2018 (6) TMI 14 - HC - Money Laundering

Scheduled offence under the Prevention of Money-Laundering Act, 2002 - whether the alleged offence under Section 13(1)(e) r/w Section 13(2) of the Prevention of Corruption Act, 1988 was included in para 8 of the schedule of the Prevention of Money Laundering Act, 2002 by amendment to the said Act only in the year 2013? - provisional attachment - Held that - Before passing the Provisional Attachment Order under Section 5(1) of the Prevention of Money-Laundering Act, 2002, notices were issued to the writ petitioners. Further, even while passing the Order of confirmation of Provisional Attachment Order by the Adjudicating Authority, statements of the writ petitioners were called for and they were also recalled to give evidence in the matter. Therefore, it cannot be said that the Provisional Attachment Order passed by the respondents/authorities and the confirmation order passed by the Adjudicating Authority of the said Provisional Attachment, are without following the due procedure and giving fair opportunity to the writ petitioners herein to submit their say in the matter. Therefore, there is no question of violation of principles of natural justice. As regards the notice dated 5.10.2016 issued to the petitioners for taking possession of the property, the writ petitioners have to challenge the same by preferring an appeal before the appellate Tribunal and they cannot directly approach this Court by filing the writ petitions invoking the extra-ordinary jurisdiction of this Court. When the provisions of the statute itself i.e., The Prevention of Money-Laundering Act, 2002 itself provides for challenging the said orders by preferring an appeal before the appellate Tribunal, as it is rightly submitted by the learned Additional Solicitor General appearing for the respondents/authorities, the writ petitions are not maintainable, since as per Section 42 of the Prevention of Money Laundering Act, 2002, only when a person is aggrieved by the decision or order of the appellate Tribunal, such person can approach this Court by preferring an appeal.

Summary

Issues Involved:
1. Validity of invoking the Prevention of Money-Laundering Act, 2002 (PMLA) for offenses committed before its amendment in 2013.
2. Legality of the provisional attachment order and subsequent possession notice under PMLA.
3. Jurisdiction and procedural propriety of the Enforcement Directorate's summons under PMLA.

Detailed Analysis:

1. Validity of Invoking PMLA for Pre-Amendment Offenses:
The petitioners argued that the offenses under Section 13 of the Prevention of Corruption Act, 1988 were included in the PMLA schedule only in 2013. Since the alleged offenses occurred before this amendment, the PMLA should not apply retroactively. The court noted that the Andhra Pradesh High Court in B. Rama Raju vs. Union of India held that property acquired before the amendment could still be subject to PMLA proceedings if it was processed to project it as untainted. The court found that the petitioners' contention that the amendment does not have retrospective effect was not sustainable in law.

2. Legality of Provisional Attachment and Possession Notice:
The petitioners contended that the provisional attachment order under Section 5(1) of PMLA and the subsequent possession notice were issued without authority, as the properties were acquired before the amendment. The court observed that the petitioners were given fair opportunity to present their case before the provisional attachment order was confirmed by the Adjudicating Authority. The court emphasized that the petitioners had already challenged these orders before the Appellate Tribunal, and thus, the writ petitions were not maintainable. The court reiterated that the proper remedy was to appeal to the Appellate Tribunal as provided under Sections 26 and 42 of PMLA.

3. Jurisdiction and Procedural Propriety of Enforcement Directorate's Summons:
The petitioners challenged the summons issued by the Enforcement Directorate, arguing that the summons were issued without proper authority. The court held that the petitioners were required to appear before the authority and submit their explanations. If any adverse action was taken subsequently, the petitioners could challenge it. Filing writ petitions to quash the summons without first responding to them was deemed premature and not maintainable.

Conclusion:
The court dismissed the writ petitions, holding that the petitioners should have availed the statutory remedy of appealing to the Appellate Tribunal. The court found no violation of principles of natural justice, as the petitioners had opportunities to present their case before the provisional attachment order and the subsequent confirmation. The court also emphasized the need to follow procedural steps before challenging the summons issued by the Enforcement Directorate.