attachment is valid for 180 days and in the meantime since substantial time has elapsed during the pendency of this writ application and the earlier writ application, the said time should not be counted while calculating 180 days as stipulated in Section 5(1) of the PML Act, 2002.

Issues:
Challenge to initiation of adjudication proceeding under Prevention of Money Laundering Act, 2002 (PML Act, 2002) based on parallel civil proceeding and violation of Article 20(3) of the Constitution of India.

Analysis:

1. Initiation of Adjudication Proceeding:
The petitioners challenged the initiation of adjudication proceeding under the PML Act, 2002, based on a parallel civil proceeding initiated by the State Vigilance Department. They argued that being compelled to give evidence against themselves in the civil proceeding would violate Article 20(3) of the Constitution of India. The High Court, in a previous order, allowed the petitioners to file an application before the Adjudicating Authority to ventilate their grievances. The Court directed the Adjudicating Authority to consider the matter in light of the observations made and decide whether to continue the proceeding or keep it in abeyance until a particular stage in the criminal trial is achieved. The Court emphasized that the show cause filed by the petitioners should not be used against them in the criminal trial.

2. Rejection of Application by Adjudicating Authority:
The application filed by the petitioners before the Adjudicating Authority to keep the civil proceeding in abeyance was rejected. The petitioners challenged this rejection in a subsequent writ application. The Court noted that similar orders were passed in other cases, except one where a stay order was granted due to the offense being committed before the Amendment Act to the PML Act, 2002. An appeal was filed in one case, raising objections regarding the use of the show cause in evidence against the appellant. The Division Bench dismissed the appeal, stating that findings by the Adjudicating Authority would be prima facie and would not have a binding effect on the criminal courts trying the case.

3. Decision and Observations:
The High Court concluded that there was no further issue to be decided in the writ application. It observed that the findings of the Adjudicating Authority under the PML Act, 2002 would not bind the trial court in the criminal case. The Court clarified that the civil proceeding was separate, and the show cause or evidence presented before the Adjudicating Authority would not be used by the prosecuting agency in the criminal trial. The petitioners were directed to file their show cause within 15 days, and the provisional attachment period was adjusted to exclude the time taken by the writ applications. The writ application was disposed of with the vacating of the interim order and no costs imposed.

In summary, the High Court addressed the challenge to the initiation of adjudication proceeding under the PML Act, 2002, based on parallel civil proceedings and the alleged violation of Article 20(3) of the Constitution of India. The Court provided detailed analysis, considered previous orders, and clarified that findings by the Adjudicating Authority would not impact the criminal trial. The petitioners were directed to file their show cause, and the provisional attachment period was adjusted. Ultimately, the writ application was disposed of with no costs imposed.

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