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2019 (2) TMI 213 - AT - Money LaunderingContinuation of freezing of the accounts to locate the proceed of crime - section 17 (4) of PMLA - Held that - The Hon ble High Court of Delhi in the case of ABDULLAH ALI BALSHARAF & ANR. VERSUS DIRECTORATE OF ENFORCEMENT & ORS. 2019 (1) TMI 515 - DELHI HIGH COURT has dealt with the issue of Section 102 of Cr.P.C. as to whether such directions could be issued by the Adjudicating Authority under the PMLA and it was held that the contention that officers of the Enforcement Directorate could issue orders of freezing under Section 102 of Cr.P.C. is rejected and the communications issued by the Enforcement Directorate to BSE are, plainly, without authority of law - appeal allowed - decided in favor of appellant.
Issues Involved
1. Validity of the second application under Section 17(4) of PMLA, 2002. 2. Authority of the Adjudicating Authority to issue directions under Section 102 of Cr.P.C. 3. Legality of the freezing orders and their extension beyond the stipulated period. Detailed Analysis 1. Validity of the Second Application under Section 17(4) of PMLA, 2002 The appeals were filed against the order dated 12th March 2018 by the Adjudicating Authority in O.A. No. 133/2017. The earlier application (O.A. No. 77/2017) was dismissed as it was beyond the scope of Sections 17(1-A) and 17(4) of PMLA. The respondent filed a fresh application under Section 17(4) for extending the debit freeze. The Tribunal reiterated that "if the statute requires a thing to be done in a particular manner, it must be in that manner otherwise action is vitiated." The Tribunal found that the application for retention was not allowed by the adjudicating authority, and the 180 days had expired from the day of seizure of the bank accounts as well as from the date of passing the impugned order. The Tribunal concluded that the adjudicating authority had no jurisdiction to direct the respondent to file a fresh application. 2. Authority of the Adjudicating Authority to Issue Directions under Section 102 of Cr.P.C. The Tribunal noted that the Adjudicating Authority had issued directions for further investigation under Section 102 of Cr.P.C. without any prayer for such relief in the application for retention of property under Section 17(4). The Hon'ble High Court of Delhi, in its judgment dated 09.01.2019, held that the scheme of seizure under Section 102 of Cr.P.C. is inconsistent with the provisions of PMLA. The Court emphasized that the PMLA has its own checks and balances, and any property can only be seized or attached if the necessary conditions are met, including the recording of reasons in writing. The Tribunal agreed with this interpretation and found that the directions under Section 102 of Cr.P.C. were beyond the authority of the Adjudicating Authority. 3. Legality of the Freezing Orders and Their Extension Beyond the Stipulated Period The Adjudicating Authority had allowed the continuation of the freezing order dated 20.09.2017 for a further period of 8 months. The Tribunal observed that the prescribed period of time stipulated in Section 20 of PMLA is 180 days, and any extension beyond this period is questionable. The freezing order had already expired in the second week of November 2018, rendering the issue moot. The Tribunal held that the impugned order was not sustainable in law and set it aside. Conclusion The Tribunal allowed the appeals, setting aside the impugned order dated 12.03.2018. The Tribunal found that the second application under Section 17(4) was not maintainable, the directions under Section 102 of Cr.P.C. were beyond the authority of the Adjudicating Authority, and the extension of the freezing orders beyond the stipulated period was not legally sustainable. The appeals were allowed, and the impugned order was set aside.
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